AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.5 billion
for its third quarter (12 weeks) ended May 9, 2015, an increase of
6.5% from the third quarter of fiscal 2014 (12 weeks). Domestic
same store sales, or sales for stores open at least one year,
increased 2.3% for the quarter.
Net income for the quarter increased 8.4% over the same period
last year to $309.1 million, while diluted earnings per share
increased 13.1% to $9.57 per share from $8.46 per share in the
year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was
52.3% (versus 52.0% for the same period last year). The improvement
in gross margin was attributable to higher merchandise margins,
partially offset by the impact from Interamerican Motor Corporation
(IMC) which was acquired during September, 2014 (-26 bps).
Operating expenses, as a percentage of sales, were 31.6% (versus
31.5% for the same period last year). The increase in operating
expenses, as a percentage of sales, was primarily due to the impact
of the IMC acquisition.
Under its share repurchase program, AutoZone repurchased 763
thousand shares of its common stock for $515 million during the
third quarter, at an average price of $675 per share. Year to date,
the Company has repurchased 1.377 million shares of its common
stock for $841 million, at an average price of $611 per share. At
the end of the third quarter, the Company had $778 million
remaining under its current share repurchase authorization.
The Company's inventory increased 10.7% over the same period
last year, driven by increased product placement, new stores, and
the acquisition of IMC. Inventory per location was $629 thousand
versus $594 thousand last year and $631 thousand last quarter. The
acquisition of IMC increased total inventory per location by $13
thousand this quarter. Net inventory, defined as merchandise
inventories less accounts payable, on a per location basis was a
negative $68 thousand versus negative $84 thousand last year and
negative $47 thousand last quarter.
"We are pleased to report our thirty-fifth consecutive quarter
of double digit earnings per share growth. AutoZoners across the
company remain committed to providing superior service to our
customers and that dedication has resulted in consistent, solid
performance. We continued to diligently work on our inventory
availability initiatives, including expanding our multi-deliveries
per week to test stores and opening two additional mega hub store
locations. Also, the expanded hard parts inventory we have deployed
throughout our chain over the last year continues to be a
contributor to our sales success. While we have continued to
strategically invest in our business in order to support our
growth, we remain committed to our disciplined approach to growing
operating earnings and utilizing our capital effectively," said
Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended May 9, 2015, AutoZone opened 27 new
stores and relocated one store in the U.S., opened seven new stores
in Mexico, and opened two new stores in Brazil. IMC relocated its
East Coast distribution center and related branch during the third
quarter. As of May 9, 2015, the Company had 5,069 stores in 49
states, the District of Columbia and Puerto Rico in the U.S., 418
stores in Mexico, 18 IMC branches, and seven stores in Brazil for a
total count of 5,512.
AutoZone is the leading retailer and a leading distributor of
automotive replacement parts and accessories in the United States.
Each AutoZone store carries an extensive product line for cars,
sport utility vehicles, vans and light trucks, including new and
remanufactured automotive hard parts, maintenance items,
accessories, and non-automotive products. Many stores also have a
commercial sales program that provides commercial credit and prompt
delivery of parts and other products to local, regional and
national repair garages, dealers, service stations, and public
sector accounts. IMC branches carry an extensive line of original
equipment quality import replacement parts. AutoZone also sells the
ALLDATA brand diagnostic and repair software through
www.alldata.com. Additionally, we sell automotive hard parts,
maintenance items, accessories, and non-automotive products through
www.autozone.com, and accessories and performance parts through
www.autoanything.com, and our commercial customers can make
purchases through www.autozonepro.com and www.imcparts.net.
AutoZone does not derive revenue from automotive repair or
installation.
AutoZone will host a conference call this morning, Tuesday, May
26, 2015, beginning at 10:00 a.m. (EDT) to discuss its third
quarter results. Investors may listen to the conference call live
and review supporting slides on the AutoZone corporate website,
www.autozoneinc.com by clicking "Investor Relations," "Conference
Calls." The call will also be available by dialing (210) 839-8923.
