01—Abstract
Summary
Summary of the 10-Q filed December 18, 2023. Cited figures are marked; the original filing is the authoritative source.
AutoZone, Inc. reported strong financial performance for the twelve weeks ended November 18, 2023.
Net sales saw a notable increase of 5.1% to $4.2 billiona, driven by a 2.1% same-store sales growth on a constant currency basis and contributions from new store openings. The company demonstrated significant operational leverage, with operating profit rising 17.4% to $848.6 million. This translated into a 10.0% increase in net income, reaching $593.5 million, and a substantial 18.6% rise in diluted earnings per share to $32.55.
The gross margin improved to 52.8% from 50.1% year-over-year, benefiting from LIFO favorability and better merchandise margins, while operating expenses as a percentage of sales slightly increased due to investments in payroll and technology. The company continues to prioritize shareholder returns through an aggressive share repurchase program, buying back $1.5 billionb in the quarter.
Despite increased capital expenditures related to growth initiatives like new stores and supply chain expansion, AutoZone maintained a strong liquidity position with $283 millionc in cash and cash equivalents and significant undrawn capacity on its revolving credit facility. The average age of vehicles on the road remains a tailwind for the industry, supporting AutoZone's long-term growth outlook.
02—Key points
Key Highlights
- Net sales increased by 5.1% to $4.2 billion, exceeding prior year comparable period.
- Diluted earnings per share (EPS) grew significantly by 18.6% to $32.55.
- Gross margin improved to 52.8% from 50.1%, driven by LIFO favorability and better merchandise margins.
- Operating profit increased substantially by 17.4% to $848.6 million, showcasing operational leverage.
- The company repurchased $1.5 billion of common stock during the quarter, demonstrating a strong commitment to returning capital to shareholders.
- Capital expenditures increased to $235.4 million, reflecting investments in growth initiatives like new stores and supply chain expansion.
- AutoZone maintained a robust liquidity position with $283 million in cash and cash equivalents and $2.2 billion in undrawn credit facility capacity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, AutoZone Inc kept $0.14.
- Revenue$4.19B100.0%
- Cost of revenue−$1.98B47.2%
- Gross profit$2.21B52.8%
- Operating costs−$1.37B32.6%
- Operating income$848.6M20.3%
- Interest, other & tax−$255.1M6.1%
- Net income$593.5M14.2%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed December 18, 2023Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $4.19B$3.99B | +5.1% |
| Cost of Revenue | $1.98B$1.99B | −0.7% |
| Gross Profit | $2.21B$1.99B | +11.0% |
| SG&A Expenses | $1.37B$1.27B | +7.4% |
| Operating Income | $848.60M$723.03M | +17.4% |
| Net Income | $593.46M$539.32M | +10.0% |
| EPS (Basic) | $33.51$28.37 | +18.1% |
| EPS (Diluted) | $32.55$27.45 | +18.6% |
| Shares Outstanding (Basic) | 17.71M19.01M | −6.8% |
| Shares Outstanding (Diluted) | 18.23M19.64M | −7.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of AutoZone's sales growth in the quarter?
AutoZone's sales growth of 5.1% was primarily driven by a 2.1% increase in same-store sales on a constant currency basis and approximately $75.7 million in net sales from new domestic and international stores. Domestic commercial sales also saw a healthy increase of 5.7%.
How did AutoZone's profitability metrics perform?
Profitability showed strong improvement. Gross profit increased to $2.2 billion, with the gross margin expanding to 52.8% from 50.1% in the prior year. This was largely due to non-cash LIFO favorability and favorable supply chain costs. Operating profit rose 17.4% to $848.6 million, and net income increased 10.0% to $593.5 million. Diluted EPS grew by 18.6% to $32.55.
What is the company's stance on returning capital to shareholders?
AutoZone continues to be aggressive in returning capital to shareholders, repurchasing $1.5 billion of its common stock during the quarter. The company had $333.1 million remaining under its Board's authorization for share repurchases as of November 18, 2023.
How is AutoZone investing in its future growth?
The company increased its capital expenditures significantly to $235.4 million (compared to $114.4 million in the prior year period). These investments are focused on growth initiatives, including new store openings, supply chain expansion (hub and mega hub projects), and distribution center enhancements.
06—Continue