Welcome to the O'Reilly Automotive Inc.'s Second Quarter Earnings Release Conference Call. My name is Robert, and I will be your operator for today's call. [Operator Instructions] I will now turn the call over to Mr. Tom McFall. Mr. McFall, you may begin.

Thank you, Robert. Good morning, everyone, and welcome to our conference call. Before I introduce Greg Henslee, our CEO, we have a brief statement. The company claims the protection of the Safe Harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as expect, believe, anticipate, should, plan, intend, estimate, project, will or similar words. In addition, statements contained within the earnings release and on this conference call that are not historical fact are forward-looking statements, such as statements discussing, among other things, expected growth, store development, integration and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental regulations, the company's increased debt levels, credit ratings on the company's public debt, the company's ability to hire and retain qualified employees, risks associated with the performance of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the Risk Factors section of the annual report on Form 10-K for the year ended December 31, 2012 for additional factors that could materially affect the company's financial performance. These forward-looking statements speak only as of the date they were made, and the company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise except as required by applicable law. At this time, I'd like to introduce Greg Henslee.

Thanks, Tom, and good morning, everyone, and welcome to the O'Reilly Auto Parts second quarter conference call. Participating on the call with me this morning is, of course, Tom McFall, our Chief Financial Officer; and Jeff Shaw, our Executive Vice President of Store Operations and Sales. David O'Reilly, our Executive Chairman; and Ted Wise, our Executive Vice President of Expansion are also present. It's my pleasure to once again congratulate Team O'Reilly on another outstanding performance in the second quarter made possible by our unwavering commitment to providing consistently excellent service to our valued customers. We're very proud of our team's ability to generate comparable store sales growth of 6.5%, which exceeded the 4% to 6% comp guidance we set for the second quarter. Our second quarter comp store sales was a significant sequential improvement from our first quarter results of 0.6% or 1.9% adjusted for Leap Day, driven by continued strong business trends and aided by more normal weather patterns and the timing of the Easter holiday. These strong business trends that started in the fourth quarter of 2012 have continued and are reflected in the steady improvements in our 2-year stack going from 7.5% in the fourth quarter of last year to 8% in the first quarter of this year to 9% last quarter. We're also very pleased that our strong sales performance in the second quarter reflected profitable growth as we successfully increased our gross profit percentage and continued our diligent expense control resulting in a record operating profit of 17.3%, the first time our company has ever exceeded 17% for a quarter. Our profitable market share growth translated into a 22% increase in operating profit dollars, which, combined with our ongoing share repurchase program, yielded a 37% increase in earnings per share. Each of our 60,000-plus…

Thanks, Greg, and good morning, everyone. I'd like to join Greg in thanking Team O'Reilly for their excellent performance in the second quarter. Our teams delivered on the increased comp expectations and drove sales growth at record levels of profitability. Most importantly, Team O'Reilly demonstrated their rock-solid commitment to providing the best customer service in the industry. I'd like to begin my comments today with some exciting distribution operation news. As we've discussed many times, our ability to provide top-notch customer service in our stores is dependent on the work our distribution center teams do to get the right parts to our stores faster than our competitors. The importance of parts availability is a driver behind our long-term investment in our robust regional DC network. That investment continues as we're pleased to announce we've acquired property to build a new DC in Naperville, Illinois, a western suburb of Chicago. First, I'd like to provide some details on the rationale behind the decision to add to our DC network in an existing market. As the third largest population center in the U.S., Chicago is an important market for us and we currently have a strong market position with over 100 stores in the greater Chicago metropolitan area, though we have a tremendous opportunity to increase our market share. Our current distribution strategy in this market has been in line with our industry-leading model with 5-night-a-week delivery to our Chicago stores from our Indianapolis DC, supplemented with additional inventory availability at hub stores located in the Chicago market. With the additional inventory provided by a DC location in the Chicago market, we can provide same-day access to the full breadth of our products to all of our customers in this market. The 360,000 square foot facility, which is slated to open in…

