Welcome to the O’Reilly Automotive, Inc. Second Quarter 2023 Earnings Call. My name is Matthew, and I’ll be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] I will now turn the call over to Jeremy Fletcher. Mr. Fletcher, you may begin.

Thank you, Matthew. Good morning, everyone, and thank you for joining us. During today’s conference call, we will discuss our second quarter 2023 results and our outlook for the remainder of the year. After our prepared comments, we will host a question-and-answer period. Before we begin this morning, I would like to remind everyone that our comments today contain forward-looking statements. And 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. You can identify these statements by forward-looking words, such as estimate, may, could, will, believe, expect, would, consider, should, anticipate, project, plan, intend or similar words. The company’s actual results could differ materially from any forward-looking statements due to several important factors described in the company’s latest annual report on Form 10-K for the year ended December 31, 2022, and other recent SEC filings. The company assumes no obligation to update any forward-looking statements made during this call. At this time, I would like to introduce Greg Johnson.

Thanks, Jeremy. Good morning, everyone, and welcome to the O’Reilly Auto Parts second quarter conference call. Participating on the call with me this morning are our Co-Presidents, Brad Beckham and Brent Kirby; as well as Jeremy Fletcher, our Chief Financial Officer. Greg Henslee, our Executive Chairman; and David O’Reilly, our Executive Vice Chairman, are also present on the call. I’d like to begin our call today thanking Team O’Reilly for their continued dedication to consistently providing excellent service to our customers. Our team’s proven ability to execute our business strategy at a high level drove our second quarter comparable store sales increase of 9%, exceeding our expectations on the – both the professional and DIY sides of our business. For the first six months of 2023, we generated a 9.8% increase in comparable store sales, which is the direct result of our team’s unrelenting focus on providing the best customer service in our industry. Our team members and our culture remain our greatest assets. I made the exact same statement on our first quarter call, but it warrants repeating. Our commitment to strengthening our culture and investing in our team is paying clear dividends in our continued strong performance and I want to congratulate all of Team O’Reilly on another outstanding job in the second quarter. Driven by the strength of our top line performance, we’re also pleased to deliver a robust 16% increase in diluted earnings per share. Our operating cost spend was elevated above our expectations, which Brad will discuss in more detail during his prepared comments, but we remain pleased with the investments we have made in our business to build on the momentum our teams are generating. Our EPS results reflect our ability to produce strong, compounding operating profit dollar growth, and we are committed to…

Thanks, Greg, and good morning, everyone. I would like to begin by congratulating Team O’Reilly on another excellent performance in the second quarter. Our continued industry-leading sales performance is the direct result of our team’s unwavering commitment to our company’s culture of providing excellent customer service, and I would like to thank all of our team members for their hard work and dedication. Over the last several quarters, our team has generated tremendous momentum in our business, and that strength carried into the second quarter, driving our outstanding top line sales performance. As we’ve discussed on our last quarter’s conference call, we faced some pressure from the timing of spring weather at the end of the first quarter, but our business rebounded with the onset of normal spring weather in April. Those strong sales trends continued throughout the quarter, resulting in our outperformance versus our expectations in each month of the quarter. From a cadence perspective, our results were very steady in each month of the quarter both in absolute terms and as compared to our expectations. The ability of our team to drive high levels of sustained sales growth month after month is the product of consistent daily execution of our key business fundamentals. And I couldn’t be more pleased with how consistently Team O’Reilly has performed in the first half of 2023. Now I would like to provide additional details on our sales performance in professional and DIY. Our professional business was again the outperformer in the second quarter. Our team delivered a mid-teens comparable store sales increase in our professional business in the quarter with incredibly strong growth coming on top of double-digit professional comps in the second quarter of 2022. The compounded gains we are seeing on this side of our business reflect a sustained high…

