- 4th quarter comparable store sales increase of 6.3%,
full-year increase of 6.0%
- 26% increase in 4th quarter diluted EPS to $1.76, 22%
increase in full-year diluted EPS to $7.34
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
fourth quarter and full year ended December 31, 2014. The results
represent 22 consecutive years of comparable store sales growth and
record revenue and operating income for O'Reilly since becoming a
public company in April of 1993.
4th Quarter Financial Results
Sales for the fourth quarter ended December 31, 2014, increased
$143 million, or 9%, to $1.76 billion from $1.62 billion for the
same period one year ago. Gross profit for the fourth quarter
increased to $912 million (or 51.7% of sales) from $819 million (or
50.5% of sales) for the same period one year ago, representing an
increase of 11%. Selling, general and administrative expenses
("SG&A") for the fourth quarter increased to $609 million (or
34.5% of sales) from $564 million (or 34.8% of sales) for the same
period one year ago, representing an increase of 8%. Operating
income for the fourth quarter increased to $303 million (or 17.2%
of sales) from $256 million (or 15.8% of sales) for the same period
one year ago, representing an increase of 18%.
Net income for the fourth quarter ended December 31, 2014,
increased $29 million, or 19%, to $182 million (or 10.3% of sales)
from $152 million (or 9.4% of sales) for the same period one year
ago. Diluted earnings per common share for the fourth quarter
increased 26% to $1.76 on 103 million shares versus $1.40 for the
same period one year ago on 109 million shares.
O'Reilly's President and CEO, Greg Henslee commented, "We are
very pleased to report another profitable quarter and a strong
finish to a very successful year. Team O'Reilly's unwavering
commitment to providing unsurpassed levels of customer service each
day drove our industry-leading 6.3% comparable store sales increase
for the fourth quarter, which exceeded our guidance and resulted in
a 6% comparable store sales increase for the full year, well above
the guidance we set at the beginning of the year. Our
unrelenting focus on profitable growth translated these strong
top-line results into a record fourth quarter operating margin of
17.2% and a 26% increase in fourth quarter earnings per share,
representing our 24th consecutive quarter of EPS growth greater
than 15%. I would like to congratulate Team O'Reilly for
exceeding our sales and profitability goals in yet another quarter
and thank each of them for their continued hard work and dedication
to our ongoing success."
Full-Year Financial Results
Sales for the year ended December 31, 2014, increased $567
million, or 9%, to $7.22 billion from $6.65 billion for the same
period one year ago. Gross profit for the year ended
December 31, 2014, increased to $3.71 billion (or 51.4% of
sales) from $3.37 billion (or 50.7% of sales) for the same period
one year ago, representing an increase of 10%. SG&A for
the year ended December 31, 2014, increased to $2.44 billion
(or 33.8% of sales) from $2.27 billion (or 34.1% of sales) for the
same period one year ago, representing an increase of
8%. Operating income for the year ended December 31,
2014, increased to $1.27 billion (or 17.6% of sales) from $1.10
billion (or 16.6% of sales) for the same period one year ago,
representing an increase of 15%.
Net income for the year ended December 31, 2014, increased
$108 million, or 16%, to $778 million (or 10.8% of sales) from $670
million (or 10.1% of sales) for the same period one year
ago. Diluted earnings per common share for the year ended
December 31, 2014, increased 22% to $7.34 on 106 million
shares versus $6.03 for the same period one year ago on 111 million
shares.
Mr. Henslee continued, "We finished 2014 with a record operating
margin of 17.6% and a 22% increase in earnings per share, which is
our sixth consecutive year of 21% or greater EPS growth. Based on
our belief in the continued strength of the long-term drivers for
demand in our industry and, more importantly, in our Team's
commitment to providing consistently high levels of customer
service, we are establishing our first quarter and full-year 2015
comparable store sales guidance at a range of 3% to 5%. We
remain steadfast in our commitment to profitable growth, and for
2015, we are projecting an increase in operating margin to between
18.1% and 18.5% of sales. I would like to again thank and
congratulate Team O'Reilly for our record breaking 2014 results as
we look forward to building on this strong performance in
2015."
