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
first quarter ended March 31, 2016.
1st Quarter Financial
ResultsSales for the first quarter ended March 31,
2016, increased $194 million, or 10%, to $2.10 billion from $1.90
billion for the same period one year ago. Gross profit for
the first quarter increased to $1.10 billion (or 52.4% of sales)
from $987 million (or 51.9% of sales) for the same period one year
ago, representing an increase of 11%. Selling, general and
administrative expenses for the first quarter increased to $679
million (or 32.4% of sales) from $637 million (or 33.5% of sales)
for the same period one year ago, representing an increase of
7%. Operating income for the first quarter increased to $419
million (or 20.0% of sales) from $350 million (or 18.4% of sales)
for the same period one year ago, representing an increase of
19%.
Net income for the first quarter ended
March 31, 2016, increased $43 million, or 20%, to $255 million
(or 12.2% of sales) from $213 million (or 11.2% of sales) for the
same period one year ago. Diluted earnings per common share
for the first quarter increased 26% to $2.59 on 99 million shares
versus $2.06 on 103 million shares for the same period one year
ago.
Commenting on the Company’s first quarter
results, O’Reilly’s President and CEO, Greg Henslee stated, “We are
very proud to report a strong start to 2016, highlighted by a 6.1%
increase in comparable store sales, which represents our 10th
consecutive quarter of comparable store sales growth greater than
5%, and a 26% increase in first quarter diluted earnings per share
to $2.59, which is our 29th consecutive quarter of diluted earnings
per share growth greater than 15%. As we previously
discussed, our first quarter 2016 results included one additional
day due to Leap Day, which is excluded from our comparable store
sales results, but benefited our first quarter EPS by approximately
$0.05 per share. Our consistently strong performance is the
direct result of the unwavering commitment of our over 73,000 Team
Members dedicated to providing excellent customer service, and I
would like to thank each of our hard working Team Members for our
strong first quarter performance and their relentless focus on our
long-term success.”
Mr. Henslee continued, “As we have commented on
in the past, our gross margin results can face headwinds relating
to merchandise acquisition cost improvements, which is a positive
driver to our long-term gross margin expansion, but can create
short term pressure on our gross margin results due to reducing our
inventory value to the lower acquisition cost in accordance with
our LIFO accounting. Our second quarter earnings per share
guidance includes an expected non-cash impact from a specific new
supplier contract resulting in LIFO headwinds of approximately $23
million. While this item impacts our second quarter gross
margin expectations, we still anticipate full-year gross margin to
be within our previously guided range of 52.3% to 52.7% of sales as
our gross margin benefits from these cost reductions for the
remainder of 2016.”
Share Repurchase ProgramDuring
the first quarter ended March 31, 2016, the Company
repurchased 1.2 million shares of its common stock, at an average
price per share of $254.02, for a total investment of $313
million. Subsequent to the end of the first quarter and
through the date of this release, the Company repurchased an
additional 0.3 million shares of its common stock, at an average
price per share of $270.61, for a total investment of $71
million. The Company has repurchased a total of 52.7 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 $108.84, for a total
aggregate investment of $5.74 billion. As of the date of this
release, the Company had approximately $509 million remaining under
its current share repurchase authorization.
1st Quarter Comparable Store Sales
ResultsComparable 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, as well as the sales from Leap Day in the three
months ended March 31, 2016. Comparable store sales increased
6.1% for the first quarter ended March 31, 2016, versus 7.2%
for the same period one year ago.
2nd Quarter and Updated Full-Year 2016
GuidanceThe table below outlines the Company’s guidance
for selected second quarter and updated full-year 2016 financial
data:
|
For the Three Months Ending June 30, 2016 |
|
For the Year Ending December 31, 2016 |
Comparable store
sales |
3% to
5% |
|
3% to
5% |
Total revenue |
|
|
$8.4
billion to $8.6 billion |
Gross profit as a
percentage of sales |
|
|
52.3%
to 52.7% |
Operating income as a
percentage of sales |
|
|
19.3%
to 19.7% |
Diluted earnings per
share (1) |
$2.54
to $2.64 |
|
$10.10
to $10.50 |
Capital
expenditures |
|
|
$460
million to $490 million |
Free cash flow (2) |
|
|
$750
million to $800 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 InformationThis
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
InformationThe Company will host a conference call on
Thursday, April 28, 2016, 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 42060798. A replay
of the conference call will be available on the Company’s website
through Thursday, April 27, 2017.
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 March 31, 2016,
the Company operated 4,623 stores in 44 states.
