O’Reilly Automotive (ORLY) Gabelli Funds 48th Annual Automotive Aftermarket Symposium summary

Company overview and business model

• Operates 6,200 stores with a 50/50 revenue split between DIY and professional installer channels.

• Focuses on non-discretionary, hard parts with over a million SKUs, supported by a regional distribution center to hub to spoke model.

• Average store carries 22,000 SKUs, hub stores over 70,000, and regional DCs about 175,000.

• DIY customers are typically lower to middle income, while professional customers value speed and service.

• Service and relationships are central to the business, with a strong emphasis on rapid parts delivery.

Distribution network and competitive advantages

• Maintains 32 regional distribution centers, strategically located in metro markets for proximity to customers.

• DCs replenish stores five nights a week within a 250-mile radius, supporting breadth of SKUs and rapid service.

• Ongoing investments include new and relocated DCs in Springfield, Atlanta, and a greenfield site in Northern Virginia.

• The Northern Virginia DC will enable expansion into the upper Mid-Atlantic, covering a third of the U.S. population.

• Distribution model is more expensive but provides a hard-to-replicate competitive edge.

Market landscape and growth opportunities

• DIY market is consolidated, but the professional installer (DIFM) market remains highly fragmented, with over 50% share held by independents.

• Independents compete on price and relationships, but fragmentation offers opportunities for greenfield expansion and M&A.

• Mexico presents significant greenfield and consolidation opportunities, with a fragmented market and older vehicle fleet.

• Canadian market is more consolidated, but rural and blue-collar markets offer DIFM and niche DIY potential.

• Vast-Auto acquisition in Canada provides a strong local team and platform for further expansion.