GlobeNewswire Inc | Feb 10, 2021 04:30PM EST

February 10, 2021



-- Fourth quarter comparable store sales increase of 11.2%, full-year increase of 10.9% -- 27% increase in fourth quarter diluted earnings per share to $5.40, full-year increase of 32% to $23.53 -- Full-year net cash provided by operating activities increased $1.13 billion, or 66.0%, to $2.84 billion

SPRINGFIELD, Mo., Feb. 10, 2021 (GLOBE NEWSWIRE) -- OReilly Automotive, Inc. (the Company or OReilly) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenue and earnings for its fourth quarter ended December31,2020. The results represent 28 consecutive years of comparable store sales growth and record revenue and operating income for OReilly since becoming a public company in April of 1993.

4th Quarter Financial ResultsGreg Johnson, OReillys CEO and Co-President, commented, We are extremely pleased to report another record-breaking quarter to finish out 2020, with the incredible performance by Team OReilly in the fourth quarter capping the best full-year financial results in our Companys history. I would like to thank Team OReilly for the tremendous dedication and hard work they demonstrated time and again over the past year in one of the most difficult environments we have ever faced as a Company. Our top priority continues to be the protection of the health and safety of our Team Members and customers, and we are extremely proud of our Teams continued outstanding service that has been so critical to our customers during the pandemic. This commitment drove our fourth quarter comparable store sales increase of 11.2% and full-year comparable store sales growth of 10.9%, which represents our highest full-year same store sales increase in the last 25 years.

Sales for the fourth quarter ended December31,2020, increased $346 million, or 14%, to $2.83 billion from $2.48 billion for the same period one year ago. Gross profit for the fourth quarter increased 11% to $1.47 billion (or 52.0% of sales) from $1.32 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 6% to $938 million (or 33.2% of sales) from $883 million (or 35.6% of sales) for the same period one year ago. Operating income for the fourth quarter increased 21% to $534 million (or 18.9% of sales) from $442 million (or 17.8% of sales) for the same period one year ago.

Net income for the fourth quarter ended December31,2020, increased $68 million, or 21%, to $393 million (or 13.9% of sales) from $325 million (or 13.1% of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 27% to $5.40 on 73 million shares versus $4.25 on 76 million shares for the same period one year ago.

Full-Year Financial ResultsMr. Johnson further commented, The robust sales volumes, combined with diligent expense control, drove another extremely profitable quarter, highlighted by a 21% increase in operating profit and a 27% increase in diluted earnings per share for the fourth quarter. For the full year, diluted earnings per share increased 32%, as Team OReilly generated an outstanding operating margin of 20.8%, which exceeded our previous record operating margin by over 100 basis points. The tireless efforts of our Team allowed us to produce these strong results even in the face of unprecedented challenges in 2020.

Sales for the year ended December31,2020, increased $1.45 billion, or 14%, to $11.60 billion from $10.15 billion for the same period one year ago. Gross profit for the year ended December31,2020, increased 13% to $6.09 billion (or 52.4% of sales) from $5.39 billion (or 53.1% of sales) for the same period one year ago. SG&A for the year ended December31,2020, increased 6% to $3.67 billion (or 31.6% of sales) from $3.47 billion (or 34.2% of sales) for the same period one year ago. Operating income for the year ended December31,2020, increased 26% to $2.42 billion (or 20.8% of sales) from $1.92 billion (or 18.9% of sales) for the same period one year ago.

Net income for the year ended December31,2020, increased $361 million, or 26%, to $1.75 billion (or 15.1% of sales) from $1.39 billion (or 13.7% of sales) for the same period one year ago. Diluted earnings per common share for the year ended December31,2020, increased 32% to $23.53 on 74 million shares versus $17.88 on 78 million shares for the same period one year ago.

As we look forward to 2021, Mr. Johnson continued, we remain optimistic about our prospects to generate continued strong financial results. We have seen a strong start to the year, with the continuation of robust sales volumes through the month of January, but we remain cautious as we plan for the coming year in light of the continued significant uncertainty related to the ongoing impact of the pandemic and the difficult comparisons we will face beginning in April, as we lap the surge of volume we experienced in 2020. As a result, our expectation is that comparable store sales will be in the range of down 2% to flat, versus 2020, but well above our historical trends on a two-year stack basis.