Forward-Looking StatementsThe
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, the economy in general, inflation, product demand, the
market for auto parts, competition, weather, risks associated with
the performance of acquired businesses, our ability to hire and
retain qualified employees, consumer debt levels, our increased
debt levels, credit ratings on public debt, governmental
regulations, 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, 2015, 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) |
|
|
|
|
|
|
|
March 31, 2016 |
|
March 31, 2015 |
|
December 31, 2015 |
|
(Unaudited) |
|
(As Adjusted, Unaudited) |
|
(Note) |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
$ |
716,008 |
|
|
$ |
473,646 |
|
|
$ |
116,301 |
|
Accounts receivable,
net |
178,282 |
|
|
162,020 |
|
|
161,078 |
|
Amounts receivable from
suppliers |
68,486 |
|
|
69,545 |
|
|
72,609 |
|
Inventory |
2,701,760 |
|
|
2,527,982 |
|
|
2,631,015 |
|
Other current assets
(1) |
36,927 |
|
|
39,326 |
|
|
29,023 |
|
Total
current assets (1) |
3,701,463 |
|
|
3,272,519 |
|
|
3,010,026 |
|
|
|
|
|
|
|
Property and equipment,
at cost |
4,473,747 |
|
|
4,080,350 |
|
|
4,372,250 |
|
Less: accumulated
depreciation and amortization |
1,559,820 |
|
|
1,381,502 |
|
|
1,510,694 |
|
Net
property and equipment |
2,913,927 |
|
|
2,698,848 |
|
|
2,861,556 |
|
|
|
|
|
|
|
Notes receivable, less
current portion |
12,172 |
|
|
12,414 |
|
|
13,219 |
|
Goodwill |
757,130 |
|
|
756,384 |
|
|
757,142 |
|
Other assets, net
(1) |
35,081 |
|
|
37,605 |
|
|
34,741 |
|
Total assets (1) |
$ |
7,419,773 |
|
|
$ |
6,777,770 |
|
|
$ |
6,676,684 |
|
|
|
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
2,782,609 |
|
|
$ |
2,470,749 |
|
|
$ |
2,608,231 |
|
Self-insurance reserves |
71,069 |
|
|
67,676 |
|
|
72,741 |
|
Accrued
payroll |
66,842 |
|
|
75,059 |
|
|
59,101 |
|
Accrued
benefits and withholdings |
49,175 |
|
|
42,413 |
|
|
72,203 |
|
Income
taxes payable |
114,321 |
|
|
78,939 |
|
|
1,444 |
|
Other
current liabilities |
231,661 |
|
|
200,888 |
|
|
232,678 |
|
Current
portion of long-term debt |
— |
|
|
6 |
|
|
— |
|
Total
current liabilities (1) |
3,315,677 |
|
|
2,935,730 |
|
|
3,046,398 |
|
|
|
|
|
|
|
Long-term debt, less
current portion (1) |
1,885,877 |
|
|
1,388,801 |
|
|
1,390,018 |
|
Deferred income taxes
(1) |
76,450 |
|
|
97,981 |
|
|
79,772 |
|
Other liabilities |
201,928 |
|
|
211,758 |
|
|
199,182 |
|
|
|
|
|
|
|
Shareholders’
equity: |
|
|
|
|
|
Common
stock, $0.01 par value: |
|
|
|
|
|
Authorized shares – 245,000,000 |
|
|
|
|
|
Issued
and outstanding shares – |
|
|
|
|
|
96,726,677 as of March 31, 2016, |
|
|
|
|
|
101,347,744 as of March 31, 2015, and |
|
|
|
|
|
97,737,171 as of December 31, 2015 |
967 |
|
|
1,013 |
|
|
977 |
|
Additional paid-in capital |
1,301,057 |
|
|
1,234,133 |
|
|
1,281,497 |
|
Retained
earnings |
637,817 |
|
|
908,354 |
|
|
678,840 |
|
Total shareholders’
equity |
1,939,841 |
|
|
2,143,500 |
|
|
1,961,314 |
|
|
|
|
|
|
|
Total liabilities and
shareholders’ equity (1) |
$ |
7,419,773 |
|
|
$ |
6,777,770 |
|
|
$ |
6,676,684 |
|
Note: The balance sheet at December 31,
2015, has been derived from the audited consolidated financial
statements at that date, but does not include all of the
information and footnotes required by United States generally
accepted accounting principles for complete financial
statements.
(1) Certain amounts as of March 31, 2015,
have been reclassified to conform to current period presentation,
due to the Company’s adoption of new accounting standards during
the fourth quarter ended December 31, 2015. See Note 1
“Summary of Significant Accounting Policies” to the Consolidated
Financial Statements of the annual report on Form 10-K for the year
ended December 31, 2015.
