AZO - NYSE

Greetings. Welcome to Auto

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 morning, and thank you for joining us today for Auto

Thanks, Phil, and good morning, everyone. As Phil has previously discussed, we had a solid second quarter, marking our fifth sequential quarter of double-digit EPS growth. This quarter, we delivered 4.6% total company sales growth with a 0.3% domestic comp, a 10.6% international comp on a constant currency basis, a 10.9% increase in EBIT and a 17.2% increase in EPS. We continue to deliver solid results and the efforts of our Auto

Thank you, Jamere. I want to stress how proud I am to represent the company as only the fifth CEO over the almost 45 years we have been in business. As you've heard, we have a lot of initiatives in flight and we have a great team of Auto

Certainly. At this time, we will be conducing a question-and-answer session. [Operator Instructions] Your first question for today is from Chris Horvers with JPMorgan.

Good morning, Chris.

Good morning. Thanks for all the information. My first question for you is, on the domestic Pro business, what's your sense of what the market is actually growing, especially in light of your mix? Obviously, your largest and most relevant competitor has a much smaller mix of national accounts. So I don't think that's obvious to us from the outside. So how are you seeing the performance of national accounts? Are you seeing that start to get better? Do we have to wait to lap that starting in June and July? And how do you think that you're growing relative to the market on the Pro side?

Yes. So if you kind of segmented the business, I think an area of customer growth on the commercial side that's been more challenged has been the folks that are more focused on under car. So think brakes, suspension, those types of areas related to the tire, one of the four corners of the car, those have probably been the areas that have been more challenged. So for us, that's categories like brakes and suspension, which we talked quite extensively about that over the last year. And that's probably been where we've been most challenged, but I'll go back to the growth opportunities we have in the commercial. At the end of the day, we still have pretty low share and there's a big opportunity for us to continue to grow share in both terms of share of wallet for the customer as well as new customers.

So does that mean that -- I mean, I guess, if you were going to isolate more of the up and down the street account? Or are you seeing better relative performance? And I know you're reluctant to give too much detail in breaking out more detail, but like any commentary of like what the performance gap between like a national account business versus and up and down the street account would be really helpful. Thank you.

I would say the national accounts, depending on who they are, they can be wildly positive or negative depending on as you pick up business or your mature business, et cetera. I probably should have mentioned another area that's been challenged for us really for the last 18 months has been the Buy here, Pay here segment in the used car segment. Those have been pretty challenged as well, as they've struggled with inventory. They had incredible sales coming out of the pandemic, and that's probably been a pretty challenged segment as well.

Got it. And then on the -- you mentioned tax refund is expected to be normal this year. I mean, based on the data that we track, it does seem to be lagging year-over-year. So can you talk about what you mean in terms of the expectation on tax refunds, it would seem like it actually plays out a little more inverted where you get benefit later this quarter versus some headwinds at the start of the quarter? Thank you.

We're effectively two weeks into our quarter, a couple of weeks into our quarter. And the taxes may be pushed back a week or two. But I think over the 12-week quarter, we expect them to be pretty similar to last year and it's -- the vast majority of the taxes should land well within our 12-week time frame. So maybe slightly moved back a little bit, but not meaningful to the quarter. We expect it to be normal.

Got it. Thanks very much.

Your next question is from Bret Jordan with Jefferies.

Hey, good morning, guys.

Good morning, Bret.

I guess a question on the competitive landscape as it relates to WDs, they seem to get better after maybe 2022 into 2023 could you talk about the up and down The Street business? Is that a pretty stable competitive environment? Do they still improve? Or are they sort of plateauing?

Well, on the -- sorry, just to make sure I'm clear on your question. Questions relative to the WDs or to the actual--

Yes, WD competitors. It seemed like they were raising their game for a bit after the pandemic and whether they're kind of stable where they are. Are they still -- are they becoming more competitive still?

Yes, I think it's hard to tell exactly what's going on in their business. But from my sense -- and we see it in our business as well. The vast majority of the supply chain constraints that you had in the latter half of the pandemic have resolved themselves, for the most part, we'll still continue to improve. In stocks are not quite back to where they were previous to the pandemic. I suspect they will continue to improve slightly. And I would also think that the vast majority of the WDs that had the inventory issues in the latter half of the pandemic have probably recovered for the most part. So, I think they're better, but I don't think they're going to have -- they're not going to materially get better over the next short period of time. I would say everybody is pretty much back to slightly lower than pre-pandemic levels.

