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Advance Auto Parts Inc (NYSE:AAP)
Q2 2020 Earnings Call
Aug 18, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the Advance Auto Parts Second Quarter 2020 Conference Call.

Before we begin, Elisabeth Eisleben, Senior Vice President, Communications and Investor Relations, will make a brief statement concerning forward-looking statements that will be discussed on this call. Please go ahead.

Elisabeth Eisleben -- Senior Vice President, Communications and Investor Relations

Good morning and thank you for joining us to discuss our second quarter 2020 results.

I'm joined by Tom Greco, our President and Chief Executive Officer; and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will turn our attention to answering your questions.

Before we begin, please be advised that our remarks today may contain forward-looking statements. All statements other than statements of historical facts are forward-looking statements, including but not limited to statements regarding our initiatives, plans, projections and future performance. Actual results could differ materially from those projected or implied by the forward-looking statements. Additional information about factors that could cause actual results to differ can be found under the caption Forward-looking Statements and Risk Factors in our most recent Annual Report on Form 10-K and subsequent filings made with the Commission.

Now let me turn the call over to Tom Greco.

Tom Greco -- President and Chief Executive Officer

Good morning to everyone joining us today.

Before we get to the specifics of our quarter, I want to start with an acknowledgment to our Advance team members and independent partners. They've shown incredible perseverance and support for each other and for our customers over the past few months. Never has the term essential business meant so much to us.

Throughout Q2, our team members responded to the pandemic with an exemplary level of customer care. At the same time, our entire organization responded with a remarkable level of speed and agility. Every week, we hear stories from both customers and team members on how Advance has helped keep America on the road during this crisis along with commendations on the safeguards we put in place to protect them while in our stores. Our sincere thanks and appreciation goes out to every single AAP team member and Carquest Independent partner who delivered the strong performance we are about to review.

Since the onset of COVID-19, we established three overarching priorities. First, prioritize the health and safety of our team members and customers; second, preserve cash and protect the P&L during the crisis; and third, prepare to be stronger following the crisis.

At the beginning of the pandemic, we stood up a team dedicated to the health and safety of our team members and customers. This cross-functional team organized daily stand-up calls throughout our organization which allowed us to respond with a tremendous sense of urgency to help keep people safe and healthy. As examples, we installed Plexiglass care shields in our stores in a matter of weeks. We institutionalized entirely new standard operating procedures across our stores and DC network. Our technology team enabled work remote capabilities for corporate functions and for our field team. We significantly increased communication through virtual town halls and regular video updates. And importantly, we provided enhanced compensation and benefits on top of our industry-leading Fuel the Frontline stock compensation program to help our team members during this time.

Health and safety has been a top priority for the leadership team here at Advance over the past few years. While none of us wanted COVID-19, the foundational processes that were put in place prior to COVID were instrumental in enabling us to not only respond to the global crisis but to provide outstanding customer support within it. As a result of our health and safety focus, we're very pleased that AAP has been well below the national average infection rate for COVID-19. We remain laser-focused on taking the necessary steps to enable our team members to feel safe coming to work and to ensure our customers feel safe shopping in our stores, which is more important than ever right now.

When we provided our quarter-to-date results during our Q1 call, we indicated that our sales results had sequentially improved every week during the first four weeks of Q2. As you saw in our results this morning, our sales momentum continued through the remainder of the quarter. Our sales grew 7.3% to $2.5 billion compared to the prior year. Comparable store sales increased by 7.5%, the highest quarterly growth rate in close to 10 years. Our adjusted operating income increased by 42% to $279 million, and our adjusted operating income margin rate increased 274 basis points to 11.2% while free cash flow in the quarter was up 60%.

Nearly all regions had positive comparable store sales, with the Gulf Coast, Central and Appalachia regions posting strong double-digit growth. The Northeast, Mid-Atlantic and West Coast regions, which were more impacted by the pandemic, significantly trailed our other regions. In fact, we had an extremely wide distribution performance geographically, with over 2000 basis points separating the highest and lowest growth regions. As you've heard from others, our professional business was more negatively impacted by COVID-19 than DIY in the quarter. This was primarily due to the temporary closure of garages across North America.

In addition, we have a disproportionate amount of our professional business in the Northeast, Mid-Atlantic and the West Coast. These regions represent over 30% of our Pro sales, and they were all well behind the rest of the country in terms of their professional growth rate. However, as the quarter progressed and stay home orders began to lift, we saw sequential improvement in our professional business each period. In the final four weeks of Q2, Pro sales were up mid single digits.

During the quarter, we continued to support our professional customers, including the rollout of our enhanced MotoLogic platform. This repair and diagnostic tool was built from the ground up by industry and technology experts and provides access to complete unedited OEM information. Since 2018, 3,700 new vehicles and 14 million plus articles have been added. Our most recent upgrade includes enhancing MotoVisuals, which allows technicians to share and prepare animations. This helps them explain services to customers in person, by text or email.

Also in Q2, we signed up a record number of new TechNet customers as we crossed 11,500 TechNets in total. Our independent Carquest, Worldpac and Carquest Canada businesses also recovered nicely as the quarter progressed. Throughout the quarter, we responded quickly to the needs of our professional customers and put new tools in place for our sales team to be successful regardless of current challenges. This includes contact pre-delivery, instructor-led virtual training for shop owners and expansion of selling capabilities, enabling our sales team to better meet the needs of our professional customers. We believe the work we've done to be there for our professional customers at a time of great need has set us apart.

Our DIY omnichannel performance was meaningfully stronger than our DIFM business throughout the second quarter. This was driven by both external and internal factors. An overarching macroeconomic factor is whether consumers are repairing or maintaining their vehicles, they are much more focused on saving money during challenging times. This generally means fewer new vehicle sales, an aging fleet and more DIY jobs. In addition, the stimulus checks from the CARES Act as well as expanded unemployment benefits in Q2 provided incremental discretionary income which we believe contributed to our DIY sales performance.

Since our DIY momentum has continued into Q3, we believe there are other external factors driving DIY beyond stimulus. First, many consumers were continuing to spend more time at home and had more time to work on their vehicles. Secondly, we believe that due to COVID-19, people were less apt to use public transportation. This includes ridesharing, buses, trains and subways. It also includes air travel, which was down significantly in the quarter. Airline leisure travel was at times replaced by road trip in a personal vehicle. In total, mass transportation indices were well below year-ago all quarter.

