ORLY O Reilly Automotive Inc

O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") (Nasdaq: ORLY) today announced record revenues and earnings for the second quarter of 2006, representing 51 quarters of record revenues and earnings for O'Reilly since becoming a public company in April 1993. Net income for the second quarter ended June 30, 2006, totaled $49.3 million, up 14.9% from $42.9 million for the same period in 2005. Diluted earnings per common share for the second quarter of 2006 increased 13.2% to $0.43 on 115.2 million shares compared to $0.38 for the second quarter of 2005 on 113.1 million shares. Product sales for the three months ended June 30, 2006, totaled $591 million, up 13.4% from $521 million for the same period a year ago. Gross profit for the second quarter of 2006 increased to $261 million (or 44.1% of product sales) from $229 million (or 43.9% of product sales) for the second quarter of 2005, representing an increase of 14.0%. Operating, Selling, General and Administrative ("OSG&A") expenses increased to $183 million (or 30.9% of product sales) for the second quarter of 2006 from $161 million (or 30.9% of product sales) for the second quarter of 2005, representing an increase of 13.6%. Net income for the first six months of 2006 totaled $89.9 million, up 18.0% from $76.1 million for the same period a year ago. Diluted earnings per common share for the first six months of 2006 increased 16.4% to $0.78 on 114.9 million shares compared to $0.67 a year ago on 112.8 million shares. Product sales for the first six months of 2006 totaled $1,128 million, up 14.2% from $987 million for the same period a year ago. Gross profit for the first six months of 2006 increased to $494 million (or 43.8% of product sales) from $425 million (or 43.1% of product sales) for the same period a year ago, representing an increase of 16.3%. OSG&A expenses increased to $351 million (or 31.1% of product sales) for the first six months of 2006 from $303 million (or 30.7% of product sales) for the same period a year ago, representing an increase of 15.7%. Comparable store product sales for stores open at least one year increased 3.5% and 3.6% for the second quarter and first six months of 2006 respectively. "We are pleased with another successful quarter for Team O'Reilly," stated Greg Henslee, CEO and Co-President. "We were able to achieve strong gross and operating margins and considering the difficult 9.6% comparable store sales comparison in the second quarter 2005, are satisfied with the solid 3.5% comparable store sales growth. These results reflect the daily commitment by Team O'Reilly to provide the absolute best customer service levels in the industry." Ted Wise, COO and Co-President, stated: "The quarter was highlighted by the opening of 49 new stores and our newest distribution center in Indianapolis. This new DC opening has been very successful and is supporting our expansion into this new market." The Company will host a conference call Thursday, July 27, 2006, at 10:00 a.m. central time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company's web site, www.oreillyauto.com, by clicking on "Investor Relations" then "News Room." O'Reilly Automotive, Inc. is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional installer markets. Founded in 1957 by the O'Reilly family, the Company operated 1,555 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of June 30, 2006. The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by forward-looking words such as "expect," "believe," "anticipate," "should," "plan," "intend," "estimate," "project," "will" or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the Risk Factors sections of the Company's Form 10-K for the year ended December 31, 2005, for more details. -0- *T O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) June 30, December 31, 2006 2005 ----------- ------------ (Unaudited) (Note) Assets Current assets: Cash and cash equivalents $ 55,247 $ 31,384 Accounts receivable, net 82,612 73,849 Amounts receivable from vendors, net 62,334 57,224 Inventory 800,459 726,390 Other current assets 15,211 22,845 ----------- ------------ Total current assets 1,015,863 911,692 Property and equipment, at cost 1,108,717 992,899 Accumulated depreciation and amortization 300,867 274,533 ----------- ------------ Net property and equipment 807,850 718,366 Notes receivable, less current portion 32,532 29,062 Other assets, net 60,081 60,827 ----------- ------------ Total assets $1,916,326 $ 1,719,947 =========== ============ Liabilities and shareholders' equity Current liabilities: Income taxes payable $ 9,360 $ -- Accounts payable 358,090 292,667 Accrued payroll 20,323 19,356 Accrued benefits and withholdings 47,287 49,794 Deferred income taxes 3,119 2,451 Other current liabilities 48,374 47,137 Current portion of long-term debt 265 75,313 ----------- ------------ Total current liabilities 486,818 486,718 Long-term debt, less current portion 100,678 25,461 Deferred income taxes 44,809 42,516 Other liabilities 22,319 19,483 Shareholders' equity: Common stock, $0.01 par value: Authorized shares - 245,000,000 Issued and outstanding shares - 113,394,091 at June 30, 2006, and 112,389,002 at December 31, 2005 1,134 1,124 Additional paid-in capital 386,371 360,325 Retained earnings 874,197 784,320 ----------- ------------ Total shareholders' equity 1,261,702 1,145,769 ----------- ------------ Total liabilities and shareholders' equity $1,916,326 $ 1,719,947 =========== ============ Note: The balance sheet at December 31, 2005, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. *T -0- *T O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, -------------------- --------------------- 2006 2005 2006 2005 ---------- --------- ----------- --------- Product sales $ 591,199 $521,209 $1,127,746 $987,448 Cost of goods sold, including warehouse and distribution expenses 330,271 292,239 633,390 562,309 ---------- --------- ----------- --------- Gross Profit 260,928 228,970 494,356 425,139 Operating, selling, general and administrative expenses 182,692 160,843 351,154 303,431 ---------- --------- ----------- --------- Operating income 78,236 68,127 143,202 121,708 Other income (expense), net 162 195 (290) (473) ---------- --------- ----------- --------- Income before income taxes 78,398 68,322 142,912 121,235 Provision for income taxes 29,085 25,399 53,035 45,099 ---------- --------- ----------- --------- Net income $ 49,313 $ 42,923 $ 89,877 $ 76,136 ========== ========= =========== ========= Net income per common share $ 0.44 $ 0.39 $ 0.80 $ 0.68 ---------- --------- ----------- --------- Net income per common share-assuming dilution $ 0.43 $ 0.38 $ 0.78 $ 0.67 ========== ========= =========== ========= Weighted-average common shares - basic 113,253 111,448 112,890 111,174 ========== ========= =========== ========= Adjusted weighted-average common shares outstanding - assuming dilution 115,196 113,138 114,908 112,827 ========== ========= =========== ========= *T -0- *T O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (Unaudited) June 30, --------------- 2006 2005 ------ ------ Inventory turnover (1) 1.6 1.6 Inventory turnover, net of payables (2) 2.8 2.7 AP to inventory (3) 44.7% 39.1% Debt-to-capital (4) 7.4% 8.8% Return on equity (5) 15.0% 14.4% Return on assets (6) 9.8% 9.3% Three Months Ended June 30, ---------------------- 2006 2005 ---------- ---------- Other Information (in thousands): Capital expenditures $ 71,986 $ 56,924 Depreciation and amortization $ 15,717 $ 13,768 Interest expense $ 1,064 $ 1,037 Lease and rental expense $ 12,353 $ 10,615 Sales per weighted-average square foot (7)(8) $ 56.64 $ 58.21 Sales per weighted-average store (in thousands) (8)(9) $ 379 $ 388 Square footage (in thousands)(8) 10,404 8,860 Store count: New stores, net (10) 49 113 Total stores 1,555 1,399 Total employment 21,277 19,426 (1) Calculated as cost of sales for the last 12 months divided by average inventory. Average inventory is calculated as the simple average of beginning and ending inventory for the same period used in determining the numerator. (2) Calculated as cost of sales for the last 12 months divided by average inventory less accounts payable. Average inventory is calculated as the simple average of beginning and ending inventory for the same period used in determining the numerator. (3) Accounts payable divided by inventory. (4) The sum of long-term debt and current portion of long-term debt, divided by the sum of long-term debt, current portion of long-term debt and total shareholders' equity. (5) Last 12 months net income divided by average shareholders' equity. Average shareholders' equity is calculated by taking a simple average of the beginning and ending shareholders' equity for the same period used in determining the numerator. (6) Last 12 months net income divided by average total assets. Average total assets is calculated by taking a simple average of the beginning and ending total assets for the same period used in determining the numerator. (7) Total sales less jobber sales, divided by weighted-average square feet. Weighted-average sales per square foot is weighted to consider the approximate dates of store openings or expansions. (8) Weighted-average square feet, weighted-average store count and total square footage for the three months ended June 30, 2005 exclude the 72 Midwest Auto Parts stores acquired May 31, 2005. (9) Total sales less jobber sales, divided by weighted-average stores. Weighted-average sales per store is weighted to consider the approximate dates of store openings or expansions. (10) Net new stores in the three months ended June 30, 2005, includes 72 Midwest Auto Parts stores acquired May 31, 2005. *T