Good morning and welcome to the AutoZone Conference Call. Your lines have been placed on listen-only until the question-and-answer session of the conference. Please be advised today's call is being recorded. If you have any objections, you may disconnect at this time. The conference call will discuss AutoZone's third quarter financial results. Bill Rhodes, the company's Chairman, President and CEO will be making a short presentation on the highlights of the quarter. The conference call will end promptly at 10:00 A.M Central Time or 11:00 A.M. Eastern Time. Before Mr. Rhodes begins, the company has requested that you listen to the following statement regarding forward-looking statements. Certain statements contained in this presentation are forward-looking statements. Forward-looking statements typically use words such as believe, anticipate, should, intend, plan, will, expect, estimate, project, position, strategy and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties including without limitation credit market conditions, the impact of recessionary conditions, competition, product demand, the ability to hire and retain qualified employees, consumer debt levels, inflation, weather, raw material costs of our suppliers, energy prices, war and the prospect of war, including terrorist activity, the availability of consumer transportation, construction delays, access to available and feasible financing and changes in laws or regulations. Certain of these risks are discussed in more detail in the Risk Factors section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year August 30, 2014, and these risk factors should be read carefully.

I would now like to turn the meeting over to Mr. Bill Rhodes. Sir, you may begin. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning and thank you for joining us today for AutoZone's 2015 third quarter conference call. With me today are Bill Giles, Executive Vice President and Chief Financial Officer IT and ALLDATA and Brian Campbell, Vice President-Treasurer (sic) [Vice President-Treasury], Investor Relations and Tax. Regarding the third quarter, I hope you've had an opportunity to read our press release and learn about the quarter's results. If not, the press release, along with slides complementing our comments today, is available on our website www.autozoneinc.com. Please click on quarterly earnings conference calls to see them. To begin this morning, I want to thank all AutoZoners for delivering another solid quarter. Our primary focus this quarter was to continue and expand our different delivery models, open two additional mega hub stores and closely monitor the performance of these ongoing tests. We've made good progress on these tests and now have just over 900 stores receiving increased deliveries intra-week or 18% of our domestic store base and we now have four mega hubs in operation. In recent years, we've diversified our portfolio somewhat with an emphasis on building additional legs of growth for the future. Our retail domestic business, which generates approximately 70% of our revenues, performed well in Q3 and while our growth slowed modestly from last quarter, we continue to see opportunities for future growth in both store count and same store sales. Secondly, our commercial domestic business, which has been growing sales by double-digits since 2010, continued its growth in Q3 and continues to represent a significant opportunity for us. Regarding our international operations, we've been doing business in Mexico since late 1998 and…

Our first question is from Seth Basham with Wedbush Securities. Your line is open.

Good morning. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning.

My first question is around your mega hub strategy. It seems like you've developed more confidence in rolling out that strategy. Can you give us some more color on what kind of lift you're seeing from mega hubs? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, first of all, Seth, thank you for the question. I want to be careful about giving out too much specific information, because we have two stores that have been on the program for a considerable amount of time. We just rolled the other two locations in the last eight weeks or so. I will tell you that those two locations are performing at or above our expectations so far, so they are helping us build our confidence level. But I don't want to get into specific sales performance indicators, because there is some variability between them and there's two of them that are just so new. But what I will tell you is we do have a higher degree of confidence in that, that's why we're going forward with looking for additional sites. And we are – it is certainly meeting or exceeding our financial expectations, which means it's meeting our internal rate of return or better.

Got you. Good to hear. And then secondly, as it relates to IMC, you talked about the sales there meeting or exceeding expectations thus far. What kind of assumptions do have there for your cross-selling lift? And do you expect to maintain that type of cross-selling lift as you expand that to more stores that are further from the IMC branches? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, it's going to be interesting over time and we're very early in this as well. We started with eight stores on the program and we've now up to over 500 stores, but many of those stores are very early in the process. I think what we're learning so far is the stores that are very close to IMC locations are going to outperform those that are farther away; and there's certainly a big amount of our stores, call it, half of them that can be touched by an IMC location today, but there's a bunch of them that would have to be serviced overnight. So it's really early. While we did have assumptions in our overall model and so far we're meeting or exceeding those assumptions, but we've got a long way to go.

Got you. Thanks and good luck. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. Thank you.