Share Repurchase Program
During the fourth quarter ended December 31, 2014, the
Company repurchased 1.2 million shares of its common stock at an
average price per share of $152.05, for a total investment of $179
million. During the year ended December 31, 2014, the
Company repurchased 5.7 million shares of its common stock at an
average price per share of $150.86, for a total investment of $866
million. Subsequent to the end of the fourth quarter and
through the date of this release, the Company repurchased an
additional 0.1 million shares of its common stock, at an average
price per share of $183.20, for a total investment of $9
million. The Company has repurchased a total of 46.4 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 $91.16, for a total
aggregate investment of $4.23 billion.
Today, the Company also announced that its Board of Directors
approved a resolution to increase the authorization amount under
its share repurchase program by an additional $500 million, raising
the aggregate authorization under the program to $5.0
billion. The additional $500 million authorization is
effective for a three-year period, beginning on February 4,
2015. Stock repurchases under the program may be made from
time to time, as the Company deems appropriate, solely through open
market repurchases effected through a broker dealer at prevailing
market prices, based on a variety of factors such as price,
corporate requirements and overall market conditions. There
can be no assurance as to the number of shares the Company will
purchase, if any. The share repurchase program may be
increased or otherwise modified, renewed, suspended or terminated
by the Company at any time, without prior notice. As of the
date of this release, the Company had approximately $770 million
remaining under its current share repurchase authorizations.
4th Quarter and Full-Year 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 and sales to
Team Members. Comparable store sales increased 6.3% for the
fourth quarter ended December 31, 2014, versus 5.4% for the
same period one year ago. Comparable store sales increased
6.0% for the year ended December 31, 2014, versus 4.3% for the
same period one year ago.
1st Quarter and Full-Year 2015 Guidance
The table below outlines the Company's guidance for selected
first quarter and full-year 2015 financial data:
|
For the Three Months Ending
March 31, 2015 |
For the Year Ending December
31, 2015 |
New store openings |
|
205 |
Comparable store sales |
3% to 5% |
3% to 5% |
Total revenue |
|
$7.6 billion to $7.8 billion |
Gross profit as a percentage of sales |
|
51.8% to 52.2% |
Operating income as a percentage of
sales |
|
18.1% to 18.5% |
Diluted earnings per share (1) |
$1.89 to $1.93 |
$8.20 to $8.30 |
Capital expenditures |
|
$400 million to $430 million |
Free cash flow (2) |
|
$675 million to $725 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
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 debt to
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 adjusted debt to 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 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, February 5,
2015, 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 38538167. A replay of
the conference call will be available on the Company's website
through February 4, 2016.
About O'Reilly Automotive, Inc.
O'Reilly Automotive, Inc. was founded in 1957 by the O'Reilly
family and 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. Visit the Company's website at
www.oreillyauto.com for additional information about O'Reilly,
including access to online shopping and current promotions, store
locations, hours and services, employment opportunities and other
programs. As of December 31, 2014, the Company operated
4,366 stores in 43 states.
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 "estimate,"
"may," "could," "will," "believe," "expect," "would," "consider,"
"should," "anticipate," "project," "plan," "intend" 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,
2013, 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) |
|
|
|
|
December 31,
2014 |
December 31, 2013 |
|
(Unaudited) |
(Note) |
Assets |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 250,560 |
$ 231,318 |
Accounts receivable, net |
143,900 |
131,504 |
Amounts receivable from suppliers |
69,311 |
66,619 |
Inventory |