A replay of the call and slides will be available on AutoZone's
website. In addition, a replay of the call will be available by
dialing (203) 369-1211 through Tuesday, June 2, 2015, at 11:59 p.m.
(EDT).
This release includes certain financial information not derived
in accordance with generally accepted accounting principles
("GAAP"). These non-GAAP measures include adjustments to reflect
return on invested capital, adjusted debt, adjusted debt to
EBITDAR, and cash flow before share repurchases. The Company
believes that the presentation of these non-GAAP measures provides
information that is useful to investors as it indicates more
clearly the Company's comparative year-to-year operating results,
but this information should not be considered a substitute for any
measures derived in accordance with GAAP. Management targets the
Company's capital structure in order to maintain its investment
grade credit ratings and manages cash flows available for share
repurchase by monitoring cash flows before share repurchases, as
shown on the attached tables. The Company believes this is
important information for the management of its debt levels and
share repurchases. We have included a reconciliation of this
additional information to the most comparable GAAP measures in the
accompanying reconciliation tables.
Certain statements contained in this press release are
forward-looking statements. Forward-looking statements typically
use words such as "believe," "anticipate," "should," "intend,"
"plan," "will," "expect," "estimate," "project," "positioned,"
"strategy" and similar expressions. These are based on assumptions
and assessments made by our management in light of experience and
perception of historical trends, current conditions, expected
future developments and other factors that we believe to be
appropriate. These forward-looking statements are subject to a
number of risks and uncertainties, including without limitation:
credit market conditions; the impact of recessionary conditions;
competition; product demand; the ability to hire and retain
qualified employees; consumer debt levels; inflation; weather; raw
material costs of our suppliers; energy prices; war and the
prospect of war, including terrorist activity; construction delays;
access to available and feasible financing; and changes in laws or
regulations. Certain of these risks are discussed in more detail in
the "Risk Factors" section contained in Item 1A under Part 1 of our
Annual Report on Form 10-K for the year ended August 30, 2014, and
these Risk Factors should be read carefully. Forward-looking
statements are not guarantees of future performance and actual
results; developments and business decisions may differ from those
contemplated by such forward-looking statements, and events
described above and in the "Risk Factors" could materially and
adversely affect our business. Forward-looking statements speak
only as of the date made. Except as required by applicable law, we
undertake no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise. Actual results may materially differ from anticipated
results.
