EX-99.1 2 orly-20210428ex991a9beb1.htm FIRST QUARTER EARNINGS PRESS RELEASE

Exhibit 99.1

Graphic

FOR IMMEDIATE RELEASE


O’REILLY AUTOMOTIVE, INC. REPORTS FIRST QUARTER 2021 RESULTS


First quarter comparable store sales increase of 24.8%
63% increase in operating income; 526 basis point increase in operating margin
78% increase in first quarter diluted earnings per share to $7.06

Springfield, MO, April 28, 2021O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq:  ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenue and earnings for its first quarter ended March 31, 2021.  

1st Quarter Financial Results

Greg Johnson, O’Reilly’s CEO and Co-President, commented, “We are extremely proud to report our exceptionally strong start to 2021, highlighted by comparable store sales growth of 24.8%, which represents the strongest quarterly comparable store sales growth in our Company’s history, and a 78% increase in diluted earnings per share.  Team O’Reilly once again delivered record-breaking results in the midst of continued challenges presented by the pandemic and extreme weather across much of the country, and I am extremely grateful for our over 77,000 Team Members and their relentless focus on consistently providing excellent service to our customers no matter the obstacles they face.  Our top priority remains the safety and wellness of our Team Members and our customers, and I sincerely appreciate the unrelenting efforts of our Team to execute on our safety protocols, while still providing great service and generating incredible operating results.”

Sales for the first quarter ended March 31, 2021, increased $614 million, or 25%, to $3.09 billion from $2.48 billion for the same period one year ago.  Gross profit for the first quarter increased 27% to $1.64 billion (or 53.1% of sales) from $1.30 billion (or 52.3% of sales) for the same period one year ago.  Selling, general and administrative expenses for the first quarter increased 9% to $950 million (or 30.7% of sales) from $872 million (or 35.2% of sales) for the same period one year ago.  Operating income for the first quarter increased 63% to $691 million (or 22.4% of sales) from $424 million (or 17.1% of sales) for the same period one year ago.

Net income for the first quarter ended March 31, 2021, increased $201 million, or 67%, to $502 million (or 16.2% of sales) from $300 million (or 12.1% of sales) for the same period one year ago.  Diluted earnings per common share for the first quarter increased 78% to $7.06 on 71 million shares versus $3.97 on 76 million shares for the same period one year ago.

Mr. Johnson continued, “Our record-breaking top-line performance, coupled with our ongoing focus on profitable growth, drove a 63% increase in operating profit dollars for the first quarter and generated a 526 basis point increase in operating margin to 22.4%.  Our sales growth for the quarter was comprised of continued, broad-based strength across our DIY and professional business and was supported by favorable winter and spring weather, as well as a significant benefit from the latest rounds of government stimulus.  Based on the strength of our first quarter results, our robust performance to date in April and, most importantly, our confidence in Team O’Reilly’s ability to continue to provide industry-leading customer service, we are raising our full-year comparable store sales guidance to a range of positive 1% to 3% from our previous range of down 2% to flat.  We also are increasing our full-year diluted earnings per share guidance to a range of $24.75 to $24.95, which represents an increase of $2.05 at the midpoint from our previously provided guidance.  I would once again like to thank all of Team O’Reilly for your hard work and commitment to our success – your tireless efforts continue to drive our record-breaking results.”


1st Quarter Comparable Store Sales Results

Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members, as well as sales from Leap Day for the three months ended March 31, 2020.  Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for U.S. stores open at least one year, are included in the comparable store sales calculation.  Comparable store sales increased 24.8% for the first quarter ended March 31, 2021, versus a decrease of 1.9% for the same period one year ago.

Share Repurchase Program

During the first quarter ended March 31, 2021, the Company repurchased 1.5 million shares of its common stock, at an average price per share of $450.65, for a total investment of $665 million.  Subsequent to the end of the first quarter and through the date of this release, the Company did not repurchase any additional shares of its common stock.  The Company has repurchased a total of 82.5 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through the date of this release, at an average price of $181.02, for a total aggregate investment of $14.93 billion.  As of the date of this release, the Company had approximately $817 million remaining under its current share repurchase authorization.

