8-K
O REILLY AUTOMOTIVE INC (ORLY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): February 2, 2023
O’Reilly Automotive, Inc.
(Exact name of registrant as specified in its charter)
| | | | | |
|---|---|---|---|---|
| Missouri | | 000-21318 | | 27-4358837 |
| (State or other jurisdiction | | Commission file | | (I.R.S. Employer |
| of incorporation or organization) | | number | | Identification No.) |
233 South Patterson Avenue
Springfield , Missouri **** 65802
(Address of principal executive offices, Zip code)
( 417 ) 862-6708
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | |
|---|---|---|---|---|
| Title of Each Class | | Trading Symbol(s) | | Name of Each Exchange on which Registered |
| Common Stock $0.01 par value | | ORLY | | The NASDAQ Stock Market LLC |
| | | | | (NASDAQ Global Select Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of Securities Act of 1933 (230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Section 2 – Financial Information
Item 2.02 – Results of Operations and Financial Condition
On February 8, 2023, O’Reilly Automotive, Inc. (the “Company”) issued a press release announcing its 2022 fourth quarter and full-year earnings. The text of the press release is attached hereto as Exhibit 99.1.
Section 5 – Corporate Governance and Management
Item 5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On February 2, 2023, the Board of Directors (the “Board”) of the Company amended its stock ownership requirements so that it now also applies to its affiliated Board Director(s), President(s), and Co-President(s). The Board believes that its amended stock ownership requirements further align the interests of the Company’s Board and management with those of its shareholders. The affiliated Director and executive stock ownership requirements, as amended, are identified below:
| • | Affiliated Board Director(s) – maintain a minimum ownership requirement of five times base salary |
|---|---|
| • | Chief Executive Officer – maintain a minimum ownership requirement of five times base salary |
| --- | --- |
| • | President(s) and Co-President(s) – maintain a minimum ownership requirement of four times base salary |
| --- | --- |
| • | Chief Financial Officer, Chief Operating Officer and Executive Vice President(s) – maintain a minimum ownership requirement of three times base salary |
| --- | --- |
| • | Senior Vice President(s) – maintain a minimum ownership requirement of two times base salary |
| --- | --- |
The affiliated Directors and executives listed above must comply with and maintain the stock ownership requirements within five years of February 2, 2023, the effective date of the requirements, or within five years of the attainment of an applicable position. Shares included in the determination of the affiliated Director and executive stock ownership requirements are identified below:
| • | Shares owned directly |
|---|---|
| • | Shares owned through the Company’s Employee Stock Purchase Plan |
| --- | --- |
| • | Shares of stock equivalents held in the Company’s Profit Sharing Plan |
| --- | --- |
| • | Restricted shares awarded by the Company, which have vested |
| --- | --- |
| • | Tax affected intrinsic value of stock options granted by the Company, which have vested |
| --- | --- |
If any of the affiliated Directors or executives listed above fails to comply with these ownership requirements within the specified time period, such person(s) will be required to hold 50% of net after-tax shares received upon the exercise of any stock option and will be restricted from selling shares of the Company until compliance is achieved. The requirements no longer apply to an executive upon reaching the age of 62 and, in addition, the Board has discretion to waive the requirements for an executive in its sole discretion.
The Board also reiterated its stock ownership requirements for its independent Board Directors at a minimum of five times their annual cash retainer. The independent Directors must comply with and maintain the stock ownership requirements within five years of the date they first become a Director or of a change in the minimum requirement. Shares included in the determination of the independent Director stock ownership requirements are identified below:
| • | Shares owned directly or indirectly |
|---|---|
| • | Restricted shares awarded by the Company, which have vested |
| --- | --- |
| • | Intrinsic value of stock options granted by the Company, which have vested |
| --- | --- |
Section 9 – Financial Statements and Exhibits
Item 9.01 – Financial Statements and Exhibits
| Exhibit Number | Description | |
|---|---|---|
| 99.1 | | Press release dated February 8, 2023 |
| 104 | | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document |
The information in Item 2 of this Current Report on Form 8-K, including the exhibit hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | |
|---|---|---|
| Date: February 8, 2023 | O’REILLY AUTOMOTIVE, INC. | |
| | | |
| | By: | /s/ Jeremy A. Fletcher |
| | | Jeremy A. Fletcher |
| | | Executive Vice President and Chief Financial Officer |
| | | (principal financial and accounting officer) |
Exhibit 99.1
FOR IMMEDIATE RELEASE
O’REILLY AUTOMOTIVE, INC. REPORTS FOURTH QUARTER AND
FULL-YEAR 2022 RESULTS
| ● | Fourth quarter comparable store sales growth of 9.0%, full-year increase of 6.4% |
|---|---|
| ● | 10% increase in fourth quarter diluted earnings per share to $8.37, full-year increase of 8% to $33.44 |
| --- | --- |
| ● | $3.15 billion net cash provided by operating activities in 2022 |
| --- | --- |
Springfield, MO, February 8, 2023 – O’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 fourth quarter and full-year ended December 31, 2022. The results represent 30 consecutive years of comparable stores sales growth and record revenue and operating income for O’Reilly since becoming a public company in April of 1993.
