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): October 26, 2022
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 October 26, 2022, O’Reilly Automotive, Inc. (the “Company”) issued a press release announcing its 2022 third quarter earnings. 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 October 26, 2022 |
| 104 | | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document |
The information in 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: October 26, 2022 | 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 THIRD QUARTER 2022 RESULTS
| ● | Third quarter comparable store sales growth of 7.6%, three-year stack increase of 31.2% |
|---|---|
| ● | 14% increase in third quarter diluted earnings per share to $9.17 |
| --- | --- |
| ● | $2.4 billion net cash provided by operating activities year-to-date |
| --- | --- |
Springfield, MO, October 26, 2022 – 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 third quarter ended September 30, 2022.
3^rd^ Quarter Financial Results
Greg Johnson, O’Reilly’s President and CEO, commented, “We are pleased to report very strong performance in the third quarter, highlighted by a 7.6% increase in comparable store sales and an incredible three-year stacked comparable store sales increase of 31.2%. Our Team’s relentless focus on providing excellent service to our customers drove the robust sales strength in the quarter. Team O’Reilly once again delivered double-digit growth in our professional business for the quarter, while also driving low single-digit DIY sales growth. Our Team’s outstanding top-line performance, coupled with a steadfast commitment to expense control, resulted in a 14% increase in third quarter diluted earnings per share to $9.17, which represents a three-year compounded annual growth rate of 22%. I would like to take this opportunity to thank each of our over 84,000 Team Members for their continued hard work and unwavering commitment to providing unsurpassed levels of customer service – your dedication to our business and our customers remains the key to O’Reilly’s ongoing success.”
Sales for the third quarter ended September 30, 2022, increased $319 million, or 9%, to $3.80 billion from $3.48 billion for the same period one year ago. Gross profit for the third quarter increased 6% to $1.93 billion (or 50.9% of sales) from $1.82 billion (or 52.3% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the third quarter increased 6% to $1.13 billion (or 29.8% of sales) from $1.06 billion (or 30.6% of sales) for the same period one year ago. Operating income for the third quarter increased 7% to $804 million (or 21.2% of sales) from $755 million (or 21.7% of sales) for the same period one year ago.
Net income for the third quarter ended September 30, 2022, increased $27 million, or 5%, to $585 million (or 15.4% of sales) from $559 million (or 16.1% of sales) for the same period one year ago. Diluted earnings per common share for the third quarter increased 14% to $9.17 on 64 million shares versus $8.07 on 69 million shares for the same period one year ago.
Year-to-Date Financial Results
Mr. Johnson continued, “Year to date, we have opened 154 net, new stores across 38 U.S. states and Mexico, and we remain on track to reach our target of approximately 180 net, new store openings in 2022. Our Team of highly-trained and technically proficient Professional Parts People continues to drive strong new store performance, and we remain very confident in our ability to profitably grow in both existing and new market areas. We are pleased to announce our 2023 new store opening target of 180 to 190 net, new stores, an increase over our 2022 growth, as we look forward to expanding the O’Reilly footprint and extending our long track record of profitable growth.”
Sales for the first nine months of 2022 increased $729 million, or 7%, to $10.77 billion from $10.04 billion for the same period one year ago. Gross profit for the first nine months of 2022 increased 5% to $5.53 billion (or 51.3% of sales) from $5.29 billion (or 52.7% of sales) for the same period one year ago. SG&A for the first nine months of 2022 increased 7% to $3.26 billion (or 30.2% of sales) from $3.04 billion (or 30.3% of sales) for the same period one year ago. Operating income for the first nine months of 2022 increased 1% to $2.27 billion (or 21.1% of sales) from $2.24 billion (or 22.3% of sales) for the same period one year ago.
Net income for the first nine months of 2022 decreased $2 million to $1.64 billion (or 15.3% of sales) from $1.65 billion (or 16.4% of sales) for the same period one year ago. Diluted earnings per common share for the first nine months of 2022 increased 7% to $25.08 on 66 million shares versus $23.45 on 70 million shares for the same period one year ago.
3^rd^ 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 7.6% for the third quarter ended September 30, 2022, on top of 6.7% for the same period one year ago. Comparable store sales increased 5.6% for the nine months ended September 30, 2022, on top of 12.9% for the same period one year ago.
