10-QPeriod: Q2 FY2013

AUTOZONE INC Quarterly Report for Q2 Ended Feb 9, 2013

Filed March 7, 2013For Securities:AZO

Summary

AutoZone Inc. reported its results for the twelve and twenty-four weeks ended February 9, 2013. For the twelve-week period, net sales increased by 2.8% to $1.855 billion, with diluted earnings per share (EPS) growing by 15.1% to $4.78. This growth was driven by new store openings and an expanding commercial sales program, despite a slight decrease in domestic same-store sales of 1.8%. The company achieved a higher gross profit margin of 51.9% compared to 51.3% in the prior year, attributed to lower acquisition costs. For the twenty-four week period, net sales rose by 3.2% to $3.846 billion, and diluted EPS increased by 15.5% to $10.19. This period also saw a slight increase in gross margin to 51.8% due to favorable merchandise margins and reduced shrink. The company completed the acquisition of AutoAnything, an online retailer, for up to $150 million to strengthen its online presence. Autozone continues to repurchase shares, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

52 data points
Beta

Revenue

$1.86B

51.9% Gross Margin

Net Income

$176.25M

9.5% Net Margin

EPS (Diluted)

$4.78

Total Assets

$6.66B

Cash & Equivalents

$115.55M

Free Cash Flow

$103.41M

Financial Statements
Beta
Revenue$1.86B
Cost of Revenue$893.22M
Gross Profit$961.98M
SG&A Expenses$644.41M
Operating Expenses$644.41M
Operating Income$317.57M
Interest Expense$41.32M
Net Income$176.25M
EPS (Basic)$4.86
EPS (Diluted)$4.78
Shares Outstanding (Basic)36.26M
Shares Outstanding (Diluted)36.90M

Key Highlights

  • 1Net sales increased by 2.8% for the twelve-week period and 3.2% for the twenty-four week period.
  • 2Diluted Earnings Per Share (EPS) grew by 15.1% in the twelve-week period and 15.5% in the twenty-four week period.
  • 3Domestic same-store sales decreased by 1.8% for the twelve-week period and 0.7% for the twenty-four week period.
  • 4Gross profit margin improved to 51.9% for the twelve-week period and 51.8% for the twenty-four week period, driven by lower acquisition costs and favorable merchandise margins.
  • 5The company completed the acquisition of AutoAnything for up to $150 million to enhance its e-commerce capabilities.
  • 6AutoZone repurchased approximately $502.3 million of its common stock during the twenty-four week period.
  • 7Operating cash flow increased to $510.8 million for the twenty-four week period, up from $461.2 million in the prior year.

Frequently Asked Questions

AutoZone demonstrated positive top-line growth with net sales increasing by 2.8% for the twelve-week period and 3.2% for the twenty-four week period. Earnings per share saw significant growth, rising by 15.1% and 15.5% respectively, indicating improved profitability and effective cost management.

Domestic same-store sales experienced a slight decline, decreasing by 1.8% for the twelve-week period and 0.7% for the twenty-four week period. Management attributed this to factors such as delayed income tax refunds impacting consumer spending and a mild winter affecting sales of maintenance-related products.

The acquisition of AutoAnything, an online retailer, for up to $150 million is a strategic move to bolster AutoZone's online presence, particularly in the high-end automotive accessory and performance markets. This acquisition is expected to enhance the company's reach and customer engagement in the digital space.

AutoZone is actively managing its debt through various financing instruments, including senior notes and commercial paper. The company issued $300 million in 2.875% Senior Notes due January 2023. The Adjusted Debt to EBITDAR ratio was 2.6:1, which management uses to maintain investment-grade credit ratings. The company also continued its significant share repurchase program, repurchasing $502.3 million in stock during the period.