Meanwhile, personal vehicle miles driven declined throughout Q2 according to Apple and Google Mobility. Finally, according to our research, many of the large box retailers, including online retailers, prioritized staples along with food and beverages in Q2. This resulted in long tail items such as auto parts to be de-prioritized which temporarily opened the door. We believe external factors represented the majority of the surge we experienced in DIY.

While we cannot speculate on the longer-term impact of these macroeconomic or COVID related variables, we do believe from past experience that DIY typically performs better during recessionary environment as consumers try to save money and keep their vehicles longer.

Additionally, as our economy continues to reopen, we believe there is still an understandable concern surrounding public transportation and mass gathering. We remain committed to providing a safe shopping experience through our suite of advanced same-day options. As more and more consumers are relying on personal vehicles, they are choosing contact-free options like Advance Same Day Curbside or Advance Same Day Delivery. While we clearly have strong momentum in DIY, it's important to reiterate that there're still many unknowns surrounding COVID-19.

In addition to external factors, our internal initiatives for DIY gained traction in Q2. First, we successfully launched DieHard on July 2 nationwide. Although it's not a meaningful growth driver in the quarter, the first week of selling DieHard was a momentous celebration and a galvanizing event for our team. The launch involved coordination across every aspect of our business.

Normally, the Advance executive team were doing store tours during a launch like this. While we would have preferred to do in-person store tours, this was simply not possible during this time. Therefore, we adopted and conducted a combination of in-person and virtual tours across the country. The good news is we got to a lot of stores very quickly. And every general manager we spoke to was incredibly excited about the potential of DieHard. While it's too early to quantify the impact of DieHard, we believe this iconic brand will be a long-term differentiator for us.

Secondly, we made a decision in the early stages of the pandemic to prioritize Advance same day messaging in our advertising over previously planned brand awareness campaigns. The Advance same day advertising was both timely and relevant. Going forward, we'll continue to build the awareness for the Advance brand, partnering with Team Penske, NASCAR and with the Indy 500 this upcoming weekend.

Third, our Speed Perks loyalty program sustained continued momentum as the number of active members grew to more than 13.5 million, an increase of nearly 30% year-over-year. We're also seeing growth on customers graduating to higher tiers within the program, along with improved retention rates.

Finally, our DIY execution continues to improve. In addition to the national launch of Advance same day delivery, we strengthen the front end user experience of our online platform, which led to improved traffic and higher conversion rates. Our in-store execution also improved with strong ticket count growth along with notable gains in units per transaction and sales per ticket. As a result of both external and internal factors, we delivered double-digit growth in DIY omnichannel throughout Q2.

To close out the top line, and as we said in our press release, we've continued to see strong sales through the first five weeks of Q3. As we turned to profitability, we made progress on each of the four pillars of margin expansion in the quarter.

In terms of sales and profit per store, we had very strong sales per store in the quarter. On a rate basis, our SG&A per store was down materially. Certainly we benefited from top line growth. However, our productivity tools are also helping. Utilizing our new scheduling and task management tool, our field team has done an excellent job managing hours despite a challenging and evolving environment. With that said, we took several actions in the quarter, reflective of the unique operating environment such as a reduction of certain labor and costs related to the softer professional business. As our business continues to normalize, including the mix, we expect to add certain expenses back.

In terms of supply chain, improved execution and standardization in our distribution centers enabled us to leverage supply chain in the quarter. As we called out in our Q1 earnings release, we did need to delay or pause some important initiatives due to COVID-19. As an update, and given the strength of our business, several of these key initiatives are now back up and running. Cross-banner replenishment, which will integrate the supply chains within Advance and Carquest, is on track to deliver the original savings we've planned in Q3 2021. This is slightly delayed from our original timeline, primarily due to factors related to COVID-19.

Our single warehouse management system or WMS initiative was officially paused during the quarter. We've restarted this work and revised the timelines for WMS, which includes prioritizing our largest DCs. We expect to complete our WMS implementation in these large DCs by the end of 2021. We believe this will enable us to realize the vast majority of the planned savings in 2022.

In terms of category management, we continue to work with suppliers on material cost optimization and own brand expansion. We also began the implementation of a new pricing platform and expect over time this new tool will enhance our price management capabilities. Our next step is to begin the implementation of market based or local pricing strategies, which is something we cannot do efficiently today.

Finally, in addition to leveraging store labor in the quarter, we continued to execute our SG&A productivity agenda. This includes the integration of back office accounting as we consolidate four ERP systems to one. We also saw significant savings in travel expenses after pausing travel across the Company. While we believe there will likely be some savings associated with reduced travel longer-term, it will not be at the level we saw in Q2.

Our focus on health and safety also continues to drive cost savings in SG&A. In Q2, we once again reduced our recordable incident rate, which has resulted in a 27% reduction for the first half of 2020. Our collision frequency rate has also improved with a year-to-date reduction of 13%.

Before I turn it over to Jeff, and based on current events happening across the US, I want to reinforce our commitment to inclusion and diversity. We are witnessing immense civil unrest across the country in recent months. These events are reinforcing the importance of our cultural beliefs at Advance. Our cultural beliefs are part of how we think and how we act at Advance regardless of level or title. Our Champion Inclusion cultural belief is highlighted by the statement, I embrace diversity of people, thoughts, skills and styles to deliver results. It's never been more apparent to my leadership team that we need to step up on our commitment to champion inclusion even more. This includes standing up against intolerance and racism, conducting business with integrity and interacting with all people in a respectful manner. We recently launched an initiative we call Advancing Black Pathways. This is focused on creating real change in three primary areas: culture, careers and communities. We look forward to seeing further progress in this important element of our culture as the initiative develops.

In summary, Q2 was a strong quarter, and we could not be prouder of how our field team members took care of our customers during a difficult time. In spite of the challenges we faced from COVID-19, our Advance leadership team also stepped up as evidenced by a significant increases in our communication and employee engagement scores in our most recent pulse survey.

While we're pleased with our second quarter results, uncertainty remains in terms of how the pandemic will impact consumer behavior and our business. Regardless, we remain focused on executing our strategy, while updating the value and prioritization of our long-term projects in this new environment. Most importantly, we will continue to prioritize the health and safety of our customers and team members for the balance of the year, while leveraging our industry-leading portfolio which now proudly includes DieHard.

With that, I'll turn it over to Jeff for details on our financial performance.

