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Press release from GlobeNewswire (a Nasdaq OMX company)

AutoZone 3rd Quarter Same Store Sales Increase 3.9%; EPS Increases 18.6% to $6.28

Tuesday, May 22, 2012

AutoZone 3rd Quarter Same Store Sales Increase 3.9%; EPS Increases 18.6% to $6.2804:00 EDT Tuesday, May 22, 2012MEMPHIS, Tenn., May 22, 2012 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.1 billion for its third quarter (12 weeks) ended May 5, 2012, an increase of 6.7% from the third quarter of fiscal 2011 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 3.9% for the quarter. Net income for the quarter increased $21.2 million, or 9.3%, over the same period last year to $248.6 million, while diluted earnings increased 18.6% to $6.28 per share from $5.29 per share in the year-ago quarter. For the quarter, gross profit, as a percentage of sales, was 51.6% (versus 51.2% for last year's quarter). The improvement in gross margin was primarily attributable to leveraging distribution costs due to higher sales (25 bps) and lower shrink expense. Operating expenses, as a percentage of sales, were flat to last year at 31.4%. During the quarter, operating expenses, as a percentage of sales, were favorably impacted by lower incentive compensation (31 bps), which was partially offset by higher self insurance costs (23 bps). Under its share repurchase program, AutoZone repurchased 1.1 million shares of its common stock for $400 million during the third quarter, at an average price of $380 per share. At quarter end, the Company had $836 million remaining under its current share repurchase authorization. The Company's inventory increased 5.5% 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 $536 thousand versus $527 thousand last year, an increase of 1.6%. "We are pleased to announce another quarter of strong performance.  This quarter marks our twenty third consecutive quarter of double digit growth in earnings per share.  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. This quarter we opened 121 new Commercial programs. I would like to thank all AutoZoners for their commitment to delivering superior customer service, which we believe remains a competitive advantage.  Additionally, our return on invested capital on a trailing four-quarter basis reached another new all-time high at 32.7%.  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 May 5, 2012, AutoZone opened 33 new stores and relocated three stores in the U.S. and opened 10 new stores in Mexico. As of May 5, 2012, the Company had 4,613 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 297 stores in Mexico for a total store count of 4,910. 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, including select stores in Mexico. 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, May 22, 2012, beginning at 10:00 a.m. (EDT) to discuss its third 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, May 29, 2012 at 11:59 p.m. (EDT). 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 3rd Quarter Highlights - Fiscal 2012            Condensed Consolidated Statements of Operations      3rd Quarter       (in thousands, except per share data)        GAAP Results    12 Weeks Ended May 5, 201212 Weeks Ended May 7, 2011           Net sales  $ 2,111,866  $ 1,978,369   Cost of sales 1,022,067 964,839   Gross profit  1,089,799  1,013,530   Operating, SG&A expenses 662,549 620,605   Operating profit (EBIT)  427,250  392,925   Interest expense, net 39,743 39,916   Income before taxes  387,507  353,009   Income taxes 138,921 125,636   Net income  $ 248,586  $ 227,373   Net income per share:       Basic  $ 6.43  $ 5.42   Diluted  $ 6.28  $ 5.29   Weighted average shares outstanding:       Basic 38,644 41,978   Diluted 39,590 42,955          Year-To-Date 3rd Quarter, FY 2012       (in thousands, except per share data)GAAP Results    36 Weeks Ended May 5, 201236 Weeks Ended May 7, 2011           Net sales  $ 5,840,277  $ 5,430,977   Cost of sales 2,840,636 2,664,088   Gross profit  2,999,641  2,766,889   Operating, SG&A expenses 1,930,806 1,796,095   Operating profit (EBIT)  1,068,835  970,794   Interest expense, net 117,760 116,745   Income before taxes  951,075  854,049   Income taxes 344,434 306,544   Net income  $ 606,641  $ 547,505   Net income per share:       Basic  $ 15.45  $ 12.63   Diluted  $ 15.08  $ 12.35   Weighted average shares outstanding:       Basic 39,263 43,349   Diluted 40,231 44,322          Selected Balance Sheet Information       (in thousands)        May 5, 2012May 7, 2011August 27, 2011         Cash and cash equivalents  $ 103,100  $ 100,367  $ 97,606 Merchandise inventories  2,629,821  2,491,981  2,466,107 Current assets  2,944,272  2,806,529  2,792,425 Property and equipment, net  2,767,098  2,615,024  2,668,875 Total assets  6,148,854  5,884,878  5,869,602 Accounts payable  2,866,580  2,710,081  2,755,853 Current liabilities*  3,567,393  3,461,843  3,430,896 Total debt*  3,606,309  3,220,786  3,351,682 Stockholders' (deficit)  (1,416,829)  (1,119,541)  (1,254,232) Working capital  (623,121)  (655,314)  (638,471)         * Current liabilities and total debt both include short-term borrowings of $7,309 at May 5, 2012; $49,686 at May 7, 2011 and $34,082 at August 27, 2011.          