Our next question is from Dan Wewer with Raymond James. Your line is open. Dan R. Wewer - Raymond James & Associates, Inc.: Thanks. Good morning, Bill. You talked about the variability and the results from the new initiatives. Does that reflect different levels of execution? Or is that just the inherent variability that AutoZone sees in a lot of its different businesses? William C. Rhodes - Chairman, President & Chief Executive Officer: That's a terrific question, Dan. I would say it's not about execution. I've got to tell you, what our team has done to roll out over 900 stores on multiple deliveries per week and really just over two quarters is pretty remarkable. I guess there's 700 stores of them (38:00) just over the last couple of quarters is really remarkable. And while we're still learning how to do it better, they've almost flawlessly executed that, so hats off to all the team that's worked on that. One of the problems we have with this initiative is that we have elected to do many of the tests very close to the specific distribution centers. It's easier, it's cheaper, lot of other reasons, but because of that, we have very small geographies that – where these tests are focused on, and some of those geographies are going through different things in the marketplace that have nothing to do with delivery frequency. So we're seeing very different results in certain markets, and so that's why we keep expanding the test to try to broaden that slot so that we can make sure that we understand what the benefits of that are. Dan R. Wewer - Raymond James & Associates, Inc.: Okay. And then just as a follow-up question, when you think about the benefits from the better parts coverage, do you think you're getting a bigger benefit from the multiple shipments per week from the distribution centers? I think those are focusing on the faster turning SKUs or do you think you're going to get a bigger lift from the slower turning SKUs that you're adding to the other mega hubs? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, I would say we definitely get a bigger lift from the frequency of delivery test, which is focused on the SKUs that are in those local stores that are sorted there and making sure we have the right replenishment levels. However, the costs of that initiative are materially higher than they are on the mega hubs. Dan R. Wewer - Raymond James & Associates, Inc.: Okay. So a bigger sales lift but also higher expenses? William C. Rhodes - Chairman, President & Chief Executive Officer: It's much higher expenses. Dan R. Wewer - Raymond James & Associates, Inc.: Great. Great. Thank you. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. Thank you.

Our next question is from John Lawrence with Stephens, Inc. Your line is open.

Thank you and good morning, Bill. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning.

Would you comment a little bit about the global sourcing strategy. I know it's very early, but give us a sense of sort of that – the context of that process of using that type of strategy globally? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: Yeah, thanks, John. We obviously today import a fair amount of product directly ourselves today and we use third parties in order to help us do that. And we will continue to do so. But what we really want to do is to be able to put ourselves in a position to increase that fairly significant over the next several years. Though as Bill highlighted in his comments, our expectation as I said, we will put AutoZone resources overseas in a dedicated office that will allow us to be closer to the vendors and the manufacturers so that we can source with a broader net and improve our quality control, et cetera. So there's a lot of opportunities there on a long-term basis.

All right. Thanks. Good luck.

Our next question is from Simeon Gutman with Morgan Stanley. Your line is open. Simeon A. Gutman - Morgan Stanley & Co. LLC: Good morning. So a follow-up question on the mega hub and then how it relates to or how it fits into the puzzle of multiple delivery. Are you expanding them, meaning testing them so that the DC may not necessarily be the primary vehicle that's used for multiple delivery? And does the number of mega hubs mean that you won't have to use the DC as much? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, let me go into a little bit more depth to make sure that we're articulating it appropriately. So think about a standard AutoZone store that carries 20,000 SKUs, 22,000 SKUs. When those SKUs are replenished, that replenishment today comes from the distribution center, and tomorrow, if our test proves successful, will still come from the distribution center, but will come three times or five times a week. When the SKU is not in that 22,000 SKU assortment, today, the AutoZoners in that store can go for that expanded assortment to a hub store, which will take the 22,000 SKUs up to 35,000 SKUs to 50,000 SKUs. Tomorrow, if the mega hub continues to work, if that hub store doesn't have it, they can reach out for another 30,000 SKUs, 40,000 SKUs to the mega hub store. So the increased frequency of delivery is all about replenishment, and the mega hub is all about increased access to additional parts coverage. Does that make sense? Simeon A. Gutman - Morgan Stanley & Co. LLC: Yeah, no, that's helpful. So my follow-up is you have – you said as of today, I think over 900 stores that are benefiting from some type…

