Autozone Inc

NYSE:AZO

Earnings Call Analysis

AutoZone Reports Steady Growth and Strategic Expansion

AutoZone reported a solid performance in Q4 2024, with total sales up 9% to $6.2 billion and earnings per share (EPS) increasing 11%. The company continues to invest in growth initiatives, opening 49 new international stores. AutoZone's domestic same-store sales were flat, but international same-store sales rose nearly 10%. The commercial business grew by 10.9%, supported by the expansion of Mega-Hubs. For fiscal 2025, AutoZone anticipates resilient DIY business, strong international expansion, and ongoing commercial growth, despite potential $55 million revenue and $0.63 EPS drags from foreign currency headwinds.

AutoZone's Fiscal Year 2024 Performance

AutoZone reported commendable results despite a challenging economic backdrop. Total sales for the fiscal year were $18.5 billion, marking a 5.9% increase from the previous year. Earnings per share (EPS) notably increased by 13%, driven by higher net income and a reduced share count. The company emphasized its focus on exceptional customer service as a key driver of these solid results【4:0†source】【4:4†source】.

Quarterly Highlights and Key Metrics

For the fourth quarter, AutoZone's sales exceeded $6.2 billion, up by 9%. The EPS for the quarter grew 11% to $51.58 from a combination of increased net income and a reduced diluted share count. Same-store sales showed diverse results, with domestic same-store sales up by 0.2% while international sales saw a significant increase of 9.9%, reflecting strong growth in these markets despite a 500 basis point headwind from currency fluctuations【4:3†source】【4:0†source】.

Commercial and Domestic Operations

AutoZone's domestic commercial business demonstrated robust growth, with fourth-quarter sales increasing by 10.9% to $1.7 billion. For the entire fiscal year, commercial sales rose by 6.2% to $4.9 billion. The company’s strategic initiatives in commercial sales are producing results, with the addition of 55 new commercial programs, bringing the total to 5,898. Moreover, the deployment of Mega-Hubs, which carry over 100,000 SKUs, has driven significant sales growth both in commercial and DIY segments【4:2†source】【4:1†source】.

DIY Business and Market Dynamics

The DIY segment faced some challenges, with Q4 comp sales down 1.1%, and a 0.6% decrease for the fiscal year. Despite the industry-wide softness, AutoZone managed to gain market share. Factors such as growing and aging car parks and a challenging new and used car market provided a supportive environment. They anticipate future growth driven by these trends, with expectations of ticket growth offsetting slightly declining transaction counts【4:3†source】【4:3†source】.

International Expansion and Performance

AutoZone’s international expansion continues to yield positive results. The company opened 31 new stores in Mexico and 18 in Brazil during the quarter, pushing total international stores to 921. International same-store sales increased by 9.9% on a constant currency basis, but this was tempered to 4.9% due to foreign exchange rates. The success in international markets has led to plans for an accelerated pace of new store openings moving forward【4:5†source】【4:9†source】.

Financial Health and Shareholder Returns

AutoZone maintains a strong balance sheet with a leverage ratio of 2.5x EBITDAR. The company generated $723 million in free cash flow for the fourth quarter and $1.9 billion for the year. This financial strength enabled AutoZone to repurchase $711 million worth of its stock in the quarter, reducing outstanding shares by 6% since the fiscal year began. The company has consistently returned value to shareholders through disciplined capital allocation, having bought back over 100% of shares outstanding since the inception of its buyback program in 1998【4:18†source】【4:0†source】.

Outlook for Fiscal Year 2025

Looking ahead to FY 2025, AutoZone is bullish on growth prospects underpinned by a resilient DIY business, a rapidly growing international segment, and an expanding domestic commercial business. The company plans to invest heavily in Mega-Hub and Hub openings and expects foreign currency rates to impact revenue, EBIT, and EPS negatively. Nonetheless, confidence remains high in AutoZone's strategy and ability to drive significant shareholder value through disciplined execution and a customer-first approach【4:0†source】【4:0†source】.

Earnings Call Transcript 2024-Q4

[Operator]

Before we begin, please note that today's call includes forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance. Please refer to this morning's press release and the company's most recent annual report on Form 10-K and other filings with the Securities and Exchange Commission for a discussion of important risks and uncertainties that could cause actual results to differ materially from expectations.

Forward-looking statements speak only as of the date made, and the company undertakes no obligation to update such statements. Today's call will also include certain non-GAAP measures. A reconciliation of GAAP to non-GAAP financial measures can be found in our press release.

Good day, everyone, and welcome to AutoZone's 2024 Fourth Quarter Earnings Release Conference Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Phil Daniele, CEO of AutoZone. Sir, the floor is yours.

[Philip Daniele, executive]

Thank you. Good morning, and thank you for joining us today for AutoZone's 2024 Fourth Quarter Conference Call. With me today are Jamere Jackson, Chief Financial Officer; and Brian Campbell, Vice President, Treasurer, Investor Relations and Tax.

Regarding the fourth quarter, I will give an opportunity to read our press release and learn about our quarter's results. If not, the press release, along with slides complementing our comments today, are available on our website at www.autozone.com under the Investor Relations link. Please click on the quarterly earnings conference call to see them.

As we begin this morning, I want to thank our more than 120,000 AutoZoners for their contributions during fiscal 2024 that resulted in our solid performance. As the first line of our pledge states, they continue putting our customers first, which resulted in total sales growth of 5.9% for the fiscal year, while earnings per share increased 13%. As a reminder, this fiscal year had an extra week of results. So excluding the 53rd week, our sales were up 3.8%, while our EPS was up 10.4%.

In the fourth quarter, with our continued focus on what we call WOW! Customer Service, our total sales were up 9%, while EPS was up 11%. On a 16-week basis, our Q4 sales were up 2.6%, while our EPS was up 3.5%. We also delivered 1.3% total company same-store sales, domestic same-store sales growth of 0.2% and international same-store sales up 9.9%.

Our domestic commercial sales accelerated sequentially, finishing up 4.5% versus last year's Q4 of 3.9%. This is on a 16-week versus 16-week basis. We were up 10.9% on a 17-week versus 16-week basis. While our international business continued to comp up approximately 10% in local currencies, we faced a nearly 500 points of currency headwind, and our reported growth rate is approximately 5%.

