01—Abstract
Summary
Summary of the 10-Q filed May 9, 2024. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive, Inc. (ORLY) reported solid results for the first quarter of 2024, demonstrating continued growth in a resilient market.
Total sales increased by 7%a year-over-year, driven by a 3.4% increase in comparable store sales and the strategic acquisition of Vast Auto, which expanded its presence into Canada. The company's dual-market strategy, serving both do-it-yourself (DIY) and professional service provider customers, remains a key strength, with both segments contributing to an increase in average ticket values. Despite inflationary pressures impacting acquisition costs, O'Reilly managed to improve its gross profit margin slightly due to improved cost management and the benefits of scale.
While selling, general, and administrative expenses (SG&A) increased due to investments in store count growth, fleet modernization, and IT, operating income still grew by 5%. Net income saw a 6% increase, translating to diluted earnings per share of $9.20b, an 11% rise compared to the prior year.
The company maintained a strong liquidity position, with healthy cash flow from operations, although investing activities were impacted by the Vast Auto acquisition. Shareholder returns remain a priority, with the company continuing its share repurchase program, though at a moderated pace compared to the previous year.
02—Key points
Key Highlights
- Total sales increased by 7% to $3.98 billion for the first quarter of 2024.
- Comparable store sales grew by 3.4%, indicating steady performance in existing locations.
- Acquisition of Vast Auto marked entry into the Canadian market, adding 23 stores.
- Net income rose by 6% to $547 million, with diluted EPS increasing 11% to $9.20.
- Gross profit margin improved slightly to 51.2% from 51.0% due to better acquisition costs and scale.
- Operating income increased by 5% to $752 million, reflecting solid operational execution.
- Company maintained compliance with debt covenants and reported a leverage ratio of 1.84x.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, O Reilly Automotive Inc kept $0.14.
- Revenue$3.98B100.0%
- Cost of revenue−$1.94B48.8%
- Gross profit$2.03B51.2%
- Operating costs−$1.28B32.2%
- Operating income$752.5M18.9%
- Interest, other & tax−$205.2M5.2%
- Net income$547.2M13.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 9, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.98B$3.71B | +7.2% |
| Cost of Revenue | $1.94B$1.82B | +6.9% |
| Gross Profit | $2.03B$1.89B | +7.6% |
| SG&A Expenses | $1.28B$1.17B | +9.2% |
| Operating Income | $752.48M$716.64M | +5.0% |
| Interest Expense | $57.15M$44.57M | +28.2% |
| Net Income | $547.24M$516.88M | +5.9% |
| EPS (Basic) | $0.62$0.56 | +10.9% |
| EPS (Diluted) | $0.61$0.55 | +11.1% |
| Shares Outstanding (Basic) | 885.25M927.60M | −4.6% |
| Shares Outstanding (Diluted) | 891.81M935.97M | −4.7% |
05—Questions
Frequently Asked Questions
What was the impact of the Vast Auto acquisition on O'Reilly's financial results?
The acquisition of Vast Auto, completed in January 2024, marked O'Reilly's entry into the Canadian market. It contributed $73 million in sales from new stores opened in 2023 and 2024 (including Vast Auto), and was included in the overall sales growth. While the acquisition added to operating expenses and initial integration costs, management noted that Vast Auto's results were not material enough to require pro forma financial statements. The acquisition is part of the company's strategy to expand its geographic footprint.
How did O'Reilly manage inflationary pressures on its cost of goods sold?
O'Reilly experienced an increase in acquisition costs due to inflationary pressures. However, the company managed to improve its gross profit margin slightly to 51.2% from 51.0%. This improvement was primarily attributed to better acquisition costs, the benefits of economies of scale from increased purchase volumes, and selective forward buying. The company also noted its historical ability to pass on cost increases through higher selling prices for affected products.
What is the company's strategy for new store growth?
O'Reilly continues to execute an aggressive new store opening strategy. The company opened 37 net new stores in the first quarter of 2024 and anticipates opening between 190 to 200 net new stores for the full year 2024. This expansion, coupled with the acquisition in Canada, is a key component of their growth strategy.
How has O'Reilly's share repurchase program been utilized?
O'Reilly has an active share repurchase program. In the first quarter of 2024, the company repurchased 0.262 million shares for a total investment of $270 million. This is a reduction compared to the $1.11 billion repurchased in the same period of 2023. As of March 31, 2024, the company had approximately $2.3 billion remaining under its share repurchase authorization, indicating continued commitment to returning capital to shareholders.
06—Continue