10-KPeriod: FY2019

O REILLY AUTOMOTIVE INC Annual Report, Year Ended Dec 31, 2019

Filed February 28, 2020For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) demonstrated resilience and growth in its 2019 fiscal year, as reflected in this 10-K filing. The company continued its expansion strategy, opening a significant number of new stores and completing the acquisition of Mayasa in Mexico, which broadened its geographic reach. O'Reilly's 'dual market strategy,' serving both DIY and professional service providers, remained a key driver of its success, with comparable store sales showing a healthy increase. The company highlighted its commitment to superior customer service, technically proficient staff, and a robust distribution network as core competitive advantages. Financially, O'Reilly reported increased sales and net income, underscoring its ability to navigate a competitive market and manage costs effectively. The company also continued its share repurchase program and managed its debt levels responsibly. While facing typical industry risks such as economic conditions and competition, O'Reilly's management expressed confidence in its continued ability to gain market share and achieve profitable growth through strategic store development, operational efficiency, and a focus on customer satisfaction.

Financial Highlights

48 data points
Beta

Revenue

$10.15B

53.1% Gross Margin

Net Income

$1.39B

13.7% Net Margin

EPS (Diluted)

$1.19

Total Assets

$10.72B

Cash & Equivalents

$40.41M

Free Cash Flow

$1.08B

Financial Statements
Beta
Revenue$10.15B
Cost of Revenue$4.76B
Gross Profit$5.39B
SG&A Expenses$3.47B
Operating Income$1.92B
Interest Expense$139.97M
Net Income$1.39B
EPS (Basic)$1.20
EPS (Diluted)$1.19
Shares Outstanding (Basic)1.15B
Shares Outstanding (Diluted)1.17B

Key Highlights

  • 1O'Reilly Automotive expanded its store footprint significantly in 2019, opening 200 net new domestic stores and completing the acquisition of Mayasa, adding 21 stores in Mexico.
  • 2Comparable store sales increased by 4.0% for the year ended December 31, 2019, indicating strong performance in existing locations.
  • 3The company reported an increase in sales to $10.15 billion and net income to $1.39 billion, demonstrating continued revenue and profit growth.
  • 4O'Reilly continued its share repurchase program, repurchasing 3.877 million shares for $1.43 billion during 2019.
  • 5The company maintained a strong focus on its 'dual market strategy,' serving both DIY and professional service provider customers, which contributed to its sales growth.
  • 6O'Reilly highlighted its robust distribution network, consisting of 28 regional distribution centers and 356 hub stores, as a key competitive advantage.
  • 7The company reported healthy financial metrics, including operating income of $1.92 billion and earnings per diluted share of $17.88.

Frequently Asked Questions

O'Reilly's growth strategy in 2019 focused on aggressively opening new stores, growing sales in existing stores, selectively pursuing strategic acquisitions, continually enhancing store design and location, and executing an omnichannel growth strategy. The company opened 200 net new stores domestically and acquired 21 stores in Mexico through the acquisition of Mayasa.

The 'dual market strategy,' serving both do-it-yourself (DIY) and professional service provider customers, was a key driver of O'Reilly's performance in 2019. The company reported that comparable store sales increased by 4.0%, with a notable increase in average ticket values for both customer segments. While transaction counts for DIY customers were flat, professional service provider transactions were positive.

In 2019, O'Reilly reported a 6% increase in sales to $10.15 billion and a 5% increase in net income to $1.39 billion. Operating income grew by 6% to $1.92 billion. Diluted earnings per share increased by 11% to $17.88.

O'Reilly managed its capital through strong operating cash flows and availability under its revolving credit facility. The company continued its share repurchase program, investing $1.43 billion in repurchasing its common stock. It also issued $500 million in senior notes. O'Reilly's debt-to-equity ratio remained manageable, and the company was in compliance with its debt covenants.

Key risks identified include deteriorating economic conditions impacting customer demand, intense competition in the automotive aftermarket, sensitivity to regional economic and weather conditions, the need to achieve future growth, retaining key employees, challenges with suppliers, risks associated with acquisitions, business interruptions at facilities, cybersecurity threats, potential litigation, and the impact of debt levels and credit ratings. The company also noted risks related to international operations and foreign currency fluctuations.