10-KPeriod: FY2013

O REILLY AUTOMOTIVE INC Annual Report, Year Ended Dec 31, 2013

Filed February 28, 2014For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) demonstrated strong performance in 2013, highlighted by an 8% increase in sales to $6.65 billion, 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 million, 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 million of stock in 2013, signaling a commitment to returning value to shareholders.

Financial Highlights

48 data points
Beta

Revenue

$6.65B

50.7% Gross Margin

Net Income

$670.29M

10.1% Net Margin

EPS (Diluted)

$0.40

Total Assets

$6.07B

Cash & Equivalents

$231.32M

Free Cash Flow

$512.14M

Financial Statements
Beta
Revenue$6.65B
Cost of Revenue$3.28B
Gross Profit$3.37B
SG&A Expenses$2.27B
Operating Income$1.10B
Interest Expense$49.07M
Net Income$670.29M
EPS (Basic)$0.41
EPS (Diluted)$0.40
Shares Outstanding (Basic)1.64B
Shares Outstanding (Diluted)1.67B

Key Highlights

  • 1Achieved an 8% increase in sales, reaching $6.65 billion in 2013, supported by a 4.3% comparable store sales growth.
  • 2Expanded store count to 4,166 locations across 42 states, opening 190 net new stores in 2013.
  • 3Reported a 14% increase in net income to $670 million, with diluted EPS growing 27% to $6.03.
  • 4Maintained strong gross profit margins at 50.7%, driven by cost improvements and distribution efficiencies.
  • 5Successfully managed Selling, General, and Administrative (SG&A) expenses, which decreased as a percentage of sales to 34.1%.
  • 6Continued significant share repurchases, investing $933 million in 2013 to buy back stock.
  • 7Demonstrated a robust and well-managed supply chain and distribution network supporting store growth.

Frequently Asked Questions

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.

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%.

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.

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.