Advance Auto Parts Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 28, 2024

There are 13 speakers on the call.

Operator

Welcome to the Advanced Auto Parts 4th Quarter and Full Year 2023 Conference Call. Before we begin, Elizabeth Eisleben, Senior Vice President, Communications and Investor Relations will make a statement concerning forward looking statements that will be discussed on this call.

Speaker 1

Good morning, and thank you for joining us to discuss our Q4 full year 2023 results. I'm joined today by Shane O'Kelly, our President and Chief Executive Officer and Ryan Grimselin, our Executive Vice President and Chief Financial Officer. Following Shane and Ryan's prepared remarks, we will turn our attention to answering your questions. Before we begin, please be advised that remarks today will contain forward looking statements. All statements other than statements of historical fact are forward looking statements, including, but not limited to, statements regarding our ongoing strategic and operational review, initiatives, plans, projections and future performance.

Speaker 1

Actual results could differ materially from those projected or implied by the forward looking statements. Additional information about forward looking statements and factors that could cause actual results to differ can be found under the captions Forward Looking Statements in our earnings release and Risk Factors in our most recent Form 10 ks and subsequent filings made with the commission. Now, let me turn the call over to Shane O'Kelley.

Speaker 2

Thanks, Elizabeth, and good morning. Before we dive into the details of the quarter, I want to take a moment to thank the entire Advance team for their dedication and continued focus on serving our customers throughout 2023. I continued to travel coast to coast during the past few months, meeting customers, meeting team members from our stores and team members from our distribution centers. I remain impressed with our team's strong work ethic and their unwavering commitment to helping our customers. I want to introduce today our new Chief Financial Officer, Ryan Grimsley.

Speaker 2

We're pleased to have Ryan on the Advanced team, and he brings vast experience in the omnichannel retail space, serving both DIY and professional customers. His deep knowledge in finance, strategy and transformation will undoubtedly help lead our company forward. Now on to the decisive actions we have been taking to turn around the business. We have continued to act with a sense of urgency to stabilize the business and position the company to return to profitable growth. All of the actions we are taking are geared to help us focus on the fundamentals of selling auto parts and we will eliminate activities that distract us from that goal.

Speaker 2

Let me be clear, our results today are disappointing and not at all what I'm accustomed to delivering. We have spent the last several months analyzing how Advance got here, and we now have a better understanding of the work required to change our trajectory. It's important to note that in recent periods, including this one, there have been several atypical items contributing to our poor financial performance. Through disciplined execution and accountability, we will tighten the fundamentals of our business, which will help reduce and then eliminate elements that introduce noise to our core performance. On our last quarter's call, we discussed decisive actions.

Speaker 2

Let's take you through those actions as well as update you on new activities the company is taking today. Number 1, initiating the sales processes for Worldpac and our Canadian business. Number 2, significantly reducing our costs to remain competitive while investing a portion of those savings back into the frontline. Number 3, making organizational changes to position us for success. And now introducing 2 additional decisive actions.

Speaker 2

Number 4, assessing the productivity of all assets, including Carquest independence and number 5, the consolidation of our supply chain. Let's take a moment and further discuss each of these decisive actions. First, we initiated separate sales processes for Worldpac and Canada. We are very pleased with the interest we have received in both businesses. The Worldpac process is underway and we are actively engaging with potential buyers.

Speaker 2

We currently expect to conclude the Worldpac process during our Q2 and look forward to sharing more information when that occurs. As it relates to the Canadian process, this is intentionally sequenced behind Worldpac and we have begun the internal work to explore separating the business. Next, as I discussed in our Q3 call, the company's costs have outpaced our sales growth during the past several years, which warranted changes in how we operate. In Q4, we implemented significant cost reductions by eliminating roles and initiatives that did not support our commitment to improve the fundamentals of the business, and we will realize at least $150,000,000 of SG and A savings in 2024. We're focused on our frontline team members and are reinvesting approximately $50,000,000 of those SG and A dollars to increase wages, bonus programs and as well enhancing our training.

Speaker 2

This represents approximately half of the dollars planned for 2024 for our frontline with additional funding coming from sunsetting previous programs. While we continue rolling out these investments over the next several months, we note that we are already seeing year over year improvement in turnover reduction of key frontline roles. In addition to the Q4 cost reductions, we are now launching an additional initiative focused on our indirect spend with the goal of eliminating a minimum of $50,000,000 on an annualized basis. We will continue to be prudent with our expense structure and are committed to building a cost conscious culture. Going forward, in every operational decision we make, if it isn't core to the business to help our frontline team members and service our customers, it's off the table.

Speaker 2

In terms of the 3rd decisive action, I mentioned on our last call that we had streamlined our management structure and reorganized parts of my leadership team to drive collaboration and accountability. These changes further simplify our structure and they upgrade talent in key positions to allow us to drive improvements in critical business areas. In addition to Ryan joining us as the CFO, another example of outstanding talent that we've recently hired is Elizabeth Dreier, who joined the Advance team as our Chief Accounting Officer and Controller. Elizabeth brings a robust track record of building and leading high performing accounting teams, and I'm confident she and Ryan will work together to create a high performing finance function. We also recently hired a new Chief Data Officer, Kunal Das, to significantly improve the quality, processing and utilization of our data.

Speaker 2

In addition, we've also hired a new procurement leader who will help deliver against the indirect cost savings that I just mentioned. We've also made a number of changes within our organizational structure to better align certain departments with our strategic goals. For example, pricing is now part of merchandising. In addition, we have consolidated our real estate function from across multiple parts of the company to form a single enterprise wide real estate team reporting directly to me. Further, our merchandising and inventory teams now directly report to me.

Speaker 2

They have been working diligently on the implementation of our new core merchandising and inventory system. We expect to complete the remainder of the vendor and SKU transitions to the new system this year. That effort involves transforming our current ordering and fulfillment processes, enabling us to move away from antiquated systems to more data driven capabilities. The 4th decisive action, which we are introducing today, is improving the productivity of all assets in the company, including company stores and independently owned Carquest locations. While we open 61 stores in 2023, we do not plan to open as many this year as we focus on improving our existing store operations and driving profitable growth.

Speaker 2

In an effort to optimize our Carquest independent business, we recently terminated our agreements with over 100 independently owned Carquest stores, which will help improve the overall profitability of our Carquest independent program. In addition to improved store productivity, our IT department has made notable improvements in the reliability of our stores' POS systems. The improvement in our network and store system resiliency is allowing our frontline to better serve our customers. Lastly, we are announcing our 5th decisive action, which is the consolidation of our supply chain to a single unified network. We know that our current network is inefficient and needs substantial work to improve our cost structure and inventory availability.