4^th^ Quarter Financial Results
Greg Johnson, O’Reilly’s CEO, commented, “We are very pleased to once again report a strong quarter, highlighted by 9.0% growth in comparable store sales and a 10% increase in diluted earnings per share. Team O’Reilly once again exceeded our expectations and delivered robust top-line growth on top of a record-breaking 14.5% comp in the prior year, which resulted in an incredible three-year comparable store sales stack of 34.7% for the fourth quarter. Our consistently strong growth is the direct result of the hard work and dedication of our entire Team. We continually evaluate the compensation and benefits we provide to our Team Members to ensure we are attracting and developing the best professional parts people in the industry. In line with this commitment to our Team, we recognized a $28 million SG&A charge in the fourth quarter, resulting from our transition to an enhanced paid time-off program. We believe investing in Team O’Reilly will continue to drive our industry-leading customer service, while also creating tremendous opportunities for our Team Members to grow and share in our Company’s success. I would like to thank our over 85,000 Team Members for their ongoing dedication to our continued profitable growth and for their unrelenting focus on providing excellent customer service.”
Sales for the fourth quarter ended December 31, 2022, increased $353 million, or 11%, to $3.64 billion from $3.29 billion for the same period one year ago. Gross profit for the fourth quarter increased 7% to $1.85 billion (or 50.9% of sales) from $1.73 billion (or 52.7% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the fourth quarter increased 11% to $1.17 billion (or 32.2% of sales) from $1.06 billion (or 32.2% of sales) for the same period one year ago. Operating income for the fourth quarter increased 1% to $682 million (or 18.7% of sales) from $676 million (or 20.5% of sales) for the same period one year ago.
Net income for the fourth quarter ended December 31, 2022, increased $10 million, or 2%, to $529 million (or 14.5% of sales) from $519 million (or 15.8% of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 10% to $8.37 on 63 million shares versus $7.64 on 68 million shares for the same period one year ago.
Full-Year Financial Results
Mr. Johnson continued, “Our strong performance in the fourth quarter capped another successful year for our Company and drove our full-year 2022 comparable store sales growth to 6.4%, resulting in a full-year diluted earnings per share increase
of 8% to $33.44 and an incredible three-year compounded annual growth rate of 23%. As we look forward to 2023, we believe the long-term drivers for demand in our industry remain solid, and we remain very confident in our Team’s ability to gain market share by providing unsurpassed levels of service to our customers and successfully executing our proven dual-market business model.”
Sales for the year ended December 31, 2022, increased $1.08 billion, or 8%, to $14.41 billion from $13.33 billion for the same period one year ago. Gross profit for the year ended December 31, 2022, increased 5% to $7.38 billion (or 51.2% of sales) from $7.02 billion (or 52.7% of sales) for the same period one year ago. SG&A for the year ended December 31, 2022, increased 8% to $4.43 billion (or 30.7% of sales) from $4.10 billion (or 30.8% of sales) for the same period one year ago. Operating income for the year ended December 31, 2022, increased 1% to $2.95 billion (or 20.5% of sales) from $2.92 billion (or 21.9% of sales) for the same period one year ago.
Net income for the year ended December 31, 2022, increased $8 million to $2.17 billion (or 15.1% of sales) from $2.16 billion (or 16.2% of sales) for the same period one year ago. Diluted earnings per common share for the year ended December 31, 2022, increased 8% to $33.44 on 65 million shares versus $31.10 on 70 million shares for the same period one year ago.
