• O’Reilly Automotive, Inc. Reports Fourth Quarter And Full-Year 2023 Results

    Source: Nasdaq GlobeNewswire / 07 Feb 2024 15:30:05   America/Chicago

    • Fourth quarter comparable store sales growth of 3.4%, full-year increase of 7.9%
    • 11% increase in fourth quarter diluted earnings per share to $9.26, full-year increase of 15% to $38.47
    • Completed previously announced Leadership Succession Plan

    SPRINGFIELD, Mo., Feb. 07, 2024 (GLOBE NEWSWIRE) -- O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenue and earnings for its fourth quarter and full-year ended December 31, 2023. The results represent 31 consecutive years of comparable store sales growth and record revenue and operating income for O’Reilly since becoming a public company in April of 1993.

    4th Quarter Financial Results

    Brad Beckham, O’Reilly’s Chief Executive Officer (“CEO”), commented, “We are pleased to report another solid quarter, highlighted by a comparable store sales increase of 3.4%, on top of the very strong 9.0% comparable store sales increase Team O’Reilly delivered in the fourth quarter last year. Our Team once again generated double-digit professional comparable store sales growth, while also successfully navigating the anticipated year-over-year pressure we experienced on the DIY side of our business, resulting from the extremely strong, weather-driven sales we produced in the fourth quarter of 2022. In total, our comparable store sales performance exceeded our expectations for the quarter, driven by Team O’Reilly’s relentless focus on providing the highest levels of service in the industry. We would like to express our appreciation to each of our over 90,000 Team Members for their unwavering commitment to going above and beyond for our customers each and every day.”

    Sales for the fourth quarter ended December 31, 2023, increased $188 million, or 5%, to $3.83 billion from $3.64 billion for the same period one year ago. Gross profit for the fourth quarter increased 6% to $1.97 billion (or 51.3% of sales) from $1.85 billion (or 50.9% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the fourth quarter increased 7% to $1.25 billion (or 32.6% of sales) from $1.17 billion (or 32.2% of sales) for the same period one year ago. Operating income for the fourth quarter increased 5% to $719 million (or 18.8% of sales) from $682 million (or 18.7% of sales) for the same period one year ago.

    Net income for the fourth quarter ended December 31, 2023, increased $24 million, or 5%, to $553 million (or 14.4% of sales) from $529 million (or 14.5% of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 11% to $9.26 on 60 million shares versus $8.37 on 63 million shares for the same period one year ago.

    Full-Year Financial Results

    Mr. Beckham continued, “We delivered another year of exceptional, profitable growth, highlighted by a 7.9% increase in comparable store sales and a full-year diluted earnings per share increase of 15% to $38.47. I would like to congratulate our entire Team for their 31st consecutive year of annual comparable store sales growth and record earnings. 2023 was also a very successful expansion year for our Company, with the successful opening of 186 new stores, the growth of our store and distribution footprint into Puerto Rico, and the opening of a large, modern distribution center in Guadalajara, Mexico.”

    Sales for the year ended December 31, 2023, increased $1.40 billion, or 10%, to $15.81 billion from $14.41 billion for the same period one year ago. Gross profit for the year ended December 31, 2023, increased 10% to $8.10 billion (or 51.3% of sales) from $7.38 billion (or 51.2% of sales) for the same period one year ago. SG&A for the year ended December 31, 2023, increased 11% to $4.92 billion (or 31.1% of sales) from $4.43 billion (or 30.7% of sales) for the same period one year ago. Operating income for the year ended December 31, 2023, increased 8% to $3.19 billion (or 20.2% of sales) from $2.95 billion (or 20.5% of sales) for the same period one year ago.

    Net income for the year ended December 31, 2023, increased $174 million, or 8%, to $2.35 billion (or 14.8% of sales) from $2.17 billion (or 15.1% of sales) for the same period one year ago. Diluted earnings per common share for the year ended December 31, 2023, increased 15% to $38.47 on 61 million shares versus $33.44 on 65 million shares for the same period one year ago.