Speaker 2

We have long served our blended box stores via 2 distinct DC networks, one from the legacy Carquest business and one from Advance. The first step is completing the implementation of our warehouse management system or WMS across all of our large DCs. With only 3 DCs remaining, we will complete this by the end of the year. Step 2, which we are conducting in parallel with step 1, is the conversion of smaller legacy DCs from functioning as a replenishment node to operating as a market hub. With 38 DCs in our Advance and Carquest network today, we view the smaller DCs as valuable assets that can be leveraged more efficiently as market hubs where we will forward deploy the right inventory closer to the customer.

Speaker 2

We have recently started our 1st DC conversion to become a market hub, and we will utilize our learnings to scale this key initiative across the network. By leveraging our current DCs, we can move faster and more cost effectively than if we green fielded a new network. Importantly, once we complete this work, we will be able to order product into fewer DCs, which will help reduce costs and improve inventory productivity. We look forward to sharing more on all of these actions as we continue to improve our blended box strategy. Before I turn it over to Ryan, the last topic I want to touch on is the macro environment.

Speaker 2

The key drivers of this industry remain strong. These include the average age of vehicles, which continues to increase and is now at 12.5 years, as well as miles driven, both of which are projected to further increase this year. Combined with the strengthening do it for me demand, I'm confident that Advance can begin to capitalize on the strong fundamentals of the industry. Now I'd like to welcome and turn the call over to Brian Grimsland, our CFO, who will review our financial performance in 2023 and discuss the 2024 guidance we provided in the release this morning. Ryan?

Speaker 2

Thanks, Shane, and good morning. I'm pleased to be here for my first earnings call as CFO of Advance. Before I move to the financials, I would also like to thank our team members for their continued dedication as well as the warm welcome I received from the team. Since my arrival at Advance, there are several swift changes we have made to allow for the necessary transformation of our finance function. As Shane discussed, we recently appointed Elizabeth Dreier as our new Senior Vice President, Chief Accounting Officer and Controller.

Speaker 2

Elizabeth's impressive track record in a variety of financial leadership roles will benefit us as we work to remediate our previously disclosed material weakness related to internal control, which I'll speak to in more detail in just a moment. In my first 90 days with Advance, I've had the privilege to meet and connect with our hardworking and talented finance and accounting teams. I'm committed to providing cohesive leadership as well as ensuring we have the needed incremental resources that will enable us to be a best in class retail organization. As you heard from Shane, we are focused on improving the fundamentals across the business to bring rigor, discipline and accountability with a sense of urgency. We have begun to make changes and are committed to elevating ourselves to become a high performing team.

Speaker 2

The first step has been filling critical roles, including hiring key leaders, as well as a thorough and time intensive review of our reconciliations and processes across the company. Within this review, we've recently discovered additional work needed to fully realize the intended benefits of our finance ERP system, including potentially sunsetting certain legacy systems. The turnover of accounting personnel over the past 12 months has increased the challenge to operate as an effective finance organization. We have taken aggressive action to bring in resources around our internal controls, both hiring accounting professionals and in sourcing contractors at varying levels to provide leadership and oversight. With these actions, we are making significant progress on remediating our material weakness related to people identified in early 2023.

Speaker 2

In addition, as disclosed in our release, we identified issues with certain previously reported financial results. We are correcting prior period financial results in our earnings release and upcoming Form 10 ks. As you saw this morning, we filed for an extension. We do not expect the results we are discussing today to be impacted. However, we need additional time principally to finalize our assessment of internal control of our financial reporting and the related disclosures.

Speaker 2

Our financial results discussed today will compare our Q4 and full year 2023 results to the corrected results for the prior periods. Now on to our results. In the 4th quarter, our net sales of $2,500,000,000 decreased 0.4% compared with Q4 2022 and comparable store sales decreased 1.4%. This was primarily driven by softness in DIY throughout the quarter, but particularly in the last 4 weeks of the year as we lapped tougher comparisons to the prior year. However, we continue to be encouraged by our performance in Pro as we realized strong transactional growth in the quarter as a result of improved availability.

Speaker 2

The West and Northeast were our top performing regions, while the Mid Atlantic and Midwest were our most challenged in the corner, as they were impacted by unfavorable weather. From a category perspective, as we improved our availability, we saw strength in filters, heating and cooling and engine management. In Q4, gross profit margin of 38.6 percent declined 5 4 basis points from the prior year quarter. There are business performance issues along with several atypical drivers that contributed to the deleverage. Inventory related items contributed approximately 280 basis points, of which roughly 170 basis points are related to changes in estimates and 110 basis points from inventory related capitalization costs.

Speaker 2

In 2022, we hired an external firm to identify and recover previously earned vendor incentives over a multiyear period. This resulted in approximately 120 basis points of deleverage. Lastly, elevated supply chain costs contributed approximately 50 basis points. SG and A was $999,000,000 in Q4 2023 compared with $960,000,000 in Q4 2022. As a percentage of net sales, our SG and A expenses deleveraged 176 basis points to 40.6 percent.

Speaker 2

The deleverage was driven by a year over year increase in occupancy costs, labor related expenses from our intentional investments in our frontline team members and new store expenses. These were partially offset by previously discussed productivity actions taken in Q4. Importantly, we also incurred approximately $8,000,000 in expenses related to our restructuring as well as $5,000,000 related to the strengthening of our accounting resources. These results are not indicative of how we want to run the organization. As Shane mentioned, we are reducing expenses by building a cost conscious mindset throughout Advance.

Speaker 2

Our Q4 operating income margin deleveraged 6 79 basis points compared with the prior year quarter. Diluted loss per share was $0.59 in Q4 compared with $1.39 earnings in the prior year quarter. This was primarily driven by lower net income as well as higher interest expense. For full year 2023, net sales of approximately $11,300,000,000 increased 1.2% compared with prior year. Full year comparable store sales decreased 0.3%.

Speaker 2

Our gross profit decreased 8.3% year over year and gross profit margin contracted 414 basis points to 40.1%. Inventory related items contributed approximately 157 basis points. Cost increases were not fully covered by price, contributed approximately 74 basis points to the full year decrease. As mentioned earlier, the initiative to recover previously earned vendor incentives negatively impacted full year gross margins by 60 basis points. Lastly, elevated supply chain costs contributed approximately 50 basis points.