4^th^ Quarter and Full-Year 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. Online sales for 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 9.0% for the fourth quarter ended December 31, 2022, on top of 14.5% for the same period one year ago. Comparable store sales increased 6.4% for the year ended December 31, 2022, on top of 13.3% for the same period one year ago.
Share Repurchase Program
During the fourth quarter ended December 31, 2022, the Company repurchased 0.5 million shares of its common stock, at an average price per share of $786.19, for a total investment of $421 million. During the year ended December 31, 2022, the Company repurchased 5.0 million shares of its common stock, at an average price per share of $661.66, for a total investment of $3.28 billion. Subsequent to the end of the fourth quarter and through the date of this release, the Company repurchased an additional 0.4 million shares of its common stock, at an average price per share of $807.84, for a total investment of $355 million. The Company has repurchased a total of 91.0 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 $224.08, for a total aggregate investment of $20.38 billion. As of the date of this release, the Company had approximately $1.37 billion remaining under its current share repurchase authorization.
Full-Year 2023 Guidance
The table below outlines the Company’s guidance for selected full-year 2023 financial data:
| | | | |||||||
|---|---|---|---|---|---|---|---|---|---|
| | **** | For the Year Ending | |||||||
| | **** | December 31, 2023 | |||||||
| Net, new store openings | 180 to 190 | ||||||||
| Comparable store sales | 4% to 6% | ||||||||
| Total revenue | $15.2 billion to $15.5 billion | ||||||||
| Gross profit as a percentage of sales | 50.8% to 51.3% | ||||||||
| Operating income as a percentage of sales | 19.8% to 20.3% | ||||||||
| Effective income tax rate | 22.9% | ||||||||
| Diluted earnings per share ^(1)^ | | $35.75 to $36.25 | |||||||
| Net cash provided by operating activities | | $2.5 billion to $2.9 billion | |||||||
| Capital expenditures | | $750 million to $800 million | |||||||
| Free cash flow ^(2)^ | | $1.8 billion to $2.1 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, 2023 | ||||||||
| Net cash provided by operating activities | | $ | 2,560 | | to | | $ | 2,920 | |
| Less: | Capital expenditures | | 750 | | to | | 800 | ||
| | Excess tax benefit from share-based compensation payments | | 10 | | to | | 20 | ||
| Free cash flow | | $ | 1,800 | | to | | $ | 2,100 |
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, February 9, 2023, 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 (888) 506-0062 and the conference call identification number is 235079. A replay of the conference call will be available on the Company’s website through Thursday, February 8, 2024.
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 December 31, 2022, the Company operated 5,929 stores in 47 U.S. states and 42 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 and supply chain disruptions; 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, 2021, 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)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | December 31, 2022 | | December 31, 2021 | ||
| | **** | (Unaudited) | **** | (Note) | ||
| Assets | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 108,583 | | $ | 362,113 |
| Accounts receivable, net | | **** | 343,155 | | | 272,562 |
| Amounts receivable from suppliers | | **** | 127,019 | | | 113,112 |
| Inventory | | **** | 4,359,126 | | | 3,686,383 |
| Other current assets | | **** | 110,376 | | | 70,092 |
| Total current assets | | **** | 5,048,259 | | | 4,504,262 |
| | | | | | | |
| Property and equipment, at cost | | **** | 7,438,065 | | | 6,948,038 |
| Less: accumulated depreciation and amortization | | **** | 3,014,024 | | | 2,734,523 |
