AutoZone EPS up 71% in Third Quarter
MEMPHIS, Tenn., May 21 AutoZone, Inc.today reported sales of $1.225 billion for its third fiscal quarter (12 weeks) ended May 4, 2002, an increase of 11% from fiscal 2001, excluding the sales of the TruckPro subsidiary which was sold in December. Same store sales, or sales for domestic auto parts stores open at least one year, increased 9.5% during the quarter, including 9% for retail sales and 18% for commercial sales. AutoZone stores in Mexico continue to report high same store sales increases. Net income for the quarter increased 61% to $102 million, while diluted earnings per share increased 71% to $0.96 from $0.56 reported in the year-ago quarter. For the third quarter, cash flow before share repurchases was $244 million, up 33% from the prior year.
For the fiscal year-to-date period (36 weeks), sales were $3.48 billion, an increase of 10% from the prior year, with a same store sales increase of 10%, including a 9% increase for retail sales and 17% for commercial sales. Year-to-date net income increased 68% to $250 million, while diluted earnings per share for the period increased 76% to $2.29 from $1.30. Return on invested capital for the trailing twelve months increased to 17.2%.
"We are very pleased with our continuing strong performance through the third quarter, even as we begin to anniversary our initiatives which have already generated such strong improvements in prior quarters," said Steve Odland, Chairman, President, and Chief Executive Officer. "In addition to these marketing, merchandising, and operating initiatives which continued to drive strong same store sales by reminding customers to maintain their vehicles, positive external factors like more older cars on the road, more miles being driven, the aging SUV and light truck population, and $60 billion of annual unperformed maintenance bode well for growth in the DIY market. We also are focused on providing the tools and training that our AutoZoners need to provide the highest level of customer service. AutoZone continues to experience very encouraging results from our increased efforts toward commercial customers and we remain optimistic about the opportunities in Mexico.
"We continue to focus on decreasing costs, through relentless expense discipline. Our cash flow and financial returns continue to improve. The strong, growing cash flow provided by our business, when combined with increased hurdle rates for new investments, should continue to drive improved return on invested capital and shareholder value."
During the quarter, AutoZone opened 19 new, replaced 2 and closed 4 stores in the U.S. and opened 4 new stores in Mexico. Year-to-date, AutoZone has opened 72 new, replaced 12 and closed 39 auto parts stores in the U.S., while opening 6 new stores in Mexico.
During the quarter, AutoZone's Board of Directors authorized an increase in the share repurchase program of $300 million to an aggregate authorization of $2.0 billion. Total share repurchases under the share repurchase program are $1.76 billion or 57.4 million shares at an average price of $30.62, including $108.8 million or 2.0 million shares under forward purchase contracts at the end of the third quarter. The amounts outstanding under the forward contracts have subsequently been settled.
AutoZone will host a one-hour conference call beginning at 9 a.m. (CDT) tomorrow to discuss the results of the quarter. Investors may listen to the conference call live and review supporting slides on the AutoZone website, www.autozone.com, by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing (712) 271-3887. A replay of the call and supporting slides will be available on the AutoZone website. In addition, a telephone replay will be available by dialing (402) 998-0456 through Wednesday, May 29, 2002, at 11 p.m. (CDT).
AutoZone sells auto and light truck parts, chemicals and accessories through 3,052 AutoZone stores in 44 states plus the District of Columbia in the U.S. and 27 AutoZone stores in Mexico and also sells the ALLDATA brand automotive diagnostic and repair software. On the web, AutoZone sells diagnostic and repair information through alldatadiy.com, and auto and light truck parts through AutoZone.com.
