Autozone Inc 10-Q for FY2024 Q1

Autozone Inc (AZO)

10-Q 2023-12-18 For: 2023-11-18

Added on April 07, 2026

About this 10-Q

Autozone Inc filed this 10-Q on December 18, 2023, covering the quarter ended November 18, 2023 (FY2024 Q1).

Headline figures

Quarter ended November 18, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $4.19B; up 5.1% from $3.99B a year earlier
Net income: $593.46M; up 10.0% from net income of $539.32M a year earlier
Diluted EPS: $32.55; up 18.6% from $27.45 a year earlier

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☒		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended November 18, 2023, or

☐		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from _______ to ________.

		Commission file number 1-10714


Nevada	62-1482048
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)


123 South Front Street, Memphis, Tennessee	38103
(Address of principal executive offices)	(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on which Registered
Common Stock ($0.01 par value)		AZO		New York Stock Exchange


Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐


PART I.		FINANCIAL INFORMATION	3
	Item 1.	Financial Statements	3
		CONDENSED CONSOLIDATED BALANCE SHEETS	3
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME	4
		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	4
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	5
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT	6
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
		REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	16
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	25
PART II.		OTHER INFORMATION	25
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 3.	Defaults Upon Senior Securities	26
	Item 4.	Mine Safety Disclosures	26
	Item 5.	Other Information	26
	Item 6.	Exhibits	26
SIGNATURES			28


	November 18,		August 26,
(in thousands)	2023		2023

Assets
Current assets:
Cash and cash equivalents	$	282,981	$	277,054
Accounts receivable		511,907		520,385
Merchandise inventories		5,774,467		5,764,143
Other current assets		387,446		217,844
Total current assets		6,956,801		6,779,426

Property and equipment:
Property and equipment		10,550,192		10,337,890
Less: Accumulated depreciation and amortization		(4,837,035)		(4,741,342)
		5,713,157		5,596,548

Operating lease right-of-use assets		2,998,672		2,998,097
Goodwill		302,645		302,645
Deferred income taxes		84,087		86,002
Other long-term assets		237,208		223,160
Total long-term assets		3,622,612		3,609,904
Total assets	$	16,292,570	$	15,985,878

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	7,182,948	$	7,201,281
Current portion of operating lease liabilities		288,854		257,256
Accrued expenses and other		1,202,508		1,000,841
Income taxes payable		111,312		52,478
Total current liabilities		8,785,622		8,511,856

Long-term debt		8,583,523		7,668,549
Operating lease liabilities, less current portion		2,910,727		2,917,046
Deferred income taxes		534,472		536,278
Other long-term liabilities		691,897		702,043

Commitments and contingencies

Stockholders’ deficit:
Preferred stock, authorized 1,000 shares; no shares issued		—		—
Common stock, par value $.01 per share, authorized 200,000 shares; 18,984 shares issued and 17,326 shares outstanding as of November 18, 2023; 18,936 shares issued and 17,857 shares outstanding as of August 26, 2023		190		189
Additional paid-in capital		1,548,510		1,484,992
Retained deficit		(2,365,815)		(2,959,278)
Accumulated other comprehensive loss		(210,359)		(190,836)
Treasury stock, at cost		(4,186,197)		(2,684,961)
Total stockholders’ deficit		(5,213,671)		(4,349,894)
Total liabilities and stockholders' deficit	$	16,292,570	$	15,985,878


	Twelve Weeks Ended
	November 18,		November 19,
(in thousands, except per share data)	2023		2022

Net sales	$	4,190,277	$	3,985,067
Cost of sales, including warehouse and delivery expenses		1,976,261		1,990,445
Gross profit		2,214,016		1,994,622
Operating, selling, general and administrative expenses		1,365,412		1,271,589
Operating profit		848,604		723,033
Interest expense, net		91,384		57,723
Income before income taxes		757,220		665,310
Income tax expense		163,757		125,992
Net income	$	593,463	$	539,318

Weighted average shares for basic earnings per share		17,709		19,007
Effect of dilutive stock equivalents		525		638
Weighted average shares for diluted earnings per share		18,234		19,645

Basic earnings per share	$	33.51	$	28.37
Diluted earnings per share	$	32.55	$	27.45


	Twelve Weeks Ended November 18, 2023
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at August 26, 2023	18,936	$	189	$	1,484,992	$	(2,959,278)	$	(190,836)	$	(2,684,961)	$	(4,349,894)
Net income	—		—		—		593,463		—		—		593,463
Total other comprehensive income	—		—		—		—		(19,523)		—		(19,523)
Purchase of 580 shares of treasury stock⁽¹⁾	—		—		—		—		—		(1,501,236)		(1,501,236)
Issuance of common stock under stock options and stock purchase plans	48		1		41,447		—		—		—		41,448
Share-based compensation expense	—		—		22,071		—		—		—		22,071
Balance at November 18, 2023	18,984	$	190	$	1,548,510	$	(2,365,815)	$	(210,359)	$	(4,186,197)	$	(5,213,671)


