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Press release from GlobeNewswire (a Nasdaq OMX company)

AutoZone 2nd Quarter Same Store Sales Increase 5.9%; EPS Increases 24.4% to $4.15

Tuesday, February 28, 2012

AutoZone 2nd Quarter Same Store Sales Increase 5.9%; EPS Increases 24.4% to $4.1504:00 EST Tuesday, February 28, 2012MEMPHIS, Tenn., Feb. 28, 2012 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.8 billion for its second quarter (12 weeks) ended February 11, 2012, an increase of 8.6% from the second quarter of fiscal 2011 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 5.9% for the quarter. Net income for the quarter increased $18.9 million, or 12.7%, over the same period last year to $166.9 million, while diluted earnings increased 24.4% to $4.15 per share from $3.34 per share in the year-ago quarter. For the quarter, gross profit, as a percentage of sales, was 51.3% (versus 50.9% for last year's quarter). The improvement in gross margin was primarily attributable to lower shrink expense (35 bps). Operating expenses, as a percentage of sales, were 34.7% (versus 34.6% last year). The primary contributor to the increase in operating expenses, as a percentage of sales, was higher self insurance costs (59 bps), partially offset by leverage of other operating expenses due to higher sales volumes. Under its share repurchase program, AutoZone repurchased 501 thousand shares of its common stock for $173 million during the second quarter, at an average price of $345 per share. At quarter end, the Company had $486 million remaining under its current share repurchase authorization. The Company's inventory increased 6.6% over the same period last year, driven by an increase in store count and continued strategic investments in hard parts assortment. However, inventory per store was $530 thousand versus $517 thousand last year, an increase of 2.3%. "We are pleased to announce another quarter of strong performance. This marks the thirteenth consecutive quarter of 20% plus growth in earnings per share and our twenty second consecutive quarter of double digit growth. We remain committed to executing our 2012 operating theme of "1TEAM; Driving our Future." We continued our focus on improving parts coverage; hiring, retaining, and training the best automotive parts professionals; and growing our Commercial business. The commitment of our more than 65,000 AutoZoners to providing trustworthy advice is what sets our company apart, and it is their dedication to meeting and exceeding our customers' needs that leads to our success. Additionally, our return on invested capital on a trailing four-quarter basis reached another new all-time high at 32.2%. We remain committed to our disciplined approach of growing operating earnings while efficiently utilizing our capital," said Bill Rhodes, Chairman, President and Chief Executive Officer.  During the quarter ended February 11, 2012, AutoZone opened 29 new stores in the U.S. and opened 6 new stores in Mexico. As of February 11, 2012, the Company had 4,580 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 287 stores in Mexico for a total store count of 4,867. AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each store carries an extensive product line for cars, sport utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. Many stores also have a commercial sales program that provides commercial credit and prompt delivery of parts and other products to local, regional and national repair garages, dealers, service stations, and public sector accounts. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com and www.alldatadiy.com. Additionally, we sell automotive hard parts, maintenance items, accessories, and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation. AutoZone will host a conference call this morning, Tuesday, February 28, 2012, beginning at 10:00 a.m. (EST) to discuss its second quarter results. Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing (210) 839-8923. A replay of the call and slides will be available on AutoZone's website. In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, March 6, 2012 at 11:59 p.m. (EST). This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP measures include return on invested capital, adjusted debt, adjusted debt to EBITDAR, and cash flow before share repurchases. The Company believes that the presentation of these non-GAAP measures provides information that is useful to investors as it indicates more clearly the Company's comparative year-to-year operating results, but this information should not be considered a substitute for any measures derived in accordance with GAAP. Management targets the Company's capital structure in order to maintain its investment grade credit ratings and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables. The Company believes this is important information for the management of its debt levels and share repurchases. We have included a reconciliation of this additional information to the most comparable GAAP measures in the accompanying reconciliation tables. Certain statements contained in this press release are forward-looking statements. Forward-looking statements typically use words such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 27, 2011, and these Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual results; developments and business decisions may differ from those contemplated by such forward-looking statements, and events described above and in the "Risk Factors" could materially and adversely affect our business. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Actual results may materially differ from anticipated results.  AutoZone's 2nd Quarter Highlights - Fiscal 2012        Condensed Consolidated Statements of Operations  2nd Quarter       (in thousands, except per share data)        GAAP Results    12 Weeks Ended12 Weeks Ended    February 11, 2012February 12, 2011           Net sales  $ 1,804,069  $ 1,660,946   Cost of sales 877,854 815,335   Gross profit  926,215  845,611   Operating, SG&A expenses 625,564 573,863   Operating profit (EBIT)  300,651  271,748   Interest expense, net 38,923 39,576   Income before taxes  261,728  232,172   Income taxes 94,798 84,116   Net income  $ 166,930  $ 148,056   Net income per share:       Basic  $ 4.25  $ 3.41   Diluted  $ 4.15  $ 3.34   Weighted average shares outstanding:       Basic 39,281 43,399   Diluted 40,237 44,378                  Year-To-Date 2nd Quarter, FY 2012     (in thousands, except per share data)GAAP Results    24 Weeks Ended24 Weeks Ended    February 11, 2012February 12, 2011           Net sales  $ 3,728,411  $ 3,452,608   Cost of sales 1,818,569 1,699,249   Gross profit  1,909,842  1,753,359   Operating, SG&A expenses 1,268,257 1,175,491   Operating profit (EBIT)  641,585  577,868   Interest expense, net 78,017 76,829   Income before taxes  563,568  501,039   Income taxes 205,513 180,908   Net income  $ 358,055  $ 320,131   Net income per share:       Basic  $ 9.05  $ 7.27   Diluted  $ 8.83  $ 7.11   Weighted Average Shares outstanding:       Basic 39,573 44,034   Diluted 40,551 45,006                  Selected Balance Sheet Information     (in thousands)        February 11, 2012February 12, 2011August 27, 2011         Cash and cash equivalents  $ 103,207  $ 107,881  $ 97,606 Merchandise inventories  2,577,704  2,418,751  2,466,107 Current assets  2,908,564  2,738,115  2,792,425 Property and equipment, net  2,724,396  2,554,864  2,668,875 Total assets  6,056,464  5,765,603  5,869,602 Accounts payable  2,824,873  2,524,539  2,755,853 Current liabilities*  3,516,789  3,225,136  3,430,896 Total debt*  3,464,360  3,249,230  3,351,682 Stockholders' (deficit)  (1,295,524)  (1,038,412)  (1,254,232) Working capital  (608,225)  (487,021)  (638,471)         * Current liabilities and total debt both include short-term borrowings of $29,560 at February 11, 2012; $40,930 at February 12, 2011 and $34,082 at August 27, 2011.                              Adjusted Debt / EBITDAR (Trailing 4 Qtrs)         (in thousands, except adjusted debt to EBITDAR ratio)          February 11, 2012February 12, 2011     Net income  $ 886,898  $ 791,809     Add: Interest  171,745  163,088      Taxes  499,877  451,575     EBIT  1,558,520  1,406,472               Add: Depreciation  203,962  193,402      Rent expense  220,875  204,218      Share-based expense  29,551  22,372     EBITDAR  $ 2,012,908  $ 1,826,464               Debt  $ 3,464,360  $ 3,249,230     Capital lease obligations  103,774  81,848     Add: rent x 6   1,325,250  1,225,308     Adjusted debt  $ 4,893,384  $ 4,556,386               Adjusted debt to EBITDAR  2.4  2.5                    Selected Cash Flow Information         (in thousands)          12 Weeks Ended12 Weeks Ended24 Weeks Ended24 Weeks Ended  