Great. And then I guess a question on international. O'Reilly has gone and acquired batt, and it seems like there's some Carquest assets for sale out there. Is Canada a market that you think about is -- or are really focused in Mexico and sort of secondarily Brazil?

Yes, I would say we have -- I mean, we've got two markets that we're trying to expand in today, which are obviously Mexico and Brazil. And we like where we are in our international footprint. Canada is interesting. I would say -- I would never say we would not look at Canada, but it does have a pretty solid competitive base up there. And we just think there's better opportunities for us at the moment in the current markets that we have. We've got plenty of expansion opportunities in both markets, and we like our performance internationally. It doesn't mean we never go to Canada, but it's not a focus for us at the moment.

Not in 2024?

No. You got six months left in 2024. In our 2024 anyway.

Thank you.

Thanks Bret.

Thanks Bret.

Your next question for today is from Michael Lasser with UBS.

Good morning. Thank you so much for taking my question. You still see an opportunity to return the commercial business back to a double-digit growth rate over time? Why or why not?

Hey Michael, great question, and thanks for the question. At the end of the day, we have -- let me go back to our comment on share. We have very low share in this marketplace. I think we will improve from here. Can I tell you exactly when we're going to get back to double-digit growth? No. I would expect that we would grow faster. We have initiatives in place that we'll think we will accelerate our sales growth, particularly in the back half of this year, and it will continue. To nail the date when I think we get back to a positive double-digit number is frankly tough to do. There's a lot of variables in there. I think we'll see consistent share growth and consistent same-store sales and total growth in the commercial market for a long time to come, probably because we have -- we're better than we were as we continue to expand our hubs and mega hubs, improve our assortments and take share, we see a long-term growth trajectory for the commercial side of the business.

Got you. That's helpful, Phil. Thank you so much. My follow-up question is that Auto

Yeah, I don't think we're over-earning from a gross margin standpoint. We've been very disciplined about gross margin expansion. We've been very disciplined about pricing. And what we're actually seeing in our gross margins today is we come out of the period where we had very high freight costs. We had a supply base that was very challenged from a cost standpoint when you looked at what was happening with transportation costs, wages and just overall inflation in general. As we've moved past those periods, it gives us an opportunity now to start to negotiate deflation with our supply base. And at the same time, as we took pricing during those higher inflationary periods, we're not giving back retails. So what you're actually seeing is a natural evolution of gross margins, if you will. The other thing I'll remind you is that our supply chain was particularly challenged during this time frame. And as our supply chain has improved its cost performance and its efficiencies, we're seeing some gross margin improvement in the from our supply chain. So this industry has been very, very disciplined for decades. We'll continue to be disciplined for decades. We don't believe that we're over earning and it's been a very disciplined approach to gross margin expansion and growing market share over time.

Thank you so much, Phil, Jamere and Brian, and good luck.

Thank you. Appreciate it.

Your next question is from Scot Ciccarelli with Truist.

Good morning guys. Jamere, can I follow up on something you just said. So you're trying to negotiate deflation. So the idea to drive down procurement costs, but fully hold retails?

Yeah. I mean, if you look at what's happened in this industry literally for decades is during periods where we have high inflation or even hyperinflation, we've raised retails to basically cover those additions and cost. And then as those cost pressures abate, this industry typically does not lower retails. So what you're seeing is the natural progression that we've seen from a gross margin standpoint as we're now in a period where things are becoming a little bit more deflationary, it gives us an opportunity to expand our margins, if you will. And we've been very disciplined about doing that as has the entire industry over this time period.

Let me -- can I add just another comment on that. I think if you go back and look at some of the gross margin pressures we had in the -- specifically in the latter half of the pandemic where the supply chain was most stressed. Some of those costs that we had in logistics, either overseas or internal in the US, not all of those costs got pushed on to the consumer, because we didn't want to kill unit demand. So we've hurdled some of that. To Jamere's point, we took those prices up and as the underlying logistics cost basis comes down, that margin is what you're seeing today. We don't think we'll give the pricing back because this industry has been very price rational over to Jamere's point, decades. We just don't see that retail pricing having to come back down.