As you know, the weaker U.S. dollar has been a tailwind for our reported results since we began reporting international comps last year in our fourth quarter earnings report. The stronger dollar had a meaningful impact on our reported sales, operating profit and EPS this quarter. Jamere will update the potential impact of foreign currency on FY '25 later in the call.

While there will always be tailwinds and headwinds in the quarter's results, what has been consistent is that we could not have achieved both this quarter's and this year's success without exceptional efforts across the entire organization. So let me dive into our sales results. First off, I will say that our domestic DIY results were very similar to last quarter. Q4 DIY comp sales were down about 1%. The impact from the headwind on our discretionary merchandise categories drove the bulk of this decline similar to last quarter.

For our fourth quarter, discretionary category sales were approximately 18% of our mix, and they were down roughly 5% year-over-year. Again, similar to our results in previous quarters this fiscal year, we have seen this trend for the entire fiscal year, and our belief is that these categories will continue to be pressured until the consumer gets some economic relief and consumer confidence improves.

With regards to our inflation impact on the DIY comp, we saw both average ticket and like-for-like SKU inflation up approximately 1% for the quarter. While still low versus historical norms, the growth is a good trend for us as we would expect inflation in our ticket average to be approximately 3% over time. We anticipate average ticket growth will return to historical industry growth rates as we move farther away from the hyperinflation of the last couple of years.

We also saw DIY transactions count down 2%. While our industry overall sales growth rate per DIY appears to be down over the last quarter, it was very encouraging to see our market share growth in DIY. We believe we have a best-in-class offering, and this gives us confidence that when our consumers return to their historical shopping habits, we will be the beneficiaries of that upswing.

Secondly, I'll speak to our regional DIY performance. Simply put, it was consistent across the country as each of our 10 reporting census regions delivered approximately a 1% negative comp. Third, I will address weather and what we believe the impact was on our DIY business. We clearly saw hot weather across the U.S. this past summer. And in those markets where the weather was hot, our sales increased accordingly. However, across the majority of the country, the weather pattern was similar to the previous year and therefore, did not have a meaningful impact on our performance.

Next, I will touch on our U.S. commercial business. While we reported this morning that our commercial sales were up 10.9% for the quarter, on a 16-week comparable basis to last year, our sales were up 4.5%. We were encouraged to see our U.S. commercial sales growth. This past quarter marked another quarter of sequential increases to year-over-year DIFM sales. We saw very little variation in the commercial sales across regions as the entire country was basically running at the overall sales growth rate of 4.5% on a 16-week basis.

While we are encouraged by the progress we are making, we still have significant opportunities in front of us to grow market share with improved satellite store inventory availability, significant improvements in Hub and Mega-Hub coverage, the strength of our Duralast brand and good execution on our initiatives to improve speed of delivery and improve customer service. We are confident about our future.

This quarter, inflation on a like-for-like SKU basis was essentially flat, which drove flat pricing and average ticket for commercial. We have seen pricing remain relatively flat as inflation has cooled for goods in our industry. We expect to see slightly more inflation next year, and our assumption is like-for-like SKU retail inflation will be in the low single digits in FY '25.

For the year, we opened 8 Hubs and 11 Mega-Hubs, which is roughly half of what we did in FY '23. We are excited about the ability to resume aggressively opening these important assets in FY '25, although openings will be somewhat second half loaded. Hubs and Mega-Hubs lead to comp results that grow faster than the balance of the chain, and we are going to continue to aggressively deploy these assets.

For our first quarter of FY '25, we expect both DIY and commercial sales trends to modestly improve. We expect better sales performance in Q2 and the Q3 time frames. We will, as always, be transparent about what we are seeing and provide color on our markets and outlook as trends change.

Before turning the call to Jamere, I would like to take a moment to discuss our international business. We were busy opening stores this quarter. Between Mexico and Brazil, we opened 49 new stores and now have 921 international stores. As you can see from our press release, our same-store sales were just under 10%. We remain committed to growing the number of stores in both Mexico and Brazil. Today, we have 13% of our store -- total store base outside of the U.S. and expect that number will continue to grow.

We plan to accelerate our openings by 2028, and we are targeting around 200 international openings per year. We continue to take our U.S. store learnings and introduce them to the international store operations, and we are very excited about our future in international.

In summary, we have continued to invest in making in-market inventory assortments better to drive future traffic growth and sales, enhancing our IT systems and our supply chain. In FY '25, we'll continue to ramp up our store openings, specifically our Hubs and Mega-Hubs, and drive efficiencies from our new DCs, which are expected to come online in 2025.

At AutoZone, we are investing in our future growth initiatives. In FY '24, we invested more than $1 billion in CapEx and are focused on our strategic growth priorities. In FY '25, you will see more of the same. We are investing in accelerated store growth, specifically Hubs and Mega-Hubs, placing inventory closer to our customers. Distribution centers that will drive efficiency and reduce supply chain costs, IT systems that will improve customer service and improve our AutoZoners' ability to help our customers.

We believe that our industry is strong, and we have an opportunity to grow market share domestically and internationally. Now, I will turn the call over to Jamere Jackson.

[Jamere Jackson, executive]

Thanks, Phil, and good morning, everyone. Before I unpack our results, I want to remind you that each year, our fiscal year ends on the last Saturday in August. Based on the way the calendar fell this year, we had an extra week in our fiscal year. And the fourth quarter is based on 17 weeks versus 16. For comparison, our same-store sales comps are based on a 16-week basis, while our total sales, EBIT and EPS results will be discussed on a 17-week basis. .

As Phil has previously discussed, we reported 9% total company sales growth. On a 16-week basis, total company sales were up 2.6%. Our domestic same-store sales grew 0.2% and our international comp was up 9.9% on a constant currency basis. Total company EBIT grew 6.1%, and our EPS grew 11%.

And I also want to point out that we had a headwind from foreign exchange rates in this quarter. We had a 500 basis points drag on international sales that resulted in a $32 million headwind on sales, an $8 million headwind to EBIT and a $0.32 a share drag on EPS versus the prior year. We continue to deliver solid results despite the economic backdrop. And the efforts of our AutoZoners in our stores and distribution centers have enabled us to grow our business in our earnings in a meaningful way.

Let me take a few moments to elaborate on the specifics in our P&L for Q4. For the quarter, total sales were just over $6.2 billion, and as I just mentioned, was up 9%. For the year, our total sales were $18.5 billion, up 5.9% versus last fiscal year.

