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, please disconnect at this time. This conference call will discuss AutoZone's second 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 A.M. Central Time/11 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, 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 ended August 30, 2014, and these risk factors should be read carefully.

Mr. Rhodes, you may begin. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning and thank you for joining us today for AutoZone's 2015 Second 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, Investor Relations and Tax. Regarding the second 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 across the globe for delivering another solid quarter. We remain focused on several key initiatives and on growing our business on a variety of fronts. We've diversified our portfolio somewhat in recent years, 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 Q2. And we continue to see opportunities for future growth in store count and same-store sales. Secondly, our Commercial domestic business, which has been growing sales by double digits for five years, accelerated its growth in Q2 and continues to be a tremendous growth opportunity. Regarding our international operations, we've been doing business in Mexico since late 1998 and our model has proven to work quite well. In Brazil, we are still in test phase, but our sales have continued to grow nicely. As with other international companies, the strengthening dollar has negatively impacted our U.S. dollar earnings from these operations recently. Our Internet businesses, AutoZone.com and AutoAnything, continue to grow nicely and generally consistent with our expectations. ALLDATA, which is the leading diagnostic and…

Thank you. The first question today is from Alan Rifkin with Barclays.

Thank you very much, and congratulations on another nice quarter, guys. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

First question for Bill Rhodes, concerns the delivery frequency program and increasing that. Could you maybe just provide a little bit more color, Bill, as to when you think, if the program goes according to your plan, when peak spending to support the effort will occur? And maybe provide a little bit of color on the comp lifts that you're seeing to the stores that are supported already by the increase in frequency? Thank you. William C. Rhodes - Chairman, President & Chief Executive Officer: That's a terrific question, Alan, and one that I don't want go in too in depth at this point in time. And one of the reasons why is we've been testing this in, I think, 168 stores in five different markets, and they're five very different geographies with different competitive sets and the like. And our results generally have been good, but some parts of them are still hard to read, and that's why we decided to expand it by another over 300 stores. And I think as we get the read on those stores, over the third quarter and fourth quarter, we will have a much better understanding to confirm that we're on the right track, hopefully to confirm that they're actually performing better than the ones we've done to date. It's just a little bit early. Our expectation is once we make a decision, we're going to come back to you all and we'll communicate it clearly and show you what we believe the financial implications are on the operating margins and gross margins and capital expenditures.

Okay. Is it reasonable to expect, Bill, that the frequency actually may vary depending on region where some stores may get deliveries three times a week and others will get deliveries as many as five times? Or are you going to do a unilateral approach across the board? William C. Rhodes - Chairman, President & Chief Executive Officer: I think at this point in time, everything is still on the table. We are testing three times, we're testing five times, we tested two times, and clearly, in some places, you're going to be very close to the store. So the cost of going five times is not as significant as if you're 500 miles away. So I think we still have to determine those things, and that's why we expanded it to another 300 plus stores in the last month.

Okay. And one follow-up if I may, I believe you said that ALLDATA was slowing. Can you maybe just provide a little bit more color as to what you are seeing there and what initiatives over the next 12 months are you going to take to reaccelerate that business? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Yeah, I mean, ALLDATA continues to be the market leader in diagnostic repair software. And so what we have seen is a little bit more competition in the marketplace and a little bit more pricing pressure on the product. We continue to command a very large market share in that segment. And our strategy over the next 12 months to 24 months is to continue to add enhancements to the product to service our customers better and add additional value. Some of that will be through repair information, confirmed repair information, we put a community website up today as part of the repair product, and that's been received very well. So there's a lot of enhancements that we're making to our suite of products that we think over time will continue to create a larger stickiness with our customers and add more value.

Okay. Thank you very much, and good luck in the spring selling season. William C. Rhodes - Chairman, President & Chief Executive Officer: All right. Thanks. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Thank you, Alan.

Thank you. The next question is from John Lawrence with Stephens.

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

Bill, would you comment – your comment on the dilution of the EBIT margin at IMC, would you take a step further and if all these other initiatives on the rollout as far as multiple deliveries per week could over time offset some of that, would that not be correct if you looked out to the completion of that project? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Actually let me – I'll jump in, John. I would say probably not. I would think of them differently. IMC operates at a lower margin business than the overall AutoZone business does. We think we can improve IMC's operating margin. We think we can continue to grow that business, but it will continue to operate at a lower margin than our overall company and therefore will create a little bit of dilution on our operating margin. Now obviously when we anniversary that acquisition that occurred in September of 2014, then it won't be a year-over-year headwind per se. Relative to delivery frequency, the play there is really to add some additional cost into our operating cost structure in an effort to increase sales, gain further market share and grow operating profit at a faster rate, and so, both of those will create a little bit of headwind from a pure operating margin rate standpoint. But the objective obviously in both cases is to continue to provide better service and value to our customers, be closer to our customers with inventory and be able to capture market share and grow operating profit.

Great. Thanks. Congratulations. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. The next call is from Aram Rubinson with Wolfe Research.

Hi, this is actually Chris Bottiglieri on for Aaron Rubinson. William C. Rhodes - Chairman, President & Chief Executive Officer: Good morning. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Hey, how are you?

I'm good. Thanks. Very nice quarter. Had just a quick question on the Commercial program growth, so you took the growth down this year, but obviously the sales were up nicely. Maybe you could just kind of walk us through your thought process there and your desire to slow that down, are your current inventory tests and field tests and delivery tests part of this? Is it to maybe realize that you grew too fast over the last couple of years or is it just kind of preserving capital to use it elsewhere in your business? Thank you. William C. Rhodes - Chairman, President & Chief Executive Officer: Yes, great question. I'll start with – it was our plan this year as we came into the year to slow down a little bit. Remember, what seven years ago, we had 51% of the stores on the program. We now have 78% of the stores on the program. We don't have a vision that 100% of the stores will have the Commercial program, but we do believe it will be significantly higher than it is today, we just don't know the exact number. The reason we slowed it down was one, we're later in the lifecycle of the program openings. But more importantly, we really want to focus the organization more on growing mature programs and specifically growing our business with mature customers. As we've opened so many these programs in the last four, five years, taken a lot of time and attention away from the existing programs, it's also cannibalized the existing programs. But this year, we really wanted to recalibrate our focus and focus intensely on growing mature programs and mature customers. And so far through the first six months, that's having some nice benefits.

Okay. That's great. I'll pass it on to the next person. Thanks for your time. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. The next question is from Dan Wewer with Raymond James. Dan R. Wewer - Raymond James & Associates, Inc.: Thanks. Bill, you'd noted that you were seeing the initial payback with your mature customers. Does that reflect the fact that they're seeing the benefit of the better in-stock positions? And then second, what is the strategy for your top-down sales guys to become more aggressive and letting new accounts know about your greater commercial capabilities? William C. Rhodes - Chairman, President & Chief Executive Officer: A couple quick questions. Thanks, Dan. On the sales force side, we really started building a sales force about seven, eight years ago now. And I will tell you I am just – every time I ride with one of our salespeople, every time I talk to our senior sales leaders, I'm just remarkably impressed by the progress that we've made. And unlike a lot of organizations where you put the salespeople out there to eat what you can kill, our sales processes are very well defined and our team determines exactly where we want our salespeople to be, the exact type of accounts and by the way, the exact accounts that they want them to call on that week. So part of what we've done is we've redirected some of their focus and efforts to the existing stores or the existing customers that we have. And that's beginning to pay off, which we are still calling on new customers, but we really want to be focused on the ones that we have today. And I'm sorry I forgot your first question. Dan R. Wewer - Raymond James & Associates, Inc.: Well, it's just – I think you answered that, that the initial payback with the mature customers, that reflects the fact that…

Thank you. The next question is from Simeon Gutman with Morgan Stanley. Joshua M. Siber - Morgan Stanley & Co. LLC: Good morning. This is Josh on for Simeon. Just a question on gasoline prices. Are you seeing a noticeable pickup from lower prices? And then on the weather front, do you expect a pickup later on as a result of the colder weather right now? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Yeah, it's always difficult to really measure with any precision on that. Clearly, the lower gas prices we believe have been helpful. And they certainty have probably contributed at some level to our comp, I don't think significantly, but they certainly have been helpful. So we try to weigh in all the things between gas and tax refunds, et cetera. From a maintenance perspective, we think that as we – obviously this has been a longer winter and it's dragging on, but clearly spring will be here hopefully in the next couple of weeks, and then we'll get back to our core maintenance categories and things like that. And we expect those businesses to perform well. So we'll have to get a little bit further down the road to look in the rearview mirror to see exactly what the impacts are of gas and whether. But we expect it to be favorable in the spring. Simeon Gutman - Morgan Stanley & Co. LLC: Hey. It's Simeon. If I can just ask one follow-up. Can you – I don't know if anyone asked this, so I apologize if it's redundant. The loyalty card, can you talk about how helpful it's been to sales? Have you've been tracking it in terms of sign-ups, in terms of wallet share, in terms of driving traffic? William C. Rhodes - Chairman, President & Chief Executive Officer: Yes, Simeon. As you know, I guess we launched the first part of the loyalty program nine or 10 years ago, and then we took it to the digital program probably seven years ago. This past year, we used to have different programs in different parts of the country. This past year, we went to one consolidated nationwide program, and the program has worked very well since the beginning. It continues to work well and it's growing, although it's growing at a lower rate just because it's more mature. Now there have been two of our competitors that have launched loyalty programs in the last year or so, but both are different than ours. So far, we continue to be very help happy with our loyalty program and we continue to grow. We haven't seen material changes in our loyalty acceptance rate versus where we were before. Simeon Gutman - Morgan Stanley & Co. LLC: Okay. Nice quarter. Thanks. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. The next question is from Seth Basham with Wedbush Securities.