So just to clarify. So unless we see a spike in logistics or freight costs, the assumption should be where your current run rate of gross margin is, should be kind of the forward number we should be thinking of?

Yes. And the only thing that I would add to that is that we do expect our commercial business to grow faster as we move forward. And so that naturally will put some drag on the gross margin percentage, if you will, we'll take that trade-off because it will give us an opportunity to have more gross margin dollars. So there'll likely be a mix pressure as we move forward with a faster growing commercial business. But the underlying fundamentals of what we're seeing in gross margin in terms of deflation, in terms of improving supply chain profile is something that is sustainable as we move forward.

Super helpful. Thanks, guys.

Your next question is from Simeon Gutman with Morgan Stanley.

Hey, good morning, everyone. Hey, Phil, I know it's tricky to prescribe when the commercial comps get back to double-digit. Can you give us a sense, I don't know if innings is the right way to think about it, where your efforts are in totality you mentioned faster delivery times, labor normalizing. There's some supply chain investments. So the collective of those, where you are on that journey to where you want to get to?

Yes. The part of your question there is what are we doing that have helped stabilize our business and get it back on a more stable footing. Our in-stocks have come back to very close to pre-pandemic levels. We've expanded our hubs and our Mega Hubs. We have a long way to go to get to our ultimate goals of North of 200 Mega Hubs. And significantly more hubs as well. Those put hard-to-find parts in the market where we can get those parts to our commercial customers, in particular, faster. It also helps DIY. It will take us quite a few innings, if you will, to get to more than 200 of those hubs. They just take longer to set up and get in place. But that is improving our efforts on delivery times. We've put in -- we've invested in technology. We've been talking about this for quite some time. We continue to leverage the technology we put in the hands of our commercial Auto

Good. I wanted to ask you, I think we asked Jamere when he joined, but since you've taken over, I wanted to ask about the EBIT dollar growth question versus margin. And part of it is timely because one of your competitors has been leading into SG&A, and it seems to be working and you're having a bifurcation in performance now in the sector. So your thought process on that balance and then leaning into SG&A over a longer period of time to take advantage of some displacement.

Yes. On the SG&A front, I would we have investments that are some in CapEx, some obviously in SG&A. To the degree we can invest and grow sales and EBIT dollars, we'll make those investments all day every day. I think over time, you should see us get our EBIT -- our SG&A growth should start to bend down slightly. I wouldn't expect a radical change, but we've had a lot of investments as we continue to improve our operational efficiencies in our distribution centers, in our stores, as our Auto

Thanks. Good luck.

Thanks Simeon.

Your next question for today is from Seth Sigman with Barclays.

Hey good morning everyone. I wanted to follow up on a couple of those points around the commercial. A lot of noise this quarter, if you step back, there was a lot of momentum in this business pre-2020 and then you clearly outperformed very significantly for multiple years, right? And then the business has slowed, reverting back to maybe more like industry growth, I'm not sure. But I guess the real question is what gives you confidence that this is the right go-forward strategy, particularly from a supply chain perspective? As you think about the next leg of growth, mega hubs has been the central part of that strategy. Is that right? Are there other options that you've thought about? I'd love to get some perspective on that. Thank you.

Yes. We're extremely excited about both of our -- both our hub and our mega hub strategy. And I'll use the previous comments around innings. We think we'll have well north of 200 mega hub and significantly larger growth of hubs. We're roughly in the third inning or so in hub growth -- mega hub growth. If you kind of said that, that strategy works for us. We see significantly higher growth in those stores -- those types of stores, and they help feed harder to find inventory to what we call our satellite stores, the markets that are close to those hubs. So, yes, we believe that is the right strategy. We will continue to modify and enhance our assortment strategies in both our satellite stores and our mega hubs and hubs to get more relevant inventory closer to the customer. The faster we can get those hard-to-find parts into the shop, the better we will grow market share. And by the way, all of that inventory we add for the commercial customer also finds its way to sales on the DIY customer.