Thanks, Brad. And I would like to join Greg and Brad in congratulating Team O’Reilly on the strength of our performance in the second quarter. Our strong top line sales performance and continued ability to outperform the market and gain share is a direct result of our team’s relentless commitment to providing excellent customer service. And I want to thank all of our team members for their dedication to our company and to our customers. Now I will walk through our second quarter gross margin results, what we are seeing in the competitive environment and discuss our investments in inventory, exciting developments in our store and distribution growth and capital expenditures. Beginning with gross margin. Our second quarter gross margin of 51.3% was down just six basis points from the second quarter of 2022 and at the top end of our expectations. Our second quarter of 2023 represents the first quarter after we have fully lapped the rollout of our professional pricing initiative and atypical LIFO impacts, which provides us a much clearer read on a year-over-year gross margin performance, excluding the noise that these factors have caused in prior quarters. We are pleased with the stability of our gross profit results, especially in light of the pressure we continue to face from the extremely strong performance of our professional business. As this side of our business has continued to outperform, we have faced mix headwinds to gross margin but have been able to offset this pressure with incremental improvements in acquisition cost, solid leverage of distribution expenses and positive shrink results. I would also like to provide some color on the cost and pricing dynamics we are seeing in our industry, both on the acquisition side of our supply chain and across the competitive environment in our markets. The…

Thanks, Brent. I would also like to thank team O’Reilly for their continued hard work and exceptional professionalism. Now, we will cover some additional details on our second quarter results and guidance for the remainder of 2023. For the quarter sales increased $398 million driven by a 9% increase in comparable store sales and a $75 million non-comp contribution from stores opened in 2022 and 2023 that have not yet entered the comp base. Brad covered our SG&A expense in the quarter in detail, but I did want to provide some additional color on our deferred compensation plan expenses given the nature of how this plan runs through our income statement. For many years, the company has sponsored a non-qualified deferred comp plan for team members whose participation would otherwise be limited in our qualified 401K Plan. Since this is a non-qualified plan, the company maintains a liability for the obligation to pay the value of the deferred compensation to team members in the future, adjusted to reflect asset performance and also holds a corresponding asset for the fully funded and participant directed assets in the plan. However, market value changes in the plan are reflected on different line items on our income statement with an increase in value driving an increase in SG&A expense and an offsetting benefit below the line in other income. Historically, the net impact has not been significant to either line item, but given the increased size of the plan assets and the more significant market value changes both in the second quarter of 2023 and 2022, we wanted to highlight the difference so that you will be able to update your models. The year-over-year swing in the market values of plan assets drove a $9 million increase in SG&A expense were 24 basis points…

Hey, good morning, everyone. It’s Simeon Gutman. Congratulations to Brad, Brent and you, Greg. My first question is market share. It looks like the spread with O’Reilly in the industry is accelerating, at least it has in this calendar year. A question is to what do you attribute it? The only thing that we could put our finger on is a year ago the PPI [ph] initiative, so maybe it just took a year for those investments to ruse, so curious what your take on the market share acceleration is due to.

Yes. Hey, good morning, Simeon. Thanks. It’s Brad. Yes. I think the PPI is a little bit easy to point to because it’s a little bit more tangible for everybody looks into our company, but I would say that if you talk to our operators like we do every day, the biggest thing we’re seeing is just a huge opportunity starting with our team, our culture, the things we’ve done to stabilize our team to rebound from kind of the COVID hangover in terms of some of the turnover and maybe what was subpar for us from a service standpoint is we just feel really great first and foremost about the teams we’ve built, what we’re doing with our human capital and the service that our store teams, our distribution teams, and our corporate offices are providing. Second thing I would say is that especially from operations and sales, the first thing they point to when we talk to them about what we’re seeing in the market, Simeon is the position we’re in from a supply chain standpoint is, as you know, as good as anybody. Our immediacy of need and non-discretionary business, it’s all about on both sides of the business. It’s all about who has the right part at the right place at the right time, and I just couldn’t be more pleased with the job that Brent and the merchant team, the inventory management, purchasing team and our distribution teams are doing for our store operators. They have just got us in a better position than we’ve been in a long time, and we feel like we’re playing from a position of strength from the team side, from the supply chain side and all the work we’re doing with our professional customers out in the field every day making sales calls. And then obviously, we still feel good about everything we did with PPI.

Yes. Simeon, if I could maybe add to what Brad said there. First of all, thanks for the congrats and Brad did a nice job of expressing confidence in the supply chain team and our inventory position. Obviously, as we’ve said over and over again, we’ve got to be competitive on price, which we are and continue to be and will continue to be, but what outweighs price is inventory, availability and service level. And Brad and his teams in the field have just done an outstanding job of making sure we’re positioned to provide the highest level of service in the industry.

Yes. And maybe the follow-up on that point this year you’re investing, it sounds like a little more at this -- in the -- at stores to get the experience improved. Service was part of it. Is it -- is there a case that you should continue to lean in given that you have transitions happening at competitors, might we see that the flow through be a little weaker as you should just lean into the business, and especially given how strong it is, are you think -- is that a thought that investment mode may continue?

