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



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

  * 37% increase in second quarter diluted earnings per share to $1.58
  * Second quarter comparable store sales increase of 6.5%
  * Operating margin for the second quarter increases 170 bps to 17.3%

SPRINGFIELD, Mo., July 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 revenues and earnings
for its second quarter ended June 30, 2013.

2^nd Quarter Financial Results

Sales for the second quarter ended June 30, 2013, increased $152 million, or
10%, to $1.71 billion from $1.56 billion for the same period one year ago.
Gross profit for the second quarter increased to $872 million (or 50.8% of
sales) from $780 million (or 49.9% of sales) for the same period one year ago,
representing an increase of 12%. Selling, general and administrative expenses
("SG&A") for the second quarter increased to $576 million (or 33.6% of sales)
from $536 million (or 34.3% of sales) for the same period one year ago,
representing an increase of 7%. Operating income for the second quarter
increased to $296 million (or 17.3% of sales) from $244 million (or 15.6% of
sales) for the same period one year ago, representing an increase of 22%.

Net income for the second quarter ended June 30, 2013, increased $31 million,
or 21%, to $177 million (or 10.3% of sales) from $146 million (or 9.3% of
sales) for the same period one year ago. Diluted earnings per common share for
the second quarter increased 37% to $1.58 on 112 million shares versus $1.15
for the same period one year ago on 127 million shares.

"We are very pleased to again report another record breaking quarter
highlighted by a 37% increase in diluted earnings per share to $1.58,
representing our 18^th consecutive quarter of 15% or greater adjusted diluted
earnings per share growth," commented Greg Henslee, President and CEO. "We
generated an impressive 6.5% increase in comparable store sales, which
exceeded the top end of our quarterly guidance range of 4% to 6%. Our
unwavering commitment to providing consistent, excellent customer service
drove outstanding sales results across all of our markets. We achieved a
record quarterly gross margin of 50.8%, primarily driven by improvements in
acquisition costs, product mix and pricing management. Our relentless focus on
expense control, along with our strong gross margin results, generated a
record quarterly operating margin of 17.3%, which was a 170 basis point
improvement over the prior year. We continue to believe in the strength of the
long-term demand drivers in our industry, and we are establishing our third
quarter comparable store sales guidance at 4% to 6% and reiterating our
full-year comparable store sales guidance of 3% to 5%. I would like to take
this opportunity to thank each of our 60,000 Team Members for their hard work
and commitment to O'Reilly's continued success."

Year-to-Date Financial Results

Sales for the first six months of 2013 increased $208 million, or 7%, to $3.30
billion from $3.09 billion for the same period one year ago. Gross profit for
the first six months of 2013 increased to $1.67 billion (or 50.6% of sales)
from $1.54 billion (or 49.9% of sales) for the same period one year ago,
representing an increase of 8%. SG&A for the first six months of 2013
increased to $1.12 billion (or 34.0% of sales) from $1.05 billion (or 34.0% of
sales) for the same period one year ago, representing an increase of 7%.
 Operating income for the first six months of 2013 increased to $547 million
(or 16.6% of sales) from $491 million (or 15.9% of sales) for the same period
one year ago, representing an increase of 11%.

Net income for the first six months of 2013 increased $38 million, or 13%, to
$331 million (or 10.0% of sales) from $294 million (or 9.5% of sales) for the
same period one year ago.  Diluted earnings per common share for the first six
months of 2013 increased 28% to $2.94 on 113 million shares versus $2.29 for
the same period one year ago on 128 million shares.

Mr. Henslee continued, "We are on track to meet our goal of 190 net, new
stores in 2013 with the opening of 111 net, new stores across 30 states in the
first half of the year. In June, we issued $300 million of ten-year senior
notes, representing another measured step to reaching our targeted leverage
range of 2.00 to 2.25 times adjusted debt to adjusted EBITDAR, and we remain
very focused on maintaining or improving our investment grade credit
ratings." 

Share Repurchase Program

As previously announced, on May 29, 2013, the Company's Board of Directors
approved a resolution to increase the authorization under the Company's share
repurchase program by an additional $500 million, raising the cumulative
authorization under the share repurchase program to $3.5 billion.  During the
second quarter ended June 30, 2013, the Company repurchased 2.5 million shares
of its common stock at an average price per share of $107.61 for a total
investment of $274 million. During the six months ended June 30, 2013, the
Company repurchased 5.0 million shares of its common stock at an average price
per share of $100.10 for a total investment of $502 million. Subsequent to the
end of the second quarter and through the date of this release, the Company
repurchased an additional 0.5 million shares of its common stock at an average
price per share of $113.66 for a total investment of $56 million. The Company
has repurchased a total of 37.6 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 $79.27, for a
total aggregate investment of $2.98 billion. As of the date of this release,
the Company had approximately $521 million remaining under its current share
repurchase authorizations.

