O’Reilly Automotive, Inc., a leading retailer in the automotive aftermarket industry, recently announced record revenues and earnings for its 3rd quarter ended Sept. 30, 2019.
3rd Quarter Financial Results
Greg Johnson, O’Reilly’s CEO and co-president, commented, “We are pleased to report strong results for the 3rd quarter, highlighted by comparable store sales growth of 5%, which was at the high end of our guidance and on top of our solid 3.9% comparable store sales growth in the prior year. Our Team is committed to driving profitable growth, and we are pleased with our ability to deliver strong sales growth in the quarter, while also expanding our gross margin by 35 basis points. We capitalized on the top-line results, as our team diligently controlled expenses to leverage SG&A by 22 basis points over last year, resulting in a total increase in operating profit dollars of 11%. Our 3rd quarter performance and ongoing success is the direct result of our team members’ continued hard work and dedication, and I would like to thank each of them for their relentless commitment to providing the highest levels of service in the industry.”
Sales for the 3rd quarter ended Sept. 30, 2019, increased $184 million, or 7%, to $2.67 billion from $2.48 billion for the same period one year ago. Gross profit for the 3rd quarter increased 8% to $1.42 billion (or 53.3% of sales) from $1.32 billion (or 53% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the 3rd quarter increased 7% to $886 million (or 33.2% of sales) from $831 million (or 33.5% of sales) for the same period one year ago. Operating income for the 3rd quarter increased 11% to $536 million (or 20.1% of sales) from $485 million (or 19.5% of sales) for the same period one year ago.
Net income for the 3rd quarter ended Sept. 30, 2019, increased $25 million to $391 million (or 14.7% of sales) from $366 million (or 14.7% of sales) for the same period one year ago. Diluted earnings per common share for the 3rd quarter increased 13% to $5.08 on 77 million shares versus $4.50 on 81 million shares for the same period one year ago.
Year-to-Date Financial Results
Johnson continued, “Through the first nine months of 2019, our free cash flow results were stronger than planned, primarily driven by the amount and timing of our quarterly estimated tax payments. We continue to invest in renewable energy projects that generate investment tax credits and the timing of these investments can create unevenness in our cash flows, however, we expect this timing to normalize during the 4th quarter, and for the full-year, we continue to expect free cash flow to finish in the range of $1.0 billion to $1.1 billion.”
Sales for the first nine months of 2019 increased $446 million, or 6%, to $7.67 billion from $7.22 billion for the same period one year ago. Gross profit for the first nine months of 2019 increased 7% to $4.07 billion (or 53.1% of sales) from $3.81 billion (or 52.7% of sales) for the same period one year ago. SG&A for the first nine months of 2019 increased 7% to $2.59 billion (or 33.8% of sales) from $2.42 billion (or 33.5% of sales) for the same period one year ago. Operating income for the first nine months of 2019 increased 7% to $1.48 billion (or 19.3% of sales) from $1.39 billion (or 19.2% of sales) for the same period one year ago.
Net income for the first nine months of 2019 increased $42 million, or 4%, to $1.07 billion (or 13.9% of sales) from $1.02 billion (or 14.2% of sales) for the same period one year ago. Diluted earnings per common share for the first nine months of 2019 increased 10% to $13.63 on 78 million shares versus $12.36 on 83 million shares for the same period one year ago.
Johnson concluded, “As we discussed in our 2nd quarter earnings release, year-to-date store openings through June 30 fell short of our plan, due to weather related construction delays. We made significant progress with store openings during the 3rd quarter to close that timing gap, and remain on track to open 200 net, new stores by the end of 2019. We continue to view organic store growth to be a strong opportunity to invest capital at robust rates of return and plan to continue to execute our expansion strategy during 2020 with the addition of approximately 180 net, new stores. This target is slightly below our 2019 store opening pace as our teams will be heavily involved with completing the acquisition of Mayasa Auto Parts, which we announced in August. We are very excited to close on this acquisition in the 4th quarter and begin the process of partnering with the experienced Mayasa leadership team to capitalize on the long-term profitable growth opportunities that exist in the Mexican market.”
3rd Quarter 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. Online sales, resulting from ship-to-home orders and pick-up-in-store orders, for stores open at least one year, are included in the comparable store sales calculation. Comparable store sales increased 5% for the 3rd quarter ended Sept. 30, 2019, on top of 3.9% for the same period one year ago. Comparable store sales increased 3.9% for the nine months ended Sept. 30, 2019, on top of 4% for the same period one year ago.
Share Repurchase Program
During the 3rd quarter ended Sept. 30, 2019, the company repurchased 1 million shares of its common stock, at an average price per share of $377.85, for a total investment of $387 million. During the first nine months ended Sept. 30, 2019, the company repurchased 3.6 million shares of its common stock, at an average price per share of $364.84, for a total investment of $1.31 billion. Subsequent to the end of the 3rd quarter and through the date of this release, the company repurchased an additional 0.1 million shares of its common stock, at an average price per share of $393.33, for a total investment of $32 million. The company has repurchased a total of 76 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 $159.11, for a total aggregate investment of $12.09 billion. As of the date of this release, the company had approximately $662 million remaining under its current share repurchase authorization.
