01—Abstract
Summary
Summary of the 10-K filed February 27, 2015. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) reported strong performance in its 2014 10-K filing, demonstrating consistent growth and a robust business model.
The company, a leading specialty retailer of automotive aftermarket parts, tools, and accessories, continues to benefit from its "dual market strategy" serving both do-it-yourself (DIY) and professional service provider customers. This strategy, combined with superior customer service, technically proficient "Professional Parts People," and an efficient distribution network, forms the core of O'Reilly's competitive advantages. The company's growth strategy remains focused on aggressively opening new stores, growing sales in existing stores, and selectively pursuing strategic acquisitions.
In 2014, O'Reilly opened 200 net new stores and planned for approximately 205 in 2015, indicating a continued expansion of its market presence. The financial highlights show a significant increase in sales and net income, reflecting the success of these strategies. O'Reilly also demonstrates a strong commitment to shareholder returns through its active share repurchase program.
02—Key points
Key Highlights
- O'Reilly operates as a leading specialty retailer in the automotive aftermarket industry, serving both DIY and professional customers with a broad range of parts, tools, and accessories.
- The company continues its aggressive store expansion, opening 200 net new stores in 2014 and planning for 205 net new stores in 2015, reinforcing its market penetration.
- Sales increased by 9% to $7.22 billion in 2014, with comparable store sales up 6.0%, indicating healthy organic growth.
- Net income rose by 16% to $778 million in 2014, with diluted EPS increasing 22% to $7.34, showcasing improved profitability.
- O'Reilly maintains a strong balance sheet with a Debt-to-Equity ratio of 0.69:1 as of December 31, 2014, and ample liquidity, with no outstanding borrowings under its $600 million revolving credit facility.
- The company actively returns capital to shareholders, having repurchased approximately 46.5 million shares for $4.2 billion since January 2011.
- Key competitive advantages include a proven "dual market strategy," exceptional customer service, knowledgeable staff, and an efficient, tiered distribution network.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2014, O Reilly Automotive Inc kept $0.11.
- Revenue$7.22B100.0%
- Cost of revenue−$3.51B48.6%
- Gross profit$3.71B51.4%
- Operating costs−$2.44B33.8%
- Operating income$1.27B17.6%
- Interest, other & tax−$492.2M6.8%
- Net income$778.2M10.8%
Where FY2014 revenue went
$7.22B- Cost of revenue: $3.51B, 49% of revenue
- SG&A: $2.44B, 34% of revenue
- Net income: $778.2M, 11% of revenue
- Interest, other & tax: $492.2M, 6.8% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 27, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $7.22B$6.65B | +8.5% |
| Cost of Revenue | $3.51B$3.28B | +6.9% |
| Gross Profit | $3.71B$3.37B | +10.1% |
| SG&A Expenses | $2.44B$2.27B | +7.6% |
| Operating Income | $1.27B$1.10B | +15.1% |
| Interest Expense | $53.29M$49.07M | +8.6% |
| Net Income | $778.18M$670.29M | +16.1% |
| EPS (Basic) | $0.50$0.41 | +21.5% |
| EPS (Diluted) | $0.49$0.40 | +21.7% |
| Shares Outstanding (Basic) | 1.56B1.64B | −4.6% |
| Shares Outstanding (Diluted) | 1.59B1.67B | −4.6% |
05—Questions
Frequently Asked Questions
What is O'Reilly's core business strategy?
O'Reilly's core strategy is its "dual market strategy," which focuses on serving both do-it-yourself (DIY) customers and professional service providers with a wide selection of automotive aftermarket parts, tools, supplies, equipment, and accessories. This is complemented by a commitment to superior customer service, technically proficient staff, and an efficient distribution network.
How is O'Reilly driving growth?
O'Reilly is driving growth through a multi-pronged approach: aggressively opening new stores to increase market penetration, growing sales within existing stores by enhancing customer service and product availability, and selectively pursuing strategic acquisitions to consolidate the fragmented automotive aftermarket industry.
What is the company's approach to returning capital to shareholders?
O'Reilly actively returns capital to shareholders primarily through its share repurchase program. As of February 27, 2015, the company had repurchased approximately 46.5 million shares for a total of $4.2 billion since January 2011, and maintained significant capacity under its authorized repurchase program.
Are there any significant risks facing O'Reilly?
Key risks identified include deteriorating economic conditions that could impact customer demand, intense competition within the automotive aftermarket, sensitivity to regional economic and weather conditions, reliance on key personnel, supply chain risks, potential complications from future acquisitions, and increased debt levels. The company also faces risks related to data security and environmental regulations.
06—Continue