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|
AutoZone's 3rd Quarter
Highlights - Fiscal 2015 |
|
|
|
|
|
Condensed Consolidated
Statements of Operations |
|
3rd Quarter,
FY2015 |
|
(in thousands, except per share data) |
|
|
|
|
GAAP
Results |
|
|
12 Weeks Ended |
12 Weeks Ended |
|
|
May 9, 2015 |
May 10, 2014 |
|
|
|
|
|
Net sales |
$ 2,493,021 |
$ 2,341,545 |
|
Cost of sales |
1,190,232 |
1,124,587 |
|
Gross profit |
1,302,789 |
1,216,958 |
|
Operating, SG&A expenses |
788,840 |
738,006 |
|
Operating profit (EBIT) |
513,949 |
478,952 |
|
Interest expense, net |
31,779 |
36,162 |
|
Income before taxes |
482,170 |
442,790 |
|
Income taxes |
173,099 |
157,633 |
|
Net income |
$ 309,071 |
$ 285,157 |
|
Net income per share: |
|
|
|
Basic |
$ 9.77 |
$ 8.62 |
|
Diluted |
$ 9.57 |
$ 8.46 |
|
Weighted average shares outstanding: |
|
|
|
Basic |
31,643 |
33,073 |
|
Diluted |
32,301 |
33,716 |
|
|
|
|
|
|
|
|
|
Year-To-Date 3rd Quarter,
FY2015 |
|
|
|
(in thousands, except per share data) |
GAAP
Results |
|
|
36 Weeks Ended |
36 Weeks Ended |
|
|
May 9, 2015 |
May 10, 2014 |
|
|
|
|
|
Net sales |
$ 6,896,936 |
$ 6,425,617 |
|
Cost of sales |
3,297,453 |
3,085,927 |
|
Gross profit |
3,599,483 |
3,339,690 |
|
Operating, SG&A expenses |
2,315,704 |
2,139,668 |
|
Operating profit (EBIT) |
1,283,779 |
1,200,022 |
|
Interest expense, net |
103,374 |
118,083 |
|
Income before taxes |
1,180,405 |
1,081,939 |
|
Income taxes |
421,301 |
385,865 |
|
Net income |
$ 759,104 |
$ 696,074 |
|
Net income per share: |
|
|
|
Basic |
$ 23.80 |
$ 20.71 |
|
Diluted |
$ 23.33 |
$ 20.34 |
|
Weighted average shares outstanding: |
|
|
|
Basic |
31,893 |
33,610 |
|
Diluted |
32,534 |
34,217 |
|
|
|
|
|
Selected Balance Sheet
Information |
|
|
|
(in thousands) |
|
|
|
|
May 9, 2015 |
May 10, 2014 |
August 30, 2014 |
|
|
|
|
Cash and cash equivalents |
$ 153,288 |
$ 145,349 |
$ 124,485 |
Merchandise inventories |
3,468,249 |
3,133,350 |
3,140,100 |
Current assets |
3,950,490 |
3,587,844 |
3,580,612 |
Property and equipment, net |
3,426,388 |
3,193,289 |
3,310,475 |
Total assets |
8,032,440 |
7,371,802 |
7,517,858 |
Accounts payable |
3,845,129 |
3,574,921 |
3,609,199 |
Current liabilities* |
4,693,102 |
4,603,952 |
4,541,094 |
Total debt* |
4,533,329 |
4,378,400 |
4,343,800 |
Stockholders' (deficit) |
(1,643,245) |
(1,808,230) |
(1,621,857) |
Working capital |
(742,612) |
(1,016,108) |
(960,482) |
|
|
|
|
* Current liabilities and total
debt both include short-term borrowings of $0 at May 9, 2015;
$215,156 at May 10, 2014 and $180,910 at August 30, 2014. These
amounts represent current debt maturities that are in excess of our
revolving credit facility available capacity. |
|
|
|
|
|
|
|
|
|
|
Adjusted Debt / EBITDAR (Trailing 4
Qtrs) |
|
|
|
|
(in thousands, except adjusted debt to
EBITDAR ratio) |
|
|
|
|
Condensed Consolidated Statements of
Operations |
May 9, 2015 |
May 10, 2014 |
|
|
Net income |
$ 1,132,774 |
$ 1,067,273 |
|
|
Add: Interest |
152,800 |
178,979 |
|
|
Taxes |
628,406 |
589,990 |
|
|
EBIT |
1,913,980 |
1,836,242 |
|
|
|
|
|
|
|
Add: Depreciation and amortization |
262,192 |
243,605 |
|
|
Rent expense |
267,247 |
