AutoZone, Inc. (NYSE: AZO) today reported net sales of $4.0 billion
for its first quarter (12 weeks) ended November 19, 2022, an
increase of 8.6% from the first quarter of fiscal 2022 (12 weeks).
Domestic same store sales, or sales for stores open at least one
year, increased 5.6% for the quarter.
“I would again like to thank and congratulate
our AutoZoners across the Company for their
ongoing commitment to deliver great results and
exceptional customer service. Their efforts allowed us to
deliver solid same store sales results on top of last year’s very
strong 13.6%. While our Commercial sales growth accelerated
15%, our retail sales also grew impressively from a year ago.
We continue to believe our initiatives to grow our business
position us well for the remainder of our fiscal year,” said Bill
Rhodes, Chairman, President and Chief Executive Officer.
For the quarter, gross profit, as a percentage of sales, was
50.1%, a decrease of 242 basis points versus the prior year. The
decrease in gross margin was driven by a 203 basis point ($81
million) non-cash LIFO charge driven primarily by rising freight
costs, with the remaining deleverage primarily from accelerated
growth in our Commercial business. Operating expenses, as a
percentage of sales, were flat to last year at 31.9%.
Operating profit decreased 4.2% to $723.0 million. Net income
for the quarter decreased 2.9% over the same period last year to
$539.3 million, while diluted earnings per share increased 6.9% to
$27.45 from $25.69 in the year-ago quarter.
Under our share repurchase program, we repurchased 392 thousand
shares of our common stock for $900.0 million during the first
quarter, at an average price of $2,295 per share. At quarter end,
we had $2.7 billion remaining under our current share repurchase
authorization.
The Company’s inventory increased 17.6% over the same period
last year, driven by inflation and our growth initiatives. Net
inventory, defined as merchandise inventories less accounts
payable, on a per store basis, was negative $249 thousand versus
negative $207 thousand last year and negative $240 thousand last
quarter.“We continue to strive to be the best place
to shop for customers’ automotive needs while also being an
exceptional place to work. We also strive to deliver
exceptional customer service while focusing on our initiatives to
grow sales and market share across both our retail and commercial
sectors. As we understand our
responsibility of being good stewards of our
stockholders’ capital, we will remain steadfast in our long-term,
disciplined approach to increasing operating earnings and cash
flows while utilizing our balance sheet effectively,”
said Rhodes.
During the quarter ended November 19, 2022, AutoZone opened 28
new stores in the U.S., opened three stores in Mexico and four
stores in Brazil. As of November 19, 2022, the Company had 6,196
stores in the U.S., 706 in Mexico and 76 in Brazil for a total
store count of 6,978.
AutoZone is the leading retailer and distributor of automotive
replacement parts and accessories in the Americas. Each store
carries an extensive product line for cars, sport utility vehicles,
vans and light trucks, including new and remanufactured automotive
hard parts, maintenance items, accessories, and non-automotive
products. Many stores also have a commercial sales program that
provides commercial credit and prompt delivery of parts and other
products to local, regional and national repair garages, dealers,
service stations and public sector accounts. We also have
commercial programs in the majority of our stores in Mexico and
Brazil. AutoZone also sells the ALLDATA brand automotive
diagnostic, repair and shop management software through
www.alldata.com. Additionally, we sell automotive hard parts,
maintenance items, accessories and non-automotive products through
www.autozone.com, and our commercial customers can make purchases
through www.autozonepro.com. We also provide product information on
our Duralast branded products through www.duralastparts.com.
AutoZone does not derive revenue from automotive repair or
installation.
AutoZone will host a conference call this morning, Tuesday,
December 6, 2022, beginning at 10:00 a.m. (ET) to discuss its first
quarter results. This call is being web cast and can be accessed,
along with supporting slides, at AutoZone’s website at
www.autozone.com and clicking on Investor Relations. Investors may
also listen to the call by dialing (888) 506-0062, passcode
AUTOZONE. In addition, a telephone replay will be available by
dialing (877) 481-4010, replay passcode 47106 through December 20,
2022.