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Thank you, Tom, and good morning, everyone.

We're certainly in an unprecedented time right now, and I truly hope that you and your families have stayed well during the past several months. Before diving into our Q2 results, I want to thank our team members for all we have accomplished over the last several months. It's a result of their dedication that we're extremely pleased with what we delivered in the second quarter.

In Q2, our adjusted gross profit was approximately $1.1 billion, which was an increase of nearly 9% compared to Q2 of the prior year. Adjusted gross profit margin improved 57 basis points year-over-year to 43.9%, driven by favorable channel mix and supply chain efficiencies. These were partially offset by inventory related costs due to a significant decrease in inventory, driven by an increase in customer demand.

Our adjusted SG&A was approximately $818 million in Q2, nearly flat compared to Q2 2019. Adjusted SG&A as a percent of net sales improved 217 basis points compared to the prior year, primarily driven by cost controls we implemented in response to the pandemic in late Q1. These include reductions in labor cost as we leveraged store labor while reducing medical claims. Further, we saw savings from lower delivery expenses to pro customers in the front half of the quarter before professional sales began to recover. Additionally, we saw favorability in travel and a reduction in insurance expenses. These cost savings were partially offset by an investment in marketing expenses associated with the launch of our Advance Same Day campaign and the DieHard brand in the quarter. Import contracts related to IT solutions we have implemented since Q2 2019 were also a slight headwind in Q2.

In addition, we incurred $15 million in COVID-19 expenses in the quarter, which partially offset the cost savings we delivered in the quarter. Our COVID-19 expenses were a combination of two things. First, we are incurring ongoing costs as we provide cleaning supplies, gloves, masks and hand sanitizer to our stores, DCs and corporate locations. In addition, we incurred some one-time expenses such as installing Plexiglass barriers in our stores. Secondly, we continued to invest in team member compensation and benefits in the quarter.

Adjusted operating income in Q2 was $279 million, which improved 42% compared to the prior year quarter. Our adjusted OI margin rate improved 274 basis points to 11.2% in the quarter. Adjusted diluted EPS was $2.92, an increase of 46%. Free cash flow in the quarter was $380 million, a 60% increase compared to $237 million in Q2 2019. Year-to-date, free cash flow was $308 million compared to $381 million during the same period in 2019.

As a reminder of our capital allocation priorities, we remain committed to maintain our investment grade rating, invest in the business, return excess cash to shareholders. Consistent with these priorities, we've taken several actions. First, we repaid the $500 million previously borrowed under our revolving credit facility. In addition, yesterday we provided notice to the trustee of our intention to redeem the $300 million 4.5% notes due in 2022. These actions will help us return leverage ratio to pre-COVID levels.

Secondly, as Tom mentioned we've restarted several projects that we expect to enable margin expansion that had been paused or delayed due to COVID-19. As a result, we now expect our full year 2020 capital spending will be a minimum of $250 million. In Q2, our capital expenditures were $57 million, which was an increase of $7 million compared to prior year. Third, with respect to our priority to return excess cash to shareholders, we're pleased to maintain a $0.25 dividend per share for Q3. In addition, we've lifted the temporary suspension of our share repurchase program and we'll remain opportunistic in our balanced approach to returning excess cash to shareholders.

In summary, we delivered strong operating results and strengthened our balance sheet this quarter. We remain diligent in managing our liquidity and executing our plan to win in the marketplace while expanding margins.

With that, let's open the call to address your questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Michael Lasser with UBS. Please go ahead.

Michael Lasser -- UBS Investment Bank -- Analyst

Good morning. Thank you, all, for taking my question. As you look at it, how is your market share in both DIY and DIFM as you try and adjust for business mix and geographic exposure? And then part of that, Tom, do you think that the customers in the DIFM segment you are levered to might be losing share within those markets?

Tom Greco -- President and Chief Executive Officer

Hey, good morning, Michael. First of all, we absolutely gained share in the quarter. We can see from the syndicated data that inside of DIY, we gained share. And on Pro, we just look at what's been reported and we compare it to what we delivered. And we feel very confident that we gained share in DIFM also. So you have to keep in mind that this is a pretty fragmented industry. In a $150 billion segment, the big four players have $40 billion to $45 billion in sales, so roughly a third of the business. So is it conceivable in the middle of a global pandemic that large-scale players that have about a third of the business can take share from the smaller-scale players that are two-thirds. I think we just showed that that's the case.

Obviously, we've got capabilities that smaller players just don't have: a great online portal; omnichannel capability; we can turn on a dime and do curbside delivery or contact-free delivery; our supply chains are robust. So, we're confident that we gained share in the quarter. And I think it's, as you've been seeing, I think the larger players are going to be doing well in a quarter like this.

Michael Lasser -- UBS Investment Bank -- Analyst

Thank you. My second question is, you've outlined some delays in the initiatives that were going to drive the margin inflection in 2021. But there's also some factors that are probably trending better than what you anticipated. So as you net those out, are you -- do you believe that the magnitude and the timing of the margin expansion that you previously outlined for 2021 will be consistent with what you had previously expected? Or should we, as we look out forward, start to recalibrate lower our expectations for next year? Thank you very much.

Tom Greco -- President and Chief Executive Officer

Well, obviously there is a tremendous amount of uncertainty right now, whether it's the shape of the recovery, the impact of COVID, we've got an election coming up. So we're still working through our update, if you will, of our strategic plan, which will be a three year plan when we -- when we discuss it later on in the year and into 2021. You're right. There's been impact to each one of the margin expansion initiatives that we have. At this point, we're not in a position to comment specifically on where we're going to be in 2021. It's obviously very early at this stage, but we feel very good about the progress that's being made, whether it's in sales and profit per store where we had a very strong quarter.

The team did a really, really good job managing payroll in the quarter. We're looking a little bit differently at our fleet, if you will, as we go forward, given the changes in the real estate environment and construction costs; supply chain, we referenced in the prepared remarks. We still feel very good about our ability to expand margins through supply chain. We're rolling up our own brand portfolio, which will drive margins. And in SG&A, we had a very strong quarter. Those initiatives are moving very well and in fact ahead of our expectations. So there is puts and takes in there, but I think it's a little early to speculate on 2021.

Michael Lasser -- UBS Investment Bank -- Analyst

Thank you.

Operator

And your next question comes from the line of Seth Sigman with Credit Suisse. Please go ahead.