	Twelve Weeks Ended November 19, 2022
								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-in		Retained		Comprehensive		Treasury
(in thousands)	Issued	Stock		Capital		Deficit		Loss		Stock		Total

Balance at August 27, 2022	20,732	$	207	$	1,354,252	$	(1,330,067)	$	(300,536)	$	(3,262,769)	$	(3,538,913)
Net income	—		—		—		539,318		—		—		539,318
Total other comprehensive income	—		—		—		—		3,271		—		3,271
Purchase of 392 shares of treasury stock	—		—		—		—		—		(899,998)		(899,998)
Issuance of common stock under stock options and stock purchase plans	62		1		40,828		—		—		—		40,829
Share-based compensation expense	—		—		17,570		—		—		—		17,570
Balance at November 19, 2022	20,794	$	208	$	1,412,650	$	(790,749)	$	(297,265)	$	(4,162,767)	$	(3,837,923)


	November 18, 2023
(in thousands)	Level 1		Level 2		Level 3		Fair Value

Other current assets	$	46,696	$	3,741	$	—	$	50,437
Other long-term assets		63,519		10,099		—		73,618
	$	110,215	$	13,840	$	—	$	124,055


	August 26, 2023
(in thousands)	Level 1		Level 2		Level 3		Fair Value

Other current assets	$	35,349	$	4,290	$	—	$	39,639
Other long-term assets		71,028		10,846		—		81,874
	$	106,377	$	15,136	$	—	$	121,513


	November 18, 2023
	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(in thousands)	Basis		Gains		Losses		Value

Corporate debt securities	$	30,998	$	—	$	(477)	$	30,521
Government bonds		63,885		475		(1,655)		62,705
Mortgage-backed securities		2,838		—		(151)		2,687
Asset-backed securities and other		28,334		—		(192)		28,142
	$	126,055	$	475	$	(2,475)	$	124,055


			Net
	Foreign		Unrealized
	Currency		Gain (Loss)
(in thousands)	and Other⁽¹⁾		on Securities		Derivatives		Total

Balance at August 26, 2023	$	(176,557)	$	(1,851)	$	(12,428)	$	(190,836)
Other comprehensive income (loss) before reclassifications⁽²⁾⁽³⁾		(20,221)		295		—		(19,926)
Amounts reclassified from Accumulated other comprehensive loss⁽³⁾		—		—		403		403
Balance at November 18, 2023	$	(196,778)	$	(1,556)	$	(12,025)	$	(210,359)


		Weighted-
	Number	Average Grant
	of Shares	Date Fair Value

Nonvested at August 26, 2023	8,133	$	1,572.87
Granted	2,173		2,549.04
Vested	(3,741)		1,383.34
Forfeited	(183)		1,933.41
Nonvested at November 18, 2023	6,382	$	2,000.23


	November 18,		August 26,
(in thousands)	2023		2023

3.125% Senior Notes due April 2024, effective interest rate 3.32%	$	300,000	$	300,000
3.250% Senior Notes due April 2025, effective interest rate 3.36%		400,000		400,000
3.625% Senior Notes due April 2025, effective interest rate 3.78%		500,000		500,000
3.125% Senior Notes due April 2026, effective interest rate 3.28%		400,000		400,000
5.050% Senior Notes due July 2026, effective interest rate 5.09%		450,000		450,000
3.750% Senior Notes due June 2027, effective interest rate 3.83%		600,000		600,000
4.500% Senior Notes due February 2028, effective interest rate 4.43%		450,000		450,000
6.250% Senior Notes due November 2028, effective interest rate 6.46%		500,000		—
3.750% Senior Notes due April 2029, effective interest rate 3.86%		450,000		450,000
4.000% Senior Notes due April 2030, effective interest rate 4.09%		750,000		750,000
1.650% Senior Notes due January 2031, effective interest rate 2.19%		600,000		600,000
4.750% Senior Notes due August 2032, effective interest rate 4.76%		750,000		750,000
4.750% Senior Notes due February 2033, effective interest rate 4.70%		550,000		550,000
5.200% Senior Notes due August 2033, effective interest rate 5.22%		300,000		300,000
6.550% Senior Notes due November 2033, effective interest rate 6.71%		500,000		—
Commercial paper, weighted average interest rate 5.43% at November 18, 2023 and August 26, 2023		1,132,700		1,209,600
Total debt before discounts and debt issuance costs		8,632,700		7,709,600
Less: Discounts and debt issuance costs		49,177		41,051
Long-term Debt	$	8,583,523	$	7,668,549


