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): July 26, 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 July 26, 2023, O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) issued a press release announcing its 2023 second quarter earnings. The text of the press release is attached hereto as Exhibit 99.2.
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 July 26, 2023, the Company issued a press release announcing that Greg Johnson, the Company’s Chief Executive Officer (“CEO”), informed the Company’s Board of Directors (the “Board”) of his intention to retire from the Company effective January 31, 2024. The Board has selected Brad Beckham, the Company’s Co-President, to succeed Mr. Johnson as CEO upon Mr. Johnson’s retirement. The Board has also determined that Brent Kirby, the Company’s Co-President, will be promoted to President upon Mr. Johnson’s retirement.
Mr. Beckham, age 44, has been an O’Reilly Team Member since 1996. Mr. Beckham’s O’Reilly career began as a Parts Specialist and progressed through the roles of Store Manager, District Manager, Regional Manager, Divisional Vice President, Vice President of Eastern Store Operations and Sales, Senior Vice President of Eastern Store Operations and Sales, Senior Vice President of Central Store Operations and Sales, Executive Vice President of Store Operations and Sales, and Executive Vice President and Chief Operating Officer. Mr. Beckham has held the position of Co-President since January of 2023.
Mr. Kirby, age 55, has been an O’Reilly Team Member since 2018. Mr. Kirby began his 35 year retail career with Lowe’s Companies, Inc. (“Lowe’s”) as a hardware associate and progressed through various positions at the store, district, and regional levels before being promoted to Senior Vice President of Store Operations and later Chief Omnichannel Officer. Prior to joining O’Reilly, Mr. Kirby held the position of Chief Supply Chain Officer for Lowe’s. In 2018, Mr. Kirby’s O’Reilly career began as Senior Vice President of Omnichannel and progressed through the roles of Executive Vice President of Supply Chain and Executive Vice President and Chief Supply Chain Officer. Mr. Kirby has held the position of Co-President since January of 2023.
The Human Capital and Compensation Committee of the Board (the “Compensation Committee”) recommended, and the Board approved, maintaining the current annual base salary and annual performance incentive compensation for Messrs. Johnson, Beckham, and Kirby at this time. The Compensation Committee will evaluate Messrs. Beckham’s and Kirby’s full compensation plan, including, but not limited to, base salary, cash-based incentive compensation, equity-based incentive compensation and other perquisites, at the time of Mr. Johnson’s retirement and Messrs. Beckham’s and Kirby’s promotions and will provide a recommendation to the Board at that time.
There are no arrangements or understandings between Mr. Beckham or Mr. Kirby and any other person pursuant to which Mr. Beckham or Mr. Kirby was selected as an officer, there are no family relationships between Mr. Beckham or Mr. Kirby and any director or other officer of the Company, and there are no transactions in which the Company is a party and in which Mr. Beckham or Mr. Kirby has a material interest subject to disclosure under Item 404(a) of Regulation S-K.
The text of the press release is attached hereto as Exhibit 99.1.
Section 9 – Financial Statements and Exhibits
Item 9.01 – Financial Statements and Exhibits
| Exhibit Number | Description | |
|---|---|---|
| 99.1 | | Press release dated July 26, 2023 |
| 99.2 | | Press release dated July 26, 2023 |
| 104 | | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document |
The information in Item 2 and Exhibit 99.2 of this Current Report on Form 8-K 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: July 26, 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. ANNOUNCES LEADERSHIP SUCCESSION PLAN
●Chief Executive Officer Greg Johnson to retire
●Brad Beckham to be promoted to Chief Executive Officer
●Brent Kirby to be promoted to President
Springfield, MO, July 26, 2023 – O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced the Company’s leadership succession plan. Greg Johnson, the Company’s Chief Executive Officer (“CEO”), has informed the Company’s Board of Directors (the “Board”) of his intention to retire from the Company effective January 31, 2024. The Board has selected Brad Beckham, the Company’s Co-President, to succeed Mr. Johnson as CEO upon Mr. Johnson’s retirement. The Board has also determined that Brent Kirby, the Company’s Co-President, will be promoted to President upon Mr. Johnson’s retirement.