Speaker 2

SG and A expense for full year 2023 increased 3 point 5% compared with 2022. On a rate basis, SG and A as a percentage of net sales increased 85 basis points to 39.1%. This was primarily driven by expenses growing faster than sales throughout the year as well as an incremental one time SG and A expenses related to headcount reductions and personnel changes. Our full year 2023 operating income decreased 82.9 percent to $114,000,000 On a rate basis, our OI margin contracted 500 basis points to 1%. Full year earnings per share were $0.50 compared with $7.65 at the end of 2022.

Speaker 2

Our 2023 capital expenditures were $242,000,000 compared with $424,000,000 in 2022. The primary drivers of the reduced capital expenditures are related to fewer new store openings and IT related expenses. We expect that our overall capital expenditures in 2024 will focus primarily on IT enhancements and supply chain optimization. We are committed to a disciplined capital allocation strategy on high return initiatives that hold our teams accountable to time, budget and financial targets. Free cash flow for the full year was $44,000,000 This year over year reduction was due to lower net income results despite lower capital spend.

Speaker 2

Since Shane and I have joined Advance, as you would expect, we have taken a deep dive into the business. While we have moved quickly to simplify the business and taken other actions to help put the company on a trajectory for improved performance, we clearly have more work to do. We are focusing on the optimization of our supply chain assets, implementing additional cost cutting measures, particularly with indirect spend and improving store productivity. We believe our efforts will begin to deliver incremental improvements this year, which is factored into our 2024 guidance, while setting the stage for growth in the years to come. Our assumptions for 2024 include continued pressure on the DIY consumer, offset by DIFM improvement and modest inflation.

Speaker 2

These factors, coupled with the solid industry fundamentals Shane discussed earlier, are considered in our full year 2024 guidance, which includes net sales of $11,300,000,000 to $11,400,000,000 comparable store sales of 0% to 1% operating income margin of 3.2% to 3.5 percent diluted earnings per share of $3.75 to 4 $0.25 capital expenditures of $200,000,000 to $250,000,000 and a minimum of $250,000,000 in free cash flow. With that, I'd like to turn the call back over to Shane. Thanks, Ryan. There's no doubt that we've got our work cut out for us in 2024, but I am confident that with our decisive actions and a focused team, coupled with favorable industry fundamentals, we can return to profitable growth. Advance has a proud 90 year legacy, a reenergized frontline team and a leadership team committed to delivering a powerful comeback.

Speaker 2

I'd now like to open the call up to address your questions. Operator?

Operator

Our first question today comes from Chris Horvers at JPMorgan. Chris, your line is open. Please go ahead.

Speaker 3

Thanks. Good morning and welcome to everybody on the management team. My first question is going to start at a low level and then I'm going to try to bring it up to a higher level from a margin perspective. If you think about the fiscal year items, could you help us understand and in 4Q like the change in the estimate, the vendor incentive pressures, what exactly is going on there? Are you essentially writing inventory off that doesn't exist?

Speaker 3

Or are you writing inventory down to a lower market level such that perhaps when you sell it later, there's going to be some gross margin recapture. And on the vendor incentive side, totally unclear on what that is. You had accrued for vendor incentives and now you're writing them off and what led to that?

Speaker 2

Yes, Chris, this is Ryan, and thanks for joining us today. Yes, a couple of things. Those are 2 really the big drivers of our our excess and obsolete calculation. And then some of it is on our excess and possibly calculation and then some of it is on the center incentives. So approved under incentives, some businesses we maybe no longer do business with, challenges in recovering.

Speaker 2

We're just making sure we've got the right amount in there that we believe we're going to be able to recover. Hey, Chris, it's Shane. Not unsurprisingly, new CFO, new CAO digging into the business and looking at our different methods of estimating what we keep and what's dead and what's not and they're digging in to set us up for success and that's exactly what's occurring here. And Chris, I'll add one more thing on that. We mentioned last year there was a prior initiative to go back and look at vendor income over a multiyear period, incentives, etcetera, that we have up on the table.

Speaker 2

That had a positive impact last year that we're cycling over this year.

Speaker 3

Okay. So then maybe to clean it up, as you think about on a fiscal year basis, like what are just clean laps, I. E, you're going to get X basis points back in the gross margin line because it was a there's an impact this year that it's not going to affect next year and you'll get it back both in terms of the gross margin and SG and A lines?

Speaker 2

Yes, Chris. So I would expect roughly 157 basis points of those kind of atypical items that I don't anticipate us cycling again next year. So from a that's a cost perspective there, margin rate. From an SG and A perspective, about $12,000,000 really that's related to severance and some of the expenses related to remediate and material weakness on the SG and A side.

Speaker 3

Got it. Thank you very much.

Operator

The next question comes from Michael Lasser from UBS. Michael, your line is open. Please go ahead.

Speaker 4

Good morning. Thank you so much for taking my question. Given all the moving parts with your margin structure right now, what do you think an ongoing sustainable operating margin for the businesses in 2025 beyond? Is the 2024 level something that you're working to grow off of?

Speaker 2

Hey, Michael, it's Shane, and Ryan will add to this. So first, you heard some color from Ryan. We sat at a one OI in terms of what we published. You can kind of put together some of the things that might not be occurring this year to get to a bit of a baseline. We put out our guide, which we feel good about.

Speaker 2

And then later this year, look for us to give a multi year perspective on where the business can go. As we sit in the trenches today, we're looking to be incrementally better every day, and that's the first step. And as we get that credibility, notably around this 2024 year guidance, we'll look to continue that journey to further points. But Ryan? Yes, Michael, good question.

Speaker 2

So that 157 basis points is what I would think from atypical items that we don't expect or anticipate to lap again this year. So that's one data point. In our guide, we do have modest margin rate expansion as we continue to execute on these decisive actions that we talked about earlier in the call. So we've got some modest increase there as you can see in our OI margin. That's primarily that OI margin expansion is primarily coming from gross profit.

Speaker 4

Okay. And then obviously, we're going to get more information on the sale process in the second quarter. So, 2 related questions to that. Can you give us a peek on how that's going to be modeling in terms of the ongoing sustainable margin rate for the core business you'll be holding on to? That's number 1.

Speaker 4

And 2, how are you thinking about balancing maximizing the value of these assets with the need for resources to improve the business given that free cash flow is under pressure, the rating agencies have downgraded your credit rating and you have a lot of receivables that are factored? Thank you so much.

