O'Reilly Automotive, Inc. Reports Second Quarter Results; 12.1% Operating Margin; 21.3% Increase in Net Income
SPRINGFIELD, Mo.--July 27, 2004--O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") today announced record revenues and earnings for the second quarter of 2004, representing 43 quarters of record revenues and earnings for O'Reilly since becoming a public company in April 1993.Net income for the second quarter ended June 30, 2004, totaled $32.7 million, up 21.3% from $26.9 million for the same period in 2003. Diluted earnings per share for the second quarter of 2004 increased 18% to $0.59 on 55.7 million shares compared to $0.50 for the second quarter of 2003 on 54.2 million shares. Product sales for the second quarter ended June 30, 2004, totaled $435.2 million, up 10.7% from $393.1 million for the same period a year ago. Gross profit for the second quarter of 2004 increased to $187.8 million (or 43.2% of product sales) from $165.7 million (or 42.2% of product sales) for the second quarter of 2003, representing an increase of 13.3%.
Net income for the first six months of 2004 totaled $59.8 million, up 28.1% from $46.7 million for the same period a year ago. Diluted earnings per common share for the first six months of 2004 increased 25.6% to $1.08 on 55.6 million shares compared to $0.86 a year ago on 54.0 million shares. Product sales for the first six months of 2004 totaled $838.5 million, up 14.5% from $732.6 million for the same period a year ago. Gross profit for the first six months of 2004 increased to $357.1 million (or 42.6% of product sales) from $306.7 million (or 41.9% of product sales) for the same period a year ago, representing an increase of 16.5%.
Comparable store product sales for stores open at least one year increased 3.8% and 7.8% for the second quarter and first six months of 2004, respectively.
"We are pleased with our overall performance this quarter," said David O'Reilly, co-chairman and chief executive officer. "Despite unusually high amounts of rainfall in the South and significantly cooler temperatures throughout our markets, we posted a 3.8% increase in comparable store product sales for the quarter. We continue to generate positive free cash flow and ended the quarter with $88 million in cash."
The Company will host a conference call Wednesday, July 28, 2004, at 10:00 a.m. Central time to discuss its results, as well as future expectations. The call will be available by Web cast at www.oreillyauto.com, www.vcall.com or www.streetevents.com. Investors may listen to the conference call live on the Company's Web site, www.oreillyauto.com, by clicking "News." A replay will also be available on the Web site shortly after the call.
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 1,170 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 June 30, 2004.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2004 2003
------------------ ------------------
(Unaudited) (Note)
(In thousands, except per share data)
Assets
Current assets:
Cash and cash equivalents $88,117 $21,094
Accounts receivable, net 60,573 52,235
Amounts receivable from
vendors, net 51,603 50,695
Inventory 582,993 554,309
Deferred income taxes 2,393 4,753
Other current assets 7,084 4,399
------------------ ------------------
Total current assets 792,763 687,485
Property and equipment, at cost 704,045 626,142
Accumulated depreciation 196,512 177,084
------------------ ------------------
Net property and
equipment 507,533 449,058
Notes receivable 22,456 24,313
Other assets, net 29,963 26,736
------------------ ------------------
Total assets $1,352,715 $1,187,592
================== ==================
Liabilities and shareholders'
equity
Current liabilities:
Income taxes payable $17,380 $6,872
Accounts payable 258,987 176,513
Accrued payroll 19,447 17,307
Accrued benefits and
withholdings 32,831 27,368
Other current liabilities 21,442 16,883
Current portion of long-term
debt 776 925
------------------ ------------------
Total current
liabilities 350,863 245,868
Long-term debt, less current
portion 100,616 120,977
Deferred income taxes 35,400 29,448
Other liabilities 7,691 7,014
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares -
90,000,000
Issued and outstanding
shares - 55,108,052 at
June 30, 2004,
and 54,664,976 at
December 31, 2003 551 547
Additional paid-in capital 316,769 302,691
Retained earnings 540,825 481,047
------------------ ------------------
Total shareholders' equity 858,145 784,285
------------------ ------------------
Total liabilities and
shareholders' equity $1,352,715 $1,187,592
================== ==================
Note: The balance sheet at December 31, 2003, has been derived from
the audited 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 financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
------ ------ ------- ------
(In thousands, except per share data)
Product sales $435,167 $393,112 $838,461 $732,587
Cost of goods sold,
including warehouse and
distribution expenses 247,409 227,399 481,365 425,928
-------- ------- ------- -------
Gross profit 187,758 165,713 357,096 306,659
Operating, selling,
general and
administrative
expenses 135,193 120,987 260,759 228,592
------- ------- ------- -------
Operating income 52,565 44,726 96,337 78,067
Other expense, net (438) (1,652) (884) (3,415)
------- ------- -------- -------
Income before income
taxes 52,127 43,074 95,453 74,652
Provision for income
taxes 19,475 16,150 35,675 28,000
------- ------- ------- ------
Net income $32,652 $26,924 $59,778 $46,652
======= ======= ======= =======
Net income per
common share $0.59 $0.50 $1.09 $0.87
======= ======= ======= =======
Net income per common
share - assuming
dilution $0.59 $0.50 $1.08 $0.86
======= ======= ======= =======
Weighted-average common
shares outstanding 54,934 53,634 54,814 53,518
======= ======= ======= =======
Adjusted weighted-average
common shares 55,720 54,222 55,551 53,988
outstanding - ======= ======= ======= =======
assuming dilution
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
June 30,
------------------
2004 2003
---- ----
Inventory turnover(1) 1.7 1.6
Inventory turnover, net of payables(2) 2.6 2.1
AP to inventory(3) 44.4% 27.0%
Debt-to-capital(4) 10.6% 16.1%
Return on equity(5) 14.4% 13.6%
Return on assets(6) 9.3% 8.8%
Square footage (in thousands) 7,768 6,851
Store count:
New stores, net (three months ended) 38 30
Total stores 1,170 1,041
Total employment 17,203 15,568
Three Months Ended
June 30,
-------------------
2004 2003
---- ----
Other information (in thousands):
Capital expenditures $ 41,669 $ 35,409
Depreciation & amortization $ 11,670 $ 10,211
Interest expense $ 975 $ 2,075
Lease & rental expense $ 8,833 $ 7,943
Sales per weighted-average square foot(7) $ 55.98 $ 57.04
Sales per weighted-average
store (in thousands)(8) $ 371 $ 375
(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 Six Months Ended
June 30, June 30,
------------------- -----------------
2004 2003 2004 2003
---- ---- ---- ----
(In thousands)
Net cash provided
by operating activities $ 78,867 $ 55,611 $ 160,878 $ 112,955
Capital expenditures 41,669 35,409 81,747 67,599
-------- -------- --------- ---------
Free cash flow (1)(2) $ 37,198 $ 20,202 $ 79,131 $ 45,356
======== ======== ========= =========
(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.