- Comparable store sales increase of 6.3%
- 18% increase in diluted earnings per share to
$1.61
- Record first quarter operating margin of
16.6%
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, 2014.
1st Quarter Financial Results
Sales for the first quarter ended March 31, 2014, increased $143
million, or 9%, to $1.73 billion from $1.59 billion for the same
period one year ago. Gross profit for the first quarter increased
to $878 million (or 50.8% of sales) from $799 million (or 50.4% of
sales) for the same period one year ago, representing an increase
of 10%. Selling, general and administrative expenses ("SG&A")
for the first quarter increased to $591 million (or 34.2% of sales)
from $548 million (or 34.5% of sales) for the same period one year
ago, representing an increase of 8%. Operating income for the first
quarter increased to $287 million (or 16.6% of sales) from $251
million (or 15.8% of sales) for the same period one year ago,
representing an increase of 14%.
Net income for the first quarter ended March 31, 2014, increased
$20 million, or 13%, to $174 million (or 10.1% of sales) from $154
million (or 9.7% of sales) for the same period one year ago.
Diluted earnings per common share for the first quarter increased
18% to $1.61 on 108 million shares versus $1.36 for the same period
one year ago on 113 million shares.
Commenting on the Company's first quarter results, President and
CEO, Greg Henslee, stated, "We are proud to report a very strong
and profitable start to 2014, highlighted by a 6.3% increase in
comparable store sales and an 18% increase in diluted earnings per
share to $1.61, which marks our 21st consecutive quarter of 15% or
greater diluted earnings per share growth. Our comparable store
sales results for the first quarter exceeded our expectations, and
the top end of our guidance range, driven by Team O'Reilly's
relentless focus on delivering the highest level of customer
service in the industry. Once again, our record-breaking
performance is the direct result of the hard work and commitment of
our dedicated Team Members, and I would like to thank each of you
for the vital role you play in our ongoing success."
Mr. Henslee continued, "During the first quarter, we opened 50
net, new stores across 23 states with many of those stores opening
in Florida where our newest distribution center in Lakeland began
providing daily inventory replenishments to our stores in those
markets in early January. Our Naperville, Illinois, distribution
center is currently under construction and remains on schedule to
open and begin servicing stores by early fall, and the planned
opening of our new Devens, Massachusetts, distribution center
before the end of the year is also progressing as planned. These
three new distribution centers augment our already robust
distribution network and reflect O'Reilly's continued commitment to
providing our customers industry leading parts availability."
Mr. Henslee added, "We have seen the strong sales volumes we
experienced in the first quarter continue into the beginning of
April; however, we face our most difficult quarterly comparable
store sales comparison in the second quarter of 2014 as we
anniversary 2013's strong second quarter comparable stores increase
of 6.5% and face a headwind from the timing of the Easter holiday,
which falls in the second quarter this year versus the first
quarter last year. Based on these comparisons, we are guiding to a
comparable stores sales increase range of 2% to 4% for the second
quarter and reiterating our full-year 2014 comparable store sales
guidance of 3% to 5%."
Share Repurchase Program
During the first quarter ended March 31, 2014, the Company
repurchased 0.1 million shares of its common stock, at an average
price per share of $148.18, for a total investment of $22 million.
Subsequent to the end of the first quarter and through the date of
this release, the Company repurchased an additional 0.2 million
shares of its common stock, at an average price per share of
$144.52, for a total investment of $34 million. The Company has
repurchased a total of 41.0 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 $83.20, for a total aggregate investment of
$3.41 billion. As of the date of this release, the Company had
approximately $590 million remaining under its current share
repurchase authorizations.
1st Quarter 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 first
quarter ended March 31, 2014, versus 0.6% for the first quarter
ended March 31, 2013. The comparable store sales increase for the
first quarter ended March 31, 2013, adjusted for the impact of one
additional day during the first quarter ended March 31, 2012, as a
result of Leap Day, was 1.9%.
2nd Quarter and Updated Full-Year 2014
Guidance
The table below outlines the Company's guidance for selected
second quarter and updated full-year 2014 financial data:
|
|
|
|
For the Three Months Ending
June 30, 2014 |
For the Year Ending December
31, 2014 |
Comparable store sales |
2% to 4% |
3% to 5% |
Total revenue |
|
$7.0 billion to $7.2 billion |
Gross profit as a percentage of sales |
|
50.9% to 51.4% |
Operating income as a percentage of
sales |
|
17.0% to 17.4% |
Diluted earnings per share (1) |
$1.79 to $1.83 |
$6.82 to $6.92 |
Capital expenditures |
|
$390 million to $420 million |
Free cash flow (2) |
|
$580 million to $620 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 rent-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 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, April 24,
2014, 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 36865970. A replay of
the conference call will be available on the Company's website
through April 23, 2015.
