O'Reilly Automotive, Inc. (?O'Reilly? or ?the Company?)(Nasdaq: ORLY) today announced record revenues and earnings for the fourth quarter and year ended December 31, 2006, representing 14 consecutive years of record revenues and earnings and positive comparable store sales increases for O'Reilly since becoming a public company in April 1993.
Sales increased $238 million, or 11.6% from $2.05 billion in 2005 to $2.28 billion for the year ended December 31, 2006, with a 3.3% increase in same-store sales. Gross profit for the year ended December 31, 2006, increased to $1.01 billion (or 44.1% of sales) from $893 million (or 43.6% of sales) for the year ended December 31, 2005, representing an increase of 12.8%. Operating, selling, general and administrative (?OSG&A?) expenses for the year ended December 31, 2006, increased to $724 million (or 31.7% of sales) from $640 million (or 31.3% of sales) for the year ended December 31, 2005, representing an increase of 13.2%. The increase in the effective tax rate from 34.6% for the year ended December 31, 2005 to 36.9% for the year ended December 31, 2006, reflects a one-time benefit of $6.1 million from the favorable resolution of prior tax uncertainties in the third quarter of 2005.
Net income for the year ended December 31, 2006, totaled $178.1 million, up 8.4% from $164.3 million for the year ended December 31, 2005. Diluted earnings per common share for the year ended December 31, 2006, increased 6.9% to $1.55 on 115.1 million shares versus $1.45 a year ago on 113.4 million shares. 2005 results include a benefit of $0.05 per share from the favorable resolution of prior tax uncertainties in the third quarter of 2005. On an adjusted basis excluding the third quarter 2005 tax resolution benefit, diluted earnings per common share increased 10.7% from $1.40 for the year ended December 31, 2005 to $1.55 for the year ended December 31, 2006.
Sales for the fourth quarter ended December 31, 2006, totaled $558 million, up 8.4% from $515 million for the same period a year ago. Gross profit for the fourth quarter ended December 31, 2006, increased to $249 million (or 44.6% of sales) from $231 million (or 44.9% of sales) for the same period a year ago, representing an increase of 7.6%. OSG&A expenses for the fourth quarter of 2006 increased to $185 million (or 33.1% of sales) from $168 million (or 32.7% of sales) for the same period a year ago, representing an increase of 10.0%. Net income for the fourth quarter ended December 31, 2006, totaled $40.4 million, up 2.1% from $39.5 million for the same period in 2005. Diluted earnings per common share for the fourth quarter ended December 31, 2006 were even at $0.35 on 115.4 million shares versus $0.35 a year ago on 114.0 million shares.
Comparable store sales for stores open at least one year increased 2.1% and 3.3% for the fourth quarter and year ended December 31, 2006, respectively, representing 55 quarters of comparable store sales increases since O'Reilly became a public company in April 1993.
?We are extremely proud of the hard work of every member of Team O'Reilly in 2006. Through a combination of relentless attention to every expense detail and our category management efforts, which generated a 44.1% gross margin, we were able to produce record operating margins in the midst of very difficult economic conditions,? stated CEO and Co-President Greg Henslee. ?Our team is committed to providing the highest levels of customer service in our business and we're looking forward to offering these services to customers in all the new markets in which we'll expand in 2007".
Ted Wise, COO and Co-President, stated, "We added 170 new stores in 2006 with 44 of those opening in the fourth quarter. We continue to identify excellent locations for new stores and are on pace to achieve our plan to open 190 to 195 new stores in 2007. Great customer service and executing our dual market strategy will continue to be the foundation of our growth and success as we expand into new markets.?
The Company will host a conference call Wednesday, February 28, 2007, 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 web site, www.oreillyauto.com, by clicking on ?Investor Relations? then ?News Room.?
This release contains certain financial information not derived in accordance with United States generally accepted accounting principles (?GAAP?). The Company does not, and does not suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. Whenever the Company uses such non-GAAP measures, it provides a reconciliation of such measures to the most closely applicable GAAP measure. The Company reports both GAAP and adjusted income and earnings per share amounts and comparisons to reflect what it believes are ongoing and/or comparable operating results excluding the Q3 2005 tax benefit. The Company excludes these items in judging its performance and believes this non-GAAP information is useful to investors as well.
O'Reilly Automotive, Inc. 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 installer markets. Founded in 1957 by the O'Reilly family, the Company operated 1,640 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of December 31, 2006.
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. These statements can be identified by forward-looking words such as ?expect,? ?believe,? ?anticipate,? ?should,? ?plan,? ?intend,? ?estimate,? ?project,? ?will? 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 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, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses, weather, 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 sections of the Company's Form 10-K for the year ended December 31, 2006, for more details.