Executive Chairman of the Board, Greg Henslee, commented, “On behalf of the Board, I would like to express my sincere gratitude to Greg for his 41 years of dedicated service to O’Reilly and, most importantly, for his outstanding leadership as CEO during a truly momentous phase of our Company’s history. Greg has mentored and developed a strong executive leadership team who led the Company through a period of unprecedented growth, driving record profitability. Greg is extremely passionate about and committed to perpetuating the O’Reilly Culture and is relentlessly focused on driving excellent customer service in all aspects of our business. Above all, Greg has been a champion for O’Reilly’s promote from within philosophy and our dedication to long-term succession planning, and he has done an exemplary job preparing both Brad Beckham and Brent Kirby for their new roles. Brad shares Greg’s passion for O’Reilly. He is a highly respected member of our executive team whose considerable experience and significant industry knowledge make him exceptionally qualified to succeed Greg as CEO. Brent is also a proven leader and his extensive retail supply chain and omnichannel experience is critical to successfully driving our Company’s strategic initiatives. The Company is well prepared for this executive leadership transition and the Board remains highly confident in Team O’Reilly’s ability to continue to generate long-term value for our shareholders.”
“It has been such a privilege to play a part in O’Reilly’s incredible growth story,” stated Mr. Johnson. “Without any doubt, our success and achievements have been driven by our dedicated Team Members who live our Culture values each day and consistently provide the highest level of service in our industry, and it has truly been an honor to work with this unbelievably talented team. During my tenure as CEO, Brad and Brent have both been critical members of the O’Reilly leadership team and their significant knowledge, combined with that of our entire experienced executive management team, positions the Company well to continue our record of 30 consecutive years of comparable store sales and operating income growth.”
“It is such an incredible honor to be chosen as the next CEO of our great Company. I am extremely humbled at the tremendous privilege it is to represent our over 88,000 dedicated and hardworking Team Members”, commented Mr. Beckham, who will become only the fourth CEO in O’Reilly’s rich history. “When I joined Team O’Reilly as a parts professional in 1996, we focused on the fundamental concept of providing excellent customer service each and every day; 27 years later that principle is alive and well and remains the foundation for our continued success. David O’Reilly, Greg Henslee, and Greg Johnson have been great examples as leaders and, along with Brent and our entire leadership team, I am absolutely committed to perpetuating our Culture, expanding our market share, and driving profitable growth long into the future.”
About Brad Beckham
Mr. Beckham, age 44, has been an O’Reilly Team Member since 1996. Mr. Beckham’s O’Reilly career began as a Parts Specialist and progressed through the roles of Store Manager, District Manager, Regional Manager, Divisional Vice President, Vice President of Eastern Store Operations and Sales, Senior Vice President of Eastern Store Operations and Sales, Senior Vice President of Central Store Operations and Sales, Executive Vice President of Store Operations and Sales, and Executive Vice President and Chief Operating Officer. Mr. Beckham has held the position of Co-President since January of 2023.
About Brent Kirby
Mr. Kirby, age 55, has been an O’Reilly Team Member since 2018. Mr. Kirby began his 35 year retail career with Lowe’s Companies, Inc. (“Lowe’s”) as a hardware associate and progressed through various positions at the store, district, and regional levels before being promoted to Senior Vice President of Store Operations and later Chief Omnichannel Officer. Prior to joining O’Reilly, Mr. Kirby held the position of Chief Supply Chain Officer for Lowe’s. In 2018, Mr. Kirby’s O’Reilly career began as Senior Vice President of Omnichannel and progressed through the roles of Executive Vice President of Supply Chain and Executive Vice President and Chief Supply Chain Officer. Mr. Kirby has held the position of Co-President since January of 2023.
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 June 30, 2023, the Company operated 6,071 stores across 48 U.S. states, Puerto Rico, and 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 economy in general; inflation; consumer debt levels; product demand; a public health crisis; 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; damage, failure or interruption of information technology systems, including 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, 2022, 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 Relations Contacts |
|---|---|
| | Mark Merz (417) 829-5878 |
| | Eric Bird (417) 868-4259 |
| | |
| | Media Contact |
| | Sonya Cox (417) 829-5709 |
Exhibit 99.2
FOR IMMEDIATE RELEASE
O’REILLY AUTOMOTIVE, INC. REPORTS SECOND QUARTER 2023 RESULTS
●Second quarter comparable store sales growth of 9.0%
●16% increase in second quarter diluted earnings per share to $10.22
●Announced Executive Leadership Succession Plan
Springfield, MO, July 26, 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 second quarter ended June 30, 2023.
