10-KPeriod: FY2010

O REILLY AUTOMOTIVE INC Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) demonstrated robust growth and operational execution in its fiscal year ending December 31, 2010. The company successfully integrated the acquired CSK Auto Corporation, expanding its store count to 3,570 across 38 states. Sales saw a significant increase of 11%, driven by strong comparable store sales growth of 8.8% and the addition of new stores. The integration of CSK has progressed well, with all stores converted to O'Reilly's systems by the end of 2010, positioning the company for continued market share gains and operational efficiencies. Financially, O'Reilly reported a substantial increase in operating income and net income, reflecting improved gross margins due to better product mix and vendor negotiations, alongside leverage on selling, general, and administrative expenses. The company also addressed its debt structure, repaying significant portions of its credit facility and issuing new senior notes in early 2011 to strengthen its financial position. Despite economic headwinds, O'Reilly's strategy of serving both DIY and professional service providers, coupled with its focus on customer service and efficient distribution, appears to be yielding positive results.

Financial Highlights

46 data points
Beta

Revenue

$5.40B

48.6% Gross Margin

Net Income

$419.37M

7.8% Net Margin

EPS (Diluted)

$0.20

Total Assets

$5.05B

Cash & Equivalents

$29.72M

Free Cash Flow

$338.27M

Financial Statements
Beta
Revenue$5.40B
Cost of Revenue$2.78B
Gross Profit$2.62B
SG&A Expenses$1.89B
Operating Income$712.78M
Interest Expense$39.27M
Net Income$419.37M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)2.08B
Shares Outstanding (Diluted)2.13B

Key Highlights

  • 1Sales increased by 11% to $5.4 billion in fiscal year 2010, driven by a strong comparable store sales growth of 8.8%.
  • 2The company successfully integrated 1,342 acquired CSK Auto Corporation stores, expanding its total store count to 3,570 across 38 states.
  • 3Operating income grew by 33% to $713 million, demonstrating improved operational leverage and profitability.
  • 4Net income increased by 36% to $419 million, reflecting the positive impact of sales growth and operational efficiencies.
  • 5The company is strategically expanding its store base, planning to open 170 net new stores in 2011.
  • 6O'Reilly continues to enhance its dual market strategy, serving both Do-It-Yourself (DIY) and professional service provider customers, with professional sales growing.
  • 7The company repaid a significant portion of its debt and refinanced its credit facility in early 2011, strengthening its balance sheet.

Frequently Asked Questions

The acquisition of CSK Auto Corporation, completed in July 2008, significantly expanded O'Reilly's footprint, adding 1,342 stores in 22 states. By the end of 2010, all CSK stores had been converted to O'Reilly's systems, and the company had integrated them into its distribution network. This integration is key to O'Reilly's strategy of expanding its market share in the Western United States and implementing its dual-market strategy more broadly.

O'Reilly generated strong cash flow from operations, which allowed it to substantially pay down its outstanding borrowings under its secured credit facility in 2010. In January 2011, the company further strengthened its financial position by issuing $500 million in unsecured senior notes and entering into a new $750 million unsecured revolving credit facility, which replaced its previous secured credit facility. This proactive approach reduced its overall debt and improved its liquidity.

O'Reilly's growth strategy involves aggressively opening new stores, planning for approximately 170 net new stores in 2011. It also focuses on achieving profitable same-store sales growth by enhancing customer service and product availability. Additionally, the company continues to selectively pursue strategic acquisitions that align with its business model and market expansion goals.

Historically, O'Reilly aimed for a 50/50 sales mix between DIY and professional service providers. In 2010, DIY customers represented approximately 62% of sales, while professional service providers accounted for 38%. The company expects this mix to move closer to historical averages as it continues to grow its commercial business, particularly within the acquired CSK store network.