And let me give a little color on our sales and our growth initiatives, starting with our domestic commercial business. For the fourth quarter, our domestic DIFM sales increased 10.9% to $1.7 billion. On a 16-week basis, our domestic commercial business grew 4.5%. For FY '24, our commercial sales were $4.9 billion, up 6.2% versus last year. In the quarter, sales to our domestic DIFM customers represented 31% of our domestic auto part sales and 27% of our total company sales. Our average weekly sales per program were $16,700, flat to last year as we lap new programs that we opened that are not at maturity.

Our commercial acceleration initiatives are continuing to deliver good results as we grow share by winning new business and increasing our share of wallet with existing customers. We now have our commercial program in approximately 92% of our domestic stores, which leverages our DIY infrastructure, and we're building our business with national, regional and local accounts. This quarter, we opened 55 net new programs finishing with 5,898 total programs. Importantly, we have a lot of runway in front of us, and we will aggressively pursue growth in commercial, which represents a tremendous growth opportunity for our company.

To support our commercial growth, we now have 109 Mega-Hub locations. While I mentioned a moment ago, our commercial weekly sales per program averaged was $16,700 per program. The 109 Mega-Hubs averaged significantly higher sales and are growing much faster than the balance of the commercial business in Q4.

As a reminder, our Mega-Hubs typically carry over 100,000 SKUs and drive tremendous lift inside the store box as well as serve as an expanded fulfillment source for other stores. The expansion of coverage and parts availability continues to deliver a meaningful sales lift to both our commercial and DIY business. These assets are performing well individually, and the fulfillment capability for the surrounding AutoZone stores is giving our customers access to thousands of additional parts and lifting the entire network.

We have an objective to have well north of 200 Mega-Hubs at full build-out. Our customers are excited by our commercial offering as we deploy more parts in the local markets closer to the customer while improving our service levels.

On the domestic retail side of our business, our DIY comp was down 1.1% for the quarter. For all of FY '24, our DIY comp was down 0.6%. Despite the industry softness, we continue to gain share in DIY, and we are well positioned when the industry reaccelerates. As Phil mentioned, we saw traffic down 2% along with 1% ticket growth. As we move forward, we would expect to see slightly declining transaction counts, offset by low to mid-single-digit ticket growth, in line with the long-term historical trends for the business, driven by changes in technology and the durability of new parts.

Our DIY business has continued to gain share behind our growth initiatives. Importantly, the market is experiencing a growing and aging car park and a challenging new and used car sales market for our customers, which continues to provide a tailwind for our business. These dynamics, ticket growth, growth initiatives and macro car park tailwinds, we believe, will continue to drive a resilient DIY business environment for FY '25.

Now, I'll say a few words regarding our international business. We continue to be pleased with the progress we're making in our international markets. During the quarter, we opened 31 new stores in Mexico to finish with 794 stores and 18 new stores in Brazil, ending with 127. Our same-store sales grew 9.9% on a constant currency basis and 4.9% when taken into account foreign exchange rates.

We remain committed to international, and given our success in these markets, we will accelerate the store opening pace going forward. We're bullish on international being an attractive and meaningful contributor to AutoZone's future sales and operating profit growth.

Let me spend a few minutes on the rest of the P&L and gross margins. For the quarter, our gross margin was 52.5%, down 21 basis points, driven primarily by an unfavorable LIFO comparison to last year. Excluding LIFO from both years, we had a 32 basis point improvement in gross margin driven by continued improvement in merchandising margins.

For Q4 last year, we had a $30 million LIFO credit while this year, we did not have any credits. We previously said that we thought we would have approximately $10 million of LIFO credits in the quarter. which would have equated to 16 bps of higher gross margins or $0.45 a share.

At year-end, we had $19 million in cumulative LIFO charges yet to be reversed through our P&L. At the moment, we are not anticipating any charges or credits to our P&L for Q1 of FY '25 as inflation has not materially impacted our LIFO inventory accounting results. I will remind you that in last year's first quarter, we booked $2 million LIFO credit. And as a reminder, once we credit back the $19 million to the P&L, we will not take any more credits and we will begin to rebuild an unrecorded LIFO reserve.

Moving to operating expenses. Our expenses were up 10.4% versus last year's Q4 as SG&A as a percentage of sales deleveraged 37 basis points. On a 16-week basis, our SG&A was up 4.6%. The growth in SG&A has been purposeful as we continue to invest at an accelerated pace in IT and payroll to underpin our growth initiatives. These investments will pay dividends and customer experience, speed and productivity. We're committed to being disciplined on SG&A growth as we move forward, and we will manage expenses in line with sales growth over time.

Moving to the rest of the P&L. EBIT for the quarter was $1.3 billion, up 6.1% versus the prior year. EBIT for FY '24 was just under $3.8 billion, up 9.1% versus the prior year driven by top line growth and gross margin improvement. Interest expense for the quarter was $153.2 million, up 41% from Q4 a year ago, as our debt outstanding at the end of the quarter was $9 billion versus $7.7 billion at Q4 end last year.

We're planning interest in the $108 million range for the first quarter of FY '25 versus $91.4 million in this year -- in this past year's first quarter. Higher debt levels and borrowing rates across the curve are driving this increase.

For the quarter, our tax rate was 21.1% and down from last year's fourth quarter of 22.4%. This quarter's rate benefited 80 basis points from stock options exercised, while last year, it benefited 22 basis points. For the first quarter of FY '25, we suggest investors model us at approximately 23.4% before any assumption on credits due to stock option exercises.

Moving to net income and EPS, net income for the quarter was $902 million, up 4.3% versus last year. Our diluted share count of 17.5 million was 6% lower than last year's fourth quarter. The combination of higher net income and lower share count drove earnings per share for the quarter to $51.58, up 11% for the quarter.

For FY '24, net income was $2.7 million, up 5.3% and earnings per share was $149.55, up 13%. Now let me talk about our free cash flow. For the fourth quarter, we generated $723 million in free cash flow. And for the year, we generated $1.9 billion in free cash. We expect to continue being in an incredibly strong cash flow generator going forward, and we remain committed to returning meaningful amounts of cash to our shareholders.

Regarding our balance sheet, our liquidity position remains very strong and our leverage ratio finished at 2.5x EBITDAR. Our inventory per store was up 3.7% versus Q4 last year, while total inventory increased 6.8% over the same period last year, driven by new store growth.