Updated Full-Year 2021 Guidance

The Company still anticipates potentially significant volatility in its results, driven by the ongoing uncertainty related to the pandemic, and will update full-year guidance during 2021, as appropriate, and if needed.  The table below outlines the Company’s guidance for selected updated full-year 2021 financial data:

    

For the Year Ending

 

December 31, 2021

Comparable store sales

 

1% to 3%

Total revenue

 

$11.8 billion to $12.1 billion

Gross profit as a percentage of sales

 

52.2% to 52.7%

Operating income as a percentage of sales

 

19.9% to 20.4%

Effective income tax rate

 

23.0%

Diluted earnings per share (1)

$24.75 to $24.95

Net cash provided by operating activities

$1.8 billion to $2.3 billion

Capital expenditures

$550 million to $650 million

Free cash flow (2)

$1.1 billion to $1.4 billion

(1)Weighted-average shares outstanding, assuming dilution, used in the denominator of this calculation, includes share repurchases made by the Company through the date of this release.
(2)Free cash flow is a non-GAAP financial measure.  The table below reconciles Free cash flow guidance to Net cash provided by operating activities guidance, the most directly comparable GAAP financial measure:

    

For the Year Ending

(in millions)

 

December 31, 2021

Net cash provided by operating activities

$

1,840

to

$

2,265

Less:

Capital expenditures

 

550

to

 

650

Excess tax benefit from share-based compensation payments

 

10

to

 

15

Investment in tax credit equity investments

180

to

200

Free cash flow

$

1,100

to

$

1,400

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States generally accepted accounting principles (“GAAP”).  These items include adjusted debt to earnings before interest, taxes, depreciation, amortization, share-based compensation and rent (“EBITDAR”) and free cash flow.  The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.  The Company believes that the presentation of adjusted debt to EBITDAR and free cash flow provide meaningful supplemental information to both management and investors that is indicative of the Company’s core operations.  The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the table above and the selected financial information below.


Earnings Conference Call Information

The Company will host a conference call on Thursday, April 29, 2021, 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 website at www.OReillyAuto.com by clicking on “Investor Relations” and then “News Room.”  Interested analysts are invited to join the call.  The dial-in number for the call is (703) 375-5524 and the conference call identification number is 8509026.  A replay of the conference call will be available on the Company’s website through Thursday, April 28, 2022.

About O’Reilly Automotive, Inc.

O’Reilly Automotive, Inc. was founded in 1957 by the O’Reilly family and 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 service provider markets.  Visit the Company’s website at www.OReillyAuto.com for additional information about O’Reilly, including access to online shopping and current promotions, store locations, hours and services, employment opportunities and other programs.  As of March 31, 2021, the Company operated 5,660 stores in 47 U.S. states and 22 stores in Mexico.

Forward-Looking Statements

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.  You can identify these statements by forward-looking words such as “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend” 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, integration 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, the COVID-19 pandemic or other public health crises; the economy in general; inflation; consumer debt levels; product demand; the market for auto parts; competition; weather; tariffs; availability of key products; business interruptions, including terrorist activities, war and the threat of war; failure to protect our brand and reputation; challenges in international markets; volatility of the market price of our common stock; our increased debt levels; credit ratings on public debt; historical growth rate sustainability; our ability to hire and retain qualified employees; risks associated with the performance of acquired businesses; information security and cyber-attacks; and governmental regulations.  Actual results may materially differ from anticipated results described or implied in these forward-looking statements.  Please refer to the “Risk Factors” section of the annual report on Form 10-K for the year ended December 31, 2020, and subsequent Securities and Exchange Commission filings for additional factors that could materially affect the Company’s financial performance.  Forward-looking statements speak only as of the date they were made and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

For further information contact:

Investor & Media Contacts

Mark Merz (417) 829-5878

Eric Bird (417) 868-4259


O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

March 31, 2021

March 31, 2020

December 31, 2020

    

(Unaudited)

    

(Unaudited)

    

(Note)

Assets

Current assets:

Cash and cash equivalents

$

610,880

$

287,067

$

465,640

Accounts receivable, net

 

265,914

 

221,167

229,679

Amounts receivable from suppliers

 

114,697

 

83,446

100,615

Inventory

 

3,622,201

 

3,556,723

3,653,195

Other current assets

 

73,947

 

53,397

50,658

Total current assets

 

4,687,639

 

4,201,800

4,499,787

Property and equipment, at cost

 

6,651,068

 

6,314,339

6,559,911

Less: accumulated depreciation and amortization

 

2,538,171

 

2,305,695

2,464,993

Net property and equipment

 

4,112,897

 

4,008,644

4,094,918

Operating lease, right-of-use assets

 

2,041,096

 

1,935,295

1,995,127

Goodwill

 

879,466

 

910,141

881,030

Other assets, net

 

129,789

 

52,982

125,780

Total assets

$

11,850,887

$

11,108,862

$

11,596,642

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

$

4,318,462

$

3,758,199

$

4,184,662

Self-insurance reserves

 

116,628

 

83,262

109,199

Accrued payroll

 

131,927

 