2^nd Quarter and Year-to-Date 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, sales to Team Members and sales from the acquired
VIP stores, due to the significant change in the business model and lack of
historical data.  Comparable store sales increased 6.5% for the second quarter
ended June 30, 2013, versus 2.5% for the same period one year ago.  Comparable
store sales increased 3.6% for the first six months of 2013, versus 4.9% for
the same period one year ago.

3^rd Quarter and Updated Full-Year 2013 Guidance

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

                                     For the Three Months For the Year Ending
                                     Ending               December 31, 2013
                                     September 30, 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                           50.3% to 50.7% 
sales
Operating profit as a percentage of                       16.0% to 16.4% 
sales
Diluted earnings per share (1)       $1.60 to $1.64       $5.79 to $5.89 
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, July 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 (847) 585-4405; the conference call
identification number is 35211264. 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
4,087 stores in 42 states as of June 30, 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)                                             
                                                                              
                             June 30, 2013   June 30, 2012   December 31,     
                                                             2012
                             (Unaudited)     (Unaudited)     (Note)           
Assets                                                                        
Current assets:                                                               
Cash and cash equivalents    $365,930        $367,717        $248,128         
Accounts receivable, net     175,877         151,936         122,989          
Amounts receivable from      82,235          61,709          58,185           
vendors
Inventory                    2,345,377       2,145,339       2,276,331        
Other current assets         35,738          37,291          27,315           
Total current assets         3,005,157       2,763,992       2,732,948        
                                                                              
Property and equipment, at   3,431,756       3,166,389       3,269,570        
cost
Less: accumulated
depreciation and             1,129,485       1,013,604       1,057,980        
amortization
Net property and equipment   2,302,271       2,152,785       2,211,590        
                                                                              
Notes receivable, less       16,295          7,404           5,347            
current portion
Goodwill                     758,537         744,131         758,410          
Other assets, net            41,386          41,780          40,892           
Total assets                 $6,123,646      $5,710,092      $5,749,187       
                                                                              
Liabilities and                                                               
shareholders' equity
Current liabilities:                                                          
Accounts payable             $2,058,859      $1,699,817      $1,929,112       
Self-insurance reserves      56,726          55,895          54,190           
Accrued payroll              60,687          56,191          60,120           
Accrued benefits and         41,273          41,332          42,417           
withholdings
Deferred income taxes        12,082          1,516           19,472           
Income taxes payable         11,075           --             5,932            
Other current liabilities    189,527         157,625         161,400          
Current portion of long-term 69              522             222              
debt
Total current liabilities    2,430,298       2,012,898       2,272,865        
                                                                              
Long-term debt, less current 1,395,922       796,884         1,095,734        
portion
Deferred income taxes        86,854          93,713          79,544           
Other liabilities            204,429         193,945         192,737          
                                                                              
Shareholders' equity:                                                         
Common stock, $0.01 par                                                       
value:
Authorized shares –                                                           
245,000,000
Issued and outstanding
shares – 108,886,775 as of
June 30, 2013, 122,014,308   1,089           1,220           1,130            
as of June 30, 2012, and
112,963,413 as of December
31, 2012
Additional paid-in capital   1,102,900       1,122,014       1,083,910        
Retained earnings            902,154         1,489,418       1,023,267        
Total shareholders' equity   2,006,143       2,612,652       2,108,307        
Total liabilities and        $6,123,646      $5,710,092      $5,749,187       
shareholders' equity
                                                                              
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 For the Six Months Ended
                           June 30,                   June 30,
                           2013          2012         2013         2012
Sales                      $1,714,969    $1,562,849   $3,299,978   $3,092,241
Cost of goods sold,
including warehouse and    843,094       782,988      1,629,440    1,550,700
distribution expenses
Gross profit               871,875       779,861      1,670,538    1,541,541
                                                                    
Selling, general and       575,614       536,258      1,123,193    1,050,437
administrative expenses
Operating income           296,261       243,603      547,345      491,104
                                                                    
Other income (expense):                                             
Interest expense           (11,467)      (9,140)      (22,867)     (18,271)
Interest income            469           658          946          1,285
Other, net                 864           (51)         1,332        744
Total other expense        (10,134)      (8,533)      (20,589)     (16,242)
                                                                    
Income before income taxes 286,127       235,070      526,756      474,862
Provision for income taxes 109,000       88,950       195,300      181,250
Net income                 $177,127      $146,120     $331,456     $293,612
                                                                    
Earnings per share-basic:                                           
Earnings per share         $1.61         $1.17        $2.99        $2.33
Weighted-average common    110,278       124,870      110,914      125,920
shares outstanding – basic
                                                                    
Earnings per                                                        
share-assuming dilution:
Earnings per share         $1.58         $1.15        $2.94        $2.29
Weighted-average common
shares outstanding –       112,079       127,188      112,736      128,261
assuming dilution

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 (In thousands)
                                                                    
