- 37% increase in second quarter diluted earnings per
share to $1.58
- Second quarter comparable store sales increase of
6.5%
- Operating margin for the second quarter increases 170
bps to 17.3%
O'Reilly Automotive, Inc. (the "Company" or "O'Reilly")
(Nasdaq:ORLY), a leading retailer in the automotive aftermarket
industry, today announced record revenues and earnings for its
second quarter ended June 30, 2013.
2nd Quarter Financial Results
Sales for the second quarter ended June 30, 2013, increased $152
million, or 10%, to $1.71 billion from $1.56 billion for the same
period one year ago. Gross profit for the second quarter increased
to $872 million (or 50.8% of sales) from $780 million (or 49.9% of
sales) for the same period one year ago, representing an increase
of 12%. Selling, general and administrative expenses ("SG&A")
for the second quarter increased to $576 million (or 33.6% of
sales) from $536 million (or 34.3% of sales) for the same period
one year ago, representing an increase of 7%. Operating income for
the second quarter increased to $296 million (or 17.3% of sales)
from $244 million (or 15.6% of sales) for the same period one year
ago, representing an increase of 22%.
Net income for the second quarter ended June 30, 2013, increased
$31 million, or 21%, to $177 million (or 10.3% of sales) from $146
million (or 9.3% of sales) for the same period one year ago.
Diluted earnings per common share for the second quarter increased
37% to $1.58 on 112 million shares versus $1.15 for the same period
one year ago on 127 million shares.
"We are very pleased to again report another record breaking
quarter highlighted by a 37% increase in diluted earnings per share
to $1.58, representing our 18th consecutive quarter of 15% or
greater adjusted diluted earnings per share growth," commented Greg
Henslee, President and CEO. "We generated an impressive 6.5%
increase in comparable store sales, which exceeded the top end of
our quarterly guidance range of 4% to 6%. Our unwavering commitment
to providing consistent, excellent customer service drove
outstanding sales results across all of our markets. We achieved a
record quarterly gross margin of 50.8%, primarily driven by
improvements in acquisition costs, product mix and pricing
management. Our relentless focus on expense control, along with our
strong gross margin results, generated a record quarterly operating
margin of 17.3%, which was a 170 basis point improvement over the
prior year. We continue to believe in the strength of the long-term
demand drivers in our industry, and we are establishing our third
quarter comparable store sales guidance at 4% to 6% and reiterating
our full-year comparable store sales guidance of 3% to 5%. I would
like to take this opportunity to thank each of our 60,000 Team
Members for their hard work and commitment to O'Reilly's continued
success."
Year-to-Date Financial Results
Sales for the first six months of 2013 increased $208 million,
or 7%, to $3.30 billion from $3.09 billion for the same period one
year ago. Gross profit for the first six months of 2013 increased
to $1.67 billion (or 50.6% of sales) from $1.54 billion (or 49.9%
of sales) for the same period one year ago, representing an
increase of 8%. SG&A for the first six months of 2013 increased
to $1.12 billion (or 34.0% of sales) from $1.05 billion (or 34.0%
of sales) for the same period one year ago, representing an
increase of 7%. Operating income for the first six months of
2013 increased to $547 million (or 16.6% of sales) from $491
million (or 15.9% of sales) for the same period one year ago,
representing an increase of 11%.
Net income for the first six months of 2013 increased $38
million, or 13%, to $331 million (or 10.0% of sales) from $294
million (or 9.5% of sales) for the same period one year ago.
Diluted earnings per common share for the first six months of
2013 increased 28% to $2.94 on 113 million shares versus $2.29 for
the same period one year ago on 128 million shares.
Mr. Henslee continued, "We are on track to meet our goal of 190
net, new stores in 2013 with the opening of 111 net, new stores
across 30 states in the first half of the year. In June, we
issued $300 million of ten-year senior notes, representing another
measured step to reaching our targeted leverage range of 2.00 to
2.25 times adjusted debt to adjusted EBITDAR, and we remain very
focused on maintaining or improving our investment grade credit
ratings."
