AutoZone 1st Quarter Same Store Sales Increase 12.3%; EPS Increases to $18.61
“As the COVID-19 global pandemic continues, our primary focus has been and continues to be the health, wellness and safety of our customers and AutoZoners. Last week, we shared with all eligible AutoZoners that we have again made some significant benefit changes to encourage personal responsibility. Most notably, we will offer another week of ‘emergency time-off,’ and we will allow an extended carryover of paid time off for much of the new calendar year. Combined, these enhanced benefits will cost roughly
For the quarter, gross profit, as a percentage of sales, was 53.1%, a decrease of 62 basis points versus the prior year. The decrease in gross margin was attributable to one-time pandemic related charges, increased loyalty program participation resulting from increased purchase frequency from existing customers, and a shift in mix. Operating expenses, as a percentage of sales, were 33.6% (versus 35.8% for last year’s quarter), with leverage primarily due to higher sales volumes.
Operating profit increased 23.0% to
AutoZone repurchased 584,379 shares of its common stock for
The Company’s inventory increased 3.7% over the same period last year, driven by new stores and improved product assortment. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was approximately negative
“Our team, particularly those in our stores and distribution centers, have not only provided exceptional service to our customers, but they have also delivered very impressive results again. Together, as 1Team, we delivered double digit same store sales growth, EBIT growth over 20% and earnings per share growth of 30%, all historically significant performances. And, both our domestic Retail and Commercial sales grew more than 10 percent and our market share growth in both sectors is growing substantially more than industry growth rates. While our sales have certainly been aided by the COVID-19 pandemic related government stimulus and consumer behavior changes, we have continued to execute on our strategies to improve inventory availability including expanding our Hub and Mega-Hub networks. We are also leveraging technology to improve our service capabilities and efficiency and further penetrating the Commercial market. Finally, after pausing our share repurchase program due to unprecedented uncertainty, we have returned to leveraging our consistently strong excess free cash flow, after healthy investments in growing the enterprise, to return cash to our shareholders through our stock buyback program,” said Rhodes.
During the quarter ended
AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the
AutoZone will host a conference call this morning,
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 and adjusted debit to EBITDAR. 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 constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” 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: product demand; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues, such as the ongoing global pandemic of a novel strain of the coronavirus (“COVID-19”); inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damages to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; disruption in our supply chain, due to public health epidemics or otherwise; impact of tariffs; anticipated impact of new accounting standards; and business interruptions. Certain of these risks and uncertainties are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of the Company’s Annual Report on Form 10-K for the fiscal year ended
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AutoZone's 1st Quarter Highlights - Fiscal 2021 |
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Condensed Consolidated Statements of Operations |
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1st Quarter, FY2021 |
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(in thousands, except per share data) | ||||||||||||
GAAP Results | ||||||||||||
12 Weeks Ended | 12 Weeks Ended | |||||||||||
Net sales | $ | 3,154,261 | $ | 2,793,038 | ||||||||
Cost of sales | 1,478,644 | 1,291,970 | ||||||||||
Gross profit | 1,675,617 | 1,501,068 | ||||||||||
Operating, SG&A expenses | 1,060,392 | 1,001,045 | ||||||||||
Operating profit (EBIT) | 615,225 | 500,023 | ||||||||||
