10-QPeriod: Q2 FY2019

AUTOZONE INC Quarterly Report for Q2 Ended Feb 9, 2019

Filed March 15, 2019For Securities:AZO

Summary

AutoZone, Inc. (AZO) reported financial results for the twelve weeks ended February 9, 2019. The company demonstrated modest top-line growth, with net sales increasing by 1.6% to $2.45 billion, driven by a 2.6% increase in domestic same-store sales and contributions from new domestic stores. This growth was partially impacted by prior-year business divestitures. Net income saw a slight increase of 1.8% to $294.6 million, resulting in a diluted earnings per share (EPS) of $11.49, a 10.7% increase compared to the prior year. This EPS growth was bolstered by the company's ongoing share repurchase program and a lower effective tax rate, partly influenced by the Tax Cuts and Jobs Act. The company maintained a strong gross profit margin of 54.1%, indicating effective merchandise cost management. Operating expenses were well-controlled, particularly when excluding the prior year's impairment charges, demonstrating operational leverage.

Financial Statements
Beta

Key Highlights

  • 1Net sales increased 1.6% to $2.45 billion for the twelve weeks ended February 9, 2019.
  • 2Domestic same-store sales grew by 2.6%.
  • 3Net income rose 1.8% to $294.6 million.
  • 4Diluted Earnings Per Share (EPS) increased significantly by 10.7% to $11.49, benefiting from share repurchases and a lower effective tax rate.
  • 5Gross profit margin improved to 54.1% from 52.9% in the prior year's comparable period.
  • 6Operating expenses as a percentage of sales decreased due to leverage, excluding prior year impairment charges.
  • 7The company continued its aggressive share repurchase program, with $847.1 million spent in the first twenty-four weeks of fiscal 2019 and $634.6 million remaining authorization as of February 9, 2019.

Frequently Asked Questions

For the twelve weeks ended February 9, 2019, AutoZone reported a 1.6% increase in net sales, reaching $2.45 billion. This growth was primarily driven by a 2.6% rise in domestic same-store sales and contributions from new store openings, partially offset by the impact of prior-year business divestitures.

Diluted earnings per share (EPS) increased by 10.7% to $11.49. This growth was significantly influenced by the company's consistent share repurchase activities, which reduced the number of outstanding shares, and a lower effective tax rate, benefiting from tax reform legislation.

AutoZone maintained a strong liquidity position, with $817.1 million in cash flow from operating activities for the first twenty-four weeks of fiscal 2019. The company had significant availability under its $2.0 billion revolving credit facility ($1.997 billion as of February 9, 2019), allowing flexibility for refinancing short-term obligations. Long-term debt stood at approximately $5.11 billion.

The primary segment reported is 'Auto Parts Locations,' encompassing its extensive retail and distribution network. The filing mentions the prior year's sale of two businesses (IMC and AutoAnything), which impacted year-over-year comparisons for certain financial metrics. No new significant segment changes or acquisitions/divestitures were reported for the current quarter.