01—Abstract
Summary
Summary of the 10-K filed February 28, 2014. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) demonstrated strong performance in 2013, highlighted by an 8% increase in sales to $6.65 billiona, driven by comparable store sales growth of 4.3% and aggressive new store openings.
The company successfully expanded its footprint to 4,166 stores across 42 states, underscoring its commitment to consolidating the fragmented automotive aftermarket. Profitability also saw a significant boost, with net income up 14% to $670 millionb, translating to a diluted EPS of $6.03, a 27% increase year-over-year. This growth was supported by effective cost management, improved gross margins due to vendor programs and distribution efficiencies, and disciplined SG&A expenses.
The company's "dual market strategy" of serving both Do-It-Yourself (DIY) and professional service provider customers continues to be a key competitive advantage. O'Reilly emphasizes its technically proficient "Professional Parts People" and a robust, regional distribution network as pillars of its success.
Management remains confident in its growth strategy, which includes opening approximately 200 net new stores in 2014, continuing to enhance existing store performance, pursuing strategic acquisitions, and investing in its e-commerce platform. The company also continued its active share repurchase program, repurchasing $933 millionc of stock in 2013, signaling a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Achieved an 8% increase in sales, reaching $6.65 billion in 2013, supported by a 4.3% comparable store sales growth.
- Expanded store count to 4,166 locations across 42 states, opening 190 net new stores in 2013.
- Reported a 14% increase in net income to $670 million, with diluted EPS growing 27% to $6.03.
- Maintained strong gross profit margins at 50.7%, driven by cost improvements and distribution efficiencies.
- Successfully managed Selling, General, and Administrative (SG&A) expenses, which decreased as a percentage of sales to 34.1%.
- Continued significant share repurchases, investing $933 million in 2013 to buy back stock.
- Demonstrated a robust and well-managed supply chain and distribution network supporting store growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, O Reilly Automotive Inc kept $0.10.
- Revenue$6.65B100.0%
- Cost of revenue−$3.28B49.3%
- Gross profit$3.37B50.7%
- Operating costs−$2.27B34.1%
- Operating income$1.10B16.6%
- Interest, other & tax−$433.2M6.5%
- Net income$670.3M10.1%
Where FY2013 revenue went
$6.65B- Cost of revenue: $3.28B, 49% of revenue
- SG&A: $2.27B, 34% of revenue
- Net income: $670.3M, 10% of revenue
- Interest, other & tax: $433.2M, 6.5% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 28, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $6.65B$6.18B | +7.6% |
| Cost of Revenue | $3.28B$3.08B | +6.3% |
| Gross Profit | $3.37B$3.10B | +8.8% |
| SG&A Expenses | $2.27B$2.12B | +6.9% |
| Operating Income | $1.10B$977.39M | +12.9% |
| Interest Expense | $49.07M$40.20M | +22.1% |
| Net Income | $670.29M$585.75M | +14.4% |
| EPS (Basic) | $0.41$0.32 | +27.1% |
| EPS (Diluted) | $0.40$0.32 | +26.9% |
| Shares Outstanding (Basic) | 1.64B1.82B | −9.9% |
| Shares Outstanding (Diluted) | 1.67B1.85B | −9.9% |
05—Questions
Frequently Asked Questions
What is O'Reilly's primary business strategy and competitive advantage?
O'Reilly's primary business strategy is its "dual market strategy," serving both Do-It-Yourself (DIY) customers and professional service providers. Its key competitive advantages include this proven ability to effectively serve both customer segments, superior customer service provided by technically proficient "Professional Parts People," a strategic regional tiered distribution network, and an experienced management team.
How did O'Reilly perform financially in 2013?
In 2013, O'Reilly reported strong financial results. Sales increased by 8% to $6.65 billion, driven by a 4.3% increase in comparable store sales and the opening of 190 net new stores. Net income rose by 14% to $670 million, and diluted earnings per share grew by 27% to $6.03. The company also managed its expenses effectively, leading to an operating income increase of 13%.
What is O'Reilly's approach to growth and expansion?
O'Reilly's growth strategy is multifaceted. It focuses on aggressively opening new stores to consolidate the fragmented automotive aftermarket, with plans to open approximately 200 net new stores in 2014. The company also aims to grow sales in existing stores through superior customer service, selectively pursues strategic acquisitions, and continually enhances its store design, location strategy, and e-commerce website functionality.
How is O'Reilly returning value to shareholders?
O'Reilly is actively returning value to shareholders primarily through its share repurchase program. In 2013, the company repurchased $933 million worth of its common stock. While the company does not currently anticipate paying cash dividends, its consistent earnings growth and share buybacks are key mechanisms for shareholder value creation.
06—Continue