February 11, 2012February 12, 2011February 11, 2012February 12, 2011           Depreciation  $ 47,523  $ 44,126  $ 96,170  $ 88,417 Capital spending  $ 70,506  $ 62,546  $ 132,430  $ 108,357          Cash flow before share repurchases:         Increase in cash and cash equivalents  $ 6,531  $ 9,868  $ 5,601  $ 9,601 Subtract increase/(decrease) in debt  107,856  370,014  113,652  340,744 Add back share repurchases  172,505  394,396  482,270  694,050 Cash flow before share repurchases and changes in debt  $ 71,180  $ 34,250  $ 374,219  $ 362,907                    Other Selected Financial Information         (in thousands, except ROIC)          February 11, 2012Febuary 12, 2011                         Cumulative share repurchases ($ since fiscal 1998)  $ 10,663,643  $ 9,408,622     Remaining share authorization ($)  $ 486,357  $ 491,378               Cumulative share repurchases (shares since fiscal 1998)  128,799  124,577               Shares outstanding, end of quarter  38,951  42,611                Trailing 4 Quarters      February 11, 2012February 12, 2011     Net income  $ 886,898  $ 791,809     Adjustments:          Interest expense  171,745  163,088      Rent expense  220,875  204,218      Tax effect*  (141,523)  (133,615)     After-tax return  1,137,995  1,025,500               Average debt**  3,328,075  2,902,027     Average stockholders' deficit**  (1,210,962)  (695,593)     Add: Rent x 6  1,325,250  1,225,308     Average capital lease obligations**  88,413  74,039     Pre-tax invested capital  $ 3,530,776  $ 3,505,781              Return on Invested Capital (ROIC) 32.2% 29.3%               * Effective tax rate over trailing four quarters ended February 11, 2012 is 36.0% and February 12, 2011 is 36.3%.   ** All averages are computed based on trailing 5 quarter balances.                              AutoZone's 2nd Quarter Fiscal 2012      Selected Operating Highlights                Store Count & Square Footage                    12 Weeks Ended12 Weeks Ended24 Weeks Ended24 Weeks Ended  February 11, 2012February 12, 2011February 11, 2012February 12, 2011Domestic stores:        Store count:         Beginning domestic stores  4,551  4,404  4,534  4,389 Stores opened  29  21  46  36 Stores closed  --  --  --   --  Ending domestic stores  4,580  4,425  4,580  4,425 Relocated stores  4  --  5  4           Stores with commercial programs  2,825  2,521  2,825  2,521          Square footage (in thousands): 29,636  28,547  29,636  28,547          Mexico stores:         Stores opened   6  8  8  11 Total stores in Mexico  287  249  287  249          Total stores chainwide  4,867  4,674  4,867  4,674          Square footage (in thousands):  31,727  30,362  31,727  30,362Square footage per store  6,519  6,496  6,519  6,496          Sales Statistics         ($ in thousands, except sales per average square foot and percentages)          12 Weeks Ended12 Weeks EndedTrailing 4 QuartersTrailing 4 QuartersTotal Auto Parts (Domestic and Mexico) February 11, 2012February 12, 2011February 11, 2012February 12, 2011 Total auto parts sales  $ 1,762,903  $ 1,623,949  $ 8,174,796  $ 7,563,470  % Increase vs. LY  8.6% 10.3% 8.1% 10.6%           Sales per average store   $ 364  $ 349  $ 1,714  $ 1,651 Sales per average square foot   $ 56  $ 54  $ 263  $ 255          Domestic Commercial          Total domestic commercial sales   $ 266,547  $ 213,849  $ 1,179,408 955,914  % Increase vs. LY 24.6% 21.2% 23.4% 19.5%          All Other (ALLDATA and E-Commerce)         All other sales  $ 41,166  $ 36,997  $ 173,980 156,286  % Increase vs. LY  11.3% 11.2% 11.3% 7.5%            12 Weeks Ended12 Weeks Ended24 Weeks Ended24 Weeks Ended  February 11, 2012February 12, 2011February 11, 2012February 12, 2011 Domestic same store sales  5.9% 7.1% 5.2% 8.4%                    Inventory Statistics (Total Stores)          as ofas of      February 11, 2012February 12, 2011     Accounts payable/inventory  109.6% 104.4%               ($ in thousands)         Inventory  $ 2,577,704  $ 2,418,751     Inventory per store  $ 530  $ 517     Net inventory (net of payables)  $ (247,169)  $ (105,788)     Net inventory / per store  $ (51)  $ (23)                Trailing 5 Quarters      February 11, 2012February 12, 2011     Inventory turns  1.6x  1.6x    CONTACT: Financial: Brian Campbell (901) 495-7005 brian.campbell@autozone.com Media: Ray Pohlman (866) 966-3017 ray.pohlman@autozone.com