Thanks, Jeff. Now we'll move on to the numbers and a little more color on our guidance. Comparable store sales for the quarter increased 6.5% on top of prior year's comps of 2.5%. Both DIY and professional contributed to the increase, with professional again leading the way by solid growth in our acquired Western markets, as well as strong results in our core markets. Both average ticket and ticket comp contributed strongly to the positive increase in comparable store sales. For the quarter, sales increased $152 million, comprised of $100 million increase in comp store sales, a $52 million increase in non-comp store sales and flat non-comp non-store sales. As Greg mentioned, we are setting our third quarter comparable store sales guidance of 4% to 6%, which is unchanged from our internal expectations created at the beginning of the year. Year-to-date, our comparable store sales increased 3.6% on top of prior year's comps of 4.9% and were within our expected range as weather partners have normalized. For the full year, sales and comparable store sales guidance for 2013 have remained unchanged from the beginning of the year at $6.6 billion to $6.7 billion in sales and a 3% to 5% increase in comparable store sales based on expected continued solid sales volumes in the back half of the year. As Greg discussed, our gross margin results exceeded our expectations for the quarter. Gross margin as a percent of sales for the quarter increased 94 basis points over the prior year to 50.8% of sales, driven by strong merchandise margins resulting from improved acquisition costs, pricing management and solid shrink results. Sequentially, our second quarter gross margin as a percent of sales improved 45 basis points over our strong first quarter results, driven by improved acquisition costs, favorable product mix and…

[Operator Instructions] And our first question comes from Dan Wewer from Raymond James. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Greg, if I wrote down my notes correctly, you're indicating that commercial was stronger than do-it-yourself.

That's correct, yes. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: That you're seeing cold weather markets rebounding, you're seeing some of the maintenance businesses, such as brakes, recovering, and yet this seems to be a significant divergence with commentary from Monro Muffler this morning. Can you give us a bit more insight, is there like a massive market share shift that's taking place to O'Reilly's advantage, or are you seeing strength in different types of commercial customers than you have in the past?

Well, what I would say is that from our side, it's a little hard to tell when you're gaining market share or not without having all of us report at the same time and so forth. What I would say is that our DIY business was the best we've seen it for a long time and the gap between our DIY and commercial was closer this past quarter than it's been for a while. Our CSK markets continue to outperform the core O'Reilly markets by a smaller margin as the core O'Reilly markets continue to improve a little bit. And then on a by category basis, some of the things like brakes, maybe some other categories that were -- and chassis, that were affected by weather in the cold weather markets more than would be typical, I think they've rebounded for us. I don't know about the whole industry. I didn't have a chance to read Monro's report yet, so I don't know what they experienced, but our experience was is that many of these maintenance and repair categories recovered nicely for us. And it wasn't just the cold weather markets. We've seen kind of the recovery in some of the warm weather markets also, which indicate that some of the maintenance and repair items that have been deferred that there's been a little bit of catch up on some of that deferred maintenance and hopefully that continues. Like I said, our -- so far in July, the trend has continued and business has been pretty good. So we're pretty happy with how we performed and how the industry appears to be performing from our perspective. But again, it's hard for us to know how the whole industry does in these short windows of time without having public reports from all the other players. Daniel R. Wewer - Raymond James & Associates, Inc., Research Division: Right. And then just as a follow-up question, there continues to be a significant number of acquisition opportunities that are shopped around. Can you remind us what type of acquisitions would now be of interest to O'Reilly? Are they more small acquisitions of independent jobbers to grow your commercial business in acquired markets at a faster rate, or are you still inclined to look at more VIP-type acquisitions that are, perhaps, still available?

Yes, the acquisitions that mean the most to us are ones that put us in a new geography, so where we don't have stores today. If we can acquire a company -- and they would typically be smaller companies, as you said, where they establish an O'Reilly presence in a market where we don't exist, those are of most value to us. But there is some value to gaining market share in existing markets through acquisitions, but of course, it's harder to pay a price that may seem like a good price to the seller in those situations because we're already there and have a piece of the market. But we're opportunistic acquirers of companies in our industry and plan to continue to consolidate where it makes sense for us, so we're always open to looking at acquisitions that make sense for us and we actively do that. As we will expand in these markets where we don't have a presence, we'll continue to look at some of the smaller players. But that's not to say that a larger acquisition couldn't make sense to us, but it would have to be rationalized considering the fact that we would have significant overlap with any of the larger companies that could potentially be acquired at this point.

Our next question comes from Alan Rifkin from Barclays.

This is Sam Reid pinch hitting in for Alan Rifkin. I just have a quick question from -- it's kind of actually a follow-up question from your last conference call. How much would you guys say of your comps this quarter would be attributable to delayed tax returns finally being spent at your stores? Have you guys done some work around that?

