O'Reilly Automotive, Inc. Reports Fourth Quarter and Full-Year 2019 Results and Announces Additional $1.0 Billion Share Repurchase Authorization

• Fourth quarter comparable store sales increase of 4.4%, full-year increase of 4.0%
• 14% increase in fourth quarter diluted earnings per share to $4.25, full-year 11% increase to $17.88

SPRINGFIELD, Mo., Feb. 05, 2020 (GLOBE NEWSWIRE) -- O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenues and earnings for its fourth quarter ended December 31, 2019. The results represent 27 consecutive years of comparable store sales growth and record revenue and operating income for O’Reilly since becoming a public company in April of 1993.

4th Quarter Financial Results
O’Reilly’s CEO and Co-President, Greg Johnson, commented, “We are pleased to once again report another profitable quarter, highlighted by a 4.4% increase in comparable store sales and a 14.2% increase in diluted earnings per share. While our comparable store sales results for the fourth quarter were in the top half of our expected range, we continued to see ongoing inflationary pressures in our expense structure, and primarily due to an unexpected surge in health benefit costs, our operating profit for the fourth quarter did not meet our expectations.”

Sales for the fourth quarter ended December 31, 2019, increased $168 million, or 7%, to $2.48 billion from $2.31 billion for the same period one year ago. Gross profit for the fourth quarter increased 7% to $1.32 billion (or 53.3% of sales) from $1.23 billion (or 53.3% of sales) for the same period one year ago. Selling, general and administrative expenses (“SG&A”) for the fourth quarter increased 10% to $883 million (or 35.6% of sales) from $806 million (or 34.8% of sales) for the same period one year ago. Operating income for the fourth quarter increased 3% to $442 million (or 17.8% of sales) from $428 million (or 18.5% of sales) for the same period one year ago.

Net income for the fourth quarter ended December 31, 2019, increased $25 million to $325 million (or 13.1% of sales) from $300 million (or 13.0% of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 14% to $4.25 on 76 million shares versus $3.72 on 81 million shares for the same period one year ago.

Full-Year Financial Results
Mr. Johnson continued, “Team O’Reilly’s commitment to providing the highest level of customer service in the industry, along with our relentless focus on profitable growth, resulted in full-year comparable stores sales growth of 4.0%, a 5.8% increase in full-year operating profit and an 11.1% increase in 2019 diluted earnings per share. I would like to take this opportunity to thank our Team for their continued dedication, hard work and commitment to O’Reilly’s ongoing success, highlighted by 2019 marking our 11th consecutive year of 10% or greater diluted earnings per share growth.”

Sales for the year ended December 31, 2019, increased $614 million, or 6%, to $10.15 billion from $9.54 billion for the same period one year ago. Gross profit for the year ended December 31, 2019, increased 7% to $5.39 billion (or 53.1% of sales) from $5.04 billion (or 52.8% of sales) for the same period one year ago. SG&A for the year ended December 31, 2019, increased 8% to $3.47 billion (or 34.2% of sales) from $3.22 billion (or 33.8% of sales) for the same period one year ago. Operating income for the year ended December 31, 2019, increased 6% to $1.92 billion (or 18.9% of sales) from $1.82 billion (or 19.0% of sales) for the same period one year ago.

Net income for the year ended December 31, 2019, increased $67 million, or 5%, to $1.39 billion (or 13.7% of sales) from $1.32 billion (or 13.9% of sales) for the same period one year ago. Diluted earnings per common share for the year ended December 31, 2019, increased 11% to $17.88 on 78 million shares versus $16.10 on 82 million shares for the same period one year ago.

Mr. Johnson concluded, “We successfully met our goal of 200 net, new store openings in 2019, in addition to converting 20 acquired Bennett stores to the O’Reilly brand. Also, we closed on our acquisition of Mayasa Auto Parts on November 29, 2019, and we are very pleased to officially welcome the over 1,100 Mayasa Team Members into the O’Reilly family. The Mayasa acquisition represents O’Reilly’s first expansion outside the U.S. as an international company, and we are excited to work together with the outstanding Mayasa team to build on their history of profitable growth as we enter the Mexican automotive aftermarket. We continued to enhance our industry-leading distribution network in 2019, as we successfully opened our 28th distribution center in Twinsburg, Ohio, and have two additional distribution center projects under construction in the Nashville and Memphis markets, which will both open in 2020. ”

4th Quarter and Full-Year 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, resulting from 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 4.4% for the fourth quarter ended December 31, 2019, on top of 3.3% for the same period one year ago. Comparable store sales increased 4.0% for the year ended December 31, 2019, on top of 3.8% for the same period one year ago.

