Welcome to the Advance Auto Parts Fourth Quarter 2013 Conference Call. [Operator Instructions] This conference is being recorded. If you have any objections, you may disconnect at this time. Before we begin, Zaheed Mawani, Director of Investor Relations, will make a brief statement concerning forward-looking statements that will be made on this call.

Good morning, and thank you for joining us on today's call. I'd like to remind you that our comments today contain forward-looking statements we intend to be covered by, and we claim the protection under, the Safe Harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address future events, developments or results and typically use words such as believe, anticipate, expect, intend, will, plan, forecast, outlook or estimate, and are subject to risks, uncertainties and assumptions that may cause our results to differ materially. Our comments today will also include certain non-GAAP measures. Please refer to our earnings press release and accompanying financial statements issued today for important information and additional detail regarding these forward-looking statements and the non-GAAP measures referenced in today's call. The company intends these forward-looking statements to speak only as of the time of this conference call and does not undertake to update or revise them as more information becomes available. Certain financial measures have been reported on a comparable basis to exclude the impact of costs that were incurred in fiscal 2013 in connection with the integration of B.W.P. Distributors and the General Parts International acquisition. A reconciliation of any non-GAAP financial measures mentioned on the call with the corresponding GAAP measures is described in our earnings release and our SEC filings, which can be found on our website at advanceautoparts.com. For planning purposes, our first quarter 2014 earnings release is scheduled for May 15 before market open, and our quarterly conference call is scheduled for the morning of Thursday, May 15, 2014. To be notified of the dates of future earnings reports, you can sign up through the Investor Relations section of our website. Finally, a replay of this call will be available on our website for 1 year. Now let me turn the call over to Darren Jackson, our Chief Executive Officer. Darren?

Thank you, Zaheed. Good morning, everyone. Thank you for joining us, and welcome to our fourth quarter conference call. I'd like to start off by thanking all of our team members for their hard work and commitment to better serve our customers and grow our business. Joining me on the call today is our President, George Sherman, who will update you on our business operations; and Mike Norona, our Chief Financial Officer, who will update you on our financials. I'd also like to take this opportunity to convey a warm welcome to the new team members from General Parts that have now joined our Advance team, bringing our total team strength to approximately 71,000. The foundation of any business is its people, and I'm proud to be surrounded by an exceptionally talented team as we head into a special and transformative year for our company in 2014. Since our last conference call at the end of the third quarter, we are very excited to have closed the General Parts acquisition on January 2, 2014. The closing of this transaction was a historic day for our company. This investment positions Advance for leadership in the industry while broadening and accelerating our growth strategy. Advance's 80-year history has been a story of growth, and adapting to the changing industry and customer needs. This combination is another strategic step forward for our great company, and I couldn't be more pleased and privileged to be part of this next chapter in our journey. I will begin my prepared remarks today updating you on our fourth quarter performance, followed by my thoughts on our 2013 outcomes as well as our priorities for 2014. I am pleased to report that our results in the fourth quarter were better than expected, with total sales increasing 6% for…

Thanks, Darren, and good morning, everyone. First, I'd like to thank our team members for their commitment to customer service while continuing to make progress on our 2013 priorities during the quarter. I'd also like to extend a very warm welcome to the General Parts team members that have now joined the Advance team in 2014. With our closing announcement of the General Parts acquisition, we now have roughly 71,000 talented team members working together, as we look forward to delivering on the tremendous opportunity this acquisition enables while providing the best customer service each day. With my prepared remarks this morning, I'll provide a view on our fourth quarter sales performance, followed by an update on the key priorities that we focused on within the quarter and the full year. Finally, I'll share my thoughts on the business as we enter 2014. Looking at our sales, we are very encouraged with our performance in the fourth quarter as the team delivered a positive comparable store sales outcome of 0.1%, a sequential acceleration of at least 200 basis points from Q3 on a 1-year and 2-year basis. Our positive sales performance was attributable to solid execution by our field teams and the continuous improvements we are making to our operational infrastructure, which I'll talk more about in a moment. In addition, the winter weather trends during the second half of the quarter across our markets generated incremental customer demand in various product categories. Our continued investments and availability and superb execution for our merchant and supply chain teams allow us to be well-positioned to respond to a lifting customer demand. Our field team accelerated performance in both our DIY and Commercial businesses. Our positive comp sales performance was driven by growth in seasonal categories, driving improvements in both dollars per…