Speaker 2

Yes, Michael, lots to unpack there. So let's start with your second question. Worldpac is a good business with good team members. This isn't a fire sale. There's no sort of urgency that we have to sell the business.

Speaker 2

It's really around strategy and where we're taking the company. We believe that the blended box model is our route to success, selling a pro and DIY customer from our core stores. And so that strategic review led to the idea of selling Worldpac, which I think is the right move for the organization. So there's not a as it relates to value maximization, we don't have to sell. And that's why we say it's a potential sale process.

Speaker 2

The good news is the interest thus far has been significant. We're seeing a lot of players, both breadth and depth of players who are expressing interest. CenterView is running the process for us and it's going at the tempo that I've seen of them 40 deals of one sort or another. And so as we get to price discovery and working with the potential buyers, we'll look to complete that process in the Q2. Importantly though, we do have and have started to think about what we would do with the proceeds.

Speaker 2

And I can kind of think about them in a couple of buckets. I think debt pay down figures into what we would disposition with the funds. And then secondly, there are some key initiatives you've heard our decisive actions that we can potentially accelerate with additional proceeds. So our supply chain consolidation, I think that can be amplified with some of the Worldpac proceeds. You could think about our IT initiatives.

Speaker 2

You heard about our we've got our new inventory system coming online, our POS system work that can be accelerated. And then lastly, just on our store infrastructure, either in terms of sprucing up existing stores or with our new real estate team, looking at what we can do in terms of our new store openings. On your first question, you're not ready to give a definitive depiction of what we look like as a remainder co without Worldpac. Again, we're titling a potential sale process at this point. But as we get closer and we get more information, we'll certainly provide that.

Speaker 2

But we feel good that in the wake of that sale process, if it goes through, We have a company that's focused on selling auto parts out of a blended box and that's what we're going to do.

Operator

The next question comes from Simeon Gutman from Morgan Stanley. Simeon, your line is open. Please go ahead.

Speaker 5

Hey, good morning, everyone. Hi, Shane. Hi, Ryan. Hey, Ryan, I wanted to look at the guidance in a little different way. If we annualize the 4th quarter EBIT, you get to about $160,000,000 And then when we add back the cost saves, which I get some of them may not fully annualize, you get back about roughly a $360,000,000 run rate.

Speaker 5

That's a tad below the guidance. So a couple of questions is partly like how much reinvestment is there in some of the savings? And then what improves in the core business to get you the higher threshold? And some of this may be some of the things that don't repeat, I think to Chris' question earlier. But there doesn't seem to be a lot of reinvestment if you just take the sort of that math.

Speaker 2

Yes, Simeon. So one of the things we did do is we invested in the front line. So we took some of the cost savings and reinvested that back into the front line. So that was about of that $150,000,000 we invested about $50,000,000 back in. I think from a if we look at our full year right now, I think we're coming in close on a EBIT perspective of $116,000,000 We take the 157 basis points, I would say, at that back was $12,000,000 in SG and A.

Speaker 2

You can get the kind of a normalized rate and then you take that $100,000,000 in SG and A. Now our guide on the top line of 0% to 1%, we're going to work to manage inflation in our SG and A to get that flow through. So I think that's how we would think where we got to our guidance. Hey, Simeon, just a couple of quick follow ups. And then a quick follow-up.

Speaker 2

Hey, Scott. I wasn't going to follow-up just a second. So on the cost out, the $150,000,000 that cost is out. So we made the tough call and never easy, some 400 team members not with the company anymore. And so that's in the run.

Speaker 2

That's not an ethereal number in terms of how we're thinking about the organization. And then as you think about what we need to do, you heard Brian's points, but in terms of actual physical initiatives on the ground, you're going to see renewed emphasis on the up and down the street pro from our organization this year. I think it's an area where we had our eye off the ball a little bit, But I also think it's an area where on a relative right to win in terms of the capabilities of the team members we have out in the field and referring to our TAMs or outside sales team members and our CPPs who are inside the store pros that that's an area that they're excited to go after.

Speaker 5

Thanks for that. And the follow-up is, Shane, I'm intrigued by some of the things you're addressing and your diagnosis of what has been kind of holding this business back. So you mentioned a bunch of things, systems and supply chain. Curious about your take, if there is an Achilles' heel, whether it is supply chain or merchandising or process versus infrastructure, if you can elaborate a bit on that?

Speaker 2

So I think some of it goes to culture and focus. And the good news is, as I meet the team members in the field, you see that 90 year heritage, you see men and women who sell auto parts who want to win. And so we need to unlock that by making sure that what we do as a company and from my time in the service call the inverted pyramid that we are geared not as a headquarters centric organization, but we're a field first organization. And if you spend time listening to the customers, they'll give you the feedback on what it takes to be success on. If you take time empowering our frontline associates, that's a key route forward for us.

Speaker 2

Additionally, it's the blended box model. We've, I think, looked at different paths that haven't as a company in the past and didn't put the emphasis on the blended box. You can see demonstrably in the industry where the blended box works. It works in terms of the breadth of customers you could serve. It works in terms of the flow through you get when you get marginal sales in the same location.

Speaker 2

So that's really where we're going as a company in the future.

Speaker 5

Thanks. Good luck.

Operator

The next question comes from Greg Melich from Evercore ISI. Greg, your line is open.

Speaker 6

Hi, thanks and welcome guys. I guess my first question is I'd just like to clarify a little bit. I know it's a potential sale, but in your guidance this year, how much of the free cash flow sales, etcetera, are coming from Worldpac or the businesses you're considering sale?

Speaker 2

Yes, Greg, this is Ryan. In the guidance, we're not contemplating. We didn't put anything in there for the sale. Our guide is based on the RemainCo or the whole company as it is today with Wolfpack and Canada. Yes.

Speaker 2

So we'll revisit with you at midyear if that process goes through and then you'll see the breakout, the proceeds, the remainder of the call and our plan for disposition proceeds.

Speaker 6

So just to be whatever Worldpac I guess maybe I'm going to ask the question in a different way. Last year and that was the RemainCo generate free cash flow for example?

Speaker 2

We're not going to talk about specific individual business units at this time, but we'll come back in Q2 to give you

Speaker 7

more details on the different.

