10-QPeriod: Q1 FY2020

AUTOZONE INC Quarterly Report for Q1 Ended Nov 23, 2019

Filed December 20, 2019For Securities:AZO

Summary

AutoZone, Inc. reported its financial results for the twelve weeks ended November 23, 2019. Net sales increased by 5.7% to $2.79 billion, driven by a 3.4% increase in domestic same-store sales and the addition of new stores. Operating profit saw a modest increase of 2.5% to $500.0 million. However, net income experienced a slight decrease of 0.3% to $350.3 million, primarily due to a higher effective tax rate resulting from a reduced tax benefit from stock options exercised compared to the prior year period. Despite the slight dip in net income, diluted earnings per share (EPS) rose by 6.2% to $14.30, indicating improved profitability on a per-share basis. The company continues to focus on growth through new store openings and its commercial sales program, which saw a significant increase. The average age of vehicles on the road, a key industry driver, continues to trend favorably, exceeding 11 years, which should support long-term demand for AutoZone's products.

Financial Highlights

45 data points
Beta

Revenue

$2.79B

53.7% Gross Margin

Net Income

$350.34M

12.5% Net Margin

EPS (Diluted)

$14.30

Total Assets

$12.70B

Cash & Equivalents

$158.09M

Free Cash Flow

$345.69M

Financial Statements
Beta
Revenue$2.79B
Cost of Revenue$1.29B
Gross Profit$1.50B
SG&A Expenses$1.00B
Operating Income$500.02M
Net Income$350.34M
EPS (Basic)$14.67
EPS (Diluted)$14.30
Shares Outstanding (Basic)23.88M
Shares Outstanding (Diluted)24.49M

Key Highlights

  • 1Net sales increased by 5.7% year-over-year to $2.79 billion.
  • 2Domestic same-store sales grew by 3.4%, indicating steady performance in existing locations.
  • 3Operating profit increased by 2.5% to $500.0 million.
  • 4Diluted Earnings Per Share (EPS) increased by 6.2% to $14.30, demonstrating enhanced shareholder value.
  • 5Commercial sales saw a robust increase of 13.6%, highlighting successful expansion in this segment.
  • 6The company repurchased $450.0 million of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

AutoZone's net sales increased by 5.7% to $2.79 billion, primarily driven by a 3.4% increase in domestic same-store sales and the addition of new AutoZone stores. The commercial sales program also contributed significantly, with an increase of 13.6%.

Net income saw a slight decrease of 0.3% to $350.3 million. This was primarily due to an increased effective tax rate, which was impacted by a reduced tax benefit from stock options exercised during the quarter compared to the same period last year. Despite this, diluted EPS increased due to fewer outstanding shares from ongoing share repurchases.

AutoZone historically maintains a high accounts payable to inventory ratio due to negotiated extended payment terms with suppliers. This trend continued, with accounts payable as a percentage of gross inventory increasing slightly, primarily due to more favorable vendor terms. The company plans to continue leveraging these inventory purchase terms.

AutoZone expects to increase its investments in the business in fiscal year 2020 compared to fiscal year 2019. These investments are focused on new stores, technology, supply chain infrastructure, and enhancements to existing stores. The company anticipates funding these investments primarily through internally generated funds and available borrowing capacity.