Yeah, great question, Simeon, and I think you’ve picked up I think the key thesis behind this is we’ve talked about it really all year that, that coming into 2023. We’ve just identified areas that, that we felt really from a long-term perspective allow us to invest within our business and continue to really double down on the momentum that we’ve seen. For us to have, I think such a sustained expense control culture within our organization for such a long period of time, that’s a substantial undertaking to think about it in those ways and to move forward and absolutely as we’ve done that that has been very focused and targeted towards a strong return on those dollars that we’re spending. And we’ve thought about that from a long-term perspective. We -- here we are, we sit in July halfway through our year, and I think we’ve given clear expectations around where we think we’ll finish out the year and funny, we don’t really provide guidance for 2024 until later on and we get closer so it’s -- I think it’s a little bit premature for us to I think talk too specifically about that. For sure, 2023 has been a heightened year for us. A -- but at the same time, to your question, I’m not going to say that as we move forward, we won’t find other opportunities for us to invest in our business and we will continue to do so aggressively when we feel like that’s appropriate. Having said that, we have an expense control focus and we’re diligent in how we manage to that, and it’s our expectation that, that we’ll continue to see the levels of productivity on a long-term basis and improvements in how we think about the returns on our operating cost spend, that, that, it’s consistent with what we’ve seen over the long course of our business.

Yes. Thanks. Well done. Good luck in the second half.

Thanks, Simeon.

Thanks, Simeon.

Thank you. Your next question is coming from Greg Melich from Evercore ISI. Your line is live.

I think -- my first question is on the same SKU rate of disinflation, I think you said it’s coming in as planned. Could you just update us on what that actually was in the quarter and what you expect it to be in the back half?

Yes, yes, Greg. We -- I think we had said that, as mid-single digits in the quarter, we think that moderates in the back half of the year. It won’t get all the way to flat but we would expect it to – by the time, we kind of exit this year. At that stage, you’re really just talking about kind of what we’ve seen in the current year from a year-over-year perspective. And we’ve kind of – as Greg mentioned in – or I’m sorry, as Brent mentioned in his comments, we’ve kind of normalized to what we think are more kind of historical long-term rates there. So that would – that puts you kind of in the low single digit range and – but really – as Brent mentioned, that’s all fallen almost directly in line with what we would’ve anticipated for this year.

Got it. And then maybe if you talk a little bit about the category mix that you’re seeing in both Pro and DIY, it sounded like some of the bigger ticket stuff with some of your competitors got a little softer, maybe some trade out happening in those categories or batteries, how some of these things are doing on both sides of the house.

Yes, Greg. Speak to – I’ll speak to a little bit of that in terms of categories at a high level. I mean, we always are looking for – we have complete lines across good, better, best product offerings. We’re always looking, is there any trade down – trade across, trade up, depending on where the consumer is. And similar to what we saw in the first quarter and how we answered this question on the call a quarter ago, we actually saw a little bit of a trade up from better to best and good kind of stayed where at the normal baseline that we’ve seen historically there. So we’re not seeing trade down with the consumer at this point. I mean, in terms of categories where we have seen strength, I would attribute a lot of that strength to better in stock position, in categories like radiators and in some cases break components versus where we were a year ago on a comparable basis or even where we were in first quarter on some of those categories. So we continue to see our store in-stock position improve. And as we talked about in our prepared comments, we really believe that’s a huge contributor to our share gains.

Yes. Greg, this is Greg. I just might add one comment there. In addition to what Brent said, we continue to also see strength and growth in our proprietary brands as well. They currently make up over half of our sales overall.

Got it. That’s great. And good luck.

Yes. Thanks, Greg. Appreciate it.

Thank you. Your next question is coming from Chris Horvers from JPMorgan. Your line is live.

Thanks. Good morning, everybody, and congratulations to everybody on their updates. My first question is, as you – can you talk about what you’re seeing from a national accounts versus the up and down the Street business perspective is one of relative strength. Are you seeing any pricing differential in those two businesses? That sounds like the answer’s no. And then lastly, I think it’d be helpful maybe if you could size how much national accounts contributes to the overall business.