Thanks, George, and good morning, everyone. I'd like to start by thanking all of our talented and dedicated team members for their commitment to serving our customers in 2013 and the better-than-expected finish they led us to in our fourth quarter. I would also like to sincerely welcome all the new team members from General Parts to the Advance team as we successfully closed the transaction on January 2, 2014. We entered 2014 with both momentum and excitement from this combination, which will allow us to leverage our new size and scale, combined capabilities and a team of roughly 71,000 talented team members to create value for our shareholders, customers and team members in 2014. I plan to cover the following topics with you this morning: one, provide some financial highlights from our fourth quarter of 2013; two, put our fourth quarter and full year results into context with our expectations and key financial priorities we use to measure our performance; and three, share with you our financial outlook for 2014. As a point of clarity, my commentary this morning regarding the 2013 financial performance will be solely related to Advance Auto Parts. The General Parts acquisition closed subsequent to our fiscal year end and we will begin consolidated reporting and commentary beginning with the first quarter of 2014. In addition, the 2013 results I will be speaking to, unless otherwise specified, will be on a comparable basis which excludes the impacts of BWP integration expenses and excludes any one-time transaction costs associated with the acquisition of General Parts. We began this year by communicating our 2013 EPS full year guidance of $5.45 to $5.60, excluding BWP integration costs, and we are pleased to have exceeded those expectations with a comparable EPS of $5.67, an 8.6% increase from 2012. This…

[Operator Instructions] The first question today is from Gary Balter with Crédit Suisse. Gary Balter - Crédit Suisse AG, Research Division: Just a -- you've owned BWP now for a little while, and that's the closest you've come in terms of having an in-depth knowledge of GPI. Could you talk about the learnings, and recognizing that's a little bit of a different situation because of the franchisee owning other franchisees? Can you talk about what you learn from the way they operate that gives you confidence in terms of things you could apply from GPII or other areas to Advance to improve performance going forward?

Yes, Gary. This is Darren. So there's a handful of things we learned. First of all, we learned, culturally, we're very similar to the -- whether it's GPI or BWP, and that early on, the work really is to retain the people that are serving our customers. What we've seen in the first 12 months is that our retention levels after acquisition were actually better than the year before. So the team members would clearly have a level of excitement about that. I would say the other thing that we learned is that we had to do some product transitions, and there were some product categories that the customer was very familiar with and very supportive of with their customers, and those product transitions went just fine. So we had to transition into some Advance private label product. We had to transition some of our belts programs and the stocking programs, and our retention levels were very good in terms of just product transitions. Three, it's not simply a real estate transaction that will take 1 of 3 types of transitions with BWP. I would tell you that the one that we're seeing just outstanding results with are the ones where we consolidate a BWP into the backroom of an AAP, what we call tuck and folds. It seemed to be working really well. We're retaining the revenues in much better rates than what we thought, and we're retaining the team members and the customers. There doesn't seem to be any customer retention challenges. Now if we move a little further down the road, we'll lose a little bit of business from those closest to us, but overall, it's exceeded our expectations. I'd tell you the conversions are just a little trickier. I would say those are meeting our expectations.…

The next question is from Matthew Fassler with Goldman Sachs.

My primary question relates to synergies. So you quantified the year end number and it sounds like you're looking to book these ratably over the 3 years. Can you talk about the qualitative buckets that you would expect to access earlier in the integration process, whether one or the others is weighted more heavily in year 1 versus year 3.

Hey, Matt, it's Mike. So as we said, we expect to generate $160 million in synergies over the 3 years, and we guided to the range of $45 million to $55 million in 2014. If you break out those, the breakout of the synergies we talked about was purchasing or procurement, as we said in the script; scale and leverage, I'm sure kind of cost synergies; and then supply chain. So kind of the cadence around that, we would expect in 2014 to see some of the purchasing synergies a little bit earlier and also some of the scale and leverage. And then the supply chain, just given now, we're putting our -- their 38 DCs together with our 12 DCs and now 50 DCs, and we've got some studies to do there. The supply chain would come later on in that 3-year journey. But the ones you're going to see this year are going to be more from the purchasing categories and the synergies there, and then -- and some cost synergies.

That's very helpful. And then just by the way, a very quick follow-up. Thank you for quantifying the EPS impact of the extra week. Should we think about the sales impact of that week just as we build up the model as being sort of an average week in your fiscal fourth quarter? Or would there be a reason to think of it differently?

