• First quarter comparable store sales increase of 3.4%
  • 28% increase in first quarter diluted earnings per share to $3.61

SPRINGFIELD, Mo., April 25, 2018 (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 first quarter ended March 31, 2018. 

1st Quarter Financial Results
Greg Henslee, O’Reilly’s CEO, commented, “Our Team’s dedication to excellent customer service drove a 3.4% increase in comparable store sales, which was above the mid-point of our guidance for the first quarter, and our relentless focus on profitable growth translated this top-line performance into a 5% increase in operating profit dollars and a 28% increase in diluted earnings per share for the first quarter.  I would like to thank Team O’Reilly for their hard work and unwavering commitment to providing unsurpassed levels of service to our customers every day and for their contributions to our ongoing success.”

Sales for the first quarter ended March 31, 2018, increased $126 million, or 6%, to $2.28 billion from $2.16 billion for the same period one year ago.  Gross profit for the first quarter increased to $1.20 billion (or 52.6% of sales) from $1.13 billion (or 52.5% of sales) for the same period one year ago, representing an increase of 6%.  Selling, general and administrative expenses for the first quarter increased to $778 million (or 34.1% of sales) from $728 million (or 33.8% of sales) for the same period one year ago, representing an increase of 7%.  Operating income for the first quarter increased to $423 million (or 18.5% of sales) from $403 million (or 18.7% of sales) for the same period one year ago, representing an increase of 5%.

Net income for the first quarter ended March 31, 2018, increased $40 million, or 15%, to $305 million (or 13.4% of sales) from $265 million (or 12.3% of sales) for the same period one year ago.  Diluted earnings per common share for the first quarter increased 28% to $3.61 on 85 million shares versus $2.83 on 93 million shares for the same period one year ago.

Mr. Henslee concluded, “We believe the long-term drivers for demand in our industry remain intact, including a growing and aging vehicle fleet that is driven over three trillion miles each year; but more importantly, we are very confident in our ability to continue to gain market share by providing consistently high levels of service to our customers, and we are well positioned to build on the improved trends we drove in the first quarter.”

Share Repurchase Program
During the first quarter ended March 31, 2018, the Company repurchased 2.2 million shares of its common stock, at an average price per share of $251.08, for a total investment of $549 million.  Subsequent to the end of the first quarter and through the date of this release, the Company repurchased an additional 0.4 million shares of its common stock, at an average price per share of $235.25, for a total investment of $87 million.  The Company has repurchased a total of 68.8 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 $140.55, for a total aggregate investment of $9.67 billion.  As of the date of this release, the Company had approximately $1.08 billion remaining under its current share repurchase authorizations. 

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 increased 3.4% for the first quarter ended March 31, 2018, on top of 0.8% for the same period one year ago.

2nd Quarter and Updated Full-Year 2018 Guidance
The table below outlines the Company’s guidance for selected second quarter and updated full-year 2018 financial data:

 For the Three Months Ending
June 30, 2018
 For the Year Ending
December 31, 2018
Comparable store sales2% to 4% 2% to 4%
Total revenue  $9.4 billion to $9.6 billion
Gross profit as a percentage of sales  52.5% to 53.0%
Operating income as a percentage of sales  18.5% to 19.0%
Effective income tax rate  23% to 24%
Diluted earnings per share (1)$3.95 to $4.05 $15.30 to $15.40
Capital expenditures  $490 million to $520 million
Free cash flow (2)  $1.1 billion to $1.2 billion


(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 provided by operating activities, less capital expenditures and excess tax benefit from share-based compensation payments 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 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, April 26, 2018, 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) 619-6397; the conference call identification number is 46648810.  A replay of the conference call will be available on the Company’s website through Thursday, April 25, 2019.

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 March 31, 2018, the Company operated 5,097 stores in 47 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 “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend” 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, the impact of the U.S. Tax Cuts and Jobs Act, 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, the economy in general, inflation, product demand, the market for auto parts, competition, weather, risks associated with the performance of acquired businesses, our ability to hire and retain qualified employees, consumer debt levels, our increased debt levels, credit ratings on public debt, governmental regulations, 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, 2017, 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.

For further information contact:Investor & Media Contact
 Mark Merz (417) 829-5878


 
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 
 March 31, 2018 March 31, 2017 December 31, 2017
 (Unaudited) (Unaudited) (Note)
Assets     
Current assets:     
Cash and cash equivalents$38,525  $27,539  $46,348 
Accounts receivable, net224,386  195,651  216,251 
Amounts receivable from suppliers78,232  71,157  76,236 
Inventory3,052,748  2,872,646  3,009,800 
Other current assets52,520  38,540  49,037 
Total current assets3,446,411  3,205,533  3,397,672 
      
Property and equipment, at cost5,292,431  4,935,126  5,191,135 
Less: accumulated depreciation and amortization1,902,668  1,760,476  1,847,329 
Net property and equipment3,389,763  3,174,650  3,343,806 
      
Goodwill789,104  785,568  789,058 
Other assets, net41,379  37,973  41,349 
Total assets$7,666,657  $7,203,724  $7,571,885 
      
Liabilities and shareholders’ equity     
Current liabilities:     
Accounts payable$3,222,785  $2,987,996  $3,190,029 
Self-insurance reserves74,826  70,479  71,695 
Accrued payroll84,579  75,762  77,147 
Accrued benefits and withholdings62,435  49,081  69,308 
Income taxes payable66,618  89,640   
Other current liabilities236,938  232,805  239,187 
Total current liabilities3,748,181  3,505,763  3,647,366 
      
Long-term debt3,193,066  1,977,539  2,978,390 
Deferred income taxes89,776  92,610  85,406 
Other liabilities211,806  205,216  207,677 
      