254,606 |
|
|
Share-based expense |
40,093 |
40,660 |
|
|
EBITDAR |
$ 2,483,512 |
$ 2,375,113 |
|
|
|
|
|
|
|
Debt |
$ 4,533,329 |
$ 4,378,400 |
|
|
Capital lease obligations |
132,016 |
106,214 |
|
|
Add: rent x 6 |
1,603,482 |
1,527,636 |
|
|
Adjusted debt |
$ 6,268,827 |
$ 6,012,250 |
|
|
|
|
|
|
|
Adjusted debt to EBITDAR |
2.5 |
2.5 |
|
|
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow
Information |
|
|
|
|
(in thousands) |
|
|
|
|
|
12 Weeks Ended |
12 Weeks Ended |
36 Weeks Ended |
36 Weeks Ended |
|
May 9, 2015 |
May 10, 2014 |
May 9, 2015 |
May 10, 2014 |
|
|
|
|
|
Depreciation and amortization |
$ 62,299 |
$ 58,132 |
$ 183,211 |
$ 172,286 |
Capital spending |
$ 106,571 |
$ 101,763 |
$ 292,745 |
$ 261,724 |
|
|
|
|
|
Cash flow before share
repurchases: |
|
|
|
|
Increase/(decrease) in cash and cash
equivalents |
$ 1,749 |
$ 5,594 |
$ 28,803 |
$ 3,158 |
Subtract increase/(decrease) in debt |
85,029 |
56,716 |
189,529 |
191,400 |
Add back share repurchases |
515,251 |
419,999 |
840,918 |
911,537 |
Cash flow before share repurchases and
changes in debt |
$ 431,971 |
$ 368,877 |
$ 680,192 |
$ 723,295 |
|
|
|
|
|
|
|
|
|
|
Other Selected Financial
Information |
|
|
|
|
(in thousands, except ROIC) |
|
|
|
|
|
May 9, 2015 |
May 10, 2014 |
|
|
|
|
|
|
|
Cumulative share repurchases ($ since fiscal
1998) |
$ 14,871,688 |
$ 13,843,095 |
|
|
Remaining share repurchase authorization
($) |
$ 778,312 |
$ 306,905 |
|
|
|
|
|
|
|
Cumulative share repurchases (shares since
fiscal 1998) |
138,258 |
136,525 |
|
|
|
|
|
|
|
Shares outstanding, end of quarter |
31,239 |
32,613 |
|
|
|
|
|
|
|
|
Trailing 4
Quarters |
|
|
|
May 9, 2015 |
May 10, 2014 |
|
|
Net income |
$ 1,132,774 |
$ 1,067,273 |
|
|
Adjustments: |
|
|
|
|
Interest expense |
152,800 |
178,979 |
|
|
Rent expense |
267,247 |
254,606 |
|
|
Tax effect* |
(149,957) |
(154,356) |
|
|
After-tax return |
1,402,864 |
1,346,502 |
|
|
|
|
|
|
|
Average debt** |
4,425,186 |
4,212,337 |
|
|
Average stockholders' deficit** |
(1,640,964) |
(1,691,875) |
|
|
Add: Rent x 6 |
1,603,482 |
1,527,636 |
|
|
Average capital lease obligations** |
121,705 |
105,496 |
|
|
Pre-tax invested capital |
$ 4,509,409 |
$ 4,153,594 |
|
|
|
|
|
|
|
Return on Invested Capital
(ROIC) |
31.1% |
32.4% |
|
|
|
|
|
|
|
* Effective tax rate over
trailing four quarters ended May 9, 2015 is 35.7% and May 10, 2014
is 35.6%. |
** All averages are computed
based on trailing 5 quarter balances. |
|
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AutoZone's 3rd Quarter
Fiscal 2015 |
Selected Operating
Highlights |
Condensed Consolidated
Statements of Operations |
Location Count &
Square Footage |
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
36 Weeks Ended |
|
36 Weeks Ended |
|
May 9, 2015 |
|
May 10, 2014 |
|
May 9, 2015 |
|
May 10, 2014 |
AutoZone Domestic stores
(Domestic): |
|
|
|
|
|
|
|
Store count: |
|
|
|
|
|
|
|
Beginning domestic stores |
5,042 |
|
4,871 |
|
4,984 |
|
4,836 |
Stores opened |
27 |
|
30 |
|
86 |
|
65 |
Stores closed |
-- |
|
-- |
|
1 |
|
-- |
Ending domestic stores |
5,069 |
|
4,901 |
|
5,069 |
|
4,901 |
|
|
|
|
|
|
|
|
