O'Reilly Automotive, Inc. Reports Record Third Quarter Results 11.8% Operating Margin
SPRINGFIELD, Mo.--Oct. 2, 20046, 2004--O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") today announced record revenues and earnings for the third quarter of 2004, representing 44 quarters of record revenues and earnings for O'Reilly since becoming a public company in April 1993.Net income for the third quarter ended September 30, 2004, totaled $33.2 million, up 12.6% from $29.5 million for the same period a year ago. Diluted earnings per share for the third quarter of 2004 increased 11.1% to $0.60 on 55.8 million shares compared to $0.54 for the third quarter of 2003 on 54.9 million shares. Product sales for the third quarter ended September 30, 2004, totaled $455.2 million, up 10.4% from $412.2 million for the same period a year ago. Gross profit for the third quarter of 2004 increased to $195.8 million (or 43.0% of product sales) from $175.7 million (or 42.6% of product sales) for the same period a year ago, representing an increase of 11.5%.
Net income for the first nine months of 2004 totaled $93.0 million, up 22.1% from $76.2 million for the same period a year ago. Diluted earnings per common share for the first nine months of 2004 increased 19.3% to $1.67 on 55.6 million shares compared to $1.40 a year ago on 54.3 million shares. Product sales for the first nine months of 2004 totaled $1.29 billion, up 13.0% from $1.14 billion for the same period a year ago. Gross profit for the first nine months of 2004 increased to $552.9 million (or 42.7% of product sales) from $482.3 million (or 42.1% of product sales) for the same period a year ago, representing an increase of 14.6%.
Comparable store product sales for stores open at least one year increased 3.4% and 6.2% for the third quarter and first nine months of 2004, respectively.
"We are very pleased with the company's performance this past quarter, particularly in light of the aftermarket's continued relative softness in sales and with the challenging circumstances that many of our stores in the southeast faced with the hurricane season," said David O'Reilly, co-chairman and chief executive officer. "Team O'Reilly fired on all eight cylinders throughout the quarter achieving a 3.4% comparable store sales increase and opening 35 new stores, driving a net income increase of 12.6%."
The Company will host a conference call Wednesday, October 27, 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 1,205 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 September 30, 2004.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
September 30, December 31,
2004 2003
--------------- ---------------
(Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents $83,619 $21,094
Accounts receivable, net 61,493 52,235
Amounts receivable from vendors, net 44,276 50,695
Inventory 612,699 554,309
Deferred income taxes 5,854 4,753
Other current assets 6,143 4,399
--------------- ---------------
Total current assets 814,084 687,485
Property and equipment, at cost 747,749 626,142
Accumulated depreciation and
amortization 208,080 177,084
--------------- ---------------
Net property and equipment 539,669 449,058
Notes receivable, less current portion 22,082 24,313
Other assets, net 29,493 26,736
--------------- ---------------
Total assets $1,405,328 $1,187,592
=============== ===============
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable $17,128 $6,872
Accounts payable 268,153 176,513
Accrued payroll 15,415 17,307
Accrued benefits and withholdings 36,979 27,368
Other current liabilities 26,032 16,883
Current portion of long-term debt 592 925
--------------- ---------------
Total current liabilities 364,299 245,868
Long-term debt, less current portion 100,469 120,977
Deferred income taxes 38,120 29,448
Other liabilities 7,770 7,014
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 90,000,000
Issued and outstanding shares -
55,208,493 at September 30,
2004, and 54,664,976 at December
31, 2003 552 547
Additional paid-in capital 320,050 302,691
Retained earnings 574,068 481,047
--------------- ---------------
Total shareholders' equity 894,669 784,285
--------------- ---------------
Total liabilities and shareholders'
equity $1,405,328 $1,187,592
=============== ===============
Note: The balance sheet at December 31, 2003, 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 financial statements.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
2004 2003 2004 2003
--------- --------- --------- ----------
Product sales $ 455,162 $ 412,182 $1,293,623 $1,144,769
Cost of goods sold,
including warehouse and
distribution expenses 259,314 236,529 740,679 662,457
--------- --------- ---------- ----------
Gross profit 195,848 175,653 552,944 482,312
Operating, selling, general
and administrative
expenses 142,039 127,291 402,798 355,883
--------- --------- ---------- ----------
Operating income 53,809 48,362 150,146 126,429
Other expense, net (791) (1,179) (1,675) (4,594)
--------- --------- ---------- ----------
Income before income taxes 53,018 47,183 148,471 121,835
Provision for income taxes 19,775 17,650 55,450 45,650
--------- --------- ---------- ----------
Net income $ 33,243 $ 29,533 $ 93,021 $ 76,185
========= ========= ========== ==========
Net income per common share$ 0.60 $ 0.55 $ 1.69 $ 1.42
========= ========= ========== ==========
Net income per common share
- assuming dilution $ 0.60 $ 0.54 $ 1.67 $ 1.40
========= ========= ========== ==========
Weighted-average common
shares outstanding 55,140 54,090 54,923 53,711
========= ========= ========== ==========
Adjusted weighted-average
common shares outstanding
- assuming dilution 55,778 54,864 55,627 54,282
========= ========= ========== ==========
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
September 30,
-------------------
2004 2003
--------- ---------
Inventory turnover (1) 1.65 1.64
Inventory turnover, net of payables (2) 2.61 2.16
AP to inventory (3) 43.8% 28.7%
Debt-to-capital (4) 10.2% 12.9%
Return on equity (5) 14.2% 13.8%
Return on assets (6) 9.2% 9.0%
Square footage (in thousands) 8,016 7,082
Store count:
New stores, net (three months ended) 35 33
Total stores 1,205 1,074
Total employment 17,320 15,660
Three Months Ended
September 30,
--------------------------
2004 2003
----------- -------------
Other information (in thousands):
Capital expenditures $ 44,472 $ 32,448
Depreciation & amortization $ 12,512 $ 10,651
Interest expense $ 1,542 $ 1,546
Lease & rental expense $ 8,478 $ 8,559
Sales per weighted-average square foot (7) $ 56.65 $ 57.63
Sales per weighted-average store (in
thousands) (8) $ 376 $ 380
(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.