Okay. Thank you for that. I guess just thinking about the programs that you've added over the last year or so. You've talked about the drag from some of these newer programs. Just any perspective on how the new programs are ramping and if that's any different than what you've seen in the past? Thanks.

Yes, I mean the math on that is we've added over the last couple of years or so, almost 600 new programs. So, we went back and retrofitted several stores that didn't have commercial programs. If you remember, historically, we ran sort of 80% to 85% of our stores have a commercial program. That number is now up over 92%. We really accelerated that over the last several quarters. So right now, we've got probably 300 to 400 immature commercial programs that are ramping up in terms of sales and efficiency and performance. And as those programs mature, it will certainly provide a tailwind to our business. So when Phil talks about this notion of our commercial business improving from an execution standpoint, we not only have that working in our favor, but we also have these maturing programs that have only been in operation for the last couple of quarters. And so if we think about the commercial business very broadly, I just keep grounding us back to this notion that we're underpenetrated. We have a four or five share in what's approaching a $100 billion market. We've put a number of things in place that are delivering and have delivered exceedingly well for us. And as we move forward, we like the competitive hand that we have with growing mega hub footprints, improving execution and adding more commercial programs it’s our number one growth priority inside the company and we’re all hands on deck there. And the last thing, I’ll just say is as you think about commercial as you think about the back half of this year, the front half of this year, we had – we’re up against 15 comp and then a 13 comp, the back half of the year, the comps get a little bit easier. So the comments that we made earlier in our prepared comments are just along the notion that the comparisons get a little bit easier. And as we have all of these things from an initiative standpoint, working in our favor, it gives us a lot of confidence about our back half execution.

In fact, let me add a little bit on to that, too, specifically around new stores, and I'll maybe take a little bit of a history lesson here. If you go back to FY 2017 or those types of number of years, our productivity per store, we have been on a pretty heavy diet of opening up new programs. And then we decided, from a strategy perspective, we would slow down our new store openings for commercial and really start trying to drive per store productivity. Back then, our per store productivity was in the $7,000 to $8,000 range. Today, as Jamere quoted earlier in the prepared comments, we're significantly higher than that. The other thing that's happened is as we open up new programs in today's environment versus years ago, they are maturing at a faster rate and get to a higher, more plateaued rate. So we like that math. We're probably not going to open up 60 or 600 stores in the next two years or so like we have over the recent history. That will probably slow a little bit. But we like the way the new stores come out of the box and the maturity curves that we get versus, frankly, 2017 or 2018.

Thank you both. Appreciate it.

Thanks.

The next question is from Steven Forbes with Guggenheim Securities.

Good morning. Maybe just a follow-up on Seth's question. And just a way to maybe contextualize the mega hub strategy for us. Is there any way to think through or maybe discuss the contribution to growth, or how ROI is trending behind these investments versus what the potential should be as we look out a couple of few years? Like any numeric contextualization of where we are in the maturity curve of the initiatives?

Yeah. I think a couple of things stand out to us. The first is that the mega hubs are growing from a commercial perspective and from an overall perspective, significantly faster than our satellite stores. And it's over 3x what we see on a total domestic business basis. So we've been very pleased with the tremendous sales lift that we're getting inside of the box, both on the DIY and the commercial side. I think the second thing that gives us a lot of confidence is we talked about this notion of testing multiple mega hubs in major metro markets. And we've done that over the last few years or so. And the idea there was to jam more Mega Hubs in a market and jam more parts closer to the customer to see really how high is high. And what we experienced in that time frame was the fact that we didn't see the kind of cannibalization that we would have anticipated, which suggested that the number of Mega Hubs that we could actually operate was significantly higher. And if you'll recall, we had Mega Hub targets that went from 100 to North of 200 over a very short period of time. So we like what we see from a sales standpoint. We like what we see from an earnings standpoint. And we -- and it's not only what we're seeing inside the four walls, but it's also the fact that these Mega Hubs are an important fulfillment source for the surrounding satellite stores. So when you put all that together in the mix, I mean, it's a pretty attractive story for us both in terms of sales and earnings and return on investments. And we're going to go as fast as we possibly can to accelerate.

