O'Reilly Automotive, Inc., Reports Fourth Quarter and Annual Earnings; 12th Consecutive Year of Record Revenues and Earnings
SPRINGFIELD, Mo.--Feb. 2, 20054, 2005--| 8.5% Increase in Fourth Quarter Comparable Store Product Sales |
O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") today announced record revenues and earnings for the fourth quarter and year ended December 31, 2004, representing 12 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, before the cumulative effect of accounting change, for the year ended December 31, 2004, totaled $124.2 million, up 24.1% from $100.1 million for the same period a year ago. Diluted earnings per common share, before the cumulative effect of accounting change, for the year ended December 31, 2004, increased 21.2% to $2.23 on 55.7 million shares versus $1.84 a year ago on 54.5 million shares. Product sales for the year ended December 31, 2004, totaled $1.72 billion, up 13.9% from $1.51 billion for the year ending December 31, 2003. Gross profit for the year ended December 31, 2004, increased to $743.2 million (or 43.2% of product sales) from $638.3 million (or 42.2% of product sales) for the year ended December 31, 2003, representing an increase of 16.4%. Operating, selling, general and administrative ("OSG&A") expenses for the year ended December 31, 2004, increased to $542.3 million (or 31.5% of product sales) from $473.1 million (or 31.3% of product sales) for the year ended December 31, 2003, representing an increase of 14.6%. The cumulative effect of accounting change resulted in a one-time benefit of $21.9 million, net of taxes, or an additional $0.39 per diluted share, bringing total earnings for the year to $146.1 million or $2.62 per diluted share.
Net income for the fourth quarter ended December 31, 2004, totaled $28.5 million, up 19.2% from $23.9 million for the same period in 2003. Diluted earnings per common share for the fourth quarter of 2004 increased 18.6% to $0.51 on 56.0 million shares compared to $0.43 for the fourth quarter of 2003 on 55.3 million shares. Product sales for the fourth quarter ended December 31, 2004, totaled $427.6 million, up 16.5% from $367.0 million for the same period a year ago. Gross profit for the fourth quarter ended December 31, 2004, increased to $186.0 million (or 43.5% of product sales) from $156.0 million (or 42.5% of product sales) for the same period a year ago, representing an increase of 19.2%. OSG&A expenses for the fourth quarter of 2004, increased to $139.5 million (or 32.6% of product sales) from $117.2 million (or 31.9% of product sales) for the same period a year ago, representing an increase of 19.0%.
Comparable store product sales for stores open at least one year increased 8.5% and 6.8% for the fourth quarter and year ending December 31, 2004, respectively, representing 47 quarters of comparable store product sales increases since becoming a public company in April 1993.
David O'Reilly, Chairman of the Board, stated, "We are extremely proud of the tremendous effort by all O'Reilly team members with this quarter's same store sales performance. Clearly there have been challenges in the market and through hard work and determination we have been able to gain market share. This has been accomplished by leading edge product availability and a very high level of customer service. 2005 is another year of opportunity as we expect to add approximately 160 new O'Reilly stores and continue to focus on growing our existing store volumes and providing outstanding customer service."
Effective January 1, 2004, the Company changed its method of applying its LIFO accounting policy for inventory costs. Under the new method, the Company has inventoried certain procurement, warehousing and distribution center costs. The previous method was to recognize those costs as incurred, reported as a component of costs of goods sold. The Company believes the new method is preferable as it better matches revenues and expenses and is the prevalent method used by other entities within the automotive aftermarket. The cumulative effect of this change was a one-time benefit of $21.9 million, net of income taxes, or an additional $ 0.39 per diluted share.
The change increased income before income taxes and cumulative effect of accounting change by $4.4 million and $123,000 for the year and fourth quarter ended December 31, 2004, respectively. The change increased income before cumulative effect of accounting change by $2.7 million (or $0.05 per diluted share) and $76,000 (or $0.00 per diluted share) for the year and fourth quarter ended December 31, 2004, respectively.
Also, the Company is currently reviewing certain lease accounting practices in light of recent SEC guidance relating to operating leases. Based upon it's preliminary review, management believes that any adjustments determined to be appropriate, if any, would be immaterial to its current and prior years' financial results and condition.