2,554,789 |
2,375,047 |
Other current assets |
48,418 |
30,713 |
Total current assets |
3,066,978 |
2,835,201 |
|
|
|
Property and equipment, at cost |
3,993,509 |
3,606,837 |
Less: accumulated depreciation and
amortization |
1,334,949 |
1,181,734 |
Net property and equipment |
2,658,560 |
2,425,103 |
|
|
|
Notes receivable, less current portion |
13,349 |
13,066 |
Goodwill |
756,384 |
756,225 |
Other assets, net |
45,030 |
37,613 |
Total assets |
$ 6,540,301 |
$ 6,067,208 |
|
|
|
Liabilities and shareholders'
equity |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 2,417,167 |
$ 2,056,521 |
Self-insurance reserves |
64,882 |
57,700 |
Accrued payroll |
78,442 |
65,520 |
Accrued benefits and withholdings |
62,946 |
41,262 |
Deferred income taxes |
17,258 |
20,222 |
Other current liabilities |
189,836 |
181,718 |
Current portion of long-term debt |
25 |
67 |
Total current liabilities |
2,830,556 |
2,423,010 |
|
|
|
Long-term debt, less current portion |
1,396,615 |
1,396,141 |
Deferred income taxes |
85,164 |
80,713 |
Other liabilities |
209,548 |
201,023 |
|
|
|
Shareholders' equity: |
|
|
Common stock, $0.01 par value: |
|
|
Authorized shares – 245,000,000 |
|
|
Issued and outstanding shares – 101,602,935
as of December 31, 2014, and 105,939,766 as of December 31,
2013 |
1,016 |
1,059 |
Additional paid-in capital |
1,194,929 |
1,118,929 |
Retained earnings |
822,473 |
846,333 |
Total shareholders' equity |
2,018,418 |
1,966,321 |
|
|
|
Total liabilities and shareholders'
equity |
$ 6,540,301 |
$ 6,067,208 |
|
|
|
Note: The balance sheet at
December 31, 2013, 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 |
(In thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
For the Three
Months Ended December 31, |
For the Year
Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Note) |
Sales |
$ 1,764,178 |
$ 1,621,234 |
$ 7,216,081 |
$ 6,649,237 |
Cost of goods sold, including warehouse and
distribution expenses |
852,071 |
801,934 |
3,507,180 |
3,280,236 |
Gross profit |
912,107 |
819,300 |
3,708,901 |
3,369,001 |
|
|
|
|
|
Selling, general and administrative
expenses |
609,095 |
563,540 |
2,438,527 |
2,265,516 |
Operating income |
303,012 |
255,760 |
1,270,374 |
1,103,485 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest expense |
(14,079) |
(12,912) |
(53,290) |
(49,074) |
Interest income |
613 |
532 |
2,301 |
1,992 |
Other, net |
560 |
517 |
2,797 |
2,539 |
Total other expense |
(12,906) |
(11,863) |
(48,192) |
(44,543) |
|
|
|
|
|
Income before income taxes |
290,106 |
243,897 |
1,222,182 |
1,058,942 |
Provision for income taxes |
108,428 |
91,550 |
444,000 |
388,650 |
Net income |
$ 181,678 |
$ 152,347 |
$ 778,182 |
$ 670,292 |
|
|
|
|
|
Earnings per share-basic: |
|
|
|
|
Earnings per share |
$ 1.79 |
$ 1.43 |
$ 7.46 |
$ 6.14 |
Weighted-average common shares outstanding –
basic |
101,640 |
106,898 |
104,262 |
109,244 |
|
|
|
|
|
Earnings per share-assuming dilution: |
|
|
|
|
Earnings per share |
$ 1.76 |
$ 1.40 |
$ 7.34 |
$ 6.03 |
Weighted-average common shares outstanding –
assuming dilution |
103,330 |
108,738 |
106,041 |
111,101 |
|
|
|
|
|
Note: The income statement
for the year ended December 31, 2013, 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 CASH FLOWS |
(In thousands) |
|
|
|
|
|
|
For the Year
Ended December 31, |
|
2014 |
2013 |
|
(Unaudited) |
(Note) |
Operating activities: |
|
|
Net income |
$ 778,182 |
$ 670,292 |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation and amortization of
property, equipment and intangibles |
194,205 |
183,180 |
Amortization of debt discount and
issuance costs |
2,086 |
2,054 |
Excess tax benefit from stock options
exercised |
(49,150) |
(30,811) |
Deferred income taxes |
1,487 |
1,919 |
Share-based compensation programs |
23,095 |
21,722 |
Other |
5,592 |
7,405 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
(19,271) |
(16,937) |
Inventory |
(179,742) |
(96,876) |
Accounts payable |
360,646 |
127,178 |
Income taxes payable |
32,158 |
24,777 |
Other |
41,142 |
14,123 |
Net cash provided by operating
activities |
1,190,430 |
908,026 |
|
|
|
Investing activities: |
|
|
Purchases of property and equipment |
(429,987) |
(395,881) |
Proceeds from sale of property and
equipment |
2,880 |
1,731 |
Payments received on notes receivable |
3,705 |
5,396 |
Net cash used in investing
activities |
(423,402) |
(388,754) |
|
|
|
