The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from GlobeNewswire (a Nasdaq OMX company)

O'Reilly Automotive, Inc. Reports First Quarter 2013 Results

Wednesday, April 24, 2013

O'Reilly Automotive, Inc. Reports First Quarter 2013 Results

15:30 EDT Wednesday, April 24, 2013
  • 19% increase in diluted earnings per share to $1.36
  • Record high first quarter gross margin of 50.4%
  • Comparable store sales increase of 0.6%, excluding Leap Day in 2012 of 1.9%

SPRINGFIELD, Mo., April 24, 2013 (GLOBE NEWSWIRE) -- O'Reilly Automotive, Inc. (the "Company" or "O'Reilly") (Nasdaq:ORLY), a leading retailer in the automotive aftermarket industry, today announced record first quarter revenues and earnings for its first quarter ended March 31, 2013.

1st Quarter Financial Results

Sales for the first quarter ended March 31, 2013, increased $56 million, or 4%, to $1.59 billion from $1.53 billion for the same period one year ago. Gross profit for the first quarter increased to $799 million (or 50.4% of sales) from $762 million (or 49.8% of sales) for the same period one year ago, representing an increase of 5%. Selling, general and administrative expenses ("SG&A") for the first quarter increased to $548 million (or 34.5% of sales) from $514 million (or 33.6% of sales) for the same period one year ago, representing an increase of 6%. Operating income for the first quarter increased to $251 million (or 15.8% of sales) from $248 million (or 16.2% of sales) for the same period one year ago, representing an increase of 1%.

Net income for the first quarter ended March 31, 2013, increased $7 million, or 5%, to $154 million (or 9.7% of sales) from $147 million (or 9.6% of sales) for the same period one year ago. Diluted earnings per common share for the first quarter increased 19% to $1.36 on 113 million shares versus $1.14 for the same period one year ago on 129 million shares.

"We are pleased to report a solid start to 2013, highlighted by a 19% increase in diluted earnings per share to $1.36, representing our 17th consecutive quarter of 15% or greater adjusted diluted earnings per share growth," commented Greg Henslee, President and CEO. "The solid sales trend we experienced in the fourth quarter of 2012 continued into the first quarter of 2013, where we faced our most difficult quarterly comparable store sales comparisons for the year. As a reminder, the first quarter included headwinds from the 2012 Leap Day, the pull forward of business into the first quarter of 2012 due to the early spring weather we experienced across most of our markets last year and the timing of the Easter holiday this year. The Leap Day in 2012, combined with the timing of the Easter holiday, which fell in the second quarter of 2012 and the first quarter of 2013, resulted in a headwind of approximately 150 bps for the first quarter this year. Adjusted for the impact of the Leap Day in 2012, our comparable store sales for the first quarter of 2013 were 1.9% on top of a very strong Leap Day adjusted comp of 6.1% in the first quarter last year. With the onset of spring weather in many markets, we are seeing a strong seasonal sales volume trend so far in April, and remain confident in the strength of the long-term demand drivers for our industry. We will continue to focus on executing our proven strategy of serving both retail and professional service provider customers, and we are reiterating our full-year comparable store sales guidance of 3% to 5%."

Mr. Henslee added, "During the first quarter of 2013, we began the process of integrating the 56 stores acquired from VIP and opened 65 net new stores of our planned 190 new stores in 2013. Our ability to consistently grow profitably is the direct result of our 56,000 Team Members who remain committed to providing industry leading service to every customer who calls or walks into our stores, and I want to thank each of our Team Members for their dedication and hard work."

Share Repurchase Program

During the first quarter ended March 31, 2013, the Company repurchased 2.5 million shares of its common stock at an average price per share of $92.35 for a total investment of $228 million under its Board-approved share repurchase program. Subsequent to the end of the first quarter and through the date of this release, the Company repurchased an additional 0.6 million shares of its common stock at an average price per share of $101.21 for a total investment of $65 million. The Company has repurchased a total of 35.2 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 through the date of this release, at an average price of $77.14, for a total aggregate investment of $2.7 billion. As of the date of this release, the Company had approximately $285 million remaining under its current share repurchase authorization.

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 for the first quarter ended March 31, 2013, increased 0.6% versus 7.4% for the first quarter ended March 31, 2012.  Comparable store sales, adjusted for the impact of one additional day during the first quarter ended March 31, 2012, as a result of Leap Day, increased 1.9% for the first quarter ended March 31, 2013, versus 6.1% for the first quarter ended March 31, 2012.  