We -- I don't know, Sam. That's a good question. It's just hard to know where your customers' money comes from. They -- there's no question that there was a delay in some of the things that people put off, spend money on when they get their taxes back. It's just one of those things that we don't have a good way of measuring. There's no question that they were definitely deferred. And since we don't cash the IRS checks, then we don't have a measurement there. So it's a good question, but I would say that some piece of our second quarter revenue was driven by people that were using tax refund money to fix up things that they had deferred on their cars.

Fair enough. And then my second question here, I think in the past you guys have suggested inflation would trend about 1% to 1.5% this year. I was wondering if that's correct and if you guys still see that as kind of the ongoing trend for the remainder of the year.

Sam, this is Tom. We're experiencing what we would say would be relatively normal levels of price inflation, and we'd continue to expect, for the remainder of the year, that will fall within that range.

Our next question comes from Gary Balter from Credit Suisse. Gary Balter - Crédit Suisse AG, Research Division: First question is, we noticed in visiting stores you've expanded out some of your retail offerings and really improved the presentation there. Can you talk about what's going on in retail because your comps in retail have been stronger than the competitors? Are you pleased with what you've seen as it rolled out to all the stores, et cetera?

Yes, our retail comps are good. This past quarter is the best retail quarter we've had for some time, and we see a significant growth opportunity for us on the retail side of the business just by virtue of comparing the amount of retail business that we do as compared to what some of our competitors do retail who have a little richer retail business mix than what we have. So with that in mind, we kind of -- we've worked to improve the adjacency at some of the product offerings we have in our display areas, the planograms and the products on those planograms and making sure that we've optimized the categories that we carry out front and that we just put ourselves in a position to be the best DIY retail supplier that we can be. And then that's also driven by some of the things that we're doing from a marketing and advertising standpoint, including our loyalty program, which will give us a way to better tie ourselves to customers and market directly to customers who have an interest in receiving information and discounts and things from us. So we're pretty excited about how we're doing in retail and how we feel like we'll continue to do in the future. But that said, we've -- our foundation is on the professional side or the commercial side of the business, and we continue to work to enhance those relationships and make sure that we don't do anything to sacrifice what we view as a pretty dominant position we have on the professional side of the business. Gary Balter - Crédit Suisse AG, Research Division: Great. And just a follow-up, the parts lookup system, could you update us on if that's now rolled in, how the employees are using that and has it made a difference in your results?

Jeff, you want to answer that?

Yes, I mean, the O'Cat's fully rolled out. The feedback we get from the field, it's a much better catalog than we had previously. We can update it much quicker than we could previously. We have several things that we're working on to continue to enhance O'Cat. We just rolled out a kind of a powersports part in O'Cat and several more things on the slate moving forward. But all in all, it's working out very well. Field's very, very happy with it.

Yes, the thing that this really does for us, Gary, it gives us a platform on which to communicate with our Team Members on a by-part basis. So if we know that the issue that a customer may be having with a particular part requires that the part be compared to a picture that you can rotate or see multiple sides of, we now have the ability to make sure that our Team Members have on their computer screens what they really need to sell a part, and we're leveraging that to make sure that we just do a better job at point of sale. This comes into play both on the professional side and the retail side, but it's really strong on the retail side where the customers maybe aren't quite as informed on auto repairs what our professional customers are. It's also a benefit with our First Call Online system that Jeff mentioned since it uses that system and gives our shops the access to that information.

Our next question comes from Matthew Fassler from Goldman Sachs.

A couple of questions. First of all, your decision to open the Chicago DC and the expansion work it will let you do in some of your more mature Midwestern markets, was there any kind of epiphany or change in perspective that you developed about your expansion potential in some of those more mature markets where you think that they are perhaps less penetrated or have more opportunity than you previously have surmised that drove that decision?

No. I think we've known we've had expansion capability in those markets for some time. And we continue to expand in those markets, but as we do so, we have put some of our distribution centers at a point where we've got to make some shifts to accommodate the number of stores that they supply. And then another factor that we've known for some time, even going back to when we bought CSK, is that to be what we should be in the third largest population center in the U.S., we're going to have to have better distribution support in Chicago. So our plan all along has been to do this at some point. We just -- as we bought CSK, the most pressing needs were putting a distribution infrastructure out West and we had the ability to service Chicago out of Indianapolis, and -- but now that we've got Indianapolis operating at capacity, we need to offload some stores from it and give us the ability to backfill some markets. And we ideally would be in a position in Chicago where we would have a distribution center and be able to leverage that distribution center to grow our professional and DIY business in the third largest population center in the U.S.