2^nd^ Quarter Financial Results
Greg Johnson, O’Reilly’s CEO, commented, “We are very pleased to report another quarter of continued strong growth, highlighted by a 9.0% increase in comparable store sales and a 16% increase in diluted earnings per share to $10.22. Team O’Reilly’s commitment to providing consistently excellent customer service drove robust double-digit professional and solid DIY comparable store sales growth in the quarter. I want to congratulate our over 88,000 dedicated Team Members on their incredible performance in the second quarter and express my sincere appreciation for their relentless focus on delivering industry-leading service to our customers each and every day.”
Sales for the second quarter ended June 30, 2023, increased $398 million, or 11%, to $4.07 billion from $3.67 billion for the same period one year ago. Gross profit for the second quarter increased 11% to $2.09 billion (or 51.3% of sales) from $1.88 billion (or 51.3% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the second quarter increased 14% to $1.23 billion (or 30.3% of sales) from $1.09 billion (or 29.6% of sales) for the same period one year ago. Operating income for the second quarter increased 7% to $854 million (or 21.0% of sales) from $799 million (or 21.8% of sales) for the same period one year ago.
Net income for the second quarter ended June 30, 2023, increased $51 million, or 9%, to $627 million (or 15.4% of sales) from $577 million (or 15.7% of sales) for the same period one year ago. Diluted earnings per common share for the second quarter increased 16% to $10.22 on 61 million shares versus $8.78 on 66 million shares for the same period one year ago.
Year-to-Date Financial Results
Mr. Johnson continued, “We have opened 100 net, new stores across 34 U.S. states, Puerto Rico, and Mexico so far in 2023 and are on pace to meet our goal of 180 to 190 net, new store openings in 2023. We continue to be very pleased with our new store performance, driven by our well-trained and technically-proficient Professional Parts People. We are also excited to celebrate the expansion of our distribution network with the opening of our first O’Reilly distribution center in Mexico in July. This new, 370,000 square foot facility strengthens our existing store network with enhanced inventory availability, empowering higher service levels and establishing the critical foundation for long-term store growth in Mexico.”
Sales for the first six months of 2023 increased $810 million, or 12%, to $7.78 billion from $6.97 billion for the same period one year ago. Gross profit for the first six months of 2023 increased 11% to $3.98 billion (or 51.1% of sales) from $3.59 billion (or 51.6% of sales) for the same period one year ago. SG&A for the first six months of 2023 increased 13% to $2.41 billion (or 30.9% of sales) from $2.12 billion (or 30.5% of sales) for the same period one year ago. Operating income for
the first six months of 2023 increased 7% to $1.57 billion (or 20.2% of sales) from $1.47 billion (or 21.1% of sales) for the same period one year ago.
Net income for the first six months of 2023 increased $86 million, or 8%, to $1.14 billion (or 14.7% of sales) from $1.06 billion (or 15.2% of sales) for the same period one year ago. Diluted earnings per common share for the first six months of 2023 increased 16% to $18.49 on 62 million shares versus $15.94 on 66 million shares for the same period one year ago.
Mr. Johnson concluded, “The strong top-line performance we delivered through the first half of the year exceeded our expectations, and we remain pleased with our performance thus far in July. We believe the core underlying demand drivers of our industry remain solid, and more importantly, we remain confident in our Team’s ability to consistently execute our proven dual market strategy and expand our market share. Based on our strong year-to-date results and continued robust sales trends, we are increasing our full-year comparable store sales guidance from a range of 4% to 6% to a range of 5% to 7%. Finally, I would like to again thank Team O’Reilly for delivering strong results in the first half of 2023 – your commitment to our customers remains the key to O’Reilly’s ongoing success.”
2^nd^ 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. 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 second quarter ended June 30, 2023, on top of 4.3% for the same period one year ago. Comparable store sales increased 9.8% for the six months ended June 30, 2023, on top of 4.5% for the same period one year ago.
Share Repurchase Program
During the second quarter ended June 30, 2023, the Company repurchased 0.8 million shares of its common stock, at an average price per share of $904.37, for a total investment of $680 million. During the first six months of 2023, the Company repurchased 2.1 million shares of its common stock, at an average price per share of $849.48, for a total investment of $1.79 billion. Excise tax on shares repurchased, assessed at one percent of the fair market value of net shares repurchased, was $16.5 million for the first six months of 2023. Subsequent to the end of the second quarter and through the date of this release, the Company repurchased an additional 0.1 million shares of its common stock, at an average price per share of $952.24, for a total investment of $119 million. The Company has repurchased a total of 92.7 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 $236.52, for a total aggregate investment of $21.94 billion. As of the date of this release, the Company had approximately $1.81 billion remaining under its current share repurchase authorization.
