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O'Reilly Automotive, Inc. Reports Fourth Quarter and Full-Year 2015 Results and Announces Additional $750 Million Share Repurchase Authorization

  • 4th quarter comparable store sales increase of 7.7%, full-year increase of 7.5%
  • 24% increase in 4th quarter diluted EPS to $2.19, 25% increase in full-year diluted EPS to $9.17

SPRINGFIELD, Mo., Feb. 10, 2016 (GLOBE NEWSWIRE) -- O'Reilly Automotive, Inc. (the "Company" or "O'Reilly") (Nasdaq:ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenues and earnings for its fourth quarter and full year ended December 31, 2015. The results represent 23 consecutive years of comparable store sales growth and record revenue and operating income for O'Reilly since becoming a public company in April of 1993.

4th Quarter Financial Results

Sales for the fourth quarter ended December 31, 2015, increased $185 million, or 10%, to $1.95 billion from $1.76 billion for the same period one year ago. Gross profit for the fourth quarter increased to $1.03 billion (or 52.7% of sales) from $912 million (or 51.7% of sales) for the same period one year ago, representing an increase of 13%. Selling, general and administrative expenses ("SG&A") for the fourth quarter increased to $665 million (or 34.1% of sales) from $609 million (or 34.5% of sales) for the same period one year ago, representing an increase of 9%. Operating income for the fourth quarter increased to $363 million (or 18.6% of sales) from $303 million (or 17.2% of sales) for the same period one year ago, representing an increase of 20%.

Net income for the fourth quarter ended December 31, 2015, increased $37 million, or 20%, to $219 million (or 11.2% of sales) from $182 million (or 10.3% of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 24% to $2.19 on 100 million shares versus $1.76 on 103 million shares for the same period one year ago.

Greg Henslee, O'Reilly's President and CEO, commented, "We are very pleased to once again report another very profitable quarter and a very strong finish to a record breaking year. Our Team's dedication to providing consistent, excellent customer service every day drove our very robust fourth quarter comparable store sales increase of 7.7%, which was on top of a strong comparable store sales increase of 6.3% in the fourth quarter of 2014. This industry leading comparable store sales performance represents our 9th consecutive quarter of comparable store sales growth greater than 5%, with increases of over 7% in each quarter of 2015. Our relentless focus on profitable growth translated our strong top line performance into a 24% increase in fourth quarter diluted earnings per share of $2.19, which represents our 28th consecutive quarter of diluted earnings per share growth greater than 15%, and I would like to thank each of our Team Members for their continued hard work and commitment to our ongoing success."

Full-Year Financial Results

Sales for the year ended December 31, 2015, increased $751 million, or 10%, to $7.97 billion from $7.22 billion for the same period one year ago. Gross profit for the year ended December 31, 2015, increased to $4.16 billion (or 52.3% of sales) from $3.71 billion (or 51.4% of sales) for the same period one year ago, representing an increase of 12%. SG&A for the year ended December 31, 2015, increased to $2.65 billion (or 33.2% of sales) from $2.44 billion (or 33.8% of sales) for the same period one year ago, representing an increase of 9%. Operating income for the year ended December 31, 2015, increased to $1.51 billion (or 19.0% of sales) from $1.27 billion (or 17.6% of sales) for the same period one year ago, representing an increase of 19%.

Net income for the year ended December 31, 2015, increased $153 million, or 20%, to $931 million (or 11.7% of sales) from $778 million (or 10.8% of sales) for the same period one year ago. Diluted earnings per common share for the year ended December 31, 2015, increased 25% to $9.17 on 102 million shares versus $7.34 on 106 million shares for the same period one year ago.

Mr. Henslee continued, "Team O'Reilly's dedication to unsurpassed service levels resulted in a full-year comparable stores sales increase of 7.5%, a record 19.0% operating margin and a 25% increase in full-year diluted earnings per share to $9.17, which represents our seventh consecutive year of 20% or greater annual diluted earnings per share growth. We are very proud of our record breaking 2015 financial results, as well as the addition of 205 net, new stores and the expansion into Connecticut, our 44th state, and we are intensely focused on extending our proven record of profitable growth in 2016. In the coming year, we expect to see continued strong demand in our industry, and more importantly, we remain very confident in our Team's commitment to providing consistently high levels of service to our customers. We will, however, face very difficult same store sales comparisons in each quarter of 2016, and based on these factors, we are establishing our first quarter and full-year 2016 comparable store sales guidance ranges at 3% to 5%. We will see a top-line benefit in 2016 from one additional calendar day, due to Leap Day in February; however, our comparable store sales guidance ranges for both the first quarter and full-year exclude this additional day."

