01—Abstract
Summary
Summary of the 10-K filed February 28, 2017. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) reported strong performance in its 2016 10-K filing, demonstrating consistent growth and strategic execution.
The company continued its aggressive store expansion, opening 210 net new stores and acquiring 48 Bond Auto Parts stores, bringing its total store count to 4,829 across 47 states. This expansion, coupled with a 4.8% increase in comparable store sales and a 7.5% rise in average ticket value, drove an 8% increase in total sales to $8.59 billiona. The company's dual-market strategy, serving both DIY and professional service providers, remains a key differentiator.
O'Reilly's focus on superior customer service, technically proficient "Professional Parts People," and a robust, tiered distribution network are highlighted as core competitive advantages. The company also effectively managed its operating expenses, with SG&A decreasing as a percentage of sales, contributing to a 12% increase in operating income. O'Reilly's commitment to shareholder returns is evident through its active share repurchase program, repurchasing approximately $1.5 billionb in shares during 2016.
02—Key points
Key Highlights
- O'Reilly Automotive Inc. reported an 8% increase in sales, reaching $8.59 billion for the year ended December 31, 2016.
- Comparable store sales increased by 4.8%, indicating healthy growth in existing locations.
- The company expanded its store footprint by opening 210 net new stores and acquiring 48 Bond Auto Parts stores, ending the year with 4,829 locations.
- O'Reilly's dual-market strategy (serving both DIY and professional customers) continued to be effective, with professional service provider sales growing faster than DIY sales.
- Operating income increased by 12% to $1.70 billion, and net income rose by 11% to $1.04 billion.
- The company repurchased approximately $1.5 billion of its common stock in 2016 under its share repurchase program.
- O'Reilly maintained strong financial health with a consolidated fixed charge coverage ratio of 6.15x, indicating robust ability to meet debt obligations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, O Reilly Automotive Inc kept $0.12.
- Revenue$8.59B100.0%
- Cost of revenue−$4.08B47.5%
- Gross profit$4.51B52.5%
- Operating costs−$2.81B32.7%
- Operating income$1.70B19.8%
- Interest, other & tax−$661.5M7.7%
- Net income$1.04B12.1%
Where FY2016 revenue went
$8.59B- Cost of revenue: $4.08B, 48% of revenue
- SG&A: $2.81B, 33% of revenue
- Net income: $1.04B, 12% of revenue
- Interest, other & tax: $661.5M, 7.7% of revenue
Kept 12% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 28, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $8.59B$7.97B | +7.9% |
| Cost of Revenue | $4.08B$3.80B | +7.4% |
| Gross Profit | $4.51B$4.16B | +8.3% |
| SG&A Expenses | $2.81B$2.65B | +6.1% |
| Operating Income | $1.70B$1.51B | +12.2% |
| Interest Expense | $70.93M$57.13M | +24.2% |
| Net Income | $1.04B$931.22M | +11.4% |
| EPS (Basic) | $0.72$0.62 | +16.6% |
| EPS (Diluted) | $0.72$0.61 | +17.0% |
| Shares Outstanding (Basic) | 1.43B1.50B | −4.5% |
| Shares Outstanding (Diluted) | 1.45B1.52B | −4.7% |
05—Questions
Frequently Asked Questions
What is O'Reilly's primary business strategy?
O'Reilly's primary business strategy is a "dual market strategy" focused on serving both "do-it-yourself" (DIY) customers and professional service provider customers with automotive aftermarket parts, tools, supplies, equipment, and accessories. They emphasize superior customer service, technically proficient staff, and a strong distribution network.
How did O'Reilly perform in terms of store growth in 2016?
In 2016, O'Reilly aggressively expanded its store network, opening 210 net new stores and acquiring 48 Bond Auto Parts stores. This brought their total store count to 4,829 across 47 states.
What was the key financial performance metric highlighted in the report?
The company reported significant growth in key financial metrics. Sales increased by 8% to $8.59 billion, comparable store sales grew by 4.8%, operating income rose by 12% to $1.70 billion, and net income increased by 11% to $1.04 billion. Diluted earnings per share saw a 17% increase.
How does O'Reilly manage its debt and capital structure?
O'Reilly manages its capital structure through a combination of operating cash flow and debt. They have senior notes totaling $1.9 billion and a $600 million unsecured revolving credit facility, which they had no borrowings against as of year-end 2016. The company's strong financial performance, including a fixed charge coverage ratio of 6.15x, demonstrates its ability to manage its debt obligations effectively.
06—Continue