Share Repurchase Program
During the third quarter ended September 30, 2022, the Company repurchased 1.0 million shares of its common stock, at an average price per share of $683.09, for a total investment of $710 million. During the first nine months of 2022, the Company repurchased 4.4 million shares of its common stock, at an average price per share of $646.61, for a total investment of $2.86 billion. Subsequent to the end of the third quarter and through the date of this release, the Company repurchased an additional 0.2 million shares of its common stock, at an average price per share of $727.12, for a total investment of $161 million. The Company has repurchased a total of 90.2 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 $219.14, for a total aggregate investment of $19.77 billion. As of the date of this release, the Company had approximately $483 million remaining under its current share repurchase authorization.
Updated Full-Year 2022 Guidance
The table below outlines the Company’s updated guidance for selected full-year 2022 financial data:
| | | | |||||||
|---|---|---|---|---|---|---|---|---|---|
| | **** | For the Year Ending | |||||||
| | **** | December 31, 2022 | |||||||
| Comparable store sales | 4.5% to 5.5% | ||||||||
| Total revenue | $14.1 billion to $14.3 billion | ||||||||
| Gross profit as a percentage of sales | 50.8% to 51.3% | ||||||||
| Operating income as a percentage of sales | 20.3% to 20.6% | ||||||||
| Effective income tax rate | 23.0% | ||||||||
| Diluted earnings per share ^(1)^ | | $32.35 to $32.85 | |||||||
| Net cash provided by operating activities | | $2.5 billion to $3.0 billion | |||||||
| Capital expenditures | | $550 million to $650 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, 2022 | ||||||||
| Net cash provided by operating activities | | $ | 2,540 | | to | | $ | 2,960 | |
| Less: | Capital expenditures | | 550 | | to | | 650 | ||
| | Excess tax benefit from share-based compensation payments | | 10 | | to | | 20 | ||
| | Investment in tax credit equity investments | | | 180 | | to | | | 190 |
| 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, October 27, 2022, 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 (404) 400-0571 and the conference call identification number is 61519118#. A replay of the conference call will be available on the Company’s website through Thursday, October 26, 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 September 30, 2022, the Company operated 5,910 stores in 47 U.S. states and 28 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)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | September 30, 2022 | | September 30, 2021 | | December 31, 2021 | |||
| | **** | (Unaudited) | **** | (Unaudited) | **** | (Note) | |||
| Assets | | | | | | | | | |
| Current assets: | | | | | | | | | |
| Cash and cash equivalents | | $ | 67,060 | | $ | 449,302 | | $ | 362,113 |
| Accounts receivable, net | | **** | 338,122 | | 282,883 | | | 272,562 | |
| Amounts receivable from suppliers | | **** | 135,584 | | 110,882 | | | 113,112 | |
| Inventory | | **** | 4,137,945 | | 3,646,988 | | | 3,686,383 | |
| Other current assets | | **** | 82,045 | | 72,154 | | | 70,092 | |
| Total current assets | | **** | 4,760,756 | | 4,562,209 | | | 4,504,262 | |
| | | | | | | | | | |
| Property and equipment, at cost | | **** | 7,291,681 | | 6,874,639 | | | 6,948,038 | |
| Less: accumulated depreciation and amortization | | **** | 2,947,861 | | 2,672,954 | | | 2,734,523 | |
| Net property and equipment | | **** | 4,343,820 | | 4,201,685 | | | 4,213,515 | |
| | | | | | | | | | |
| Operating lease, right-of-use assets | | **** | 2,109,581 | | 2,011,115 | | | 1,982,478 | |
| Goodwill | | **** | 881,102 | | 878,872 | | | 879,340 | |
| Other assets, net | | **** | 142,769 | | 135,504 | | | 139,112 | |