2nd Quarter and Updated Full-Year 2013 Guidance

The table below outlines the Company's guidance for selected second quarter and updated full-year 2013 financial data:

    For the Three Months Ending
June 30, 2013
  For the Year Ending
December 31, 2013
Comparable store sales 4% to 6%   3% to 5%
Total revenue     $6.6 billion to $6.7 billion
Gross profit as a percentage of sales     50.0% to 50.4%
Operating profit as a percentage of sales     15.8% to 16.2%
Diluted earnings per share (1) $1.46 to $1.50   $5.64 to $5.74
Capital expenditures     $385 million to $415 million
Free cash flow (2)     $450 million to $500 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 flows 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 net income, rent-adjusted debt to adjusted 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 financial results and estimates excluding the impact of the former CSK Auto Corporation ("CSK") officer clawback, as well as the presentation of adjusted debt to adjusted 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 excludes this item in judging its performance and 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 25, 2013, 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 (706) 679-5789; the conference call identification number is 27031351. A replay of the call will be available on the Company's website following the conference call.

About O'Reilly Automotive, Inc.

O'Reilly Automotive, Inc. 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. Founded in 1957 by the O'Reilly family, the Company operated 4,041 stores in 42 states as of March 31, 2013.

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, 2012, 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, 2013 March 31, 2012 December 31, 2012
  (Unaudited) (Unaudited) (Note)
Assets      
Current assets:      
Cash and cash equivalents   $ 205,410  $ 575,196  $ 248,128
Accounts receivable, net 153,189 144,822 122,989
Amounts receivable from vendors 51,695 68,376 58,185
Inventory 2,295,846 2,004,917 2,276,331
Other current assets 35,048 37,071 27,315
Total current assets 2,741,188 2,830,382 2,732,948
       
Property and equipment, at cost 3,342,371 3,101,720 3,269,570
Less: accumulated depreciation and amortization 1,098,297 975,121 1,057,980
Net property and equipment 2,244,074 2,126,599 2,211,590
       
Notes receivable, less current portion 4,318 9,817 5,347
Goodwill 758,578 744,031 758,410
Other assets, net 41,383 43,296 40,892
Total assets  $ 5,789,541  $ 5,754,125  $ 5,749,187
       
Liabilities and shareholders' equity      
Current liabilities:      
Accounts payable  $ 1,967,000  $ 1,469,310  $ 1,929,112
Self-insurance reserves 56,052 56,805 54,190
Accrued payroll 58,958 54,105 60,120
Accrued benefits and withholdings 36,780 36,183 42,417
Deferred income taxes 13,196 3,671 19,472
Income taxes payable 56,004 37,146 5,932
Other current liabilities 160,949 143,811 161,400
Current portion of long-term debt 83 625 222
Total current liabilities 2,349,022 1,801,656 2,272,865
       
Long-term debt, less current portion 1,095,852 796,863 1,095,734
Deferred income taxes 83,130 92,316 79,544
Other liabilities 189,012 191,443 192,737
       
Shareholders' equity:      
Common stock, $0.01 par value:      
Authorized shares – 245,000,000      
Issued and outstanding shares –       
111,041,666 as of March 31, 2013,      
125,992,829 as of March 31, 2012, and      
112,963,413 as of December 31, 2012 1,110 1,260 1,130
Additional paid-in capital 1,097,928 1,127,947 1,083,910
Retained earnings 973,487 1,742,640 1,023,267
Total shareholders' equity 2,072,525 2,871,847 2,108,307
Total liabilities and shareholders' equity  $ 5,789,541  $ 5,754,125  $ 5,749,187
       
Note: The balance sheet at December 31, 2012, 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,
  2013 2012
Sales  $ 1,585,009  $ 1,529,392
Cost of goods sold, including warehouse and distribution expenses 786,346 767,712
Gross profit 798,663 761,680
     
Selling, general and administrative expenses 547,579 514,179
Operating income 251,084 247,501
     
Other income (expense):    
Interest expense (11,400) (9,131)
Interest income 477 627
Other, net 468 795
Total other expense (10,455) (7,709)
Income before income taxes 240,629 239,792
     
Provision for income taxes 86,300 92,300
Net income  $ 154,329  $ 147,492
     
Earnings per share-basic:    
Earnings per share  $ 1.38  $ 1.16
Weighted-average common shares outstanding – basic 111,557 126,970
     
Earnings per share-assuming dilution:    
Earnings per share  $ 1.36  $ 1.14
Weighted-average common shares outstanding – assuming dilution 113,396 129,327
     
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES    
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS    
(Unaudited)    
(In thousands)    
     