| Net property and equipment | | **** | 4,424,041 | | | 4,213,515 |
| | | | | | | |
| Operating lease, right-of-use assets | | **** | 2,112,267 | | | 1,982,478 |
| Goodwill | | **** | 884,445 | | | 879,340 |
| Other assets, net | | **** | 158,967 | | | 139,112 |
| Total assets | | $ | 12,627,979 | | $ | 11,718,707 |
| | | | | | | |
| Liabilities and shareholders’ deficit | | | | | | |
| Current liabilities: | | | | | | |
| Accounts payable | | $ | 5,881,157 | | $ | 4,695,312 |
| Self-insurance reserves | | **** | 138,926 | | | 128,794 |
| Accrued payroll | | **** | 126,888 | | | 107,588 |
| Accrued benefits and withholdings | | **** | 166,433 | | | 234,872 |
| Current portion of operating lease liabilities | | **** | 366,721 | | | 337,832 |
| Other current liabilities | | **** | 383,692 | | | 370,217 |
| Total current liabilities | | **** | 7,063,817 | | | 5,874,615 |
| | | | | | | |
| Long-term debt | | **** | 4,371,653 | | | 3,826,978 |
| Operating lease liabilities, less current portion | | **** | 1,806,656 | | | 1,701,757 |
| Deferred income taxes | | **** | 245,347 | | | 175,212 |
| Other liabilities | | **** | 201,258 | | | 206,568 |
| | | | | | | |
| Shareholders’ equity (deficit): | | | | | | |
| Common stock, $0.01 par value: | | | | | | |
| Authorized shares – 245,000,000 | | **** | | | | |
| Issued and outstanding shares – | | | | | | |
| 62,353,221 as of December 31, 2022, and | | | | | | |
| 67,029,042 as of December 31, 2021 | | | 624 | | | 670 |
| Additional paid-in capital | | **** | 1,311,488 | | | 1,305,508 |
| Retained deficit | | **** | (2,375,860) | | | (1,365,802) |
| Accumulated other comprehensive income (loss) | | | 2,996 | | | (6,799) |
| Total shareholders’ deficit | | **** | (1,060,752) | | | (66,423) |
| | | | | | | |
| Total liabilities and shareholders’ deficit | | $ | 12,627,979 | | $ | 11,718,707 |
Note: The balance sheet at December 31, 2021, 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 | **** | For the Year Ended | ||||||||
| | **** | December 31, | **** | December 31, | ||||||||
| | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | ||||
| | **** | | (Unaudited) | | (Unaudited) | **** | | (Unaudited) | | (Note) | ||
| Sales | | $ | 3,644,493 | | $ | 3,291,493 | | $ | 14,409,860 | | $ | 13,327,563 |
| Cost of goods sold, including warehouse and distribution expenses | | **** | 1,790,539 | | 1,556,957 | | **** | 7,028,154 | | 6,307,614 | ||
| Gross profit | | **** | 1,853,954 | | 1,734,536 | | **** | 7,381,706 | | 7,019,949 | ||
| | | | | | | | | | | | | |
| Selling, general and administrative expenses | | **** | 1,171,737 | | 1,058,655 | | **** | 4,427,215 | | 4,102,781 | ||
| Operating income | | **** | 682,217 | | 675,881 | | **** | 2,954,491 | | 2,917,168 | ||
| | | | | | | | | | | | | |
| Other income (expense): | | | | | ||||||||
| Interest expense | | **** | (42,331) | | (34,732) | | **** | (157,720) | | (144,768) | ||
| Interest income | | **** | 2,136 | | 493 | | **** | 4,763 | | 1,971 | ||
| Other, net | | **** | 4,225 | | 2,582 | | **** | (2,879) | | 7,543 | ||
| Total other expense | | **** | (35,970) | | (31,657) | | **** | (155,836) | | (135,254) | ||
| | | | | | | | | | | | | |
| Income before income taxes | | **** | 646,247 | | 644,224 | | **** | 2,798,655 | | 2,781,914 | ||
| Provision for income taxes | | **** | 117,675 | | 125,251 | | **** | 626,005 | | 617,229 | ||
| Net income | | $ | 528,572 | | $ | 518,973 | | $ | 2,172,650 | | $ | 2,164,685 |
| | | | | | | | | | | | | |
| Earnings per share-basic: | | | | | ||||||||
| Earnings per share | | $ | 8.45 | | $ | 7.71 | | $ | 33.75 | | $ | 31.39 |
| Weighted-average common shares outstanding – basic | | **** | 62,577 | | 67,300 | | **** | 64,372 | | 68,967 | ||
| | | | | | | | | | | | | |
| Earnings per share-assuming dilution: | | | | | ||||||||
| Earnings per share | | $ | 8.37 | | $ | 7.64 | | $ | 33.44 | | $ | 31.10 |
