10-KPeriod: FY2011

O REILLY AUTOMOTIVE INC Annual Report, Year Ended Dec 31, 2011

Filed February 28, 2012For Securities:ORLY

Summary

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 billion, 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 million 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.

Financial Highlights

47 data points
Beta

Revenue

$5.79B

49.0% Gross Margin

Net Income

$507.67M

8.8% Net Margin

EPS (Diluted)

$0.25

Total Assets

$5.50B

Cash & Equivalents

$361.55M

Free Cash Flow

$790.67M

Financial Statements
Beta
Revenue$5.79B
Cost of Revenue$2.95B
Gross Profit$2.84B
SG&A Expenses$1.97B
Operating Income$866.77M
Interest Expense$28.16M
Net Income$507.67M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)2.02B
Shares Outstanding (Diluted)2.05B

Key Highlights

  • 1Sales increased by 7.2% to $5.79 billion.
  • 2Comparable store sales grew by 4.6%.
  • 3Opened 170 net new stores, bringing the total to 3,740.
  • 4Operating income increased by 22% to $867 million.
  • 5Net income rose by 21% to $508 million.
  • 6Company significantly expanded its share repurchase program to $1.5 billion.
  • 7Refinanced debt, issuing $800 million in senior notes.

Frequently Asked Questions

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.

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.

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.

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.