Brad Beckham
Chief Executive Officer at O'Reilly Automotive
Thanks, Jeremy. Good morning, everyone, and welcome to the O'Reilly Auto parts fourth quarter conference call. Participating on the call with me this morning are Brent Kirby, our President; and Jeremy Fletcher, our Chief Financial Officer. Greg Henslee, our Executive Chairman; and David O'Reilly, our Executive Vice Chairman are also present on the call.
I'd like to begin our call this morning by congratulating Team O'Reilly on another strong performance in the fourth quarter. Our team faced our toughest prior year comparisons where we generated 9% comparable store sales in the fourth quarter last year, which represented our strongest quarterly performance in 2022. Against this very high bar, our team was able to deliver a strong comparable store sales increase of 3.4% in the fourth quarter of 2023. This was a direct result of their unwavering commitment to providing excellent customer service every day in each of our over 6,000 stores.
For the full year of 2023, our team generated a robust 7.9% comparable store sales increase, which was at the high-end of the revised guidance range we provided on last quarter's call. This performance was also almost two full percentage points above the high-end of our original 2023 comp sales guidance range of 4% to 6%. We're extremely pleased with the ability of our team to deliver industry-leading results again in 2023, especially since this performance was on top of the incredible sales growth in the preceding three years.
These strong top line sales results drove another year of record setting earning per share as diluted EPS increased 15% to $38.47, representing continued strong value creation for our shareholders. As strong as this performance was in 2023, I again think it's helpful to view these continued outstanding results in a longer term context.
To give some perspective, just in the last four years, our company has more than doubled earnings per share with our 2023 EPS 115% above the $17.88 we generated in 2019. After such an amazing run of performance, it would have been far too easy for our team to accept the idea that we may be forced to give back some of our growth. Instead, they did just the opposite as our business accelerated in 2023. I couldn't be more proud of our team's relentless dedication to outperforming the competition by providing the best customer service in the industry.
As you'd expect, the incredible momentum we built in our business this year has generated a lot of excitement for our team, and that excitement was on full display at our annual leadership conference held in Dallas just two weeks ago. Each year, we bring all of our store managers and field leadership, including our sales and distribution management teams together in one place to build leadership skills, enhance product knowledge, share best practices across our company, celebrate award winning performances and most importantly, set our focus on the year to come. Our conference theme this year was leaders in motion, which perfectly defines the focus and attitude of our team. It's clear the energy created by winning with our customers and driving industry- leading performance is infectious, and all of our leaders are passionate about taking the next step forward and seizing the opportunities in front of us.
Now, I'd like to take a few minutes and provide some color on our fourth quarter results. As we discussed on last quarter's conference call, we started the fourth quarter with solid sales results, in-line with trends we saw as we exited the third quarter. As we progressed throughout the quarter, our results remained relatively consistent from a volume perspective, with each month performing better than our guidance expectations. As we expected, our comparable store sales results on a year-over-year basis faced pressure in December against very challenging comparisons the last two years when we capitalized on favorable winter weather. So far this winter, we have seen typical variability in winter weather with more of the harsh conditions that support our business arriving in January versus December. However, we are very pleased with how we finished out 2023 with broad-based solid performance across our core nonweather related categories.
Our comparable store sales results were driven by strength on the professional side of our business, where our team delivered yet another quarter of double digit comp growth in the fourth quarter. Our professional performance was primarily driven by robust growth in ticket counts, and we continue to be pleased with our team's ability to execute our proven business model at a high level and gain share through exceptional customer service.
Our professional strength was partially offset by pressure in our DIY business, where we face challenging ticket count comparisons to the weather benefits we saw in 2022, as well as a moderating benefit from same SKU inflation. Overall, the combined impact of average ticket growth on both sides of our business was a contributor to our comp growth in the quarter.
As we discussed on last quarter's call, as we entered the fourth quarter, we had fully lapped the year-over-year inflation benefits that carried over from price levels that ramped throughout 2022. For the fourth quarter, our same SKU benefit was just over 1%, in-line with our expectations.