                                                      For the Six Months Ended
                                                      June 30,
                                                      2013         2012
Operating activities:                                               
Net income                                            $331,456     $293,612
Adjustments to reconcile net income to net cash                     
 provided by operating activities:                                  
 Depreciation and amortization of property, equipment 89,682       88,230
and intangibles
 Amortization of debt discount and issuance costs     1,000        837
 Excess tax benefit from stock options exercised      (18,681)     (23,692)
 Deferred income taxes                                (80)         4,375
 Share-based compensation programs                    11,174       10,891
 Other                                                3,117        4,075
 Changes in operating assets and liabilities:                       
 Accounts receivable                                  (56,681)     (20,802)
 Inventory                                            (69,046)     (159,591)
 Accounts payable                                     129,747      420,554
 Income taxes payable                                 23,823       47,159
 Other                                                (6,099)      25,810
 Net cash provided by operating activities            439,412      691,458
                                                                    
Investing activities:                                               
Purchases of property and equipment                   (176,577)    (151,327)
Proceeds from sale of property and equipment          678          2,071
Payments received on notes receivable                 2,166        2,100
 Net cash used in investing activities                (173,733)    (147,156)
                                                                    
Financing activities:                                               
Proceeds from the issuance of long-term debt          299,976       --
Payment of debt issuance costs                        (1,879)       --
Principal payments on capital leases                  (189)        (367)
Repurchases of common stock                           (501,914)    (594,450)
Excess tax benefit from stock options exercised       18,681       23,692
Net proceeds from issuance of common stock            37,448       32,988
 Net cash used in financing activities                (147,877)    (538,137)
                                                                    
Net increase in cash and cash equivalents             117,802      6,165
Cash and cash equivalents at beginning of period      248,128      361,552
Cash and cash equivalents at end of period            $365,930     $367,717
                                                                    
Supplemental disclosures of cash flow information:                  
Income taxes paid                                     $170,100     $125,575
Interest paid, net of capitalized interest            21,706       17,718

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
                                                                  
                                                   For the Twelve Months Ended
Adjusted Debt to Adjusted EBITDAR:                 June 30,
(In thousands, except adjusted debt to adjusted    2013          2012
EBITDAR ratio)
GAAP debt                                          $1,395,991    $797,406
Add: Letters of credit                             51,849        57,773
Discount on senior notes                           4,141         3,483
Rent times six                                     1,495,794     1,413,048
Non-GAAP adjusted debt                             $2,947,775    $2,271,710
                                                                  
GAAP net income                                    $623,590      $565,039
Add: Former CSK officer clawback, net of tax        --           (1,741)
Non-GAAP adjusted net income                       623,590       563,298
Add: Interest expense                              44,796        34,942
Taxes, net of impact of former CSK officer         369,825       341,383
clawback
Depreciation and amortization                      178,558       173,996
Share-based compensation expense                   22,309        20,937
Rent expense                                       249,299       235,508
Adjusted EBITDAR                                   $1,488,377    $1,370,064
                                                                  
Adjusted debt to adjusted EBITDAR                  1.98          1.66
                                                                  
                                                                  
                                                   June 30,
                                                   2013          2012
Selected Balance Sheet Ratios:                                    
Inventory turnover (1)                             1.4           1.5
Inventory turnover, net of payables (2)            9.7           4.8
Average inventory per store (in thousands) (3)     $574          $556
Accounts payable to inventory (4)                  87.8%         79.2%
Return on equity (5)                               29.5%         20.2%
Return on assets (6)                               10.6%         10.1%

                           For the Three Months Ended For the Six Months Ended
                           June 30,                   June 30,
                           2013          2012         2013         2012
Selected Financial
Information (in                                                     
thousands):
Capital expenditures       $103,093      $75,870      $176,577     $151,327
Free cash flow (7)         $109,975      $201,060     $262,835     $540,131
Depreciation and           $45,503       $44,397      $89,682      $88,230
amortization 
Interest expense           $11,467       $9,140       $22,867      $18,271
Lease and rental expense   $64,457       $60,065      $127,354     $118,924

Store and Team Member Information:                                            
                 For the
                 Three       For the Six   For the Twelve
                 Months      Months Ended  Months Ended                       
                 Ended       June 30,      June 30,
                 June 30,
                 2013  2012  2013   2012   2013    2012                       
Beginning store  4,041 3,809 3,976  3,740  3,859   3,657                      
count
New stores       47    50    113    123    175     207                        
opened
Stores acquired   --    --    --     --    56       --                        
Stores closed    (1)    --   (2)    (4)    (3)     (5)                        
Ending store     4,087 3,859 4,087  3,859  4,087   3,859                      
count
                                                                              
                                                                              
                             For the Three For the Twelve
                             Months Ended  Months Ended                       
                             June 30,      June 30,
                             2013   2012   2013    2012                       
Total employment             60,035 52,254                                    
Square footage               29,435 27,421                                    
(in thousands) 
Sales per
weighted-average             $58.16 $56.82 $222.96 $223.45                    
square foot (8)
Sales per
weighted-average             $419   $404   $1,597  $1,586                     
store (in
thousands) (9)

(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: Investor & Media Contact
         Mark Merz (417) 829-5878

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