10-QPeriod: Q1 FY2021

O REILLY AUTOMOTIVE INC Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 7, 2021For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported a strong first quarter for 2021, with significant year-over-year growth across key financial metrics. Net sales surged by 25% to $3.09 billion, driven by a robust 24.8% increase in comparable store sales. This top-line growth translated into a substantial improvement in profitability, with net income rising 67% to $501.6 million, or $7.06 per diluted share. The company's financial health remains solid, evidenced by a significant increase in operating cash flow to $890.7 million. Management attributes the strong performance to factors including government stimulus, the reopening of markets, favorable industry dynamics like consumers investing in existing vehicles, and the company's effective "dual market strategy" serving both DIY and professional customers. O'Reilly continues to execute its growth strategy through new store openings and a substantial share repurchase program, demonstrating confidence in its business outlook.

Financial Highlights

47 data points
Beta

Revenue

$3.09B

53.1% Gross Margin

Net Income

$501.61M

16.2% Net Margin

EPS (Diluted)

$0.47

Total Assets

$11.85B

Cash & Equivalents

$610.88M

Free Cash Flow

$795.79M

Financial Statements
Beta
Revenue$3.09B
Cost of Revenue$1.45B
Gross Profit$1.64B
SG&A Expenses$949.69M
Operating Income$691.11M
Interest Expense$37.51M
Net Income$501.61M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)1.06B
Shares Outstanding (Diluted)1.07B

Key Highlights

  • 1Net sales increased by 25% year-over-year to $3.09 billion.
  • 2Comparable store sales grew by an impressive 24.8%.
  • 3Net income rose by 67% to $501.6 million, with diluted EPS reaching $7.06.
  • 4Operating cash flow significantly increased to $890.7 million.
  • 5Gross profit margin improved to 53.1% from 52.3% in the prior year.
  • 6The company opened 66 net new U.S. stores in the quarter.
  • 7Share repurchases totaled $664.5 million during the quarter.

Frequently Asked Questions

The substantial increase in sales and net income was driven by a combination of factors including government stimulus payments, the reopening of markets, favorable industry dynamics such as consumers investing in their existing vehicles, and O'Reilly's effective dual market strategy serving both DIY and professional customers. Strong comparable store sales growth also contributed significantly.

The company reported a larger decrease in net inventory investment compared to the prior year, largely attributed to strong comparable store sales growth and improved inventory turns. This suggests effective inventory management in response to robust demand.

O'Reilly continues to execute its growth strategy by opening new stores (66 net new U.S. stores in Q1 2021) and remains committed to its share repurchase program, increasing authorization by an additional $1 billion in February 2021. The company expects its operating cash flow and revolving credit facility to be sufficient for its future capital and liquidity needs.

The company remains in compliance with all debt covenants. The consolidated fixed charge coverage ratio was 6.46x and the consolidated leverage ratio was 1.77x as of March 31, 2021, indicating a strong financial position. No borrowings were outstanding under its revolving credit facility at the end of the quarter.