Share Repurchase Program
As previously announced, on May 29, 2013, the Company's Board of
Directors approved a resolution to increase the authorization under
the Company's share repurchase program by an additional $500
million, raising the cumulative authorization under the share
repurchase program to $3.5 billion. During the second quarter
ended June 30, 2013, the Company repurchased 2.5 million shares of
its common stock at an average price per share of $107.61 for a
total investment of $274 million. During the six months ended
June 30, 2013, the Company repurchased 5.0 million shares of its
common stock at an average price per share of $100.10 for a total
investment of $502 million. Subsequent to the end of the
second quarter and through the date of this release, the Company
repurchased an additional 0.5 million shares of its common stock at
an average price per share of $113.66 for a total investment of $56
million. The Company has repurchased a total of 37.6 million
shares of its common stock under its share repurchase program since
the inception of the program in January of 2011 and through the
date of this release, at an average price of $79.27, for a total
aggregate investment of $2.98 billion. As of the date of this
release, the Company had approximately $521 million remaining under
its current share repurchase authorizations.
2nd Quarter and Year-to-Date Comparable Store Sales
Results
Comparable store sales are calculated based on the change in
sales for stores open at least one year and exclude sales of
specialty machinery, sales to independent parts stores, sales to
Team Members and sales from the acquired VIP stores, due to the
significant change in the business model and lack of historical
data. Comparable store sales increased 6.5% for the second
quarter ended June 30, 2013, versus 2.5% for the same period one
year ago. Comparable store sales increased 3.6% for the first
six months of 2013, versus 4.9% for the same period one year
ago.
3rd Quarter and Updated Full-Year 2013
Guidance
The table below outlines the Company's guidance for selected
third quarter and updated full-year 2013 financial data:
|
For the Three Months Ending
September 30, 2013 |
For the Year Ending
December 31, 2013 |
Comparable store sales |
4% to 6% |
3% to 5% |
Total revenue |
|
$6.6 billion to $6.7 billion |
Gross profit as a percentage of sales |
|
50.3% to 50.7% |
Operating profit as a percentage of
sales |
|
16.0% to 16.4% |
Diluted earnings per share (1) |
$1.60 to $1.64 |
$5.79 to $5.89 |
Capital expenditures |
|
$385 million to $415 million |
Free cash flow (2) |
|
$450 million to $500 million |
(1) Weighted-average shares outstanding, assuming dilution, used
in the denominator of this calculation, includes share repurchases
made by the Company through the date of this release.
(2) Calculated as net cash flows provided by operating
activities less capital expenditures for the period.
Non-GAAP Information
This release contains certain financial information not derived
in accordance with United States generally accepted accounting
principles ("GAAP"). These items include adjusted net income,
rent-adjusted debt to adjusted earnings before interest, taxes,
depreciation, amortization, share-based compensation and rent
("EBITDAR") and free cash flow. The Company does not, nor does
it suggest investors should, consider such non-GAAP financial
measures in isolation from, or as a substitute for, GAAP financial
information. The Company believes that the presentation of
financial results and estimates excluding the impact of the former
CSK Auto Corporation ("CSK") officer clawback, as well as the
presentation of adjusted debt to adjusted EBITDAR and free cash
flow provide meaningful supplemental information to both management
and investors that is indicative of the Company's core
operations. The Company excludes this item in judging its
performance and believes this non-GAAP information is useful to
investors as well. The Company has included a reconciliation
of this additional information to the most comparable GAAP measure
in the selected financial information below.
Earnings Conference Call Information
The Company will host a conference call on Thursday, July 25,
2013, 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 website at www.oreillyauto.com by
clicking on "Investor Relations" and then "News
Room". Interested analysts are invited to join the
call. The dial-in number for the call is (847) 585-4405; the
conference call identification number is 35211264. A replay of
the call will be available on the Company's website following the
conference call.
About O'Reilly Automotive, Inc.
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 service provider
markets. Founded in 1957 by the O'Reilly family, the Company
operated 4,087 stores in 42 states as of June 30, 2013.