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

Can we take a step back and just think a little bit more about the long-term financial model? You continue to expect mid-single EBIT growth or better, but it seems like you're investing a little bit more capital in DCs and whatnot, and some of these acquisitions. So longer term, should we expect ROIC to continue to decline? Or is it going to be stable? How do you think about that? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: The way we really think about it is that, and as Bill, I think, highlighted in his remarks, we're very proud of the ROIC number that we have. And we recognize that it's probably one of the highest in hardline retail. At the same time, we're very focused on investing in the initiatives that we believe will generate very strong returns and more importantly will capture market share and grow earnings. So I think as we look at the model on a longer-term basis that we'll focus on those kinds of initiatives and they may or may not have some pressure on ROIC and bring it down a little bit. But again, we're focused on growing operating profit dollars, capturing market share and investing in activities that generate very strong returns. William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, can I add to that too? If we held ourselves to a standard where we wouldn't make investments unless they were at 32% return on invested capital, we wouldn't do a lot of things that would be very important to our business and would frankly put ourselves at a competitive disadvantage. That's why we've held to this long-term internal hurdle rate and it's worked very well. Remember when we implemented the internal hurdle rate, our ROIC was around 20%, so we've been able to grow it over time by being very disciplined, but at the same time, we can't hold single initiatives to a 30%-plus return.

That makes perfect sense. If you look at the portfolio of initiatives you have right now, how do you think about them in a rank order in terms of the ROIC potential, whether it be IMC, whether it be delivery frequency, mega hubs, inventory additions, et cetera? William C. Rhodes - Chairman, President & Chief Executive Officer: I would say the first and foremost biggest short-term to medium-term opportunity is just growing the Commercial business. It's a very low capital required to grow that business, so anything that we can do, enhance our sales force, continue to improve our execution, that is by far and away the single biggest way to drive ROIC. I think most of the other initiatives, based upon our modeling today, would be slightly dilutive to return on invested capital, but they have very good returns and they're going to accelerate the growth of operating profit dollars, which is one of our objectives.

Got it. Thanks a lot, guys, and good luck.

Thank you. The next question is from Christopher Horvers with JPMorgan.

Hi. It's actually Mark Becks on for Chris. I just wanted to sharpen the pencil on the trend. You mentioned your core business was up 200 basis points on a two-year rolling basis. Outside of the 50 basis point contribution from tax refunds, is it safe to say the remainder is what you view as sustainable? I guess I'm just trying to get a sense of how you view the underlying growth rate of the industry versus potential share gains in the moving pieces with gas and whether. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Yeah, I think that well, first of all, I think to some extent, gas is probably a more longer-term one. I mean obviously, we're going to get some increases in gas prices. But on a relative basis, they will be well below last year. And I suspect that they will continue to be so for at least the immediate future. Relative to tax refunds, you're right. As we called out, we think that maybe that was 100 basis points of impact on Q2. We'll have a better feel for that as we move our way through Q3. And then excluding that, I think that the way we look at it is that that really is the underlying core trends of the business.

Okay. If I look at DIY, historically it's been kind of a 1%, 2% growth business, and obviously that's with the benefit inflation which you're not seeing right now. Is there anything structurally changing with the industry, or are maybe your thoughts on just the outlook for the Retail business in general? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: I don't think that we see anything necessarily structurally changing in the business. If you look at the competitive landscape from a pricing, promotional activity, even from a capital investment perspective, it continues to be pretty consistent and rational industry overall, and you are right. We have not been the beneficiary of inflation over the last, almost at this point I'd say 18 plus months, maybe pushing 24 months, and it doesn't appear as though there's a lot of inflation in the horizon either. There's a couple of categories here and there that have some inflation, but for the most part, we've been generating these sales out of a no inflation kind of environment. So it really is the strength of the customer, the strength of our offering that was really driving that.

Great. And then a follow-up to Alan's question on the expanded daily delivery frequency, your 10% of your stores now, if you were to flip the switch and roll it out to a greater number, is there anything in terms of a particular stretch that you'd be able to do to add to a greater number of stores? Or how would you think about the timing of that growth? William C. Rhodes - Chairman, President & Chief Executive Officer: Well, I think it's still yet to be determined. We just went over and implemented 300 stores. Obviously, that's the biggest thing that we've done at this point in time. We did it over about three weeks, and so far, it's gone pretty well, but there have to be a tremendous amount of efforts in the distribution centers to ramp up for that increase of activity both inside the warehouse and in the transportation team. So we'll learn from this newest rollout and will plan for future wins, but more importantly now we got about 500 stores on the program and we are hopeful that we can quickly confirm our expectations today.

