Summary
O'Reilly Automotive, Inc. (ORLY) reported solid financial results for the third quarter and first nine months of 2019, showcasing continued growth and profitability. Sales increased by 7% year-over-year for the quarter and 6% for the nine-month period, driven by comparable store sales growth and new store openings. The company's dual-market strategy, serving both DIY and professional customers, remains a key driver of this success. Profitability metrics also showed improvement, with operating income up 11% for the quarter and gross profit margin expanding slightly.
Financial Highlights
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Financial Statements
Beta
| Revenue | $2.67B |
| Cost of Revenue | $1.24B |
| Gross Profit | $1.42B |
| SG&A Expenses | $886.17M |
| Operating Income | $536.36M |
| Interest Expense | $35.86M |
| Net Income | $391.29M |
| EPS (Basic) | $0.34 |
| EPS (Diluted) | $0.34 |
| Shares Outstanding (Basic) | 1.14B |
| Shares Outstanding (Diluted) | 1.15B |
Key Highlights
- 1Total sales increased by 7% to $2.67 billion for the third quarter and 6% to $7.67 billion for the first nine months of 2019, compared to the prior year periods.
- 2Comparable store sales increased by 5.0% for the third quarter and 3.9% for the nine months ended September 30, 2019.
- 3Gross profit increased by 8% to $1.42 billion for the quarter and 7% to $4.07 billion for the nine months, with gross profit margin improving to 53.3% and 53.1% respectively.
- 4Operating income saw a robust increase of 11% to $536 million for the quarter, and a 7% increase to $1.48 billion for the nine months.
- 5Net income grew by 7% to $391 million for the quarter and 4% to $1.07 billion for the nine months.
- 6Diluted earnings per share (EPS) increased by 13% to $5.08 for the quarter and 10% to $13.63 for the nine months.
- 7The company continues its expansion, opening 76 net new stores in the third quarter and 181 net new stores year-to-date, bringing the total store count to 5,420.
- 8Significant share repurchases continued, with $387 million invested in the third quarter and $1.31 billion in the first nine months, indicating a commitment to returning capital to shareholders.
Frequently Asked Questions
O'Reilly Automotive reported a 7% increase in sales to $2.67 billion for the third quarter of 2019 compared to the same period last year. Gross profit increased by 8% to $1.42 billion, and operating income rose by 11% to $536 million. Net income grew by 7% to $391 million, resulting in a 13% increase in diluted earnings per share to $5.08.
O'Reilly employs a dual-market strategy, serving both do-it-yourself (DIY) customers and professional service providers. Their growth strategy includes opening new stores to penetrate existing markets and expand into new contiguous markets. In 2019, they planned to open 200 net new stores and are also pursuing strategic acquisitions, such as the Mayasa acquisition in Mexico.
O'Reilly has a $1.2 billion unsecured revolving credit facility and has issued senior notes totaling $3.65 billion. The company's liquidity is primarily generated from operations and its credit facility. They maintain compliance with debt covenants and believe their cash flow from operations and available credit are sufficient to meet their capital needs. The company also continues to actively repurchase its common stock.
The company identifies several key drivers, including the number of miles driven, the total number of U.S. registered vehicles, new light vehicle registrations, and the average age of vehicles. An increasing average vehicle age (11.7 years in 2018) is seen as a positive, as older vehicles tend to require more maintenance and repairs. Healthy employment levels also support consumer spending in the aftermarket.