| Total assets | | $ | 12,238,028 | | $ | 11,789,385 | | $ | 11,718,707 |
| | | | | | | | | | |
| Liabilities and shareholders’ deficit | | | | | | | | | |
| Current liabilities: | | | | | | | | | |
| Accounts payable | | $ | 5,574,098 | | $ | 4,608,549 | | $ | 4,695,312 |
| Self-insurance reserves | | **** | 142,390 | | 122,551 | | | 128,794 | |
| Accrued payroll | | **** | 109,095 | | 89,095 | | | 107,588 | |
| Accrued benefits and withholdings | | **** | 167,452 | | 288,134 | | | 234,872 | |
| Income taxes payable | | **** | 63,916 | | 158,481 | | | — | |
| Current portion of operating lease liabilities | | **** | 360,529 | | 336,962 | | | 337,832 | |
| Other current liabilities | | **** | 423,999 | | 385,982 | | | 370,217 | |
| Total current liabilities | | **** | 6,841,479 | | **** | 5,989,754 | | | 5,874,615 |
| | | | | | | | | | |
| Long-term debt | | **** | 4,370,772 | | 3,826,073 | | | 3,826,978 | |
| Operating lease liabilities, less current portion | | **** | 1,809,241 | | 1,729,013 | | | 1,701,757 | |
| Deferred income taxes | | **** | 218,087 | | 172,807 | | | 175,212 | |
| Other liabilities | | **** | 203,912 | | 212,591 | | | 206,568 | |
| | | | | | | | | | |
| Shareholders’ equity (deficit): | | | | | | | | | |
| Common stock, $0.01 par value: | | | | | | | | | |
| Authorized shares – 245,000,000 | | **** | | | | | | | |
| Issued and outstanding shares – | | | | | | | | | |
| 62,798,821 as of September 30, 2022, | | | | | | | | | |
| 67,684,615 as of September 30, 2021, and | | | | | | | | | |
| 67,029,042 as of December 31, 2021 | | | 628 | | 677 | | | 670 | |
| Additional paid-in capital | | **** | 1,292,725 | | 1,296,358 | | | 1,305,508 | |
| Retained deficit | | **** | (2,494,833) | | (1,430,060) | | | (1,365,802) | |
| Accumulated other comprehensive loss | | | (3,983) | | | (7,828) | | | (6,799) |
| Total shareholders’ deficit | | **** | (1,205,463) | | (140,853) | | | (66,423) | |
| | | | | | | | | | |
| Total liabilities and shareholders’ deficit | | $ | 12,238,028 | | $ | 11,789,385 | | $ | 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 Nine Months Ended | ||||||||
| | **** | September 30, | **** | September 30, | ||||||||
| | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | ||||
| Sales | | $ | 3,798,619 | | $ | 3,479,570 | | $ | 10,765,367 | | $ | 10,036,070 |
| Cost of goods sold, including warehouse and distribution expenses | | **** | 1,863,657 | | 1,661,330 | | **** | 5,237,615 | | 4,750,657 | ||
| Gross profit | | **** | 1,934,962 | | 1,818,240 | | **** | 5,527,752 | | 5,285,413 | ||
| | | | | | | | | | | | | |
| Selling, general and administrative expenses | | **** | 1,130,768 | | 1,063,641 | | **** | 3,255,478 | | 3,044,126 | ||
| Operating income | | **** | 804,194 | | 754,599 | | **** | 2,272,274 | | 2,241,287 | ||
| | | | | | | | | | | | | |
| Other income (expense): | | | | | ||||||||
| Interest expense | | **** | (43,164) | | (34,873) | | **** | (115,389) | | (110,036) | ||
| Interest income | | **** | 1,435 | | 485 | | **** | 2,627 | | 1,478 | ||
| Other, net | | **** | (616) | | 318 | | **** | (7,104) | | 4,961 | ||
| Total other expense | | **** | (42,345) | | (34,070) | | **** | (119,866) | | (103,597) | ||
| | | | | | | | | | | | | |
| Income before income taxes | | **** | 761,849 | | 720,529 | | **** | 2,152,408 | | 2,137,690 | ||
| Provision for income taxes | | **** | 176,411 | | 161,877 | | **** | 508,330 | | 491,978 | ||
| Net income | | $ | 585,438 | | $ | 558,652 | | $ | 1,644,078 | | $ | 1,645,712 |
| | | | | | | | | | | | | |
| Earnings per share-basic: | | | | | ||||||||
| Earnings per share | | $ | 9.25 | | $ | 8.14 | | $ | 25.30 | | $ | 23.67 |
| Weighted-average common shares outstanding – basic | | **** | 63,288 | | 68,608 | | **** | 64,979 | | 69,529 | ||
