AutoZone Reports Record Year With $2.00 EPS, up 23%
22 September 2000
AutoZone Reports Record Year With $2.00 EPS, up 23%; Fourth Quarter EPS Hits 84 Cents, up 25%; CEO Adams to Begin Transition
MEMPHIS, Tenn., Sept. 21 AutoZone, Inc. today
reported record diluted earnings per share of $2.00 for the fiscal year ended
August 26, 2000, an increase of 23% from $1.63 per share in fiscal 1999.
Earnings before interest and taxes for the year were $512 million, an increase
of 18% from $433 million in the prior year. Net income for the year was
$268 million, an increase of 9% from $245 million in the prior year. Sales
for the year rose 9% to $4.48 billion from $4.12 billion in fiscal 1999, with
same store sales, or sales for domestic auto parts stores open at least one
year, increasing 5%.
For the 16 weeks ended August 26, 2000, AutoZone reported diluted earnings
per share of 84 cents, a 25% increase over prior year diluted earnings per
share of 67 cents. Earnings before interest and taxes for the quarter of
$200 million were up 16% from $172 million in the prior year. Net income for
the quarter was $105 million, an increase of 7% from $99 million for the
fiscal fourth quarter of 1999. Sales for the quarter rose 7% to $1.49 billion
from $1.39 billion a year earlier. Same store sales, or sales for domestic
auto parts stores open at least a year, rose 3% for the quarter.
"We achieved important milestones this fiscal year," said John C. Adams,
chairman and chief executive officer. "We regained our earnings growth
momentum by showing we can still build sales in the DIY business, by becoming
an increasingly large and successful participant in the commercial business,
and by demonstrating our ability to bring our acquired stores to AutoZone
standards of operating performance. Specifically, we met and exceeded the
fiscal 2000 sales and profitability goals for the former Chief stores we set
for ourselves in 1998 -- $1 million per store in sales and a 10% EBITDA
margin.
"We also met our objectives for improved returns. Higher sales per store
and lower inventories helped us reach our goal of 13% after tax return on
capital for fiscal 2000. Our free cash flow before stock repurchases exceeded
$200 million for the year. Return on equity grew from 19% last year to 23%
this year.
"This solid performance gives us confidence that our long-term EPS growth
goal of 15% is achievable and our goal of increasing after-tax return on
capital to 15% by fiscal 2002 is on track.
"On a personal note, the success we've achieved didn't come without
personal sacrifice. Leading the company through a period of industry
consolidation while, at the same time, developing our commercial and
international businesses, and directing our push into truck parts and e-
commerce all took considerable time and energy away from my family. I'm ready
now to give someone else the opportunity to build on these successes, and I
have decided to step aside as CEO.
"We have established a search committee of the board to seek a recognized
leader as CEO who will be able to take the company to the next level. I will
remain as CEO until the replacement is appointed and will continue as chairman
as long as the board deems appropriate. Tim Vargo has expressed a desire to
continue in his present role as president and COO rather than be a candidate
for CEO.
"Tim and our management team have put together a strong plan for the
upcoming year, and we're confident AutoZone can continue to build sales,
profitability and returns in fiscal 2001. We are very comfortable with EPS
estimates of $.46 for the current quarter and $2.30 for the fiscal year."
During the quarter, AutoZone opened 63 new auto parts stores and replaced
11 in the U.S. Two stores were closed. For the year, AutoZone opened 208 new
auto parts stores in the U.S. and 7 in Mexico, replaced 30 stores and closed
four. In addition, AutoZone opened one new TruckPro store and relocated one
during the quarter for year-to-date totals of 3 new TruckPro stores and
5 relocations.
At the end of the quarter, aggregate share repurchases under the share
repurchase program totaled $1.151 billion and 44.4 million shares, including
$280 million and 11.6 million shares under forward purchase contracts.
Currently, the total share repurchase authorization is $1.25 billion.
Management expects to request board approval for an additional $100 million
stock repurchase authority in the near future.