Next, I want to transition to a discussion of our guidance for 2024, starting with our sales outlook. As we disclosed in our earnings release yesterday, we're establishing our annual comparable store sales guidance for 2024 at a range of 3% to 5%, and we want to provide some additional color on how we're viewing both the broader economic conditions in our industry and the opportunities we have to outperform the market. As we progress through 2023 and now enter 2024, we believe the fundamental backdrop for the automotive aftermarket industry is stable and the drivers for demand in our industry remain strong.
The daily transportation needs of consumers generates robust and resilient demand for our industry, and there continues to be a very compelling value proposition for consumers to invest in the repair and maintenance of their existing vehicles. We've been pleased to see improvement in the total miles driven in the US over the last several quarters and expect to see continued steady growth in this metric, in-line with long term industry trends driven by population growth and an increase in the size of the car park.
We also believe our industry has benefited and will continue to benefit from the increasing average age of vehicles as consumers show a strong willingness to prioritize investments in their existing vehicles to keep them on the road longer at higher and higher mileages. From a broader macroeconomic standpoint, we view current conditions as favorable for our customers and in turn, our industry. We believe the economic health of the consumer is solid, supported by strong employment trends, improved wages, stable fuel prices and moderating inflation. However, our expertise is not in our ability to predict broader economic conditions.
We remain cautious in our outlook regarding the potential for worsening economic or the possibility of short term economic shocks, particularly any impacts we could see from sustained higher price levels and interest rates, jumps in gas prices or election year volatility.
As we have discussed in the past, we maintain our conviction that consumers in our industry quickly adjust to challenging environments and will prioritize the maintenance and repair of their existing vehicles as a countermeasure in the face of economic pressures. Due to the resiliency of our customers and the nondiscretionary nature of our business, we have confidence our industry will perform well in 2024, even if the broader economy ends up facing challenges.
While our outlook for 2024 incorporates our assumptions of a reasonably stable economic environment, ultimately our performance this year will depend on our effectiveness in executing our business model, providing exceptional customer service, and in turn gaining market share. To that end, I want to spend a few minutes discussing how we view our opportunities on both sides of our business.
We expect both our DIY and professional businesses to be positive contributors to our comparable store sales growth in 2024, with professional again expected to outperform. We have been truly blown away by the incredible momentum our team has generated with our professional customer base, driving three consecutive years of comparable store sales growth in the mid teens. We were especially excited with the ticket count gains we saw in 2023 as our store sales, distribution and office team members delivered on our commitment to excellent customer service and industry-leading inventory availability. We remain bullish in our outlook for growth in professional in 2024, but expect comps to naturally moderate as we compare against the higher bar we set in 2023.
We also believe we have opportunities to gain share on the DIY side of our business, but anticipate that any share growth in the DIY will come in the context of the long term industry trend of pressure to DIY ticket counts. We believe the industry dynamic of extended service and repair intervals resulting from increased complexity and quality of parts will drive down DIY ticket counts broadly in our industry. As a result, we anticipate DIY traffic will be flat to slightly down in 2024, with an expectation that we will continue to gain share to partially offset the normal industry drag on ticket counts.
However, increased complexity and quality of parts also drives higher average ticket values and we expect total DIY comps to be positive in 2024. For both sides of our business, we expect to see continued growth in average ticket values. However, our 2024 projections assume same SKU inflation will provide a smaller benefit than we have realized in the last three years.
Overall price levels were very much more stable in 2023 and consistent with our historical practice, we are assuming only modest increases in price levels from this point forward in 2024. As a result, our guidance assumes a minimal tailwind of less than 1% from same SKU inflation, with overall ticket expected to be up low single digits, driven by increased complexity.
Before I move on from sales guidance, I would like to highlight our expectation for the quarterly cadence of our sales growth in 2024. On a weekly volume basis, our business was fairly steady in 2023 and we expect our quarterly comparable store sales growth to be relatively even throughout 2024, absent any unforeseen seasonal variability in weather and a minor shift from the timing of the Easter holiday in the first quarter of 2024 versus the second quarter last year.
We are pleased to be off to a solid start in 2024, aided by favorable winter weather in January. As I mentioned previously, we did not see much of the winter weather benefit in the fourth quarter. However, with the arrival of typical winter conditions in January, we would now view the weather backdrop as normal, and our assumptions underlying our sales guidance for the full year of 2024 do not include any material impacts from weather.
