10-QPeriod: Q2 FY2024

O REILLY AUTOMOTIVE INC Quarterly Report for Q2 Ended Jun 30, 2024

Filed August 8, 2024For Securities:ORLY

Summary

O'Reilly Automotive, Inc. (ORLY) reported second-quarter 2024 results showing continued sales growth, albeit at a moderated pace compared to the previous year. Total sales increased by 5% to $4.27 billion, driven by a 2.3% increase in comparable store sales and contributions from new and acquired stores. Despite the sales growth, net income saw a slight decrease of 1% to $623 million, impacted by a lower gross profit margin and increased selling, general, and administrative (SG&A) expenses. The company's expansion into Canada through the Vast Auto acquisition is progressing, with its results integrated into the financial statements. Financially, O'Reilly maintained a strong liquidity position, with significant cash generated from operations. Capital expenditures remain robust, supporting store growth and infrastructure improvements. The company also continued its share repurchase program, returning capital to shareholders. While the overall financial health appears solid, investors should note the slight compression in gross and operating margins, which warrants monitoring in future quarters.

Financial Highlights

46 data points
Beta

Revenue

$4.27B

50.7% Gross Margin

Net Income

$622.85M

14.6% Net Margin

EPS (Diluted)

$0.70

Total Assets

$14.39B

Cash & Equivalents

$145.04M

Free Cash Flow

$723.49M

Financial Statements
Beta
Revenue$4.27B
Cost of Revenue$2.10B
Gross Profit$2.17B
SG&A Expenses$1.30B
Operating Income$863.30M
Interest Expense$54.83M
Net Income$622.85M
EPS (Basic)$0.71
EPS (Diluted)$0.70
Shares Outstanding (Basic)880.18M
Shares Outstanding (Diluted)885.65M

Key Highlights

  • 1Total sales increased 5% year-over-year to $4.27 billion for the three months ended June 30, 2024.
  • 2Comparable store sales increased 2.3% for the second quarter, driven by higher average ticket values for both DIY and professional customers.
  • 3Net income decreased slightly by 1% to $623 million, attributed to a lower gross profit margin and increased SG&A expenses.
  • 4The company successfully integrated the Vast Auto acquisition in Canada, contributing to sales growth.
  • 5Operating income was $863 million, representing 20.2% of sales, a slight decrease from 21.0% in the prior year period.
  • 6Diluted earnings per share (EPS) increased by 3% to $10.55 for the quarter.
  • 7The company generated $1.65 billion in cash from operations for the six months ended June 30, 2024, and maintained a strong liquidity position.

Frequently Asked Questions

The acquisition of Vast Auto, which expanded O'Reilly's presence into Canada, contributed to the overall sales growth in the second quarter of 2024. The results of Vast Auto have been included in the company's consolidated financial statements since the acquisition date, with the company reporting 23 stores in Canada post-acquisition. While contributing to sales, the lower gross margin associated with the acquired business also played a role in the slight decrease in overall gross profit margin.

Average ticket values have increased due to both inflationary selling price adjustments and the rising complexity and cost of replacement parts for newer, more technically advanced vehicles. While this benefits average ticket values, it has led to a decrease in transaction counts for DIY customers, likely due to pressured consumer spending and the higher cost and durability of parts for these advanced vehicles, leading to less frequent repairs.

O'Reilly maintains a strong liquidity position, primarily funded by cash generated from operations, borrowings under its unsecured revolving credit facility, and its commercial paper program. As of June 30, 2024, the company had no outstanding borrowings under its revolving credit facility and $575 million in commercial paper. The company remains in compliance with all debt covenants, indicating a stable financial footing.

O'Reilly opened 27 net new stores during the three months ended June 30, 2024, and 64 net new stores in the first six months. The company anticipates opening between 190 to 200 net new stores in total for the full year 2024, continuing its strategic expansion.