Relocated stores |
1 |
|
4 |
|
3 |
|
7 |
|
|
|
|
|
|
|
|
Stores with commercial
programs |
4,007 |
|
3,732 |
|
4,007 |
|
3,732 |
|
|
|
|
|
|
|
|
Square footage (in
thousands) |
33,025 |
|
31,863 |
|
33,025 |
|
31,863 |
|
|
|
|
|
|
|
|
AutoZone Mexico stores: |
|
|
|
|
|
|
|
Stores opened |
7 |
|
7 |
|
16 |
|
12 |
Total stores in Mexico |
418 |
|
374 |
|
418 |
|
374 |
|
|
|
|
|
|
|
|
AutoZone Brazil stores: |
|
|
|
|
|
|
|
Stores opened |
2 |
|
-- |
|
2 |
|
1 |
Total stores in Brazil |
7 |
|
4 |
|
7 |
|
4 |
|
|
|
|
|
|
|
|
Total AutoZone stores |
5,494 |
|
5,279 |
|
5,494 |
|
5,279 |
Square footage (in
thousands) |
36,157 |
|
34,627 |
|
36,157 |
|
34,627 |
Square footage per store |
6,581 |
|
6,559 |
|
6,581 |
|
6,559 |
|
|
|
|
|
|
|
|
IMC branches: |
|
|
|
|
|
|
|
Branches opened |
-- |
|
-- |
|
1 |
|
-- |
Branches acquired |
-- |
|
-- |
|
17 |
|
-- |
Total IMC branches |
18 |
|
-- |
|
18 |
|
-- |
|
|
|
|
|
|
|
|
Total locations
chainwide |
5,512 |
|
5,279 |
|
5,512 |
|
5,279 |
|
|
|
|
|
|
|
|
Sales Statistics |
|
|
|
|
|
|
|
($ in thousands, except sales per average
square foot) |
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
Trailing 4 Quarters |
|
Trailing 4 Quarters |
Total AutoZone stores (Domestic,
Mexico and Brazil) |
May 9, 2015 |
|
May 10, 2014 |
|
May 9, 2015 |
|
May 10, 2014 |
Sales per average store |
$ 432 |
|
$ 429 |
|
$ 1,761 |
|
$ 1,767 |
Sales per average square
foot |
$ 66 |
|
$ 65 |
|
$ 268 |
|
$ 270 |
|
|
|
|
|
|
|
|
Total Auto Parts (Domestic, Mexico,
Brazil, and IMC) |
|
|
|
|
|
|
|
Total auto parts sales |
$ 2,404,469 |
|
$ 2,258,413 |
|
$ 9,586,307 |
|
$ 9,177,184 |
% Increase vs.
LY |
6.5% |
|
6.1% |
|
4.5% |
|
7.0% |
|
|
|
|
|
|
|
|
Domestic Commercial (Excludes
IMC) |
|
|
|
|
|
|
|
Total domestic commercial
sales |
$ 452,153 |
|
$ 406,038 |
|
$ 1,752,211 |
|
$ 1,586,706 |
% Increase vs. LY |
11.4% |
|
14.0% |
|
10.4% |
|
14.6% |
|
|
|
|
|
|
|
|
All Other (ALLDATA, E-Commerce, and
AutoAnything) |
|
|
|
|
|
|
|
All other sales |
$ 88,552 |
|
$ 83,132 |
|
$ 360,326 |
|
$ 343,847 |
% Increase vs.
LY |
6.5% |
|
6.9% |
|
4.8% |
|
45.8% |
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
36 Weeks Ended |
|
36 Weeks Ended |
|
May 9, 2015 |
|
May 10, 2014 |
|
May 9, 2015 |
|
May 10, 2014 |
Domestic same store
sales |
2.3% |
|
4.0% |
|
3.4% |
|
3.1% |
|
|
|
|
|
|
|
|
Inventory Statistics (Total
Locations) |
|
|
|
|
|
|
|
|
as of |
|
as of |
|
|
|
|
|
May 9, 2015 |
|
May 10, 2014 |
|
|
|
|
Accounts
payable/inventory |
110.9% |
|
114.1% |
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
Inventory |
$ 3,468,249 |
|
$ 3,133,350 |
|
|
|
|
Inventory per location |
$ 629 |
|
$ 594 |
|
|
|
|
Net inventory (net of
payables) |
$ (376,880) |
|
$ (441,571) |
|
|
|
|
Net inventory / per
location |
$ (68) |
|
$ (84) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing 5
Quarters |
|
|
|
|
May 9, 2015 |
|
May 10, 2014 |
|
|
|
|
Inventory turns |
1.4 |
x |
1.5 |
x |
|
|
|
CONTACT: Financial:
Brian Campbell at (901) 495-7005, brian.campbell@autozone.com
Media:
Ray Pohlman at (866) 966-3017, ray.pohlman@autozone.com
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