O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) | |||
December 31,
2006 |
December 31,
2005 | ||
(Unaudited) | (Note) | ||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 29,903 | $ 31,384 | |
Accounts receivable, net | 81,048 | 73,849 | |
Amounts receivable from vendors, net | 47,790 | 57,224 | |
Inventory | 812,938 | 725,339 | |
Other current assets | 28,997 | 22,845 | |
Total current assets | 1,000,676 | 910,641 | |
Property and equipment, at cost | 1,214,854 | 992,899 | |
Accumulated depreciation and amortization | 331,759 | 274,533 | |
Net property and equipment | 883,095 | 718,366 | |
Notes receivable, less current portion | 30,288 | 29,062 | |
Other assets, net | 63,437 | 60,827 | |
Total assets | $ 1,977,496 | $ 1,718,896 | |
Liabilities and shareholders' equity | |||
Current liabilities: | |||
Accounts payable | $ 318,404 | $ 292,667 | |
Accrued payroll | 21,171 | 19,356 | |
Accrued benefits and withholdings | 44,032 | 49,794 | |
Deferred income taxes | 5,779 | 2,451 | |
Other current liabilities | 44,089 | 46,086 | |
Current portion of long-term debt | 309 | 75,313 | |
Total current liabilities | 433,784 | 485,667 | |
Long-term debt, less current portion | 110,170 | 25,461 | |
Deferred income taxes | 38,171 | 42,516 | |
Other liabilities | 31,275 | 19,483 | |
Shareholders' equity: | |||
Common stock, $0.01 par value: | |||
Authorized shares ? 245,000,000 | |||
Issued and outstanding shares ? 113,929,327 at December 31, 2006, and 112,389,002 at December 31, 2005 | |||
1,139 | 1,124 | ||
Additional paid-in capital | 400,552 | 360,325 | |
Retained earnings | 962,405 | 784,320 | |
Total shareholders' equity | 1,364,096 | 1,145,769 | |
Total liabilities and shareholders' equity | $ 1,977,496 | $ 1,718,896 | |
Note: The balance sheet at December 31, 2005, 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 INCOME (In thousands, except per share data) | |||||||||||
Three Months Ended | Year Ended | ||||||||||
December 31, | December 31, | ||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||
(Unaudited) | (Note) | (Unaudited) | (Note) | ||||||||
Sales | $ | 558,332 | $ | 514,964 | $ | 2,283,222 | $ | 2,045,318 | |||
Cost of goods sold, including warehouse and distribution expenses | 309,303 | 283,516 | 1,276,511 | 1,152,815 | |||||||
Gross Profit | 249,029 | 231,448 | 1,006,711 | 892,503 | |||||||
Operating, selling, general and administrative expenses | 185,000 | 168,217 | 724,396 | 639,979 | |||||||
Operating income | 64,029 | 63,231 | 282,315 | 252,524 | |||||||
Other expense, net | (32) | (421) | (50) | (1,455) | |||||||
Income before income taxes | 63,997 | 62,810 | 282,265 | 251,069 | |||||||
Provision for income taxes | 23,645 | 23,303 | 104,180 | 86,803 | |||||||
Net income | $ | 40,352 | $ | 39,507 | $ | 178,085 | $ | 164,266 | |||
Net income per common share (1) | $ | 0.35 | $ | 0.35 | $ | 1.57 | $ | 1.47 | |||
Net income per common share ? assuming dilution (1) | $ | 0.35 | $ | 0.35 | $ | 1.55 | $ | 1.45 | |||
Weighted-average common shares outstanding (1) | 113,755 | 112,176 | 113,253 | 111,613 | |||||||
Adjusted weighted-average common shares outstanding ? assuming dilution (1) | 115,430 | 114,041 | 115,119 | 113,385 | |||||||
(1) On June 15, 2005, the Company completed a two-for-one split of its common stock. All share and per share amounts for the periods presented have been adjusted to reflect the effect of the stock split. | |||||||||||
Note: The income statement for the year ended December 31, 2005, has been derived from the audited consolidated financial statements 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) | |||
December 31, | |||
2006 | 2005 | ||
Inventory turnover (1) | 1.7 | 1.7 | |
Inventory turnover, net of payables (2) | 2.8 | 2.8 | |
AP to inventory (3) | 39.2% | 40.3% | |
Debt-to-capital (4) | 7.5% | 8.1% | |
Return on equity (5) | 14.2% | 15.1% | |
Return on assets (6) | 9.6% | 10.0% |