This release includes certain financial information not derived
in accordance with generally accepted accounting principles
(“GAAP”). These non-GAAP measures include adjustments to reflect
return on invested capital, adjusted debt and adjusted debt to
EBITDAR. The Company believes that the presentation of these
non-GAAP measures provides information that is useful to investors
as it indicates more clearly the Company’s comparative year-to-year
operating results, but this information should not be considered a
substitute for any measures derived in accordance with GAAP.
Management targets the Company’s capital structure in order to
maintain its investment grade credit ratings. The Company believes
this is important information for the management of its debt levels
and share repurchases. We have included a reconciliation of this
additional information to the most comparable GAAP measures in the
accompanying reconciliation tables.
Certain statements contained herein constitute forward-looking
statements that are subject to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements typically use words such as “believe,” “anticipate,”
“should,” “intend,” “plan,” “will,” “expect,” “estimate,”
“project,” “positioned,” “strategy,” “seek,” “may,” “could” and
similar expressions. These are based on assumptions and assessments
made by our management in light of experience and perception of
historical trends, current conditions, expected future developments
and other factors that we believe to be appropriate. These
forward-looking statements are subject to a number of risks and
uncertainties, including without limitation: product demand, due to
changes in fuel prices, miles driven or otherwise; energy prices;
weather; competition; credit market conditions; cash flows; access
to available and feasible financing; future stock repurchases; the
impact of recessionary conditions; consumer debt levels; changes in
laws or regulations; risks associated with self-insurance; war and
the prospect of war, including terrorist activity; the impact of
public health issues, such as the ongoing global coronavirus
(“COVID-19”) pandemic; inflation; the ability to hire, train and
retain qualified employees; construction delays; failure or
interruption of our information technology systems; issues relating
to the confidentiality, integrity or availability of information,
including due to cyber-attacks; historic growth rate
sustainability; downgrade of our credit ratings; damage to our
reputation; challenges in international markets; origin and raw
material costs of suppliers; inventory availability; disruption in
our supply chain; impact of tariffs; impact of new accounting
standards; and business interruptions. Certain of these risks and
uncertainties are discussed in more detail in the “Risk Factors”
section contained in Item 1A under Part 1 of the Company’s Annual
Report on Form 10-K for the year ended August 27, 2022, and these
Risk Factors should be read carefully. Forward-looking statements
are not guarantees of future performance and actual results,
developments and business decisions may differ from those
contemplated by such forward-looking statements. Events described
above and in the “Risk Factors” could materially and adversely
affect our business. However, it should be understood that it is
not possible to identify or predict all such risks and other