Interest expense, net | 46,179 | 43,743 | ||||||||||
Income before taxes | 569,046 | 456,280 | ||||||||||
Income taxes(1) | 126,613 | 105,942 | ||||||||||
Net income | $ | 442,433 | $ | 350,338 | ||||||||
Net income per share: | ||||||||||||
Basic | $ | 19.05 | $ | 14.67 | ||||||||
Diluted | $ | 18.61 | $ | 14.30 | ||||||||
Weighted average shares outstanding: | ||||||||||||
Basic | 23,223 | 23,875 | ||||||||||
Diluted | 23,778 | 24,493 | ||||||||||
(1)First quarter Fiscal 2021 and 2020 include |
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Selected Balance Sheet Information |
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(in thousands) | ||||||||||||
Cash and cash equivalents | $ | 1,664,005 | $ | 158,089 | $ | 1,750,815 | ||||||
Merchandise inventories | 4,628,334 | 4,463,124 | 4,473,282 | |||||||||
Current assets | 6,836,795 | 5,156,975 | 6,811,872 | |||||||||
Property and equipment, net | 4,586,002 | 4,450,656 | 4,509,221 | |||||||||
Operating lease right-of-use assets | 2,607,019 | 2,585,105 | 2,581,677 | |||||||||
Total assets | 14,568,574 | 12,700,456 | 14,423,872 | |||||||||
Accounts payable | 5,282,313 | 4,922,148 | 5,156,324 | |||||||||
Current liabilities | 6,456,703 | 5,868,236 | 6,283,091 | |||||||||
Operating lease liabilities, less current portion | 2,524,008 | 2,506,829 | 2,501,560 | |||||||||
Total debt | 5,514,874 | 5,287,324 | 5,513,371 | |||||||||
Stockholders' deficit | (1,026,980 | ) | (1,776,090 | ) | (877,977 | ) | ||||||
Working capital | 380,092 | (711,261 | ) | 528,781 | ||||||||
AutoZone's 1st Quarter Highlights - Fiscal 2021 | |||||||||
Condensed Consolidated Statements of Operations |
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Adjusted Debt / EBITDAR | |||||||||
(in thousands, except adjusted debt to EBITDAR ratio) | Trailing 4 Quarters |
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Net income | $ | 1,825,067 | $ | 1,616,153 | |||||
Add: Interest expense | 203,601 | 189,541 | |||||||
Income tax expense | 504,213 | 422,648 | |||||||
Adjusted EBIT | 2,532,881 | 2,228,342 | |||||||
Add: Depreciation and amortization | 397,267 | 377,255 | |||||||
Rent expense(1) | 332,218 | 337,102 | |||||||
Share-based expense | 45,347 | 42,724 | |||||||
Adjusted EBITDAR | $ | 3,307,713 | $ | 2,985,423 | |||||
Debt(2) | $ | 4,045,681 | $ | 5,287,324 | |||||
Financing lease liabilities | 232,921 | 195,663 | |||||||
Add: Rent x 6(1) | 1,993,308 | 2,022,612 | |||||||
Adjusted debt | $ | 6,271,910 | $ | 7,505,599 | |||||
Adjusted debt to EBITDAR | 1.9 | 2.5 | |||||||
Adjusted Return on |
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(in thousands, except ROIC) | |||||||||
Trailing 4 Quarters |
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Net income | $ | 1,825,067 | $ | 1,616,153 | |||||
Adjustments: | |||||||||
Interest expense | 203,601 | 189,541 | |||||||
Rent expense(1) | 332,218 | 337,102 | |||||||
Tax effect(3) | (115,737 | ) | (109,015 | ) | |||||
Deferred tax liabilities, net of repatriation tax | - | (6,340 | ) | ||||||
Adjusted after-tax return | $ | 2,245,149 | $ | 2,027,441 | |||||
Average debt(4)(5) | $ | 4,769,061 | $ | 5,182,565 | |||||
Average stockholders' deficit(5) | (1,404,980 | ) | (1,666,486 | ) | |||||
Add: Rent x 6(1) | 1,993,308 | 2,022,612 | |||||||
Average financing lease liabilities(5) | 214,601 | 170,863 | |||||||
Invested capital | $ | 5,571,990 | $ | 5,709,554 | |||||
Adjusted After-Tax ROIC | 40.3 | % | 35.5 | % | |||||
(1)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 52 weeks ended |
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Total lease cost, per ASC 842, for the 52 weeks ended |
$ | 413,790 | |||||||
Less: | Financing lease interest and amortization | (56,256 | ) | ||||||
Less: | Variable operating lease components, related to insurance and common area maintenance for the 52 weeks ended |
(25,316 | ) | ||||||
Rent expense for the 52 weeks ended |
$ | 332,218 | |||||||
Total lease cost, per ASC 842, for the 12 weeks ended |
$ | 95,840 | |||||||
Less: | Financing lease interest and amortization | (14,041 | ) | ||||||
Less: | Variable operating lease components, related to insurance and common area maintenance for the 12 weeks ended |
(6,207 | ) | ||||||
Rent expense for the 12 weeks ended |
$ | 75,592 | |||||||
Add: | Rent expense for the 41 weeks ended |