Net inventory, defined as merchandise inventories less accounts payable on a per store basis was a negative $163,000 versus negative $201,000 last year and negative $168,000 last quarter. As a result, accounts payable as a percent of gross inventory finished the quarter at 119.5% versus last year's Q4 of 124.9%.

Lastly, I'll spend a moment on capital allocation and our share repurchase program. We repurchased $711 million of AutoZone stock in the quarter. And at quarter end, we had just under $2.2 billion remaining under our share buyback authorization. The strong earnings balance sheet and powerful free cash we generated this year has allowed us to buy back 6% of the shares outstanding since the beginning of the fiscal year.

We have bought back over 100% of the then outstanding shares of stock since our buyback inception in 1998, while investing in our existing assets and growing our business. We remain committed to this disciplined capital allocation approach that will enable us to invest in the business and return meaningful amounts of cash to shareholders.

To wrap up, we remain committed to driving long-term shareholder value by investing in our growth initiatives, driving robust earnings and cash and returning excess cash to our shareholders. Our strategy continues to work. We've grown our market share domestically and internationally and improving our competitive positioning in a disciplined way. As we look forward to FY '25, we're bullish on our growth prospects behind a resilient DIY business, a fast-growing international business and a domestic commercial business that is continuing to grow share.

I continue to have tremendous confidence in our ability to drive significant and ongoing value for our shareholders behind a strong industry, a winning strategy and an exceptional team of AutoZoners. Before handing the call back to Phil, I want to remind you that we report revenue comps on a constant currency basis to reflect our operating performance. We generally don't take on transactional risk, so our results reflect the translation impact for reporting purposes. As I mentioned earlier, in the quarter, foreign currency resulted in a headwind on revenue and EPS.

If yesterday's spot rates held constant for Q1 FY '25, then we expect an approximate $55 million drag on revenue, a $16 million drag on EBIT and a $0.63 a share drag on EPS. And if rates remained at the current spot rates for the full fiscal year 2025, we would expect an approximate $265 million impact to revenues, a $90 million impact to EBIT and a $3.64 a share impact to full year EPS.

And now I'll turn it back to Phil.

[Philip Daniele, executive]

Thank you, Jamere.

We're proud of our AutoZoners across the globe and the results our team delivered this past quarter. In FY '24, we focused on improving execution and driving WOW! customer service. We made meaningful progress and are well positioned to grow sales across our domestic and international store bases with both our retail and our commercial customers. Our gross margins are solid and our operating expense is appropriate for future growth.

We continue to put our capital to work where we'll have the biggest impact on sales. Our stores, distribution centers and leveraging technology to build a superior customer service experience where we are able to say yes to our customers' needs. The top focus areas for fiscal 2025 will remain growing share in our domestic commercial business and continuing our momentum in our international markets. We believe we have a solid plan in place for growth over the next 12 months. We know our focus on parts availability, flawless execution and what we call WOW! Customer service will lead to sales growth and gains in market share. We're excited to start 2025.

This time of the year, we also enjoy reflecting on the past. Our team achieved some impressive milestones this past fiscal year, $18.5 billion in sales headed towards the $20 billion milestone. Commercial sales are about to eclipse $5 billion. It wasn't that long ago, we just crossed $2 billion. That was only 2017. Average weekly sales domestically of $47,000 a week equating to just under $2.5 million per store annually.

Our Mexico and our ALLDATA teams both broke multiple records, and Brazil has now more than 100 stores and is growing. We bought back $3.2 billion in AutoZone stock marking $37 billion in buybacks since the start of our program back in '98.

As we start our new fiscal year, I'd like to take a moment and discuss our operating theme for this new year, great people, great service. I am asked frequently what differentiates AutoZone from others. My answer always goes back to the same point over and over again, our AutoZoners and AutoZone's amazing culture.

Our AutoZoners have built this culture. This year, we will focus on our AutoZoners like never before. We are determined to improve upon an already existing culture of service. Next week will mark the start of our national sales meeting here in Memphis. Just over 3,000 AutoZoners will be in Memphis to learn about our parts and products, celebrate this past year's accomplishments as well as allowing our leadership to celebrate and recognize the best-performing store and distribution center AutoZoners. We cannot wait to have everyone here.

But we can't rest on our laurels, and we aren't without our challenges, that's for sure. We must make sure that every store is staffed right every hour of every day. Our processes need to function properly always and we have to meet our new store opening goals and time lines. Simply put, we have to remain the execution machine that we have always been.

Fiscal 2025's top priorities will continue to be based on improving execution and we will continue to invest in our following strategic projects, reaccelerate our new Hub and Mega-Hub openings, effectively and efficiently open our new distribution centers and optimize our direct import facility, ramp up our domestic and international store growth. As discussed, our international teams posted same-store sales comps on a constant currency basis of 10.2%, continuing several years of very strong growth. And most importantly, reaccelerate our domestic commercial sales growth and continue to gain market share on DIY.

Also this morning, I'd like to remind everyone that Ken Jaycox joined AutoZone this past quarter as our Senior Vice President, Commercial. Ken is a strong addition for us, having served most recently at U.S. Steel, where he served as their Senior Vice President and Commercial Chief Officer. He has extensive experience in the B2B space and has developed and led world-class sales teams. He is a great cultural fit, and we are fortunate to have Ken join us.

We are excited about what we can accomplish and our AutoZoners are committed to delivering even better results. we believe in our potential for future growth. We believe in AutoZone's best days lie ahead of us.

Now, we'd like to open up the call for questions.

[Operator]

[Operator Instructions] Your first question is coming from Simeon Gutman from Morgan Stanley.

[Simeon Gutman, analyst]

Phil, you mentioned accelerating commercial sales growth. You made a hire recently, and we talked about Hubs on the call, and I think you're tweaking inventory. Can you talk about timing? What should investors expect, what you expect out of the organization when we could see commercial sales move to that next level?

[Philip Daniele, executive]

Great question. Thanks, Simeon. I think we will sequentially improve from here. Again, like we've talked about on the last couple of calls, I think it's a progressive improvement. I don't think it's going to be a snapback. You look at the environment out there, the consumer is still pressured, and we think that's showing up on both DIY and the commercial side of the business. .

But we like our strategies that we have in place as far as exactly what you said, incrementally improving the store side assortments at the satellite stores, opening up these Hubs and Mega-Hubs and adding inventory closer to the customers. And then we're also working on ways to streamline customer service, specifically improving speed to customer on those harder to find parts. So we like our strategy, and we think we'll continue to build from here.