Shareholders’ equity:     
Common stock, $0.01 par value:     
Authorized shares – 245,000,000     
Issued and outstanding shares –     
82,267,885 as of March 31, 2018,     
91,320,866 as of March 31, 2017, and     
84,302,187 as of December 31, 2017823  913  843 
Additional paid-in capital1,247,366  1,331,416  1,265,043 
Retained (deficit) earnings(824,361) 90,267  (612,840)
Total shareholders’ equity423,828  1,422,596  653,046 
      
Total liabilities and shareholders’ equity$7,666,657  $7,203,724  $7,571,885 

Note:  The balance sheet at December 31, 2017, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles 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,
 2018  2017 
Sales$2,282,681  $2,156,259 
Cost of goods sold, including warehouse and distribution expenses1,081,423  1,025,112 
Gross profit1,201,258  1,131,147 
    
Selling, general and administrative expenses778,412  727,990 
Operating income422,846  403,157 
    
Other income (expense):   
Interest expense(28,217) (19,404)
Interest income572  706 
Other, net205  765 
Total other expense(27,440) (17,933)
    
Income before income taxes395,406  385,224 
Provision for income taxes90,500  120,290 
Net income$304,906  $264,934 
    
Earnings per share-basic:   
Earnings per share$3.65  $2.88 
Weighted-average common shares outstanding – basic83,530  92,001 
    
Earnings per share-assuming dilution:   
Earnings per share$3.61  $2.83 
Weighted-average common shares outstanding – assuming dilution84,523  93,495 


 
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 For the Three Months Ended
March 31,
 2018 2017
    
Operating activities:   
Net income$304,906  $264,934 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization of property, equipment and intangibles69,920  57,008 
Amortization of debt discount and issuance costs795  642 
Deferred income taxes4,370  2,611 
Share-based compensation programs5,176  5,428 
Other2,244  1,810 
Changes in operating assets and liabilities:   
Accounts receivable(10,421) 219 
Inventory(42,643) (93,167)
Accounts payable32,756  51,230 
Income taxes payable79,380  116,009 
Other(14,206) (30,024)
Net cash provided by operating activities432,277  376,700 
    
Investing activities:   
Purchases of property and equipment(114,843) (110,632)
Proceeds from sale of property and equipment752  245 
Other(375) (636)
Net cash used in investing activities(114,466) (111,023)
    
Financing activities:   
Proceeds from borrowings on revolving credit facility755,000  482,000 
Payments on revolving credit facility(541,000) (392,000)
Repurchases of common stock(549,450) (490,330)
Net proceeds from issuance of common stock11,972  15,750 
Other(2,156) (156)
Net cash used in financing activities(325,634) (384,736)
    
Net decrease in cash and cash equivalents(7,823) (119,059)
Cash and cash equivalents at beginning of the period46,348  146,598 
Cash and cash equivalents at end of the period$38,525  $27,539 
    
Supplemental disclosures of cash flow information:   
Income taxes paid$7,939  $ 
Interest paid, net of capitalized interest48,763  31,954 


 
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
 
 For the Twelve Months Ended
March 31,
Adjusted Debt to EBITDAR:2018 2017
(In thousands, except adjusted debt to EBITDAR ratio)                                            
GAAP debt$3,193,066  $1,977,539 
Add:Letters of credit36,943  41,196 
 Discount on senior notes3,548  3,002 
 Debt issuance costs13,386  9,459 
 Six-times rent expense1,810,932  1,729,020 
Adjusted debt$5,057,875  $3,760,216 
     
GAAP net income$1,173,776  $1,047,251 
Add:Interest expense100,162  75,514 
 Provision for income taxes474,210  569,590 
 Depreciation and amortization246,757  222,096 
 Share-based compensation expense19,149  19,109 
 Rent expense301,822  288,170 
EBITDAR$2,315,876  $2,221,730 
     
Adjusted debt to EBITDAR 2.18   1.69 


 March 31,
 2018 2017
Selected Balance Sheet Ratios:   
Inventory turnover (1)1.4  1.5 
Average inventory per store (in thousands) (2)$599  $588 
Accounts payable to inventory (3)105.6% 104.0%
Return on assets (4)15.6% 14.4%


 For the Three Months Ended
March 31,
 2018 2017
Reconciliation of Free Cash Flow (in thousands):   
Cash provided by operating activities$432,277  $376,700 
Less:Capital expenditures114,843  110,632 
 Excess tax benefit from share-based compensation payments               6,318  23,314 
Free cash flow$311,116  $242,754 


Store and Team Member Information:    
      
 For the Three Months Ended
March 31,
 For the Twelve Months Ended
March 31,
 2018 2017 2018 2017
Beginning store count                                               5,019  4,829  4,888  4,623 
New stores opened78  60  216  220 
Stores acquired      48 
Stores closed  (1) (7) (3)
Ending store count5,097  4,888  5,097  4,888 


 For the Three Months Ended
March 31,
 For the Twelve Months Ended
March 31,
 2018 2017 2018 2017
Total employment76,946  75,108     
Square footage (in thousands)37,339  35,573     
Sales per weighted-average square foot (5)$61.15  $60.53  $248.58  $249.47 
Sales per weighted-average store (in thousands) (6)$447  $440  $1,814  $1,813 


(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 inventory divided by store count at the end of the reported period.
(3) Calculated as accounts payable divided by inventory.
(4) Calculated as net income for the last 12 months divided by average total assets.  Average total assets is calculated as the average of total assets for the trailing four quarters used in determining the denominator.
(5) Calculated as sales less jobber sales, divided by weighted-average square footage.  Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions or closures.
(6) Calculated as sales less jobber sales, divided by weighted-average stores.  Weighted-average stores is determined by weighting stores based on their approximate dates of openings, acquisitions or closures.