| Weighted-average common shares outstanding – assuming dilution | | **** | 63,160 | | 67,928 | | **** | 64,962 | | 69,611 |
Note: The income statement for the year ended December 31, 2021, 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 CASH FLOWS
(In thousands)
| | | | | | | |
|---|---|---|---|---|---|---|
| | For the Year Ended | |||||
| | December 31, | |||||
| | 2022 | 2021 | ||||
| | (Unaudited) | (Note) | ||||
| Operating activities: | | | | | ||
| Net income | | $ | 2,172,650 | | $ | 2,164,685 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | ||||
| Depreciation and amortization of property, equipment and intangibles | | **** | 357,933 | | 328,217 | |
| Amortization of debt discount and issuance costs | | **** | 4,704 | | 4,388 | |
| Deferred income taxes | | **** | 69,575 | | 20,383 | |
| Share-based compensation programs | | **** | 26,458 | | 24,656 | |
| Other | | **** | 885 | | 2,128 | |
| Changes in operating assets and liabilities: | | | ||||
| Accounts receivable | | **** | (75,859) | | (47,427) | |
| Inventory | | **** | (669,046) | | (32,634) | |
| Accounts payable | | **** | 1,184,858 | | 510,911 | |
| Income taxes payable | | **** | 151,063 | | 152,339 | |
| Other | | **** | (74,971) | | 79,664 | |
| Net cash provided by operating activities | | **** | 3,148,250 | | 3,207,310 | |
| | | | | | | |
| Investing activities: | | | ||||
| Purchases of property and equipment | | **** | (563,342) | | (442,853) | |
| Proceeds from sale of property and equipment | | **** | 14,803 | | 9,494 | |
| Investment in tax credit equity investments | | | (188,282) | | | (180,333) |
| Other | | **** | (3,164) | | (1,928) | |
| Net cash used in investing activities | | **** | (739,985) | | (615,620) | |
| | | | | | | |
| Financing activities: | | | ||||
| Proceeds from borrowings on revolving credit facility | | **** | 785,800 | | — | |
| Payments on revolving credit facility | | **** | (785,800) | | — | |
| Proceeds from the issuance of long-term debt | | **** | 847,314 | | — | |
| Principal payments on long-term debt | | | (300,000) | | (300,000) | |
| Payment of debt issuance costs | | **** | (6,591) | | (3,412) | |
| Repurchases of common stock | | **** | (3,282,265) | | (2,476,048) | |
| Net proceeds from issuance of common stock | | **** | 79,356 | | 84,915 | |
| Other | | **** | (350) | | (313) | |
| Net cash used in financing activities | | **** | (2,662,536) | | (2,694,858) | |
| | | | | | | |
| Effect of exchange rate changes on cash | | | 741 | | | (359) |
| Net decrease in cash and cash equivalents | | **** | (253,530) | | (103,527) | |
| Cash and cash equivalents at beginning of the period | | **** | 362,113 | | 465,640 | |
| Cash and cash equivalents at end of the period | | $ | 108,583 | | $ | 362,113 |
| | | | | | | |
| Supplemental disclosures of cash flow information: | | | ||||
| Income taxes paid | | $ | 415,165 | | $ | 450,935 |
| Interest paid, net of capitalized interest | | **** | 155,853 | | 144,293 |
Note: The cash flow statement for the year ended December 31, 2021, 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
SELECTED FINANCIAL INFORMATION
(Unaudited)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | For the Year Ended | |||||
| | | December 31, | |||||
| Adjusted Debt to EBITDAR: | 2022 | 2021 | |||||
| (In thousands, except adjusted debt to EBITDAR ratio) | | | |||||
| GAAP debt | | $ | 4,371,653 | | $ | 3,826,978 | |
| Add: | Letters of credit | | **** | 101,741 | | 83,985 | |
| | Discount on senior notes | | **** | 6,285 | | 4,360 | |
| | Debt issuance costs | | **** | 22,062 | | 18,662 | |
| | Six-times rent expense | | **** | 2,358,192 | | 2,232,132 | |
| Adjusted debt | | $ | 6,859,933 | | $ | 6,166,117 | |
| | | | | | | | |
| GAAP net income | | $ | 2,172,650 | | $ | 2,164,685 | |
| Add: | Interest expense | | **** | 157,720 | | 144,768 | |
| | Provision for income taxes | | **** | 626,005 | | 617,229 | |
