10-QPeriod: Q3 FY2022

AUTOZONE INC Quarterly Report for Q3 Ended May 7, 2022

Filed June 10, 2022For Securities:AZO

Summary

AutoZone Inc. (AZO) reported solid performance for the third quarter of fiscal year 2022, ending May 7, 2022. Net sales increased by 5.9% to $3.9 billion, driven by a 2.6% rise in domestic same-store sales and a significant 26.0% increase in domestic commercial sales, which now constitute approximately 30% of domestic auto parts sales. This growth underscores the company's expanding reach within the professional repair market. Despite the sales increase, operating profit saw a slight decrease of 2.2% to $785.7 million, largely due to accelerated growth in the lower-margin commercial business and payroll deleverage compared to the prior year's strong performance. However, net income remained robust at $592.6 million, a marginal 0.6% decrease. Diluted earnings per share (EPS) demonstrated strong growth, increasing by 9.6% to $29.03, indicating effective capital allocation and share repurchases. The company maintains a strong liquidity position with $263.0 million in cash and equivalents and substantial undrawn capacity on its revolving credit facility, supporting its strategy of reinvesting in growth initiatives and returning capital to shareholders.

Financial Highlights

45 data points
Beta

Revenue

$3.87B

51.9% Gross Margin

Net Income

$592.57M

15.3% Net Margin

EPS (Diluted)

$29.03

Total Assets

$14.52B

Cash & Equivalents

$263.04M

Free Cash Flow

$682.16M

Financial Statements
Beta
Revenue$3.87B
Cost of Revenue$1.86B
Gross Profit$2.01B
SG&A Expenses$1.22B
Operating Income$785.67M
Net Income$592.57M
EPS (Basic)$29.93
EPS (Diluted)$29.03
Shares Outstanding (Basic)19.80M
Shares Outstanding (Diluted)20.41M

Key Highlights

  • 1Net sales increased by 5.9% to $3.9 billion for the twelve weeks ended May 7, 2022.
  • 2Domestic same-store sales grew by 2.6%, while domestic commercial sales surged by 26.0%.
  • 3Gross profit margin slightly decreased to 51.9% from 52.4% due to a higher mix of lower-margin commercial sales.
  • 4Operating expenses as a percentage of sales increased to 31.6% from 30.4%, attributed to payroll deleverage.
  • 5Diluted earnings per share (EPS) increased by 9.6% to $29.03, benefiting from share repurchases.
  • 6The company repaid $500 million in senior notes and managed its debt structure, ending the period with $2.2 billion in availability under its revolving credit facility.
  • 7AutoZone repurchased $3.4 billion of its common stock during the first thirty-six weeks of fiscal 2022, with $2.1 billion remaining authorization.

Frequently Asked Questions

The primary driver of AutoZone's sales growth was a combination of a 2.6% increase in domestic same-store sales and a significant 26.0% increase in domestic commercial sales. The growth in the commercial segment, which serves repair garages and fleets, is a key focus area for the company.

The gross profit margin decreased slightly from 52.4% to 51.9%. This was primarily driven by an accelerated growth in the company's lower-margin commercial business segment compared to the retail segment.

AutoZone repaid $500 million in senior notes during the period and maintained a strong liquidity position with $263.0 million in cash and cash equivalents. Additionally, it had $2.2 billion in undrawn capacity on its revolving credit facility, providing flexibility for operations, investments, and shareholder returns.

AutoZone has a robust share repurchase program. During the first 36 weeks of fiscal 2022, the company repurchased $3.4 billion of its common stock and has $2.1 billion remaining under its current authorization, demonstrating a continued commitment to returning capital to shareholders.