Share Repurchase Program

During the fourth quarter ended December 31, 2015, the Company repurchased 1.1 million shares of its common stock at an average price per share of $256.93, for a total investment of $287 million. During the year ended December 31, 2015, the Company repurchased 4.9 million shares of its common stock at an average price per share of $231.81, for a total investment of $1.14 billion. Subsequent to the end of the fourth quarter and through the date of this release, the Company repurchased an additional 0.6 million shares of its common stock, at an average price per share of $243.96, for a total investment of $141 million. The Company has repurchased a total of 51.8 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through the date of this release, at an average price of $106.08, for a total aggregate investment of $5.50 billion.

Today, the Company also announced that its Board of Directors approved a resolution to increase the authorization amount under its share repurchase program by an additional $750 million, raising the aggregate authorization under the program to $6.25 billion. The additional $750 million authorization is effective for a three-year period, beginning on February 10, 2016. Stock repurchases under the program may be made from time to time, as the Company deems appropriate, solely through open market repurchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate requirements and overall market conditions. There can be no assurance as to the number of shares the Company will purchase, if any. The share repurchase program may be increased or otherwise modified, renewed, suspended or terminated by the Company at any time, without prior notice. As of the date of this release, the Company had approximately $750 million remaining under its current share repurchase authorizations.

4th Quarter and Full-Year Comparable Store Sales Results

Comparable store sales are calculated based on the change in sales for stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members. Comparable store sales increased 7.7% for the fourth quarter ended December 31, 2015, versus 6.3% for the same period one year ago. Comparable store sales increased 7.5% for the year ended December 31, 2015, versus 6.0% for the same period one year ago.

1st Quarter and Full-Year 2016 Guidance

The table below outlines the Company's guidance for selected first quarter and full-year 2016 financial data:

For the Three Months Ending
March 31, 2016
For the Year Ending
December 31, 2016
New store openings 210
Comparable store sales3% to 5% 3% to 5%
Total revenue $8.4 billion to $8.6 billion
Gross profit as a percentage of sales 52.3% to 52.7%
Operating income as a percentage of sales 19.3% to 19.7%
Diluted earnings per share (1)$2.41 to $2.51 $10.10 to $10.50
Capital expenditures $460 million to $490 million
Free cash flow (2) $750 million to $800 million
(1) Weighted-average shares outstanding, assuming dilution, used in the denominator of this calculation,
includes share repurchases made by the Company through the date of this release.
(2) Calculated as net cash provided by operating activities less capital expenditures for the period.

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States generally accepted accounting principles ("GAAP"). These items include adjusted debt to earnings before interest, taxes, depreciation, amortization, share-based compensation and rent ("EBITDAR") and free cash flow. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of adjusted debt to EBITDAR and free cash flow provide meaningful supplemental information to both management and investors that is indicative of the Company's core operations. The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the selected financial information below.

Earnings Conference Call Information

The Company will host a conference call on Thursday, February 11, 2016, at 10:00 a.m. central time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company's website at www.oreillyauto.com by clicking on "Investor Relations" and then "News Room." Interested analysts are invited to join the call. The dial-in number for the call is (847) 585-4405; the conference call identification number is 41434249. A replay of the conference call will be available on the Company's website through February 10, 2017.

About O'Reilly Automotive, Inc.

O'Reilly Automotive, Inc. was founded in 1957 by the O'Reilly family and is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional service provider markets. Visit the Company's website at www.oreillyauto.com for additional information about O'Reilly, including access to online shopping and current promotions, store locations, hours and services, employment opportunities and other programs. As of December 31, 2015, the Company operated 4,571 stores in 44 states.