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 1,249 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas and Virginia as of December 31, 2004.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31, December 31,
2004 2003
---------------- --------------
(Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents $ 69,028 $ 21,094
Accounts receivable, net 60,928 52,235
Amounts receivable from vendors, net 52,976 50,695
Inventory 625,320 523,750
Deferred income taxes - 4,753
Other current assets 5,225 4,399
----------- -----------
Total current assets 813,477 656,926
Property and equipment, at cost 791,794 626,142
Accumulated depreciation and
amortization 218,243 177,084
----------- -----------
Net property and equipment 573,551 449,058
Notes receivable, less current portion 21,690 24,313
Other assets, net 29,697 26,736
----------- -----------
Total assets $ 1,438,415 $ 1,157,033
=========== ===========
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable $ 9,736 $ 6,872
Accounts payable 240,548 145,954
Accrued payroll 15,130 17,307
Accrued benefits and withholdings 35,794 27,368
Deferred income taxes 7,198 -
Other current liabilities 24,817 16,883
Current portion of long-term debt 592 925
----------- -----------
Total current liabilities 333,815 215,309
Long-term debt, less current portion 100,322 120,977
Deferred income taxes 42,381 29,448
Other liabilities 7,596 7,014
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 90,000,000
Issued and outstanding shares -
55,377,130 at December 31, 2004,
and 54,664,976 at December 31,
2003 554 547
Additional paid-in capital 326,650 302,691
Retained earnings 627,097 481,047
----------- -----------
Total shareholders' equity 954,301 784,285
----------- -----------
Total liabilities and shareholders'
equity $ 1,438,415 $ 1,157,033
=========== ===========
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
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2004 2003 2004 2003
---------- ----------- ----------- ----------
(Unaudited) (Unaudited) (Unaudited) (Note)
Product sales $ 427,618 $ 367,047 $ 1,721,241 $1,511,816
Cost of goods sold,
including warehouse
and distribution
expenses 241,650 211,024 978,076 873,481
---------- ----------- ----------- ----------
Gross profit 185,968 156,023 743,165 638,335
Operating, selling,
general and
administrative
expenses 139,484 117,177 542,282 473,060
---------- ----------- ----------- ----------
Operating income 46,484 38,846 200,883 165,275
Other expense, net (1,046) (639) (2,721) (5,233)
---------- ----------- ----------- ----------
Income before income
taxes and
cumulative effect
of accounting
change 45,438 38,207 198,162 160,042
Provision for income
taxes 16,947 14,305 74,004 59,955
---------- ----------- ----------- ----------
Income before
cumulative effect
of accounting
change 28,491 23,902 124,158 100,087
Cumulative effect of
accounting change,
net of tax - - 21,892 -
---------- ----------- ----------- ----------
Net income $ 28,491 $ 23,902 $ 146,050 $ 100,087
========== =========== =========== ==========
Net income per
common share:
Income before
cumulative effect
of accounting
change $ 0.52 $ 0.44 $ 2.26 $ 1.86
Cumulative effect of
accounting change,
net of tax - - 0.40 -
---------- ----------- ----------- ----------
Net income $ 0.52 $ 0.44 $ 2.66 $ 1.86
========== =========== =========== ==========
Net income per
common share -
assuming dilution:
Income before
cumulative effect
of accounting
change $ 0.51 $ 0.43 $ 2.23 $ 1.84
Cumulative effect of
accounting change,
net of tax - - 0.39 -
---------- ----------- ----------- ----------
Net income $ 0.51 $ 0.43 $ 2.62 $ 1.84
========== =========== =========== ==========
Weighted average
common shares
outstanding 55,267 54,492 55,010 53,908
========== =========== =========== ==========
Adjusted weighted
average common
shares outstanding
- assuming dilution 55,962 55,266 55,711 54,530
========== =========== =========== ==========
Note: The income statement at December 31, 2003, has been derived
from the audited consolidated financial statements 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
SELECTED FINANCIAL INFORMATION
(Unaudited)
December 31,
-----------
Excluding Including
Cumulative Cumulative
Effect Effect
of Accounting of Accounting
Change 2004 Change 2004 2003
----------- ----------- -----
Inventory
turnover (1) 1.8 1.7 1.7
Inventory
turnover, net
of payables
(2) 2.7 2.6 2.2
AP to Inventory
(3) 40.8% 38.5% 27.9%
Debt-to-capital
(4) 9.8% 9.6% 13.5%
Return on
equity (5) 14.5% 16.8% 14.0%
Return on
assets (6) 9.7% 11.3% 9.2%
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ --------------------
2004 2003 2004 2003
Other -------- --------- ---------- ---------
Information
(in thousands):
Capital
Expenditures $ 47,266 $36,450 $ 173,486 $136,497
Depreciation
&
Amortization $ 13,192 $11,131 $ 48,268 $ 42,374
Interest
Expense $ 1,288 $ 956 $ 4,700 $ 6,864
Lease &
Rental
Expense $ 9,659 $ 8,587 $ 35,803 $ 33,456
Sales per
weighted-
average square
foot (7) $ 51.31 $ 49.82 $ 217.13 $ 214.73
Sales per
weighted-
average
store (in
thousands)
(8) $ 342 $ 330 $ 1,443 $ 1,413
Square footage
(in thousands) 8,318 7,348
Store count:
New stores,
net (twelve
months
ended) 140 128
Total stores 1,249 1,109
Total
employment 17,410 15,484
(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 for the last 12 months 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.