Forward-Looking Statements
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. You can identify
these statements 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, integration 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 regulations, the Company's increased debt levels,
credit ratings on public debt, the Company's ability to hire and
retain qualified employees, risks associated with the performance
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" section of the
annual report on Form 10-K for the year ended December 31, 2012,
for additional factors that could materially affect the Company's
financial performance. Forward-looking statements speak only
as of the date they were made and the Company undertakes no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
O'REILLY AUTOMOTIVE,
INC. AND SUBSIDIARIES |
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS |
|
|
(In thousands, except share
data) |
|
|
|
|
|
|
|
|
|
June 30, 2013 |
June 30, 2012 |
December 31, 2012 |
|
|
|
(Unaudited) |
(Unaudited) |
(Note) |
|
|
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$365,930 |
$367,717 |
$248,128 |
|
|
Accounts receivable, net |
175,877 |
151,936 |
122,989 |
|
|
Amounts receivable from vendors |
82,235 |
61,709 |
58,185 |
|
|
Inventory |
2,345,377 |
2,145,339 |
2,276,331 |
|
|
Other current assets |
35,738 |
37,291 |
27,315 |
|
|
Total current assets |
3,005,157 |
2,763,992 |
2,732,948 |
|
|
|
|
|
|
|
|
Property and equipment, at cost |
3,431,756 |
3,166,389 |
3,269,570 |
|
|
Less: accumulated depreciation and
amortization |
1,129,485 |
1,013,604 |
1,057,980 |
|
|
Net property and equipment |
2,302,271 |
2,152,785 |
2,211,590 |
|
|
|
|
|
|
|
|
Notes receivable, less current portion |
16,295 |
7,404 |
5,347 |
|
|
Goodwill |
758,537 |
744,131 |
758,410 |
|
|
Other assets, net |
41,386 |
41,780 |
40,892 |
|
|
Total assets |
$6,123,646 |
$5,710,092 |
$5,749,187 |
|
|
|
|
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$2,058,859 |
$1,699,817 |
$1,929,112 |
|
|
Self-insurance reserves |
56,726 |
55,895 |
54,190 |
|
|
Accrued payroll |
60,687 |
56,191 |
60,120 |
|
|
Accrued benefits and withholdings |
41,273 |
41,332 |
42,417 |
|
|
Deferred income taxes |
12,082 |
1,516 |
19,472 |
|
|
Income taxes payable |
11,075 |
-- |
5,932 |
|
|
Other current liabilities |
189,527 |
157,625 |
161,400 |
|
|
Current portion of long-term debt |
69 |
522 |
222 |
|
|
Total current liabilities |
2,430,298 |
2,012,898 |
2,272,865 |
|
|
|
|
|
|
|
|
Long-term debt, less current portion |
1,395,922 |
796,884 |
1,095,734 |
|
|
Deferred income taxes |
86,854 |
93,713 |
79,544 |
|
|
Other liabilities |
204,429 |
193,945 |
192,737 |
|
|
|
|
|
|
|
|
Shareholders' equity: |
|
|
|
|
|
Common stock, $0.01 par value: |
|
|
|
|
|
Authorized shares – 245,000,000 |
|
|
|
|
|
Issued and outstanding shares –
108,886,775 as of June 30, 2013, 122,014,308 as of June 30, 2012,
and 112,963,413 as of December 31, 2012 |
1,089 |
1,220 |
1,130 |
|
|
Additional paid-in capital |
1,102,900 |
1,122,014 |
1,083,910 |
|
|
Retained earnings |
902,154 |
1,489,418 |
1,023,267 |
|
|
Total shareholders' equity |
2,006,143 |
2,612,652 |
2,108,307 |
|
|
Total liabilities and shareholders'
equity |
$6,123,646 |
$5,710,092 |
$5,749,187 |
|
|
|
|
|
|
|
|
Note: The balance sheet at
December 31, 2012, 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) |
|
|
|
|
|
|
For the Three
Months Ended June 30, |
For the Six
Months Ended June 30, |
|
2013 |
2012 |
2013 |
2012 |
Sales |
$1,714,969 |
$1,562,849 |
$3,299,978 |
$3,092,241 |
Cost of goods sold, including warehouse and
distribution expenses |
843,094 |
782,988 |
1,629,440 |
1,550,700 |
Gross profit |
871,875 |
779,861 |
1,670,538 |
1,541,541 |
|
|
|
|
|
Selling, general and administrative
expenses |
575,614 |