Forward-Looking Statements

The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as "estimate," "may," "could," "will," "believe," "expect," "would," "consider," "should," "anticipate," "project," "plan," "intend" or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing, among other things, expected growth, store development, integration and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, the economy in general, inflation, product demand, the market for auto parts, competition, weather, risks associated with the performance of acquired businesses, our ability to hire and retain qualified employees, consumer debt levels, our increased debt levels, credit ratings on public debt, governmental regulations, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the "Risk Factors" section of the annual report on Form 10-K for the year ended December 31, 2014, for additional factors that could materially affect the Company's financial performance. Forward-looking statements speak only as of the date they were made and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, 2015 December 31, 2014
(Unaudited) (As Adjusted, Note)
Assets
Current assets:
Cash and cash equivalents$116,301 $250,560
Accounts receivable, net161,078 143,900
Amounts receivable from suppliers72,609 69,311
Inventory2,631,015 2,554,789
Other current assets (1)29,023 46,820
Total current assets (1)3,010,026 3,065,380
Property and equipment, at cost4,372,250 3,993,509
Less: accumulated depreciation and amortization1,510,694 1,334,949
Net property and equipment2,861,556 2,658,560
Notes receivable, less current portion13,219 13,349
Goodwill757,142 756,384
Other assets, net (1)34,741 38,410
Total assets (1)$6,676,684 $6,532,083
Liabilities and shareholders' equity
Current liabilities:
Accounts payable$2,608,231 $2,417,167
Self-insurance reserves72,741 64,882
Accrued payroll59,101 78,442
Accrued benefits and withholdings72,203 62,946
Income taxes payable1,444
Other current liabilities232,678 189,836
Current portion of long-term debt 25
Total current liabilities (1)3,046,398 2,813,298
Long-term debt, less current portion (1)1,390,018 1,388,397
Deferred income taxes (1)79,772 102,422
Other liabilities199,182 209,548
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares –
97,737,171 and 101,602,935 as of December 31, 2015 and 2014, respectively977 1,016
Additional paid-in capital1,281,497 1,194,929
Retained earnings678,840 822,473
Total shareholders' equity1,961,314 2,018,418
Total liabilities and shareholders' equity (1)$6,676,684 $6,532,083
Note: The balance sheet at December 31, 2014, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
(1) Prior period amounts have been reclassified to conform to current period presentation, due to the Company's adoption of new accounting standards during the fourth quarter ended December 31, 2015.


O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
For the Three Months Ended
December 31,
For the Year Ended
December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited) (Unaudited) (Note)
Sales$1,949,052 $1,764,178 $7,966,674 $7,216,081
Cost of goods sold, including warehouse and distribution expenses921,413 852,071 3,804,031 3,507,180
Gross profit1,027,639 912,107 4,162,643 3,708,901
Selling, general and administrative expenses665,019 609,095 2,648,622 2,438,527
Operating income362,620 303,012 1,514,021 1,270,374
Other income (expense):
Interest expense(14,112) (14,079) (57,129) (53,290)
Interest income632 613 2,340 2,301
Other, net486 560 1,134 2,797
Total other expense(12,994) (12,906) (53,655) (48,192)
Income before income taxes349,626 290,106 1,460,366 1,222,182
Provision for income taxes131,050 108,428 529,150 444,000
Net income$218,576 $181,678 $931,216 $778,182
Earnings per share-basic:
Earnings per share$2.22 $1.79 $9.32 $7.46
Weighted-average common shares outstanding – basic98,474 101,640 99,965 104,262
Earnings per share-assuming dilution:
Earnings per share$2.19 $1.76 $9.17 $7.34
Weighted-average common shares outstanding – assuming dilution99,935 103,330 101,514 106,041
Note: The income statement for the year ended December 31, 2014, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.