4th Quarter and Full-Year Comparable Store Sales ResultsComparable 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, as well as sales from Leap Day for the year ended December 31, 2020. 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 11.2% for the fourth quarter ended December31,2020, on top of 4.4% for the same period one year ago. Comparable store sales increased 10.9% for the year ended December31,2020, on top of 4.0% for the same period one year ago.

Share Repurchase ProgramDuring the fourth quarter ended December31,2020, the Company repurchased 2.2 million shares of its common stock, at an average price per share of $451.90, for a total investment of $993 million. During the year ended December 31, 2020, the Company repurchased 4.8 million shares of its common stock, at an average price per share of $431.93, for a total investment of $2.09 billion. Subsequent to the end of the fourth quarter and through the date of this release, the Company repurchased an additional 0.7 million shares of its common stock, at an average price per share of $447.40, for a total investment of $298 million. The Company has repurchased a total of 81.7 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 $178.33, for a total aggregate investment of $14.57 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 $15.75 billion. The additional $1.0 billion authorization is effective for a three-year period, beginning on February 10, 2021. 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 $1.18 billion remaining under its current share repurchase authorizations.

Full-Year 2021 GuidanceThe Company is reinstituting its practice of providing selected full-year guidance for 2021. The Company still anticipates potentially significant volatility in its results, driven by the ongoing uncertainty related to the pandemic, and will update full-year guidance during 2021, as appropriate. The table below outlines the Companys guidance for selected full-year 2021 financial data:

FortheYearEnding December 31, 2021Net, new store openings 165 to 175Comparable store sales -2% to 0%Total revenue $11.5 billion to $11.8 billionGross profit as apercentage of sales 52.2% to 52.7%Operating income as apercentage of sales 19.0% to 19.5%Effective income tax rate 23.0%Diluted earnings per share ^(1) $22.70 to $22.90Net cash provided by operating activities $1.7 billion to $2.2 billionCapital expenditures $550 million to $650 millionFree cash flow ^(2) $1.0 billion to $1.3 billion

(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:

[FortheYearEnding][(in millions)] [December 31, 2021][Net cash provided by operating activities] [$] [1,735 [to [$] [2,160 ] ] ] [Less: [Capital expenditures] [550] [to [650] ] ] [Excess tax benefit from share-based [5] [to [10] compensation payments] ] [Investment in tax credit equity [180] [to [200] investments] ][Free cash flow] [$] [1,000 [to [$] [1,300 ] ] ]

Non-GAAP InformationThis 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 Companys 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 InformationThe Company will host a conference call on Thursday, February 11, 2021, 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 Companys website at www.OReillyAuto.comby clicking on Investor Relations and then News Room. Interested analysts are invited to join the call. The dial-in number for the call is (703) 375-5524; the conference call identification number is 4092338. A replay of the conference call will be available on the Companys website through Thursday, February 10, 2022.

About OReilly Automotive, Inc.OReilly Automotive, Inc. was founded in 1957 by the OReilly 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 Companys website at www.OReillyAuto.comfor additional information about OReilly, including access to online shopping and current promotions, store locations, hours and services, employment opportunities and other programs. As of December31,2020, the Company operated 5,594 stores in 47 U.S. states and 22 stores in Mexico.

Forward-Looking StatementsThe 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 COVID-19 pandemic or other public health crisis, 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 December31,2019, and subsequent Securities and Exchange Commission filings for additional factors that could materially affect the Companys 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.

For further information contact: Investor & Media Contacts Mark Merz (417) 829-5878 Eric Bird (417) 868-4259

OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except share data)

