01—Abstract
Summary
Summary of the 10-K filed February 28, 2012. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) reported its annual results for the fiscal year ended December 31, 2011.
The company experienced a 7.2% increase in sales, reaching $5.79 billiona, driven by a 4.6% comparable store sales growth and the opening of 170 new stores. This expansion brings the total store count to 3,740 across 39 states. The company's dual market strategy, serving both DIY and professional service providers, continues to be a key driver of growth, with professional service provider sales increasing as a percentage of the total sales mix.
Profitability also saw a significant boost, with operating income up 22% to $867 millionb and net income increasing by 21% to $508 million. This improvement was attributed to favorable product mix, improved acquisition costs, better inventory management, and operating efficiencies, alongside a reduction in legacy legal charges compared to the previous year. The company also strengthened its financial position by refinancing its debt, issuing new senior notes, and repurchasing shares under a $1.5 billion program, demonstrating a commitment to shareholder value and operational strength in a competitive market.
02—Key points
Key Highlights
- Sales increased by 7.2% to $5.79 billion.
- Comparable store sales grew by 4.6%.
- Opened 170 net new stores, bringing the total to 3,740.
- Operating income increased by 22% to $867 million.
- Net income rose by 21% to $508 million.
- Company significantly expanded its share repurchase program to $1.5 billion.
- Refinanced debt, issuing $800 million in senior notes.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2011, O Reilly Automotive Inc kept $0.09.
- Revenue$5.79B100.0%
- Cost of revenue−$2.95B51.0%
- Gross profit$2.84B49.0%
- Operating costs−$1.97B34.0%
- Operating income$866.8M15.0%
- Interest, other & tax−$359.1M6.2%
- Net income$507.7M8.8%
Where FY2011 revenue went
$5.79B- Cost of revenue: $2.95B, 51% of revenue
- SG&A: $1.97B, 34% of revenue
- Net income: $507.7M, 8.8% of revenue
- Interest, other & tax: $359.1M, 6.2% of revenue
Kept 8.8% as net incomeNet income $507.7M · 8.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 28, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $5.79B$5.40B | +7.2% |
| Cost of Revenue | $2.95B$2.78B | +6.3% |
| Gross Profit | $2.84B$2.62B | +8.3% |
| SG&A Expenses | $1.97B$1.89B | +4.6% |
| Operating Income | $866.77M$712.78M | +21.6% |
| Interest Expense | $28.16M$39.27M | −28.3% |
| Net Income | $507.67M$419.37M | +21.1% |
| EPS (Basic) | $0.25$0.20 | +24.8% |
| EPS (Diluted) | $0.25$0.20 | +25.8% |
| Shares Outstanding (Basic) | 2.02B2.08B | −2.9% |
| Shares Outstanding (Diluted) | 2.05B2.13B | −3.5% |
05—Questions
Frequently Asked Questions
What is O'Reilly's primary business strategy?
O'Reilly operates as a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories. Their core strategy is a 'dual market strategy,' serving both do-it-yourself (DIY) customers and professional service providers. They focus on superior customer service, technical proficiency of staff, a broad product selection, and strategic distribution networks.
How did the CSK acquisition impact the business?
The acquisition of CSK Auto Corporation in July 2008 significantly expanded O'Reilly's store count and geographic reach, particularly in the Western United States. While integrating CSK presented challenges, O'Reilly has been working to implement its successful dual market strategy and operational efficiencies across the acquired stores, which is contributing to sales growth and market share gains in those regions.
What is the company's approach to growth?
O'Reilly's growth strategy focuses on several key areas: aggressively opening new stores, growing sales in existing stores through improved customer service and product offerings, selectively pursuing strategic acquisitions, and continually enhancing store design and location. They plan to open approximately 180 new stores in 2012.
How is the company managing its debt and capital structure?
In 2011, O'Reilly made significant moves to strengthen its capital structure. This included issuing $500 million in 4.875% Senior Notes due 2021 and $300 million in 4.625% Senior Notes due 2021, using the proceeds to repay outstanding borrowings under its asset-based revolving credit facility. Additionally, the company amended and extended its unsecured revolving credit facility. The company also continued its share repurchase program, increasing the authorization to $1.5 billion, demonstrating a focus on returning capital to shareholders.
06—Continue