AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.5 billion
for its first quarter (12 weeks) ended November 19, 2016, an
increase of 3.4% from the first quarter of fiscal 2016 (12 weeks).
Domestic same store sales, or sales for stores open at least
one year, increased 1.6% for the quarter.
Net income for the quarter increased 7.8% over the same period
last year to $278.1 million, while diluted earnings per share
increased 13.0% to $9.36 per share from $8.29 per share in the
year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was
52.7% (versus 52.5% for the same period last year). The
improvement in gross margin was attributable to lower acquisition
costs, partially offset by higher supply chain costs associated
with current year inventory initiatives (-14 bps). Operating
expenses, as a percentage of sales, were 34.1% (versus 34.2% the
same period last year). Operating expenses, as a percentage
of sales, were relatively flat to last year as favorability across
several areas was offset by higher domestic store payroll (-9 bps).
Under its share repurchase program, AutoZone repurchased 478
thousand shares of its common stock for $363 million during the
first quarter, at an average price of $759 per share. At the
end of the first quarter, the Company had $783 million remaining
under its current share repurchase authorization.
The Company’s inventory increased 7.3% over the same period last
year, driven by new stores and increased product placement.
Inventory per location was $647 thousand versus $624 thousand last
year and $625 thousand last quarter. Net inventory, defined
as merchandise inventories less accounts payable, on a per location
basis, was a negative $67 thousand versus negative $66 thousand
last year and negative $80 thousand last quarter.
“I would like to thank our entire organization for delivering
another quarter of very solid results. We are pleased to
report our forty-first consecutive quarter of double digit earnings
per share growth. We remain committed to providing superior
customer service and trustworthy advice. For the quarter, we
reached record first quarter sales and earnings per share while
opening 21 new locations and 35 Commercial programs. We also
continued with the rollout of our inventory availability
initiatives, including expanding our multi-deliveries per week to
161 net additional stores. We will continue with our
deliberately-paced multiple delivery rollouts in 2017, and we will
continue to open more Mega Hub locations. We have opened our
second distribution center in Mexico, and we are in the process of
building two new domestic distribution centers. We believe
these initiatives will allow us to continue to meet our customers’
needs across all selling channels. As we continue to invest
capital in all our businesses, we remain committed to our
disciplined approach of increasing operating earnings and utilizing
our capital effectively,” said Bill Rhodes, Chairman, President and
Chief Executive Officer.
During the quarter ended November 19, 2016, AutoZone opened 16
new stores and relocated two stores in the U.S., and opened five
new stores in Mexico. As of November 19, 2016, the Company
had 5,313 stores in 50 states in the U.S., the District of Columbia
and Puerto Rico, 488 stores in Mexico, 26 IMC branches, and eight
stores in Brazil for a total count of 5,835.
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, performance and replacement
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,
December 6, 2016, beginning at 10:00 a.m. (EST) to discuss its
first 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, December 13, 2016, at 11:59 p.m. (EST).
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; the compromising of the
confidentiality, availability or integrity of information,
including cyber security attacks; 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 the
Annual Report on Form 10-K for the year ended August 27, 2016, 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.
AutoZone's 1st Quarter Highlights - Fiscal
2017 |
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|
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|
Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
1st Quarter, FY2017 |
|
|
|
|
|
|
(in
thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
GAAP Results |
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
2,467,845 |
|
|
$ |
2,386,043 |
|
|
|
Cost of
sales |
|
|
1,166,303 |
|
|
|
1,133,109 |
|
|
|
Gross
profit |
|
|
1,301,542 |
|
|
|
1,252,934 |
|
|
|
Operating,
SG&A expenses |
|
|
842,640 |
|
|
|
814,939 |