Our next question is from Bret Jordan with BB&T. Your line is open. Bret D. Jordan - BB&T Capital Markets: Hey. Good morning. William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: Good morning. Bret D. Jordan - BB&T Capital Markets: A question on the global sourcing and I guess as you look at it, is this going to increase your penetration with the Duralast mix? And I guess what does it do to supply chain? Does it add inventory because you own inventory further into the supply chain? And I guess is the strategy to pick up better pricing? Or is it to have better management of products quality? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: I think probably better opportunity to source from a broader selection of manufacturers and vendors. It will have the opportunity to reduce pricing, because we'll be able to go direct in many circumstances. It likely will add a little bit of inventory just from the standpoint that you'll own it for a longer period of time in the process, but we believe obviously there's the savings that we will achieve from the acquisition costs will far outweigh those carrying costs. And then from a quality perspective, it probably has some opportunity to improve the quality although we feel really good about the quality of our product today that we import. So there's a little bit of opportunity there, but probably not as much. The real focus is going to be on the acquisition cost, getting closer to the vendors and the manufacturers and improving the profitability of the company. Bret D. Jordan - BB&T Capital Markets: Will Duralast as a percentage of the inventory increase in this process? Or is it largely stable just better sourcing? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: I would say that if Duralast increases as a percent of our total, it wouldn't be as a result of this initiative necessarily. It's more about sourcing. Bret D. Jordan - BB&T Capital Markets: Okay. And then one quick question on the e-commerce; you said it was growing faster than brick-and-mortar. Is that traffic-driven increases or is that ticket-driven increases? Are you seeing any price pressures out there from people like RockAuto or is the market pretty stable? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: The market is somewhat stable from an online, although it does continues to be somewhat promotional in nature. From our vantage point, it's really mostly traffic. And so, our traffic has continued to grow at double-digit kind of rates. So we've experienced good traffic and it's a great source of information for our end customers. Bret D. Jordan - BB&T Capital Markets: Okay. Thank you. I appreciate it. William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: Okay.

Our next question is from Aram Rubinson with Wolfe Research. Your line is open.

Hey, there, guys. Good morning. Two questions. The first one just about the capital structure, shares outstanding fell by 4.2% on a year-over-year basis, the lowest that I've seen at least in our model. Can you talk to us a little bit about the CapEx element that might be pressuring that? CapEx is higher as a percent of sales, but talk a little bit about where you think that might max out? And also whether or not it's making you think about things differently on the rent-to-own calculation when you're building out some new stores? Thanks. William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: Yeah, just to kind of – if you don't mind me going backwards, it doesn't necessarily change our mind relative from a rent perspective. We're obviously going to continue to prefer to own where we have those opportunities, because we want to be in control of the asset and we think it's cheaper long-term. I would say from the 4% element, it is a little bit lower, but you've seen it come down a little bit over time. Some of that is stock price driven, and so the cash flow generation that we have has been relatively consistent and the stock price has gone up along with the P/E so it's had a little bit of a natural dilution effect, if you will, from that perspective. And from a CapEx perspective, it continues to be a little bit of an increase in CapEx. We had mentioned in previous calls it's likely that we would do an additional distribution center or two over the next couple of years, so that will have some additional usage of CapEx certainly not in the numbers today. And then AP to inventory ratio, which has been a big benefit for us over the past several years, has begun to moderate a little bit more. And so, as we have said before that our expectation is that our AP to inventory ratio will probably stay close to its current rate or a little better, but it won't have the significant increases that it experienced two years or three years ago. Does that help?

Yeah, thanks. And just to follow-up the second question on the commercial, really, you've given us some statistics in terms of commercial penetration and growth. Can you give us some more subjective elements in terms of whether that you've got customer service scores or retention out rates or anything internally that you can help us to get a sense that you're qualitatively gaining traction there would be great. William C. Rhodes - Chairman, President & Chief Executive Officer: Yes. One of the things we talked about probably more extensively on the last call was at the beginning of this fiscal year, we made a shift. We've been opening a tremendous amount of stores over the last three years or four years on the commercial program. And with that, our sales with our mature programs and specifically, our mature customers, were not performing as well as we would have liked. So beginning kind of September 1, we really re-anchored our focus on those mature stores and mature customers, and we've turned the tide not I would say, marginally at this point in time, but probably more encouragingly than we would have thought. We still have a ways to go, but I think that is one of the key metrics that's on the forefront of what we were looking at. More subjectively, I'd just say you think back seven years, eight years ago, when we went to this new commercial strategy, our receptivity in the marketplace is just vastly different from people that we try to hire to customers that we go in and make sales calls. Think back eight years ago, we didn't have a sales force out telling our story. Now, we have a very robust and talented and well-trained sales force out there telling our story, and it's making a meaningful difference in the marketplace on their receptivity to us.

And is it fair to say that the lift in sales that you're getting from the hubs and the mega hubs, is that all attributable to the commercial side of the house? William C. Rhodes - Chairman, President & Chief Executive Officer: No, not at all. Not at all. It's probably slightly skewed to commercial, but it's also very robust on the retail side.