Kieran McGrath -- Credit Suisse -- Analyst

Good morning. This is Kieran McGrath on for Seth Sigman. Congrats on the great quarter. Two questions from me. Firstly, you discussed DIY strength continuing quarter to date. Does that tell you that stimulus was a smaller piece of the elevated DIY demand in the first half? And related, do you now think that that elevated demand is more durable than your initial expectations?

Tom Greco -- President and Chief Executive Officer

I'm sorry, Kieran, can you repeat the first question? I'm not sure I understood everything.

Kieran McGrath -- Credit Suisse -- Analyst

Okay. Just regarding the strong quarter to date DIY trends, stimulus has now expired. So does that inform you that the stimulus was a smaller piece of that elevated demand in the first half? And then related, is that demand now more durable, in your opinion, than your initial expectations?

Tom Greco -- President and Chief Executive Officer

Well, I think the -- I guess the -- there's a lot of factors in there. I do think that we obviously benefited from stimulus and the unemployment benefits, but we know that in the back half, we're going to get less benefit from that. That said, the strength has continued as we indicated. When you've got a challenged economy and when you have COVID, there is a number of things that work in our favor. We know we're going to have less new vehicle sales. That means an aging fleet that means more repairs. It means more DIY work.

We know that people are going to avoid mass transportation. We hear a lot about the car as a safe place for people right now. So they're choosing to use a personal vehicle. There are some people that are buying cars because of that that have not used and did not have a vehicle before and they're buying a used vehicle to get around when they had been doing nothing but ridesharing. So that's going to help us. And the fact that people have time on their hands to do projects and are spending less on travel, entertainment and those types of things also benefit us. So I think there are some macroeconomic factors related to the environment and COVID that benefit us.

And then we do have a lot of confidence in our internal drivers. I mean, DieHard is launching. Our field team is very, very excited about it. Our marketing plans are kicking in. We're into our second year of Speed Perks. So we believe, regardless of the environment, we'll have strength in DIY in the back half.

Kieran McGrath -- Credit Suisse -- Analyst

Great. Thank you. And then secondly, regarding your category performance. Was that relatively broad based or was it led by maintenance and appearance? And then, what are you seeing in failure categories on the back of the miles driven trends that you discussed? Thank you.

Tom Greco -- President and Chief Executive Officer

Yeah, sure. Good question. I mean, there is some impact on the categories that really rely on -- rely on miles driven. If you talk about things like brakes, to a lesser extent undercar chassis. As the economy started to open back up, I mean, in the early part of the quarter, we were -- we were soft in those categories, particularly on the professional side. But we gained momentum throughout the quarter and now we're in the mid-single digit land growth rate in those categories. So, the categories that are very reliant on miles driven, we've seen an improvement in the last couple of months.

On failure, this intermittent driving that's going on obviously benefits certain categories for us, be that batteries or fuel pumps. There is others where we're seeing very, very strong growth. AC bounced back nicely in recent weeks. It was obviously quite warm in our geography. So that came on very strong. And as you heard from others, appearance, wash and wax, very, very strong performance, and that's also sustained. So you've got the normal dynamics around miles driven and its relationship to the category I don't think is as relevant. It doesn't correlate as highly as we're seeing strength in certain categories that really aren't depending on miles driven.

Kieran McGrath -- Credit Suisse -- Analyst

Thank you.

Operator

And your next question comes from the line of Elizabeth Suzuki with Bank of America. Please go ahead.

Elizabeth Lane Suzuki -- Bank of America Merrill Lynch -- Analyst

Great. Thank you. Just following up on a previous question. I guess looking at the cost reductions that were made in the quarter, I mean, it sounds like a lot of it was labor expense that will likely come back as the sales environment is more favorable, but at the same time you have longer-term cost savings initiatives that were delayed. So as we think about just the remainder of the year, should we expect labor costs to come back, but then longer-term you get the benefits of the larger initiatives over the next two, three years?

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Yeah, sure, Liz. This is Jeff. So we had obviously a number of cost initiatives that we put in place at the end of the first quarter. They did start to manifest themselves obviously in the second quarter. And you hit on the main things. It was -- the payroll was a big driver. Professional delivery -- as that segment was slower in recovering, we were able to see benefit there. And we saw benefits associated with cost we can control like travel, and then we saw benefits in areas like medical because a lot of our team members were deferring elective procedures and even checkups.

So as we look to the back half of the year, I think there is -- there's potential headwinds. There are some continued tailwinds, and then there are some that could go either way. So as professional recovers, we are going to have additional professional labor. We've got to deliver that part to the customer, and that just requires additional labor hours driving and costs associated with that. We are going to continue to invest in our marketing in the back half. We've launched that both for DieHard as well as our Same Day, and it's something we believe in, which should obviously drive revenue, but that's something we want to invest in. And then the capex, the projects that we're starting -- that we're restarting that were paused. There is obviously opex related to that. And we're going to continue to make those investments. And then obviously the COVID costs. And we're going to continue to prioritize people over profit.

Having said that, we think there are some tailwinds as well. We're going to continue to control things like travel. And in-store payroll is another area we believe that we can continue to leverage. And we've got our labor tools that's been put in place, and we're seeing a lot of benefit from that. So while we think there's going to be some additional labor associated on the professional side, we think we continue to control store payroll. And then there is a question mark with medical. Medical continued to be a tailwind but it can also be a headwind in back half if team members are going to be more comfortable going into the doctor's office to get checkups or start to do elective procedures. So those are sort of the costs that we're looking at in the back half. Obviously, we're still in the pandemic, there're still a lot of uncertainties, which is part of the reason why we don't have any guidance out there right now.

Elizabeth Lane Suzuki -- Bank of America Merrill Lynch -- Analyst

Okay. Great. Thank you.

Operator

And your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Simeon Ari Gutman -- Morgan Stanley -- Analyst

Thanks. Good morning, everyone. I wanted to start with a question on some of the DCs that you've begun to standardize. Can you talk about the sales and margin performance around those DCs or the areas in which they serve? I think some of them may have been impacted just because of COVID and some of the Northeast but curious since it's a building block of the transformation, how it's progressing and are you seeing real change as a stepping stone to margin.