261,510 | |||||||
Rent expense for the 53 weeks ended |
$ | 337,102 | |||||||
(2)The Company ended Q1 FY21 with excess cash of |
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(3) Effective tax rate over trailing four quarters ended |
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(4)Average debt for the trailing four quarters ended |
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(5)All averages are computed based on trailing 5 quarter balances | |||||||||
Other Selected Financial Information |
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(in thousands) | |||||||||
Cumulative share repurchases ($ since fiscal 1998) | $ | 23,032,434 | $ | 21,873,206 | |||||
Remaining share repurchase authorization ($) | 117,566 | 1,276,794 | |||||||
Cumulative share repurchases (shares since fiscal 1998) | 148,281 | 147,273 | |||||||
Shares outstanding, end of quarter | 22,855 | 23,655 | |||||||
Depreciation and amortization | 89,551 | 89,750 | |||||||
Capital spending | 113,036 | 101,407 | |||||||
AutoZone's 1st Quarter Highlights - Fiscal 2021 | |||||||||||||||||||
Selected Operating Highlights |
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Condensed Consolidated Statements of Operations |
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Store Count & Square Footage |
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12 Weeks Ended | 12 Weeks Ended | ||||||||||||||||||
Domestic: |
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Beginning stores | 5,885 | 5,772 | |||||||||||||||||
Stores opened | 39 | 18 | |||||||||||||||||
Ending domestic stores | 5,924 | 5,790 | |||||||||||||||||
Relocated stores | 4 | - | |||||||||||||||||
Stores with commercial programs | 5,043 | 4,917 | |||||||||||||||||
Square footage (in thousands) | 38,823 | 37,910 | |||||||||||||||||
Beginning stores | 621 | 604 | |||||||||||||||||
Stores opened | - | 2 | |||||||||||||||||
Ending |
621 | 606 | |||||||||||||||||
Beginning stores | 43 | 35 | |||||||||||||||||
Stores opened | 2 | 2 | |||||||||||||||||
Ending |
45 | 37 | |||||||||||||||||
Total |
6,590 | 6,433 | |||||||||||||||||
Square footage (in thousands) | 43,781 | 42,695 | |||||||||||||||||
Square footage per store | 6,644 | 6,637 | |||||||||||||||||
Sales Statistics | |||||||||||||||||||
($ in thousands, except sales per average square foot) | |||||||||||||||||||
12 Weeks Ended | 12 Weeks Ended | Trailing 4 Quarters | Trailing 4 Quarters (1) | ||||||||||||||||
Total AutoZone Stores (Domestic, |
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Sales per average store | $ | 472 | $ | 427 | $ | 1,960 | $ | 1,865 | |||||||||||
Sales per average square foot | $ | 71 | $ | 64 | $ | 295 | $ | 281 | |||||||||||
Total auto parts sales | $ | 3,101,597 | $ | 2,743,239 | $ | 12,764,287 | $ | 11,795,034 | |||||||||||
% Increase vs. LY | 13.1 | % | 5.8 | % | 8.2 | % | 6.9 | % | |||||||||||
Domestic Commercial | |||||||||||||||||||
Total domestic commercial sales | $ | 695,343 | $ | 621,483 | $ | 2,801,626 | $ | 2,637,406 | |||||||||||
% Increase vs. LY | 11.9 | % | 13.6 | % | 6.2 | % | 16.2 | % | |||||||||||
Average sales per program per week | $ | 11.5 | $ | 10.6 | $ | 10.8 | $ | 10.3 | |||||||||||
% Increase vs. LY | 9.2 | % | 10.1 | % | 5.3 | % | 10.5 | % | |||||||||||
All Other, including |
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All other sales | $ | 52,664 | $ | 49,799 | $ | 228,902 | $ | 220,013 | |||||||||||
% Increase vs. LY | 5.8 | % | 3.1 | % | 4.0 | % | (7.9 | %) | |||||||||||
(1) | Fiscal 2019 results include an additional week of sales of approximately |
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12 Weeks Ended | 12 Weeks Ended | ||||||||||||||||||
Domestic same store sales | 12.3 | % | 3.4 | % | |||||||||||||||
Inventory Statistics (Total Stores) | |||||||||||||||||||
as of | as of | ||||||||||||||||||
Accounts payable/inventory | 114.1 | % | 110.3 | % | |||||||||||||||
($ in thousands) | |||||||||||||||||||
Inventory | $ | 4,628,334 | $ | 4,463,124 | |||||||||||||||
Inventory per store | 702 | 694 | |||||||||||||||||
Net inventory (net of payables) | (653,979 | ) | (459,024 | ) | |||||||||||||||
Net inventory / per store | (99 | ) | (71 | ) | |||||||||||||||
Trailing 5 Quarters | |||||||||||||||||||
Inventory turns | 1.3 | x | 1.3 | x | |||||||||||||||
Source: AutoZone, Inc.