    Mr. Beckham concluded, “Our success in 2023 is a testament to our Team’s hard work, and as we look forward to 2024, we remain absolutely confident in our Team’s ability to consistently execute our dual market strategy and provide the best customer service in the industry. Our Team has repeatedly proven their ability to aggressively gain market share and profitably grow our business, and we are extremely excited to welcome our new Canadian Team Members to the O’Reilly family, with the closing of the Groupe Del Vasto acquisition in January. O’Reilly’s experienced leadership is already working closely with our seasoned management team in Canada, and we look forward to capitalizing on the long-term profitable growth opportunities in our new markets as we extend our track record of profitable growth throughout North America.”

    4th Quarter and Full-Year Comparable Store Sales Results

    Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members. Online sales for ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. Comparable store sales increased 3.4% for the fourth quarter ended December 31, 2023, on top of 9.0% for the same period one year ago.   Comparable store sales increased 7.9% for the year ended December 31, 2023, on top of 6.4% for the same period one year ago.

    Share Repurchase Program

    During the fourth quarter ended December 31, 2023, the Company repurchased 0.6 million shares of its common stock, at an average price per share of $922.86, for a total investment of $560 million. During the year ended December 31, 2023, the Company repurchased 3.6 million shares of its common stock, at an average price per share of $883.13, for a total investment of $3.15 billion. Excise tax on shares repurchased, assessed at one percent of the fair market value of net shares repurchased, was $28.8 million for the year ended December 31, 2023. Subsequent to the end of the fourth quarter and through the date of this release, the Company repurchased an additional 0.1 million shares of its common stock, at an average price per share of $967.63, for a total investment of $102 million. The Company has repurchased a total of 94.2 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 $247.16, for a total aggregate investment of $23.28 billion.   As of the date of this release, the Company had approximately $2.47 billion remaining under its current share repurchase authorizations.

    Full-Year 2024 Guidance

    The table below outlines the Company’s guidance for selected full-year 2024 financial data:

       
      For the Year Ending
      December 31, 2024
    Net, new store openings 190 to 200
    Comparable store sales 3.0% to 5.0%
    Total revenue $16.8 billion to $17.1 billion
    Gross profit as a percentage of sales 51.0% to 51.5%
    Operating income as a percentage of sales 19.7% to 20.2%
    Effective income tax rate 22.6%
    Diluted earnings per share(1) $41.05 to $41.55
    Net cash provided by operating activities $2.7 billion to $3.1 billion
    Capital expenditures $900 million to $1.0 billion
    Free cash flow(2) $1.8 billion to $2.1 billion

    The Company closed on its previously announced Canadian acquisition of Groupe Del Vasto in January of 2024. The above consolidated guidance for selected full-year 2024 financial data includes preliminary estimates from the impact of the operations of our newly acquired Canadian business, which incorporates an estimated 25 basis point dilution to gross profit as a percentage of sales and an estimated 15 basis point dilution to operating income as a percentage of sales for the full year 2024.

          (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)   Free cash flow is a non-GAAP financial measure. The table below reconciles Free cash flow guidance to Net cash provided by operating activities guidance, the most directly comparable GAAP financial measure:

              
      For the Year Ending
    (in millions) December 31, 2024
    Net cash provided by operating activities $2,710 to $3,120
    Less:Capital expenditures  900 to  1,000
     Excess tax benefit from share-based compensation payments  10 to  20
    Free cash flow $1,800 to $2,100

    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 table above and the selected financial information below.