|
|
|
Operating
profit (EBIT) |
|
|
458,902 |
|
|
|
437,995 |
|
|
|
Interest
expense, net |
|
|
33,306 |
|
|
|
35,010 |
|
|
|
Income
before taxes |
|
|
425,596 |
|
|
|
402,985 |
|
|
|
Income
taxes (1) |
|
|
147,471 |
|
|
|
144,873 |
|
|
|
Net
income |
|
$ |
278,125 |
|
|
$ |
258,112 |
|
|
|
Net income
per share: (1) |
|
|
|
|
|
|
|
Basic |
|
$ |
9.61 |
|
|
$ |
8.46 |
|
|
|
|
Diluted |
|
$ |
9.36 |
|
|
$ |
8.29 |
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
|
28,951 |
|
|
|
30,498 |
|
|
|
|
Diluted
(1) |
|
|
29,703 |
|
|
|
31,138 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company adopted a new accounting standard on August
28, 2016, that requires excess tax benefits from stock option
exercises to be recognized in the income statement. The adoption of
the new standard increased EPS by $0.03, driven by a lower
effective tax rate of 74 bps, (an $0.11 benefit to EPS), partially
offset by a change to the dilutive outstanding shares calculation
(an $.08 reduction to EPS). Prior period's financial information
was not restated to conform to the current period’s
presentation. |
|
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|
|
|
|
|
|
|
|
|
|
|
Selected Balance Sheet Information |
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
August 27, 2016 |
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
195,538 |
|
|
$ |
165,486 |
|
|
$ |
189,734 |
|
Merchandise
inventories |
|
|
3,773,242 |
|
|
|
3,515,703 |
|
|
|
3,631,916 |
|
Current
assets |
|
|
4,368,686 |
|
|
|
4,053,871 |
|
|
|
4,239,573 |
|
Property and equipment, net |
|
|
3,750,511 |
|
|
|
3,537,055 |
|
|
|
3,733,254 |
|
Total
assets |
|
|
8,742,544 |
|
|
|
8,217,528 |
|
|
|
8,599,787 |
|
Accounts
payable |
|
|
4,162,316 |
|
|
|
3,889,849 |
|
|
|
4,095,854 |
|
Current
liabilities |
|
|
4,850,219 |
|
|
|
4,775,241 |
|
|
|
4,690,320 |
|
Total
debt |
|
|
4,997,446 |
|
|
|
4,754,101 |
|
|
|
4,924,119 |
|
Stockholders' (deficit) |
|
|
(1,895,225 |
) |
|
|
(1,778,121 |
) |
|
|
(1,787,538 |
) |
Working capital |
|
|
(481,533 |
) |
|
|
(721,370 |
) |
|
|
(450,747 |
) |
Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
Adjusted Debt / EBITDAR (Trailing 4 Qtrs) |
|
|
|
|
(in
thousands, except adjusted debt to EBITDAR ratio) |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
Net income |
|
$ |
1,261,020 |
|
|
$ |
1,180,043 |
|
Add:
Interest |
|
|
145,977 |
|
|
|
148,389 |
|
Taxes |
|
|
674,305 |
|
|
|
654,052 |
|
EBIT |
|
|
|
2,081,302 |
|
|
|
1,982,484 |
|
|
|
|
|
|
|
|
|
Add: Depreciation and amortization |
|
|
302,926 |
|
|
|
275,157 |
|
Rent expense |
|
|
283,474 |
|
|
|
271,562 |
|
Share-based expense |
|
|
40,956 |
|
|
|
40,847 |
|
EBITDAR |
|
$ |
2,708,658 |
|
|
$ |
2,570,050 |
|
|
|
|
|
|
|
|
|
Debt |
|
|
$ |
4,997,446 |
|
|
$ |
4,754,101 |
|
Capital lease obligations |
|
|
150,829 |
|
|
|
123,250 |
|
Add: rent x 6 |
|
|
1,700,844 |
|
|
|
1,629,372 |
|
Adjusted debt |
|
$ |
6,849,119 |
|
|
$ |
6,506,723 |
|
|
|
|
|
|
|
|
|
Adjusted debt to EBITDAR |
|
|
2.5 |
|
|
|
2.5 |
|
|
|
|
|
|
|
|
|
|
Selected Cash Flow Information |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
$ |
71,812 |
|
|
$ |
66,283 |
|
Capital spending |
|
|
97,917 |
|
|
|
86,658 |
|
|
|
|
|
|
|
|
|
Cash flow before share repurchases: |
|
|
|
|
Increase
(decrease) in cash and cash equivalents |
|
$ |
5,804 |
|
|
$ |
(9,823 |
) |
Subtract increase in debt, excluding deferred financing
costs |
|
|
72,200 |
|
|
|
128,300 |
|
Add back share repurchases |
|
|
362,634 |
|
|
|
400,100 |
|
Cash flow
before share repurchases and changes in debt |
|
$ |
296,238 |
|
|
$ |
261,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Selected Financial Information |
|
|
|
|
(in
thousands, except ROIC) |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative share repurchases ($ since fiscal 1998) |
|
$ |
17,117,283 |
|
|
$ |
15,702,286 |
|
Remaining share repurchase authorization ($) |
|
|
782,717 |
|
|
|
697,714 |
|
|
|
|
|
|
|
|
|
Cumulative share repurchases (shares since fiscal 1998) |
|
|
141,272 |
|
|
|
139,428 |
|
|
|
|
|
|
|
|
|
Shares
outstanding, end of quarter |
|
|
28,662 |
|
|
|
30,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing 4 Quarters |
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
Net income |
|
$ |
1,261,020 |
|
|
$ |
1,180,043 |
|
Adjustments: |
|
|
|
|
Interest expense |
|
|
145,977 |
|
|
|
148,389 |
|
Rent expense |
|
|
283,474 |
|
|
|
271,562 |
|
Tax effect* |
|
|
(149,450 |
) |
|
|
(149,922 |
) |
After-tax return |
|
|
1,541,021 |
|
|
|
1,450,072 |
|
|
|
|
|
|
|
|
|
Average
debt** |
|
|
4,894,916 |
|
|
|
4,544,313 |
|