Speaker 6

Fair enough. We'll update that. I guess, Shane, I wanted to follow-up a little bit more on the actions taken from in terms of stabilizing the business from a profit standpoint. I think you went through I'd love to hear a little bit more as you tour the country and talk to the frontline and the customers. It sounds like the focus here is getting up and down the street, serving them.

Speaker 6

What is it that they need to get that they're not getting or haven't gotten from Advance the last couple of years? Is it product quality? Is it speed? Is it in stocks? What could you narrow that down a little bit more?

Speaker 2

Yes, great question. So I'll start with the team members. We've got to make sure that our team members feel like they're valued. And if you looked at where we'd invested dollars, it hadn't been on the front line. And so that goes to wage rates, that goes to what their bonus programs are, that goes to training programs and certifications so that both their capabilities and sense of pride are amplified.

Speaker 2

So we've got a significant body of work underway focused on the front line and we're seeing reduction in turnover. So that's been a key piece. Secondarily, as we spent money and this goes to the SG and A takeout, we would engage in marketing programs that were expensive that didn't bear fruit. And so we're pivoting anything we do around being successful with the customer in the market. As it relates to the customer's feedback, product availability.

Speaker 2

So we would hear from Statute customers who were their first call and they'd say, hey, if that's I call you first, but you don't have the product. So you are literally driving me to call somebody else. And so we've had a lot of work going on in product availability. Our in stocks are up over 200 basis points this year. We if you look at our aggregate inventory, it's down and Ryan's talked to some of the disposition.

Speaker 2

But notably, we've put $300,000,000 of incremental Nutritive inventory that our customers are asking for. We're capturing those demand signals so that we have better in stocks. We want to further that in terms of how we cover on the Up and Down the Street Pro with our outside sales team members, and there's a tremendous amount of work there. I didn't touch on this in the script, but within our work structure, our pro efforts were bifurcated in different parts of the company. And now those are solidified.

Speaker 2

And so we go forward as one team as we think about our Pro. So it's not if you call the store and you're the same customer, you get a different set of interactions than you might get if you're working with our outside team. So that's going on a much more definitive basis. And the last thing I'll touch on the merchandising side of the house is reaching out to our vendors, both to ensure that from a cost position and the product availability and a prioritization for innovation that where we need to be. But I think important for everybody to know as we talk to the vendors that feedback is also overwhelmingly positive around supporting Advance.

Speaker 2

There's a strong desire to see Advance thrive and you could say, hey, that's the vendors should have that perspective, but that works for us. The idea that we've got this collective coalition between the vendors, between our engaged frontline, between customers who want to buy from us, we just need to have our fundamentals right in terms of that product, price and the delivery all working together.

Speaker 6

Got it. And I think, Ryan, you mentioned as part of the guide, you expected a little bit of inflation in the numbers as we reinvest in that inventory and get the right stuff there. Is that fair, 1% or 2%?

Speaker 2

Yes. Our inflation rate right now that we're looking at is about a 1 percent inflation rate that we're seeing and we're expecting.

Speaker 6

Got it. Thanks guys and good luck. Yes.

Speaker 2

Appreciate it. Thank you.

Operator

The next question is from Bret Jordan from Jefferies. Bret, your line is open.

Speaker 2

Hey, good morning, guys.

Speaker 8

On the supply chain initiative and obviously that seems like it's been on for a while, The WMS should be done by the end of this year. At what point do you see actually having the DCs on a single ERP system? And when you've used those smaller DCs as a sort of forward inventory, will there be an investment cycle in building more large distribution center infrastructure?

Speaker 2

Yes. So great, great questions. Thank you, Brent. On the WMS, we'll be done with that this year. So Highjump is our WMS system, so we'll have that in all of what will be our replenishment DCs.

Speaker 2

The second part of the journey in terms of creating market hubs, and you see this model probably elsewhere in the industry, we can use our smaller DCs to perform in this fashion. And we've had a journey in definitive one in terms of creating a unified single supply chain. What we had in the past, we had cross banner replenishment. But what we were doing is basically asking 38 DCs to function as full on replenishment nodes, basically to provide every product to a store requiring that product. And some products, some DCs don't have the size and capability to do that.

Speaker 2

38 is far too many for my to define that exact number, but you can look at other companies and sometimes you'll see 8, 10, 12, 14 large DCs to give you that national footprint. And then market hubs, both the conversion of these smaller DCs, we'll add additional market hubs beyond that because I think that that flow model works. And so if you take those 2 together and look at the footprint, there are probably some additional large DC efforts that we need to undertake and we'll describe that more in terms of here's our exact number, here's where we have them today, here's where we might need a new one. That will all be coming in the coming months. But the key for today is that we are putting a flag in the ground to have a unified supply chain, one flow path, one set of systems and an easier interaction for our vendors to open us.

Speaker 8

Do you have a feeling, I guess, internally for what your basis point impact has been to run to disparate pretty inefficient supply chains? Like what's the incremental cost of running as you have been running or what might you pick up by consolidating?

Speaker 2

I'll just say it's material, right. So if anybody has been in logistics, if you're running 2 supply chains and everybody else or your previous endeavors is 1 supply chain, It's just not the path forward for us. So as we will explain with you, we think there is material monies that come out of the system. And then importantly for our customers, the product flows better. The availability goes up.

Speaker 2

And so there's kind of a 1, 2 combo there that we'll describe more at a later date.

Speaker 3

Great. Thank you.

Operator

The next question is from Stephen Forbes at Guggenheim Partners. Stephen, your line is open. Please go ahead.

Speaker 9

Good morning, Shane, Ryan. Shane, maybe a follow-up on the supply chain. You mentioned potentially using the sale proceeds to accelerate the migration to the single unified network. I would say just curious like if we can think through the two scenarios here in terms of timeframe to completion of that initiative, right? If the asset sale occurs, is there like a timeframe in mind that you have to reach the goal?

Speaker 9

And then I guess if the asset sale doesn't occur, sort of what is that change in the timeframe that it would that would result in in maybe a difference in sort of the near term free cash flow proceeds of the business?

Speaker 2

Yes. So this is my 3rd time combining supply chain thing companies.

Speaker 4

And we want it

Speaker 2

to be sooner rather than later. But it's a multi year endeavor. I think that's just the practical reality of what happens. So can we shave time off? Absolutely.

