O'Reilly Automotive, Inc. Reports Record 2006 Second Quarter Results
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Net income for the second quarter ended June 30, 2006, totaled $49.3 million, up 14.9% from $42.9 million for the same period in 2005. Diluted earnings per common share for the second quarter of 2006 increased 13.2% to $0.43 on 115.2 million shares compared to $0.38 for the second quarter of 2005 on 113.1 million shares. Product sales for the three months ended June 30, 2006, totaled $591 million, up 13.4% from $521 million for the same period a year ago. Gross profit for the second quarter of 2006 increased to $261 million (or 44.1% of product sales) from $229 million (or 43.9% of product sales) for the second quarter of 2005, representing an increase of 14.0%. Operating, Selling, General and Administrative ("OSG&A") expenses increased to $183 million (or 30.9% of product sales) for the second quarter of 2006 from $161 million (or 30.9% of product sales) for the second quarter of 2005, representing an increase of 13.6%.
Net income for the first six months of 2006 totaled $89.9 million, up 18.0% from $76.1 million for the same period a year ago. Diluted earnings per common share for the first six months of 2006 increased 16.4% to $0.78 on 114.9 million shares compared to $0.67 a year ago on 112.8 million shares. Product sales for the first six months of 2006 totaled $1,128 million, up 14.2% from $987 million for the same period a year ago. Gross profit for the first six months of 2006 increased to $494 million (or 43.8% of product sales) from $425 million (or 43.1% of product sales) for the same period a year ago, representing an increase of 16.3%. OSG&A expenses increased to $351 million (or 31.1% of product sales) for the first six months of 2006 from $303 million (or 30.7% of product sales) for the same period a year ago, representing an increase of 15.7%.
Comparable store product sales for stores open at least one year increased 3.5% and 3.6% for the second quarter and first six months of 2006 respectively.
"We are pleased with another successful quarter for Team O'Reilly," stated Greg Henslee, CEO and Co-President. "We were able to achieve strong gross and operating margins and considering the difficult 9.6% comparable store sales comparison in the second quarter 2005, are satisfied with the solid 3.5% comparable store sales growth. These results reflect the daily commitment by Team O'Reilly to provide the absolute best customer service levels in the industry."
Ted Wise, COO and Co-President, stated: "The quarter was highlighted by the opening of 49 new stores and our newest distribution center in Indianapolis. This new DC opening has been very successful and is supporting our expansion into this new market."
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 1,555 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 June 30, 2006.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
June 30, December 31,
2006 2005
----------- ------------
(Unaudited) (Note)
Assets
Current assets:
Cash and cash equivalents $ 55,247 $ 31,384
Accounts receivable, net 82,612 73,849
Amounts receivable from vendors, net 62,334 57,224
Inventory 800,459 726,390
Other current assets 15,211 22,845
----------- ------------
Total current assets 1,015,863 911,692
Property and equipment, at cost 1,108,717 992,899
Accumulated depreciation and amortization 300,867 274,533
----------- ------------
Net property and equipment 807,850 718,366
Notes receivable, less current portion 32,532 29,062
Other assets, net 60,081 60,827
----------- ------------
Total assets $1,916,326 $ 1,719,947
=========== ============
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable $ 9,360 $ --
Accounts payable 358,090 292,667
Accrued payroll 20,323 19,356
Accrued benefits and withholdings 47,287 49,794
Deferred income taxes 3,119 2,451
Other current liabilities 48,374 47,137
Current portion of long-term debt 265 75,313
----------- ------------
Total current liabilities 486,818 486,718
Long-term debt, less current portion 100,678 25,461
Deferred income taxes 44,809 42,516
Other liabilities 22,319 19,483
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 245,000,000
Issued and outstanding shares -
113,394,091
at June 30, 2006, and
112,389,002 at December 31, 2005 1,134 1,124
Additional paid-in capital 386,371 360,325
Retained earnings 874,197 784,320
----------- ------------
Total shareholders' equity 1,261,702 1,145,769
----------- ------------
Total liabilities and shareholders' equity $1,916,326 $ 1,719,947
=========== ============
Note: The balance sheet at December 31, 2005, 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)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ---------------------
2006 2005 2006 2005
---------- --------- ----------- ---------
Product sales $ 591,199 $521,209 $1,127,746 $987,448
Cost of goods sold,
including warehouse and
distribution
expenses 330,271 292,239 633,390 562,309
---------- --------- ----------- ---------
Gross Profit 260,928 228,970 494,356 425,139
Operating, selling,
general and
administrative expenses 182,692 160,843 351,154 303,431
---------- --------- ----------- ---------
Operating income 78,236 68,127 143,202 121,708
Other income (expense),
net 162 195 (290) (473)
---------- --------- ----------- ---------
Income before income taxes 78,398 68,322 142,912 121,235
Provision for income taxes 29,085 25,399 53,035 45,099
---------- --------- ----------- ---------
Net income $ 49,313 $ 42,923 $ 89,877 $ 76,136
========== ========= =========== =========
Net income per common
share $ 0.44 $ 0.39 $ 0.80 $ 0.68
---------- --------- ----------- ---------
Net income per common
share-assuming dilution $ 0.43 $ 0.38 $ 0.78 $ 0.67
========== ========= =========== =========
Weighted-average common
shares - basic 113,253 111,448 112,890 111,174
========== ========= =========== =========
Adjusted weighted-average
common shares
outstanding - assuming
dilution 115,196 113,138 114,908 112,827
========== ========= =========== =========
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
June 30,
---------------
2006 2005
------ ------
Inventory turnover (1) 1.6 1.6
Inventory turnover, net of payables (2) 2.8 2.7
AP to inventory (3) 44.7% 39.1%
Debt-to-capital (4) 7.4% 8.8%
Return on equity (5) 15.0% 14.4%
Return on assets (6) 9.8% 9.3%
Three Months Ended
June 30,
----------------------
2006 2005
---------- ----------
Other Information (in thousands):
Capital expenditures $ 71,986 $ 56,924
Depreciation and amortization $ 15,717 $ 13,768
Interest expense $ 1,064 $ 1,037
Lease and rental expense $ 12,353 $ 10,615
Sales per weighted-average square foot (7)(8) $ 56.64 $ 58.21
Sales per weighted-average store
(in thousands) (8)(9) $ 379 $ 388
Square footage (in thousands)(8) 10,404 8,860
Store count:
New stores, net (10) 49 113
Total stores 1,555 1,399
Total employment 21,277 19,426
(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) Weighted-average square feet, weighted-average store count and
total square footage for the three months ended June 30, 2005
exclude the 72 Midwest Auto Parts stores acquired May 31, 2005.
(9) 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.
(10) Net new stores in the three months ended June 30, 2005, includes
72 Midwest Auto Parts stores acquired May 31, 2005.