O'Reilly Automotive Reports Fourth Quarter and Annual Earnings 11Th Consecutive Year of Record Revenues and Earnings 7.8% Increase in Comparable Store Product Sales
SPRINGFIELD, Mo.--Feb. 2, 20045, 2004--O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") today announced record revenues and earnings for the fourth quarter and year ended December 31, 2003, representing 11 consecutive years of record revenues and earnings and positive comparable store product sales increases for O'Reilly since becoming a public company in April 1993.Net income for the year ended December 31, 2003, totaled $100.1 million, up 22.1% from $82.0 million for the same period a year ago. Diluted earnings per common share for the year ended December 31, 2003, increased 20.3% to $1.84 on 54.5 million shares versus $1.53 a year ago on 53.7 million shares. Product sales for the year ended December 31, 2003, totaled $1.51 billion, up 15.2% from $1.31 billion for the year ending December 31, 2002. Gross profit for the year ended December 31, 2003, increased to $638.3 million (or 42.2% of product sales) from $553.4 million (or 42.2% of product sales) for the year ended December 31, 2002, representing an increase of 15.4%. Operating, selling, general and administrative ("OSG&A") expenses for the year ended December 31, 2003, increased to $473.1 million (or 31.3% of product sales) from $415.1 million (or 31.6% of product sales) for the year ended December 31, 2002, representing an increase of 14.0%.
Net income for the fourth quarter ended December 31, 2003, totaled $23.9 million, up 27.8% from $18.7 million for the same period in 2002. Diluted earnings per common share for the fourth quarter of 2003 increased 22.9% to $0.43 on 55.3 million shares compared to $0.35 for the fourth quarter of 2002 on 53.7 million shares. Product sales for the fourth quarter ended December 31, 2003, totaled $367.0 million, up 16.8% from $314.2 million for the same period a year ago. Gross profit for the fourth quarter ended December 31, 2003, increased to $156.0 million (or 42.5% of product sales) from $131.0 million (or 41.7% of product sales) for the same period a year ago, representing an increase of 19.1%. OSG&A expenses for the fourth quarter of 2003, increased to $117.2 million (or 31.9% of product sales) from $99.8 million (or 31.8% of product sales) for the same period a year ago, representing an increase of 17.4%.
Comparable store product sales for stores open at least one year increased 9.8% and 7.8% for the fourth quarter and year ending December 31, 2003, respectively, representing 43 quarters of comparable store product sales increases since becoming a public company in April 1993.
David O'Reilly, co-chairman and chief executive officer, stated, "We are proud to report another strong year for Team O'Reilly. Our sales increased 15% over last year and our net income increased 22%, reflecting our expansion into many less populated but very profitable markets and our continuing efforts to control expenses. Our net cash provided by operating activities allowed us to pay down debt by approximately $70.0 million for 2003, a decrease of 36%. Our customers continue to reward our good customer service, resulting in an industry leading comparable store product sales increase of 7.8%."
"We opened 35, net new stores in the fourth quarter for a total of 128, net new stores in 2003, bringing our total store count to 1,109" said Ted Wise, co-president. "Our 2004 plans call for opening approximately 140 new stores."
O'Reilly Automotive, Inc. 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 installer markets. Founded in 1957 by the O'Reilly family, the Company operated 1,109 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Tennessee, Texas and Virginia as of December 31, 2003.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
2003 2002
-------------- -------------
(Unaudited) (Note)
(In thousands, except share
data)
Assets
Current assets:
Cash $21,094 $29,333
Accounts receivable, net 52,235 45,421
Amounts receivable from vendors 43,608 42,918
Inventory 554,309 504,098
Deferred income taxes 4,753 5,040
Other current assets 4,399 4,235
-------------- -------------
Total current assets 680,398 631,045
Property and equipment, at cost 626,142 491,523
Accumulated depreciation and amortization 177,084 137,922
-------------- -------------
Net property and equipment 449,058 353,601
Notes receivable 1,743 1,880
Long-term receivable 37,654 3,761
Other assets 18,739 19,132
-------------- -------------
Total assets $1,187,592 $1,009,419
============== =============
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable $6,872 $9,798
Accounts payable 176,513 85,370
Accrued payroll 17,307 15,257
Accrued benefits and withholdings 27,368 19,165
Other current liabilities 16,883 17,150
Current portion of long-term debt 925 682
-------------- -------------
Total current liabilities 245,868 147,422
Long-term debt, less current portion 120,977 190,470
Deferred income taxes 29,448 15,939
Other liabilities 7,014 5,064
Commitments and contingencies -- --
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 90,000,000