Tom Greco -- President and Chief Executive Officer

Hey, good morning, Simeon. Yeah, for sure, out of the gate, we were really happy with what we were getting from the implementation of the new warehouse management system. The fill rates improved, the DC that we did was much more organized, the people there were trained and very excited about what was done. It was a material difference I think between what was there before. Obviously, the impact of COVID has been significant in -- throughout all of our DCs and in our stores. It's made it difficult to hire people. It's a challenging environment right now if you have an infection in the DC. There's obviously things that we have to go through. We have to quarantine people. So I think it's a difficult time to really benchmark the success of the warehouse management system at this point.

As we're starting to ramp back up and get people hired in our buildings -- we just went through this yesterday -- we are seeing progress and improvement on fill rates and how quickly to put things away and all of the things that go with running a DC successfully. So the short answer is, we're highly optimistic that the warehouse management system implementation will enable a much more structured labor management system for our buildings and standardize our buildings and allow us to drive productivity. During the last several months, it was difficult to realize some of those benefits.

Simeon Ari Gutman -- Morgan Stanley -- Analyst

Okay. Thanks for that. And then my follow-up is related to a couple of initiatives in the do-it-yourself side. I think marketing was on the cusp of changing and being enhanced. And then the DieHard battery -- and apologize if some of this was asked already, but curious where you are on these two initiatives and how you manage in this environment.

Tom Greco -- President and Chief Executive Officer

Sure. I mean, the marketing we repurposed from essentially a branded campaign to really lift up Advance, the name Advance. We've talked a lot about the low relative awareness of the Advance brand, and we remain committed to that. That said, as COVID hit and speed and urgency of getting parts became paramount, we repurposed that advertising to the -- to the Raleigh CRY [Phonetic] campaign that we've been running, which is Advance Same Day, and that has worked extremely well. It really drives home the speed and convenience and trusted advice that we can provide to our customers. It allows us to lift up Advance Same Day Curbside, so if somebody wants to come into our store and just wait in their car, we can walk the battery out, install it, and they don't even have to get out of their car. Advance Same Day Delivery, I think we're the only people in the industry doing that at this point. It has been very successful for us. And it's driven our pick up in store business as well. So we're happy with where that campaign went. That said, we're -- we remain committed to driving awareness of the Advance brand.

In terms of DieHard, we couldn't be more excited about DieHard. I mean, we had -- we mentioned in our prepared remarks that we went out and did virtual market tours. We were in a lot of stores very quickly. We saw our execution against it. Our team members are so excited about this brand. They've lived with it their whole lives. In some cases, a team member remembers when they're five years old and they went out and they bought their first battery, it was a DieHard battery. So we've got a tremendous amount of energy and enthusiasm around it. The marketing plans are coming together for the fall. But we dialed the execution on this, and we created our field team. We wanted to launch at that July 4 weekend, and we stopped the landing on that. The execution looks fantastic coast to coast on DieHard. So more to come there, Simeon, but off to a great start, and now we've got to really got the pull going so we can drive people into our stores.

Simeon Ari Gutman -- Morgan Stanley -- Analyst

Okay. Thanks for that, Tom.

Operator

And your next question comes from the line of Scot Ciccarelli with RBC Capital Markets. Please go ahead.

Robert Scot Ciccarelli -- RBC Capital Markets -- Analyst

Good morning, guys. So based on the flat comp that you had in the first four weeks of the quarter, it looks like comp side [Indecipherable] 10% to 11% or so in the last eight weeks of the quarter. So, Tom, when you talk about strong sales continuing so far in 3Q, does that mean we're still running at a double-digit rate?

Tom Greco -- President and Chief Executive Officer

Yeah. We're not going to give specific numbers, Scot, for it, but I mean, we obviously --we did end up running double digits those last couple of periods and we've continued to see strength into the third quarter, which we feel good about. So, the category remains strong for some of the reasons I mentioned earlier. So we feel good about it.

Robert Scot Ciccarelli -- RBC Capital Markets -- Analyst

Got it. Okay. And then when you talked about the 2,000 basis point gap across some of the geographies, I'm assuming that was kind of full quarter commentary. But should we assume there's been a fairly meaningful narrowing in that performance in kind of July and August so far just as consumer mobility has continued to improve? Are you still seeing that the gap that wide?

Tom Greco -- President and Chief Executive Officer

Yeah. Good question. We are seeing it narrow. And we commented on the Northeast, the mid-Atlantic, specifically where we've seen the most significant impact of COVID, and particularly on the Pro side, by the way. DIY, we're doing better there. But even there, you've got that differential that we're talking about. But it has narrowed as time has gone on, and we are optimistic it'll continue to narrow. It's just the people up in the Northeast and mid-Atlantic have been just less mobile and our overall performance up there has lagged. I mean, the center of the country was very, very strong throughout the entire quarter, both on Pro and DIY. Mid-Atlantic and the Northeast, challenged. West Coast, we did well on DIY. Pro was more challenged on the West Coast for us. So that's kind of the geographic performance, but we are seeing it narrowing, which is good for us.

Robert Scot Ciccarelli -- RBC Capital Markets -- Analyst

Got it. Very helpful. Thanks, guys.

Operator

And your next question comes from the line of Michael Montani with Evercore. Please go ahead.

Michael David Montani -- Evercore ISI -- Analyst

Hey, good morning. Thanks for taking the question. Just wanted to focus on two things. One was top line and then a margin follow-up. So just specifically as it relates to the top line, I was just hoping for some extra clarification and color around the Pro side. Was that positive during the quarter? And then anything you can share, Tom, in terms of traffic count versus ticket size for DIY and DIFM? And then I just had the margin follow-up after that.

Tom Greco -- President and Chief Executive Officer

Yeah. First of all, on Pro, we were down slightly in the quarter overall I think on ticket and traffic. Very, very strong ticket performance on DIY. Dollars per ticket up very strong. In terms of Pro, we were -- we measure accounts, right, Michael in Pro like how many accounts are we servicing. In April and into early May, that number dropped significantly. It was down 30%. For a couple of weeks, there was -- the garages were closed and some of these markets were shelter in place and were shut down. As the quarter progressed, the number of accounts we were servicing came back, and right up through the end of the quarter, we started to approach year-ago levels. We're still slightly negative, but approaching year-ago levels. But our dollars per account surged. So you're seeing some consolidation there a little bit, but overall our Pro business has recovered week in, week out since this thing started, and we're optimistic about that.

