10-QPeriod: Q1 FY2023

O REILLY AUTOMOTIVE INC Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 9, 2023For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported strong first-quarter 2023 results, demonstrating robust sales growth and profitability. Net sales increased by 12% to $3.71 billion, driven by a significant 10.8% rise in comparable store sales. This growth was fueled by an increase in average ticket values for both professional service providers and DIY customers, with average ticket values benefiting from higher average selling prices and the increasing complexity and cost of parts for newer vehicles. The company also saw a healthy increase in net income, up 7% to $517 million, translating to diluted earnings per share (EPS) of $8.28, a 15% increase from the prior year. Despite a slight decrease in gross profit margin to 51.0% from 51.8% due to pricing initiatives and a greater mix of professional sales, the overall financial performance remains strong. The company continues its expansion, with plans for 180-190 net new store openings in 2023. ORLY also actively returned capital to shareholders through its share repurchase program, investing $1.11 billion in the quarter.

Financial Highlights

46 data points
Beta

Revenue

$3.71B

51.0% Gross Margin

Net Income

$516.88M

13.9% Net Margin

EPS (Diluted)

$0.55

Total Assets

$12.97B

Cash & Equivalents

$59.87M

Free Cash Flow

$490.50M

Financial Statements
Beta
Revenue$3.71B
Cost of Revenue$1.82B
Gross Profit$1.89B
SG&A Expenses$1.17B
Operating Income$716.64M
Interest Expense$44.57M
Net Income$516.88M
EPS (Basic)$0.56
EPS (Diluted)$0.55
Shares Outstanding (Basic)927.60M
Shares Outstanding (Diluted)935.97M

Key Highlights

  • 1Net sales grew 12% year-over-year to $3.71 billion.
  • 2Comparable store sales increased by a strong 10.8% in Q1 2023.
  • 3Net income rose 7% to $517 million, with diluted EPS up 15% to $8.28.
  • 4The company plans to open 180-190 net new stores in 2023.
  • 5Significant share repurchases continued, with $1.11 billion invested in Q1 2023.
  • 6Average ticket values increased due to higher selling prices and the rising complexity of vehicle parts.
  • 7Operating income increased 7% to $717 million, though operating margin slightly decreased to 19.3%.

Frequently Asked Questions

Sales growth was primarily driven by a substantial 10.8% increase in comparable store sales and an additional $68 million from new stores opened in 2022 and 2023. The increase in comparable store sales was fueled by higher average ticket values for both professional service provider and DIY customers, attributed to increased average selling prices and the growing complexity and cost of parts for newer vehicles. Positive transaction counts from professional service providers also contributed, partially offset by a decline in DIY transaction counts.

Net income increased by 7% to $517 million, resulting in a 15% rise in diluted earnings per share to $8.28. While gross profit dollars increased, the gross profit margin slightly decreased to 51.0% from 51.8% year-over-year. This was primarily due to strategic pricing initiatives, a greater proportion of sales coming from the professional segment (which typically has lower margins), and a prior-year benefit from selling inventory purchased before recent cost increases.

O'Reilly Automotive plans an aggressive expansion strategy, with an anticipated 180 to 190 net new store openings planned for the full year 2023.

The company continues to actively repurchase its common stock, investing $1.11 billion in share repurchases during the first quarter of 2023. As of March 31, 2023, $611.9 million remained under its share repurchase authorization. O'Reilly also funds its operations and growth through cash generated from operations and borrowings under its unsecured revolving credit facility.