O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Year Ended
December 31,
2015 2014
(Unaudited) (Note)
Operating activities:
Net income$931,216 $778,182
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and intangibles210,256 194,205
Amortization of debt discount and issuance costs2,106 2,086
Excess tax benefit from share-based compensation(63,078) (49,150)
Deferred income taxes(22,650) 1,487
Share-based compensation programs21,899 23,095
Other6,839 5,592
Changes in operating assets and liabilities:
Accounts receivable(23,858) (19,271)
Inventory(76,226) (179,742)
Accounts payable191,064 360,646
Income taxes payable81,617 32,158
Other22,291 41,142
Net cash provided by operating activities1,281,476 1,190,430
Investing activities:
Purchases of property and equipment(414,020) (429,987)
Proceeds from sale of property and equipment2,758 2,880
Payments received on notes receivable4,074 3,705
Net cash used in investing activities(407,188) (423,402)
Financing activities:
Principal payments on capital leases(25) (72)
Repurchases of common stock(1,136,213) (866,484)
Excess tax benefit from share-based compensation63,078 49,150
Net proceeds from issuance of common stock64,613 69,620
Net cash used in financing activities(1,008,547) (747,786)
Net (decrease) increase in cash and cash equivalents(134,259) 19,242
Cash and cash equivalents at beginning of the year250,560 231,318
Cash and cash equivalents at end of the year$116,301 $250,560
Supplemental disclosures of cash flow information:
Income taxes paid$485,824 $416,458
Interest paid, net of capitalized interest55,061 51,203
Note: The cash flow statement for the year ended December 31, 2014, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.


O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
SELECTED FINANCIAL INFORMATION
(Unaudited)
For the Year Ended
December 31,
Adjusted Debt to EBITDAR: 2015 2014
(In thousands, except adjusted debt to EBITDAR ratio)
GAAP debt $1,390,018 $1,388,422
Add:Letters of credit 37,536 47,861
Discount on senior notes 2,877 3,385
Debt issuance costs 7,105 8,218
Six-times rent expense 1,639,554 1,578,168
Adjusted debt $3,077,090 $3,026,054
GAAP net income $931,216 $778,182
Add:Interest expense 57,129 53,290
Provision for income taxes 529,150 444,000
Depreciation and amortization 210,256 194,205
Share-based compensation expense 21,899 23,095
Rent expense 273,259 263,028
EBITDAR $2,022,909 $1,755,800
Adjusted debt to EBITDAR 1.52 1.72
December 31,
2015 2014
Selected Balance Sheet Ratios:
Inventory turnover (1) 1.5 1.4
Average inventory per store (in thousands) (2) $576 $585
Accounts payable to inventory (3) 99.1% 94.6%
Return on equity (4) 46.1% 37.6%
Return on assets (5) 13.9% 12.0%
For the Three Months Ended For the Year Ended
December 31, December 31,
2015 2014 2015 2014
Selected Financial Information (in thousands):
Capital expenditures$117,546 $112,830 $414,020 $429,987
Free cash flow (6) 101,208 94,646 867,456 760,443
Depreciation and amortization 52,191 50,690 210,256 194,205
Interest expense 14,112 14,079 57,129 53,290
Rent expense$69,184 $67,005 $273,259 $263,028
Store and Team Member Information:
For the Three Months Ended For the Year Ended
December 31, December 31,
2015 2014 2015 2014
Beginning store count 4,523 4,311 4,366 4,166
New stores opened 49 57 209 207
Stores closed (1) (2) (4) (7)
Ending store count 4,571 4,366 4,571 4,366
For the Three Months Ended For the Year Ended
December 31, December 31,
2015 2014 2015 2014
Total employment 71,621 67,569
Square footage (in thousands) 33,148 31,591
Sales per weighted-average square foot (7)$58.72 $55.76 $244.13 $232.22
Sales per weighted-average store (in thousands) (8)$426 $403 $1,769 $1,678
(1) Calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.
(2) Calculated as inventory divided by store count at the end of the reported period.
(3) Calculated as accounts payable divided by inventory.
(4) Calculated as net income for the last 12 months divided by average total shareholders' equity. Average total shareholders' equity is calculated as the average of total shareholders' equity for the trailing four quarters used in determining the denominator.
(5) Calculated as net income for the last 12 months divided by average total assets. Average total assets is calculated as the average of total assets for the trailing four quarters used in determining the denominator.
(6) Calculated as net cash provided by operating activities less capital expenditures for the period.
(7) Calculated as sales less jobber sales, divided by weighted-average square footage. Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions or closings.
(8) Calculated as sales less jobber sales, divided by weighted-average stores. Weighted-average stores is determined by weighting stores based on their approximate opening, acquisition or closing dates.

For further information contact: Investor & Media Contact Mark Merz (417) 829-5878

Source: O'REILLY AUTO PARTS