Exactly, Matt. And if that changes, and throughout the year, we'll give you that. It's just difficult to predict 1 week, especially in the fourth quarter just given the volatile that you sometimes see with the weather, but I think the assumption you've made is exactly what I would do.

Our next question today comes from Greg Melich with ISI Group.

I wanted to follow up a little bit on the cash flow and the CapEx investments you've done. Mike, could you highlight what portion of the cost of the integration are cash versus noncash, and also put that in the context of the CapEx going forward, whether it's the run rate we should expect or does it go up as you start to figure out supply chain?

Yes. So first of all, virtually all of those costs that we talked about of $190 million are all -- virtually all cash costs. So -- and then -- and we...

P&L costs.

P&L costs, and then the -- and then we've kind of broken out the capital separate. So when we -- so you can see when we guided this year, we guided our total capital lease year for $325 million to $350 million, and we said roughly $50 million to $60 million of that is related to the acquisition. Things like IT capital, conversion capital, stores, supply chain systems, so those are some of the capital buckets. And then some of the cost buckets, if you're interested in some of those buckets, I think that was your question, Greg, is we've got project costs, transition costs. Early on, we've got retention and severance costs, conversion costs and then the last big bucket is IT costs. So that gives you just the kind of the P&L versus capital.

And maybe if you could just tie that into the $450 million or more of free cash flow, I think you said that was x GPI. Presumably, that's x the GPI costs? Or that $450 million, that's consolidated?

Yes, that's an all-in -- so the cash flow number's an all-in number. The free cash flow number that we got it to, the minimum $450 million, that's an all-in number.

Okay. And included in that would be any working capital benefits, and if you have any guidance on that, and then I'll let you go.

Yes, it would be, Greg.

Okay. And how much working capital do you think we could get?

We haven't shared that out, but that's a good one.

Yes. And Greg, those build over time. I think we've had our first vendor meeting this week. So...

I mean, Greg, just to give you a little bit of clarity. I mean, the one thing that we said in the announcement of the deal, and I'll share with you again, is maintaining our investment-grade ratings was important. That will help us as we continue to improve our AP ratio. We see some opportunities with GPI. They have a lower AP ratio than we do in their base part of the GPI basis, excluding the WORLDPAC part, and we see some great opportunities improving that working capital through AP ratio with our investment-grade ratings. But it's still too early to tell and provide any further guidance than that.

And we do have time for one more question from Scot Ciccarelli with RBC Capital Markets.

Can you give us a concrete example of how you plan to leverage the capabilities and relationships that you kind of brought on board from GPI into the Advance store base? And then just kind of, hopefully it's a sidebar, how close are you to making any kind of meaningful decisions on store and DC consolidation plans?

Yes, Scot. I'll give you 2 examples on GPI. Last weekend, I was in Orlando with members of my senior management team, meeting with the TECH-NET customers and meeting with the independent channel customers. The TECH-NET customers, there's 5,300 of them, and they tend to be more of the large bay garages. If you look at the Motor Age, they -- the #1 garage in the country this year was the Pellman garage in Colorado Springs, and that's a TECH-NET customer. And so one of the things Advance did not develop is its own auto care program for garages. We don't need to. The TECH-NET program is 17 years old. Al Wheeler, who George spoke about earlier, has been with CARQUEST 17 years and helped build that program from the ground up. And we see that as a tremendous asset that we would build upon with all the assets of GPI. The other one is CARQUEST Technical Institute. They're a training institute, and to that point, the WORLDPAC Training Institute goes out. And when they train installers, it's not just training them on new technical things, but how to run a business. We could run those programs 52 weeks a year and have them sold out. Those are not capabilities that we build to help our -- our installers are more e-commerce-based. And conversely, our Moto shop suite are owned assets that we will offer through the CARQUEST organization and sales teams. So those are just 2 simple ones. I think as to the supply chain, I'll just say this at this point. We're just too early. We recently engaged a third party to help work with us. The LNO study has just begun, and the color on that will be forthcoming later this year.

And that's all the time we have for questions. I will now turn the call back to management for any final comments.

Thank you, Wendy, and thanks to our audience for participating in our third quarter earnings conference call. If you have additional questions, please call me at (952) 715-5097. Reporters, please contact Shelly Whitaker at (540) 561-8452. That concludes our call.

Thank you. That concludes our call today. You may now disconnect. Thank you for joining us.