10-QPeriod: Q2 FY2023

O REILLY AUTOMOTIVE INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed August 8, 2023For Securities:ORLY

Summary

O'Reilly Automotive, Inc. reported strong financial results for the second quarter and the first half of 2023. Sales increased by 11% year-over-year for the quarter and 12% for the first half, driven by robust comparable store sales growth of 9.0% and 9.8%, respectively. This growth was fueled by increases in average ticket values for both professional service providers and do-it-yourself (DIY) customers, alongside positive transaction counts from professional customers. Net income saw a significant rise of 9% for the quarter and 8% for the first half, reflecting effective cost management and operational efficiency. The company's balance sheet remains solid, with total assets increasing due to growth in inventory and property and equipment. While long-term debt increased, O'Reilly maintained compliance with its debt covenants. The company also demonstrated a strong commitment to shareholder returns through a substantial share repurchase program, repurchasing approximately $680 million in the second quarter. Management remains optimistic about continued market share gains and growth, leveraging its dual market strategy and focus on customer service.

Financial Highlights

46 data points
Beta

Revenue

$4.07B

51.3% Gross Margin

Net Income

$627.37M

15.4% Net Margin

EPS (Diluted)

$0.68

Total Assets

$13.28B

Cash & Equivalents

$57.88M

Free Cash Flow

$699.93M

Financial Statements
Beta
Revenue$4.07B
Cost of Revenue$1.98B
Gross Profit$2.09B
SG&A Expenses$1.23B
Operating Income$853.77M
Interest Expense$49.59M
Net Income$627.37M
EPS (Basic)$0.69
EPS (Diluted)$0.68
Shares Outstanding (Basic)912.25M
Shares Outstanding (Diluted)920.49M

Key Highlights

  • 1Second quarter sales increased by 11% to $4.07 billion, with comparable store sales up 9.0%.
  • 2First half sales grew 12% to $7.78 billion, with comparable store sales up 9.8%.
  • 3Net income for the second quarter rose 9% to $627 million, or $10.22 per diluted share.
  • 4First half net income increased 8% to $1.14 billion, or $18.49 per diluted share.
  • 5Significant share repurchases continued, with $680 million invested in the second quarter and $1.79 billion in the first half.
  • 6The company opened 42 net new stores in the second quarter and 100 net new stores in the first half, with plans for 180-190 net new openings in 2023.
  • 7O'Reilly maintained compliance with its debt covenants, demonstrating financial stability.

Frequently Asked Questions

O'Reilly's sales in the second quarter of 2023 increased by 11% to $4.07 billion, primarily driven by a 9.0% increase in comparable store sales. This growth was supported by higher average ticket values for both professional service providers and DIY customers, and an increase in transaction counts from professional customers. Sales from new stores opened in 2022 and 2023 also contributed to the overall increase.

For the first six months of 2023, O'Reilly reported a net income of $1.14 billion, an 8% increase compared to the same period in 2022. Diluted earnings per share were $18.49, up 16% from $15.94 in the prior year. This improved profitability reflects strong sales growth, disciplined cost management, and efficient operations.

O'Reilly's growth strategy centers on its dual market approach, serving both do-it-yourself (DIY) customers and professional service providers. Key initiatives include aggressively opening new stores (planning 180-190 net new openings in 2023), enhancing merchandising and store layouts, and implementing omnichannel initiatives. The company also focuses on superior customer service provided by well-trained team members and leveraging its strategic distribution network.

O'Reilly maintains a solid liquidity position, funding its capital requirements through operational cash flow, its unsecured revolving credit facility, and senior note offerings. The company's long-term debt increased due to borrowings under its revolving credit facility and the maturity of its 2023 Senior Notes. O'Reilly reported compliance with all covenants under its Credit Agreement and senior notes indentures, indicating sound financial management and stability.