factors that could affect these forward-looking statements.
Forward-looking statements speak only as of the date made. Except
as required by applicable law, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Contact Information:Financial: Brian Campbell at (901) 495-7005,
brian.campbell@autozone.comMedia: David McKinney at (901) 495-7951,
david.mckinney@autozone.com
AutoZone's 1st Quarter Highlights - Fiscal
2023 |
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations |
|
|
|
|
1st Quarter, FY2023 |
|
|
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
GAAP Results |
|
|
|
|
12 Weeks
Ended |
|
12 Weeks
Ended |
|
|
|
|
November 19, 2022 |
|
November 20, 2021 |
|
|
|
|
|
|
|
|
|
Net sales |
$ |
3,985,067 |
|
|
$ |
3,668,904 |
|
|
|
Cost of sales |
|
1,990,445 |
|
|
|
1,743,744 |
|
|
|
Gross profit |
|
1,994,622 |
|
|
|
1,925,160 |
|
|
|
Operating, SG&A expenses |
|
1,271,589 |
|
|
|
1,170,675 |
|
|
|
Operating profit (EBIT) |
|
723,033 |
|
|
|
754,485 |
|
|
|
Interest expense, net |
|
57,723 |
|
|
|
43,284 |
|
|
|
Income before taxes |
|
665,310 |
|
|
|
711,201 |
|
|
|
Income tax expense |
|
125,992 |
|
|
|
155,966 |
|
|
|
Net income |
$ |
539,318 |
|
|
$ |
555,235 |
|
|
|
Net income per share: |
|
|
|
|
|
|
Basic |
$ |
28.37 |
|
|
$ |
26.45 |
|
|
|
|
Diluted |
$ |
27.45 |
|
|
$ |
25.69 |
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
Basic |
|
19,007 |
|
|
|
20,988 |
|
|
|
|
Diluted |
|
19,645 |
|
|
|
21,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Information |
|
|
|
|
|
(in thousands) |
|
|
|
|
|
|
|
November 19, 2022 |
|
November 20, 2021 |
|
August 27, 2022 |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
269,790 |
|
|
$ |
961,125 |
|
|
$ |
264,380 |
|
Merchandise inventories |
|
5,607,690 |
|
|
|
4,768,258 |
|
|
|
5,638,004 |
|
Current assets |
|
6,633,118 |
|
|
|
6,349,146 |
|
|
|
6,627,984 |
|
Property and equipment, net |
|
5,194,546 |
|
|
|
4,857,928 |
|
|
|
5,170,419 |
|
Operating lease right-of-use assets |
|
2,922,148 |
|
|
|
2,717,566 |
|
|
|
2,918,817 |
|
Total assets |
|
15,315,933 |
|
|
|
14,460,949 |
|
|
|
15,275,043 |
|
Accounts payable |
|
7,345,981 |
|
|
|
6,171,344 |
|
|
|
7,301,347 |
|
Current liabilities |
|
8,708,989 |
|
|
|
8,087,893 |
|
|
|
8,588,393 |
|
Operating lease liabilities, less current portion |
|
2,838,433 |
|
|
|
2,624,676 |
|
|
|
2,837,973 |
|
Total debt |
|
6,328,344 |
|
|
|
5,271,266 |
|
|
|
6,122,092 |
|
Stockholders' deficit |
|
(3,837,923 |
) |
|
|
(2,124,750 |
) |
|
|
(3,538,913 |
) |
Working capital |
|
(2,075,871 |
) |
|
|
(1,738,747 |
) |
|
|
(1,960,409 |
) |
|
|
|
|
|
|
|
AutoZone's
1st Quarter Highlights - Fiscal
2023 |
|
Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
Adjusted Debt /
EBITDAR |
(in thousands, except adjusted
debt to EBITDAR ratio) |
Trailing 4 Quarters |
|
November 19, 2022 |
|
|
November 20, 2021 |
|
Net income |
$ |
2,413,687 |
|
|
$ |
2,283,116 |
|
Add: Interest expense |
206,077 |
|
|
192,442 |
|
Income tax expense |
619,513 |
|
|
608,229 |
|
EBIT |
3,239,277 |
|
|
3,083,787 |
|
|
|
|
|
|
|
Add: Depreciation and amortization |
451,886 |
|
|
417,722 |
|
Rent expense(1) |
383,880 |
|
|
349,680 |
|
Share-based expense |
75,322 |
|
|
59,899 |
|
EBITDAR |
$ |
4,150,365 |
|
|
$ |
3,911,088 |
|
|
|
|
|
|
|
Debt |
$ |
6,328,344 |
|
|
$ |
5,271,266 |
|
Financing lease liabilities |
309,320 |
|
|
274,703 |
|
