What was the main driver for the increase in net income this quarter?

The primary driver for the increase in net income was a combination of a modest increase in net sales and, more significantly, a lower effective income tax rate resulting from the U.S. Tax Reform enacted in late 2017. This tax benefit significantly boosted profitability and EPS.

How did AutoZone's sales perform in the core automotive parts business?

Sales in the core Auto Parts Locations segment increased, driven by contributions from new domestic store openings and a 0.6% increase in domestic same-store sales for the quarter. Commercial sales also saw a notable increase of 7.3%.

What is the company's outlook regarding capital allocation and shareholder returns?

AutoZone continues to be committed to returning capital to shareholders through its share repurchase program. As of May 5, 2018, the company had $896.5 million remaining under its authorized repurchase program, indicating an ongoing focus on buybacks.

Were there any significant charges or impairments impacting the results?

Yes, during the thirty-six week period, the company recorded impairment charges totaling $193.2 million related to the sale of its IMC and AutoAnything businesses. These charges impacted operating expenses but were offset by the benefits of Tax Reform on net income.

AZO 10-Q Quarterly Report Q3 FY2018 — Revenue, Net Income, EPS

Summary

AutoZone, Inc. (AZO) reported its fiscal third-quarter results for the period ending May 5, 2018. Net sales saw a modest increase of 1.6% year-over-year, driven by new domestic store openings and growth in commercial sales. A significant factor positively impacting profitability was the lower effective income tax rate, largely attributed to the recent U.S. Tax Reform, which contributed to a 17.3% increase in diluted earnings per share for the quarter. The company also highlighted progress in its supply chain initiatives, including increased delivery frequency to a substantial portion of its stores, aimed at enhancing inventory availability. Despite a challenging retail environment, AutoZone's strategic focus on core automotive parts and accessories, coupled with ongoing investments in new locations and technology, positions it to benefit from favorable industry trends such as the increasing average age of vehicles on the road.

Financial Highlights

46 data points

Beta

Revenue

$2.66B

0.5% Gross Margin

Net Income

$366.72M

0.1% Net Margin

EPS (Diluted)

$13.42

Total Assets

$9.30B

Cash & Equivalents

$218.39M

Free Cash Flow

$391.61M

Financial Statements

Beta

Revenue	$2.66B
Cost of Revenue	$1.24B
Gross Profit	$1.42B
SG&A Expenses	$877.21M
Operating Income	$545.76M
Net Income	$366.72M
EPS (Basic)	$13.62
EPS (Diluted)	$13.42
Shares Outstanding (Basic)	26.93M
Shares Outstanding (Diluted)	27.33M

Key Highlights

1Net sales increased by 1.6% to $2.66 billion for the twelve weeks ended May 5, 2018, compared to the prior year period.
2Diluted Earnings Per Share (EPS) rose by 17.3% to $13.42 for the quarter, benefiting from a lower effective tax rate due to Tax Reform.
3Gross profit margin improved to 53.5% from 52.6% in the prior year's comparable quarter, driven by higher merchandise margins.
4Operating expenses as a percentage of sales increased, primarily due to occupancy costs and higher store payroll.
5Domestic commercial sales showed a strong increase of 7.3% year-over-year.
6The company continued its aggressive share repurchase program, with $896.5 million remaining authorization as of May 5, 2018.
7Net cash provided by operating activities increased significantly to $1.256 billion for the first thirty-six weeks of the fiscal year.

AUTOZONE INC Quarterly Report for Q3 Ended May 5, 2018

Summary

Financial Highlights

Key Highlights

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