10-QPeriod: Q3 FY2015

O REILLY AUTOMOTIVE INC Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 6, 2015For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported strong financial results for the nine months ended September 30, 2015, driven by robust sales growth and improved profitability. Total sales increased by 10% to $6.02 billion, with comparable store sales showing a healthy 7.4% increase. This growth was fueled by an increase in both average ticket values and customer transaction counts, benefiting from favorable macroeconomic conditions such as lower gas prices and decreasing unemployment, which led to more miles driven. The company demonstrated improved operational efficiency, with gross profit margin increasing to 52.1% of sales and operating income rising by 19% to $1.15 billion. Net income saw a significant jump of 19% to $713 million, translating to a diluted earnings per share of $6.98, up 25% year-over-year. O'Reilly continues its expansion strategy, opening 160 net new stores during the period, bringing the total store count to 4,523. The company also actively returned capital to shareholders through share repurchases, investing $849 million in buybacks during the first nine months of the year.

Financial Highlights

44 data points
Beta

Revenue

$2.08B

52.4% Gross Margin

Net Income

$266.27M

12.8% Net Margin

EPS (Diluted)

$0.18

Total Assets

$6.78B

Cash & Equivalents

$276.92M

Free Cash Flow

$254.33M

Financial Statements
Beta
Revenue$2.08B
Cost of Revenue$990.95M
Gross Profit$1.09B
SG&A Expenses$673.99M
Operating Income$415.26M
Interest Expense$14.30M
Net Income$266.27M
EPS (Basic)$0.18
EPS (Diluted)$0.18
Shares Outstanding (Basic)1.49B
Shares Outstanding (Diluted)1.51B

Key Highlights

  • 1Total sales for the first nine months of 2015 increased by 10% to $6.02 billion.
  • 2Comparable store sales grew by 7.4% for the same period, indicating strong performance in existing locations.
  • 3Gross profit margin improved to 52.1% of sales, up from 51.3% in the prior year period, driven by acquisition cost improvements.
  • 4Operating income increased by 19% to $1.15 billion, reflecting effective cost management and sales growth.
  • 5Net income grew by 19% to $713 million, with diluted EPS up 25% to $6.98.
  • 6The company continued its growth strategy by opening 160 net new stores, reaching a total of 4,523 stores.
  • 7O'Reilly repurchased $849 million of its common stock during the nine-month period, demonstrating commitment to shareholder returns.

Frequently Asked Questions

Sales increased due to a combination of comparable store sales growth (7.4%) and the addition of new stores. The growth in comparable store sales was driven by increases in both average ticket values and customer transaction counts, benefiting from lower gas prices, decreasing unemployment, and increased miles driven.

The company improved its gross profit margin to 52.1% due to product acquisition cost improvements and a smaller non-cash LIFO impact. Selling, general, and administrative (SG&A) expenses increased by 8% in absolute dollars to support store growth, but as a percentage of sales, it decreased from 33.6% to 33.0% for the nine-month period, indicating improved leverage and efficiency.

O'Reilly's strategy includes opening new stores to increase market penetration and expand into new markets. They plan to open approximately 205 net new stores in 2015 and 210 net new stores in 2016. They also continue to focus on their 'dual market strategy' serving both DIY and professional service providers, enhanced services, and a strong product offering.

O'Reilly is actively repurchasing its common stock. During the first nine months of 2015, the company invested $849 million in share repurchases. As of September 30, 2015, they had $430 million remaining under their authorized share repurchase program.