10-QPeriod: Q2 FY2025

AUTOZONE INC Quarterly Report for Q2 Ended Feb 15, 2025

Filed March 21, 2025For Securities:AZO

Summary

AutoZone Inc. reported its second-quarter results for the fiscal year ending February 15, 2025. Net sales saw a modest increase of 2.4% to $4.0 billion, driven by same-store sales growth and new store openings, although this was partially offset by unfavorable foreign currency exchange rates. Despite the sales increase, profitability metrics showed a decline. Operating profit decreased by 4.9% to $706.8 million, and net income fell by 5.3% to $487.9 million. Diluted earnings per share also decreased by 2.1% to $28.29. The company attributed some of the profit decline to unfavorable foreign currency exchange rates and a non-cash LIFO adjustment in the prior year. The company continues to invest in growth initiatives, including new stores and distribution centers, which contributed to an increase in operating expenses as a percentage of sales.

Financial Highlights

44 data points
Beta

Revenue

$3.95B

53.9% Gross Margin

Net Income

$487.92M

12.3% Net Margin

EPS (Diluted)

$28.29

Total Assets

$18.12B

Cash & Equivalents

$300.90M

Free Cash Flow

$291.05M

Financial Statements
Beta
Revenue$3.95B
Cost of Revenue$1.82B
Gross Profit$2.13B
SG&A Expenses$1.42B
Operating Income$706.77M
Net Income$487.92M
EPS (Basic)$29.06
EPS (Diluted)$28.29
Shares Outstanding (Basic)16.79M
Shares Outstanding (Diluted)17.25M

Key Highlights

  • 1Net sales increased by 2.4% to $4.0 billion for the twelve weeks ended February 15, 2025, compared to the prior year period.
  • 2Operating profit decreased by 4.9% to $706.8 million, and net income decreased by 5.3% to $487.9 million.
  • 3Diluted earnings per share declined by 2.1% to $28.29 for the quarter.
  • 4The company's domestic commercial sales showed a healthy increase of 7.3% ($71.6 million).
  • 5Operating expenses as a percentage of sales increased to 36.0% from 34.6% in the prior year period due to investments in growth initiatives.
  • 6The company repurchased $834.6 million of its common stock during the first twenty-four weeks of fiscal 2025.
  • 7Total assets grew to $18.1 billion, with merchandise inventories increasing to $6.6 billion.

Frequently Asked Questions

The primary drivers of the sales increase were a 2.9% increase in total company same-store sales on a constant currency basis and net sales of $71.8 million from new domestic and international stores. Domestic commercial sales also contributed positively with a 7.3% increase.

The decrease in net income and earnings per share was primarily due to unfavorable foreign currency exchange rates, which had a significant impact on sales and operating profit. Additionally, operating expenses increased as a percentage of sales due to investments in growth initiatives, and the prior year's comparable period benefited from a favorable non-cash LIFO adjustment.

AutoZone has strong liquidity, with $300.9 million in cash and cash equivalents and $2.2 billion in undrawn capacity on its Revolving Credit Agreement as of February 15, 2025. The company expects its operating cash flows, credit facilities, and long-term borrowings to fund operations, strategic investments, and share repurchases. They are also increasing capital expenditures for growth initiatives like new stores and distribution centers.

AutoZone acknowledges that its business is impacted by various economic factors such as inflation, interest rates, consumer debt, fuel costs, and supply chain disruptions. While they cannot predict the exact impact, they highlight miles driven and the average age of vehicles on the road as long-term indicators of market growth.