103,804

88,875

Accrued benefits and withholdings

 

195,563

 

72,561

242,724

Income taxes payable

 

155,491

 

12,884

16,786

Current portion of operating lease liabilities

 

329,334

 

316,932

322,778

Other current liabilities

 

355,793

 

277,290

297,393

Current portion of long-term debt

299,880

Total current liabilities

 

5,903,078

 

4,624,932

5,262,417

Long-term debt, less current portion

 

3,824,288

 

4,471,248

4,123,217

Operating lease liabilities, less current portion

 

1,761,732

 

1,661,991

1,718,691

Deferred income taxes

 

165,396

 

73,212

155,899

Other liabilities

 

203,370

 

168,635

196,160

Shareholders’ equity:

Common stock, $0.01 par value:

Authorized shares – 245,000,000

 

Issued and outstanding shares –

69,734,990 as of March 31, 2021, and

74,199,261 as of March 31, 2020, and

71,123,109 as of December 31, 2020

697

 

742

711

Additional paid-in capital

 

1,274,033

 

1,271,250

1,280,841

Retained deficit

 

(1,275,409)

 

(1,137,392)

(1,139,139)

Accumulated other comprehensive loss

(6,298)

(25,756)

(2,155)

Total shareholders’ (deficit) equity

 

(6,977)

 

108,844

140,258

Total liabilities and shareholders’ equity

$

11,850,887

$

11,108,862

$

11,596,642

Note:  The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.


O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

 

For the Three Months Ended

 

March 31, 

    

2021

    

2020

Sales

$

3,090,899

$

2,476,487

Cost of goods sold, including warehouse and distribution expenses

 

1,450,104

 

1,180,581

Gross profit

 

1,640,795

 

1,295,906

Selling, general and administrative expenses

 

949,690

 

872,345

Operating income

 

691,105

 

423,561

Other income (expense):

 

  

 

  

Interest expense

 

(37,506)

 

(39,386)

Interest income

 

537

 

675

Other, net

 

1,691

 

(5,190)

Total other expense

 

(35,278)

 

(43,901)

Income before income taxes

 

655,827

 

379,660

Provision for income taxes

 

154,218

 

79,222

Net income

$

501,609

$

300,438

Earnings per share-basic:

 

  

 

  

Earnings per share

$

7.13

$

4.00

Weighted-average common shares outstanding – basic

 

70,383

 

75,022

Earnings per share-assuming dilution:

 

  

 

  

Earnings per share

$

7.06

$

3.97

Weighted-average common shares outstanding – assuming dilution

 

71,015

 

75,663


O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

For the Three Months Ended

 

March 31, 

    

2021

    

2020

Operating activities:

  

  

Net income

$

501,609

$

300,438

Adjustments to reconcile net income to net cash provided by operating activities:

 

  

 

  

Depreciation and amortization of property, equipment and intangibles

 

79,757

 

73,963

Amortization of debt discount and issuance costs

 

1,070

 

1,035

Deferred income taxes

 

10,551

 

(58,732)

Share-based compensation programs

 

6,292

 

5,875

Other

 

920

 

1,739

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable

 

(37,917)

 

(12,208)

Inventory

 

30,915

 

(106,937)

Accounts payable

 

134,091

 

156,584

Income taxes payable

 

138,196

 

131,949

Other

 

25,188

 

(34,613)

Net cash provided by operating activities

 

890,672

 

459,093

Investing activities:

 

  

 

  

Purchases of property and equipment

 

(94,879)

 

(133,284)

Proceeds from sale of property and equipment

 

2,097

 

1,901

Investment in tax credit equity investments

(6)

(95,259)

Other

 

(969)

 

Net cash used in investing activities

 

(93,757)

 

(226,642)

Financing activities:

 

  

 

  

Proceeds from borrowings on revolving credit facility

 

 

1,052,000

Payments on revolving credit facility

 

 

(969,000)

Proceeds from the issuance of long-term debt

 

 

499,795

Payment of debt issuance costs

 

 

(2,990)

Repurchases of common stock

 

(664,548)

 

(574,052)

Net proceeds from issuance of common stock

 

13,557

 

9,800

Other

 

(313)

 

(253)

Net cash (used in) provided by financing activities

 

(651,304)

 

15,300

Effect of exchange rate changes on cash

(371)

(1,090)

Net increase in cash and cash equivalents

 

145,240

 

246,661

Cash and cash equivalents at beginning of the period

 

465,640

 

40,406

Cash and cash equivalents at end of the period

$

610,880

$

287,067

Supplemental disclosures of cash flow information:

 

  

 

  

Income taxes paid

$

5,567

$

4,975

Interest paid, net of capitalized interest

 

