Summary
O'Reilly Automotive, Inc. (ORLY) reported strong growth in its third quarter and the first nine months of 2005. Total product sales increased significantly year-over-year, driven by both new store openings and comparable store sales growth. The company also experienced an improvement in gross profit margin due to reduced merchandise costs and lower warehouse and delivery expenses. Financially, the company shows a healthy income statement with increased net income. However, operating cash flows decreased slightly due to smaller increases in accounts payable compared to the prior year, while investing activities saw a substantial rise in cash used, primarily due to the acquisition of Midwest Auto Parts Distributors and increased capital expenditures for new stores. The company maintains a strong liquidity position with ample availability under its revolving credit facility and expresses confidence in its ability to fund ongoing expansion and operational needs.
Key Highlights
- 1Product sales increased by 19.3% to $542.9 million in Q3 2005 and by 18.3% to $1.5 billion for the first nine months of 2005 compared to the prior year periods.
- 2Comparable store sales grew by 6.1% in Q3 2005 and 7.6% for the first nine months of 2005.
- 3Gross profit margin remained stable at 43.5% of product sales in Q3 2005 and slightly increased to 43.2% for the nine-month period, driven by reduced vendor costs and warehouse expenses.
- 4Net income rose to $48.6 million in Q3 2005 ($0.43 per share basic) and $124.8 million for the nine months ($1.12 per share basic).
- 5The company acquired Midwest Auto Parts Distributors for $63 million on May 31, 2005.
- 6A two-for-one stock split was declared and effected on May 20, 2005.
- 7Net cash provided by operating activities decreased by $14.5 million to $183.1 million for the first nine months of 2005, primarily due to a smaller increase in accounts payable.
- 8Net cash used in investing activities significantly increased to $214.5 million for the nine months of 2005, mainly due to the Midwest acquisition and increased capital expenditures.