Updated Full-Year 2023 Guidance
The table below outlines the Company’s updated 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 | 5.0% to 7.0% | ||||||||
| Total revenue | $15.4 billion to $15.7 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 | 22.5% | ||||||||
| Diluted earnings per share ^(1)^ | | $37.05 to $37.55 | |||||||
| Net cash provided by operating activities | | $2.6 billion to $3.0 billion | |||||||
| Capital expenditures | | $750 million to $800 million | |||||||
| Free cash flow ^(2)^ | | $1.9 billion to $2.2 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 | | $ | 2,670 | | to | | $ | 3,030 | |
| Less: | Capital expenditures | | 750 | | to | | 800 | ||
| | Excess tax benefit from share-based compensation payments | | 20 | | to | | 30 | ||
| Free cash flow | | $ | 1,900 | | to | | $ | 2,200 |
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.
Executive Leadership Succession Plan
Today, in a separate press release, O’Reilly also announced the Company’s leadership succession plan. Effective January 31, 2024, Greg Johnson, who currently serves as the Company’s Chief Executive Officer (“CEO”) will retire and, at that time, Brad Beckham, who currently serves as the Company’s Co-President, will be promoted to CEO, and Brent Kirby, who currently serves as the Company’s Co-President, will be promoted to President.
Earnings Conference Call Information
The Company will host a conference call on Thursday, July 27, 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 273805. A replay of the conference call will be available on the Company’s website through Friday, July 26, 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 June 30, 2023, the Company operated 6,071 stores across 48 U.S. states, Puerto Rico, and 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 economy in general; inflation; consumer debt levels; product demand; a public health crisis; 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; damage, failure or interruption of information technology systems, including 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, 2022, 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 Relations Contacts |
| | Mark Merz (417) 829-5878 |
| | Eric Bird (417) 868-4259 |
| | |
| | Media Contact |
| | Sonya Cox (417) 829-5709 |
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | June 30, 2023 | | June 30, 2022 | | December 31, 2022 | |||
| | **** | (Unaudited) | **** | (Unaudited) | **** | (Note) | |||
| Assets | | | | | | | | | |
| Current assets: | | | | | | | | | |
| Cash and cash equivalents | | $ | 57,880 | | $ | 253,904 | | $ | 108,583 |
| Accounts receivable, net | | **** | 374,714 | | 330,672 | | | 343,155 | |
| Amounts receivable from suppliers | | **** | 138,666 | | 123,112 | | | 127,019 | |
| Inventory | | **** | 4,626,410 | | 4,005,384 | | | 4,359,126 | |
| Other current assets | | **** | 113,597 | | 86,800 | | | 110,376 | |
| Total current assets | | **** | 5,311,267 | | 4,799,872 | | | 5,048,259 | |
| | | | | | | | | | |
| Property and equipment, at cost | | **** | 7,872,672 | | 7,160,583 | | | 7,438,065 | |
| Less: accumulated depreciation and amortization | | **** | 3,170,474 | | 2,878,170 | | | 3,014,024 | |
| Net property and equipment | | **** | 4,702,198 | | 4,282,413 | | | 4,424,041 | |
| | | | | | | | | | |
| Operating lease, right-of-use assets | | **** | 2,185,196 | | 1,965,941 | | | 2,112,267 | |
| Goodwill | | **** | 897,128 | | 881,299 | | | 884,445 | |
| Other assets, net | | **** | 180,834 | | 138,164 | | | 158,967 | |
| Total assets | | $ | 13,276,623 | | $ | 12,067,689 | | $ | 12,627,979 |
| | | | | | | | | | |
| Liabilities and shareholders’ deficit | | | | | | | | | |
| Current liabilities: | | | | | | | | | |