Certain statements contained in this press release are forward-looking statements. These statements discuss, among other things, business strategies and future performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including, without limitation, competition, product demand, the economy, inflation, gasoline prices, the ability to hire and retain qualified employees, consumer debt levels, war and the prospect of war, including terrorist activity, and availability of commercial transportation. Actual results may materially differ from anticipated results. Please refer to the Risk Factors section of AutoZone's amended Form S-3 dated April 25, 2002, for more information related to those risks. AutoZone undertakes no obligation to publicly release any revisions to any forward-looking statements contained in this press release to reflect events or circumstances occurring after the date of this release or to reflect the occurrence of unanticipated events.
AutoZone's 3rd Quarter Highlights- Fiscal 2002 Condensed Consolidated Statements of Operations (in thousands, except per share data) 12 Weeks Ended 12 Weeks Ended 36 Weeks Ended May 4, 2002 May 5, 2001 May 4, 2002 Net sales $1,224,810 $1,139,957 $3,482,173 Cost of goods sold 682,826 657,379 1,949,153 Gross profit 541,984 482,578 1,533,020 Operating expenses 359,551 349,512 1,073,934 Restructuring and impairment charges -- 5,200 -- Operating profit 182,433 127,866 459,086 Interest expense, net 17,419 23,841 55,124 Income before taxes 165,014 104,025 403,962 Taxes 62,700 40,500 153,800 Net income $102,314 $63,525 $250,162 Net income per share: Basic $0.98 $0.57 $2.35 Diluted $0.96 $0.56 $2.29 Shares outstanding: Basic 103,961 112,364 106,264 Diluted 106,644 113,037 109,015 AutoZone's 3rd Quarter Highlights- Fiscal 20021 Condensed Consolidated Statements of Operations (in thousands, except per share data) Trailing 12 Trailing 12 36 Weeks Ended months months May 5, 2001 May 4, 2002 May 5, 2001 Net sales $3,177,522 $5,122,836 $4,670,167 Cost of goods sold 1,852,046 2,902,003 2,724,242 Gross profit 1,325,476 2,220,833 1,945,925 Operating expenses 1,004,362 1,568,481 1,425,236 Restructuring and impairment charges 5,200 121,489 5,200 Operating profit 315,914 530,863 515,489 Interest expense, net 72,365 83,424 100,720 Income before taxes 243,549 447,439 414,769 Taxes 94,500 170,800 160,500 Net income $149,049 $276,639 $254,269 Net income per share: Basic $1.30 $2.58 $2.17 Diluted $1.30 $2.52 $2.16 Shares outstanding: Basic 114,330 107,250 117,334 Diluted 114,861 109,754 117,950 Selected Balance Sheet Information (in thousands) May 4, May 5, August 25, 2002 2001 2001 Merchandise inventories $1,291,189 $1,214,942 $1,242,896 Current assets 1,371,977 1,293,616 1,328,511 Property and equipment, net 1,691,593 1,770,310 1,710,443 Total assets 3,444,247 3,447,166 3,432,512 Accounts payable 932,106 782,007 945,666 Current liabilities 1,348,016 1,111,821 1,266,654 Stockholders' equity 774,915 889,646 866,213 Debt 1,251,134 1,392,729 1,225,402 Working capital 23,961 181,795 61,857 Selected Cash Flow Information (in thousands) 12 Weeks 12 Weeks 36 Weeks 36 Weeks Ended Ended Ended Ended May 4, 2002 May 5, 2001 May 4, 2002 May 5, 2001 Depreciation & amortization $26,404 $30,451 $82,497 $91,694 Capital spending $41,223 $44,234 $81,845 $137,305 Cash flow before share repurchases $244,039 $184,194 $386,710 $118,798 Share repurchases $243,231 $56,878 $412,442 $261,590 Trailing 12 Trailing 12 Months Months May 4, 2002 May 5, 2001 Depreciation & amortization $122,136 $130,413 Capital spending $113,836 $206,818 Cash flow before share repurchases $658,544 $347,689 Share repurchases $516,949 $525,007 Other Selected Financial Information (in thousands) May 4, May 5, August 25, 2002 2001 2001 Cumulative share repurchases ($): On balance sheet $1,649,182 $1,132,504 $1,236,733 Forward contracts 108,789 130,765 131,092 Total $1,757,971 $1,263,269 $1,367,825 Cumulative share repurchases (shares): On balance sheet 55,421 42,953 47,162 Forward contracts 1,999 5,761 3,894 Total 57,420 48,714 51,056 Shares outstanding, end of quarter 102,979 111,861 109,408 Condensed Consolidated Statements of Operations - Before Restructuring Charges (in thousands, except per share data) 12 Weeks 12 Weeks 36 Weeks Ended Ended Ended May 4, 2002 May 5, 2001 May 4, 2002 Net sales $1,224,810 $1,139,957 $3,482,173 Cost of goods sold 682,826 657,379 1,949,153 Gross profit 541,984 482,578 1,533,020 Operating expenses 359,551 349,512 1,073,934 Operating profit 182,433 133,066 459,086 Interest expense, net 17,419 23,841 55,124 Income before taxes 165,014 109,225 403,962 Taxes 62,700 42,500 153,800 Net income $102,314 $66,725 $250,162 Net income per share: Basic $0.98 $0.59 $2.35 Diluted $0.96 $0.59 $2.29 Shares outstanding: Basic 103,961 112,364 106,264 Diluted 106,644 113,037 109,015 Condensed Consolidated Statements of Operations - Before Restructuring Charges (in thousands, except per share data) 36 Weeks Trailing 12 Trailing 12 Ended months months May 5, 2001 May 4, 2002 May 5, 2001 Net sales $3,177,522 $5,122,836 $4,670,167 Cost of goods sold 1,852,046 2,871,870 2,724,242 Gross profit 1,325,476 2,250,966 1,945,925 Operating expenses 1,004,362 1,568,481 1,425,236 Operating profit 321,114 682,485 520,689 Interest expense, net 72,365 83,424 100,720 Income before taxes 248,749 599,061 419,969 Taxes 96,500 229,800 162,500 Net income $152,249 $369,261 $257,469 Net income per share: Basic $1.33 $3.44 $2.19 Diluted $1.33 $3.36 $2.18 Shares outstanding: Basic 114,330 107,250 117,334 Diluted 114,861 109,754 117,950 Store Count & Square Footage 12 Weeks 12 Weeks 36 Weeks 36 Weeks Ended Ended Ended Ended May 4, May 5, May 4, May 5, 2002 2001 2002 2001 Domestic auto parts stores: Store count: Stores opened 19 23 72 82 Stores closed 4 1 39 3 Replacement stores 2 5 12 13 Total domestic auto parts stores 3,052 2,994 3,052 2,994 Stores with commercial sales 1,652 1,492 1,652 1,492 Square footage (in thousands) 19,596 19,223 19,596 19,223 Auto parts stores in Mexico: Stores opened 4 3 6 3 Total auto parts stores in Mexico 27 16 27 16 TruckPro stores (total) -- 49 -- 49 Note: TruckPro was sold on Dec. 19, 2001 Sales & Inventory Statistics (Domestic auto parts): 12 Weeks 12 Weeks 36 Weeks 36 Weeks Ended Ended Ended Ended May 4, May 5, May 4, May 5, 2002 2001 2002 2001 Sales per average store ($ in thousands) $393 $362 $1,105 $1,021 Sales per average sq foot $61 $57 $172 $159 Same store sales - rolling 13 periods Total 9% 5% 10% 3% Organic vs acquired: Organic 9% 3% 9% 1% Acquired 14% 13% 15% 12% Retail vs commercial Retail 9% 4% 9% 2% Commercial 18% 11% 17% 11% Inventory turns: Based on average inventories 2.3 X 2.3 X Based on ending inventories 2.2 X 2.2 X Inventory turns, net of payables: Based on average inventories 7.7 X 6.6 X Based on ending inventories 8.2 X 6.5 X Accounts payable/inventory (total company) 72% 64%