    Completion of Leadership Succession Plan

    O’Reilly completed its previously announced Leadership Succession Plan on January 31, 2024, with the retirement of O’Reilly’s CEO Greg Johnson, and the simultaneous promotions of Brad Beckham to the role of CEO and Brent Kirby to the role of President. In addition, on February 1, 2024, the Company’s Board of Directors (the “Board”) nominated Greg Johnson to serve on O’Reilly’s Board, to be voted upon by the Company’s shareholders at O’Reilly’s Annual Shareholders’ Meeting, which will be held in May of 2024. Mr. Johnson is being nominated to replace the Board seat currently held by Jay Burchfield, who is expected to retire from the Board at the end of his current director term in May, consistent with the Board’s mandatory retirement age policy.

    Greg Henslee, O’Reilly’s Chairman of the Board, commented, “On behalf of the Board, I would once again like to express our sincere appreciation to Greg for his 41 years of dedicated service to O’Reilly, as well as reiterate our confidence in the Company’s future under the leadership of Brad and Brent, who are both very well respected and proven leaders with O’Reilly. I would also like to take this opportunity to thank Jay Burchfield for his guidance as the Company’s Lead Director and congratulate him on his upcoming Board retirement. Finally, I would like to relay our excitement with Greg Johnson’s acceptance to be a nominee to our Board; his vast experience and industry knowledge will be a tremendous asset to our Board in the future.”

    Earnings Conference Call Information

    The Company will host a conference call on Thursday, February 8, 2024, 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 (888) 506-0062 and the conference call identification number is 116638. A replay of the conference call will be available on the Company’s website through Friday, February 7, 2025.

    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 December 31, 2023, the Company operated 6,157 stores across 48 U.S. states, Puerto Rico, and Mexico.

    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, 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; consumer debt levels; product demand; a public health crisis; the market for auto parts; competition; weather; tariffs; availability of key products and supply chain disruptions; business interruptions, including terrorist activities, war and the threat of war; failure to protect our brand and reputation; challenges in international markets; volatility of the market price of our common stock; our increased debt levels; credit ratings on public debt; historical growth rate sustainability; our ability to hire and retain qualified employees; risks associated with the performance of acquired businesses; damage, failure or interruption of information technology systems, including information security and cyber-attacks; and governmental regulations. 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, 2022, and subsequent Securities and Exchange Commission filings, 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 Relations Contacts
     Mark Merz (417) 829-5878
     Eric Bird (417) 868-4259
      
     Media Contact
     Sonya Cox (417) 829-5709


    O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In thousands, except share data)
     
      December 31, 2023 December 31, 2022
      (Unaudited) (Note)
    Assets      
    Current assets:      
    Cash and cash equivalents $279,132  $108,583 
    Accounts receivable, net  375,049   343,155 
    Amounts receivable from suppliers  140,443   127,019 
    Inventory  4,658,367   4,359,126 
    Other current assets  105,311   110,376 
    Total current assets  5,558,302   5,048,259 
           
    Property and equipment, at cost  8,312,367   7,438,065 
    Less: accumulated depreciation and amortization  3,275,387   3,014,024 
    Net property and equipment  5,036,980   4,424,041 
           
    Operating lease, right-of-use assets  2,200,554   2,112,267 
    Goodwill  897,696   884,445 
    Other assets, net  179,463   158,967 
    Total assets $13,872,995  $12,627,979 
           
    Liabilities and shareholders’ deficit      
    Current liabilities:      
    Accounts payable $6,091,700  $5,881,157 
    Self-insurance reserves  128,548   138,926 
    Accrued payroll  138,122   126,888 
    Accrued benefits and withholdings  174,650   166,433 
    Income taxes payable  7,860    
    Current portion of operating lease liabilities  389,536   366,721 
    Other current liabilities  730,937   383,692 
    Total current liabilities  7,661,353   7,063,817 
           
    Long-term debt  5,570,125   4,371,653 
    Operating lease liabilities, less current portion  1,881,344   1,806,656 
    Deferred income taxes  295,471   245,347 
    Other liabilities  203,980   201,258 
           