| Accounts payable | | $ | 6,219,838 | | $ | 5,258,712 | | $ | 5,881,157 |
| Self-insurance reserves | | **** | 131,781 | | 137,281 | | | 138,926 | |
| Accrued payroll | | **** | 127,333 | | 106,814 | | | 126,888 | |
| Accrued benefits and withholdings | | **** | 150,453 | | 148,805 | | | 166,433 | |
| Income taxes payable | | **** | 233,507 | | 2,080 | | | — | |
| Current portion of operating lease liabilities | | **** | 380,618 | | 341,705 | | | 366,721 | |
| Other current liabilities | | **** | 450,169 | | 417,792 | | | 383,692 | |
| Total current liabilities | | **** | 7,693,699 | | **** | 6,413,189 | | | 7,063,817 |
| | | | | | | | | | |
| Long-term debt | | **** | 4,873,702 | | 4,669,833 | | | 4,371,653 | |
| Operating lease liabilities, less current portion | | **** | 1,870,392 | | 1,683,216 | | | 1,806,656 | |
| Deferred income taxes | | **** | 260,642 | | 203,744 | | | 245,347 | |
| Other liabilities | | **** | 205,661 | | 205,137 | | | 201,258 | |
| | | | | | | | | | |
| Shareholders’ equity (deficit): | | | | | | | | | |
| Common stock, $0.01 par value: | | | | | | | | | |
| Authorized shares – 245,000,000 | | **** | | | | | | | |
| Issued and outstanding shares – | | | | | | | | | |
| 60,402,359 as of June 30, 2023, | | | | | | | | | |
| 63,752,833 as of June 30, 2022, and | | | | | | | | | |
| 62,353,221 as of December 31, 2022 | | | 604 | | 638 | | | 624 | |
| Additional paid-in capital | | **** | 1,330,270 | | 1,286,651 | | | 1,311,488 | |
| Retained deficit | | **** | (2,994,418) | | (2,391,108) | | | (2,375,860) | |
| Accumulated other comprehensive income (loss) | | | 36,071 | | | (3,611) | | | 2,996 |
| Total shareholders’ deficit | | **** | (1,627,473) | | (1,107,430) | | | (1,060,752) | |
| | | | | | | | | | |
| Total liabilities and shareholders’ deficit | | $ | 13,276,623 | | $ | 12,067,689 | | $ | 12,627,979 |
Note: The balance sheet at December 31, 2022, 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 Six Months Ended | ||||||||
| | **** | June 30, | **** | June 30, | ||||||||
| | **** | 2023 | **** | 2022 | **** | 2023 | **** | 2022 | ||||
| Sales | | $ | 4,068,991 | | $ | 3,670,737 | | $ | 7,776,855 | | $ | 6,966,748 |
| Cost of goods sold, including warehouse and distribution expenses | | **** | 1,982,409 | | 1,786,019 | | **** | 3,799,944 | | 3,373,958 | ||
| Gross profit | | **** | 2,086,582 | | 1,884,718 | | **** | 3,976,911 | | 3,592,790 | ||
| | | | | | | | | | | | | |
| Selling, general and administrative expenses | | **** | 1,232,809 | | 1,086,168 | | **** | 2,406,493 | | 2,124,710 | ||
| Operating income | | **** | 853,773 | | 798,550 | | **** | 1,570,418 | | 1,468,080 | ||
| | | | | | | | | | | | | |
| Other income (expense): | | | | | ||||||||
| Interest expense | | **** | (49,587) | | (37,384) | | **** | (94,159) | | (72,225) | ||
| Interest income | | **** | 760 | | 682 | | **** | 1,628 | | 1,192 | ||
| Other, net | | **** | 4,186 | | (4,550) | | **** | 8,665 | | (6,488) | ||
| Total other expense | | **** | (44,641) | | (41,252) | | **** | (83,866) | | (77,521) | ||
| | | | | | | | | | | | | |
| Income before income taxes | | **** | 809,132 | | 757,298 | | **** | 1,486,552 | | 1,390,559 | ||
| Provision for income taxes | | **** | 181,767 | | 180,538 | | **** | 342,302 | | 331,919 | ||
| Net income | | $ | 627,365 | | $ | 576,760 | | $ | 1,144,250 | | $ | 1,058,640 |
| | | | | | | | | | | | | |
| Earnings per share-basic: | | | | | ||||||||
| Earnings per share | | $ | 10.32 | | $ | 8.86 | | $ | 18.66 | | $ | 16.08 |
| Weighted-average common shares outstanding – basic | | **** | 60,817 | | 65,116 | | **** | 61,324 | | 65,840 | ||
| | | | | | | | | | | | | |
| Earnings per share-assuming dilution: | | | | | ||||||||