Michael David Montani -- Evercore ISI -- Analyst

Okay. Great. And then just on the margin front, kind of a two-parter. But one is, on SG&A dollars, Jeff had some significant puts and takes there. But if you think about the back half, can you kind of continue SG&A dollars to be more or less flattish with last year even if the volumes remain strong? What should we think about there? And then secondly on the gross margin front, just wanted to see what kind of inflation you are experiencing and if you feel you can get it through because, as I recall, there's significant tailwinds from cycling of Speed Perks 2.0 launch as well as supply chain leverage into 3Q that should be good for gross margin.

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Yeah, sure. Let me start with the SG&A. As I said on a previous question, we certainly have some tailwinds and we have some tailwinds. And if you kind of tick back through those, the headwinds are controllable. We have marketing, but if we need to scale it back, we can scale it back. The only -- the only one you really can't is COVID. I mean, we're going to -- we're going to spend what it takes to protect our people and protect our customers. Pro labor doesn't continue to trend the way it has been. We're not going to have drivers in the store if there's no parts to deliver. And then on the tailwind side, obviously travel and payroll in the store, I feel really confident we can continue to leverage that, not to mention the awareness that we're going to get from the marketing and the impact that we're going to get from DieHard that we really didn't see much in the second quarter. And then, medical, again, could go either way.

In terms of gross margin, inflation was relatively low in the quarter. I think we were right around 2%, maybe slightly under. And you're right, in the back half, there's two things we're going to be lapping on a -- you touched on one of them, in terms of Speed Perks, and then also the full impact of the tariff. So, on a year-over-year basis, we should be able to see some benefit there, assuming we don't get anything in the back half associated with elections or anything else. So, yes, certainly some opportunity.

Michael David Montani -- Evercore ISI -- Analyst

Thank you and good luck.

Operator

And your next question comes from the line of Daniel Imbro with Stephens, Inc. Please go ahead.

Daniel Robert Imbro -- Stephens Inc. -- Analyst

Hey. Good morning, guys.

Tom Greco -- President and Chief Executive Officer

Good morning.

Daniel Robert Imbro -- Stephens Inc. -- Analyst

Tom, can you update us on the status of the independent Carquest locations? Obviously, they're levered toward the DIFM market, which has underperformed. I know you added a few, but just any material change in the health of the independent landscape you're seeing, especially maybe August year-to-date, as we've seen the PPP funding kind of run out in late July. Any change you're seeing out there that [Indecipherable]?

Tom Greco -- President and Chief Executive Officer

Well, first of all, it is changing. There's no question about that. But, we grew in the quarter with our independents. We're really excited about that. I'd like to commend them. I mean, they did a phenomenal job amid tremendous challenges. I think, the team really banded together, the independents themselves, our field team, our pro team that supported them. We acted really fast. And a lot of our independent partners were able to just take all of the things we were doing inside of Advance to keep their team members safe, leverage the PPP loans. They were able to roll out curbside delivery in conjunction with our AAP stores, which allowed them to provide essential parts and services to their communities.

So, I think, more and more, we're able to move faster to enable our independents to do the things that they need to do to win in the marketplace. And that's why the Carquest program is growing. So, we feel very good about the progress that's been made there. And they had a strong quarter actually. So, we feel good about it, Daniel.

Daniel Robert Imbro -- Stephens Inc. -- Analyst

That's great. Helpful. And then, Jeff, maybe one on gross margin as a follow-up. We're hearing from transportation companies, especially in truckload and LTL, that rates are beginning to move a lot higher due to limited capacity. Can you remind us how much of your freight is exposed to third-party freight rates or contract rates? And then, how you are expecting that to maybe impact gross margin in the back half, maybe as a follow-up to the last question on gross margin?

Tom Greco -- President and Chief Executive Officer

Yeah. And we haven't broken out our third-party transportation, but we certainly do have exposure. A portion of it is third-party, a portion of it we do have internal. So, we do have exposure to it. But we haven't seen a significant amount of inflation here in the second quarter. Doesn't mean we won't get it in the back half. But what we've seen here in Q2 has been basically immaterial.

Daniel Robert Imbro -- Stephens Inc. -- Analyst

Yeah. Thanks.

Operator

And your next question comes from the line of Zach Fadem with Wells Fargo.

Zachary Fadem -- Wells Fargo Securities -- Analyst

Hey. Good morning. On the Do-it-for-Me, you mentioned performance was down slightly in the quarter. Curious if this was consistent across all the varying professional customer or commercial customer types, Jeff, and whether you saw any disparities across kind of mom and pop garages or regional chains.

Tom Greco -- President and Chief Executive Officer

Well, the way we measure that, Zach, is obviously we have our large strategic customers, we have our TechNet customers, we have the all other. What I can tell you is all of them have been bouncing back. As we mentioned in our most recent four-week period, which kind of is mid-June to mid-July, we were up very nicely in our professional business overall. And that really was across the board. Our strategic accounts are coming back. Our TechNet probably led the way, it did lead the way in the quarter. We added additional TechNets and our base TechNet customers performed very well in the quarter. And even the all other segment in the last four weeks, we grew. So, it was really a function of that first big change when COVID impacted the country in April when there was just people -- people closed down, and it was pretty uniform across our channels within Professional.

And then, as the country began to open back up, we saw it improve. And [Indecipherable] experienced similar things to us. We looked at the geographic performance and I talked to the CEOs of these companies. We do the benchmarking. Everybody struggled in the mid-Atlantic and the Northeast. Everybody had a huge growth rate in the center of the country. So, that's really what was going on. And I do think over time, as we said before, the large strategic accounts are going to continue to grow at an accelerated growth rate and where they have the scale, they're going to leverage that scale.

Zachary Fadem -- Wells Fargo Securities -- Analyst

Got it. That's helpful. And then, on the gross margin line, again, how much of this 60 basis-point expansion would you attribute to DIY mix? And how would you quantify that relative to the impact of other factors like LIFO and the supply chain leverage?

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Yeah. So, basically, in rank order, there were two major drivers to the gross margin expansion, the first actually being supply chain. We leveraged both in rate and dollars on a year-over-year basis. And then the second item would be your -- the mix that you're referring to. And then that was offset by what we call inventory related, which was largely -- you think of it in terms of volume because we took the inventory down, so substantially, those capitalized supply chain costs worked their way through the P&L. The LIFO impact for the quarter was a little over $3 million. And so year-over-year, we actually saw that as a tailwind, but it was a $3 million hit in the second quarter.