[Simeon Gutman, analyst]

And then a quick follow-up on gross margin. What's left and how high it can go? Because I think discretionary being down would have hurt you, commercial being up would probably hurt you. So how do you -- I guess, where is the strength coming from? And how much can it continue?

[Jamere Jackson, executive]

Yes. I think we got a couple of things working in our favor. One, our merchants are doing a fantastic job driving merchandising margin improvements and negotiating with our supply base, and that team has done a tremendous job for us. So I think as we move forward, we'll continue to drive margin improvements.

We have a little bit of a drag early on because we're adding a couple of DCs associated with the supply chain efforts that we have. But net-net, we think that the merchandising margin improvements will continue to power us moving forward.

The one area that we're watching very closely is what's happening in the industry from a pricing standpoint, as Phil alluded to and I alluded to as well, that we're not seeing the average ticket growth. That's largely a function of what we're seeing on the inflation side. As we get some additional inflation that starts to make its way into the industry, we're looking forward to having an opportunity to push retails a little bit harder.

So a very disciplined approach, very strong merchandising margins. And we're looking forward to a pretty good outlook for FY '25.

[Operator]

Your next question is coming from Bret Jordan from Jefferies.

[Bret Jordan, analyst]

Could you talk about what, if any, are the hurdles to reaccelerating the Hub growth now that the 3 major players are all using a Hub strategy? Is it a real estate access issue? Or is it just sort of timing of your internal development team?

[Jamere Jackson, executive]

Phil always smiles when we get this question. I own store development inside of our organization. We feel very good about what we've done. Essentially, what we've done over the last year or so is rebuilding our pipeline and our capabilities. Obviously, and we've talked about it here on the call, we struggled a little bit as we got through the pandemic. Everything was generally delayed during that time frame. But the reality is that there were things that we needed to improve from an operational standpoint to really improve that pipeline.

We're pretty excited about where we are on Hubs and Mega-Hubs. We still have our plan to open 200-plus Mega-Hubs versus our original estimate of 110. We'll build 20 plus in FY '25, and I'm really excited about the fact that we have about 70 Mega-Hubs in the pipeline today, most of which are under construction. So I feel good about the team, what we've executed on, et cetera. These are big 30,000 square foot boxes in tough to find locations, but we've reorganized our team and doubled down on our efforts to get those boxes into the marketplace. I'm excited about what they will contribute to our future growth prospects.

[Bret Jordan, analyst]

Okay. Then a follow-up on the commercial business. I mean, can you talk about the cadence through the quarter and then any dispersion between national account business versus the up and down the street business?

[Philip Daniele, executive]

Yes. If you talk about the quarter, like I said, both regionally and the cadence across the quarter were all pretty similar. If you -- the very beginning of the quarter was a little bit lighter. June was great. Some of it due to the hot weather came a little bit earlier this year. And then when you got into July and August, it was pretty similar to last year from a weather perspective. So you didn't see meaningful change in July and August from a comp perspective.

Where it was hot, we saw all of the categories take off like you would expect. So we had a good summer. It wasn't demonstrably different than last year, though. And so that's kind of how we think about that from a quarter perspective.

Sorry, what's the second part of the question?

[Bret Jordan, analyst]

And I guess, national account versus the up and down the street business, are you seeing any change in the independent, the WD competitive landscape out there and run the demo Street?

[Philip Daniele, executive]

Yes. So on national accounts -- that's a great question. We kind of think of our -- the up and down the street customer. We think about national accounts and then we have what we call some verticals. And I'll explain kind of how we saw performance across those segments. The up and down the street customer has been very resilient and been one of the best growing segments for us.

The national accounts have improved quarter-over-quarter and part of that improvement has come from -- a lot of those national accounts are heavily tied towards tires, and tires are not as bad as they used to be. The trends have improved. We're seeing more tire replacements, even though those customers generally, I think, are seeing down customer traffic. But tires are not the big drag that they have historically been.

The one segment that has not performed very good for us. And as I said, I think you're going to -- it's going to make sense. It's anything related to new cars, used cars or buyer payer lots. As cars change hands, there's generally an uptick in maintenance to a used car. They may refurb and put on -- put tires on, put on new brakes, suspension items, change all the filters, do some maintenance, et cetera. And as that new customer picks up the new car, they may continue to personalize it.

So that segment of the business, which were highly penetrated, has not performed as well. We think as the environment and the economy improves a little bit and we see more used cars change hands and new cars being sold, that will help those 2 segments of the business.

[Operator]

Your next question is coming from Chris Horvers from JPMorgan.

[Christopher Horvers, analyst]

Can you talk about where you think the DIY -- domestic DIY and domestic commercial markets are growing. You mentioned share gains in DIY, but you comp down 1. So any thoughts on where you think those markets are -- grew during the quarter and how we think about the improvement in the backdrop over FY '25?

[Philip Daniele, executive]

Great question. Thank you. So on DIY, as we said, the biggest pressure point has really been in the discretionary part categories of the business. So think of that's accessories, truck tolling, performance, things of that nature. That business has been pretty tough for us for at least a year. And when you look at the share gains, that sort of area is where we've seen the most challenging performance.

Our maintenance categories and our failure categories on the DIY side of the business have been pretty resilient, but it's those headwinds from the discretionary categories that have been tough.

And we frankly don't know that, that's going to change too much until that -- our pressured consumer starts to get some economic relief, and frankly, when their confidence starts to improve a bit. On the commercial side, we believe we're still one of the fastest growing in the industry. A little bit of a tougher comp scenario, but we believe we're growing share, and we like our strategies of deploying inventory through the Hub and the Mega-Hub assortments. And we have several strategies that are focused on improving customer service and commercial, and we're seeing really good results from those.

[Jamere Jackson, executive]

And I would say, just to build on that, I mean, if you think about the growth rates, we actually believe that the DIY market has been down kind of low single digits because of those dynamics that Phil talked about but also the fact that we're not seeing the same level of retail inflation. Tickets are still growing slower than historical levels, and that's put some pressure on it. So a combination of the consumer sentiment, the fact that we are not seeing retail inflation are sort of driving that business down a little bit.

