O'Reilly Automotive, Inc., Reports Fourth Quarter and Annual Earnings
SPRINGFIELD, Mo.--Feb. 28, 2006--O'Reilly Automotive, Inc. ("O'Reilly" or "the Company") today announced record revenues and earnings for the fourth quarter and year ended December 31, 2005, representing 13 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.Income before the cumulative effect of accounting change for the year ended December 31, 2005, totaled $164.3 million, up 39.6% from $117.7 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, 2005, increased 38.1% to $1.45 on 113.4 million shares versus $1.05 a year ago on 111.4 million shares. This improvement includes a benefit of $0.05 per share from the favorable resolution of prior tax uncertainties in the third quarter of 2005 and an adverse impact of $0.01 per share for the fourth quarter 2005 charge for the acceleration of stock options. Diluted earnings per common share in 2004 included an adverse impact of $0.04 per share for lease accounting corrections related to prior years. On an adjusted basis excluding the third quarter 2005 tax resolution benefit, the fourth quarter 2005 stock option acceleration charge and the fourth quarter 2004 lease accounting correction, diluted earnings per common share, before the cumulative effect of accounting change, increased 29.4% from $1.09 for the year ended December 31, 2004 to $1.41 for the year ended December 31, 2005.
Product sales for the year ended December 31, 2005, totaled $2.05 billion, up 18.8% from $1.72 billion for the year ended December 31, 2004. Gross profit for the year ended December 31, 2005, increased to $892.5 million (or 43.6% of product sales) from $743.2 million (or 43.2% of product sales) for the year ended December 31, 2004, representing an increase of 20.1%. Operating, selling, general and administrative ("OSG&A") expenses for the year ended December 31, 2005, increased to $640.0 million (or 31.3% of product sales) from $552.7 million (or 32.1% of product sales) for the year ended December 31, 2004, representing an increase of 15.8%. The reduction in the effective tax rate from 37.3% for the year ended December 31, 2004 to 34.6% for the year ended December 31, 2005, reflects a one-time benefit of $6.1 million from the favorable resolution of prior tax uncertainties in the third quarter of 2005.
Net income for the fourth quarter ended December 31, 2005, totaled $39.5 million, up 79.5% from $22.0 million for the same period in 2004. Diluted earnings per common share for the fourth quarter of 2005 increased 75.0% to $0.35 on 114.0 million shares compared to $0.20 for the fourth quarter of 2004 on 111.9 million shares. This improvement includes the adverse impact of $0.01 per share for the fourth quarter 2005 charge for the acceleration of stock options. Diluted earnings per common share for the three months ended December 31, 2004 included an adverse impact of $0.05 per share for lease accounting corrections related to prior periods. On an adjusted basis excluding the fourth quarter 2005 stock option acceleration charge and the fourth quarter 2004 lease accounting correction, diluted earnings per common share increased 44.0% from $0.25 for the quarter ended December 31, 2004 to $0.36 for the quarter ended December 31, 2005.
Product sales for the fourth quarter ended December 31, 2005, totaled $515.0 million, up 20.4% from $427.6 million for the same period a year ago. Gross profit for the fourth quarter ended December 31, 2005, increased to $231.4 million (or 44.9% of product sales) from $186.0 million (or 43.5% of product sales) for the same period a year ago, representing an increase of 24.5%. OSG&A expenses for the fourth quarter of 2005 increased to $168.2 million (or 32.7% of product sales) from $149.9 million (or 35.1% of product sales) for the same period a year ago, representing an increase of 12.2%.
Comparable store product sales for stores open at least one year increased 7.4% and 7.5% for the fourth quarter and year ending December 31, 2005, respectively, representing 51 quarters of comparable store product sales increases since O'Reilly became a public company in April 1993.
"We are pleased with the strong results this quarter and for the full year 2005," stated Greg Henslee, CEO and Co-President. "We are proud of the continued hard work and dedication of Team O'Reilly that enabled us to achieve comparable store sales growth of 7.5% while also improving our operating margin to 12.3%. This performance is the direct result of our team's commitment to providing the best possible service and selection for the professional installer and the do-it-yourself customer."