Okay. And one quick follow-up to that. Given the potential for increased CapEx, should you continue to roll this out, do you think that would meaningfully alter your philosophy on share buybacks going forward? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: It won't alter our philosophy at all. I mean we believe that it is a great way to add value back to our shareholders and return capital back to the shareholders through the share repurchase program. We've been very disciplined about it. We operate at a very defined credit metric and will continue to do so.

Great. Best of luck. William C. Rhodes - Chairman, President & Chief Executive Officer: Thanks. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Thank you.

Thank you. The next question is from Greg Melich with Evercore ISI.

Hi, thanks. I had two questions. First was, how many stores now have the extended IMC inventory? So I think it was the 300 with the added inventory, but how many of those, or is it a different group that had the IMC? William C. Rhodes - Chairman, President & Chief Executive Officer: A different group. It's under 10.

It's just a handful. William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, we've been doing this for six weeks or seven weeks so far, Greg. And we did a lot of work around the systems piece, but even now at this point in time, we're muscling it. We're just trying to get a sense for it. So far we've been really encouraged.

Very early days. Okay. So then switching to CapEx and cash flow a little bit, if my math is right, you'll be opening or doing 100 Commercial programs each of the next two quarters? William C. Rhodes - Chairman, President & Chief Executive Officer: Yeah, roughly. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: That's about right, yeah.

And then with given everything that you've talked about, what's sort of CapEx run rate? Should we look at the last six months as sort of a normal thing now to get all the initiatives done that you've talked about? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: I would say it's probably about that. We're certainly going to be right around about a $500 million number or so, I think, on an annualized basis. So it'll be a little bit of a step-up, but not significantly.

And on the AP to inventory ratio, it seems like that came down. Was there any sort of timing issues there? Or again, just given everything you're doing on inventory that could be – we might see that effect kind of stick around for a little bit? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: I think the latter. I think that hopefully we were somewhat consistent two or three quarters ago when we began to add more inventory, and we tried to call out that that will put a little bit of pressure on AP to inventory when you fast-forward three quarters or four quarters, and here we are. So it was certainly down this quarter. We don't anticipate it going down further, necessarily, for the next two quarters, but expect it to hang around that kind of number.

Great. Good job. Good luck, guys. William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: Thanks. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. The next question is from Matthew Fassler with Goldman Sachs. Chandni Luthra - Goldman Sachs & Co.: Hi, guys. Nice quarter, this is Chandni Luthra on behalf of Matt Fassler. I just have two quick ones. Could you give us the contribution of IMC to your SG&A? William T. Giles - CFO & Executive VP-Information Technology and ALLDATA: I think we said that it was probably around 15 basis points. I would say all three of those categories that we identified accounted for about 45 basis points... Chandni Luthra - Goldman Sachs & Co.: Okay. Got it. And then just to get some clarity on the recent cold weather, particularly Northeast region. Did it help? And what we're trying to basically gauge is, would the Northeast results have been any worse without the cold snap? William C. Rhodes - Chairman, President & Chief Executive Officer: Are you talking about the most recent cold snap? They weren't... Chandni Luthra - Goldman Sachs & Co.: Yes. I mean basically the last month or so. William C. Rhodes - Chairman, President & Chief Executive Officer: Okay. So about half of that was in our results. But remember, the cold snaps – as you get later in the winter, the cold snaps are more of a headwind than they are a benefit. Early in the season, it spurs activity of people trying to get their vehicles ready for the winter. What happens late in the winter, most of the parts that were going to fail have already failed, and frankly customers have winter fatigue and they're not doing things getting ready for the winter. So they're generally not beneficial later in the year or later in the season as they are (56:59). Chandni Luthra - Goldman Sachs & Co.: Got it. Okay. Thank you. William C. Rhodes - Chairman, President & Chief Executive Officer: Thank you.

Thank you. And that concludes the question-and-answer session. I'd like to turn the call back over to Mr. Rhodes for any closing comments. William C. Rhodes - Chairman, President & Chief Executive Officer: Right. Before we conclude the call, I'd like to take a moment to reiterate that we have a long and strong heritage of consistent impressive performance. While we are excited about our growth prospects for the year, we will not take anything for granted as we understand our customers have choices. We have a solid plan to succeed this fiscal year, but I want to stress this is a marathon and not a sprint. As we continue to focus on the basics and focus on optimizing long-term shareholder value, we are confident AutoZone will continue to be very successful. Thank you for participating in today's call.

Thank you. This does conclude today's conference. Thank you for joining. You may disconnect at this time.