But what we're excited about is the fact that we continue to execute, as Phil mentioned, I mean, we're providing great service to the customer, and as that portion of the industry reaccelerates, we'll be in great shape. And on the commercial side, I mean, as near as we can tell, I mean, commercial has been flat to declining for -- or slightly declining for a few quarters here. And if we look at what we saw this quarter, it was probably in a similar sort of zip code. So we're excited about the fact that we've accelerated our commercial sales growth. And as we move forward, the execution on our initiatives that Phil talked about, the fact that we'll get more Hubs and Mega-Hubs in the marketplace all bode well for us as we move forward.

[Christopher Horvers, analyst]

Got it. And then a couple of quick margin follow-ups. First on the gross margin, it looks like that 53rd week, the gross margin was maybe 80 basis points lower. So is there something to read into that? You talked about being positive on gross margin over the year, but some DC pressures. So was that just accounting nuance or something that we should think about in terms of cadence? And then secondly, on the potential FX headwind, the international implied operating margin for the year is materially higher than the quarter, so what you experienced in the fourth quarter. So is that the 53rd week impact? Or is there something going on there?

[Jamere Jackson, executive]

Yes. So the 53rd work is always a little bit noisy for us just in general in terms of how allocations happen, et cetera. So I wouldn't read much into how you think about it. I mean, overall, for the total company, we had about $365 million of sales and about $87 million of EBIT associated with that extra week when you look at it on a like-for-like basis. And I wouldn't -- the margin impacts and SG&A impacts and all those things can get a little bit skewed just based on how you do allocations in the quarter. .

What I'll say about international and the international margins as we think about it going forward, it's a very strong business for us. Our business in Mexico has basically doubled over the last 3 fiscal years or so. So given that significant revenue and even impact of our international footprint, swings in FX rates are going to impact us, et cetera. The team is doing a great job of executing. And we wanted to be really transparent on what we see in terms of FX moving forward and what the margin impact is going to be going forward.

[Operator]

Your next question is coming from Steven Forbes from Guggenheim Securities.

[Steven Forbes, analyst]

A follow-up to start on the commercial business. Maybe if we just focus on sort of weekly sales per commercial program, if we adjust for the extra week contribution, it looks like sales were sort of down mid-single digits year-over-year. Any way to help contextualize sort of what's driving that? And/or any sort of additional thoughts on how your initiatives on the speed of delivery, customer service may help inflect that as we look out over the coming quarters here and potentially get it back to growing?

[Philip Daniele, executive]

Yes. Well, again, if you compare the 16 weeks to 16 weeks, we were up 4.5% versus last year. So -- and sequentially from the last 3 quarters, that's 3 quarters in a row of growing trend on our commercial sales. If you look at what we're focused on with the -- obviously, improving our assortment is something we do all the time. I think our merchants have done a fantastic job of improving the store level assortments and also improving the store -- the Hub and Mega-Hub assortments within any given market that may have one of those types of boxes.

What we're focused on is utilizing deployed inventory in a given market, either in a Hub or a satellite and getting that inventory quicker to the customer at the shop level. So we think of it in terms of time speed to shop, how quickly can we get that inventory from wherever it may be to the shop the fastest way to improve customer service. And as you back up to a Hub or a Mega-Hub, the assortments get deeper and how do we get that product to those customers faster.

We've deployed quite a bit of technology over the last couple of years. We continue to leverage that technology and learn how to improve the customer service for the AutoZoners, allowing them to help the customer better as well as getting that inventory quicker to the customer wherever that inventory may be. And we're seeing really good results.

We like the strategy. What I'll tell you is -- it's dependent on having a Hub and a Mega-Hub, which is why the strategy of having more Hubs deployed with those inventory assets closer to the customer is so important. We wish we could go faster. We'll start reaccelerating those Hub and Mega-Hubs later in the year. And then we've got -- as Jamere mentioned, we've got a great pipeline. We feel good about the future. We know where we want all these big boxes to be, all the well north of 200 of them on the Mega-Hub side. We know where they are. It's just a matter of negotiating and getting them open.

[Steven Forbes, analyst]

I appreciate the color. And then just a quick follow-up for Jamere. Appreciate the quantification of FX, assuming all things constant, the release obviously quantified the EBIT contribution of the extra week. You also called that LIFO. If we add these up, we have sort of a mid-single-digit headwind to EBIT growth next year. Is that the right way to frame up sort of noncontrollable headwinds to EBIT growth or anything else you want to add as we think about sort of cleansing the models here?

[Jamere Jackson, executive]

That's really 2 pieces. One is we had about $40 million of LIFO credits that rolled through the P&L this year that become headwinds next year. Now depending on what happens from an inflation standpoint, we've got about $19 million of credits still to come before we go back to an unrecorded balance. So you could offset maybe half of that $40 million benefit that you had this year on the LIFO side. So that should help you from a modeling standpoint. And then from an FX standpoint, we try to be transparent about where the spot rates are.

We're certainly not making a prediction on where FX is going to land or lots of things that will impact that. Certainly, things that happen in the U.S. economy, things that happen in the international economies and some of the political dynamics.

So what we wanted to do is just be really transparent about where the spot rates currently are and what the impact could potentially be on our P&L. And we'll update you as we move through the year. It's been pretty volatile. You've seen a pretty significant spike probably to the tune of 20% or 25% in a very short period of time. And again, as I said, given the size of international and our P&L and the profitability of that business, it does have an impact. So we'll be transparent and share with you exactly what we see as it rolls its way through the P&L.

[Operator]

Your next question is coming from Robby Ohmes from Bank of America.

[Robert Ohmes, analyst]

I was hoping could you guys talk a little bit more about seeing inflation return and what the drivers to that normally are or what they could be? And maybe as part of that, remind us how historically tariffs in port strikes and things like that impact inflation for you guys.

[Philip Daniele, executive]

Yes. So let me kind of back up and we've talked about this a couple of different times, the historical growth rates versus what we're seeing today in ticket average, it's been fairly muted over the last year or so at around this 1% retail inflation and ticket average inflation that's been muted. But on both sides of the business, similar numbers that are down from historical rates. .

Over the long term, and I'm talking literally close -- somewhere between 20 and 30 years, the industry has generally seen somewhere between 3% and 5% inflation in average ticket and around 1% to 3% decline in transactions, typically driven by inflation of parts as well as technology, enhancements and quality of the product.

We believe that sometime in the near time horizon, we would revert back to a historical growth rate on both of those metrics. What we typically see what drives inflation is mix of -- or drives ticket average is mix of business converting to higher technology parts, which, generally speaking, are more expensive and inflation caused by product cost.

