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

SPRINGFIELD, Mo.--O’Reilly Automotive, Inc. (“O’Reilly” or “the Company”) today announced revenues and earnings for the third quarter ended September 30, 2007, representing 56 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, 2007, totaled $53.1 million, up 10.9% from $47.9 million for the same period in 2006. Diluted earnings per common share for the third quarter of 2007 increased 9.5% to $0.46 on 116.3 million shares compared to $0.42 for the third quarter of 2006 on 115.0 million shares. Sales for the three months ended September 30, 2007 totaled $662 million, up 10.8% from $597 million for the same period a year ago. Gross profit for the third quarter of 2007 increased to $294 million (or 44.4% of sales) from $263 million (or 44.1% of sales) for the third quarter of 2006, representing an increase of 11.5%. Operating, Selling, General and Administrative (“OSG&A”) expenses increased to $211 million (or 31.9% of sales) for the third quarter of 2007 from $188 million (or 31.5% of sales) for the third quarter of 2006, representing an increase of 12.1%.

Net income for the first nine months of 2007 totaled $153.4 million, up 11.4% from $137.7 million for the same period a year ago. Diluted earnings per common share for the first nine months of 2007 increased 10.0% to $1.32 on 116.0 million shares compared to $1.20 a year ago on 114.9 million shares. Sales for the first nine months of 2007 totaled $1.92 billion, up 11.2% from $1.72 billion for the same period a year ago. Gross profit for the first nine months of 2007 increased to $850 million (or 44.3% of sales) from $758 million (or 43.9% of sales) for the same period a year ago, representing an increase of 12.2%. OSG&A expenses increased to $609 million (or 31.7% of sales) for the first nine months of 2007 from $539 million (or 31.3% of sales) for the same period a year ago, representing an increase of 12.8%.

Comparable store sales for stores open at least one year increased 4.3% for both the third quarter and first nine months of 2007.

“We are very pleased with our strong performance in the third quarter as we continue to focus on building market share in both the professional and 'do it yourself' sides of our business,” stated Greg Henslee, CEO and Co-President. “Team O’Reilly continues to offer the highest levels of customer service in our industry, which resulted in another quarter of record sales and profits, and we are looking forward to offering these services to customers in markets new to our Company as we continue our aggressive expansion.”

Ted Wise, COO and Co-President, stated, “We opened 43 new stores during the quarter bringing our net new store total to 134 for the year. Through the first three quarters our store openings were slightly behind our plan due to permitting and construction delays. However, we are confident that by the end of the fourth quarter we will meet our target of 190 new store openings for the year. Our dedication to providing the best service to the professional installer and do-it-yourself customer continues to be the first priority in our expansion efforts.”

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 1,774 stores in the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of September 30, 2007.

The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by forward-looking words such as “expect,” “believe,” “anticipate,” “should,” “plan,” “intend,” “estimate,” “project,” “will” or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the Risk Factors sections of the Company’s Form 10-K for the year ended December 31, 2006, for more details.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
	�			�			�
		September 30, 2007			September 30, 2006			December 31, 2006
		(Unaudited)			(Unaudited)				(Note)
Assets
Current assets:
Cash and cash equivalents		$	109,783		$	40,823		$	29,903
Accounts receivable, net			90,654			82,154			81,048
Amounts receivable from vendors			46,334			48,475			47,790
Inventory			856,586			815,395			812,938
Deferred income taxes			--			838			--
Other current assets		�	22,478		�	17,253		�	28,997
Total current assets			1,125,835			1,004,938			1,000,676
									�
Property and equipment, at cost			1,416,573			1,162,664			1,214,854
Accumulated depreciation and amortization		�	370,630		�	316,000		�	331,759
Net property and equipment			1,045,943			846,664			883,095
									�
Notes receivable, less current portion			26,765			31,033			30,288
Goodwill			49,857			48,953			49,065
Other assets		�	12,150		�	13,014		�	14,372
Total assets		$	2,260,550		$	1,944,602		$	1,977,496
									�
Liabilities and shareholders' equity
Current liabilities:
Accounts payable		$	401,308		$	341,375		$	318,404
Accrued payroll			26,334			22,824			21,171
Accrued benefits and withholdings			43,620			42,611			44,032
Deferred income taxes			9,299			--			5,779
Other current liabilities			48,074			47,806			44,089
Current portion of long-term debt		�	25,317		�	307		�	309
Total current liabilities			553,952			454,923			433,784
									�
Long-term debt, less current portion			75,230			100,548			110,170
Deferred income taxes			25,896			41,699			38,171
Other liabilities			52,301			31,353			31,275
									�
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares – 115,067,095 as of September 30, 2007, 113,641,241 as of September 30, 2006 and 113,929,327 as of December 31, 2006			1,151			1,136			1,139
Additional paid-in capital			436,222			392,890			400,552
Retained earnings		�	1,115,798		�	922,053		�	962,405
Total shareholders’ equity		�	1,553,171		�	1,316,079		�	1,364,096
Total liabilities and shareholders’ equity		$	2,260,550		$	1,944,602		$	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						Nine Months Ended
		September 30,						September 30,
		2007		�	2006			2007		�	2006		�
												�
Sales		$	661,778		$	597,144		$	1,918,031		$	1,724,890
Cost of goods sold, including warehouse and distribution expenses		�	368,077		�	333,818		�	1,067,864		�	967,208	�
												�
Gross profit			293,701			263,326			850,167			757,682
Operating, selling, general and administrative expenses		�	210,985		�	188,242		�	608,701		�	539,396	�
												�
Operating income			82,716			75,084			241,466			218,286
Other income (expense), net		�	756		�	272		�	1,527		�	(18	)
												�
Income before income taxes			83,472			75,356			242,993			218,268
Provision for income taxes		�	30,385		�	27,500		�	89,600		�	80,535	�
												�
Net income		$	53,087		$	47,856		$	153,393		$	137,733	�
												�
Net income per common share		$	0.46		$	0.42		$	1.34		$	1.22	�
Net income per common share - assuming dilution		$	0.46		$	0.42		$	1.32		$	1.20	�
												�
Weighted-average common shares outstanding		�	114,946		�	113,464		�	114,508		�	113,084	�
Adjusted weighted-average common shares outstanding – assuming dilution		�	116,306		�	115,026		�	115,989		�	114,949	�

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES SELECTED FINANCIAL INFORMATION (Unaudited)
	�
		September 30,
		2007		�	�	2006		�
						�
Inventory turnover (1)		1.6				1.6
Inventory turnover, net of payables (2)		3.0				2.8
						�
AP to inventory (3)		46.8		%		41.9		%
Debt-to-capital (4)		6.1		%		7.1		%
Return on equity (5)		13.5		%		14.7		%
Return on assets (6)		9.2		%		9.8		%
						�
		Three Months Ended
		September 30,
		2007		�		2006		�
Other Information (in thousands):
Capital Expenditures		$	79,008			$	55,431
Depreciation and Amortization		$	20,787			$	16,547
Interest Expense		$	1,081			$	929
Lease and Rental Expense		$	14,370			$	12,215
							�
Sales per weighted-average square foot (7)		$	54.98			$	55.56
							�
Sales per weighted-average store (in thousands) (8)		$	371			$	372
							�
Square footage (in thousands)			12,005				10,697
							�
Store count:
New stores, net			43				41
Total stores			1,774				1,596
							�
Total employment			24,075				22,091
							�
(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.