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, 2014, the Company operated 4,216
stores in 42 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 "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, 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) |
|
|
|
|
|
March 31, 2014 |
March 31, 2013 |
December 31, 2013 |
|
(Unaudited) |
(Unaudited) |
(Note) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ 511,831 |
$ 205,410 |
$ 231,318 |
Accounts receivable, net |
142,703 |
153,189 |
131,504 |
Amounts receivable from
vendors |
69,034 |
51,695 |
66,619 |
Inventory |
2,397,042 |
2,295,846 |
2,375,047 |
Other current assets |
40,663 |
35,048 |
30,713 |
Total current assets |
3,161,273 |
2,741,188 |
2,835,201 |
|
|
|
|
Property and equipment, at cost |
3,676,061 |
3,342,371 |
3,606,837 |
Less: accumulated depreciation and
amortization |
1,212,962 |
1,098,297 |
1,181,734 |
Net property and equipment |
2,463,099 |
2,244,074 |
2,425,103 |
|
|
|
|
Notes receivable, less current portion |
12,165 |
4,318 |
13,066 |
Goodwill |
756,225 |
758,578 |
756,225 |
Other assets, net |
37,011 |
41,383 |
37,613 |
Total assets |
$ 6,429,773 |
$ 5,789,541 |
$ 6,067,208 |
|
|
|
|
Liabilities and shareholders'
equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ 2,160,897 |
$ 1,967,000 |
$ 2,056,521 |
Self-insurance reserves |
68,625 |
56,052 |
57,700 |
Accrued payroll |
64,473 |
58,958 |
65,520 |
Accrued benefits and
withholdings |
42,405 |
36,780 |
41,262 |
Deferred income taxes |
21,977 |
13,196 |
20,222 |
Income taxes payable |
51,971 |
56,004 |
— |
Other current liabilities |
187,428 |
160,949 |
181,718 |
Current portion of long-term
debt |
74 |
83 |
67 |
Total current liabilities |
2,597,850 |
2,349,022 |
2,423,010 |
|
|
|
|
Long-term debt, less current portion |
1,396,242 |
1,095,852 |
1,396,141 |
Deferred income taxes |
75,162 |
83,130 |
80,713 |
Other liabilities |
197,295 |
189,012 |
201,023 |
|
|
|
|
Shareholders' equity: |
|
|
|
Common stock, $0.01 par
value: |
|
|
|
Authorized shares –
245,000,000 |
|
|
|
Issued and outstanding shares –
106,303,884 as of March 31, 2014, 111,041,666 as of March 31, 2013,
and 105,939,766 as of December 31, 2013 |
1,063 |
1,110 |
1,059 |
Additional paid-in capital |
1,162,413 |
1,097,928 |
1,118,929 |
Retained earnings |
999,748 |
973,487 |
846,333 |
Total shareholders' equity |
2,163,224 |
2,072,525 |
1,966,321 |
|
|
|
|
Total liabilities and shareholders'
equity |
$ 6,429,773 |
$ 5,789,541 |
$ 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 |
(Unaudited) |
(In thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, |
|
2014 |
2013 |
Sales |
$ 1,727,943 |
$ 1,585,009 |
Cost of goods sold, including warehouse and
distribution expenses |
850,227 |
786,346 |
Gross profit |
877,716 |
798,663 |
|
|
|
Selling, general and administrative
expenses |
590,596 |
547,579 |
Operating income |
287,120 |
251,084 |
|
|
|
Other income (expense): |
|
|
Interest expense |
(13,409) |
(11,400) |
Interest income |
631 |
477 |
Other, net |
618 |
468 |
Total other expense |
(12,160) |
(10,455) |
|
|
|
Income before income taxes |
274,960 |
240,629 |
Provision for income taxes |
101,100 |
86,300 |
Net income |
$ 173,860 |
$ 154,329 |
|
|
|
Earnings per share-basic: |
|
|
Earnings per share |
$ 1.64 |
$ 1.38 |
Weighted-average common shares outstanding –
basic |
106,191 |
111,557 |
|
|
|
Earnings per share-assuming dilution: |
|
|
Earnings per share |
$ 1.61 |
$ 1.36 |
Weighted-average common shares outstanding –
assuming dilution |
108,070 |
113,396 |
|
O'REILLY AUTOMOTIVE,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, |
|
2014 |
2013 |
Operating activities: |
|
|
Net income |
$ 173,860 |
$ 154,329 |
Adjustments to reconcile net income to net
cash provided by operating activities: |
|
|
Depreciation and amortization of
property, equipment and intangibles |
47,477 |
44,179 |
Amortization of debt discount and
issuance costs |
520 |
496 |
Excess tax benefit from stock options
exercised |
(17,850) |
(10,788) |