Speaker 2

And we will do that with the proceeds. But this isn't something that this group should expect to be done in 2024, will extend into 2025 and probably into 'twenty six as we do this. And in particular, there's both the existing set of efforts, which is what we'll do with the first 38. Where we have to add net new market hubs or where if we look at our larger DC structure where we need to put in large scale new DC, those efforts take time. I think the thing for everybody here to know is that journey is beginning and our 1st market hub conversion is going on.

Speaker 2

And so and early indications are this is going to be a really good thing for us. We will move as fast as we can because we know that the end state creates value for the customers and improves the profitability of the customer. And so more to come, but know that our supply chain team is dedicated, they're focused and they're already.

Speaker 9

Thanks. And maybe just a quick follow-up for Ryan, as we think through sort of non cash and cash impacts on the margin outlook, any sort of color around the 4th quarter LIFO either benefit or charge? And then sort of what's implied within the margin guide for 2024 in terms of LIFO?

Speaker 2

Yes. So in Q4, we saw $5,200,000 of income related to LIFO. And we expect it to be moderating in 2024, so moderate expectations in 2024 in our guidance. Thank you.

Operator

The next question comes from Seth Sigman from Barclays. Seth, your line is open. Please go ahead.

Speaker 2

Hey, good morning, everyone. I want to follow-up

Speaker 10

on the comps this quarter, down 1.4%. I'm just curious as you started to implement changes, are you seeing a wider dispersion in performance across the store base? I'm sure it's noisy with weather, but anything you can point to and maybe quantify to say that some of the early initiatives are working?

Speaker 2

Yes, absolutely. So as we saw availability improve, we did see improvement in the Pro traction. So we're excited about that encouraged by our inventory availability. We still see DIY pressure. And so that kind of offsets some of the pro performance in that.

Speaker 2

And that's also kind of what's informed our guide going forward. We expect to see good improvement in the pro as we have improved availability. We do see DIY pressure going forward.

Speaker 10

Got it. Okay. And then my follow-up question is just thinking about the gap in profitability versus some of your peers and what I guess you'll ultimately guide us to at some point, how much of the issueopportunity is just four wall profitability that's sales driven, it's volume driven versus how much of that profit gap is maybe inefficiency outside of the stores? And it may be both, but I'm curious how you think about that as we contemplate the roadmap from here? Thank you.

Speaker 2

Yes, good question. It is a little bit of both. So some of it is we talked about supply chain conversion that obviously will generate some benefit for us and help close that gap as well. There's also a mix factor as far as the type of the product and our mix being heavier prone than DIY and that margin mix have a little bit of an impact as well. Yes, there's also other areas where we need to focus on for merch excellence.

Speaker 2

Shane talked about improving line reviews, etcetera. So there's some areas there. We're not going to go into specifics around de comping all of that, but obviously there is some work and opportunity to close the gap. But I think the biggest one is that the mix impact will keep us from closing completely. But we do have opportunity and that's why we're focused on the big one here is just supply chain conversion.

Speaker 2

Brian is exactly right. And one way to illustrate and why we're focused on the blended box, if you look at revenue per store and you think about us as kind of a 17, 18, and you can look at other folks who have higher numbers. When you add revenue to a store, dollars 100,000, dollars 200,000, dollars 300,000 that money drops to the bottom line at an incrementally larger level, right? So you got your fixed cost covered. So that's a key for us.

Speaker 2

So I think your question is a good one, Seth, that you need to do both. And as we do both, we see the path forward to continued success. And know that as we look at where Advance is, we don't sit and say, hey, let's benchmark off the other guys. Our goal as an organization is to be incrementally better every day, take care of our customers, look after our team members. And I've seen this movie before in other industries, in fact, in my last organization.

Speaker 2

And that's a recipe for success. And you'll look for that from us and then look for us later this year to provide a perspective on what that might look like after a couple of years. Okay, great. Thank you both and good luck.

Operator

Next question comes from Chris Bottiglieri from BNP Paribas. Chris, your line is open. Please go ahead.

Speaker 2

Hey, thanks for taking the question. Sorry about picket, it was nice to seeing some of these inventory adjustments. Just wanted to I'm not sure I fully understood Chris Horvage question. Is it likely these inventory write downs and changes in estimates could reverse in subsequent period when you sell it? Or is that not possible?

Speaker 2

Like are these permanent changes? Yes. No, I don't anticipate reversing it. This was making changes to estimates vendor receivables that went through that process. I don't I wouldn't expect that these would reverse at any one time.

Speaker 2

Got you. Okay. And then next question is just, I was hoping you could talk more about the independent businesses that you've divested. So it looks like you take up the first 100. Is this like an immediate margin saving because you're actually losing money to these customers?

Speaker 2

Or does this enable you to actually shut down some of these Carquest DCs, because you wouldn't need them anymore if you stop serving market? Yes.

Speaker 7

So I'll

Speaker 2

start, Chris, and Ryan can yes. Thanks, Chris. I'll start and Ryan can jump in. The independents are an important part of the business, right. They could serve geographies we can't get to.

Speaker 2

They could serve end markets where their depth of capability exceeds ours. So this isn't a play around exiting the independent arena. This is one where at times we were exuberant in terms of adding independence. And as we looked at the sort of balance of trade, if you will, in terms of the benefit to each party, it wasn't working for us. It's okay if it wasn't working for the independent either.

Speaker 2

And so we looked at the aggregate number and there are about 100 folks that at the end of the day that didn't make sense for us to continue that relationship. And as we did that, it's a good move for us, right, to talk about the impact, but it's also been received well in the independent network. The independents who are good at what they do and they probably exhibit a lot of pride in their business. They don't want folks representing the Carquest name and doing it in a manner inconsistent with what our customers would expect. So it's been a well received adjustment and we're happy with the independence that we have.

Speaker 2

Yes, Chris, I'll just add that we'll lose some sales on that, but we're actually going to gain on the bottom line and operating profitability roughly $3,000,000 to $4,000,000 So it's definitely a net positive for us. Okay. That makes sense. Thank you.

Operator

The next question comes from Seth Basham from Wedbush. Seth, your line is open. Please go ahead.

Speaker 11

Thanks a lot and good morning. My question is around the balance sheet and leverage going forward. How do you expect that to play out over the next few quarters, including post sale of HardQuest? And any implications for the vendor inventory financing program?

Speaker 2

Yes, it's a good question. So as we said with the sale and Shane talked about it, if we do get the proceeds and sale, one of the first things we'll do is work to deleverage our balance sheet with some of those proceeds. That's one thing we'll look at daily. But going forward, I think the business is generating good cash flow and as part of that cash flow, we'll continue to work to delever the balance sheet. We're going to 1st invest in the business, but also get that leverage target into a better place.