| | | | | | | | | | | | | |
| Earnings per share-assuming dilution: | | | | | ||||||||
| Earnings per share | | $ | 9.17 | | $ | 8.07 | | $ | 25.08 | | $ | 23.45 |
| Weighted-average common shares outstanding – assuming dilution | | **** | 63,860 | | 69,240 | | **** | 65,566 | | 70,174 |
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | | |
|---|---|---|---|---|---|---|
| | For the Nine Months Ended | |||||
| | September 30, | |||||
| | 2022 | 2021 | ||||
| Operating activities: | | | | | ||
| Net income | | $ | 1,644,078 | | $ | 1,645,712 |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | ||||
| Depreciation and amortization of property, equipment and intangibles | | **** | 258,048 | | 237,654 | |
| Amortization of debt discount and issuance costs | | **** | 3,490 | | 3,294 | |
| Deferred income taxes | | **** | 42,673 | | 18,053 | |
| Share-based compensation programs | | **** | 18,913 | | 18,544 | |
| Other | | **** | 716 | | 1,803 | |
| Changes in operating assets and liabilities: | | | ||||
| Accounts receivable | | **** | (69,965) | | (56,743) | |
| Inventory | | **** | (450,991) | | 6,420 | |
| Accounts payable | | **** | 878,501 | | 424,710 | |
| Income taxes payable | | **** | 73,853 | | 141,273 | |
| Other | | **** | (46,296) | | 124,607 | |
| Net cash provided by operating activities | | **** | 2,353,020 | | 2,565,327 | |
| | | | | | | |
| Investing activities: | | | ||||
| Purchases of property and equipment | | **** | (388,820) | | (340,687) | |
| Proceeds from sale of property and equipment | | **** | 10,829 | | 6,643 | |
| Investment in tax credit equity investments | | | (5,262) | | | (1,795) |
| Other | | **** | (448) | | (1,897) | |
| Net cash used in investing activities | | **** | (383,701) | | (337,736) | |
| | | | | | | |
| 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 | | **** | (6,442) | | (3,404) | |
| Repurchases of common stock | | **** | (2,861,557) | | (2,007,161) | |
| Net proceeds from issuance of common stock | | **** | 56,575 | | 67,361 | |
| Other | | **** | (350) | | (313) | |
| Net cash used in financing activities | | **** | (2,264,460) | | (2,243,517) | |
| | | | | | | |
| Effect of exchange rate changes on cash | | | 88 | | | (412) |
| Net decrease in cash and cash equivalents | | **** | (295,053) | | (16,338) | |
| Cash and cash equivalents at beginning of the period | | **** | 362,113 | | 465,640 | |
| Cash and cash equivalents at end of the period | | $ | 67,060 | | $ | 449,302 |
| | | | | | | |
| Supplemental disclosures of cash flow information: | | | ||||
| Income taxes paid | | $ | 392,490 | | $ | 333,360 |
| Interest paid, net of capitalized interest | | **** | 99,674 | | 107,971 |
O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
| | | | | | | | |
|---|---|---|---|---|---|---|---|
| | | For the Twelve Months Ended | |||||
| | | September 30, | |||||
| Adjusted Debt to EBITDAR: | 2022 | 2021 | |||||
| (In thousands, except adjusted debt to EBITDAR ratio) | | | |||||
| GAAP debt | | $ | 4,370,772 | | $ | 3,826,073 | |
| Add: | Letters of credit | | **** | 101,741 | | 83,985 | |
| | Discount on senior notes | | **** | 6,481 | | 4,531 | |
| | Debt issuance costs | | **** | 22,747 | | 19,396 | |
| | Six-times rent expense | | **** | 2,318,454 | | 2,206,056 | |
| Adjusted debt | | $ | 6,820,195 | | $ | 6,140,041 | |
| | | | | | | | |
| GAAP net income | | $ | 2,163,051 | | $ | 2,038,657 | |
| Add: | Interest expense | | **** | 150,121 | | 148,385 | |
| | Provision for income taxes | | **** | 633,581 | | 598,962 | |
| | Depreciation and amortization | | **** | 348,611 | | 320,779 | |
| | Share-based compensation expense | | **** | 25,025 | | 24,229 | |
| | Rent expense ^(i)^ | | **** | 386,409 | | 367,676 | |
| EBITDAR | | $ | 3,706,798 | | $ | 3,498,688 | |