    Shareholders’ equity (deficit):      
    Common stock, $0.01 par value:      
    Authorized shares – 245,000,000      
    Issued and outstanding shares –      
    59,072,792 as of December 31, 2023, and      
    62,353,221 as of December 31, 2022  591   624 
    Additional paid-in capital  1,352,275   1,311,488 
    Retained deficit  (3,131,532)  (2,375,860)
    Accumulated other comprehensive income  39,388   2,996 
    Total shareholders’ deficit  (1,739,278)  (1,060,752)
           
    Total liabilities and shareholders’ deficit $13,872,995  $12,627,979 

    Note: The balance sheet at December 31, 2022, 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
    (In thousands, except per share data)
     
      For the Three Months Ended For the Year Ended
      December 31, December 31,
      2023  2022  2023  2022 
       (Unaudited)  (Unaudited)  (Unaudited)  (Note)
    Sales $3,832,015  $3,644,493  $15,812,250  $14,409,860 
    Cost of goods sold, including warehouse and distribution expenses  1,864,586   1,790,539   7,707,447   7,028,154 
    Gross profit  1,967,429   1,853,954   8,104,803   7,381,706 
                 
    Selling, general and administrative expenses  1,248,693   1,171,737   4,918,427   4,427,215 
    Operating income  718,736   682,217   3,186,376   2,954,491 
                 
    Other income (expense):            
    Interest expense  (56,148)  (42,331)  (201,668)  (157,720)
    Interest income  1,980   2,136   4,900   4,763 
    Other, net  6,963   4,225   15,142   (2,879)
    Total other expense  (47,205)  (35,970)  (181,626)  (155,836)
                 
    Income before income taxes  671,531   646,247   3,004,750   2,798,655 
    Provision for income taxes  119,027   117,675   658,169   626,005 
    Net income $552,504  $528,572  $2,346,581  $2,172,650 
                 
    Earnings per share-basic:            
    Earnings per share $9.33  $8.45  $38.80  $33.75 
    Weighted-average common shares outstanding – basic  59,200   62,577   60,475   64,372 
                 
    Earnings per share-assuming dilution:            
    Earnings per share $9.26  $8.37  $38.47  $33.44 
    Weighted-average common shares outstanding – assuming dilution  59,673   63,160   60,998   64,962 

    Note: The income statement for the year ended December 31, 2022, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by the United States generally accepted accounting principles for complete financial statements.

     O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In thousands)
     
      For the Year Ended
      December 31, 
         2023     2022 
      (Unaudited) (Note)
    Operating activities:        
    Net income $ 2,346,581  $2,172,650 
    Adjustments to reconcile net income to net cash provided by operating activities:        
    Depreciation and amortization of property, equipment and intangibles   409,061   357,933 
    Amortization of debt discount and issuance costs   4,954   4,704 
    Deferred income taxes   48,232   69,575 
    Share-based compensation programs   27,511   26,458 
    Other   2,116   885 
    Changes in operating assets and liabilities:        
    Accounts receivable   (35,539)  (75,859)
    Inventory   (288,323)  (669,046)
    Accounts payable   207,061   1,184,858 
    Income taxes payable   33,889   151,063 
    Other   278,541   (74,971)
    Net cash provided by operating activities   3,034,084   3,148,250 
           
    Investing activities:        
    Purchases of property and equipment   (1,006,264)  (563,342)
    Proceeds from sale of property and equipment   17,689   14,803 
    Investment in tax credit equity investments   (4,150)  (188,282)
    Other   (3,211)  (3,164)
    Net cash used in investing activities   (995,936)  (739,985)
           
    Financing activities:        
    Proceeds from borrowings on revolving credit facility   3,227,000   785,800 
    Payments on revolving credit facility   (3,227,000)  (785,800)
    Net proceeds from commercial paper   746,789    
    Proceeds from the issuance of long-term debt   749,655   847,314 
    Principal payments on long-term debt   (300,000)  (300,000)
    Payment of debt issuance costs   (4,989)  (6,591)
    Repurchases of common stock   (3,151,155)  (3,282,265)
    Net proceeds from issuance of common stock   91,316   79,356 
    Other   (354)  (350)
    Net cash used in financing activities   (1,868,738)  (2,662,536)
           