Over the last year, there hasn't been much product cost come into the system. And we all believe that that's because of -- if you look back through the pandemic year, we had supply chain constraints. We had massive inflation in cost and we took those retails and pushed them to the consumer, and we ended up with this hyperinflation. We're now lapping a lot of that and that trend starts to slow down kind of now going through the end of the year, and we would expect that inflation would come back in some time in '25 and get back to normal.

As far as tariffs, your question there, those sorts of things have ebbed and flowed over the years. If we get tariffs, we will pass those tariff costs back to the consumer, and we'll pass them through. As they turn through, we'll generally raise prices ahead of -- we know what the tariffs will be. We generally raise prices ahead of that. You get some gross margin improvement as the cost of goods turn in, and then it flattens out. So that's historically what we've done. I see no reason this industry has been very consistent on pricing and rational, and we believe that all those same metrics are still in place.

[Robert Ohmes, analyst]

And just a quick follow-up, since you brought up the last 20 to 30 years. When over the last 20 to 30 years has the consumer been like this? You guys are talking about on the DIY side a challenged consumer. What happened last time the consumer was like this?

[Philip Daniele, executive]

Gosh. I don't know -- well, that's a great question. The consumer is under much different pressure. The bottom end consumer has been pressured for the last 20 months or so or maybe more. But it's ebbed and flowed over recessions, et cetera. Have we seen the type of inflation that we saw over the last 3 years? No. Not -- certainly not in my lifetime, but generally speaking, in tougher economic times, people will generally defer maintenance and discretionary items early in the cycle. And then as we get further through the cycle, they start to repair their cars because they realize a little investment today maintaining their vehicle defers a major repair into the future. So we think it's going to ebb and flow over time. But we feel like our execution, our improvement in execution and our strategies are the right strategies for us, and we'll work over the long term.

[Jamere Jackson, executive]

Just a little more on the consumer. I mean a couple of things really stand out to us. One is if you look at the economy just in general, I've said this for a while that you've had this sort of this 2-speed world where the middle and upper-income consumers have strong balance sheets and are continuing to spend as normal, and the lower end is still in the pinch, particularly in the discretionary categories. .

The beauty of our business is that the lion's share of our business is relatively inelastic. It's break-fix, it's essential maintenance. Consumers need their vehicles for mobility. So we tend to power our way through those.

What encourages us about the consumer is that even in this environment, you've got unemployment at 4.2%. You've got wage growth at 4%. So wage growth is finally keeping up or outpacing inflation. So we feel pretty good that as consumer sentiment improves moving forward that you'll see some return of normalcy in terms of spending and our business will benefit from that. But the good news, again, is the lion's share of our business, that break-fix, essential maintenance, it's pretty resilient really through all cycles.

[Operator]

Your next question is coming from Michael Lasser from UBS.

[Michael Lasser, analyst]

So the market grown accustomed to AutoZone growing its earnings by a double-digit clip with mid-single-digit operating income growth and the rest coming from share repurchases. It seems like your message today is that algorithm might prove elusive for the next few quarters as the headwind to our international business comes into play from FX and some of the other unique factors like LIFO.

So when is it realistic that AutoZone can get back to this double-digit EPS growth algorithm? And is it really incumbent on an acceleration in pricing that's going to both help the top line as well as the margins moving through 2025?

[Jamere Jackson, executive]

Thanks for your question, Michael. The first thing I'll say is that the long-term algo is unchanged. I mean this is a business that we believe as we look forward, will be a consistent, steady grower, has an opportunity to expand margins. That will have a ton of free cash flow at the bottom of the waterfall, and we'll buy back shares and do shareholder-friendly things associated with it.

In the near term, the things that you've alluded to, things like LIFO, a little bit of pressure on from an FX standpoint, may impact that on a quarterly basis. But that long-term algo doesn't change. I think what we're encouraged by is that the growth initiatives that we have, as the macro environment improves, you'll see the acceleration in the top line, which is key to that algo working as we move forward. So all the things that we're working on from a growth initiative standpoint will really start to show up in the results. But in this environment where particularly the consumers have been pressured, DIY has been a little bit soft, it's a little tough to print that number quarter-over-quarter as we move forward.

So we feel good about where we are. We feel good about the fundamentals of the business, the fundamentals of the industry, the fundamentals of our execution. But on a quarterly basis, it's difficult to print the algo as it has been. So long term, no change. Short term, you'll certainly see some impact from the top line and some of these other drivers in the business.

[Philip Daniele, executive]

Yes, just to reiterate. I mean, there definitely will be pressure on a given quarter. But the Mexico business and the international business is an incredible business and growing. We like the profitability of that market. And we like our strategies, both on the international markets and our opportunities that we still have here in the U.S. So we're happy with our strategy. We don't like the FX pressure, but we can't -- that's not one we can deal with at the moment.

[Michael Lasser, analyst]

My follow-up question is the margin structure of AutoZone has evolved a bit over the years. It's now more incumbent upon the gross margin expansion to drive stable to flat overall operating margins and offset some growth in SG&A. So if AutoZone is running into obstacle to grow its gross margin should the market expect that it can manage its SG&A to moderate that, keep its overall operating margin flattish moving forward?

[Jamere Jackson, executive]

Yes. I think 2 things associated with that. One is we are continuing to run the gross margin play with intensity inside the company. And as I mentioned a little bit earlier, our merchandising teams are doing a fantastic job of finding a way to give us expanding margins even in an environment where we haven't had an opportunity to raise retails as fast, which is a pretty significant achievement for the company.

I've also said that in the middle of the P&L that to the extent that the top line or the gross margins don't materialize, that we have the muscle and we'll make the decisions that are necessary to make sure that we're protecting our operating margins in total, and that includes the things that we do on the SG&A line.

What we've been able to do over the last couple of years is invest in a very disciplined way in things that position us very, very well for the future in SG&A. So things like IT, payroll to improve service, the payroll that's necessary to support some of these growth initiatives. And those things are all going to pay benefits for us.

So I think the message here is no change to the algo, no outlook that suggests that operating margins are going to be on the decline here. We'll work our way through these. And as we see the top line return and as we continue to work gross margins and work the middle of the P&L, the operating margin profile of the company is protected.

[Operator]

Your next question is coming from Michael Baker from D.A. Davidson.