Add: Rent x 6(1) |
2,303,280 |
|
|
2,098,080 |
|
Adjusted debt |
$ |
8,940,944 |
|
|
$ |
7,644,049 |
|
|
|
|
|
|
|
Adjusted debt to EBITDAR |
2.2 |
|
|
2.0 |
|
|
|
|
|
|
|
Adjusted Return on Invested Capital (ROIC) |
|
|
|
|
|
(in thousands, except
ROIC) |
|
|
|
|
|
|
Trailing 4 Quarters |
|
|
November 19, 2022 |
|
|
November 20, 2021 |
|
Net income |
$ |
2,413,687 |
|
|
$ |
2,283,116 |
|
Adjustments: |
|
|
|
|
|
Interest expense |
206,077 |
|
|
192,442 |
|
Rent expense(1) |
383,880 |
|
|
349,680 |
|
Tax effect(2) |
(120,351 |
) |
|
(113,846 |
) |
Adjusted after-tax return |
$ |
2,883,293 |
|
|
$ |
2,711,392 |
|
|
|
|
|
|
|
Average debt(3) |
$ |
5,924,006 |
|
|
$ |
5,368,050 |
|
Average stockholders' deficit(3) |
(3,205,259 |
) |
|
(1,647,246 |
) |
Add: Rent x 6(1) |
2,303,280 |
|
|
2,098,080 |
|
Average financing lease liabilities(3) |
291,106 |
|
|
247,537 |
|
Invested capital |
$ |
5,313,133 |
|
|
$ |
6,066,421 |
|
|
|
|
|
|
|
Adjusted After-Tax
ROIC |
54.3 |
% |
|
44.7 |
% |
|
|
|
|
|
|
(1) The table below outlines the calculation of rent expense and
reconciles rent expense to total lease cost, per ASC 842,
the most directly comparable GAAP financial measure, for the
trailing four quarters ended November 19, 2022 and November
20, 2021 |
|
|
Trailing 4 Quarters |
|
(in thousands) |
|
November 19, 2022 |
|
November 20, 2021 |
Total lease cost, per ASC 842, for the trailing four quarters |
|
$ |
483,867 |
|
|
$ |
436,488 |
|
Less: Financing lease interest and amortization |
|
(72,400 |
) |
|
(61,102 |
) |
Less: Variable operating lease components, related to insurance and
common area maintenance |
|
(27,587 |
) |
|
(25,706 |
) |
Rent expense for the trailing four quarters |
|
$ |
383,880 |
|
|
$ |
349,680 |
|
(2) Effective tax rate over trailing four quarters ended November
19, 2022 and Novmeber 20, 2021 was 20.4% and
21.0% |
(3)All averages are computed based on trailing five quarter
balances |
Other
Selected Financial Information |
(in
thousands) |
|
November 19, 2022 |
|
November 20, 2021 |
Cumulative share repurchases ($ since fiscal 1998) |
$ |
30,992,420 |
|
$ |
26,632,428 |
Remaining share repurchase authorization ($) |
2,657,580 |
|
1,017,572 |
|
|
|
|
Cumulative share repurchases (shares since fiscal 1998) |
152,901 |
|
150,803 |
|
|
|
|
Shares outstanding, end of
quarter |
18,797 |
|
20,674 |
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
November 19, 2022 |
|
November 20, 2021 |
|
|
|
|
Depreciation and
amortization |
$ |
109,253 |
|
$ |
99,590 |
|
|
|
|
Cash flow from operations |
793,587 |
|
777,930 |
|
|
|
|
Capital spending |
114,397 |
|
102,269 |
AutoZone's 1st
Quarter Highlights - Fiscal 2023 |
Condensed
Consolidated Statements of Operations |
Selected
Operating Highlights |
|
Store Count
& Square Footage |
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended |
|
|
12 Weeks
Ended |
|
|
|
|
|
|
|
November 19, 2022 |
|
|
November 20, 2021 |
|
|
|
|
|
|
Domestic: |
|
|
|
|
|
|
|
|
|
|
Beginning stores |
|
6,168 |
|
|
|
|
6,051 |
|
|
|
|
|
|
|
Stores opened |
|
28 |
|
|
|
|
15 |
|
|
|
|
|
|
|
Ending domestic stores |
|
6,196 |
|
|
|
|
6,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relocated stores |
|
3 |
|
|
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores with commercial programs |
|
5,459 |
|
|
|
|
5,211 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square footage (in thousands) |
