Autozone 4Q16 Earnings Call Notes

AutoZone’s (AZO) CEO Bill Rhodes on Q4 2016 Results

Believe international will be good for us

“While the domestic business dominates our sales mix and continues to be our primary focus, we believe we have great growth opportunities outside the U.S. for many years to come. I would expect the international mix of our business to only grow from here. In 2016, we expanded our online offerings in both our traditional and website as well as on AutoAnything.”

40 consecutive quarters of double digit EPS growth

“We are pleased to report our 40th consecutive quarter of double-digit EPS growth and for the year to report an EPS growth rate of 13%. We are also quite pleased with all we accomplished during 2016.”

Attention to detail and consistent execution are what matter

“We believe our steady, consistent strategy is correct. It is the attention to detail and consistent execution that will matter. Our belief is solid, consistent strategy combined with superior execution is a formula for success. Our charge remains to optimize our performance regardless of market condition and continue to ensure we are investing in the key initiatives that will drive our long-term performance. In the end, delivering strong EPS growth and ROIC each and every quarter is how we measure ourselves.”

I don’t think we’re a good indicator of the strength of the consumer

“I don’t think the health of the consumer is really that significant of a driver. If you turn back the clock to 2009, 2010 and 2011 when everybody was really struggling, we performed exceptionally well. So I don’t think we are a good barometer of the consumer and the consumer’s health”

Bill Giles

Gas prices rose 2c during the quarter

“Let me touch on domestic macro trends for a second. During the quarter, nationally unleaded gas prices started out at $2.22 a gallon and ended the quarter at $2.24 a gallon, a $0.02 increase. Now, last year gas prices decreased $0.18 per gallon during the fourth quarter, starting at $2.69 and ending at $2.51 a gallon. We continue to believe gas prices have a real impact on our customers’ ability to maintain their vehicles and as cost reductions help all Americans, we hope to continue to benefit from this increase in disposable income.”

Miles driven is up 3.3% this year

“Miles driven increased 2% in May and 3.2% in June and we don’t have July or August data yet. But year-to-date through June, miles driven were up 3.3% and ahead of last year’s increase at this time. The other statistic we highlight is the number of seven year and older vehicles on the road, which continues to trend in our industry’s favor.”

Inflation has been down slightly year over year

“In regards to inflation, it has been down slightly year-over-year. Currently we feel costs will be predictable and manageable. We will remain cognizant of future developments regarding inflation and we will make the appropriate adjustments should they arise.”