O Reilly Automotive (ORLY) Q1 FY26 earnings call: guidance and Q&A

Is O'Reilly's market share accelerating relative to the industry, and is this corroborated by internal data? What are the drivers?

Brad Beckham confirmed that both internal and external data indicate O'Reilly is driving solid market share gains, potentially beyond what has been seen in recent years, across both retail and professional segments. He attributed this to high-level execution by all teams (store operations, sales, supply chain) and a focus on continuous improvement and customer service.

“Yes, I think directionally, when we look at the data that we see both internally and externally, we do agree with you that our team continues to drive solid share gains beyond maybe even what we've seen in the last couple of years and on both sides of the business.”

asked by Simeon Gutman · answered by Brad Beckham

What percentage of professional customers consider O'Reilly their primary distributor, and is this percentage increasing?

Brad Beckham stated that the company does not disclose the exact percentage of primary distributor share. However, he expressed satisfaction with broad-based performance across all markets and customer types, noting success with both existing and new customers. He emphasized that even in mature markets, O'Reilly still has significant growth potential, with only about 10% share in some of its oldest regions.

“We don't disclose exactly what that percentage looks like to that part of your question, but just feel really good about overall performance across all markets and all customer types, both with new customers and existing customers the same.”

asked by Simeon Gutman · answered by Brad Beckham

Given the 6% like-for-like inflation in Q1, how will changing input costs impact its deceleration, especially with potential gasoline cost increases?

Jeremy Fletcher clarified that the full-year guidance still assumes 3% same SKU inflation. He explained that their approach is not to speculate on future price movements without clear evidence. He expects a year-over-year tailwind in Q2, with comparisons against 2025 price increases in the back half, and a muted inflation expectation within the average ticket growth for the back half.

“What informed our outlook from an inflation perspective this year was really how we saw price levels change last year where that had stabilized and kind of how we've entered and moved into 2026, and haven't really seen fundamental shifts or movements.”

asked by Gregory Melich · answered by Jeremy Fletcher

Was the Q1 demand surge, partly attributed to tax refunds, an 'extra couple of hundred basis points' of demand, and how will this cadence affect spring/summer?

Brad Beckham avoided quantifying the exact impact of tax refunds or weather. He suggested that the strong Q1 performance was more likely due to 'catch-up' demand from consumers who had deferred maintenance in prior quarters, rather than a pull-forward of future demand. He noted that both tax refunds and favorable weather were overall helpers.

“Part of that, we feel, is contributed to or should be attributed to tax refunds. Part of that, we feel like even though there was some choppiness week-to-week from a weather perspective, weather on balance was a tailwind for us, we feel.”

asked by Gregory Melich · answered by Brad Beckham

Will product cost inflation (commodities, ocean freight) be passed on, while domestic fuel costs (supply chain, DIFM deliveries) are absorbed? Is there a point where domestic freight costs are passed through?

Jeremy Fletcher confirmed that product acquisition costs, including the freight component, are generally viewed as part of the product cost and would be passed through after working with suppliers to mitigate. Operating fuel costs, which show up in distribution costs and SG&A, are managed within the broader expense outlook. He stated that if operating costs are sustained and broad-based, the industry has the ability to pass them through, typically coupled with product price increases.

“So historically, for us, a lot of times, it's also that our suppliers obtain here a big portion of that. And so what we see there, we view from that one is the product cost and it's, I think, no different for us than any other kind of components of input costs that we would pass through to a customer and pricing.”

asked by Christian Carlino · answered by Jeremy Fletcher

What drove the 5.5% SG&A per store growth in Q1? Was it primarily due to higher comps or the legal/healthcare issues from previous quarters, and how will it evolve?

Jeremy Fletcher explained that Q1 SG&A growth was largely in line with expectations, driven by wage rates and incremental spend to support higher transaction volumes. He noted that the higher per-store growth rate was anticipated due to comparisons with the back half of last year. The exposure to insurance and liability costs was consistent with expectations and did not represent a trend change.

“When we look at it from a year-over-year perspective, we have had an expectation that the first quarter, in particular, and a little bit in the first half, we would see a higher per store SG&A growth rate just because of the kind of the cadence of what we saw from the pressure perspective in the back half of last year.”

asked by Michael Baker · answered by Jeremy Fletcher

With private label over 50%, is there a target for penetration, and are there regional differences in adoption?

Brent Kirby stated there is no specific target for private label penetration; the company lets customers choose between private label and national brands. Brad Beckham added that private label adoption is strong and consistent across both mature and new expansion markets, attributing this to the trust customers have in their diversified proprietary brands.

“So we don't have a stated goal that we're going after there in terms of percent penetration. We let the customer vote with their wallet.”

asked by Bret Jordan · answered by Brent Kirby

What level of gas prices would impact miles driven, historically cited as $4/gallon, and how is this evolving?

Brad Beckham explained that it typically takes a sustained level of heightened fuel prices, well over $4/gallon, to minimally affect miles driven, which has not been observed yet across most markets. He acknowledged that short-term spikes can create consumer shock, but no direct impact on demand has been seen. He emphasized that the low-to-middle income core customer has faced significant inflation in other areas.

“But as we mentioned earlier on the business front, aside from expenses on the share consumer front and what we're seeing from consumer demand, we have not seen an impact that we would tie directly to gas prices.”

asked by Maksim Rakhlenko · answered by Brad Beckham