O'Reilly Automotive, Inc. Reports First Quarter 2007 Earnings

SPRINGFIELD, Mo.--O’Reilly Automotive, Inc. (“O’Reilly” or “the Company”) today announced record revenues and earnings for the first quarter ended March 31, 2007, representing 54 consecutive quarters of record revenues, earnings and comparable store sales increases for O’Reilly since becoming a public company in April 1993.

Net income for the first quarter ended March 31, 2007, totaled $48.4 million, up 19.3% from $40.6 million for the same period in 2006. Diluted earnings per common share for the first quarter of 2007 increased 20.0% to $0.42 on 115.5 million shares compared to $0.35 for the first quarter of 2006 on 114.6 million shares. Sales for the three months ended March 31, 2007, totaled $613 million, up 14.3% from $537 million for the same period a year ago. Gross profit for the first quarter of 2007 increased to $269 million (or 43.9% of sales) from $233 million (or 43.5% of sales) for the first quarter of 2006, representing an increase of 15.4%. Operating, Selling, General and Administrative (“OSG&A”) expenses increased to $192 million (or 31.3% of sales) for the first quarter of 2007 from $168 million (or 31.4% of sales) for the first quarter of 2006, representing an increase of 14.0%.

Comparable store sales for stores open at least one year increased 6.8% and 3.8% for the first quarter of 2007 and 2006, respectively.

“We are very pleased with our outstanding results in the first quarter, particularly our 6.8% increase in comparable store sales,” Greg Henslee, CEO and Co-President, stated. “Team O’Reilly’s continued commitment to customer service and expense control have resulted in another record quarter for sales and earnings. Every team member is focused on doing their part to make O’Reilly’s 50^th year in business our best year ever.”

“We opened 47 new stores during the first quarter and are on track to hit our target of 190 to 195 new stores in 2007,” stated Ted Wise, COO and Co-President. “Our aggressive expansion efforts, dual market strategy and commitment to providing the best customer service in the industry are moving us toward achieving our goal of $4 billion in sales by 2010.”

The Company will host a conference call Wednesday, April 25, 2007, at 10:00 a.m. Central time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company’s web site, www.oreillyauto.com, by clicking on “Investor Relations” then “News Room.”

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 1,687 stores in 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 March 31, 2007.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data)
		March 31, 2007		March 31, 2006		December 31, 2006
		(Unaudited)		(Unaudited)		(Note)
Assets
Current assets:
Cash and cash equivalents		$90,217		$55,290		$29,903
Accounts receivable, net		87,309		74,575		81,048
Amounts receivable from vendors, net		46,828		60,372		47,790
Inventory		825,206		753,760		812,938
Other current assets		21,129		17,739		28,997
Total current assets		1,070,689		961,736		1,000,676
Property and equipment, at cost		1,276,410		1,038,221		1,214,854
Accumulated depreciation and amortization		345,319		287,576		331,759
Net property and equipment		931,091		750,645		883,095
Notes receivable, less current portion		29,151		27,898		30,288
Other assets, net		62,697		61,449		63,437
Total assets		$2,093,628		$1,801,728		$1,977,496
Liabilities and shareholders' equity
Current liabilities:
Income taxes payable		$1,571		$--		$--
Accounts payable		372,061		312,509		318,404
Accrued payroll		25,130		20,286		21,171
Accrued benefits and withholdings		44,905		46,236		44,032
Deferred income taxes		10,111		10,868		5,779
Other current liabilities		43,425		42,248		44,089
Current portion of long-term debt		312		75,154		309
Total current liabilities		497,515		507,301		433,784
Long-term debt, less current portion		100,390		25,436		110,170
Deferred income taxes		32,297		42,882		38,171
Other liabilities		42,941		19,637		31,275
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares – 114,126,459 as of March 31, 2007, 113,199,354 as of March 31, 2006 and 113,929,327 as of December 31, 2006		1,141		1,132		1,139
Additional paid-in capital		408,532		380,456		400,552
Retained earnings		1,010,812		824,884		962,405
Total shareholders’ equity		1,420,485		1,206,472		1,364,096
Total liabilities and shareholders’ equity		$2,093,628		$1,801,728		$1,977,496
Note: The balance sheet at December 31, 2006 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
		March 31,
		2007		2006
Sales		$613,145		$536,547
Cost of goods sold, including warehouse and distribution expenses		343,864		303,119
Gross profit		269,281		233,428
Operating, selling, general and administrative expenses		192,089		168,462
Operating income		77,192		64,966
Other expense, net		10		452
Income before income taxes		77,182		64,514
Provision for income taxes		28,775		23,950
Net income		$48,407		$40,564
Net income per common share		$0.42		$0.36
Net income per common share – assuming dilution		$0.42		$0.35
Weighted-average common shares outstanding		113,936		112,523
Adjusted weighted-average common shares outstanding – assuming dilution		115,537		114,615

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (Unaudited)
		March 31,
		2007		2006
Inventory turnover (1)		1.7		1.7
Inventory turnover, net of payables (2)		2.9		2.9
AP to inventory (3)		45.1%		41.5%
Debt-to-capital (4)		6.6%		7.7%
Return on equity (5)		14.2%		15.1%
Return on assets (6)		9.5%		10.0%

		Three Months Ended
		March 31,
		2007		2006
Other Information (in thousands):
Capital Expenditures		$64,089		$47,450
Depreciation and Amortization		$17,436		$15,111
Interest Expense		$749		$1,359
Lease and Rental Expense		$13,694		$12,239
Sales per weighted-average square foot (7)		$53.82		$53.02
Sales per weighted-average store (in thousands) (8)		$361		$353
Square footage (in thousands)		11,339		10,046
Store count:
New stores, net		47		36
Total stores		1,687		1,506
Total employment		22,493		20,312
(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.