Issued and outstanding shares -
54,664,976 at December 31, 2003,
and 53,371,242 at December 31,
2002 547 534
Additional paid-in capital 302,691 269,030
Retained earnings 481,047 380,960
-------------- -------------
Total shareholders' equity 784,285 650,524
-------------- -------------
Total liabilities and shareholders'
equity $1,187,592 $1,009,419
============== =============
Note: The condensed consolidated balance sheet at December 31, 2002,
has been derived from the audited consolidated financial statements at
that date, but does not include all of the information and footnotes
required by accounting principles generally accepted in the United
States for complete consolidated financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
(In thousands, except per share data)
Product sales $ 367,047 $ 314,241 $1,511,816 $1,312,490
Cost of goods sold,
including warehouse
and distribution
expenses 211,024 183,251 873,481 759,090
--------- --------- ---------- ----------
Gross profit 156,023 130,990 638,335 553,400
Operating, selling,
general and
administrative
expenses 117,177 99,819 473,060 415,099
--------- --------- ---------- ----------
Operating income 38,846 31,171 165,275 138,301
Other expense, net (639) (1,949) (5,233) (7,319)
--------- --------- ---------- ----------
Income before income taxes 38,207 29,222 160,042 130,982
Provision for income taxes 14,305 10,515 59,955 48,990
--------- --------- ---------- ----------
Net income $ 23,902 $ 18,707 $ 100,087 $ 81,992
========= ========= ========== ==========
Net income per common
share $ 0.44 $ 0.35 $ 1.86 $ 1.54
========= ========= ========== ==========
Net income per common
share - assuming
dilution $ 0.43 $ 0.35 $ 1.84 $ 1.53
========= ========= ========== ==========
Weighted average common
shares outstanding 54,492 53,322 53,908 53,114
========= ========= ========== ==========
Adjusted weighted
average common shares
outstanding - assuming
dilution 55,266 53,740 54,530 53,692
========= ========= ========== ==========
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
December 31,
2003 2002
---- ----
Inventory turnover (1) 1.7 1.6
Inventory turnover, net of payables (2) 2.2 1.9
AP to Inventory (3) 31.8% 16.9%
Debt-to-capital (4) 13.5% 22.7%
Return on equity (5) 14.0% 13.6%
Return on assets (6) 9.1% 8.8%
Square footage (in thousands) 7,348 6,408
Store count:
New stores, net (twelve months ended) 128 106
Total stores 1,109 981
Total employment 15,484 14,273
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Other Information ---- ---- ---- ----
(in thousands):
Capital Expenditures $ 36,450 $ 29,647 $ 136,497 $ 102,257
Depreciation & Amortization $ 11,131 $ 9,786 $ 42,374 $ 36,979
Interest Expense $ 956 $ 2,296 $ 6,864 $ 9,248
Lease & Rental Expense $ 8,587 $ 8,268 $ 33,456 $ 31,383
Sales per weighted-average
square foot (7) $ 49.82 $ 48.44 $ 214.73 $ 211.38
Sales per weighted-average
store (in thousands) (8) $ 330 $ 316 $ 1,413 $ 1,372
(1) Calculated as cost of sales for the last 12 months divided by
average inventory. Average inventory is calculated as the simple
average of beginning and ending inventory for the same period used
in determining the numerator.
(2) Calculated as cost of sales divided by average inventory less
accounts payable. Average inventory is calculated as the simple
average of beginning and ending inventory for the same period used
in determining the numerator.
(3) Accounts payable divided by inventory.
(4) The sum of long-term debt and current portion of long-term debt,
divided by the sum of long-term debt, current portion of long-term
debt and total shareholders' equity.
(5) Last 12 months net income divided by average shareholders' equity.
Average shareholders' equity is calculated by taking a simple
average of the beginning and ending shareholders' equity for the
same period used in determining the numerator.
(6) Last 12 months net income divided by average total assets. Average
total assets is calculated by taking a simple average of the
beginning and ending total assets for the same period used in
determining the numerator.
(7) Total sales less jobber sales, divided by weighted-average square
feet. Weighted-average sales per square foot is weighted to
consider the approximate dates of store openings or expansions.
(8) Total sales less jobber sales, divided by weighted-average stores.
Weighted-average sales per store is weighted to consider the
approximate dates of store openings or expansions.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
RECONCILIATION OF FREE CASH FLOW TO OPERATING CASH FLOW
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
---- ---- ---- ----
(In thousands)
Net cash provided
by operating activities $ 722 $ (591) $ 172,841 $ 104,533
Capital expenditures 36,450 29,647 136,497 102,257
--------- --------- --------- ---------
Free cash flow (1)(2) $(35,728) $(30,238) $ 36,344 $ 2,276
========= ========= ========= =========
(1) Free cash flow is calculated as net cash provided by operating
activities less capital expenditures.
(2) The Company believes that presenting free cash flow provides
investors a metric to evaluate the Company's ability to fund its
planned growth.