O'Reilly Automotive, Inc. Reports Third Quarter 2014 Results

• Third quarter comparable store sales increase of 6.2%
• 22% increase in third quarter diluted earnings per share to $2.06

SPRINGFIELD, Mo., Oct. 22, 2014 (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 third quarter ended September 30, 2014.

3^rd Quarter Financial Results

Sales for the third quarter ended September 30, 2014, increased $149 million, or 9%, to $1.88 billion from $1.73 billion for the same period one year ago. Gross profit for the third quarter increased to $968 million (or 51.6% of sales) from $879 million (or 50.9% of sales) for the same period one year ago, representing an increase of 10%. Selling, general and administrative expenses ("SG&A") for the third quarter increased to $624 million (or 33.3% of sales) from $579 million (or 33.5% of sales) for the same period one year ago, representing an increase of 8%. Operating income for the third quarter increased to $344 million (or 18.3% of sales) from $300 million (or 17.4% of sales) for the same period one year ago, representing an increase of 14%.

Net income for the third quarter ended September 30, 2014, increased $31 million, or 16%, to $217 million (or 11.6% of sales) from $186 million (or 10.8% of sales) for the same period one year ago. Diluted earnings per common share for the third quarter increased 22% to $2.06 on 105 million shares versus $1.69 for the same period one year ago on 110 million shares.

Commenting on the Company's third quarter results, President and CEO, Greg Henslee, stated, "We are very proud to report another very successful quarter. Team O'Reilly's unwavering commitment to providing excellent customer service to every customer who calls or walks into our stores continues to be the key to our ability to grow our market share and generate record breaking results, highlighted by our 6.2% increase in comparable store sales for the third quarter, which exceeded the top end of our quarterly guidance by 120 basis points. Our strong top-line performance and continued robust gross margin results drove a record operating margin of 18.3% and a 22% increase in diluted earnings per share to $2.06 for the quarter, representing our 23^rd consecutive quarter of 15% or greater diluted earnings per share growth. I would like to thank each of our over 67,000 Team Members for their continued hard work and dedication to our ongoing success."

Year-to-Date Financial Results

Sales for the first nine months of 2014 increased $424 million, or 8%, to $5.45 billion from $5.03 billion for the same period one year ago. Gross profit for the first nine months of 2014 increased to $2.80 billion (or 51.3% of sales) from $2.55 billion (or 50.7% of sales) for the same period one year ago, representing an increase of 10%. SG&A for the first nine months of 2014 increased to $1.83 billion (or 33.6% of sales) from $1.70 billion (or 33.8% of sales) for the same period one year ago, representing an increase of 7%. Operating income for the first nine months of 2014 increased to $967 million (or 17.7% of sales) from $848 million (or 16.9% of sales) for the same period one year ago, representing an increase of 14%.

Net income for the first nine months of 2014 increased $79 million, or 15%, to $597 million (or 10.9% of sales) from $518 million (or 10.3% of sales) for the same period one year ago. Diluted earnings per common share for the first nine months of 2014 increased 21% to $5.58 on 107 million shares versus $4.63 for the same period one year ago on 112 million shares.

Mr. Henslee continued, "During the third quarter, we opened 54 net, new stores, which brings our year-to-date store expansion to 145 net, new stores, and we remain on target to open 200 net, new stores in 2014. Included in the third quarter openings was our first store in Pennsylvania, representing expansion into our 43rd state. We remain confident in our ability to profitably grow our brand in both existing and new markets, and we plan to continue our aggressive growth by establishing a target of 205 new store openings in 2015."

Mr. Henslee added, "In September, we successfully opened our 26th distribution center in Naperville, Illinois. This new, 363,000 square foot, state-of-the-art facility will support our stores in the busy Chicagoland markets and will free up capacity in several of our existing Midwestern distribution centers, better positioning those facilities to support future store growth. As of the date of this release, the Chicago distribution center is already servicing 118 stores and will ramp up to 165 stores by early November. Additionally, the relocation of our Lewiston, Maine, distribution center into a new, larger facility in Devens, Massachusetts, remains on schedule to be completed during the fourth quarter. The ongoing investment in our distribution infrastructure creates capacity for future growth and provides our stores with the critical support necessary to continue to provide unparalleled customer service and industry-leading parts availability."

Share Repurchase Program

During the third quarter ended September 30, 2014, the Company repurchased 2.5 million shares of its common stock, at an average price per share of $152.42, for a total investment of $387 million. During the first nine months of 2014, the Company repurchased 4.6 million shares of its common stock, at an average price per share of $150.55, for a total investment of $687 million. Subsequent to the end of the third quarter and through the date of this release, the Company repurchased an additional 1.0 million shares of its common stock, at an average price per share of $150.55, for a total investment of $156 million. The Company has repurchased a total of 46.2 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 $90.84, for a total aggregate investment of $4.20 billion. As of the date of this release, the Company had approximately $303 million remaining under its current share repurchase authorization. 

3^rd 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 and sales to Team Members. Comparable store sales increased 6.2% for the third quarter ended September 30, 2014, versus 4.6% for the same period one year ago. Comparable store sales increased 5.9% for the first nine months of 2014, versus 3.9% for the same period one year ago.  

4^th Quarter and Updated Full-Year 2014 Guidance

The table below outlines the Company's guidance for selected fourth quarter and updated full-year 2014 financial data:

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 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 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, October 23, 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 38131433. A replay of the conference call will be available on the Company's website through October 22, 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 September 30, 2014, the Company operated 4,311 stores in 43 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.