Ted Wise, COO and Co-President, stated, "In the fourth quarter of 2005, we opened 38 new stores and continued our successful integration of Midwest Auto Parts. We expect to add 170 to 175 new stores in 2006 as well as a new distribution center in Indianapolis, Indiana that will support our expansion in this region."
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 1,470 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of December 31, 2005.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31, December 31,
2005 2004
--------------- ---------------
(Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents $31,384 $69,028
Accounts receivable, net 73,849 60,928
Amounts receivable from vendors,
net 57,224 52,976
Inventory 726,390 625,320
Other current assets 21,808 5,225
--------------- ---------------
Total current assets 910,655 813,477
Property and equipment, at cost 992,899 791,794
Accumulated depreciation and
amortization 274,533 224,301
--------------- ---------------
Net property and equipment 718,366 567,493
Notes receivable, less current portion 24,051 21,690
Other assets, net 60,827 29,697
--------------- ---------------
Total assets $1,713,899 $1,432,357
=============== ===============
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable $-- $9,736
Accounts payable 292,667 240,548
Self insurance reserve 34,797 25,174
Accrued payroll 19,356 15,130
Accrued benefits and withholdings 14,997 10,620
Deferred income taxes 2,451 7,198
Other current liabilities 46,100 24,817
Current portion of long-term debt 75,313 592
--------------- ---------------
Total current liabilities 485,681 333,815
Long-term debt, less current portion 25,461 100,322
Deferred income taxes 42,516 38,440
Other liabilities 14,472 11,963
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 245,000,000
Issued and outstanding shares -
112,389,002 at
December 31, 2005, and
55,377,130 at December 31,
2004 1,124 554
Additional paid-in capital 360,325 326,650
Retained earnings 784,320 620,613
--------------- ---------------
Total shareholders' equity 1,145,769 947,817
--------------- ---------------
Total liabilities and shareholders'
equity $1,713,899 $1,432,357
=============== ===============
Note: The balance sheet at December 31, 2004, 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 Year Ended
December 31, December 31,
2005 2004 2005 2004
---------- --------- --------- ---------
(Unaudited) (Unaudited) (Unaudited) (Note)
Product sales $ 514,964 $ 427,618 $2,045,318 $1,721,241
Cost of goods sold,
including warehouse
and distribution
expenses 283,516 241,650 1,152,815 978,076
--------- --------- ---------- ----------
Gross profit 231,448 185,968 892,503 743,165
Operating, selling,
general and
administrative
expenses 168,217 149,909 639,979 552,707
--------- --------- ---------- ----------
Operating income 63,231 36,059 252,524 190,458
Other expense, net (421) (1,046) (1,455) (2,721)
--------- --------- ---------- ----------
Income before income
taxes and cumulative
effect of
accounting change 62,810 35,013 251,069 187,737
Provision for
income taxes 23,303 13,006 86,803 70,063
--------- --------- ---------- ----------
Income before
cumulative effect of
accounting change 39,507 22,007 164,266 117,674
Cumulative effect of
accounting change,
net of tax -- -- -- 21,892
--------- --------- ---------- ----------
Net income $ 39,507 $ 22,007 $ 164,266 $ 139,566
========= ========= ========== ==========
Net income per
common share:(1)
Income before cumulative
effect of
accounting change $ 0.35 $ 0.20 $ 1.47 $ 1.07
Cumulative effect of
accounting change,
net of tax -- -- -- 0.20
--------- --------- ---------- ----------
Net income $ 0.35 $ 0.20 $ 1.47 $ 1.27
========= ========= ========== ==========
Net income per common
share - assuming
dilution:(1)
Income before cumulative
effect of
accounting change $ 0.35 $ 0.20 $ 1.45 $ 1.05
Cumulative effect of
accounting change,
net of tax -- -- -- 0.20
--------- --------- ---------- ----------
Net income $ 0.35 $ 0.20 $ 1.45 $ 1.25
========= ========= ========== ==========
Weighted average
common shares
outstanding(1) 112,176 110,535 111,613 110,020
========= ========= ========== ==========
Adjusted weighted
average common shares
outstanding - assuming
dilution(1) 114,041 111,925 113,385 111,423
========= ========= ========== ==========
(1) On June 15, 2005, the Company completed a two-for-one split of its
common stock. All share and per share amounts for the periods
presented have been adjusted to reflect the effect of the stock
split.