	Twelve Weeks Ended
	November 18,		November 19,
	2023		2022

Expected price volatility	29	%	29	%
Risk-free interest rate	4.8	%	3.8	%
Weighted average expected lives (in years)	5.4		5.4
Forfeiture rate	7	%	10	%
Dividend yield	0	%	0	%


	Twelve Weeks Ended
						Constant Currency⁽¹⁾
		November 18,		November 19,		November 18,		November 19,
		2023		2022		2023		2022
Domestic		1.2	%	5.6	%	1.2	%	5.6	%
International		25.1	%	23.3	%	10.9	%	20.8	%
Total Company		3.4	%	7.0	%	2.1	%	6.8	%


	A		B		A-B=C		D		C+D
	Fiscal Year		Twelve		Forty		Twelve		Trailing Four
	Ended		Weeks Ended		Weeks Ended		Weeks Ended		Quarters Ended
	August 26,		November 19,		August 26,		November 18,		November 18,
(in thousands, except percentage)	2023		2022		2023		2023		2023

Net income	$	2,528,426	$	539,318	$	1,989,108	$	593,463	$	2,582,571
Adjustments:
Interest expense		306,372		57,723		248,649		91,384		340,033
Rent expense⁽¹⁾		406,398		92,881		313,517		98,693		412,210
Tax effect⁽²⁾		(148,256)		(31,326)		(116,930)		(39,536)		(156,466)
Adjusted after-tax return	$	3,092,940	$	658,596	$	2,434,344	$	744,004	$	3,178,348

Average debt⁽³⁾									$	7,392,640
Average stockholders’ deficit⁽³⁾										(4,377,447)
Add: Rent x 6⁽¹⁾										2,473,260
Average finance lease liabilities⁽³⁾										291,567
Invested capital									$	5,780,020

Adjusted after-tax ROIC										55.0	%


	Trailing Four Quarters Ended
(in thousands)	November 18, 2023		November 19, 2022

Total lease cost, per ASC 842	$	536,217	$	483,867
Less: Finance lease interest and amortization		(90,864)		(72,400)
Less: Variable operating lease components, related to insurance and common area maintenance		(33,143)		(27,587)
Rent expense	$	412,210	$	383,880


				Total Number of	Maximum Dollar
				Shares Purchased as	Value that May Yet
	Total Number	Average		Part of Publicly	Be Purchased Under
	of Shares	Price Paid		Announced Plans or	the Plans or
Period	Purchased	per Share		Programs	Programs

August 27, 2023 to September 23, 2023	49,066	$	2,572.72	49,066	$	1,708,055,998
September 24, 2023 to October 21, 2023	203,373		2,591.91	203,373		1,180,931,636
October 22, 2023 to November 18, 2023	327,277		2,590.71	327,277		333,052,581
Total	579,716	$	$2,589.61	579,716	$	333,052,581

		Restated Articles of Incorporation of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended February 13, 1999.
3.1		Restated Articles of Incorporation of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarter ended February 13, 1999.

3.2		Eighth Amended and Restated By-Laws of AutoZone, Inc. Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K dated March 23, 2023.

4.1		Officers’ Certificate dated October 25, 2023, pursuant to Section 3.2 of the Indenture dated August 8, 2003, setting forth the terms of the 6.250% Senior Notes due 2028. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated October 25, 2023.

4.2		Form of 6.250% Senior Notes due 2028. Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K dated October 25, 2023.

4.3		Officers’ Certificate dated October 25, 2023, pursuant to Section 3.2 of the Indenture dated August 8, 2003, setting forth the terms of the 6.550% Senior Notes due 2033. Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K dated October 25, 2023.

4.4		Form of 6.550% Senior Notes due 2033. Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K dated October 25, 2023.

15.1*		Letter Regarding Unaudited Interim Financial Statements.

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101. INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended November 18, 2023, has been formatted in Inline XBRL.


	AUTOZONE, INC.

	By:	/s/ JAMERE JACKSON
	Jamere Jackson
	Chief Financial Officer
	(Principal Financial Officer)


	By:	/s/ J. SCOTT MURPHY
	J. Scott Murphy
	Vice President, Controller (Principal Accounting Officer)

Dated: December 18, 2023


December 18, 2023

	/s/ WILLIAM C. RHODES, III
	William C. Rhodes, III
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)