O’REILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME |
(Unaudited) |
(In thousands,
except per share data) |
|
|
|
For the Three Months Ended March
31, |
|
2016 |
|
2015 |
Sales |
$ |
2,096,150 |
|
|
$ |
1,901,903 |
|
Cost of goods sold,
including warehouse and distribution expenses |
998,571 |
|
|
914,944 |
|
Gross profit |
1,097,579 |
|
|
986,959 |
|
|
|
|
|
Selling, general and
administrative expenses |
678,953 |
|
|
636,586 |
|
Operating income |
418,626 |
|
|
350,373 |
|
|
|
|
|
Other income
(expense): |
|
|
|
Interest
expense |
(14,821 |
) |
|
(14,402 |
) |
Interest
income |
752 |
|
|
580 |
|
Other,
net |
1,017 |
|
|
1,113 |
|
Total
other expense |
(13,052 |
) |
|
(12,709 |
) |
|
|
|
|
Income before income
taxes |
405,574 |
|
|
337,664 |
|
Provision for income
taxes |
150,200 |
|
|
124,800 |
|
Net income |
$ |
255,374 |
|
|
$ |
212,864 |
|
|
|
|
|
Earnings per
share-basic: |
|
|
|
Earnings per share |
$ |
2.63 |
|
|
$ |
2.09 |
|
Weighted-average common
shares outstanding – basic |
97,140 |
|
|
101,612 |
|
|
|
|
|
Earnings per
share-assuming dilution: |
|
|
|
Earnings per share |
$ |
2.59 |
|
|
$ |
2.06 |
|
Weighted-average common
shares outstanding – assuming dilution |
98,537 |
|
|
103,257 |
|
|
|
|
|
|
|
O’REILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES |
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
For the Three Months Ended March
31, |
|
2016 |
|
2015 |
Operating
activities: |
|
|
|
Net income |
$ |
255,374 |
|
|
$ |
212,864 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization of property, equipment and
intangibles |
52,778 |
|
|
54,950 |
|
Amortization of debt discount and issuance costs |
546 |
|
|
525 |
|
Excess
tax benefit from share-based compensation |
(14,762 |
) |
|
(21,188 |
) |
Deferred
income taxes |
(3,322 |
) |
|
(4,441 |
) |
Share-based compensation programs |
5,178 |
|
|
5,890 |
|
Other |
1,481 |
|
|
1,355 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
(19,206 |
) |
|
(19,867 |
) |
Inventory |
(70,745 |
) |
|
26,807 |
|
Accounts
payable |
174,378 |
|
|
53,582 |
|
Income
taxes payable |
127,638 |
|
|
117,221 |
|
Other |
(21,183 |
) |
|
(21,673 |
) |
Net cash
provided by operating activities |
488,155 |
|
|
406,025 |
|
|
|
|
|
Investing
activities: |
|
|
|
Purchases of property
and equipment |
(103,974 |
) |
|
(91,140 |
) |
Proceeds from sale of
property and equipment |
864 |
|
|
658 |
|
Payments received on
notes receivable |
1,047 |
|
|
935 |
|
Net cash
used in investing activities |
(102,063 |
) |
|
(89,547 |
) |
|
|
|
|
Financing
activities: |
|
|
|
Proceeds from the
issuance of long-term debt |
499,160 |
|
|
— |
|
Payment of debt
issuance costs |
(3,725 |
) |
|
— |
|
Principal payments on
capital leases |
— |
|
|
(19 |
) |
Repurchases of common
stock |
(312,656 |
) |
|
(134,813 |
) |
Excess tax benefit from
share-based compensation |
14,762 |
|
|
21,188 |
|
Net proceeds from
issuance of common stock |
16,074 |
|
|
20,252 |
|
Net cash
provided by (used in) financing activities |
213,615 |
|
|
(93,392 |
) |
|
|
|
|
Net increase in cash
and cash equivalents |
599,707 |
|
|
223,086 |
|
Cash and cash
equivalents at beginning of the period |
116,301 |
|
|
250,560 |
|
Cash and cash
equivalents at end of the period |
$ |
716,008 |
|
|
$ |
473,646 |
|
|
|
|
|
Supplemental
disclosures of cash flow information: |
|
|
|
Income taxes paid |
$ |
23,765 |
|
|
$ |
8,675 |
|
Interest paid, net of
capitalized interest |
23,063 |
|
|
23,435 |
|
|
|
|
|
|
|
O’REILLY
AUTOMOTIVE, INC. AND SUBSIDIARIES |
