10-QPeriod: Q3 FY2010

AUTOZONE INC Quarterly Report for Q3 Ended May 8, 2010

Filed June 16, 2010For Securities:AZO

Summary

AutoZone Inc. reported solid financial results for the twelve weeks ended May 8, 2010, demonstrating significant year-over-year growth. Net sales increased by 9.9% to $1.82 billion, driven by a robust 7.1% increase in domestic same-store sales, indicating healthy demand from both retail and commercial customers. This top-line growth translated into a substantial 31.5% increase in diluted earnings per share, reaching $4.12. The company also showed improved profitability, with gross profit margin increasing to 50.7% from 50.2% in the prior year period. This was attributed to higher merchandise margins and better leverage of distribution costs. Operating expenses as a percentage of sales also decreased, reflecting improved operational efficiency. The company's strong cash flow from operations of $741 million for the thirty-six week period highlights its ability to generate cash to fund investments and capital allocation. AutoZone continues its strategic focus on growth through new store development and enhancements, while also actively returning capital to shareholders through its share repurchase program. The company's financial health appears strong, supported by consistent sales growth, improved margins, and effective cost management, positioning it well within its industry.

Financial Highlights

46 data points
Beta

Revenue

$1.82B

50.7% Gross Margin

Net Income

$202.75M

11.1% Net Margin

EPS (Diluted)

$4.12

Total Assets

$5.45B

Cash & Equivalents

$95.76M

Free Cash Flow

$323.16M

Financial Statements
Beta
Revenue$1.82B
Cost of Revenue$898.87M
Gross Profit$923.12M
Operating Expenses$567.26M
Operating Income$355.87M
Interest Expense$36.83M
Net Income$202.75M
EPS (Basic)$4.19
EPS (Diluted)$4.12
Shares Outstanding (Basic)48.38M
Shares Outstanding (Diluted)49.21M

Key Highlights

  • 1Net sales increased by 9.9% to $1.82 billion for the twelve weeks ended May 8, 2010.
  • 2Domestic same-store sales grew by a strong 7.1%, indicating healthy customer demand.
  • 3Diluted earnings per share (EPS) saw a significant increase of 31.5% to $4.12.
  • 4Gross profit margin improved to 50.7% from 50.2% in the prior year period.
  • 5Operating expenses as a percentage of sales decreased to 31.1% from 31.8%, demonstrating improved efficiency.
  • 6Cash flow from operations for the thirty-six week period was robust at $741 million.
  • 7The company repurchased $558.3 million of its common stock during the thirty-six week period, reflecting a commitment to shareholder returns.

Frequently Asked Questions

The primary driver of AutoZone's sales growth was a strong increase in domestic same-store sales, which grew by 7.1%. This indicates healthy demand and performance from existing store locations, benefiting from both higher transaction values and counts. Growth was also observed from both retail and commercial customers.

Profitability improved significantly. Gross profit margin increased to 50.7% due to higher merchandise margins and better leveraging of distribution costs. Furthermore, operating expenses as a percentage of sales decreased to 31.1% from 31.8%, reflecting improved operational efficiencies and the benefit of higher sales.

AutoZone continues to invest in its business through new store development and enhancements. Concurrently, the company actively returns capital to shareholders through its share repurchase program. For the thirty-six week period, the company repurchased $558.3 million of its common stock.

The company demonstrated strong cash flow generation. Net cash provided by operating activities for the thirty-six weeks ended May 8, 2010, was $741 million, an increase from the prior year. This robust operating cash flow provides the company with flexibility for investments and capital allocation.