ORLY O Reilly Automotive Inc

O�Reilly Automotive, Inc. (�O�Reilly� or �the Company�) (Nasdaq: ORLY) today announced revenues and earnings for the first quarter ended March 31, 2008. Sales for the three months ended March 31, 2008, totaled $646 million, up 5.4% from $613 million for the same period a year ago. Gross profit for the first quarter of 2008 increased to $288 million (or 44.6% of sales) from $269 million (or 43.9% of sales) for the first quarter of 2007, representing an increase of 7.1%. Selling, General and Administrative expenses increased to $214 million (or 33.2% of sales) for the first quarter of 2008 from $192 million (or 31.3% of sales) for the first quarter of 2007, representing an increase of 11.6%. Net income for the first quarter ended March 31, 2008, totaled $46.3 million, down 4.3% from $48.4 million for the same period in 2007. Diluted earnings per common share for the first quarter of 2008 decreased 4.8% to $0.40 on 116.3 million shares compared to $0.42 for the first quarter of 2007 on 115.5 million shares. �With softer sales resulting from a very challenging macro environment, our first quarter results were short of our expectations. However, even in the midst of these obstacles, we were able to increase gross profit to 44.6% of sales.� Greg Henslee, CEO and Co-President stated, �Although customer demand in our markets during the first quarter was sluggish, we continue to see opportunity to expand our market share on both the DIY and DIFM sides of our business. We remain excited about our upcoming acquisition of CSK Auto Corporation (�CSK�) and look forward to implementing our dual market strategy in CSK�s markets. Team O�Reilly will remain focused on our core values of customer service and expense control as we move forward in 2008.� Comparable store sales for stores open at least one year decreased 0.4% for the first quarter of 2008 compared to a 6.8% increase in the first quarter of 2007. �We opened 37 new stores during the first quarter and are on track to hit our revised target of 140 to 150 new stores in 2008,� stated Ted Wise, COO and Co-President. �As we expand in 2008, our Team remains dedicated to the O�Reilly culture and values that have made us successful for over 50 years. Our goal to be the dominant supplier in each of our markets continues to be our top priority, and we will continue to move toward that goal by providing industry leading customer service and parts availability. This will be a historical year for O�Reilly as we look forward to completing the CSK acquisition and beginning the integration process.� Assuming no significant change in the macroeconomic environment, the Company estimates that diluted earnings per share for the second quarter of 2008 will be approximately $0.47 to $0.51 with an expected comparable store sales increase of 3% to 5%. The Company projects full-year earnings to range from $1.81 to $1.85 per share, which has been adjusted slightly downward from the original guidance provided on February 20, 2008 of $1.84 to $1.88 per share, with an expected comparable store sales increase of 3% to 5%. The Company will host a conference call Wednesday, April 23, 2008, 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.� A replay of the call will also be available on the Company�s website following the conference call. We invite interested analysts to join our call. The dial-in number for the call is (706) 643-0114, the conference call ID number is 42380760. 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 1,867 stores in the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of March 31, 2008. 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, 2007, for more details. O�REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) � � March 31,2008 March 31,2007 December 31,2007 (Unaudited) (Unaudited) (Note) Assets Current assets: Cash and cash equivalents $ 113,287 $ 90,217 $ 47,555 Accounts receivable, net 93,123 87,309 84,242 Amounts receivable from vendors 47,293 46,828 48,263 Inventory 892,583 825,206 881,761 Other current assets � 20,331 � � 21,129 � 40,483 � Total current assets 1,166,617 1,070,689 1,102,304 � Property and equipment, at cost 1,534,819 1,276,410 1,479,779 Accumulated depreciation and amortization � 408,856 � � 345,319 � 389,619 � Net property and equipment 1,125,963 931,091 1,090,160 � Notes receivable, less current portion 24,253 29,151 25,437 Goodwill 50,583 49,312 50,447 Other assets � 30,320 � � 13,385 � 11,389 � Total assets $ 2,397,736 � $ 2,093,628 $ 2,279,737 � � Liabilities and shareholders' equity Current