December31,2020 December31,2019 (Unaudited) (Note)Assets Current assets: Cash and cash equivalents $ 465,640 $ 40,406 Accounts receivable, net 229,679 214,915 Amounts receivable from suppliers 100,615 79,492 Inventory 3,653,195 3,454,092 Other current assets 50,658 44,757 Total current assets 4,499,787 3,833,662 Property and equipment, at cost 6,559,911 6,191,427 Less: accumulated depreciation and 2,464,993 2,243,224 amortizationNet property and equipment 4,094,918 3,948,203 Operating lease, right-of-use assets 1,995,127 1,928,369 Goodwill 881,030 936,814 Other assets, net 125,780 70,112 Total assets $ 11,596,642 $ 10,717,160 Liabilities and shareholders? equity Current liabilities: Accounts payable $ 4,184,662 $ 3,604,722 Self-insurance reserves 109,199 79,079 Accrued payroll 88,875 100,816 Accrued benefits and withholdings 242,724 98,539 Income taxes payable 16,786 ? Current portion of operating lease 322,778 316,061 liabilitiesOther current liabilities 297,393 270,210 Total current liabilities 5,262,417 4,469,427 Long-term debt 4,123,217 3,890,527 Operating lease liabilities, less 1,718,691 1,655,297 current portionDeferred income taxes 155,899 133,280 Other liabilities 196,160 171,289 Shareholders? equity: Common stock, $0.01 par value: Authorized shares ? 245,000,000 Issuedand outstanding shares ? 71,123,109 as 711 756 of December31,2020, and 75,618,659 asof December31,2019Additional paid-in capital 1,280,841 1,280,760 Retained deficit (1,139,139 ) (889,066 )Accumulated other comprehensive (loss) (2,155 ) 4,890 incomeTotal shareholders? equity 140,258 397,340 Total liabilities and shareholders? $ 11,596,642 $ 10,717,160 equity

Note: The balance sheet at December31,2019, 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.

OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data)

Forthe Three Months Ended Forthe Year Ended December31, December31, 2020 2019 2020 2019 (Unaudited) (Unaudited) (Unaudited) (Note)Sales $ 2,828,773 $ 2,482,975 $ 11,604,493 $ 10,149,985 Cost of goodssold, includingwarehouse and 1,356,635 1,158,391 5,518,801 4,755,294 distributionexpensesGross profit 1,472,138 1,324,584 6,085,692 5,394,691 Selling, generaland 937,866 883,081 3,666,356 3,473,965 administrativeexpensesOperating income 534,272 441,503 2,419,336 1,920,726 Other income (expense):Interest expense (38,349 ) (35,288 ) (161,126 ) (139,975 )Interest income 599 732 2,491 2,545 Other, net 3,407 2,366 5,704 7,033 Total other (34,343 ) (32,190 ) (152,931 ) (130,397 )expense Income before 499,929 409,313 2,266,405 1,790,329 income taxesProvision for 106,984 84,397 514,103 399,287 income taxesNet income $ 392,945 $ 324,916 $ 1,752,302 $ 1,391,042 Earnings per share-basic:Earnings per $ 5.45 $ 4.29 $ 23.74 $ 18.07 shareWeighted-averagecommon shares 72,143 75,713 73,817 76,985 outstanding ?basic Earnings pershare-assuming dilution:Earnings per $ 5.40 $ 4.25 $ 23.53 $ 17.88 shareWeighted-averagecommon sharesoutstanding ? 72,771 76,495 74,462 77,788 assumingdilution

Note: The income statement for the year ended December 31, 2019, 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.

OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

Forthe Year Ended December31, 2020 2019 (Unaudited) (Note)Operating activities: Net income $ 1,752,302 $ 1,391,042 Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization of property, 314,635 270,875 equipment and intangiblesAmortization of debt discount and issuance 4,580 3,916 costsDeferred income taxes 12,381 21,158 Share-based compensation programs 22,747 21,921 Other 4,686 7,529 Changes in operating assets and liabilities: Accounts receivable (20,515 ) (15,577 )Inventory (198,864 ) (239,912 )Accounts payable 580,608 213,423 Income taxes payable 197,739 (20,139 )Other 166,304 54,243 Net cash provided by operating activities 2,836,603 1,708,479 Investing activities: Purchases of property and equipment (465,579 ) (628,057 )Proceeds from sale of property and equipment 15,770 7,118 Investment in tax credit equity investments (164,111 ) (33,781 )Other (975 ) (142,026 )Net cash used in investing activities (614,895 ) (796,746 ) Financing activities: Proceeds from borrowings on revolving credit 1,162,000 2,708,000 facilityPayments on revolving credit facility (1,423,000 ) (2,734,000 )Proceeds from the issuance of long-term debt 997,515 499,955 Repayment of long-term debt (500,000 ) ? Payment of debt issuance costs (7,929 ) (3,990 )Repurchases of common stock (2,087,194 ) (1,432,791 )Net proceeds from issuance of common stock 62,284 60,206 Other (253 ) (191 )Net cash used in financing activities (1,796,577 ) (902,811 ) Effect of exchange rate changes on cash 103 169 Net increase in cash and cash equivalents 425,234 9,091 Cash and cash equivalents at beginning of the 40,406 31,315 yearCash and cash equivalents at end of the year $ 465,640 $ 40,406 Supplemental disclosures of cash flow information:Income taxes paid $ 305,087 $ 394,931 Interest paid, net of capitalized interest 159,717 134,634

Note: The cash flow statement for the year ended December 31, 2019, 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.