Now, I'd like to move on to discuss our capital investment and expansion results in 2023 as well as our plans for 2024. Our capital expenditures for 2023 were just over $1 billion, which exceeded the guidance range we updated on last quarter's call, and is approximately $200 million above our initial guidance for the year. As we progressed through 2023, we realized incremental opportunities to further invest in our store and distribution network, as well as accelerate our spend on certain initiatives to refresh our vehicle fleet and enhance our store image and appearance.
For 2024, we're setting our capital expenditure guidance at $900 million to $1 billion. While our expected total capex will approach a similar level of spend as 2023, the composition will change somewhat. A portion of our capital deployment in 2023 was directed at restarting initiatives that were delayed in previous years and accelerating certain projects where we saw an opportunity to improve the image and convenience of our stores.
Our 2024 plans anticipate a leveling of capital investment for these type projects back to a more normalized annual spend. We also expect to see a reduced capex spend for new distribution projects in 2024. We continue to be on track with our ongoing distribution expansion, and Brent will provide a status update on these projects in a few moments.
While we still have substantial dollars to invest to move these projects forward in 2024, our anticipated investment this year will be below our spend in 2023 based upon development timelines for new facilities. These plan reductions in capex will be largely offset by an increased investment in new stores as well as continued strategic investments in technology projects and infrastructure.
Our growth in new store capex is being driven by a shift toward owned store growth versus leased stores in our planned 2024 new store openings and future store development. As we disclosed last quarter, we have established a target of 190 to 200 net new store openings for 2024 spread across multiple markets in the US and Mexico. We continue to be very pleased with the performance of our new stores and are excited about our growth opportunities in both new and existing markets alike. We have a long held preference toward owned properties as we fuel our expansion, and our ability to successfully open stores that increasingly generate higher sales volumes and stronger cash flows is driving enhanced returns on capital invested in our new store growth.
One of the strengths of our company and a key factor in our growth story has been our ability to balance our organic greenfield growth across our geographic footprint, while also supplementing our expansion with strategic acquisitions. The most important factor in the success of our new stores is the ability to staff the store with highly trained professional parts people who live the O'Reilly culture and are committed to providing excellent customer service in their markets.
Over the course of our history, we have been very fortunate to join forces with several great companies through acquisitions and our ability to partner with seasoned professionals who have strong relationships with customers in markets that are new to our company has been paramount to our success. With this in mind, we are thrilled to have completed our acquisition of Groupe Del Vasto in January, and are extremely excited to partner with their experienced leadership team to enter the Canadian market.
As noted in our press release in December, the company is headquartered in Montreal, Quebec, Canada, and operates as Vast Auto Distribution. Vast Auto is a highly respected family owned business founded over 35 years ago with a company culture focused on the core values of hard work and excellent customer service. They currently operate two distribution centers and six satellite warehouses that support 23 company owned stores, a network of strategic independent partners and thousands of professional customers across eastern Canada. We are still in the very early innings of the planning process for our future expansion in Canada, and there will definitely be more to come as we grow our footprint. But for now, we are very excited to welcome the 500 plus Vast Auto team members to Team O'Reilly. In a few moments, Brent will provide additional details on our gross profit and operating profit results as well as our expectations for 2024. But before I turn the call over to him, I want to highlight our earnings per share guidance we outlined in our press release last night. We have established our EPS guidance for 2024 at $41.05, the $41.55, while we expect the Vast Auto acquisition to be slightly accretive to our bottom line in 2024, it will not have a material impact on earnings per share.
Our 2024 operating plans and earnings and profitability outlook reflects our continued commitment to investing in our business to grow market share and drive industry leading results. We have been pleased with our ability to capitalize on our strong competitive positioning and generate robust sales momentum, and will continue to judiciously manage our capital and operating investments to drive long term growth and high returns.
Our entire team remains highly committed to our business and our customers, and we are very confident in our ability to build on the strong historical EPS results I outlined at the beginning of our call today. As I wrap up my prepared comments, I would like to once again thank Team O'Reilly for their hard work, dedication and performance in 2023.
Now, I will turn the call over to Brent.