Hey, good morning, Chris. It’s Brad. Hey, I’ll start this one and a couple others may want to jump in, but great question. I think, as you know us growing our company over the last few decades from humble beginnings here in the center part of the country and growing out toward the coast through acquisition and greenfield expansion. We founded our company on the independent garage. What you called up and down the Street accounts, the small everything from a shadetree mechanic to the larger independent garages that compete very well with the larger players. And then obviously as we – we’ve grown over time, you have your small accounts, you have your mid-size accounts, and then obviously, we do have a sizable book of strategic account business that’s made up of both national players and regional players. Part of that is, as you know, Chris, is we still have that gap in footprint, we have kind of in the upper mid-Atlantic and going up into New York and those markets, that doesn’t always match up with some of the biggest national players. So that’s still an opportunity for us as we build out the U.S. But really from what we’ve seen from your direct question about kind of what we’re seeing in our share gains and momentum and how that relates to pricing on the Street. We’re seeing every bit of our business grow very consistently from the small shops, the larger independent garages, our strategic accounts, all that is very consistent in what we’re seeing. And we’ve never quantified the exact how that splits out between our strategic and our other book of business. But I would tell you that our – by far the foundation of our professional business is the independent garage and the way that we built that from the ground up.

Yes. Chris, if I just add one thing to that maybe in respect to your size question, Brad talked about it, those are the national regional account. They’re very important customers to us. They’re an important part of our business. But we may differ from others in that the relative size of that business for us is, it’s not so significant that it’s a huge needle mover to our overall performance. It’s important, as Brad mentioned, it’s grown consistently well along with the rest of our business, but it is not a dynamic that has caused our results to be significantly different than the broader base of business.

Got it. Thank you for that. My follow-up question is for you, Jeremy, I mean, if you look back historically, gross margin seasonality is pretty flattish over the year X periods where you have inflation or deflation – I’m sorry, like yes, inflation or disinflation in the business. And you talk about things getting back to normal. So I guess, does that – would that suggest that the back half of the year is maybe in the sort of the upper half of the – upper half of your guide, sort of consistent with the year-to-date level? Thank you.

Yes. Thanks, Chris. I appreciate that question. And you’ve been around our story for a really long time to go back to those periods when you could say that the quarter-to-quarter wasn’t impacted by some of the noisy items, the life of story itself has been a long history. But I think your appropriate to identify that, generally speaking, seasonality, it has some impact on our gross margin results. Product mix in any quarter can have some impact as well. But they’re going to be I think much less muted moving forward than some of the larger variances we’ve seen. I tell you, we’d be cautious in saying that the guidance would be in the back half of the year or in the top half of the range in the back half of the year. For no other reason than we – we’ve seen our professional business continue to perform well and we give a guidance range for a reason. There’s going to be some degree of volatility around product mix and the timing of pricing. And Brent called those out in the script, but we feel comfortable with the guidance range that we’ve had. And really with the strength of our gross margin as we’ve seen our business accelerate and be successful. It’s important for us to be able to grow those sales in the right way. And we’ve seen that with I think the steadiness of our gross margin results.

Thanks guys. Best of luck.

Thanks, Chris.

Thank you. Your next question is coming from Scot Ciccarelli from Truist. Your line is live.

Good morning guys. Scot Ciccarelli. We’re hearing from the field that services facilities are seeing slower tire sales, presumably that would stem from increased economic pressure. So the questions are, A, are you hearing similar from your customers? And then B, even though, you guys don’t sell tires, you would presumably sell parts on a car being brought in for service. So how much exposure to such a train could O’Reilly have just from a customer standpoint? Thanks.

Hey, good morning, Scot. It’s Brad. As you said, we don’t sell tires and I want to be careful not to speak for the professional customer installer base. But what we see generally is kind of good and good meaning if our shops are selling a lot of tires, then they have wheels off, they have, they’re looking at, they’re doing inspections, they’re looking at brake parts, they’re looking at the chassis, they’re looking at a lot of different things. But then, if they’re not selling tires, they have a little bit more time on their hands to spend a little bit more time with customers and diagnose better and potentially get ahead of some of the DIFM job. So I just want to be careful to answer that two pointed versus that population. But we haven’t really seen anything with softer tire sales. The way business comes to us, we really haven’t seen anything on that front.

Yes. And I think maybe just more broadly, Scot, the consumer that we engage and interact with continues to be resilient and healthy. We – as you know, we benefit from just the nature of our industry and the immediacy of need and the key, I guess, value of that transportation demand being so high that we always tend to be a little bit lagging to others that start to see pressure there. We’re cognizant that in short periods of time you can see customer reactions, but we still have a lot of confidence in what we see as we interact with our customers. They’re valuing the proposition of keeping the cars on the road. It’s a good return on their investment. I think we’ll continue to see that as we have in past economic cycles. But at this point, we haven’t seen any of those types of things that you would point to that would indicate the customer – our customer is suffering.

Hey, Scot, just maybe to add one other point to the points that Brad and Jeremy have already made. Interestingly enough, we’ve continued to see strength in under car ride control, chassis, a lot of those categories that are getting looked at when the cars up on the rack. So just throw that in as well for color.

I appreciate that. And then just a quickie on accounts payable, inventory stays, pretty elevated, Jeremy, is there any reason that should shift by the time we hit year end or is it just the accelerated sales pace and we should continue to see kind of like 125%, 130% type ratio? Thank you.

Yes, we would expect it would stay at reasonably elevated levels there. Sometimes it can moderate a bit just on seasonality of how some things flow through in the back after the year within our free cash flow expectations. We’ve got a little bit of that built in. But we continue to see a strong productivity out of our existing inventory, even as we’ve added over the course of the last year. And ability to turn that inventory helps us to maintain that negative net investment that is so nice to have.

Awesome. Thanks guys.

Thanks, Scot.

Thank you. Your next question is coming from Brian Nagel from Oppenheimer. Your line is live.

Hi. Good morning. Thank you for taking my question. I would like to add my congratulations to the promotions all around.

Thank you.

So the question I have – the first question, just with respect, I guess looking to the back half of the year, and you talked about sort of say the waning benefits of, I guess inflation from a sales perspective. But as we think about that then, should we also expect on the other side potentially – at least the potential for more benefits on the gross margin front with potentially easing sourcing costs?

Yes. Brian, I can start on that. I mean I would just tell you and I mentioned it in the script, a lot of suppliers are still under some pressure from increased cost of capital, increased raw materials, increased labor cost. I mean we do see that. We also, though are always aggressively looking at price and cost of goods and doing everything we can to drive out cost of goods and purchase the best we can. Greg talked a little bit earlier about proprietary brands and our continued strength we see in growth in those proprietary brands. That gives us an opportunity to shop that with multiple suppliers and be multi-sourced in those categories, which is certainly a strategic strength for us and an opportunity on the cost side. But I would tell you, in general a lot of our suppliers would tell you, they’re still under cost pressure, as you would expect them to report that. But we feel like we’re in a very good position to mitigate that through this period and have done that in many cases.

Got it. That’s helpful. So my follow-up question, just with respect to June. So we’ve heard others in your sector talk about weaker June, in others – in retail talk about a weaker June. I mean it sounds like your business was pretty steady. So I guess the question is, I mean, did you see anything in the month of June to suggest weakness? And if you didn’t, can you – is there an explanation of why O’Reilly performed much better than others in that month?

To answer the question directly, Brian, we didn’t see weakness in June. We were pleased with our results for the month. The compares obviously are different month-to-month. But relative to our expectations, it performed as strongly as in the other months, actually a little bit higher. The actual comp they were all within a really tight band. So we feel positive. We obviously week-to-week, month-to-month evaluate all of the individual drivers of our business. And I think it’s tough in such a time period to be able to parse out too much what we see versus what others in the marketplace might see. But we saw solid demand really across regions, across categories throughout the quarter.

I appreciate it, and congrats again.

Thanks Brian.

Thanks Brian.

Thank you. Your next question is coming from Kate McShane from Goldman Sachs. Your line is live.

Hi. Good morning. Thanks for taking my question. We just wanted to make sure that aside from the moderating inflation and some of the challenging ticket count compares, if there was anything else driving the sequentially lower comp outlook for the second half of the year?

No, Kate. I mean, I think you’ve identified what really we talked about since we established our guidance at the beginning of the year. Most of the cadence differences as we move quarter-to-quarter throughout 2023 in the actual math that pushes out our comp, it relates to the way volumes flowed in 2022. So for sure, there’s a waning same-SKU benefit. 2022 is also a unique year for us, really on both sides of our business where from a transaction perspective, the back half was stronger than the first half for different reasons. The DIY, we faced some pressure in the front half of last year for just volatility in the overall macro economy and then responded better. And then on the professional side, we’ve continued to see ramp growth there from a transaction perspective. Really, as we think about the balance of the year, nothing has changed about where we would expect on a sequential volume basis to be our overall business when we think week-to-week from a dollar standpoint. We’re anticipating to remain consistent and strong. We’re excited about the trends that we’ve produced in the business.

Thank you.

Thanks Kate.

Thanks Kate.

Your next question is coming from Mike Baker from D.A. Davidson. Your line is live.

Okay. Thanks. Real quick, can you just talk about the heat that we’re seeing throughout the country and how this impacts your business? And specifically, I think you said – I hate to put – to have two short-term, but you said that July was continuing the strength that you saw in June with incremental benefit from the weather. So does that actually mean that July was better than June?

Hi. Thanks Mike. It’s Brad. Yes, as you know, heat – we like heat, we like extremes and we work in enough markets, especially where the hot weather really contributes to failure and weather be immediate. One thing to remember about heat is a lot of time, something like a battery, heat kills batteries but then it fails in the winter. So we want to be a little bit cautious. But overall, we’re really excited about where our business is. We’re excited where we ended the quarter and we’re really excited about how we started July. We’re always a little bit careful with a three-week period, but there’s no doubt in our minds that what we’re seeing in the market and – relating to weather that the heat is good for us and we’re doing everything we can to capitalize on it.

Yes, Mike. Brent said it right. We don’t ever overreact to three-week periods of time. But it should come as no surprise, you walk outside, you know that, that hot weather is good for us. And that’s how we would, I think frame Brad’s comments in the prepared comments around that is, yes, we’ve seen the benefit that you would expect to see with the weather we’ve had.

Great. Excellent. One more quick follow-up. The deferred compensation impact in the second quarter that you talked about, that $9 million shift, do we – does that continue into the third and fourth quarter? I presume if it does or doesn’t, that’s in the guidance, but just trying to think about how to think about that in terms of our models?

Yes. We don’t – we don’t do a lot of forecasting within our guide there. We hate to even talk about it, but it does create noise on that other income and expense line. It just really kind of depends on the broader market activity that impacts those accounts. And in normal periods, it’s not a needle mover, but it just happened coincide in the second quarter that it creates noise.

Understood. So in other words, it wasn’t a catch-up in the second quarter. It has to do with, I presume, the increase in the stock price during the quarter?

Yes. Yes. When the market recovers, we see the liability go up, the assets go up. Its net nothing, it literally – it perfectly offsets, it just creates noise.

Right. It’s important though, because it makes looks like your SG&A is higher than expected and that the only reason why you beat earnings is because of below-the-line items. But – so I think it’s important to understand it’s just a change in the geography.

Yes, agreed.

Thanks.

Thank you. Your next question is coming from Seth Basham from Wedbush Securities. Your line is live.

Thanks a lot and good morning. Sales productivity on a per employee basis was very strong, reaching on a new record by my calculation. I mean, first, do you see this as sustainable? And then second, can you provide more color on wages and benefits in the quarter and how you expect them to trend going forward on a year-over-year growth basis?

Yes. So maybe I can start there and then others can chime in, Seth, and probably answer the second question first. Overall, from a workforce perspective, continuing to see pressure from a wage rate standpoint there. I’d tell you, it’s largely in line with what we’re seeing with the inflation benefit that we’ve seen on our top line. And all of that were within our expectations. I know Brad talked about the SG&A as we’ve seen the opportunities to invest. But none of our spend outside of our original guide was driven by wage rates. Those were in line with where we had expected. And we continue to anticipate that we’ll have opportunities from an investment perspective in the team member experience enhancements that we’ve had. We felt very positive about those [indiscernible]. I talked about those at length. Those start to moderate just on a comparison basis as we move throughout the year for the things that we’ve been executing. In terms of where that’s driven us from a productivity perspective on the sales per team member, absolutely, we’re seeing a very robust top line. And Brad talked about it at length in the sense that we really believe that we’re winning business based upon the strength of our team and the service and value that they’re providing. And we think that our ability to double down on the strength of our team is really going to help us continue to sustain that and improve it as we move forward.

Got it. I appreciate it. Thank you again and congrats to Greg, Brad and Brent.

Thanks Seth.

Thanks Seth.

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

Thank you, Matthew. We’d like to conclude our call today by thanking the entire O’Reilly team for your unwavering dedication and the great results you’ve generated in the first half of 2023. I’d like to thank everyone for joining the call today, and we look forward to reporting our third quarter results in October. Thank you.

Thank you. This concludes today’s event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.