Summary
O'Reilly Automotive Inc. (ORLY) reported a strong third quarter of 2018, demonstrating robust sales growth and improved profitability. Total sales increased by 6% year-over-year for both the three and nine-month periods ending September 30, 2018. This growth was driven by comparable store sales increases of 3.9% and 4.0% for the respective periods, attributed to higher average ticket values for both do-it-yourself (DIY) and professional customers, a reflection of the increasing complexity and cost of parts for modern vehicles. The company also saw a significant improvement in net income, up 29% for the quarter and 23% for the nine months, bolstered by a lower effective tax rate due to the Tax Cuts and Jobs Act of 2017 and higher excess tax benefits from share-based compensation. Operationally, O'Reilly continues to execute its growth strategy, opening a net of 43 new stores in the third quarter, contributing to an expanded store count of 5,190 locations. Despite investments in store growth and the reinvestment of tax savings, the company maintained healthy operating margins. Liquidity remains strong, with substantial cash generated from operations. The company also actively returned capital to shareholders through share repurchases, though at a slightly lower pace compared to the previous year. Overall, the results indicate a financially sound company effectively managing growth and profitability in the automotive aftermarket sector.
Financial Highlights
45 data points| Revenue | $2.48B |
| Cost of Revenue | $1.17B |
| Gross Profit | $1.32B |
| SG&A Expenses | $830.61M |
| Operating Income | $485.15M |
| Interest Expense | $31.58M |
| Net Income | $366.15M |
| EPS (Basic) | $0.30 |
| EPS (Diluted) | $0.30 |
| Shares Outstanding (Basic) | 1.21B |
| Shares Outstanding (Diluted) | 1.22B |
Key Highlights
- 1Total sales grew 6% year-over-year for both the three and nine months ended September 30, 2018, reaching $2.48 billion and $7.22 billion, respectively.
- 2Comparable store sales increased by 3.9% for the third quarter and 4.0% for the first nine months of 2018, driven by higher average ticket values.
- 3Net income saw substantial growth, increasing 29% to $366 million for the third quarter and 23% to $1.02 billion for the nine months.
- 4Diluted earnings per share rose significantly to $4.50 for the quarter and $12.36 for the nine months, up 40% and 35% respectively, compared to the prior year.
- 5The effective tax rate decreased considerably due to the Tax Cuts and Jobs Act of 2017, contributing to improved net income.
- 6O'Reilly continued its expansion, opening a net of 43 new stores in Q3 2018, bringing the total store count to 5,190.
- 7Free cash flow remained strong, increasing to $958.6 million for the nine months ended September 30, 2018, compared to $704.4 million in the prior year.