536,258 |
1,123,193 |
1,050,437 |
Operating income |
296,261 |
243,603 |
547,345 |
491,104 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest expense |
(11,467) |
(9,140) |
(22,867) |
(18,271) |
Interest income |
469 |
658 |
946 |
1,285 |
Other, net |
864 |
(51) |
1,332 |
744 |
Total other expense |
(10,134) |
(8,533) |
(20,589) |
(16,242) |
|
|
|
|
|
Income before income taxes |
286,127 |
235,070 |
526,756 |
474,862 |
Provision for income taxes |
109,000 |
88,950 |
195,300 |
181,250 |
Net income |
$177,127 |
$146,120 |
$331,456 |
$293,612 |
|
|
|
|
|
Earnings per share-basic: |
|
|
|
|
Earnings per share |
$1.61 |
$1.17 |
$2.99 |
$2.33 |
Weighted-average common shares outstanding –
basic |
110,278 |
124,870 |
110,914 |
125,920 |
|
|
|
|
|
Earnings per share-assuming dilution: |
|
|
|
|
Earnings per share |
$1.58 |
$1.15 |
$2.94 |
$2.29 |
Weighted-average common shares outstanding –
assuming dilution |
112,079 |
127,188 |
112,736 |
128,261 |
O'REILLY AUTOMOTIVE,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
|
|
For the Six
Months Ended June 30, |
|
2013 |
2012 |
Operating activities: |
|
|
Net income |
$331,456 |
$293,612 |
Adjustments to reconcile net income to net
cash |
|
|
provided by operating
activities: |
|
|
Depreciation and amortization of
property, equipment and intangibles |
89,682 |
88,230 |
Amortization of debt discount and
issuance costs |
1,000 |
837 |
Excess tax benefit from stock
options exercised |
(18,681) |
(23,692) |
Deferred income taxes |
(80) |
4,375 |
Share-based compensation
programs |
11,174 |
10,891 |
Other |
3,117 |
4,075 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
(56,681) |
(20,802) |
Inventory |
(69,046) |
(159,591) |
Accounts payable |
129,747 |
420,554 |
Income taxes payable |
23,823 |
47,159 |
Other |
(6,099) |
25,810 |
Net cash provided by operating
activities |
439,412 |
691,458 |
|
|
|
Investing activities: |
|
|
Purchases of property and equipment |
(176,577) |
(151,327) |
Proceeds from sale of property and
equipment |
678 |
2,071 |
Payments received on notes receivable |
2,166 |
2,100 |
Net cash used in investing
activities |
(173,733) |
(147,156) |
|
|
|
Financing activities: |
|
|
Proceeds from the issuance of long-term
debt |
299,976 |
-- |
Payment of debt issuance costs |
(1,879) |
-- |
Principal payments on capital leases |
(189) |
(367) |
Repurchases of common stock |
(501,914) |
(594,450) |
Excess tax benefit from stock options
exercised |
18,681 |
23,692 |
Net proceeds from issuance of common
stock |
37,448 |
32,988 |
Net cash used in financing
activities |
(147,877) |
(538,137) |
|
|
|
Net increase in cash and cash
equivalents |
117,802 |
6,165 |
Cash and cash equivalents at beginning of
period |
248,128 |
361,552 |
Cash and cash equivalents at end of
period |
$365,930 |
$367,717 |
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
Income taxes paid |
$170,100 |
$125,575 |
Interest paid, net of capitalized
interest |
21,706 |
17,718 |
O'REILLY AUTOMOTIVE,
INC. AND SUBSIDIARIES |
SELECTED FINANCIAL
INFORMATION |
(Unaudited) |
|
|
|
|
For the Twelve Months
Ended |
Adjusted Debt to Adjusted
EBITDAR: |
June
30, |
(In thousands, except adjusted debt to
adjusted EBITDAR ratio) |
2013 |
2012 |
GAAP debt |
$1,395,991 |
$797,406 |
Add: Letters of credit |
51,849 |
57,773 |
Discount on senior notes |
4,141 |
3,483 |
Rent times six |
1,495,794 |
1,413,048 |
Non-GAAP adjusted debt |
$2,947,775 |
$2,271,710 |
|
|
|
GAAP net income |
$623,590 |
$565,039 |
Add: Former CSK officer clawback, net of
tax |
-- |
(1,741) |
Non-GAAP adjusted net income |
623,590 |
563,298 |
Add: Interest expense |
44,796 |
34,942 |
Taxes, net of impact of former CSK
officer clawback |
369,825 |
341,383 |
Depreciation and amortization |
178,558 |
173,996 |
Share-based compensation expense |