Share Repurchase Program
During the fourth quarter ended December 31, 2019, the Company repurchased 0.3 million shares of its common stock, at an average price per share of $427.33, for a total investment of $125 million. During the year ended December 31, 2019, the Company repurchased 3.9 million shares of its common stock, at an average price per share of $369.55, for a total investment of $1.43 billion. Subsequent to the end of the fourth 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 $428.29, for a total investment of $88 million. The Company has repurchased a total of 76.4 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 $160.61, for a total aggregate investment of $12.27 billion.

Today, the Company also announced that its Board of Directors (the “Board”) approved a resolution to increase the authorization amount under its share repurchase program by an additional $1.0 billion, raising the aggregate authorization under the program to $13.75 billion. The additional $1.0 billion authorization is effective for a three-year period, beginning on February 5, 2020. Stock repurchases under the program may be made from time to time, as the Company deems appropriate, solely through open market repurchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate requirements and overall market conditions. There can be no assurance as to the number of shares the Company will purchase, if any. The share repurchase program may be increased or otherwise modified, renewed, suspended or terminated by the Company at any time, without prior notice. As of the date of this release, the Company had approximately $1.48 billion remaining under its current share repurchase authorizations.

1st Quarter and Full-Year 2020 Guidance
The table below outlines the Company’s guidance for selected first quarter and full-year 2020 financial data:

(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:

Non-GAAP Information
This release contains certain financial information not derived in accordance with United States generally accepted accounting principles (“GAAP”). These items include adjusted debt to earnings before interest, taxes, depreciation, amortization, share-based compensation and rent (“EBITDAR”) and free cash flow. The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of adjusted debt to EBITDAR and free cash flow provide meaningful supplemental information to both management and investors that is indicative of the Company’s core operations. The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the table above and the selected financial information below.

Earnings Conference Call Information
The Company will host a conference call on Thursday, February 6, 2020, 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 website at www.OReillyAuto.com by clicking on “Investor Relations” and then “News Room.” Interested analysts are invited to join the call. The dial-in number for the call is (847) 619-6396; the conference call identification number is 49267105. A replay of the conference call will be available on the Company’s website through Friday, February 5, 2021.

About O’Reilly Automotive, Inc.
O’Reilly Automotive, Inc. was founded in 1957 by the O’Reilly family and 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 service provider markets. Visit the Company’s website at www.OReillyAuto.com for additional information about O’Reilly, including access to online shopping and current promotions, store locations, hours and services, employment opportunities and other programs. As of December 31, 2019, the Company operated 5,439 stores in 47 U.S. states and 21 stores in Mexico.

Forward-Looking Statements
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. You can identify these statements by forward-looking words such as “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend” 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, integration 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, the economy in general, inflation, tariffs, product demand, the market for auto parts, competition, weather, risks associated with the performance of acquired businesses, our ability to hire and retain qualified employees, consumer debt levels, our increased debt levels, credit ratings on public debt, governmental regulations, information security and cyber-attacks, 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” section of the annual report on Form 10-K for the year ended December 31, 2018, and subsequent Securities and Exchange Commission filings for additional factors that could materially affect the Company’s financial performance. Forward-looking statements speak only as of the date they were made and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Note: The balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

(1) The Company adopted Accounting Standard Codification 842 - Leases (“ASC 842”) during the first quarter ended March 31, 2019, using the additional, optional transition method, which does not require prior periods to be restated.

(2) Includes goodwill and other intangible assets related to the acquisition of Mayasa Auto Parts as part of the preliminary purchase price allocation.

Note: The income statement for the year ended December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

Note: The cash flow statement for the year ended December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

(i) The table below outlines the calculation of Rent expense and reconciles Rent expense to Total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the year ended December 31, 2019 (in thousands):

(1) Represents O’Reilly’s U.S. operations only.

(2) Calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.

(3) Calculated as inventory divided by store count at the end of the reported period.

(4) Calculated as accounts payable divided by inventory.

(5) O’Reilly acquired 33 Bennett Auto Supply, Inc. (“Bennett”) stores after the close of business on December 31, 2018, which were not included in the December 31, 2018, store count, as they were not operated by the Company for any portion of 2018. During the first quarter ended March 31, 2019, O’Reilly merged eight of the acquired Bennett stores into existing O’Reilly locations, and during the second quarter ended June 30, 2019, O’Reilly merged an additional five acquired Bennett stores into existing O’Reilly locations.

(6) O’Reilly acquired Mayoreo de Autopartes y Aceites, S.A. de C.V. (“Mayasa”), headquartered in Guadalajara, Jalisco, Mexico, after the close of business on November 29, 2019.

(7) Calculated as sales less jobber sales, divided by weighted-average square footage. Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions or closures.

(8) Calculated as sales less jobber sales, divided by weighted-average stores. Weighted-average stores is determined by weighting stores based on their approximate dates of openings, acquisitions or closures.