10-QPeriod: Q2 FY2009

AUTOZONE INC Quarterly Report for Q2 Ended Feb 14, 2009

Filed March 19, 2009For Securities:AZO

Summary

AutoZone Inc. reported solid results for the twelve weeks ended February 14, 2009, demonstrating resilience in a challenging economic environment. Net sales increased by 8.1% to $1.45 billion, driven by a 6.0% rise in domestic same-store sales, indicating robust customer demand. Diluted earnings per share saw a significant increase of 21.1% to $2.03, reflecting effective cost management and strong sales performance. The company highlighted that despite a decline in miles driven, the increasing number of older vehicles on the road is a positive factor for its business. Management also noted the benefit of lower gas prices, which are expected to increase consumer discretionary spending. AutoZone remains focused on optimizing its product assortment and enhancing operational efficiencies to navigate the economic landscape.

Financial Highlights

26 data points
Beta

Revenue

$1.45B

49.7% Gross Margin

Net Income

$115.86M

8.0% Net Margin

EPS (Diluted)

$2.03

Cash & Equivalents

$107.97M

Free Cash Flow

-$39.54M

Financial Statements
Beta
Revenue$1.45B
Cost of Revenue$728.58M
Gross Profit$719.30M
Operating Expenses$504.60M
Operating Income$214.70M
Interest Expense$31.91M
Net Income$115.86M
EPS (Basic)$2.05
EPS (Diluted)$2.03
Shares Outstanding (Basic)56.52M
Shares Outstanding (Diluted)57.16M

Key Highlights

  • 1Net sales increased 8.1% year-over-year for the twelve-week period, reaching $1.45 billion.
  • 2Domestic same-store sales grew by 6.0%, indicating healthy underlying demand.
  • 3Diluted earnings per share (EPS) increased by a significant 21.1% to $2.03.
  • 4Gross profit margin slightly decreased to 49.7% from 49.9% due to higher shrink expense, partially offset by lower distribution costs.
  • 5Operating expenses as a percentage of sales improved to 34.9% from 35.2% due to positive leverage and lower promotion costs.
  • 6The company continued its aggressive share repurchase program, buying back $647.2 million in stock during the 24-week period.
  • 7AutoZone's balance sheet reflects a substantial increase in debt, with total long-term debt at $2.69 billion, up from $2.25 billion year-over-year, primarily due to commercial paper.

Frequently Asked Questions

For the twelve weeks ended February 14, 2009, AutoZone reported a net sales increase of 8.1% to $1.45 billion, driven by a 6.0% increase in domestic same-store sales. Diluted earnings per share rose by 21.1% to $2.03, indicating strong profitability and operational efficiency.

The company's sales growth is supported by several factors. These include the increasing number of vehicles aged seven years or older on the road, which often require more maintenance and parts, and the benefit of lower gas prices, which may lead to increased consumer discretionary spending on vehicle maintenance. Domestic same-store sales growth was driven by an improved transaction count and an increase in transaction value.

AutoZone managed its operating expenses effectively, with operating, selling, general, and administrative expenses decreasing as a percentage of sales to 34.9% from 35.2% in the prior year period. This improvement was due to positive leverage from store operations and lower promotion costs. While gross profit margin slightly decreased due to higher shrink expenses, overall profitability improved due to sales growth and expense control.

AutoZone continues to be aggressive with its share repurchase program, having bought back $647.2 million of stock in the 24-week period ended February 14, 2009, with $461.9 million remaining under its authorization. The company's debt levels have increased, with total long-term debt at $2.69 billion, largely due to a significant increase in commercial paper borrowings. Management expects to fund future investments through internally generated funds and available borrowing capacity.