    Effect of exchange rate changes on cash   1,139   741 
    Net increase (decrease) in cash and cash equivalents   170,549   (253,530)
    Cash and cash equivalents at beginning of the period   108,583   362,113 
    Cash and cash equivalents at end of the period $ 279,132  $108,583 
           
    Supplemental disclosures of cash flow information:        
    Income taxes paid $ 315,060  $415,165 
    Interest paid, net of capitalized interest   189,611   155,853 

    Note: The cash flow statement for the year ended December 31, 2022, 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
    SELECTED FINANCIAL INFORMATION
    (Unaudited)
      For the Year Ended
      December 31,
    Adjusted Debt to EBITDAR: 2023 2022
    (In thousands, except adjusted debt to EBITDAR ratio)      
    GAAP debt $5,570,125 $4,371,653
    Add:Letters of credit  112,163  101,741
     Unamortized discount and debt issuance costs  30,775  28,347
     Six-times rent expense  2,548,890  2,358,192
    Adjusted debt $8,261,953 $6,859,933
           
    GAAP net income $2,346,581 $2,172,650
    Add:Interest expense  201,668  157,720
     Provision for income taxes  658,169  626,005
     Depreciation and amortization  409,061  357,933
     Share-based compensation expense  27,511  26,458
     Rent expense(i)  424,815  393,032
    EBITDAR $4,067,805 $3,733,798
           
    Adjusted debt to EBITDAR  2.03  1.84

          (i)   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 year ended December 31, 2023 and 2022 (in thousands):

            
      For the Year Ended
      December31, 
      2023 2022
    Total lease cost, per ASC 842 $503,151 $467,758
    Less:Variable non-contract operating lease components, related to property taxes and insurance  78,336  74,726
    Rent expense $424,815 $393,032


           
      December 31,
      2023 2022
    Selected Balance Sheet Ratios:      
    Inventory turnover(1)  1.7  1.7
    Average inventory per store (in thousands)(2) $757 $730
    Accounts payable to inventory(3)  130.8%  134.9%


                  
       For the Three Months Ended For the Year Ended
       December 31, December 31,
       2023 2022 2023 2022
    Reconciliation of Free Cash Flow (in thousands):            
    Net cash provided by operating activities $516,429 $795,230 $3,034,084 $3,148,250
    Less:Capital expenditures  252,306  174,522  1,006,264  563,342
     Excess tax benefit from share-based compensation payments  8,098  11,203  35,950  25,503
     Investment in tax credit equity investments    183,020  4,150  188,282
    Free cash flow $256,025 $426,485 $1,987,720 $2,371,123


             
      For the Three Months Ended For the Year Ended
      December 31, December 31,
      2023  2022  2023  2022 
    Store Count:        
    Beginning domestic store count 6,063  5,910  5,929  5,759 
    New stores opened 33  20  169  173 
    Stores closed (1) (1) (3) (3)
    Ending domestic store count 6,095  5,929  6,095  5,929 
             
    Beginning Mexico store count 48  28  42  25 
    New stores opened 14  14  20  17 
    Ending Mexico store count 62  42  62  42 
             
    Total ending store count 6,157  5,971  6,157  5,971 


                 
      For the Three Months Ended For the Year Ended
      December 31, December 31,
      2023 2022 2023 2022
    Store and Team Member Information:(4)            
    Total employment  87,363  85,130      
    Square footage (in thousands)  46,681  44,604      
    Sales per weighted-average square foot(5) $81.06 $80.39 $340.23 $321.71
    Sales per weighted-average store (in thousands)(6) $619 $604 $2,578 $2,415

    (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) Represents O’Reilly’s U.S. and Puerto Rico operations only.

    (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.

     


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