Speaker 7

Okay, that's helpful. And if you look beyond 2024, obviously early, but with

Speaker 11

the supply chain transformation, should we expect CapEx to rise from 2024 guide?

Speaker 2

The CapEx guide that we put out contemplates actions we're taking at supply chain conversion. We're going to be much more focused on our capital expenditures and making sure we're investing in the right things that drive our business and then we're focused on these decisive actions. So as we said earlier, this, the capital is really focused on IP and supply chain right now.

Speaker 7

Thank you.

Speaker 2

Yes, I'll just jump in there. The supply chain transformation is a big one. I think Brian's got our guide exactly where it should be for 2024. We could raise it in 2025 and we'll either through the proceeds from Worldpac or just as the business performed better and we're able to deploy more. Again, back to the previous questions, if we can accelerate or wherever we can accelerate the supply chain consolidation, we'll do it.

Operator

Next question comes from Michael Baker from D. A. Davidson. Michael, your line is open. Please go ahead.

Speaker 4

Okay, great. I just want to follow-up on the 38 distribution centers that you talked about. Any I'm looking in the Ks and past annual reports and everything and I can't find a breakdown. I know in the past you used to talk about PDQs, which are the smaller DCs. But can you just

Speaker 2

tell us, of these 38 DCs, how many

Speaker 4

do you consider bigger? What are what's you with a bigger DC? How many are smaller? Just trying to get a sense of what you're going to go forward with in terms of your big DCs and what may need to be added to that? Thanks.

Speaker 2

Yes. So the 38, I know it's hard to bridge 38. 38 is the advanced and Carquest DC network. So I think in total, we're about 50, which would include the Worldpac as well. So that's when we talk about 38, we're specifically talking about the advanced and conquest DC network.

Speaker 2

So we'll give you in the coming months a complete breakout of all the facilities. I'm a little reticent to be more specific. Obviously, we've got team members in these DCs and if their DC is going to be converted into a market hub, as we go through that plan, we want to make sure we're staying abreast of keeping them in the loop. So we'll break out the differences. In general, the smaller DCs that are more that are appropriate for the Market Hub conversion came from Carquest, the larger DCs from the advanced model.

Speaker 2

There's a substantial size footprint difference. We largely think we have the large DC network that we need. Again, we may refine that a little bit in terms of what that national footprint might look like. So you had said to a

Speaker 4

previous question earlier that based on the other guys somewhere between 8 to 10 to 12 to 14 is the right number of large DCs. And you're saying that you think you have those already from the advanced, the old advanced network, give or take a couple?

Speaker 2

I just want to clarify that. Yes, Michael, good job threading some questions and answers together. The age of 12, 14, that's my experience in a past life, right. If we hired some of the firms that do the work on setting up national infrastructures and you say, hey, I want to have a nationwide distribution network. That's what they're going to tell you.

Speaker 2

That's what I've seen and that's what I've lived. And so I think that's an appropriate range for us. And yes, we largely think we've got the facilities today. Thank you.

Speaker 9

I think the key

Speaker 2

thing is, we're leveraging our current assets, right? We're leveraging our current assets that we have. We think we have the assets to create the network that we need. Yes. We came to you and said, hey, we got to put 10 new 500 to a 1000000 Square Foot DCs up in the United States, you guys can do the math on what those buildings cost and how long that takes.

Speaker 2

We're trying to do this both more quickly and then efficiently using the facilities we have. And a national model might come out and say, gosh, the DC you have might be marginally better if it was located an hour this way or that way. That's a little bit of the trade offs we'll make, which is minor in terms of the efficiency drag. But in exchange for the speed and the overall cost effectiveness, that's the right way to go. Yes.

Speaker 2

That makes sense. One other just from the beginning of the

Speaker 4

call, if I could clarify, you talked about you found another $50,000,000 to get to frontline employees from sun setting things. What is that? And I guess on a year over year basis,

Speaker 2

is that an incremental 50 $1,000,000 investment or is that netted somewhere? Yes. So make the math easy. The $150,000,000 is out. We took out $150,000,000 and then we said, hey, we're going to take $50,000,000 of that and it goes in the front line for wages, bonuses and training.

Speaker 2

There's an incremental amount roughly double that that comes from some of it's our ordinary course. So we've got our merit plan for the year, but some of it comes from sunsetting. We had some HR programs out there that we spend money on that weren't directed towards the front line. So we canceled those programs and we're putting those dollars into just bonuses and training. So it's no net it's no incremental drag to the company.

Speaker 2

It's a better use of funds that we weren't putting in the right place.

Operator

The next question comes from Brian Nagel from Oppenheimer. Brian, your line is open. Please go ahead.

Speaker 12

Hi, good morning. Thanks for taking my questions. So a couple of questions, I guess, basically both maybe philosophical in nature. But first off, maybe not totally fair, but Shane, for those of us who followed Advance for a while, I think we've heard we've discussed in the past with prior management teams, supply chain fixes. So I guess we're talking a lot about that here as a key component of your view of the business.

Speaker 12

What's different? I mean, as you look at what you plan to do here for the business from a supply chain perspective and evaluating what has been done in the past, what's the really the key differences here? And then my second question, you have a lot going on here in the near term. How do you balance or how do you think about market share? Because you have a very fragmented sector, but within that sector, you've got a really a couple of really strong competitors.

Speaker 12

So how do you think about maintaining market share amid all these newer term type efforts within the business?

Speaker 2

We'll start with the second question on market share. There's lots of good companies. There's lots of people that we compete with every day. The Viewpoint has some notable examples, but there are plenty of smaller companies out there who sell auto parts. So we know that we've got to earn our keep every day.

Speaker 2

We've put out our guide. We think that's modest. And we know that our engine as we restart it with this turnaround will take a minute to get a full head of steam. But the industry fundamentals are very good. This is a disciplined industry.

Speaker 2

By the way, it's an industry that even with the big players, there's still room and runway to grow. By the way, there's just growth that occurs naturally. And so we won't be a share taker, but we're first step is to be a shareholder. And I mean that in terms of market share. So that's what we're looking to do.

Speaker 2

And we don't spend the day thinking, hey, what are the other guys doing? We think about listening to our customer and when they tell us, hey, if you have this part and by the way, if your pricing is this versus that or if you can get it to me in this timeframe or I feel good about the relationship, we get the order. So those are the things we focus on. That's what we can control and that's what gets us to sales. If we do that right and repetitively over time, then the share loss stemmed and we start that road back to holding and then gaining share.