Financing activities: |
|
|
Proceeds from the issuance of long-term
debt |
— |
299,976 |
Payment of debt issuance costs |
— |
(2,967) |
Principal payments on capital leases |
(72) |
(224) |
Repurchases of common stock |
(866,484) |
(933,028) |
Excess tax benefit from stock options
exercised |
49,150 |
30,811 |
Net proceeds from issuance of common
stock |
69,620 |
69,350 |
Net cash used in financing
activities |
(747,786) |
(536,082) |
|
|
|
Net increase (decrease) in cash and cash
equivalents |
19,242 |
(16,810) |
Cash and cash equivalents at beginning of the
year |
231,318 |
248,128 |
Cash and cash equivalents at end of the
year |
$ 250,560 |
$ 231,318 |
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
Income taxes paid |
$ 416,458 |
$ 362,596 |
Interest paid, net of capitalized
interest |
51,203 |
46,760 |
|
|
|
Note: The cash flow
statement for the year ended December 31, 2013, 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 |
SELECTED FINANCIAL
INFORMATION |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
For the Year
Ended December 31, |
Adjusted Debt to
EBITDAR: |
|
|
2014 |
2013 |
(In thousands, except adjusted debt to
EBITDAR ratio) |
|
|
|
|
GAAP debt |
|
|
$ 1,396,640 |
$ 1,396,208 |
Add: Letters of credit |
|
|
47,861 |
51,715 |
Discount on senior
notes |
|
|
3,385 |
3,890 |
Six-times rent expense |
|
|
1,578,168 |
1,529,352 |
Adjusted debt |
|
|
$ 3,026,054 |
$ 2,981,165 |
|
|
|
|
|
GAAP net income |
|
|
$ 778,182 |
$ 670,292 |
Add: Interest expense |
|
|
53,290 |
49,074 |
Provision for income
taxes |
|
|
444,000 |
388,650 |
Depreciation and
amortization |
|
|
194,205 |
183,180 |
Share-based compensation
expense |
|
|
23,095 |
21,722 |
Rent expense |
|
|
263,028 |
254,892 |
EBITDAR |
|
|
$ 1,755,800 |
$ 1,567,810 |
|
|
|
|
|
Adjusted debt to EBITDAR |
|
|
1.72 |
1.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
|
|
2014 |
2013 |
Selected Balance Sheet
Ratios: |
|
|
|
|
Inventory turnover (1) |
|
|
1.4 |
1.4 |
Inventory turnover, net of payables (2) |
|
|
21.8 |
10.7 |
Average inventory per store (in thousands)
(3) |
|
|
$ 585 |
$ 570 |
Accounts payable to inventory (4) |
|
|
94.6% |
86.6% |
Return on equity (5) |
|
|
37.6% |
33.2% |
Return on assets (6) |
|
|
12.0% |
11.1% |
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended December 31, |
For the
Year Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
Selected Financial Information (in
thousands): |
|
|
|
|
Capital expenditures |
$ 112,830 |
$ 96,370 |
$ 429,987 |
$ 395,881 |
Free cash flow (7) |
94,646 |
91,808 |
760,443 |
512,145 |
Depreciation and amortization |
50,690 |
47,109 |
194,205 |
183,180 |
Interest expense |
14,079 |
12,912 |
53,290 |
49,074 |
Rent expense |
$ 67,005 |
$ 63,987 |
$ 263,028 |
$ 254,892 |
|
|
|
|
|
Store and Team Member
Information: |
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended December 31, |
For the Year
Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
Beginning store count |
4,311 |
4,135 |
4,166 |
3,976 |
New stores opened |
57 |
32 |
207 |
195 |
Stores closed |
(2) |
(1) |
(7) |
(5) |
Ending store count |
4,366 |
4,166 |
4,366 |
4,166 |
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended December 31, |
For the Year
Ended December 31, |
|
2014 |
2013 |
2014 |
2013 |
Total employment |
67,569 |
61,909 |
|
|
Square footage (in thousands) |
31,591 |
30,077 |
|
|
Sales per weighted-average square foot
(8) |
$ 55.76 |
$ 53.64 |
$ 232.22 |
$ 223.95 |
Sales per weighted-average store (in
thousands) (9) |
$ 403 |
$ 387 |
$ 1,678 |
$ 1,614 |
|
|
|
|
|
(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 net
income for the last 12 months 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 net
income for the last 12 months divided by average total
assets. Average total assets is calculated as the average of
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
footage. Weighted-average square footage is determined by
weighting store square footage based on the approximate dates of
store openings, acquisitions, expansions or closings. |
(9) Calculated as sales
less jobber sales, divided by weighted-average
stores. Weighted-average stores is determined by weighting
stores based on their approximate opening, acquisition or closing
dates. |
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Mark Merz (417) 829-5878
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