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AutoZone 2nd Quarter Same Store Sales Increase 5.3%; EPS Increases to $24.64
Source: Nasdaq GlobeNewswire / 28 Feb 2023 05:55:17 America/Chicago
MEMPHIS, Tenn., Feb. 28, 2023 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $3.7 billion for its second quarter (12 weeks) ended February 11, 2023, an increase of 9.5% from the second quarter of fiscal 2022 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 5.3% for the quarter.
“We are proud to report solid same store sales growth on top of last year’s 13.8%. We could not have achieved these results without phenomenal contributions from across the organization. Once again, our AutoZoners’ efforts generated double digit domestic Commercial growth and single digit domestic Retail sales growth. We continue to believe the initiatives we have in place position us well for the remainder of our fiscal year,” said Bill Rhodes, Chairman, President and Chief Executive Officer.
For the quarter, gross profit, as a percentage of sales, was 52.3%, a decrease of 69 basis points versus the prior year. The decrease in gross margin was impacted by a 27 basis point ($10 million) non-cash LIFO charge driven primarily by freight costs. The remaining deleverage was driven by supply chain costs and accelerated growth in our Commercial business. Operating expenses, as a percentage of sales, were 34.1% versus last year at 34.4%.
Operating profit increased 6.9% to $670.0 million. Net income for the quarter increased 1.0% over the same period last year to $476.5 million, while diluted earnings per share increased 10.5% to $24.64 from $22.30 in the year-ago quarter.
Under its share repurchase program, AutoZone repurchased 372 thousand shares of its common stock for $906.0 million during the second quarter, at an average price of $2,434 per share. At the end of the second quarter, the Company had $1.8 billion remaining under its current share repurchase authorization.
The Company’s inventory increased 13.9% over the same period last year, driven by inflation and its growth initiatives. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $227 thousand versus negative $198 thousand last year and negative $249 thousand last quarter.
“We remain committed to providing the best place for our customers to shop while being an exceptional place for our AutoZoners to build their careers. For the remainder of fiscal 2023, we will be laser focused on relentless execution, and we will continue to focus our capital on projects that meet or exceed our return on capital targets. We will take nothing for granted as we will continue to focus on our long-term approach of increasing operating earnings and free cash flows while using our balance sheet effectively,” said Rhodes.During the quarter ended February 11, 2023, AutoZone opened 30 new stores in the U.S., one in Mexico and five in Brazil. As of February 11, 2023, the Company had 6,226 stores in the U.S., 707 in Mexico and 81 in Brazil for a total store count of 7,014.
AutoZone is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. 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. We also have commercial programs in the majority of our stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.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. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation services.AutoZone will host a conference call this morning, Tuesday, February 28, 2023, beginning at 10:00 a.m. (ET) to discuss its second quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com and clicking on Investor Relations. Investors may also listen to the call by dialing (888) 506-0062, passcode AUTOZONE. In addition, a telephone replay will be available by dialing (877) 481-4010, replay passcode 47607 through March 14, 2023.
This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP measures include adjustments to reflect return on invested capital, adjusted debt and adjusted debt to EBITDAR. 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. 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 herein constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” 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: product demand, due to changes in fuel prices, miles driven or otherwise; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues, such as the ongoing global coronavirus (“COVID-19”) pandemic; inflation; the ability to hire, train and retain qualified employees; construction delays; failure or interruption of our information technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges in international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; impact of new accounting standards; and business interruptions. Certain of these risks and uncertainties are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of the Company’s Annual Report on Form 10-K for the year ended August 27, 2022, 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. Events described above and in the “Risk Factors” could materially and adversely affect our business. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. 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.
Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com
Media: David McKinney at (901) 495-7951, david.mckinney@autozone.comAutoZone's 2nd Quarter Highlights - Fiscal 2023 Condensed Consolidated Statements of Operations 2nd Quarter, FY2023 (in thousands, except per share data) GAAP Results 12 Weeks Ended 12 Weeks Ended February 11, 2023 February 12, 2022 Net sales $ 3,690,982 $ 3,369,750 Cost of sales 1,760,979 1,584,524 Gross profit 1,930,003 1,785,226 Operating, SG&A expenses 1,260,026 1,158,466 Operating profit (EBIT) 669,977 626,760 Interest expense, net 65,609 42,471 Income before taxes 604,368 584,289 Income tax expense 127,824 112,534 Net income $ 476,544 $ 471,755 Net income per share: Basic $ 25.48 $ 23.00 Diluted $ 24.64 $ 22.30 Weighted average shares outstanding: Basic 18,705 20,513 Diluted 19,337 21,158 Year-To-Date 2nd Quarter, FY2023 (in thousands, except per share data) GAAP Results 24 Weeks Ended 24 Weeks Ended February 11, 2023 February 12, 2022 Net sales $ 7,676,049 $ 7,038,653 Cost of sales 3,751,424 3,328,267 Gross profit 3,924,625 3,710,386 Operating, SG&A expenses 2,531,615 2,329,141 Operating profit (EBIT) 1,393,010 1,381,245 Interest expense, net 123,332 85,755 Income before taxes 1,269,678 1,295,490 Income taxes 253,816 268,500 Net income $ 1,015,862 $ 1,026,990 Net income per share: Basic $ 53.87 $ 49.49 Diluted $ 52.12 $ 48.03 Weighted average shares outstanding: Basic 18,856 20,750 Diluted 19,491 21,383 Selected Balance Sheet Information (in thousands) February 11, 2023 February 12, 2022 August 27, 2022 Cash and cash equivalents $ 301,286 $ 239,423 $ 264,380 Merchandise inventories 5,731,255 5,031,222 5,638,004 Current assets 6,794,805 5,903,770 6,627,984 Property and equipment, net 5,236,129 4,879,079 5,170,419 Operating lease right-of-use assets 2,943,844 2,743,771 2,918,817 Total assets 15,545,142 14,078,473 15,275,043 Accounts payable 7,321,551 6,378,606 7,301,347 Current liabilities 8,614,618 7,684,645 8,588,393 Operating lease liabilities, less current portion 2,854,227 2,641,555 2,837,973 Total debt 7,042,302 5,840,884 6,122,092 Stockholders' deficit (4,184,170 ) (3,137,477 ) (3,538,913 ) Working capital (1,819,813 ) (1,780,875 ) (1,960,409 )
AutoZone's 2nd Quarter Highlights - Fiscal 2023 Condensed Consolidated Statements of Operations Adjusted Debt / EBITDAR (in thousands, except adjusted debt to EBITDAR ratio) Trailing 4 Quarters February 11, 2023 February 12, 2022 Net income $ 2,418,476 $ 2,408,925 Add: Interest expense 229,215 188,901 Income tax expense 634,803 630,954 EBIT 3,282,494 3,228,780 Add: Depreciation and amortization 465,905 422,938 Rent expense(1) 394,298 354,410 Share-based expense 82,253 62,672 EBITDAR $ 4,224,950 $ 4,068,800 Debt $ 7,042,302 $ 5,840,884 Financing lease liabilities 290,858 272,719 Add: Rent x 6(1) 2,365,788 2,126,460 Adjusted debt $ 9,698,948 $ 8,240,063 Adjusted debt to EBITDAR 2.3 2.0 Adjusted Return on Invested Capital (ROIC) (in thousands, except ROIC) Trailing 4 Quarters February 11, 2023 February 12, 2022 Net income $ 2,418,476 $ 2,408,925 Adjustments: Interest expense 229,215 188,901 Rent expense(1) 394,298 354,410 Tax effect(2) (129,691 ) (113,008 ) Adjusted after-tax return $ 2,912,298 $ 2,839,228 Average debt(3) $ 6,278,213 $ 5,433,252 Average stockholders' deficit(3) (3,617,143 ) (2,069,346 ) Add: Rent x 6(1) 2,365,788 2,126,460 Average financing lease liabilities(3) 294,337 255,497 Invested capital $ 5,321,195 $ 5,745,863 Adjusted After-Tax ROIC 54.7 % 49.4 % (1) The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the trailing four quarters ended February 11, 2023 and