Deferred income taxes |
(3,796) |
(2,691) |
Share-based compensation programs |
5,096 |
5,597 |
Other |
1,526 |
1,462 |
Changes in operating assets and
liabilities: |
|
|
Accounts receivable |
(13,016) |
(31,844) |
Inventory |
(21,994) |
(19,515) |
Accounts payable |
104,376 |
37,888 |
Income taxes payable |
69,922 |
60,859 |
Other |
(572) |
(13,628) |
Net cash provided by operating
activities |
345,549 |
226,344 |
|
|
|
Investing activities: |
|
|
Purchases of property and equipment |
(83,085) |
(73,484) |
Proceeds from sale of property and
equipment |
287 |
355 |
Payments received on notes receivable |
900 |
1,029 |
Net cash used in investing
activities |
(81,898) |
(72,100) |
|
|
|
Financing activities: |
|
|
Principal payments on capital leases |
(18) |
(145) |
Repurchases of common stock |
(22,067) |
(227,930) |
Excess tax benefit from stock options
exercised |
17,850 |
10,788 |
Net proceeds from issuance of common
stock |
21,097 |
20,325 |
Net cash provided by (used in)
financing activities |
16,862 |
(196,962) |
|
|
|
Net increase (decrease) in cash and cash
equivalents |
280,513 |
(42,718) |
Cash and cash equivalents at beginning of the
period |
231,318 |
248,128 |
Cash and cash equivalents at end of the
period |
$ 511,831 |
$ 205,410 |
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
Income taxes paid |
$ 33,331 |
$ 29,158 |
Interest paid, net of capitalized
interest |
22,419 |
23,764 |
|
O'REILLY AUTOMOTIVE,
INC. AND SUBSIDIARIES |
SELECTED FINANCIAL
INFORMATION |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
For the Twelve
Months Ended March 31, |
Adjusted Debt to
EBITDAR: |
2014 |
2013 |
(In thousands, except adjusted debt to
EBITDAR ratio) |
|
|
GAAP debt |
$ 1,396,316 |
$ 1,095,935 |
Add: Letters of credit |
54,701 |
56,525 |
Discount on senior notes |
3,764 |
4,241 |
Six-times rent expense |
1,540,488 |
1,469,442 |
Adjusted debt |
$ 2,995,269 |
$ 2,626,143 |
|
|
|
GAAP net income |
$ 689,823 |
$ 592,583 |
Add: Interest expense |
51,083 |
42,469 |
Provision for income taxes |
403,450 |
349,775 |
Depreciation and
amortization |
186,478 |
177,452 |
Share-based compensation
expense |
21,221 |
22,399 |
Rent expense |
256,748 |
244,907 |
EBITDAR |
$ 1,608,803 |
$ 1,429,585 |
|
|
|
Adjusted debt to EBITDAR |
1.86 |
1.84 |
|
|
|
|
|
|
|
March
31, |
|
2014 |
2013 |
Selected Balance Sheet
Ratios: |
|
|
Inventory turnover (1) |
1.4 |
1.4 |
Inventory turnover, net of payables (2) |
11.8 |
8.5 |
Average inventory per store (in thousands)
(3) |
$ 569 |
$ 568 |
Accounts payable to inventory (4) |
90.1% |
85.7% |
Return on equity (5) |
33.8% |
26.2% |
Return on assets (6) |
11.1% |
10.3% |
|
|
|
|
|
|
|
For the Three
Months Ended March 31, |
|
2014 |
2013 |
Selected Financial Information (in
thousands): |
|
|
Capital expenditures |
$ 83,085 |
$ 73,484 |
Free cash flow (7) |
$ 262,464 |
$ 152,860 |
Depreciation and amortization |
$ 47,477 |
$ 44,179 |
Interest expense |
$ 13,409 |
$ 11,400 |
Rent expense |
$ 64,753 |
$ 62,897 |
|
|
|
|
|
Store and Team Member
Information: |
|
|
|
|
|
For the Three
Months Ended March 31, |
For the Twelve
Months Ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
Beginning store count |
4,166 |
3,976 |
4,041 |
3,809 |
New stores opened |
51 |
66 |
180 |
178 |
Stores acquired |
— |
— |
— |
56 |
Stores closed |
(1) |
(1) |
(5) |
(2) |
Ending store count |
4,216 |
4,041 |
4,216 |
4,041 |
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended March 31, |
For the Twelve
Months Ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
Total employment |
64,676 |
55,782 |
|
|
Square footage (in thousands) |
30,454 |
29,102 |
|
|
Sales per weighted-average square foot
(8) |
$ 56.47 |
$ 54.31 |
$ 226.10 |
$ 221.48 |
Sales per weighted-average store (in
thousands) (9) |
$ 408 |
$ 391 |
$ 1,630 |
$ 1,581 |
|
|
(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. |
CONTACT: For further information contact:
Investor & Media Contact
Mark Merz (417) 829-5878
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