Thank you for that. Maybe just a quick follow-up on the outlook for expense growth. I think you mentioned how it should – should curve downward. But obviously, we also have the store growth acceleration plan, looking at the 2026 and beyond. And so maybe just help provide additional clarity on why there's sort of no disconnect in maybe sort of leaning into the investment cycle ahead of a ramp in store growth? I mean is there any risk that EBIT margin could or should take a step back as you sort of ramp the business for a more accelerated growth period?

Yes. I mean we've invested in SG&A in a very disciplined fashion over the last several years or so. And what we've always said is that over time, SG&A growth should be in line with what we see in terms of the top line. Now in the near-term, to your point, we've invested at an accelerated pace behind technology, behind store payroll, all of those things to drive near-term growth for us. And we won't hesitate to go do that. To the extent that there are opportunities for us to invest in SG&A to drive our growth initiatives, we will do that as we've done historically. As we move out and look to accelerate our store growth, there will be some drag on SG&A, but we should be able to manage that within that framework that I talked about.

Thank you.

Thank you.

Your next question is from Greg Melich with Evercore ISI.

Hi, Thanks. Congrats as a nice quarter. I would just like to follow-up on inflation. So if ticket was up 1.7%, is it fair to say that same SKU inflation was sort of near that number and that -- how did items of basket and mix, et cetera, out in the quarter?

Yes. So what we've seen on ticket growth was something in the low single-digits right now. And we're seeing same SKU inflation somewhere in that same

Got it. But presumably, that -- a little bit of acceleration in ticket comes from mix and items of basket rather than inflation ticking up, same SKU?

I think that's right. And as we move forward, I mean, it's a pretty dynamic environment out there even from an inflation standpoint. We'll stay very close to and be disciplined about how we manage our business.

Go back over long periods of time, decades, I mean, this industry has had a slight decline in transactions and units and an increase in ticket average and average unit retails in that somewhere between 2% to 4% range on average, predominantly because of changes in technology, better parts, and some -- it's great to think about belts on a car. Used to -- the average car used to have belts on it today, they have one. And the belt used to be $4 or $5 today about maybe $60 or $70. So that technology change is probably going to continue. And that's been -- it's been a pretty understandable decline in units and a change in average unit retail and we generally have pretty good line of sight to this because the product development takes years and an item may stay in our stores for 20 years. It's the beauty of having a -- frankly, a lower term business that's very predictable.

I'd love to follow up on SG&A and investment there. Jamere, maybe could you level set us on just what wage inflation is running now and what you're looking at for the next few quarters? And if you think about these pilots that you're doing on the faster delivery, it sounds like it's a lot of tech investment. But is there -- are there delivery people as well? Just help us understand that a little bit more, the reacceleration of commercial there?

Yes. So, from an average wage standpoint, we're thrilled that we're starting to see average wages now with a two handle versus a three or four that we've seen over the last few years or so. So, as things have cooled down, we've seen some of the hyperinflation go away in the labor markets. We're now back to more normalized sort of wage inflation, if you will. Now, in terms of the investments that we're making, nearly every investment that we have from a growth initiative standpoint is underpinned by some changes in technology. Whether that's on the commercial side with what we're looking to do with some of our commercial acceleration initiatives are on the retail side, nearly all of those growth initiatives are underpinned by some changes that we're making in technology. Our technology teams have done a tremendous job doing that in a very cost-efficient way. And we -- and as we move forward, we'll continue to invest in a very disciplined way as we move forward. In terms of the commercial business and how we improve delivery. I mean we've been very efficient in terms of how we've deployed our physical assets in terms of vehicles and our people assets in terms of labor to manage that commercial business over time, and there hasn't been a meaningful change in what we're doing there.

Great. Thanks and good luck.

Thank you.

Your next question is from Max Rakhlenko with TD Cowen.

Great. Thanks a lot guys. So in the stores where you're piloting the initiatives to improve DIFM services and speed levels, just how is that going versus your own internal expectations? And then how are you thinking about scaling these initiatives over the coming quarters? Just curious how early those are and when you think that they could be ready to go lighter?