SELECTED FINANCIAL
INFORMATION |
(Unaudited) |
|
|
|
For the Twelve Months Ended March
31, |
Adjusted Debt to EBITDAR: |
2016 |
|
2015 |
(In
thousands, except adjusted debt to EBITDAR ratio) |
|
|
|
GAAP debt
(1) |
$ |
1,885,877 |
|
|
$ |
1,388,807 |
|
Add: |
Letters of credit |
38,936 |
|
|
50,506 |
|
|
Discount on senior
notes |
3,586 |
|
|
3,259 |
|
|
Debt issuance
costs |
10,537 |
|
|
7,940 |
|
|
Six-times rent
expense |
1,651,944 |
|
|
1,597,278 |
|
Adjusted
debt |
$ |
3,590,880 |
|
|
$ |
3,047,790 |
|
|
|
|
|
|
GAAP net
income |
$ |
973,726 |
|
|
$ |
817,186 |
|
Add: |
Interest expense |
57,548 |
|
|
54,283 |
|
|
Provision for income
taxes |
554,550 |
|
|
467,700 |
|
|
Depreciation and
amortization |
208,084 |
|
|
201,678 |
|
|
Share-based
compensation expense |
21,187 |
|
|
23,889 |
|
|
Rent expense |
275,324 |
|
|
266,213 |
|
EBITDAR |
$ |
2,090,419 |
|
|
$ |
1,830,949 |
|
|
|
|
|
|
Adjusted
debt to EBITDAR |
1.72 |
|
1.66 |
|
|
|
|
|
|
|
|
|
March 31, |
|
2016 |
|
2015 |
Selected Balance Sheet Ratios: |
|
|
|
Inventory
turnover (2) |
|
1.5 |
|
|
|
1.4 |
|
Average
inventory per store (in thousands) (3) |
$ |
584 |
|
|
$ |
570 |
|
Accounts
payable to inventory (4) |
|
103.0 |
% |
|
|
97.7 |
% |
Return on
equity (5) |
|
49.5 |
% |
|
|
39.6 |
% |
Return on
assets (1)(6) |
|
14.2 |
% |
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March
31, |
|
|
2016 |
|
|
|
2015 |
|
Selected Financial Information (in
thousands): |
|
|
|
|
|
|
|
Capital expenditures |
$ |
103,974 |
|
|
$ |
91,140 |
|
Free cash flow (7) |
|
384,181 |
|
|
|
314,885 |
|
Depreciation and amortization |
|
52,778 |
|
|
|
54,950 |
|
Interest expense |
|
14,821 |
|
|
|
14,402 |
|
Rent expense |
$ |
70,003 |
|
|
|
67,938 |
|
|
|
|
|
|
|
|
|
Store and Team Member
Information: |
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March
31, |
|
For the Twelve Months Ended March 31, |
|
2016 |
|
2015 |
|
|
2016 |
|
|
2015 |
Beginning store count |
4,571 |
|
4,366 |
|
|
|
4,433 |
|
|
|
4,216 |
|
New stores opened |
52 |
|
67 |
|
|
|
194 |
|
|
|
223 |
|
Stores closed |
— |
|
— |
|
|
|
(4 |
) |
|
|
(6 |
) |
Ending store count |
4,623 |
|
4,433 |
|
|
|
4,623 |
|
|
|
4,433 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended March
31, |
|
For the Twelve Months Ended March
31, |
|
2016 |
|
2015 |
|
|
2016 |
|
|
2015 |
Total employment |
73,599 |
|
69,708 |
|
|
|
|
|
|
Square footage (in thousands) |
33,559 |
|
32,101 |
|
|
|
|
|
|
Sales per weighted-average square foot (8) |
$ |
62.39 |
|
$ |
59.24 |
|
$ |
247.28 |
|
$ |
234.98 |
Sales per weighted-average store (in thousands)
(9) |
$ |
452 |
|
$ |
429 |
|
$ |
1,792 |
|
$ |
1,699 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Prior period amount
has been reclassified to conform to current period presentation,
due to the Company’s adoption of new accounting standards during
the fourth quarter ended December 31, 2015. See Note 1
“Summary of Significant Accounting Policies” to the Consolidated
Financial Statements of the annual report on Form 10-K for the year
ended December 31, 2015. |
(2) 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. |
(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 closures. |
(9) Calculated as sales
less jobber sales, divided by weighted-average stores.
Weighted-average stores is determined by weighting stores based on
their approximate dates of opening, acquisition or closures. |
For further information contact:
Investor & Media Contact:
Mark Merz (417) 829-5878
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