| | Depreciation and amortization | | **** | 357,933 | | 328,217 | |
| | Share-based compensation expense | | **** | 26,458 | | 24,656 | |
| | Rent expense ^(i)^ | | **** | 393,032 | | 372,022 | |
| EBITDAR | | $ | 3,733,798 | | $ | 3,651,577 | |
| | | | | | | | |
| Adjusted debt to EBITDAR | | **** | 1.84 | | 1.69 |
| (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 year ended December 31, 2022 and 2021 (in thousands): | |||
|---|---|---|---|---|
| | | | | |
| --- | --- | --- | --- | --- |
| Total lease cost, per ASC 842, for the year ended December 31, 2022 | $ | 467,758 | ||
| Less: | Variable non-contract operating lease components, related to property taxes and insurance, for the year ended December 31, 2022 | | 74,726 | |
| Rent expense for the year ended December 31, 2022 | | $ | 393,032 | |
| | | | | |
| Total lease cost, per ASC 842, for the year ended December 31, 2021 | | $ | 443,484 | |
| Less: | Variable non-contract operating lease components, related to property taxes and insurance, for the year ended December 31, 2021 | | | 71,462 |
| Rent expense for the year ended December 31, 2021 | | $ | 372,022 |
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | December 31, | ||||||
| | 2022 | | 2021 | |||||
| Selected Balance Sheet Ratios: | | | | | ||||
| Inventory turnover ^(1)^ | **** | | 1.7 | | | 1.7 | ||
| Average inventory per store (in thousands) ^(2)^ | | $ | 730 | | $ | 637 | ||
| Accounts payable to inventory ^(3)^ | | **** | 134.9 | % | | 127.4 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | For the Three Months Ended | | For the Year Ended | ||||||||
| | | | December 31, | | December 31, | ||||||||
| | | 2022 | 2021 | 2022 | 2021 | ||||||||
| Reconciliation of Free Cash Flow (in thousands): | | | | | |||||||||
| Net cash provided by operating activities | | $ | 795,230 | | $ | 641,983 | | $ | 3,148,250 | | $ | 3,207,310 | |
| Less: | Capital expenditures | | **** | 174,522 | | 102,166 | | **** | 563,342 | | 442,853 | ||
| | Excess tax benefit from share-based compensation payments | | **** | 11,203 | | 6,246 | | **** | 25,503 | | 35,202 | ||
| | Investment in tax credit equity investments | | | 183,020 | | | 178,538 | | | 188,282 | | | 180,333 |
| Free cash flow | | $ | 426,485 | | $ | 355,033 | | $ | 2,371,123 | | $ | 2,548,922 |
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Year Ended | ||||
| | | December 31, | | December 31, | ||||
| | **** | 2022 | 2021 | **** | 2022 | 2021 | ||
| Store Count: | | | | | | | | |
| Beginning domestic store count | **** | 5,910 | 5,740 | **** | 5,759 | 5,594 | ||
| New stores opened | **** | 20 | 19 | **** | 173 | 167 | ||
| Stores closed | **** | (1) | — | **** | (3) | (2) | ||
| Ending domestic store count | | 5,929 | | 5,759 | | 5,929 | | 5,759 |
| | | | | | | | | |
| Beginning Mexico store count | | 28 | | 22 | | 25 | | 22 |
| New stores opened | | 14 | | 3 | | 17 | | 3 |
| Ending Mexico store count | | 42 | | 25 | | 42 | | 25 |
| | | | | | | | | |
| Total ending store count | **** | 5,971 | 5,784 | **** | 5,971 | 5,784 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Year Ended | ||||||||
| | | December 31, | | December 31, | ||||||||
| | **** | 2022 | 2021 | 2022 | 2021 | |||||||
| Store and Team Member Information: **** ^(4)^ | | | | | | | | | | | | |
| Total employment | **** | | 85,130 | | 81,123 | | | | | |||
| Square footage (in thousands) | | | 44,604 | | | 43,185 | | | | | | |
| Sales per weighted-average square foot ^(5)^ | | $ | 80.39 | | $ | 74.96 | | $ | 321.71 | | $ | 307.37 |
| Sales per weighted-average store (in thousands) ^(6)^ | | $ | 604 | | $ | 562 | | $ | 2,415 | | $ | 2,298 |
| (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) | Represents O’Reilly’s U.S. operations only. |
| --- | --- |
| (5) | 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. |
| --- | --- |
| (6) | 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. |
| --- | --- |