10-QPeriod: Q2 FY2020

AUTOZONE INC Quarterly Report for Q2 Ended Feb 15, 2020

Filed March 17, 2020For Securities:AZO

Summary

AutoZone, Inc. reported its second-quarter fiscal year 2020 results, demonstrating modest top-line growth and improved profitability. Net sales increased by 2.6% to $2.51 billion, driven by the opening of new stores and a strong performance in its domestic commercial sales program, which saw an 8.2% increase. This growth was partially offset by a slight decrease of 0.8% in domestic same-store sales. Despite a slight increase in operating expenses as a percentage of sales, primarily due to domestic store payroll, the company managed to increase its operating profit by 2.0% to $407.9 million. Net income rose by 1.6% to $299.3 million, leading to a significant 7.8% increase in diluted earnings per share to $12.39. The company continued its aggressive share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

45 data points
Beta

Revenue

$2.51B

54.3% Gross Margin

Net Income

$299.28M

11.9% Net Margin

EPS (Diluted)

$12.39

Total Assets

$12.86B

Cash & Equivalents

$152.97M

Free Cash Flow

$115.39M

Financial Statements
Beta
Revenue$2.51B
Cost of Revenue$1.15B
Gross Profit$1.37B
SG&A Expenses$958.13M
Operating Income$407.94M
Net Income$299.28M
EPS (Basic)$12.70
EPS (Diluted)$12.39
Shares Outstanding (Basic)23.57M
Shares Outstanding (Diluted)24.16M

Key Highlights

  • 1Net sales increased by 2.6% to $2.51 billion for the twelve weeks ended February 15, 2020.
  • 2Domestic commercial sales showed strong growth, increasing by 8.2% to $556.9 million.
  • 3Net income for the quarter rose by 1.6% to $299.3 million.
  • 4Diluted earnings per share (EPS) saw a substantial increase of 7.8% to $12.39.
  • 5The company repurchased approximately $764.8 million of its common stock during the twenty-four week period.
  • 6Operating profit increased by 2.0% to $407.9 million.
  • 7Gross profit margin improved slightly to 54.3% from 54.1% in the prior year period, driven by supply chain leverage.

Frequently Asked Questions

AutoZone's net sales increased by 2.6% to $2.51 billion for the twelve weeks ended February 15, 2020. This growth was driven by new store openings and an 8.2% increase in domestic commercial sales, although domestic same-store sales saw a slight decrease of 0.8%.

AutoZone continued its robust share repurchase program, buying back $764.8 million worth of stock in the first twenty-four weeks of fiscal 2020. This program significantly contributed to the 7.8% increase in diluted earnings per share, by reducing the weighted average number of shares outstanding.

Yes, profitability improved. Net income increased by 1.6% to $299.3 million, and operating profit rose by 2.0% to $407.9 million. The diluted earnings per share increased by a notable 7.8% to $12.39, indicating improved bottom-line performance for shareholders.

The company acknowledged the outbreak of COVID-19 and its potential adverse impacts on the national and global economy. While they have contingency plans in place and had not incurred significant disruptions at the time of the filing, they noted the inability to accurately predict the full impact due to numerous uncertainties, which could negatively affect demand, store operations, and supply chain.