Great. That's helpful. And then just a second question, on the loyalty program, if you could talk about the characteristics of your customer in terms of both frequency and in terms of your share of their wallet in the category that you tend to have as we think about what this card could do for you as the program builds.

Yes. Well, there's really not as much known about this, Matt, as we would ideally like to know. We think our typical customer business, our store -- a heavy DIY-er would visit our store more than 4x a year, and average would be maybe 2 or 3x a year. As we start gathering data from the deployment of our loyalty program across our company, we'll have a lot better idea as to how our customers behave with regard to -- some of the surveys that we've had other companies do have indicated that in some cases, us and our competitors share customers that sometimes it's a matter of convenience, and the loyalty card program is a way we think for us to market directly to those customers and try to gain a bigger share of their wallet. But to this point, there's just not good information that I would be able to express to everyone to define exactly what that share is.

And just a closing question on that, does the loyalty program play into your e-commerce effort at all? As you think about the DIY customer in that regard, would you see that perhaps being a traffic driver once you have that information locked up?

Yes. It gives us a means to market directly to the customer. And connecting them to our -- through our website or an app, if we want to, or however we do it to give them access to information on the kinds of repairs they're doing, reminders of -- about things that they might want to do based on the age of their vehicle or the miles on their vehicle, all those kinds of things tie into this loyalty program. So it just gives us the ability to have a tighter relationship with our customers in a kind of a digital way, and we plan to leverage that once deployed.

Our next question comes from Colin McGranahan from Bernstein. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: First question on gross margin, it sounds like -- obviously, nice improvement both sequentially and year-over-year; the inventory acquisition cost is a big part of it. Can you just give us a little bit more color on where that's sourcing from or where that's coming from, is it volume rebate, is it more private label, what's the source of that better inventory acquisition?

Well, it's many things. We work hard with our vendors to make sure that we have the most efficient supply chain that we can have. And in doing that, we've been able to -- over time, as we've imported more products and we've had a little bit of improvement in our private label product performance and growth, we've yielded a little better gross margin. We also work hard to manage our prices. We've been a company that has over the years been pretty traditional in the way we price products to professional customers, and we've -- are becoming a little more scientific in the way we do that. So -- and we have yielded some opportunities and we continue to have opportunities both on the cost side and on the selling price side that we'll continue to try and take advantage of over the next few years. Tom?

Colin, this is Tom. What I would also add to that is, when we bought CSK, obviously our volumes went up a lot, but there was uncertainty on how well we'd execute on the transaction. Now that we're 5 years out, most of the biggest vendor deals are 5-year deals, so as we start tripping over these 5-year deals and look at repapering the deal, the volumes that we've achieved in most parts exceeded expectations and it's allowed us to go back and look at those deals and get pricing for where volume is now, and that's been a big driver for our gross margin improvement. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: Tom, that's really helpful. So that sounds like it's a bit of a persistent effect, and how do I think about that relative to probably no supply chain leverage or even maybe some supply chain deleverage next year with 2 new DCs coming on? And I guess, the ultimate question is, you're at 50.5%, 50.6%, how do you think about that margin rate going forward?

Well, we've given guidance for the back half of the year. We're not ready to give guidance for next year. What I'd tell you on the distribution side is, right now, we have a number of distribution centers that are running overcapacity, which makes them inefficient across the whole spectrum of stores that they support. And when we open these 2 new DCs, they are going to be less efficient, but the existing DCs, whether it be Mobile or Atlanta or Des Moines or Minneapolis or Indy, are going to become efficient, and we'd expect to not delever even though we have 2 new DCs. Colin McGranahan - Sanford C. Bernstein & Co., LLC., Research Division: That's helpful. And then if I can sneak in 1 follow-up here, yes, I know the weather issue has been long-suffering, but what I'm trying to get a sense of, given very disparate results out of you and Monro and others, if you look at your stores that are core stores, the legacy O'Reilly stores, in non-cold weather markets, what kind of a differential in comp is that to your average?