22,309 |
20,937 |
Rent expense |
249,299 |
235,508 |
Adjusted EBITDAR |
$1,488,377 |
$1,370,064 |
|
|
|
Adjusted debt to adjusted EBITDAR |
1.98 |
1.66 |
|
|
|
|
|
|
|
June
30, |
|
2013 |
2012 |
Selected Balance Sheet
Ratios: |
|
|
Inventory turnover (1) |
1.4 |
1.5 |
Inventory turnover, net of payables (2) |
9.7 |
4.8 |
Average inventory per store (in thousands)
(3) |
$574 |
$556 |
Accounts payable to inventory (4) |
87.8% |
79.2% |
Return on equity (5) |
29.5% |
20.2% |
Return on assets (6) |
10.6% |
10.1% |
|
For the Three
Months Ended June 30, |
For the Six
Months Ended June 30, |
|
2013 |
2012 |
2013 |
2012 |
Selected Financial Information (in
thousands): |
|
|
|
|
Capital expenditures |
$103,093 |
$75,870 |
$176,577 |
$151,327 |
Free cash flow (7) |
$109,975 |
$201,060 |
$262,835 |
$540,131 |
Depreciation and amortization |
$45,503 |
$44,397 |
$89,682 |
$88,230 |
Interest expense |
$11,467 |
$9,140 |
$22,867 |
$18,271 |
Lease and rental expense |
$64,457 |
$60,065 |
$127,354 |
$118,924 |
Store and Team Member
Information: |
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30, |
For the Six
Months Ended June 30, |
For the Twelve
Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
2013 |
2012 |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
Beginning store count |
4,041 |
3,809 |
3,976 |
3,740 |
3,859 |
3,657 |
|
|
|
|
|
|
|
|
|
|
New stores opened |
47 |
50 |
113 |
123 |
175 |
207 |
|
|
|
|
|
|
|
|
|
|
Stores acquired |
-- |
-- |
-- |
-- |
56 |
-- |
|
|
|
|
|
|
|
|
|
|
Stores closed |
(1) |
-- |
(2) |
(4) |
(3) |
(5) |
|
|
|
|
|
|
|
|
|
|
Ending store count |
4,087 |
3,859 |
4,087 |
3,859 |
4,087 |
3,859 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30, |
For the Twelve
Months Ended June 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
Total employment |
|
|
60,035 |
52,254 |
|
|
|
|
|
|
|
|
|
|
|
|
Square footage (in thousands) |
|
|
29,435 |
27,421 |
|
|
|
|
|
|
|
|
|
|
|
|
Sales per weighted-average square foot
(8) |
|
|
$58.16 |
$56.82 |
$222.96 |
$223.45 |
|
|
|
|
|
|
|
|
|
|
Sales per weighted-average store (in
thousands) (9) |
|
|
$419 |
$404 |
$1,597 |
$1,586 |
|
|
|
|
|
|
|
|
|
|
(1) Calculated as cost of goods sold 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 denominator.
(2) Calculated as cost of goods sold 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 denominator.
(3) Calculated as inventory divided by store count at the end of
the reported period.
(4) Calculated as accounts payable divided by inventory.
(5) Calculated as the last 12 months adjusted net income,
adjusted to exclude the benefit related to the former CSK officer
clawback in the amount of $3 million ($2 million, net of tax),
divided by average total shareholders' equity. Average total
shareholders' equity is calculated as the average of total
shareholders' equity for the trailing four quarters used in
determining the denominator.
(6) Calculated as the last 12 months adjusted net income,
adjusted for the item discussed in footnote (5), divided by average
total assets. Average total assets are calculated as the
average total assets for the trailing four quarters used in
determining the denominator.
(7) Calculated as net cash provided by operating activities less
capital expenditures for the period.
(8) Calculated as sales less jobber sales, divided by
weighted-average square foot. Weighted-average sales per
square foot are weighted to consider the approximate dates of store
openings or expansions.
(9) Calculated as sales less jobber sales, divided by
weighted-average stores. Weighted-average sales per store are
weighted to consider the approximate dates of store openings or
expansions.
CONTACT: Investor & Media Contact
Mark Merz (417) 829-5878
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