liabilities: Accounts payable $ 417,128 $ 372,061 $ 380,683 Accrued payroll 27,445 25,130 23,739 Accrued benefits and withholdings 46,536 44,905 43,463 Deferred income taxes 10,364 10,111 6,235 Other current liabilities 61,530 44,996 49,536 Current portion of long-term debt � 25,323 � � 312 � 25,320 � Total current liabilities 588,326 497,515 528,976 � Long-term debt, less current portion 75,068 100,390 75,149 Deferred income taxes 26,651 32,297 27,241 Other liabilities 56,678 42,941 55,894 � Shareholders' equity: Common stock, $0.01 par value: Authorized shares � 245,000,000 Issued and outstanding shares � 115,481,606 as of March 31, 2008, 114,126,459 as of March 31, 2007 and 115,260,564 as of December 31, 2007 1,155 1,141 1,153 Additional paid-in capital 448,173 408,532 441,731 Retained earnings 1,202,724 1,010,812 1,156,393 Accumulated other comprehensive loss � (1,039 ) � -- � (6,800 ) Total shareholders� equity � 1,651,013 � � 1,420,485 � 1,592,477 � Total liabilities and shareholders� equity $ 2,397,736 � $ 2,093,628 $ 2,279,737 � � Note: The balance sheet at December 31, 2007 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. O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands, except per share data) � Three Months Ended March 31, 2008 � 2007 � Sales $ 646,220 $ 613,145 Cost of goods sold, including warehouse and distribution expenses � 357,726 � 343,864 � Gross profit 288,494 269,281 Selling, general and administrative expenses � 214,338 � 192,089 � Operating income 74,156 77,192 Other expense, net � 450 � 10 � Income before income taxes 73,706 77,182 Provision for income taxes � 27,375 � 28,775 � Net income $ 46,331 $ 48,407 � Net income per common share $ 0.40 $ 0.42 � Net income per common share � assuming dilution $ 0.40 $ 0.42 � Weighted-average common shares outstanding � 115,386 � 113,936 Adjusted weighted-average common shares outstanding � assuming dilution � 116,291 � 115,537 O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) � Three Months Ended March 31, 2008 � 2007 � Net cash provided by operating activities $ 118,854 $ 128,631 � Investing activities: Purchases of property and equipment (59,186 ) (64,089 ) Proceeds from sale of property and equipment 1,367 223 Payments received on notes receivable 1,193 1,132 Other � 48 � � (1,402 ) � Net cash used in investing activities (56,578 ) (64,136 ) � Financing activities: Proceeds from issuance of long-term debt -- 16,450 Tax benefit of stock options exercised 549 1,418 Principal payments of long-term debt (79 ) (26,226 ) Net proceeds from issuance of common stock � 2,986 � � 4,177 � � Net cash provided by/(used in) financing activities 3,456 (4,181 ) � Net increase in cash and cash equivalents 65,732 60,314 Cash and cash equivalents at beginning of period � 47,555 � � 29,903 � � Cash and cash equivalents at end of period $ 113,287 � $ 90,217 � O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIESSELECTED FINANCIAL INFORMATION(Unaudited) � March 31, 2008 � 2007 � Inventory turnover (1) 1.6 1.6 Inventory turnover, net of payables (2) 3.0 2.8 � AP to inventory (3) 46.7% 45.1% Debt-to-capital (4) 5.7% 6.6% Return on equity (5) 12.2% 13.9% Return on assets (6) 8.4% 9.4% Three Months Ended March 31, 2008 � 2007 Other Information (in thousands): Capital Expenditures $ 59,186 $ 64,089 Depreciation and Amortization $ 21,492 $ 17,436 Interest Expense $ 1,371 $ 749 Lease and Rental Expense $ 14,861 $ 13,694 � Sales per weighted-average square foot (7) $ 50.71 $ 53.82 � Square footage (in thousands) 12,735 11,339 � Sales per weighted-average store (in thousands) (8) $ 346 $ 361 � Store count: New stores, net (9) 37 47 Total stores 1,867 1,687 � Total employment 24,017 22,493 � (1) Calculated as cost of sales for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the numerator. � (2) Calculated as cost of sales for the last 12 months divided by average net inventory. Average net inventory is calculated as the average of inventory less accounts payable for the trailing four quarters 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 as the average of shareholders' equity for the trailing four quarters used in determining the numerator. � (6) Last 12 months net income divided by average total assets. Average total assets is calculated as the average total assets for the trailing four quarters 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) 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. � (9) New stores, net reflects the closing of 2 stores during the first quarter of 2008, there were no store closings in the first quarter of 2007.