Well, as you know, Colin, we really -- we've always tried to stay away from giving geographic comp results just for competitive reasons, and we spoke to geography more than we typically would have through this mild winter of 2012 just because we thought it was something that needed to be talked about. I can tell you that for instance in the Southeast, we comped very well. Probably -- well, in our case, we comped a little bit better than we did in the -- in some of the cold weather markets, but we've had a good rebound in the cold weather markets. There's no question that the issue we had there was real and that it's recovered. But we had good comp results across the country, and even in some of the warm weather markets, we've done very well.

Our next question comes from Scot Ciccarelli from RBC Capital Markets.

This is Patrick Palfrey on for Scot today. I guess, can you give us a sense as to sort of the amount of deferred maintenance out there? And then, I guess, maybe put that in the context of people putting off maintenance in anticipation of getting a new vehicle or perhaps in the context of some of the macroeconomic pressures that you're seeing on your consumers?

Okay. Well, we get our deferred maintenance number from our -- one of our industry associations, and it's been -- I think it's a little bit north of $60 million right now -- I mean, I'm sorry, $60 billion is what they say it is. Who really knows. It's hard for us to really have a solid bead on that. I think that we see -- we're able to identify it better through just the behaviors of some of our product category performance. When we see something that we know wears on automobiles, like brakes or belts and hoses, things like that, when we see those categories get softer, you kind of know that there's some maintenance being deferred. But what I would say is that our industry refers to the deferred maintenance number right now being just a little bit north of $60 billion, and our associations calculate that by just taking the number of miles driven and the age of vehicles and knowing what the typical spend would be on those vehicles at certain ages in coming up with that number. And it's -- I don't know if it's 100% accurate, but it's the best that we have.

And then, I guess, put it in the context of people looking to get new vehicles, do you guys have a sense that people are actually deferring their maintenance and you perhaps maybe won't see this maintenance come back, or is it sort of a greater percentage of people just being under pressure from some of the macroeconomic things that you cited?

Yes, I think what you said, I think there is some merit to that. I think if you're planning to trade a vehicle, you may not maintain it as well as you would one you're going to keep. Typically and especially in today's world, vehicles being capable of being on the road so long, those vehicles are not scrapped, and that's what's encouraging to us, is the scrap rates continue to stay very stable as new vehicle sales has improved over the last couple of years. Those vehicles are going back out on the road as used cars. And when you buy a used car, it's a new car to you and it may go through a very heavy routine maintenance cycle as a point of a new acquisition of the car. So to us, the fact that new cars are selling, these cars might be traded in, yes, you might have a little bit of a deferral for a while before the car gets traded in, but once it's bought it's a new car to someone else, even though it's used, it becomes one that becomes a well maintained car because it may be the family's primary driver.

Our next question comes from Michael Lasser from UBS.

If you look at your performance by geography based on where your market shares are, are you starting to see you tap out in certain areas, and that's limiting our ability to grow within some of your more established markets? And I'm not just talking West Coast versus East Coast. I'm talking if you get down to a more micro level. Is that a governing factor at this point?

Michael, this is Tom. I think we're always in that situation where we have a high level of the market share and we have mature stores. There's not the large amount of market share to go out and grab. So if we're in Missouri or Oklahoma, those store counts have been relatively stable for a long period of time versus markets that we're newer in, where we're underpenetrated give a tremendous opportunity to grow in those markets. So that's the typical results that we would see.

My second question is on the situation in Chicago. How many other opportunities like that exist where if you had a DC, it will free up and perhaps lead to some nice gain?

There's another 1 or 2 that I can think of that we don't have any immediate plans for, but over time, I think it will make sense for us to possibly relieve a DC here or there, from a store count perspective. And allow them to better leverage their cost through better efficiency and then put us in a better market position in some large markets. So I would say that over the next 5 years, you'll see us do something like this another time or 2.

And my last question is, can you remind us of the cadence of how the end of the summer flowed last year, was it -- or the third quarter, was it pretty consistent across each month, just to get a sense of do you face a more difficult comparison as the quarter goes on?

Yes. Last year, of course, we didn't have any real standout quarters from a comp store sales perspective. In the last year third quarter, I would say that August was slightly the best month of the quarter, but it wasn't much difference, and all 3 months generating the comp store sales, what we had were pretty low comp months.

