O’Reilly Automotive Inc. announced record revenue and earnings for its first quarter ended March 31, 2023.
1st Quarter Financial Results
Greg Johnson, O’Reilly’s CEO, commented, “We are pleased to report a very strong start to 2023, highlighted by robust 10.8% growth in comparable store sales and a 15% increase in our first quarter diluted earnings per share to $8.28. Team O’Reilly’s commitment to taking care of our customers drove another quarter of double-digit comparable store sales growth in our professional business, while also generating growth in DIY sales. Our team continues to execute our proven dual market strategy at an extremely high level, and we remain confident in their ability to out-service the competition and expand our market share. I would like to thank each of our over 86,000 Team Members for their relentless focus on providing the best customer service in our industry.”
Sales for the first quarter ended March 31, 2023, increased $412 million, or 12%, to $3.71 billion from $3.30 billion for the same period one year ago. Gross profit for the first quarter increased 11% to $1.89 billion (or 51% of sales) from $1.71 billion (or 51.8% of sales) for the same period one year ago. Selling, general and administrative expenses for the first quarter increased 13% to $1.17 billion (or 31.7% of sales) from $1.04 billion (or 31.5% of sales) for the same period one year ago. Operating income for the first quarter increased 7% to $717 million (or 19.3% of sales) from $670 million (or 20.3% of sales) for the same period one year ago.
Net income for the first quarter ended March 31, 2023, increased $35 million, or 7%, to $517 million (or 13.9% of sales) from $482 million (or 14.6% of sales) for the same period one year ago. Diluted earnings per common share for the first quarter increased 15% to $8.28 on 62 million shares versus $7.17 on 67 million shares for the same period one year ago.
Johnson continued, “During the first quarter we celebrated several milestones, including the opening of our 6,000th store, the opening of our first store in Maryland, which marked our entrance into our 48th U.S. state, and our expansion into Puerto Rico, where we opened two stores and a distribution center. In addition, we remain on schedule to open our next distribution center in Guadalajara, Mexico, this summer. This facility will provide an enhanced level of service to the large and growing Guadalajara metro area, while also better positioning our overall distribution network for future growth across Mexico. Team O’Reilly’s incredible dedication and hard work drove these tremendous accomplishments, and I could not be more proud of our achievements this quarter and the great work our Teams have done to position us to build upon our record of strong, profitable growth well into the future.”
1st Quarter Comparable Store Sales Results
Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members. Online sales for ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. Comparable store sales increased 10.8% for the first quarter ended March 31, 2023, on top of 4.8% for the same period one year ago.
Share Repurchase Program
During the first quarter ended March 31, 2023, the company repurchased 1.4 million shares of its common stock, at an average price per share of $819.06, for a total investment of $1.11 billion. Excise tax on shares repurchased, assessed at one percent of the fair market value of net shares repurchased, was $11.1 million for the three months ended March 31, 2023. Subsequent to the end of the first quarter and through the date of this release, the Company repurchased an additional 0.2 million shares of its common stock, at an average price per share of $864.44, for a total investment of $137 million. The Company has repurchased a total of 92 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 $231.17, for a total aggregate investment of $21.28 billion. As of the date of this release, the company had approximately $475 million remaining under its current share repurchase authorization.
Updated Full-Year 2023 Guidance
The table below outlines the company’s updated guidance for selected full-year 2023 financial data:
| For the Year Ending | |
| December 31, 2023 | |
| Net, new store openings | 180 to 190 |
| Comparable store sales | 4% to 6% |
| Total revenue | $15.2 billion to $15.5 billion |
| Gross profit as a percentage of sales | 50.8% to 51.3% |
| Operating income as a percentage of sales | 19.8% to 20.3% |
| Effective income tax rate | 22.9% |
| Diluted earnings per share (1) | $36.50 to $37.00 |
| Net cash provided by operating activities | $2.5 billion to $2.9 billion |
| Capital expenditures | $750 million to $800 million |
| Free cash flow (2) | $1.8 billion to $2.1 billion |
(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) Free cash flow is a non-GAAP financial measure. The table below reconciles Free cash flow guidance to Net cash provided by operating activities guidance, the most directly comparable GAAP financial measure:
| For the Year Ending | ||||||
| (in millions) | December 31, 2023 | |||||
| Net cash provided by operating activities | $ | 2,560 | to | $ | 2,920 | |
| Less: | Capital expenditures | 750 | to | 800 | ||
| Excess tax benefit from share-based compensation payments | 10 | to | 20 | |||
| Free cash flow | $ | 1,800 | to | $ | 2,100 |