February 12, 2022 Trailing 4 Quarters (in thousands) February 11, 2023 February 12, 2022 Total lease cost, per ASC 842, for the trailing four quarters $ 498,970 $ 442,950 Less: Financing lease interest and amortization (77,302 ) (62,607 ) Less: Variable operating lease components, related to insurance and common area maintenance (27,370 ) (25,933 ) Rent expense for the trailing four quarters $ 394,298 $ 354,410 (2) Effective tax rate over trailing four quarters ended February 11, 2023 and February 12, 2022 was 20.8% (3)All averages are computed based on trailing five quarter balances Other Selected Financial Information (in thousands) February 11, 2023 February 12, 2022 Cumulative share repurchases ($ since fiscal 1998) $ 31,898,212 $ 28,192,426 Remaining share repurchase authorization ($) 1,751,788 957,574 Cumulative share repurchases (shares since fiscal 1998) 153,273 151,586 Shares outstanding, end of quarter 18,467 19,967 12 Weeks Ended 12 Weeks Ended 24 Weeks Ended 24 Weeks Ended February 11, 2023 February 12, 2022 February 11, 2023 February 12, 2022 Depreciation and amortization $ 113,711 $ 99,692 $ 222,964 $ 199,282 Cash flow from operations 354,474 361,816 1,148,061 1,139,746 Capital spending 144,837 105,874 259,234 208,143
AutoZone's 2nd Quarter Highlights - Fiscal 2023 Condensed Consolidated Statements of Operations Selected Operating Highlights Store Count & Square Footage 12 Weeks Ended 12 Weeks Ended 24 Weeks Ended 24 Weeks Ended February 11, 2023 February 12, 2022 February 11, 2023 February 12, 2022 Domestic: Beginning stores 6,196 6,066 6,168 6,051 Stores opened 30 26 58 41 Stores closed - (1 ) - (1 ) Ending domestic stores 6,226 6,091 6,226 6,091 Relocated stores 1 1 4 4 Stores with commercial programs 5,500 5,233 5,500 5,233 Square footage (in thousands) 41,103 40,037 41,103 40,037 Mexico: Beginning stores 706 666 703 664 Stores opened 1 3 4 5 Ending Mexico stores 707 669 707 669 Brazil: Beginning stores 76 53 72 52 Stores opened 5 2 9 3 Ending Brazil stores 81 55 81 55 Total 7,014 6,815 7,014 6,815 Square footage (in thousands) 46,982 45,433 46,982 45,433 Square footage per store 6,698 6,667 6,698 6,667 Sales Statistics ($ in thousands, except sales per average square foot) 12 Weeks Ended 12 Weeks Ended Trailing 4 Quarters Trailing 4 Quarters Total AutoZone Stores (Domestic, Mexico and Brazil) February 11, 2023 February 12, 2022 February 11, 2023 February 12, 2022 Sales per average store $ 518 $ 486 $ 2,399 $ 2,282 Sales per average square foot $ 77 $ 73 $ 359 $ 343 Total Auto Parts (Domestic, Mexico and Brazil) Total auto parts sales $ 3,623,110 $ 3,306,223 $ 16,590,483 $ 15,332,148 % Increase vs. LY 9.6% 15.6% 8.2% 16.5% Domestic Commercial Total domestic commercial sales $ 954,584 $ 843,889 $ 4,475,546 $ 3,755,003 % Increase vs. LY 13.1% 32.1% 19.2% 30.2% Average sales per program per week $ 14.5 $ 13.5 $ 16.0 $ 14.0 % Increase vs. LY 7.4% 28.6% 14.3% 26.1% All Other, including ALLDATA All other sales $ 67,872 $ 63,527 $ 299,144 $ 271,012 % Increase vs. LY 6.8% 24.3% 10.4% 17.1% 12 Weeks Ended 12 Weeks Ended 24 Weeks Ended 24 Weeks Ended February 11, 2023 February 12, 2022 February 11, 2023 February 12, 2022 Domestic same store sales 5.3% 13.8% 5.5% 13.7% Inventory Statistics (Total Stores) as of as of February 11, 2023 February 12, 2022 Accounts payable/inventory 127.7% 126.8% ($ in thousands) Inventory $ 5,731,255 $ 5,031,222 Inventory per store 817 738 Net inventory (net of payables) (1,590,296 ) (1,347,384 ) Net inventory / per store (227 ) (198 ) Trailing 5 Quarters February 11, 2023 February 12, 2022 Inventory turns 1.5 x 1.6 x 