Speaker 2

That's the first part. And then remind

Speaker 12

me again on the supply chain, Brian. Yes, just real simply, what's different with your plan versus what may have been tried in the past or attempted in the past to rationalize the supply chain advance?

Speaker 2

We didn't do it. I think that's the key thing. And we didn't if you look at retail distribution models on what it takes to be successful, that wasn't the path we were followed, right? We did a cross banner replenishment model, but we never set out and we should have, right? If you think about when we did the GPI acquisition, anytime you put 2 companies together, the first thing you got to think about is what are you going to do with the logistics infrastructure.

Speaker 2

And so we let 2 different models exist for a long time and then had sort of a patch solution. And what we're telling the market today is the right answer for auto parts distribution is to have 1 single national network and that's what we're doing. And so you won't be able to identify facilities in terms of that's a blue versus a red, e. G. Carquest versus advanced.

Speaker 2

We are advanced auto parts and we will have a national distribution network. The second thing is the idea of using this market hub. And I think you see that probably. I think it's a good way to get product closer to the customer or SKUs closer to the customer to be more responsive. And I think that's a function that's a bit of an evolution.

Speaker 2

I think the customers' expectations have increased in terms of what can you get me in a short timeframe. We want to be participated in that and that market hub makes that happen.

Operator

The next question is from Scot Ciccarelli from Truist. Scott, your line is open. Please go ahead.

Speaker 7

Thanks for fitting me in guys.

Speaker 4

So you talked about 400 teammates that

Speaker 7

are now gone, but can you provide more color on where you're able to take out $150,000,000 of expenses from your cost structure? It's a pretty big number in a short period of time. And related to that, have you factored in some sort of negative impact on sales? Like in theory, the people there were doing at least something semi productive?

Speaker 2

So the cost takeout was broad based. So no functional area was exact. And if I go back to an earlier comment, I think we had a bit of a headquarters centric approach to running the business. And with that, you end up with bloat in your corporate infrastructure. I believe in the inverted pyramid, the idea that we need to be field first and corporate needs to be lean.

Speaker 2

Corporate needs to be everybody who sits in a corporate seat needs to be supporting the field. And so we want to cross the functional areas. I think notably, marketing was an area where there were more significant cuts than in the other areas because we invested in marketing programs that didn't have a yield. And so we view that cost takeout not only as necessary, but one that didn't dampen our sales. If anything, I think we've got the opposite going out, was we've cleared out some bureaucracy, we've looked at processes that were inefficient and we're empowering the frontline.

Speaker 2

And as we take dollars and put it in the frontline and reduce turnover and create energy, those team members feel like they're heard and supported in a way that wasn't occurring.

Speaker 7

Okay. So you don't think you'll lose any sales on the reduction in marketing. One other question. Are there more restatements to historical results and anything on 23 we should be thoughtful of before some of the new team on the finance side came in?

Speaker 2

Are you saying more than what actually is being recorded today? Correct. Yes. No, I think what we're talking about today is what we've shared today are the restatements we plan to see in the Form 10 ks. We'll have the Form 10 ks out in short order.

Speaker 2

It should be within that extension period of time. Got it. Okay. So no more restated historical results.

Speaker 6

Okay. Thanks, guys. Good luck.

Speaker 2

Thank you. Thanks, Scott.

Operator

Our next question comes from Max Ratlenko from Cowen. Max, your line is open. Please go ahead. Great.

Speaker 11

Thanks a lot guys. So first, how far away are your in stocks from where they need to be or where you want them to be? I think you mentioned they've improved by 200 basis points. So how much room ahead? And then just how we should think about that timing?

Speaker 2

Hey, Max, we didn't get the question. Can you say

Speaker 9

it one more time, please?

Speaker 11

Sorry. Just how far away are you in stocks from where they need to be? I think you mentioned 200 basis point improvement. So how much further do you have to go? And then just how should we think about the timing?

Speaker 2

Yes. So we're doing that real time. And as we complete this, our inventory system that comes online, it will get better from where it sits today. So I don't want to put a definitive number on it, but that journey continues. We do get customer feedback that says, hey, I feel better about your product availability.

Speaker 2

We get feedback from our board as well. But I don't want to put a pinpoint, but more to come. But material progress that has been noted by customer and field team members. Yes. I'll just add, I think broad based improvement, absolutely.

Speaker 2

Broad based improvement, but there's still work to do geographically. You think 38 different distribution centers, some are smaller, just the ability to allocate the work. That's the work that we're doing with the new system being

Speaker 6

able to get this.

Speaker 2

So there's still work to do, but broadly significant improvement.

Speaker 11

Okay. And then how are you thinking about pricing on the DIFM side and whether you are where you need to be in order to be competitive? And then just latest thinking around private label versus national brands following some of the conversations that you've been having with the pros?

Speaker 2

So I'll start with private label. We think private label is an important dimension of the business and we've got some great brands that we control. Die Hard, I think is the premier name, the Carquest name and think about Carquest as it relates to our platinum brakes product. So we've seen growth in private brands and we want private brands to be an important part of the portfolio. I think something we've done is in the past, sometimes our exuberance as it relates to who we work with, we may have had suppliers not in a position to fully represent what our needs are.

Speaker 2

We've come through those issues and our merchant and sourcing teams are making sure that we're not only getting high quality products, but we're getting it in the quantities that we need. On the pricing front, a couple of things here. One, this is a disciplined industry and I think that's important, the conduct between the players in terms of how they act with customers, I would describe it as rational. But customer feedback is an important dimension. I would say we need to be in the zip code of the customer's needs on price, but availability is important as is speed to service.

Speaker 2

And that's something that we're focused on. We know that if you've got a pure pro and you've got a car on a lift, you've got a Chevy Tahoe that needs brake rotors, we've got to get them to you expeditiously. So we're focused on that speed of service, which is something we measure. But as it relates to price, we'll be where the market sort of demands.

Speaker 11

Got it. Thanks a lot.

Speaker 1

All right. Thank you all. That is our last question for today. Thank you for joining us. We look forward to sharing more progress on our decisive actions that we covered today when we speak with you again in May.

Speaker 1

Have a great day.

Operator

This concludes today's call. Thank you very much for your attendance. You may now disconnect your

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Advance Auto Parts Q4 2023
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