| Earnings per share | | $ | 10.22 | | $ | 8.78 | | $ | 18.49 | | $ | 15.94 |
| Weighted-average common shares outstanding – assuming dilution | | **** | 61,366 | | 65,686 | | **** | 61,878 | | 66,434 |
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | | |
|---|---|---|---|---|---|---|
| | For the Six Months Ended | |||||
| | June 30, | |||||
| | 2023 | 2022 | ||||
| Operating activities: | | | | | ||
| Net income | | $ | 1,144,250 | | $ | 1,058,640 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | ||||
| Depreciation and amortization of property, equipment and intangibles | | **** | 191,673 | | 168,045 | |
| Amortization of debt discount and issuance costs | | **** | 2,431 | | 2,242 | |
| Deferred income taxes | | **** | 13,507 | | 28,302 | |
| Share-based compensation programs | | **** | 14,571 | | 12,702 | |
| Other | | **** | 75 | | 283 | |
| Changes in operating assets and liabilities: | | | ||||
| Accounts receivable | | **** | (31,443) | | (60,593) | |
| Inventory | | **** | (257,337) | | (318,756) | |
| Accounts payable | | **** | 335,299 | | 563,012 | |
| Income taxes payable | | **** | 261,208 | | 12,013 | |
| Other | | **** | (22,865) | | (73,917) | |
| Net cash provided by operating activities | | **** | 1,651,369 | | 1,391,973 | |
| | | | | | | |
| Investing activities: | | | ||||
| Purchases of property and equipment | | **** | (460,942) | | (228,921) | |
| Proceeds from sale of property and equipment | | **** | 7,056 | | 8,222 | |
| Investment in tax credit equity investments | | | (4,149) | | | (4,080) |
| Other | | **** | (1,971) | | (86) | |
| Net cash used in investing activities | | **** | (460,006) | | (224,865) | |
| | | | | | | |
| Financing activities: | | | ||||
| Proceeds from borrowings on revolving credit facility | | **** | 2,776,000 | | 785,800 | |
| Payments on revolving credit facility | | **** | (1,976,000) | | (785,800) | |
| Proceeds from the issuance of long-term debt | | **** | — | | 847,314 | |
| Principal payments on long-term debt | | | (300,000) | | — | |
| Payment of debt issuance costs | | **** | (24) | | (6,323) | |
| Repurchases of common stock | | **** | (1,791,451) | | (2,151,242) | |
| Net proceeds from issuance of common stock | | **** | 48,680 | | 35,112 | |
| Other | | **** | (354) | | (350) | |
| Net cash used in financing activities | | **** | (1,243,149) | | (1,275,489) | |
| | | | | | | |
| Effect of exchange rate changes on cash | | | 1,083 | | | 172 |
| Net decrease in cash and cash equivalents | | **** | (50,703) | | (108,209) | |
| Cash and cash equivalents at beginning of the period | | **** | 108,583 | | 362,113 | |
| Cash and cash equivalents at end of the period | | $ | 57,880 | | $ | 253,904 |
| | | | | | | |
| Supplemental disclosures of cash flow information: | | | ||||
| Income taxes paid | | $ | 65,361 | | $ | 291,695 |
| Interest paid, net of capitalized interest | | **** | 88,924 | | 68,318 |
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | For the Twelve Months Ended | |||||
| | | June 30, | |||||
| Adjusted Debt to EBITDAR: | 2023 | 2022 | |||||
| (In thousands, except adjusted debt to EBITDAR ratio) | | | |||||
| GAAP debt | | $ | 4,873,702 | | $ | 4,669,833 | |
| Add: | Letters of credit | | **** | 111,428 | | 108,891 | |
| | Discount on senior notes | | **** | 5,888 | | 6,692 | |
| | Debt issuance costs | | **** | 20,410 | | 23,475 | |
| | Six-times rent expense | | **** | 2,455,938 | | 2,282,502 | |
| Adjusted debt | | $ | 7,467,366 | | $ | 7,091,393 | |
| | | | | | | | |
| GAAP net income | | $ | 2,258,260 | | $ | 2,136,265 | |
| Add: | Interest expense | | **** | 179,654 | | 141,830 | |
| | Provision for income taxes | | **** | 636,388 | | 619,047 | |