Our next question comes from David Gober from Morgan Stanley.

Just a quick follow-up on inflation. It sounds like you guys are seeing fairly steady trends there, and I know GPC has talked a little bit more about seeing some headwinds to inflation and that the CPI data out there has been a little bit weaker. Just curious if you guys have any idea why there'd be some inconsistencies across kind of the operating data sources there.

I think what you will see is that certain categories, especially more DIY categories that are more oil- and commodity-based, have seen a little bit more pressure, and that could be just a difference in our mix.

Okay, that's helpful. And just on the VIP acquisition. It sounds like that, that's going along nicely as planned. Just curious when you'd expect to start to explore more greenfield store rollouts there, what the distribution plan looks like and how far along you are there.

Well, we're in the process now of exploring more greenfield expansion up there. It's, of course, a market that's not easy to expand in because it's very congested, a lot of people, which is a great opportunity for us. We're working on that right now. We've not yet defined our distribution strategy up there publicly and will be over the next few months, but we're in the process right now of evaluating what our long-term distribution strategy up there will be because the VIP acquisition was an acquisition that was strategic from the perspective as -- that it put us in a position to grow into the Northeast. And those stores will help leverage our distribution costs as we put ourselves in a position to grow up there, but we're not ready to announce what our long-term plan is up there yet.

That makes sense. Do you think as you head into 2014 that the growth -- given that you now have base to grow off of, that, that's going to actually accelerate the overall store growth potential for the next couple of years?

For some time to come, more than a couple of years, we'll be growing in the Northeast. So yes, starting 2014, there won't be much growth up there, but there'll be a little bit maybe towards the tail-end of the year. But for several years to come, a big part of our growth will be up in the Northeast.

And sorry, I guess, where I was coming from is, is it a matter of shifting growth to Northeast versus actually moving from 200 to 250 or 300 stores? That was kind of the direction of the call -- of the question there.

Obviously, we want to make sure that we have capacity in all of our DCs to seize the best opportunities. We haven't determined what store count we're going to do next year and the following year, but we'll let you know on the usually the third quarter call.

Our next question comes from Daniel Hofkin from William Blair & Company. Daniel Hofkin - William Blair & Company L.L.C., Research Division: So just a question regarding the, I guess, core O'Reilly versus converted CSK. In general, I know that do-it-for-me business tends to be lower gross margin, but I'm curious to what degree you can say whether the CSK ramp of their commercial business is hurting or helping your overall gross margin, given that, it's my understanding that the improved hard parts mix theoretically could be a benefit. I'd just be interested in how much of your overall gross margin improvement is coming from core. Is it all the core, or is it some of it also from converted CSK, and what that says about your long-term gross margin opportunity.

Yes. Well, of course, the gross margin dollars come from the growth in both, but the rate, of course, is lower on the do-it-for-me side. So as we expand our do-it-for-me business in the CSK stores, it does pull our rate back up a little bit, although we have the mitigating factors of the acquisition cost benefits that Tom referred to earlier and then, of course, the better pricing management that we're trying to execute. But there's no question that the do-it-for-me business is at a lower gross margin rate than the DIY business. Daniel Hofkin - William Blair & Company L.L.C., Research Division: Okay. So even though you're adding more hard parts to CSK, the net effect is that it is pulling down your overall gross margin. Therefore, the improvement in the core O'Reilly is even larger than what is implied by the kind of the rolled-up number.

Well, no, what I would say is that we have a mix shift there. Also, what comes into it is as we work our way up call lists, as you sell more of the hard parts, we tend to have better margins with our commercial customers. And then the acquisition cost improvements and pricing management are chain-wide. So I wouldn't say that the math on the numbers you're pushing gives us a significantly different improvement in gross margin in core as opposed to acquired markets.

And we have reached our allotted time for questions. I will now turn the call back over to Mr. Greg Henslee for closing remarks.

Thanks, Robert. We'd like to conclude our call today by again thanking our 60,000 Team Members for their commitment to providing the best customer service in our industry. It's your hard work and dedication to serving our customers that drive the outstanding financial performance we delivered this past quarter. I'd also like to thank everyone for their time and attending our call today. We look forward to reporting our third quarter results in October. Thank you.

Thank you, ladies and gentlemen, this concludes today's conference. Thank you, all, for participating. You may now disconnect.