|
40,874 |
|
|
|
|
39,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mexico: |
|
|
|
|
|
|
|
|
|
|
Beginning stores |
|
703 |
|
|
|
|
664 |
|
|
|
|
|
|
|
Stores opened |
|
3 |
|
|
|
|
2 |
|
|
|
|
|
|
|
Ending Mexico stores |
|
706 |
|
|
|
|
666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil: |
|
|
|
|
|
|
|
|
|
|
Beginning stores |
|
72 |
|
|
|
|
52 |
|
|
|
|
|
|
|
Stores opened |
|
4 |
|
|
|
|
1 |
|
|
|
|
|
|
|
Ending Brazil stores |
|
76 |
|
|
|
|
53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
6,978 |
|
|
|
|
6,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square footage (in thousands) |
|
46,708 |
|
|
|
|
45,214 |
|
|
|
|
|
|
|
Square footage per store |
|
6,694 |
|
|
|
|
6,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
Statistics |
($ in thousands,
except sales per average square foot) |
|
12 Weeks
Ended |
|
|
12 Weeks
Ended |
|
|
Trailing 4
Quarters |
|
|
Trailing 4
Quarters |
Total AutoZone Stores (Domestic, Mexico and
Brazil) |
November 19, 2022 |
|
|
November 20, 2021 |
|
|
November 19, 2022 |
|
|
November 20, 2021 |
Sales per average store |
$ |
563 |
|
|
|
$ |
532 |
|
|
|
$ |
2,365 |
|
|
|
$ |
2,226 |
|
Sales per average square foot |
$ |
84 |
|
|
|
$ |
80 |
|
|
|
$ |
354 |
|
|
|
$ |
335 |
|
|
|
|
|
|
|
|
|
|
|
|
Total Auto Parts (Domestic, Mexico and
Brazil) |
|
|
|
|
|
|
|
|
|
|
Total auto parts sales |
$ |
3,915,907 |
|
|
|
$ |
3,605,508 |
|
|
|
$ |
16,273,595 |
|
|
|
$ |
14,885,624 |
|
%
Increase vs. LY |
|
8.6 |
% |
|
|
|
16.2 |
% |
|
|
|
9.3 |
% |
|
|
|
16.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Domestic Commercial |
|
|
|
|
|
|
|
|
|
|
Total domestic commercial sales |
$ |
1,034,356 |
|
|
|
$ |
899,919 |
|
|
|
$ |
4,364,852 |
|
|
|
$ |
3,550,026 |
|
%
Increase vs. LY |
|
14.9 |
% |
|
|
|
29.4 |
% |
|
|
|
23.0 |
% |
|
|
|
26.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Average sales per program per week |
$ |
16.0 |
|
|
|
$ |
14.4 |
|
|
|
$ |
15.7 |
|
|
|
$ |
13.3 |
|
%
Increase vs. LY |
|
11.1 |
% |
|
|
|
25.2 |
% |
|
|
|
18.0 |
% |
|
|
|
23.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
All
Other, including ALLDATA |
|
|
|
|
|
|
|
|
|
|
All other sales |
$ |
69,160 |
|
|
|
$ |
63,396 |
|
|
|
$ |
294,800 |
|
|
|
$ |
258,605 |
|
%
Increase vs. LY |
|
9.1 |
% |
|
|
|
20.4 |
% |
|
|
|
14.0 |
% |
|
|
|
13.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended |
|
|
12 Weeks
Ended |
|
|
|
|
|
|
|
November 19, 2022 |
|
|
November 20, 2021 |
|
|
|
|
|
|
Domestic same store sales |
|
5.6 |
% |
|
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory Statistics (Total Stores) |
|
|
|
|
|
|
|
|
|
|
|
as
of |
|
|
as
of |
|
|
|
|
|
|
|
November 19, 2022 |
|
|
November 20, 2021 |
|
|
|
|
|
|
Accounts payable/inventory |
|
131.0 |
% |
|
|
|
129.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
Inventory |
$ |
5,607,690 |
|
|
|
$ |
4,768,258 |
|
|
|
|
|
|
|
Inventory per store |
|
804 |
|
|
|
|
703 |
|
|
|
|
|
|
|
Net inventory (net of payables) |
|
(1,738,291 |
) |
|
|
|
(1,403,086 |
) |
|
|
|
|
|
|
Net inventory / per store |
|
(249 |
) |
|
|
|
(207 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing 5
Quarters |
|
|
|
|
|
|
|
November 19, 2022 |
|
|
November 20, 2021 |
|
|
|
|
|
|
Inventory turns |
|
1.5 |
|
x |
|
|
1.5 |
|
x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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