01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) filed its 2009 10-K on February 25, 2010, detailing a year marked by the significant integration of the CSK Auto Corporation acquisition completed in July 2008.
The company operated 3,421 stores across 38 states at the close of 2009. O'Reilly emphasizes its "dual market strategy," serving both do-it-yourself (DIY) and professional installer customers, which it believes is a key competitive advantage. The integration of CSK involved converting store systems, enhancing distribution infrastructure, and aligning product offerings, with the process expected to continue into 2011.
The company highlighted its experienced management team and a proven ability to execute its growth strategy, which includes opening new stores and selectively pursuing strategic acquisitions. Financially, O'Reilly reported increased sales driven by the full inclusion of CSK's results and comparable store sales growth. The company also saw improvements in gross profit margins attributed to lower product acquisition costs, favorable product mix, and distribution system enhancements.
However, the acquisition also led to increased debt levels and higher selling, general, and administrative (SG&A) expenses. Despite economic headwinds, O'Reilly expressed confidence in its liquidity and ability to fund future growth through operating cash flows and its credit facility.
02—Key points
Key Highlights
- O'Reilly operated 3,421 stores in 38 states by the end of 2009, following the acquisition of CSK Auto Corporation.
- The company continued to focus on its "dual market strategy" (DIY and professional installers), a key competitive advantage.
- Sales increased significantly due to the full inclusion of CSK's operations and positive comparable store sales growth.
- Gross profit margin improved, driven by lower product acquisition costs and better product mix.
- Significant investments were made in distribution infrastructure, including new distribution centers to support the acquired CSK stores.
- The company maintained strong executive and store management with extensive tenure, contributing to operational consistency.
- Increased debt levels from the CSK acquisition were noted as a risk factor, alongside integration challenges.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, O Reilly Automotive Inc kept $0.06.
- Revenue$4.85B100.0%
- Cost of revenue−$2.52B52.0%
- Gross profit$2.33B48.0%
- Operating costs−$1.79B36.9%
- Operating income$537.6M11.1%
- Interest, other & tax−$230.1M4.7%
- Net income$307.5M6.3%
Where FY2009 revenue went
$4.85B- Cost of revenue: $2.52B, 52% of revenue
- SG&A: $1.79B, 37% of revenue
- Net income: $307.5M, 6.3% of revenue
- Interest, other & tax: $230.1M, 4.7% of revenue
Kept 6.3% as net incomeNet income $307.5M · 6.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $4.85B$3.58B | +35.5% |
| Cost of Revenue | $2.52B$1.95B | +29.3% |
| Gross Profit | $2.33B$1.63B | +42.9% |
| SG&A Expenses | $1.79B$1.29B | +38.4% |
| Operating Income | $537.62M$335.62M | +60.2% |
| Interest Expense | $45.18M$26.14M | +72.8% |
| Net Income | $307.50M$186.23M | +65.1% |
| EPS (Basic) | $0.15$0.10 | +50.7% |
| EPS (Diluted) | $0.15$0.10 | +50.7% |
| Shares Outstanding (Basic) | 2.04B1.87B | +9.4% |
| Shares Outstanding (Diluted) | 2.07B1.88B | +9.9% |
05—Questions
Frequently Asked Questions
What was the primary strategic initiative for O'Reilly during 2009?
The primary strategic initiative for O'Reilly in 2009 was the ongoing integration of the CSK Auto Corporation acquisition, which was completed in July 2008. This involved converting CSK stores to O'Reilly's systems and branding, enhancing distribution networks, and aligning product offerings to leverage O'Reilly's 'dual market strategy'.
How did the CSK acquisition impact the company's financial performance?
The CSK acquisition significantly increased O'Reilly's store count and sales. While it boosted revenue and gross profit dollars, it also led to higher selling, general, and administrative expenses and increased debt levels. The integration process itself incurred costs and required substantial investment in infrastructure.
What are O'Reilly's key competitive advantages?
O'Reilly identifies several key competitive advantages, including its proven ability to execute a dual market strategy (serving both DIY and professional installers), superior customer service provided by technically proficient 'Professional Parts People,' a strategic and expanding distribution system, and an experienced management team with a long track record of success.
What is the outlook for store growth in the near future?
For 2010, O'Reilly planned to open approximately 150 new stores. The company also planned significant conversions of acquired CSK stores to O'Reilly branded stores and the opening of new distribution centers to support the expanded store network.
06—Continue