37,485

 

46,282


O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Unaudited)

For the Twelve Months Ended

March 31, 

Adjusted Debt to EBITDAR:

    

2021

    

2020

(In thousands, except adjusted debt to EBITDAR ratio)

 

  

 

  

GAAP debt

$

4,124,168

$

4,471,248

Add:

Letters of credit

 

84,045

 

39,083

Discount on senior notes

 

4,892

 

3,510

Debt issuance costs

 

20,940

 

19,242

Six-times rent expense

 

2,151,918

 

2,057,448

Adjusted debt

$

6,385,963

$

6,590,531

GAAP net income

$

1,953,473

$

1,370,328

Add:

Interest expense

 

159,246

 

145,070

Provision for income taxes

 

589,099

 

385,509

Depreciation and amortization

 

320,429

 

280,874

Share-based compensation expense

 

23,164

 

22,372

Rent expense (i)

 

358,653

 

342,908

EBITDAR

$

3,404,064

$

2,547,061

Adjusted debt to EBITDAR

 

1.88

 

2.59

(i)The table below outlines the calculation of Rent expense and reconciles Rent expense to Total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the twelve months ended March 31, 2021 and 2020 (in thousands):

Total lease cost, per ASC 842, for the twelve months ended March 31, 2021

    

$

426,126

Less:

Variable non-contract operating lease components, related to property taxes and insurance, for the twelve months ended March 31, 2021

 

67,473

Rent expense for the twelve months ended March 31, 2021

$

358,653

Total lease cost, per ASC 842, for the twelve months ended March 31, 2020

$

404,138

Less:

Variable non-contract operating lease components, related to property taxes and insurance, for the twelve months ended March 31, 2020

61,230

Rent expense for the twelve months ended March 31, 2020

$

342,908

March 31, 

    

2021

2020

Selected Balance Sheet Ratios:

 

  

 

  

Inventory turnover (1)

 

1.6

1.4

Average inventory per store (in thousands) (2)

$

637

$

643

Accounts payable to inventory (3)

 

119.2

%

 

105.7

%

For the Three Months Ended

March 31, 

    

2021

    

2020

Reconciliation of Free Cash Flow (in thousands):

 

  

 

  

Net cash provided by operating activities

$

890,672

$

459,093

Less:

Capital expenditures

 

94,879

 

133,284

Excess tax benefit from share-based compensation payments

 

6,007

 

3,380

Investment in tax credit equity investments

6

95,259

Free cash flow

$

789,780

$

227,170


For the Three Months Ended

For the Twelve Months Ended

March 31, 

March 31, 

    

2021

    

2020

    

2021

    

2020

Store Count:

Beginning domestic store count

 

5,594

 

5,439

 

5,512

 

5,306

New stores opened

 

68

 

76

 

159

 

214

Bennett stores acquired, net of stores merged (4)

 

 

 

 

(5)

Stores closed

 

(2)

 

(3)

 

(11)

 

(3)

Ending domestic store count

5,660

5,512

5,660

5,512

Mexico stores

22

21

22

21

Ending total store count

 

5,682

 

5,533

 

5,682

 

5,533

For the Three Months Ended

For the Twelve Months Ended

March 31, 

March 31, 

    

2021

    

2020

    

2021

    

2020

Store and Team Member Information: (5)

Total employment

 

77,383

 

79,778

 

  

Square footage (in thousands)

42,191

40,908

Sales per weighted-average square foot (6)

$

72.30

$

59.82

$

289.29

$

253.12

Sales per weighted-average store (in thousands) (7)

$

539

$

443

$

2,152

$

1,871

(1)Calculated as cost of goods sold for the last 12 months divided by average inventory.  Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.
(2)Calculated as inventory divided by store count at the end of the reported period.
(3)Calculated as accounts payable divided by inventory.
(4)O’Reilly acquired 33 Bennett Auto Supply, Inc. (“Bennett”) stores after the close of business on December 31, 2018, which were not included in the December 31, 2018, store count, as they were not operated by the Company for any portion of 2018.  During the first quarter ended March 31, 2019, O’Reilly merged eight of the acquired Bennett stores into existing O’Reilly locations, and during the second quarter ended June 30, 2019, O’Reilly merged an additional five acquired Bennett stores into existing O’Reilly locations.
(5)Represents O’Reilly’s U.S. operations only.
(6)Calculated as sales less jobber sales, divided by weighted-average square footage.  Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions or closures.
(7)Calculated as sales less jobber sales, divided by weighted-average stores.  Weighted-average stores is determined by weighting stores based on their approximate dates of openings, acquisitions or closures.