OREILLY AUTOMOTIVE, INC. AND SUBSIDIARIESSELECTED FINANCIAL INFORMATION (Unaudited)

For the Year Ended December31,Adjusted Debt to EBITDAR: 2020 2019(In thousands, except adjusted debt to EBITDAR ratio)GAAP debt $ 4,123,217 $ 3,890,527 Add: Letters of credit 66,427 38,870 Discount on senior notes 5,071 3,515 Debt issuance costs 21,712 16,958 Six-times rent expense 2,125,896 2,032,182 Adjusted debt $ 6,342,323 $ 5,982,052 GAAP net income $ 1,752,302 $ 1,391,042 Add: Interest expense 161,126 139,975 Provision for income taxes 514,103 399,287 Depreciation and amortization 314,635 270,875 Share-based compensation expense 22,747 21,921 Rent expense ^(^i^) 354,316 338,697 EBITDAR $ 3,119,229 $ 2,561,797 Adjusted debt to EBITDAR 2.03 2.34

(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 December31,2020 and 2019 (in thousands):

[Total lease cost, per ASC 842, for the year ended [$] [420,365 December31,2020] ] [Less: [Variable non-contract operating lease components, ] related to property taxes and insurance, for the year [66,049] ended December31,2020][Rent expense for the year ended December31,2020] [$] [354,316 ] [Total lease cost, per ASC 842, for the year ended [$] [398,294 December31,2019] ] [Less: [Variable non-contract operating lease components, ] related to property taxes and insurance, for the year [59,597] ended December31,2019][Rent expense for the year ended December31,2019] [$] [338,697 ]

December31, 2020 2019Selected Balance Sheet Ratios: Inventory turnover ^(1) 1.5 1.4 Average inventory per store (in thousands) ^(2) $ 650 $ 633 Accounts payable to inventory ^(3) 114.5 % 104.4 %

Forthe Three Months Ended Forthe Year Ended December31, December31, 2020 2019 2020 2019Reconciliation ofFree Cash Flow (in thousands):Net cash providedby operating $ 487,474 $ 218,803 $ 2,836,603 $ 1,708,479 activitiesLess: Capital 102,154 146,850 465,579 628,057 expenditures Excess tax benefit from share-based 2,132 12,933 16,918 25,992 compensation payments Investment in tax credit 68,819 15,793 164,111 33,781 equity investmentsFree cash flow $ 314,369 $ 43,227 $ 2,189,995 $ 1,020,649

Forthe Three Months For the Year Ended Ended December31, December31, 2020 2019 2020 2019Store Count: Beginning store count 5,592 5,420 5,439 5,219 New stores opened 5 19 167 202 Bennett stores acquired, net of ? ? ? 20 stores merged ^(4)Stores closed (3 ) ? (12 ) (2 )Ending domestic store count 5,594 5,439 5,594 5,439 Mexico stores ^(5) 22 21 22 21 Ending total store count 5,616 5,460 5,616 5,460

Forthe Three Months Ended FortheYearEnded December31, December31, 2020 2019 2020 2019Store and TeamMember Information: ^(6)Total employment 76,257 81,223 Square footage 41,668 40,227 (in thousands)Sales perweighted-average $ 66.70 $ 61.15 $ 276.96 $ 254.81 square foot ^(7)Sales perweighted-average $ 497 $ 452 $ 2,057 $ 1,881 store (inthousands) ^(8)

(1)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.(2)Calculated as inventory divided by store count at the end of the reported period.(3)Calculated as accounts payable divided by inventory.(4)OReilly 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, OReilly merged eight of the acquired Bennett stores into existing OReilly locations, and during the second quarter ended June 30, 2019, OReilly merged an additional five acquired Bennett stores into existing OReilly locations.(5)OReilly 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.(6)Represents OReillys U.S. operations only.(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.