Zachary Fadem -- Wells Fargo Securities -- Analyst

Got it. That's helpful. Appreciate the time, guys.

Tom Greco -- President and Chief Executive Officer

Thanks, Zach.

Operator

And your next question comes from the line of Bret Jordan with Jefferies. Please go ahead.

Bret David Jordan -- Jefferies -- Analyst

Hey, good morning, guys.

Tom Greco -- President and Chief Executive Officer

Good morning.

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Good morning.

Bret David Jordan -- Jefferies -- Analyst

As you look at Duro-Last, at the -- sorry, DieHard with six weeks, I guess sort of history, how has the performance of the battery category been with that new brand? I mean, as you compare it to what you were doing with AutoCraft in the prior year in July, do you see anything that you can sort of measure the success with? And I guess, as you think about the DieHard brand for product expansion, are you going to keep that in battery or is that rolling out to broader categories?

Tom Greco -- President and Chief Executive Officer

Well, first of all, you've heard from others that batteries performed very well in the second quarter period for some of the reasons that we mentioned earlier, and that was fortuitous for us because obviously we're in the middle of a transition, and we wanted to sell through all of those AutoCraft batteries, but -- and that was a massive undertaking, Bret, for us. So, I mean, it enabled a very smooth transition. As I mentioned, every store in the country was full with DieHard in early July. We can see the share numbers. We like the share numbers a lot in batteries. And we're optimistic that DieHard is going to sustain that momentum. So, I think it's early to comment on the performance of it. But, there's no question that we are very bullish on our ability to drive market share gains in batteries in the back half of the year.

And in terms of what we're going to do with the brand, more to come there. I mean, we want to be very thoughtful and deliberate about DieHard. So, you think about the big things that we're focused on there. We have to win in batteries. That's kind of job number one. We want to make sure that we're doing the job there, and not kind of moving on to something else before we've established ourselves within batteries. But beyond that, there's a lot of extension opportunities that we're discussing, but you're not going to see a lot there over the next couple of months. I mean, right now we're focused on dialing the execution of the battery launch, marketing it flawlessly, making sure DIY consumers know that the only place they can get it is at Advance Auto Parts. And our Pro customers, we've got programs that we're launching there as well. And our team members -- we want to make sure that our team members are really, really clear on the benefits and the features associated with DieHard. So, that's kind of -- the current focus is on really dialing the battery launch in the back half of the year.

Bret David Jordan -- Jefferies -- Analyst

Okay. And then a quick question. You mentioned that you gained market share in the quarter. I guess, do you have a feeling for where the share gains may have come from? I mean, you did comment some other online and non-traditional auto retailers de-emphasize the category, or was it from smaller independents who were just sort of stressed with pre-care PPP funding?

Tom Greco -- President and Chief Executive Officer

Yeah. I think, it's a combination of both from what we can see, Bret. There's limited information that you can see the true online performance that when we look at share of buyers or some of the growth rates that you can get surrounding the online players, we can see those gains. And when we see our performance versus the market, we have to assume that some of those gains came from some smaller players also, which is not as clear to us, right. You can't see specifics there. You see us versus just the market. But I think it's a combination of both of those two.

Bret David Jordan -- Jefferies -- Analyst

Great. Thank you.

Operator

And your next question comes from the line of Seth Basham with Wedbush Securities. Please go ahead.

Seth Mckain Basham -- Wedbush Securities -- Analyst

Thanks a lot and good morning. My first question is just around the effect of -- the pressure on miles driven and whether or not you're seeing declines in failure and maintenance categories directly tied to miles driven, particularly in the regions where it has remained the weakest such as the mid-Atlantic and Northeast. Could you provide a little bit more color there?

Tom Greco -- President and Chief Executive Officer

Yeah. Honestly, Seth, on the -- it's impacted more the brakes, undercar chassis categories. And again, I mentioned earlier that that was early in the quarter. So we saw -- as miles driven dropped to minus 40 and minus 50, right, which was kind of the April numbers. And in particular, in the geographies you mentioned, we definitely saw a slowdown in brakes and to a lesser extent undercar chassis. But that gained momentum as the quarter went along. And by the time we got to the end of the quarter and into the third quarter -- and this was largely a professional comment by the way. We were able to see that number come up and we're now growing mid single digits in those categories.

In the failure related, particularly batteries, when you got intermittent driving, you're basically increasing the likelihood of failure. So, that has actually helped us and sales are up very strong in those categories. And we mentioned appearance and accessories, which people just have time on their hands, they're washing their own cars, they're detailing their own cars, they're not buying a new car, they're buying a used car that they want to work on and do some things. So, they're doing the things that people who have time on their hands are doing right now. So DIY -- it's a great time for DIY because people have time on their hands and they're going to do things at that time rather than just sit around the house and get outside and do the things that people love to do. So, miles driven is normally a very high correlation of performance in the category, but we're not seeing that same relationship that we've historically seen.

Seth Mckain Basham -- Wedbush Securities -- Analyst

That's really helpful. And then secondly on cross-banner distribution. I know you've delayed some of the expected changes and benefits. But for DCs, where you have implemented it so far, can you provide a little bit of an update as to types of improved margin or improved performance that you're seeing?

Tom Greco -- President and Chief Executive Officer

Yeah. We're right on the number in terms of the productivity we expect in the buildings that we've made the changes, Seth. So we feel very good about that. We're continuing to roll it out. We delayed it. I mean, it was a difficult quarter. You're running through all the challenges that we were facing. Our e-commerce business surged significantly in the quarter. We had COVID incidents in our distribution centers, which caused us to have to slow it down, which we didn't want to do, but we had to. So, we're not going to realize the full benefits until the third quarter of 2021 as we indicated in our prepared remarks, which moves it back about a quarter. But, in the buildings and the stores where we've made the change, you're just taking stem miles spread out. So, it's just great stem miles savings. As fuel costs fluctuate, that's going to fluctuate. But, overall we're -- it's on track with the planned productivity we expect.

Seth Mckain Basham -- Wedbush Securities -- Analyst

Thanks a lot and good luck.

Operator

And your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead.

Chandni Luthra -- Goldman Sachs -- Analyst

Hi. Thank you for taking my question. This is Chandni Luthra on behalf of Kate McShane. Tom, in terms of sort of thinking about COVID-related cost and you guys mentioned that you incurred $15 million of COVID costs in 2Q and part of it was one-time expenses like Plexiglass, etc. How should we think about this expense going forward?