  For the Three Months Ended
March 31,
  2013 2012
Operating activities:    
Net income  $ 154,329  $ 147,492
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization of property, equipment and intangibles 44,179 43,833
Amortization of debt discount and issuance costs 496 417
Excess tax benefit from stock options exercised (10,788) (10,784)
Deferred income taxes (2,691) 5,132
Share-based compensation programs 5,597 5,224
Other 1,462 1,290
Changes in operating assets and liabilities:    
Accounts receivable (31,844) (11,360)
Inventory (19,515) (19,169)
Accounts payable 37,888 190,034
Income taxes payable 60,859 74,713
Other (13,628) (12,294)
Net cash provided by operating activities 226,344 414,528
     
Investing activities:    
Purchases of property and equipment (73,484) (75,457)
Proceeds from sale of property and equipment 355 487
Payments received on notes receivable 1,029 1,071
Net cash used in investing activities (72,100) (73,899)
     
Financing activities:    
Principal payments on capital leases (145) (185)
Repurchases of common stock (227,930) (154,013)
Excess tax benefit from stock options exercised 10,788 10,784
Net proceeds from issuance of common stock 20,325 16,429
Net cash used in financing activities (196,962) (126,985)
     
Net (decrease) increase in cash and cash equivalents (42,718) 213,644
Cash and cash equivalents at beginning of period 248,128 361,552
Cash and cash equivalents at end of period  $ 205,410  $ 575,196
     
Supplemental disclosures of cash flow information:    
Income taxes paid  $ 29,158  $ 11,295
Interest paid, net of capitalized interest 23,764 18,447
 
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
 (Unaudited)
     
Adjusted Debt to Adjusted EBITDAR: For the Twelve Months Ended
March 31,
(In thousands, except adjusted debt to adjusted EBITDAR ratio) 2013 2012
GAAP debt  $ 1,095,935  $ 797,488
 Add:  Letters of credit 56,525 57,778
 Discount on senior notes 4,241 3,584
 Rent times six 1,469,442 1,395,570
Non-GAAP adjusted debt  $ 2,626,143  $ 2,254,420
     
GAAP net income  $ 592,583  $ 552,691
 Add: Former CSK officer clawback, net of tax  -- (1,741)
Non-GAAP adjusted net income 592,583 550,950
 Add: Interest expense 42,469 32,059
 Taxes, net of impact of former CSK officer clawback 349,775 335,643
 Depreciation and amortization 177,452 170,922
 Share-based compensation expense 22,399 20,667
 Rent expense 244,907 232,595
 Adjusted EBITDAR  $ 1,429,585  $ 1,342,836
     
Adjusted debt to adjusted EBITDAR 1.84 1.68
     
     
  March 31,
  2013 2012
Selected Balance Sheet Ratios:    
Inventory turnover (1) 1.4 1.5
Inventory turnover, net of payables (2) 8.5 4.0
Average inventory per store (in thousands) (3)  $ 568  $ 526
Accounts payable to inventory (4) 85.7% 73.3%
Return on equity (5) 26.2% 18.8%
Return on assets (6) 10.3% 10.0%
     
     
  For the Three Months Ended
March 31,
  2013 2012
Selected Financial Information (in thousands):    
Capital expenditures  $ 73,484  $ 75,457
Free cash flow (7)  $ 152,860  $ 339,071
Depreciation and amortization   $ 44,179  $ 43,833
Interest expense  $ 11,400  $ 9,131
Lease and rental expense  $ 62,897  $ 58,859
         
Store and Team Member Information:        
         
  For the Three Months Ended
March 31,
For the Twelve Months Ended
March 31,
  2013 2012 2013 2012
Beginning store count 3,976 3,740 3,809 3,613
New stores opened 66 73 178 201
Stores acquired  --  -- 56  --
Stores closed (1) (4) (2) (5)
Ending store count 4,041 3,809 4,041 3,809
         
         
  For the Three Months Ended
March 31,
For the Twelve Months Ended
March 31,
  2013 2012 2013 2012
Total employment 55,782 51,723    
Square footage (in thousands)  29,102 27,055    
Sales per weighted-average square foot (8)  $ 54.31  $ 56.37  $ 221.48  $ 223.36
Sales per weighted-average store (in thousands) (9)  $ 391  $ 400  $ 1,581  $ 1,585
         
(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 the last 12 months adjusted net income, adjusted to exclude the benefit related to the former CSK officer clawback in the amount of $3 million ($2 million, net of tax), 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 the last 12 months adjusted net income, adjusted for the item discussed in footnote (5), divided by average total assets. Average total assets are calculated as the average 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 foot. Weighted-average sales per square foot are weighted to consider the approximate dates of store openings or expansions.
(9) Calculated as sales less jobber sales, divided by weighted-average stores. Weighted-average sales per store are weighted to consider the approximate dates of store openings or expansions.        
CONTACT: For further information contact:
Investor & Media Contact
Mark Merz (417) 829-5878

O'Reilly Automotive, Inc. Logo

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

The Globe at your Workplace
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections