O'Reilly Automotive, Inc. Q3 FY2025 earnings call

• Comparable store sales: Generated 5.6% increase, with professional business up over 10% and DIY in low single-digit. Weather was neutral on balance for the quarter.
• Supply chain: Teams navigating tariff environment, maintaining gross margins, diversified supplier base, monitoring supplier health.
• SG&A: Per store growth of 4% at top end of expectations, driven by sales performance and inflationary pressures, expecting SG&A per store growth at or slightly above full year guide of 3.5%.
• Expansion: Opened 55 net new stores in Q3, on track for 200-210 net new stores in 2025, announced 2026 target of 225-235 net new stores, beginning to service stores from Stafford, Virginia distribution center.

The professional business was a significant driver of sales results with comparable store sales increase of just over 10%. The DIY business finished the quarter with a low single-digit comp, driven by average ticket benefits but partially offset by pressure to ticket counts. Professional comp was primarily driven by Pro ticket count growth, while DIY saw some deferral in larger ticket jobs but strength in other maintenance categories like oil, filters, and fluids.

• Comparable store sales: Updated guidance from 3%-4.5% to 4%-5%, midpoint reflects current sales volumes and pricing environment.
• EPS: Updated to range of $2.90-$3, midpoint up ~2% from previous and up 9% year-over-year.
• Free cash flow: Updated to range of $1.5B-$1.8B, down from previous range due to accelerated tax payment timing partially offset by reduced capital expenditures guidance.
• Capital expenditures: Reduced full year guidance by $100M to $1.1B-$1.2B due to timing of store and DC growth projects.

• Supplier risk: Monitoring supplier partner health, though collective health of suppliers is pleased, with risk management processes in place.
• Tariff uncertainty: Broader tariff landscape has potential to remain fluid, though lion's share of cost impacts currently in effect.
• DIY consumer pressure: Continued pressure to DIY customers from dynamics like potential deferral of larger ticket jobs.

Q: Comment on 4% same SKU inflation and residual flow through next quarters?

A: Still think will see tailwind in fourth quarter and first quarter, with most cost impacts from tariffs seen, but tariff environment still fluid.

Q: Price elasticity on DIY side?

A: Some categories may see deferral, but early stages, with different factors like weather and seasonality affecting, will see how fourth quarter plays out.

Q: U.S. store potential and international growth?

A: Extremely good about new store cohorts and team quality, excited about Mexico and Canada opportunities, with 2026 store opening target and continued U.S. store growth potential.

Q: Supplier health and First Brands exposure?

A: Dual and triple sourced on most lines, with good engagement with First Brands leadership and competitors, no material impact expected.

Q: SG&A per store growth and technology investments?

A: SG&A per store growth affected by inflation and other factors, but teams managing SG&A to sales, with technology and other investments considered for long-term growth.