Okay. Thanks so much. Have a good day. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. You too. Thanks.

Our next question is from Matthew Fassler with Goldman Sachs. Your line is open. Matthew Jeremy Fassler - Goldman Sachs & Co.: Thanks a lot. Good morning. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning, Matt. Matthew Jeremy Fassler - Goldman Sachs & Co.: I want to ask another question on global sourcing and then a quick follow-up. Can you help us get a sense of the relative profitability of branded goods versus private label goods as they're currently sourced versus where you think having your own sourcing infrastructure overseas will take you? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: That's a good question, and my expectation is that the further we penetrate into the global sourcing, the narrower those numbers will get. But I suspect it's a few hundred basis points when you take everything into consideration. But you do have some additional cost, as we mentioned earlier, relative to owning the inventory for a longer period of time, and frankly, owning it end-to-end. So there are some offsets, but I would say that's probably a round number to use. Matthew Jeremy Fassler - Goldman Sachs & Co.: And if you think you're starting essentially at zero, how much penetration do you think you could ultimately achieve with your own sourcing infrastructure? And to some degree, would simply having an infrastructure in place be a good bargaining or negotiating tool for you to work with your costs with your current vendors? William T. Giles - Chief Financial Officer and Executive Vice President–Finance, Information Technology and ALLDATA: Yeah, I think the way to think about it is that we've started this journey a long time ago, and we do a fair amount of direct importing today. And so,…

Our next question is from Michael Lasser with UBS Investment. Your line is open.

Good morning. Thanks a lot for taking my question. Bill, I was hoping you could size (55:08) the potential opportunity from both the mega hubs store rollout as well as increasing the frequency of replenishment. So of that 22,000 SKUs that will see a benefit from the mega hub, are you missing out like 10% of the time? Or is it more like 20%? And then how would you size the increasing frequency of replenishment as well? William C. Rhodes - Chairman, President & Chief Executive Officer: I think it's difficult for us right now to continue to size it. Look, we're doing close to $1.8 million per store on an annual basis. These are not going to make that $2.5 million. We could maybe pick up $1,000, $1,500 per store per week over time if these initiatives work, but that's let's also remember the competitive landscape is not a stagnant place either. People – this whole industry is chasing parts coverage, parts availability and the ability to say yes, because our customers need it. As parts proliferation continues, it's become a greater and greater challenge and frankly, it's on the forefront of one of the ways we compete against each other. But I don't know that we can sit here and say here's what the numbers going to be because the landscape is going to change over time.

Does the sales increase all come from being able to say yes more often? Or is there some element where the parts pros, the folks in the stores feel a little bit more comfortable with what's available and then they can go out and sell the capabilities to the commercial relationships more aggressively? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, you're talking about really a halo effect there, and clearly, the confidence of our sales team on the commercial side of our counter folks on the DIY side, that's certainly an element. But I would say the bigger element of it is, if a customer, specifically a commercial customer, is calling you six times or seven times a day, if they see a noticeable increase in the amount of times that you say yes, you're going to pick up more share with him. Conversely, if you're saying no more than your competitors said, then you're going to be challenged. So I think there certainly are halo effects. That's hard to see in the data and hard to estimate over what time that's going to happen, but we certainly think if there's an issue or a benefit there.

Okay. And then last question on this line is what's the downside? Can a store become overwhelmed with too much inventory? Or does the complexity become a little greater when there's more availability? Thank you very much. William C. Rhodes - Chairman, President & Chief Executive Officer: I think the downside is what's the cost to get that last sale. There is a lot of diminishing returns on putting inventory into locations. Why don't we put 50,000 SKUs into the local store? Well, because we can't afford to. That's why we have a hub store that will aggregate the demand of 30 stores or 40 stores. Same kind of issue with delivery frequency, there is a lot of diminishing returns, how much can you afford to get that last sale?

Okay. Thank you so much. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. Thank you. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. Before we conclude the call, I hope you had a nice Memorial Day weekend, and I look forward to updating you on our activities from the summer. While we're excited about our growth prospects for the year, we do not take things for granted, as we understand our customers have choices. Our competition is not standing still and we must continue to challenge ourselves to improve. We have a solid plan to succeed this fiscal year, but I want to stress this is a marathon, not a sprint. As we continue to focus on the basics and focus on optimizing long-term shareholder value, we're confident AutoZone will continue to be very successful. Thank you for participating in today's call, and have a great week.

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