Average stockholders' deficit** |
|
|
(1,813,096 |
) |
|
|
(1,650,849 |
) |
Add: Rent x 6 |
|
|
1,700,844 |
|
|
|
1,629,372 |
|
Average capital lease obligations** |
|
|
135,540 |
|
|
|
126,825 |
|
Pre-tax invested capital |
|
$ |
4,918,204 |
|
|
$ |
4,649,661 |
|
|
|
|
|
|
|
|
|
Return on Invested Capital (ROIC) |
|
|
31.3 |
% |
|
|
31.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Effective tax rate over trailing four quarters ended November
19, 2016 is 34.8% and November 21, 2015 is 35.7%. |
** |
All averages are computed based on trailing 5 quarter
balances. |
|
|
|
|
|
|
|
AutoZone's 1st Quarter Fiscal
2017 |
|
|
|
|
|
|
Selected Operating Highlights |
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Location Count & Square Footage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
AutoZone Domestic stores (Domestic): |
|
|
|
|
|
|
|
|
|
Store count: |
|
|
|
|
|
|
|
|
|
Beginning
domestic stores |
|
|
5,297 |
|
|
|
5,141 |
|
|
|
|
|
|
Stores
opened |
|
|
16 |
|
|
|
22 |
|
|
|
|
|
|
Stores
closed |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Ending
domestic stores |
|
|
5,313 |
|
|
|
5,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relocated
stores |
|
|
2 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores with commercial programs |
|
|
4,425 |
|
|
|
4,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Square
footage (in thousands) |
|
|
34,684 |
|
|
|
33,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AutoZone Mexico stores: |
|
|
|
|
|
|
|
|
|
Stores
opened |
|
|
5 |
|
|
|
1 |
|
|
|
|
|
|
Total
stores in Mexico |
|
|
488 |
|
|
|
442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AutoZone Brazil stores: |
|
|
|
|
|
|
|
|
|
Stores
opened |
|
|
- |
|
|
|
1 |
|
|
|
|
|
|
Total
stores in Brazil |
|
|
8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AutoZone stores |
|
|
5,809 |
|
|
|
5,613 |
|
|
|
|
|
|
Square
footage (in thousands) |
|
|
38,345 |
|
|
|
36,981 |
|
|
|
|
|
|
Square
footage per store |
|
|
6,601 |
|
|
|
6,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IMC
branches: |
|
|
|
|
|
|
|
|
|
|
Branches
opened |
|
|
- |
|
|
|
2 |
|
|
|
|
|
|
Branches
acquired |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Total IMC
branches |
|
|
26 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total locations chainwide |
|
|
5,835 |
|
|
|
5,635 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
November 19, 2016 |
|
November 21, 2015 |
|
November 19, 2016 |
|
November 21, 2015 |
|
Sales per
average store |
|
$ |
405 |
|
|
$ |
405 |
|
|
$ |
1,781 |
|
|
$ |
1,773 |
|
|
Sales per
average square foot |
|
$ |
61 |
|
|
$ |
61 |
|
|
$ |
270 |
|
|
$ |
269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Auto Parts (Domestic, Mexico, Brazil, and
IMC) |
|
|
|
|
|
|
|
|
Total auto
parts sales |
|
$ |
2,389,561 |
|
|
$ |
2,304,318 |
|
|
$ |
10,346,355 |
|
|
$ |
9,947,663 |
|
|
% Increase vs. LY |
|
|
3.7 |
% |
|
|
5.6 |
% |
|
|
4.0 |
% |
|
|
7.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Domestic Commercial (Excludes IMC) |
|
|
|
|
|
|
|
|
|
Total
domestic commercial sales |
|
$ |
460,607 |
|
|
$ |
433,313 |
|
|
$ |
1,979,213 |
|
|
$ |
1,861,360 |
|
|
% Increase vs. LY |
|
|
6.3 |
% |
|
|
10.0 |
% |
|
|
6.3 |
% |
|
|
12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
All
Other (ALLDATA, E-Commerce, and AutoAnything) |
|
|
|
|
|
|
All other
sales |
|
$ |
78,284 |
|
|
$ |
81,725 |
|
|
$ |
371,124 |
|
|
$ |
365,456 |
|
|
% Increase vs. LY |
|
|
(4.2 |
%) |
|
|
3.8 |
% |
|
|
1.6 |
% |
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks Ended |
|
12 Weeks Ended |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
Domestic same store
sales |
|
|
1.6 |
% |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory Statistics (Total Locations) |
|
|
|
|
|
|
|
|
|
|
|
|
|
as of |
|
as of |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
|
Accounts payable/inventory |
|
|
110.3 |
% |
|
|
110.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in
thousands) |
|
|
|
|
|
|
|
|
|
|
Inventory |
|
|
$ |
3,773,242 |
|
|
$ |
3,515,703 |
|
|
|
|
|
|
Inventory
per location |
|
|
647 |
|
|
|
624 |
|
|
|
|
|
|
Net
inventory (net of payables) |
|
|
(389,074 |
) |
|
|
(374,146 |
) |
|
|
|
|
|
Net
inventory / per location |
|
|
(67 |
) |
|
|
(66 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trailing 5 Quarters |
|
|
|
|
|
|
|
|
|
November 19, 2016 |
|
November 21, 2015 |
|
|
|
|
|
Inventory
turns |
|
|
1.4 |
x |
|
|
1.4 |
x |
|
|
|
|
Contact Information:
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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