Adjusted Debt / EBITDAR (Trailing 4 Qtrs)         (in thousands, except adjusted debt to EBITDAR ratio)          May 5, 2012May 7, 2011     Net income  $ 908,110  $ 816,438     Add: Interest  171,572  166,171     Taxes  513,162  460,924     EBIT  1,592,844  1,443,533               Add: Depreciation  208,039  195,513     Rent expense  224,703  209,324     Share-based expense  32,015  24,387     EBITDAR  $ 2,057,601  $ 1,872,757               Debt  $ 3,606,309  $ 3,220,786     Capital lease obligations  100,687  83,027     Add: rent x 6   1,348,218  1,255,944     Adjusted debt  $ 5,055,214  $ 4,559,757               Adjusted debt to EBITDAR  2.5  2.4          Selected Cash Flow Information         (in thousands)          12 Weeks Ended May 5, 201212 Weeks Ended May 7, 201136 Weeks Ended May 5, 201236 Weeks Ended May 7, 2011           Depreciation  $ 49,007  $ 44,930  $ 145,177  $ 133,347 Capital spending  $ 95,847  $ 92,227  $ 228,277  $ 200,584          Cash flow before share repurchases:         (Decrease)/increase in cash and cash equivalents  $ (107)  $ (7,514)  $ 5,494  $ 2,087 Subtract increase/(decrease) in debt  142,955  (30,003)  256,607  308,490 Add back share repurchases  400,455  339,438  882,725  1,033,488 Cash flow before share repurchases and changes in debt  $ 257,393  $ 361,927  $ 631,612  $ 727,085          Other Selected Financial Information         (in thousands, except ROIC)          May 5, 2012May 7, 2011               Cumulative share repurchases ($ since fiscal 1998)  $ 11,064,099  $ 9,748,059     Remaining share authorization ($)  $ 835,901  $ 151,941               Cumulative share repurchases (shares since fiscal 1998)  129,854  125,846               Shares outstanding, end of quarter  38,069  41,439                Trailing 4 Quarters      May 5, 2012May 7, 2011     Net income  $ 908,110  $ 816,438     Adjustments:         Interest expense  171,572  166,171     Rent expense  224,703  209,324     Tax effect*  (143,079)  (135,553)     After-tax return  1,161,306  1,056,380               Average debt**  3,399,491  2,991,244     Average stockholders' deficit**  (1,286,645)  (835,167)     Add: Rent x 6  1,348,218  1,255,944     Average capital lease obligations**  92,181  80,302     Pre-tax invested capital  $ 3,553,245  $ 3,492,323              Return on Invested Capital (ROIC) 32.7% 30.2%               * Effective tax rate over trailing four quarters ended May 5, 2012 is 36.1% and May 7, 2011 is 36.1%.     ** All averages are computed based on trailing 5 quarter balances.                  AutoZone's 3rd Quarter Fiscal 2012        Selected Operating Highlights                  Store Count & Square Footage                    12 Weeks Ended May 5, 201212 Weeks Ended May 7, 201136 Weeks Ended May 5, 201236 Weeks Ended May 7, 2011Domestic stores:        Store count:         Beginning domestic stores  4,580  4,425  4,534  4,389 Stores opened  33  43  79  79 Stores closed  --  1  --   1 Ending domestic stores  4,613  4,467  4,613  4,467 Relocated stores  3  1  8  5           Stores with commercial programs  2,946  2,555  2,946  2,555          Square footage (in thousands): 29,854  28,836  29,854  28,836          Mexico stores:         Stores opened   10  12  18  23 Total stores in Mexico  297  261  297  261          Total stores chainwide  4,910  4,728  4,910  4,728          Square footage (in thousands):  32,020  30,742  32,020  30,742Square footage per store  6,521  6,502  6,521  6,502          Sales Statistics         ($ in thousands, except sales per average square foot and percentages)                  Total Auto Parts (Domestic and Mexico) 12 Weeks Ended May 5, 201212 Weeks Ended May 7, 2011Trailing 4 Quarters May 5, 2012Trailing 4 Quarters May 7, 2011 Total auto parts sales  $ 2,068,643  $ 1,939,094  $ 8,304,344  $ 7,715,496  % Increase vs. LY  6.7% 8.5% 7.6% 10.2%           Sales per average store   $ 423  $ 412  $ 1,723  $ 1,668 Sales per average square foot   $ 65  $ 63  $ 265  $ 257          Domestic Commercial          Total domestic commercial sales   $ 324,614  $ 267,493  $ 1,236,530 $ 1,005,596  % Increase vs. LY 21.4% 22.8% 23.0% 21.3%          All Other (ALLDATA and E-Commerce)         All other sales  $ 43,223  $ 39,275  $ 177,928 $ 160,640  % Increase vs. LY  10.1% 12.5% 10.8% 9.3%            12 Weeks Ended May 5, 201212 Weeks Ended May 7, 201136 Weeks Ended May 5, 201236 Weeks Ended May 7, 2011 Domestic same store sales  3.9% 5.3% 4.7% 7.2%          Inventory Statistics (Total Stores)          as of May 5, 2012as of May 7, 2011     Accounts payable/inventory  109.0% 108.8%               ($ in thousands)         Inventory  $ 2,629,821  $ 2,491,981     Inventory per store  $ 536  $ 527     Net inventory (net of payables)  $ (236,759)  $ (218,100)     Net inventory / per store  $ (48)  $ (46)                Trailing 5 Quarters      May 5, 2012May 7, 2011     Inventory turns  1.6 x  1.6 x    CONTACT: Financial: Brian Campbell at (901) 495-7005 brian.campbell@autozone.com Media: Ray Pohlman at (866) 966-3017 ray.pohlman@autozone.com