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%
Three Months Ended

December 31,

Year Ended

December 31,

2006  2005  2006  2005 
Other Information (in thousands):
Capital Expenditures $ 54,004  $ 55,558  $ 228,871  $ 205,159 
Depreciation and Amortization $ 17,563  $ 14,988  $ 64,938  $ 57,228 
Interest Expense $ 970  $ 1,462  $ 4,322  $ 5,062 
Lease and Rental Expense $ 13,331  $ 11,968  $ 50,138  $ 44,243 
$ $
Sales per weighted-average square foot (7) $ 50.30  $ 51.77  $ 215.30  $ 220.24 
 
Sales per weighted-average store

(in thousands) (8)

$ 337  $ 345  $ 1,439  $
© Business Wire - 2007
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O'Reilly Automotive, Inc. is one of the largest American distributors of automotive parts. The products are sold under own brands (BesTest®, BrakeBest®, Cartek®, Import Direct®, MasterPro®, MicroGard®, Murray®, Omnispark®, O'Reilly Auto Parts®, Precision®, Power Torque®, Super Start®, Syntec® and Ultima®) and third-party brands (AC Delco, Armor All, Bosch, Castrol, Dorman, Fel-Pro, Gates Rubber, Lucas Oil, Mobil1, Monroe, Moog, Pennzoil, Prestone, Standard, STP, Turtle Wax, Valvoline, Wagner et Wix). The group's activity is primarily organized around 3 families of products: - automotive parts: alternator, starters, water pumps, chassis parts, etc.; - maintenance products: antifreeze, filters, etc.; - accessories: primarily automotive carpets and seat covers. At the end of 2022, the products were marketed through a network of 5,971 stores located in the United States (5,929) and Mexico (42).
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Trading Rating
Investor Rating
ESG Refinitiv
C
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Sell
Consensus
Buy
Mean consensus
OUTPERFORM
Number of Analysts
29
Last Close Price
1,136 USD
Average target price
1,119 USD
Spread / Average Target
-1.44%
Consensus
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