10-QPeriod: Q2 FY2022

O REILLY AUTOMOTIVE INC Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 8, 2022For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported solid financial performance for the second quarter and first half of 2022. Sales grew by 6% year-over-year for both periods, reaching $3.67 billion for the quarter and $6.97 billion for the first half. This growth was driven by a combination of comparable store sales increases, primarily fueled by higher average ticket prices, and the opening of new stores. The company's dual-market strategy, serving both DIY and professional customers, continues to be a key factor in its resilience. Despite a slight decrease in gross profit margin due to a strategic pricing initiative and a shift in sales mix towards professional customers, the company managed to increase its diluted earnings per share by 5% for the quarter to $8.78 and by 4% for the six-month period to $15.94. While operating income saw a slight decrease year-over-year, net income remained robust. The company also continued its aggressive share repurchase program, underscoring its commitment to returning capital to shareholders. ORLY's strong liquidity position and compliance with debt covenants provide a stable financial foundation.

Financial Highlights

46 data points
Beta

Revenue

$3.67B

51.3% Gross Margin

Net Income

$576.76M

15.7% Net Margin

EPS (Diluted)

$0.59

Total Assets

$12.07B

Cash & Equivalents

$253.90M

Free Cash Flow

$577.16M

Financial Statements
Beta
Revenue$3.67B
Cost of Revenue$1.79B
Gross Profit$1.88B
SG&A Expenses$1.09B
Operating Income$798.55M
Interest Expense$37.38M
Net Income$576.76M
EPS (Basic)$0.59
EPS (Diluted)$0.59
Shares Outstanding (Basic)976.74M
Shares Outstanding (Diluted)985.29M

Key Highlights

  • 1Sales increased by 6% year-over-year for both the three and six months ended June 30, 2022, reaching $3.67 billion and $6.97 billion, respectively.
  • 2Diluted Earnings Per Share (EPS) grew by 5% to $8.78 for the quarter and by 4% to $15.94 for the six-month period, compared to the prior year.
  • 3Comparable store sales increased by 4.3% for the quarter and 4.5% for the six-month period, driven by higher average ticket values.
  • 4The company opened 62 net new U.S. stores in the second quarter and 114 net new U.S. stores in the first half of 2022, contributing to overall sales growth.
  • 5Despite a slight decrease in gross profit margin to 51.3% for the quarter, the company's operating income remained strong at $799 million.
  • 6O'Reilly continued its significant share repurchase activity, investing $1.38 billion in the second quarter and $2.15 billion in the first half of 2022.
  • 7The company maintains a strong liquidity position, with $253.9 million in cash and cash equivalents and remains in compliance with all debt covenants.

Frequently Asked Questions

O'Reilly Automotive demonstrated a healthy financial performance in the second quarter and first half of 2022. Sales growth was consistent, and diluted EPS increased year-over-year. The company maintained strong operational execution, continued store expansion, and returned significant capital to shareholders through its share repurchase program, while also managing its debt effectively and remaining in compliance with covenants.

Sales growth was primarily driven by a combination of comparable store sales increases, which were largely due to higher average ticket prices, and the opening of new stores. The company's strategy of serving both do-it-yourself (DIY) and professional service provider customers continued to support this growth, with professional customer transactions showing positive growth.

The decrease in gross profit margin, from 52.7% in Q2 2021 to 51.3% in Q2 2022, was attributed to two main factors: the rollout of a professional pricing initiative aimed at enhancing competitiveness in the professional segment, and a greater proportion of total sales coming from professional service providers, who typically have lower gross margins than DIY customers.

O'Reilly Automotive maintains a solid liquidity position, with $253.9 million in cash and cash equivalents as of June 30, 2022. The company has access to a $1.8 billion unsecured revolving credit facility and remains in compliance with all debt covenants related to both its credit agreement and senior notes. The company also actively manages its capital through its share repurchase program.