| | Depreciation and amortization | | **** | 381,561 | | 337,345 | |
| | Share-based compensation expense | | **** | 28,327 | | 24,783 | |
| | Rent expense ^(i)^ | | **** | 409,323 | | 380,417 | |
| EBITDAR | | $ | 3,893,513 | | $ | 3,639,687 | |
| | | | | | | | |
| Adjusted debt to EBITDAR | | **** | 1.92 | | 1.95 |
| (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 June 30, 2023 and 2022 (in thousands): | ||||||
|---|---|---|---|---|---|---|---|
| | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | For the Twelve Months Ended | |||||
| | | June 30, | |||||
| | | 2023 | | 2022 | |||
| Total lease cost, per ASC 842 | $ | 485,805 | | $ | 453,697 | ||
| Less: | Variable non-contract operating lease components, related to property taxes and insurance | | 76,482 | | | 73,280 | |
| Rent expense | | $ | 409,323 | | $ | 380,417 |
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | June 30, | ||||||
| | 2023 | | 2022 | |||||
| Selected Balance Sheet Ratios: | | | | | ||||
| Inventory turnover ^(1)^ | **** | | 1.7 | | | 1.7 | ||
| Average inventory per store (in thousands) ^(2)^ | | $ | 762 | | $ | 679 | ||
| Accounts payable to inventory ^(3)^ | | **** | 134.4 | % | | 131.3 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | For the Three Months Ended | | For the Six Months Ended | ||||||||
| | | | June 30, | | June 30, | ||||||||
| | | 2023 | 2022 | 2023 | 2022 | ||||||||
| Reconciliation of Free Cash Flow (in thousands): | | | | | |||||||||
| Net cash provided by operating activities | | $ | 937,605 | | $ | 702,087 | | $ | 1,651,369 | | $ | 1,391,973 | |
| Less: | Capital expenditures | | **** | 237,674 | | 124,931 | | **** | 460,942 | | 228,921 | ||
| | Excess tax benefit from share-based compensation payments | | **** | 14,612 | | 3,353 | | **** | 18,990 | | 5,819 | ||
| | Investment in tax credit equity investments | | | 4,149 | | | — | | | 4,149 | | | 4,080 |
| Free cash flow | | $ | 681,170 | | $ | 573,803 | | $ | 1,167,288 | | $ | 1,153,153 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Six Months Ended | | For the Twelve Months Ended | ||||||
| | | June 30, | | June 30, | | June 30, | ||||||
| | **** | 2023 | 2022 | **** | 2023 | 2022 | **** | 2023 | 2022 | |||
| Store Count: | | | | | | | | | | | | |
| Beginning domestic store count | **** | 5,986 | 5,811 | **** | 5,929 | 5,759 | **** | 5,873 | 5,710 | |||
| New stores opened | **** | 41 | 62 | **** | 100 | 115 | **** | 158 | 164 | |||
| Stores closed | **** | — | — | **** | (2) | (1) | **** | (4) | (1) | |||
| Ending domestic store count | | 6,027 | | 5,873 | | 6,027 | | 5,873 | | 6,027 | | 5,873 |
| | | | | | | | | | | | | |
| Beginning Mexico store count | | 43 | | 27 | | 42 | | 25 | | 27 | | 22 |
| New stores opened | | 1 | | — | | 2 | | 2 | | 17 | | 5 |
| Ending Mexico store count | | 44 | | 27 | | 44 | | 27 | | 44 | | 27 |
| | | | | | | | | | | | | |
| Total ending store count | **** | 6,071 | 5,900 | **** | 6,071 | 5,900 | **** | 6,071 | 5,900 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Twelve Months Ended | ||||||||
| | | June 30, | | June 30, | ||||||||
| | **** | 2023 | 2022 | 2023 | 2022 | |||||||
| Store and Team Member Information: **** ^(4)^ | | | | | | | | | | | | |
| Total employment | **** | | 88,149 | | 84,788 | | | | | |||
| Square footage (in thousands) | | | 45,622 | | | 44,072 | | | | | | |
| Sales per weighted-average square foot ^(5)^ | | $ | 88.12 | | $ | 82.30 | | $ | 334.21 | | $ | 311.47 |
| Sales per weighted-average store (in thousands) ^(6)^ | | $ | 665 | | $ | 617 | | $ | 2,516 | | $ | 2,335 |
| (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. and Puerto Rico 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. |
| --- | --- |