Note: The income statement for the year ended December 31, 2004, 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,
2005 2004
---- ----
Inventory turnover (1) 1.7 1.7
Inventory turnover,
net of payables (2) 2.8 2.6
AP to Inventory (3) 40.3% 38.5%
Debt-to-capital (4) 8.1% 9.6%
Return on equity (5) 15.2% 14.1%
Return on assets (6) 10.1% 9.4%
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Other Information ---- ---- ---- ----
(in thousands):
Capital Expenditures $ 55,558 $ 47,266 $205,159 $ 173,486
Depreciation and
Amortization(7) $ 14,988 $ 19,249 $ 57,228 $ 54,325
Interest Expense $ 1,462 $ 863 $ 5,062 $ 4,700
Lease and Rental Expense(8) $ 11,968 $ 14,026 $ 44,243 $ 40,170
Sales per weighted-average
square foot(9) $ 51.77 $ 51.31 $ 220.24 $ 217.13
Sales per weighted-average
store (in thousands)(10) $ 345 $ 342 $ 1,478 $ 1,443
Square footage (in thousands) 9,801 8,318
Store count:
New stores, net (year ended) 221 140
Total stores 1,470 1,249
Total employment 19,614 17,410
(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, before cumulative effect of accounting
change, lease accounting correction, tax benefit and charge for
stock option acceleration, divided by average shareholders'
equity. Due to the one-time nature of the lease accounting
correction, tax benefit and charge for stock option acceleration,
these adjustments are made to provide comparable results. 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, before cumulative effect of accounting
change, lease accounting correction, tax benefit and charge for
stock option acceleration, divided by average total assets. Due to
the one-time nature of the lease accounting correction, tax
benefit and charge for stock option acceleration, these
adjustments are made to provide comparable results. 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) Depreciation and amortization for the three months and year ended
December 31, 2004 includes the fourth quarter lease accounting
correction of $6.0 million.
(8) Lease and rental expense for the three months and year ended
December 31, 2004 includes the fourth quarter lease accounting
correction of $4.4 million.
(9) 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.
(10) 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 NON-GAAP FINANCIAL MEASURES TO
COMPARABLE GAAP MEASURES
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Income before cumulative effect
of accounting
change and non-GAAP
adjustments $ 40,862 $ 27,947 $159,564 $121,990
Adjustments, net of tax:
Lease accounting
correction -- (5,940) -- (4,316)
Charge for acceleration of
stock options (1,355) -- (1,355) --
Favorable resolution of
tax uncertainties -- -- 6,057 --
--------- --------- --------- ---------
Income before cumulative effect
of accounting
Change 39,507 22,007 164,266 117,674
Cumulative effect of accounting
change,
net of tax -- -- -- 21,892
--------- --------- --------- ---------
Net income $ 39,507 $ 22,007 $164,266 $139,566
========= ========= ========= =========
Net income per common share -
assuming dilution (1)
Income before cumulative effect
of accounting
change and non-GAAP
adjustments $ 0.36 $ 0.25 $ 1.41 $ 1.09
Adjustments, net of tax:
Lease accounting
correction -- (0.05) -- (0.04)
Charge for acceleration of
stock options (0.01) -- (0.01) --
Favorable resolution of
tax uncertainties -- -- 0.05 --
--------- --------- --------- ---------
Income before cumulative effect
of accounting
change 0.35 0.20 1.45 1.05
Cumulative effect of accounting
change,
net of tax -- -- -- 0.20
--------- --------- --------- ---------
Net income $ 0.35 $ 0.20 $ 1.45 $ 1.25
========= ========= ========= =========
Adjusted weighted-average
common shares
outstanding - assuming
dilution (1) 114,041 111,925 113,385 111,423
========= ========= ========= =========