[Michael Baker, analyst]

Okay. Two quick ones. You've alluded a little bit to pricing, competitive pricing. Can you just tell us -- we know one of your competitors has been investing in price. Is that impacting the average ticket at all?

[Philip Daniele, executive]

Yes. I would say that -- we heard that they're doing that. And at the end of the day, we monitor our pricing all the time. We haven't seen any radical change. I think specifically on the commercial side of the business, the vast majority of the share is with the WDs and that's who we focus on in our pricing strategies, and we haven't seen any material change there. And I would say that if you ask if that's the pressure point for a lack of average ticket growth, the answer is no. The impetus for average ticket growth and retail inflation really comes from cost.

And as the cost comes in, we'll push that cost to the consumer, and that's where you get some of that retail average ticket inflation. So I would say it's not -- that is not the primary reason for the lack of inflation on ticket average. It goes back to this hyperinflation that we had since the supply chain issues of the pandemic.

[Jamere Jackson, executive]

Yes. I mean, you heard me say in the past, particularly during the pandemic where we saw pretty significant increases in ticket that inflation is a bit of our friend when it comes to retails, and that dynamic is because, as Phil alluded to, this is a very disciplined, rational industry in terms of pricing.

And so even when you are looking at changes that you're making dynamically from a pricing standpoint because you're largely in a break-fix business where you don't necessarily stimulate demand from pricing -- downward pressure on pricing, you generally don't see that happening in our industry. And this industry is rational today. It's been rational for decades.

[Philip Daniele, executive]

Exactly.

[Michael Baker, analyst]

Yes. Okay. Pretty clear. One follow-up, I guess, maybe in 2 quick parts. You said you expect first quarter comps to be, I think you said, improving. Why? Is that based on what you're seeing quarter to date? And then you also said accelerating or more store growth, can you quantify that? How many stores? You gave us a Mega-Hub number for next year. How many total stores should we expect in 2025?

[Philip Daniele, executive]

Yes. So Jamere said, I think we're expecting somewhere north of 20 on the Mega-Hubs. As I said, they'll also be kind of back-end loaded. So I think kind of after Christmas or so would be where the vast majority of those will come in, in the latter part of the year. So we like to -- we'll reaccelerate those. We wish they were going to be earlier in the year. They, just from a timing perspective, are going to come in the back half of the year.

As far as the first quarter, what we said was we expect Q1 to look pretty similar to the last quarter. We don't see a whole lot of -- the consumer is still under the same pressure they were back in -- over the summertime. The consumer confidence, I think, is pretty stable at the moment. We wish it would improve. But we don't see a whole lot of catalyst for it to improve, frankly, maybe until December time frame after the election, et cetera.

So we expect it to be pretty similar, and we think it will improve. We'll get back to a normal growth average ticket growth later in the year. So that's kind of when we see things maybe having a better inflection point. We'd love for winter to get here and have a harsh winter.

[Michael Baker, analyst]

I thought you said you expect first quarter to modestly improve, so.

[Philip Daniele, executive]

Yes, modestly improve from a debt perspective. That's correct.

[Operator]

And our last question this morning is coming from Zach Fadem from Wells Fargo. .

[Zachary Fadem, analyst]

Jamere, you mentioned the car park as a tailwind. But since we're entering a period where new cars from 2018, 2019 are starting to come off warranty, and new car sales lagged during the pandemic, just curious why you wouldn't view this as an air pocket or headwind for the industry. Any thoughts on why that wouldn't be the case?

[Jamere Jackson, executive]

Yes, I think simply put, the cars are lasting longer and they're staying on the road. So even though the SAAR has come down, you're not seeing cars go to the bone yard. So as a result of that, the car park has continued to tick up. And you can see that from the data that's out there. I mean the average age of the vehicle on the road has ticked up to 12.6 years. And what all the data suggests based on what we know today is that it's likely going to be 1 or 2 ticks higher next year.

And that's a combination of what consumer behavior is, but it's also the factor of what's happening with technology, the cars just simply last longer, and you're seeing them stay in the car park, much longer, which means the average household is fractionally going up a little bit more in terms of the number of vehicles that they have.

[Philip Daniele, executive]

Yes. I think going to kind of your air pocket. I think that did happen to some degree, back in the financial crisis, 2007, '08, '09, but your new car SAAR literally dipped below $10 million annually. And we haven't seen anywhere near that type of decline in SAARs, so I don't think it's necessarily going to be an issue. Again, we love the fact that cars are now over 12 years on average and the American consumer is driving a lot. Those are great tailwinds for us. We like that.

[Zachary Fadem, analyst]

Got it. That makes sense. So maybe newer cars entering the addressable market, but also fewer scraps, so that makes sense. So just separately, when you look at your SG&A growth on a per store basis, it was about 1% normalized step down from about 3% in Q4. And when you think about managing your business for 2025. Could you talk about why this low single-digit range is the right level for you, particularly in light of the investments that you're making in commercial and also in light of some of the peers stepping up to mid-single digit to drive share gains?

[Jamere Jackson, executive]

I mean what we've said about SG&A is that we'll continue to invest in a disciplined way to support our growth initiatives. And so to the extent that there are opportunities for us to invest in things like store payroll, the work that we're continuing to do in IT to improve the customer experience and improve our AutoZoners experience, we're going to invest into that all day long. .

But we are also very responsible in terms of how we manage that SG&A as we move forward. So in a softer sales environment, we do the things that we need to do to make sure that we're running efficiently from an SG&A standpoint.

So it's a balanced approach. We're not hesitating to invest in growth initiatives. We haven't pulled back on any investment in growth initiatives, but we are disciplined about how we manage it when the top line is a little bit softer.

[Operator]

Thank you. That concludes our Q&A session. I will now hand the conference back to Phil Daniele, CEO of AutoZone, for closing remarks. Please go ahead.

[Philip Daniele, executive]

Thank you, everyone, for the questions today. Before we conclude the call, I'd like to take a moment to reiterate we believe our industry is in a strong position and our business model is solid. We are excited about our growth prospects for the year, but we will take nothing for granted as we understand our customers have alternatives.

We have exciting plans that should help us succeed into the future, but I want to stress that this is a marathon and not a sprint. As we continue to focus on flawless execution and WOW! customer service and strive to optimize shareholder value for the future, we are confident AutoZone will be successful. Thank you for participating in today's call.

[Operator]

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