Yeah. It's -- thank you for the question. And it's early innings in that. We've been testing some stuff, how to use the data we've had our -- if you think about our handhelds and a lot of technology enhancements that we made over the last couple of years, and now we've got a pretty robust set of data where we can look and figure out what are the best and most efficient ways to use our assets, both human assets, our great Auto

Got it. It's very helpful. And then can you just speak to your in-store staff retention rates? How are those trending, and if that's translating into improvements in pro satisfaction? And then ultimately, better demand trends in those stores.

I'll say two things have happened. One is -- and we've mentioned it a couple of different times. We've if you think about staffing in whole, it's not back to pre-pandemic levels, but it's better than it was during the pandemic. We still have work to do to get retention and turnover back down to pre-pandemic levels, both in our stores and in our distribution centers, but improving, and we like the trends that we're seeing, although we'd love it to be faster. The other thing we did on commercial, and Jamere has mentioned it a couple of times, we've opened up roughly 600 stores in slightly over two years. As we did that, obviously, that takes your -- the commercial specialists and the TSMs and things of that nature, those really high caliber of people that were concentrated in some stores, we expanded pretty quickly. So you got new promotions and people got to learn their job and learn those new shops and get really ingrained with those long-term relationships, and that will continue to get better as we move forward. So it's kind of two elements.

Great. Thanks. Best regards.

Thanks.

Thank you. Appreciate the question. I think we have time for one last call.

The next question is from Brian Nagel with Oppenheimer.

Hi, good morning. Thanks for slipping me in.

Hi, Brian.

So with my first question, I know there's been a lot of questions on commercial, and we recognize this has been an ongoing conversation. There's a lot of moving parts here as we look at the kind of the near-term trends. But I guess not at the risk of being too simplistic. We for a long time have talked about a key measure of success in commercial, so to say, climbing that list. In each individual store climbing that list of the – your mechanic customer. So the question I have is, as you pull and talk to your stores, are you seeing any indications that you're falling further down those lists or maybe the climb up some of these lists stalled?

Yes. I mean, to say we're falling down the list. I don't think that would be a good characterization. Is there always opportunities to improve? The answer is yes. Go back to our share comments that we've made several times we still have under 5% share, we believe. And as we get better and mature in relationships, open up new stores, get better in new stores and drive parts availability and what we call internally time to shop. The quicker we can get those parts to the shop, the better we'll be. And this -- I think there's a bit of a misnomer that a customer has a first call. They all -- nobody has every part that's needed in a particular shop. So a customer will have multiple people they call. we think we will continually move up the call list and gain a larger share of wallet for each customer, but to say that you're always first call with any particular customers, that's pretty rare for a customer to put all of their eggs in one basket because nobody's got all the parts. It's virtually impossible. There's too many SKUs. So I think we will continue to get better. I think we've gotten better from where we were, and we've got a long road in front of us to continue to take market share and gain new customers.

That's very helpful. And then a quick follow-up just on weather. And in your prepared comments, you talked about some of the sales volatility we saw through the fiscal Q2. and obviously, weather was a key component of that. But I guess the question I have is as you look at the weather, maybe we're not even through winter yet, but as you look at the weather, has it been enough -- has there been enough winter weather, so to say, give you that normal driver business as we head into spring and even in the summer?

Yes. Great question, and time will tell. We're not completely through winter weather, as you said. I think if I could lay out the weather calendar that I'd love to have, like I said, I would love to have more really cold winter in the big cities on the eastern seaboard. I mean if you're in New York, you've got a little bit of snow this year and it was gone within 24 hours. It's a heck of a lot more than you got last year. But New York, Philadelphia, D.C., those areas really haven't had a lot of really extreme cold weather. The Midwest did and the eastern half of the Northeast or the western half. I'm sorry, I got some pretty cold weather. But the big metro cities along the East Coast just really haven't for more than two years now. So I would love to have had more there, but that's something that we can't control. We're going to do our best to go grow market share in those company -- in those areas of the country, no matter what. So thanks for the follow-up question.

Thanks, guys. Thank you.

Thank you. All right. So before we conclude the call, I'd like to take a moment and reiterate we believe that 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 do have alternatives. We have exciting plans that should help us succeed in the future, but I want to stress that this is a marathon and not a sprint. As we continue to focus on the basics and drive to optimize shareholder value for the future, we are confident, Auto