O’Reilly Automotive has announced record revenues and earnings for its first quarter ended March 31, 2017.
Sales for the first quarter ended March 31, 2017, increased $60 million, or 3 percent, to $2.16 billion from $2.10 billion for the same period one year ago. Gross profit for the first quarter increased to $1.13 billion (or 52.5 percent of sales) from $1.10 billion (or 52.4 percent of sales) for the same period one year ago, representing an increase of 3 percent.
Net income for the first quarter increased $10 million, or 4 percent, to $265 million (or 12.3 percent of sales) from $255 million (or 12.2 percent of sales) for the same period one year ago. Diluted earnings per common share for the first quarter increased 9 percent to $2.83 on 93 million shares versus $2.59 on 99 million shares for the same period one year ago. The company adopted a new share-based compensation accounting standard during the first quarter ended March 31, 2017, which requires excess tax benefits from share-based compensation payments to be recorded in the income statement, and the Company’s first quarter diluted earnings per common share of $2.83 includes a 23 cent benefit from the adoption of this new accounting standard.
“On our Feb. 7, 2017 conference call, we discussed the volatility weather brings to our first quarter results. Based on mild January temperatures and the headwind that created in our business, we reduced our quarterly comparable store sales guidance for the first quarter to 2 percent to 4 percent. The unseasonal weather continued in February, and the absence of typical spring weather in many of our markets in March, combined with the dislocation of tax refunds, continued to create headwinds for the remainder of the quarter. We believe these headwinds were the primary drivers of our below expectation comparable store sales of 0.8 percent,” said Greg Henslee, O’Reilly’s CEO. “With these transient headwinds behind us and the onset of our spring selling season, we are establishing our second quarter comparable store sales guidance of 3 to 5 percent and maintaining our full-year comparable store sales guidance of 3 to 5 percent. We continue to strongly believe our team’s strength and ability to consistently execute our business model, along with the positive industry factors of an aging vehicle fleet, increasing number of vehicles on the road, relatively low gas prices and low unemployment rates, will continue to underpin our solid, long-term profitable growth.
“Excluding the benefit of the change in accounting for stock option gains, our earnings per share fell well short of our guidance range of $2.78 to $2.88, as the shortfall in sales created leverage pressure on all areas of our business. The unseasonal weather created mix headwinds to our gross margin and the soft sales resulted in deleverage of fixed costs in our gross margin and our SG&A, although our Team did a good job of controlling expenses during this slower than anticipated demand environment. Despite the specific challenges of the first quarter, our team was able to generate a very respectable 18.7 percent operating profit,” said Henslee. “Looking forward to the remainder of the year, we continue to expect our business to be solid and are reiterating our full-year operating profit guidance range of 20.1 to 20.5 percent of sales.”