| | | | | | | | |
| Adjusted debt to EBITDAR | | **** | 1.84 | | 1.75 |
| (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 September 30, 2022 and 2021 (in thousands): | |||
|---|---|---|---|---|
| | | | | |
| --- | --- | --- | --- | --- |
| Total lease cost, per ASC 842, for the twelve months ended September 30, 2022 | $ | 460,299 | ||
| Less: | Variable non-contract operating lease components, related to property taxes and insurance, for the twelve months ended September 30, 2022 | | 73,890 | |
| Rent expense for the twelve months ended September 30, 2022 | | $ | 386,409 | |
| | | | | |
| Total lease cost, per ASC 842, for the twelve months ended September 30, 2021 | | $ | 438,205 | |
| Less: | Variable non-contract operating lease components, related to property taxes and insurance, for the twelve months ended September 30, 2021 | | | 70,529 |
| Rent expense for the twelve months ended September 30, 2021 | | $ | 367,676 |
| | | | | | | | | |
|---|---|---|---|---|---|---|---|---|
| | | September 30, | ||||||
| | 2022 | | 2021 | |||||
| Selected Balance Sheet Ratios: | | | | | ||||
| Inventory turnover ^(1)^ | **** | | 1.7 | | | 1.7 | ||
| Average inventory per store (in thousands) ^(2)^ | | $ | 697 | | $ | 633 | ||
| Accounts payable to inventory ^(3)^ | | **** | 134.7 | % | | 126.4 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | For the Three Months Ended | | For the Nine Months Ended | ||||||||
| | | | September 30, | | September 30, | ||||||||
| | | 2022 | 2021 | 2022 | 2021 | ||||||||
| Reconciliation of Free Cash Flow (in thousands): | | | | | |||||||||
| Net cash provided by operating activities | | $ | 961,047 | | $ | 852,495 | | $ | 2,353,020 | | $ | 2,565,327 | |
| Less: | Capital expenditures | | **** | 159,899 | | 118,080 | | **** | 388,820 | | 340,687 | ||
| | Excess tax benefit from share-based compensation payments | | **** | 8,481 | | 12,141 | | **** | 14,300 | | 28,956 | ||
| | Investment in tax credit equity investments | | | 1,182 | | | 27 | | | 5,262 | | | 1,795 |
| Free cash flow | | $ | 791,485 | | $ | 722,247 | | $ | 1,944,638 | | $ | 2,193,889 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Nine Months Ended | | For the Twelve Months Ended | ||||||
| | | September 30, | | September 30, | | September 30, | ||||||
| | **** | 2022 | 2021 | **** | 2022 | 2021 | **** | 2022 | 2021 | |||
| Store Count: | | | | | | | | | | | | |
| Beginning domestic store count | **** | 5,873 | 5,710 | **** | 5,759 | 5,594 | **** | 5,740 | 5,592 | |||
| New stores opened | **** | 38 | 30 | **** | 153 | 148 | **** | 172 | 153 | |||
| Stores closed | **** | (1) | — | **** | (2) | (2) | **** | (2) | (5) | |||
| Ending domestic store count | | 5,910 | | 5,740 | | 5,910 | | 5,740 | | 5,910 | | 5,740 |
| | | | | | | | | | | | | |
| Beginning Mexico store count | | 27 | | 22 | | 25 | | 22 | | 22 | | 21 |
| New stores opened | | 1 | | — | | 3 | | — | | 6 | | 1 |
| Ending Mexico store count | | 28 | | 22 | | 28 | | 22 | | 28 | | 22 |
| | | | | | | | | | | | | |
| Total ending store count | **** | 5,938 | 5,762 | **** | 5,938 | 5,762 | **** | 5,938 | 5,762 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | | For the Twelve Months Ended | ||||||||
| | | September 30, | | September 30, | ||||||||
| | **** | 2022 | 2021 | 2022 | 2021 | |||||||
| Store and Team Member Information: **** ^(4)^ | | | | | | | | | | | | |
| Total employment | **** | | 84,050 | | 80,536 | | | | | |||
| Square footage (in thousands) | | | 44,373 | | | 43,035 | | | | | | |
| Sales per weighted-average square foot ^(5)^ | | $ | 84.54 | | $ | 79.73 | | $ | 316.37 | | $ | 299.31 |
| Sales per weighted-average store (in thousands) ^(6)^ | | $ | 634 | | $ | 597 | | $ | 2,373 | | $ | 2,231 |
| (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. |
| --- | --- |