AUTOZONE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
Subject to reclassification August 26, Aug. 28,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $ 6,969 $ 5,918
Accounts receivable 21,407 25,917
Merchandise inventories 1,108,978 1,129,693
Prepaid expenses 30,214 33,468
Deferred income taxes 18,438 30,088
Total current assets 1,186,006 1,225,084
Property and equipment:
Property and equipment 2,320,376 2,089,052
Less accumulated depreciation
and amortization 561,936 450,566
1,758,440 1,638,486
Other assets:
Cost in excess of net assets acquired 328,499 337,261
Deferred income taxes 54,774 76,412
Other assets 11,321 7,524
394,594 421,197
$ 3,339,040 $ 3,284,767
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $788,825 $757,447
Accrued expenses 229,655 230,036
Income taxes payable 21,886 13,071
Total current liabilities 1,040,366 1,000,554
Long-term debt 1,249,937 888,340
Other liabilities 56,558 72,072
Stockholders' equity 992,179 1,323,801
$ 3,339,040 $ 3,284,767
AUTOZONE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Sixteen Weeks Ended Fifty-Two Weeks Ended
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
Net sales $ 1,492,645 $1,392,669 $ 4,482,696 $4,116,392
Cost of sales,
including warehouse
and delivery expenses 872,196 800,155 2,602,386 2,384,970
Operating, selling,
general and administrative
expenses 420,874 420,819 1,368,290 1,298,327
Operating profit 199,575 171,695 512,020 433,095
Interest expense, net 28,355 15,386 76,830 45,312
Income before income
taxes 171,220 156,309 435,190 387,783
Income taxes 66,000 57,600 167,600 143,000
Net income $105,220 $98,709 $267,590 $244,783
Weighted average shares
for basic earnings
per share 124,095 146,929 132,945 149,014
Effect of dilutive
stock options 805 930 924 1,243
Adjusted weighted average
shares for diluted earnings
per share 124,900 147,859 133,869 150,257
Basic earnings per share $0.85 $ 0.67 $2.01 $1.64
Diluted earnings per share $0.84 $ 0.67 $2.00 $1.63
AutoZone's 4th Quarter - Fiscal 2000
Selected Cash Flow Information
16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
Capital
spending* $78,892 $102,180 $255,540 $428,315
Depreciation &
amortization $40,908 $40,881 $131,458 $128,531
Selected Operating Highlights
Store Count & Square Footage:
16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
Domestic auto
parts stores:
Store count:
Stores opened 63 26 208 245
Stores closed(A) 2 10 4 191
Replacement
stores 11 15 30 59
Total domestic
auto parts
stores 2,915 2,711
Square footage 18,719 17,405
Auto parts stores in Mexico:
Stores opened -- 2 7 6
Total auto parts
stores in Mexico 13 6
TruckPro stores:
Stores opened 1 3 3 3
Replacement stores 1 1 5 6
Total TruckPro
stores(D) 49 46
(A) 1999 closings include 5 former Auto Palace locations and 167 former
Chief locations.
Sales & Inventory Statistics:
(Domestic auto parts)
16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended
August 26, August 28, August 26, August 28,
2000 1999 2000 1999
Sales per
average store
($ in thousands) $493 $493 $1,517 $1,465
Sales per average
sq foot $77 $77 $236 $232
Same store sales
- rolling 13 periods
Total 3% 5% 5% 5%
Organic vs acquired:
Organic stores 0% 3% 2% 5%
Former Auto
Palace stores 9% 42% 15% 47%
Former Chief
stores 27% 7% 31% 7%
Former Pep
Express stores 23% -- 30% --
Commercial
vs retail:
Retail 3% 4% 4% 5%
Commercial 7% 14% 8% 12%
Same store sales
- static 2% 2% 4% 4%
Inventory turns:
Based on average
inventories 2.3X 2.2X
Based on ending
inventories 2.3X 2.1X
Accounts
payable/inventory 71% 67%