10-QPeriod: Q1 FY2021

AUTOZONE INC Quarterly Report for Q1 Ended Nov 21, 2020

Filed December 18, 2020For Securities:AZO

Summary

AutoZone Inc. (AZO) reported strong financial results for the twelve weeks ended November 21, 2020. Net sales increased by 12.9% year-over-year, driven by a robust 12.3% increase in domestic same-store sales. The company also saw a significant 23.0% rise in operating profit and a 26.3% increase in net income, reaching $442.4 million. Diluted earnings per share saw a substantial improvement of 30.1%, rising to $18.61 from $14.30 in the prior year's comparable period. The company's performance was bolstered by strong sales in failure and maintenance-related auto parts, which continued to represent the majority of their sales mix. Additionally, the average age of vehicles on the road, exceeding 11 years, remains a favorable long-term trend for the automotive aftermarket industry. AutoZone continues its aggressive share repurchase program, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

44 data points
Beta

Revenue

$3.15B

53.1% Gross Margin

Net Income

$442.43M

14.0% Net Margin

EPS (Diluted)

$18.61

Total Assets

$14.57B

Cash & Equivalents

$1.66B

Free Cash Flow

$570.46M

Financial Statements
Beta
Revenue$3.15B
Cost of Revenue$1.48B
Gross Profit$1.68B
SG&A Expenses$1.06B
Operating Income$615.23M
Net Income$442.43M
EPS (Basic)$19.05
EPS (Diluted)$18.61
Shares Outstanding (Basic)23.22M
Shares Outstanding (Diluted)23.78M

Key Highlights

  • 1Net sales grew by 12.9% to $3.15 billion compared to the prior year's comparable period.
  • 2Domestic same-store sales increased by a strong 12.3%.
  • 3Operating profit rose by 23.0% to $615.2 million.
  • 4Net income increased by 26.3% to $442.4 million.
  • 5Diluted earnings per share grew by 30.1% to $18.61.
  • 6The company repurchased $678.3 million of its common stock during the quarter.
  • 7The average age of vehicles on the road continues to increase, exceeding 11 years, which is a positive indicator for the industry.

Frequently Asked Questions

AutoZone reported a 12.9% increase in net sales for the twelve weeks ended November 21, 2020, reaching $3.15 billion. This growth was primarily driven by a 12.3% rise in domestic same-store sales and an 11.9% increase in domestic commercial sales.

The COVID-19 pandemic has continued to impact AutoZone. While sales remain elevated compared to pre-pandemic levels, the company has observed a deceleration in sales growth rates. AutoZone continues to invest in employee and customer safety, incurring increased operating expenses for personal protective equipment and enhanced cleaning protocols. An estimated $50 million expense related to additional Emergency Time-Off benefits for employees is expected in the second quarter of fiscal 2021.

AutoZone actively manages its capital through significant share repurchases. During the twelve weeks ended November 21, 2020, the company repurchased $678.3 million of its common stock. Furthermore, the Board authorized an additional $1.5 billion for share repurchases, bringing the cumulative authorization to $24.65 billion.

Key financial highlights include a 12.9% increase in net sales, a 23.0% rise in operating profit, and a 30.1% increase in diluted earnings per share. The company also noted a strong operating cash flow of $683.5 million and an adjusted after-tax return on invested capital (ROIC) of 40.3% for the trailing four quarters.