10-QPeriod: Q3 FY2020

O REILLY AUTOMOTIVE INC Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported strong financial results for the third quarter and nine months ended September 30, 2020. The company demonstrated significant sales growth driven by a 16.9% increase in comparable store sales for the quarter, fueled by both do-it-yourself (DIY) and professional service provider customers. This performance, which bounced back from COVID-19 related headwinds experienced in March and April, was supported by government stimulus, market reopenings, and favorable industry dynamics like consumers investing in existing vehicles. Net income saw a substantial increase of 35% for the quarter and 28% for the nine-month period, with diluted earnings per share rising to $7.07 and $18.12, respectively. The company also generated robust operating cash flow and free cash flow, underscoring its operational efficiency and financial strength. Despite increased debt from recent note issuances, O'Reilly maintained compliance with its debt covenants and demonstrated strong liquidity, ending the quarter with over $1.6 billion in cash and cash equivalents. Management's outlook remains focused on its dual-market strategy and continued store growth.

Financial Highlights

46 data points
Beta

Revenue

$3.21B

52.4% Gross Margin

Net Income

$527.25M

16.4% Net Margin

EPS (Diluted)

$0.47

Total Assets

$12.50B

Cash & Equivalents

$1.63B

Free Cash Flow

$671.10M

Financial Statements
Beta
Revenue$3.21B
Cost of Revenue$1.53B
Gross Profit$1.68B
SG&A Expenses$955.46M
Operating Income$725.01M
Interest Expense$41.67M
Net Income$527.25M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)1.11B
Shares Outstanding (Diluted)1.12B

Key Highlights

  • 1Sales increased by 20% to $3.21 billion for the third quarter and 14% to $8.78 billion for the nine months ended September 30, 2020.
  • 2Comparable store sales surged by 16.9% for the third quarter, indicating strong consumer demand and effective market penetration.
  • 3Net income grew by 35% to $527 million for the third quarter and 28% to $1.36 billion for the nine months, demonstrating profitability improvements.
  • 4Diluted earnings per share rose significantly to $7.07 for the quarter and $18.12 for the nine months, offering enhanced returns to shareholders.
  • 5Operating cash flow significantly increased to $2.35 billion for the nine months, highlighting the company's ability to generate cash from its core operations.
  • 6The company maintained strong liquidity, ending the quarter with $1.63 billion in cash and cash equivalents.
  • 7O'Reilly resumed its share repurchase program in May 2020 after a temporary suspension due to COVID-19, repurchasing shares at an average price of $458.70 in the third quarter.

Frequently Asked Questions

O'Reilly Automotive delivered a strong third quarter with sales increasing 20% to $3.21 billion and net income rising 35% to $527 million. Comparable store sales grew an impressive 16.9%, driven by strong demand from both DIY and professional customers. Diluted earnings per share increased to $7.07.

While O'Reilly experienced headwinds in March and April due to COVID-19 related stay-at-home orders, the company was deemed an essential service provider. Performance rebounded significantly starting in April, aided by government stimulus, market reopenings, and consumers investing in their existing vehicles. The company implemented safety measures and temporarily suspended its share repurchase program but resumed it in May 2020.

O'Reilly ended the third quarter with $1.63 billion in cash and cash equivalents. The company issued new senior notes in March and September 2020, increasing its total debt. However, it remained in compliance with its debt covenants and demonstrated strong liquidity. Operating cash flow for the first nine months was $2.35 billion.

O'Reilly continues to focus on its dual-market strategy, serving both DIY and professional service providers. The company is also expanding its store footprint, opening 165 net new U.S. stores in 2020, and focuses on superior inventory availability, customer service, and a broad product selection. The company also has an active share repurchase program.