Tom Greco -- President and Chief Executive Officer

Yeah. It's a tough one, obviously, to predict. We're going to continue to pay whatever we need to keep our people safe. We had $16 million in the first quarter, we had $15 million in the second quarter. So, one could say that is a run rate. We did have some one-time costs. Well, we had that in the first quarter as well. So the question really becomes, is there a third quarter one-time cost or is there a fourth quarter one-time cost. It remains to be seen. Like we said in some of our comments, we put in the Plexiglass, we continue with sanitation, masks, temperature taking, and then we did some support directly to our team members in the form of -- some one-time compensation. So, that's sort of the dynamics of the first half of the year, a little bit difficult to predict what's going to happen in the second half of the year. But, we're certainly going to make sure we keep our people safe.

Chandni Luthra -- Goldman Sachs -- Analyst

That is very helpful. Thank you. And if I could get a quick follow-up. In terms of your inventory down slightly in the quarter, how should we think about the back half outlook for inventory? And are there any issues in sort of sourcing in supply chain globally at this point or everything's pretty seamless right now?

Tom Greco -- President and Chief Executive Officer

Yeah. In terms of sourcing, we've been very successful in working with our supplier partners across the globe in terms of getting the SKUs that we need. We're -- we have some in-stocks that are a little bit lower in some of our lower -- slower velocity SKUs, but we intend to get that back on track in the second half of the year. So, we're not anticipating any significant investments or any significant decreases in the back half as we sit here today. Again, if we get another surge, it could drive down our inventory. But right now, we're well-stocked, we're well-prepared and we're going to keep working through that through the back of the year, as we make sure we can get the customers the parts they need.

Chandni Luthra -- Goldman Sachs -- Analyst

Glad. Thank you.

Operator

And your next question comes from the line of David Bellinger with Wolfe Research. Please go ahead.

David Bellinger -- Wolfe Research -- Analyst

Hey. Good morning and thanks for taking the questions. May be just somewhat of a follow-up on the last question. Given the volatility in sales trends and the strong pick-up off the lows in late April, have you sort of come across any supply constraints, especially within the Worldpac business? Is that something we could see from the deploying more toward the later stages of the year?

Tom Greco -- President and Chief Executive Officer

We haven't, David, I mean, it's -- we've obviously are managing this daily. We get an update that's comprehensive every Monday and every Friday, kind of lets us know where we are. It has been challenging because there has been a significant surge in demand and you've got suppliers and manufacturers out there that are scrambling to source. But we're well positioned. Our Worldpac team does a terrific job sourcing the parts that they get that are somewhat unique, a very long tail of OE parts and private label parts that they have, branded parts that they have. So, we haven't had anything specific that we would say we're in any way disadvantaged. I think we're actually very well-positioned versus the rest of market.

David Bellinger -- Wolfe Research -- Analyst

Got it. Thank you. And if I just follow up on -- in terms of online. So, online growth has been significant with DIY channel. So, what do you think from a competitive standpoint now that this category seems to be gaining more traction online? Have you seen any other players get more aggressive in the states and how are you addressing it?

Tom Greco -- President and Chief Executive Officer

I mean, the big key here, David, is to make sure -- I mean, obviously, we've had some new customers come to Advance in the last several months, and we've talked a lot about that over the last few months. How do we make sure that somebody walks into our store for the first time or goes to our online portal for the first time that we keep that customer? And obviously, Speed Perks is the vehicle to do that. We're very happy with the loyalty program that we have. We were very focused on that in the past 12 months. We indicated that the number of people year-on-year was up 30%.

We also know that we're graduating people that were in Speed Perks to the higher tiers. We had a 24% increase in graduation rates in the quarter. So, somebody who was a club member is now a VIP or an elite. So, that tells us that that person is increasing their share of wallet with Advance, which is very, very important in this time frame. You can't -- you don't want us to be a won and done, you want us to make it sticky. And we know that our average dollars per member is up significantly. So, that tells us we're driving share of wallets. So that's kind of how we look at it to make sure that these online purchases that they're making with us are translated into a great customer experience, whether that's online, on our app, by the way, which we launched in the quarter, or in our store. And I feel that we're making good progress there. There's a tremendous amount of runway there. We've now got that first party data, we've got an email, we're able to personalize our offers.

So obviously, other online players are going to do what they do. But our ability to know the category and provide the subject matter expertise and content knowledge that we have, along with the trusted advice and the speed and convenience of our stores, we feel we're well positioned to compete in that world.

David Bellinger -- Wolfe Research -- Analyst

Very good. Thank you very much. Appreciate it.

Operator

And there are no further questions at this time. I will turn the call back over to Tom for closing remarks.

Tom Greco -- President and Chief Executive Officer

Well, thanks again for joining us today. And as you heard, we delivered strong results in Q2 and we're very optimistic about the second half of 2020. During this unprecedented time we're all enduring, I'm incredibly proud of how our team has come together to serve our customers with care and speed while protecting the health and safety of all of our team members. I'm confident that the actions we're taking will allow us continue building on this positive momentum for Advance and enable meaningful top line growth, margin expansion and significant cash flow generation. We look forward to talking to you again in November. Thanks again for your continued support and please stay safe.

Operator

[Operator Closing Remarks]

Duration: 69 minutes

Call participants:

Elisabeth Eisleben -- Senior Vice President, Communications and Investor Relations

Tom Greco -- President and Chief Executive Officer

Jeff Shepherd -- Executive Vice President, Chief Financial Officer

Michael Lasser -- UBS Investment Bank -- Analyst

Kieran McGrath -- Credit Suisse -- Analyst

Elizabeth Lane Suzuki -- Bank of America Merrill Lynch -- Analyst

Simeon Ari Gutman -- Morgan Stanley -- Analyst

Robert Scot Ciccarelli -- RBC Capital Markets -- Analyst

Michael David Montani -- Evercore ISI -- Analyst

Daniel Robert Imbro -- Stephens Inc. -- Analyst

Zachary Fadem -- Wells Fargo Securities -- Analyst

Bret David Jordan -- Jefferies -- Analyst

Seth Mckain Basham -- Wedbush Securities -- Analyst

Chandni Luthra -- Goldman Sachs -- Analyst

David Bellinger -- Wolfe Research -- Analyst

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