AutoZone 1st Quarter Same Store Sales Increase 2.7%; EPS Increases 34.7% to $13.47
Net income for the quarter increased 25.1% over the same period last year to
For the quarter, gross profit, as a percentage of sales, was 53.7% (versus 52.8% for the same period last year). The increase in gross margin was primarily attributable to the impact of the sale of two businesses completed in the prior year (65 bps) and higher merchandise margins. Operating expenses, as a percentage of sales, were 35.2% (versus 34.6% the same period last year), with deleverage primarily driven by domestic store payroll (56 bps).
Under its share repurchase program,
The Company’s inventory increased 2.0% over the same period last year, driven by new stores and increased product placement, partially offset by the impact of the sale of two businesses completed in the prior year. Inventory per location was
“I want to thank all AutoZoners across the company for their tremendous efforts during our first fiscal quarter. Their dedication and commitment to superior service resulted in a strong start to our new year. As we entered the quarter, we knew we had difficult comparisons to last year’s first quarter due to the prior year’s sales benefit from three major hurricanes. Our team delivered very solid performance in DIY and our Commercial growth accelerated again reaching our highest growth since 2015. Our industry fundamentals remain strong and we continue to be excited about the initiatives we have underway to further enhance our inventory availability, to continue to accelerate commercial and to meet our customers how, when and where they want to be met with our omni-channel initiatives. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and utilizing our balance sheet and capital effectively,” said
During the quarter ended
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. These calculations include adjustments for impairment charges, pension termination charges and adjustments related to Tax Reform. 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; access to available and feasible financing; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; war and the prospect of war, including terrorist activity; inflation; the ability to hire and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber attacks; and raw material costs of suppliers. 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
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AutoZone's 1st Quarter Highlights - Fiscal 2019 | |||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||
1st Quarter, FY2019 | |||||||||||||
(in thousands, except per share data) | |||||||||||||
GAAP Results | |||||||||||||
12 Weeks Ended | 12 Weeks Ended | ||||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||||
Net sales | $ | 2,641,733 | $ | 2,589,131 | |||||||||
Cost of sales | 1,224,259 | 1,223,283 | |||||||||||
Gross profit | 1,417,474 | 1,365,848 | |||||||||||
Operating, SG&A expenses | 929,656 | 897,094 | |||||||||||
Operating profit (EBIT) | 487,818 | 468,754 | |||||||||||
Interest expense, net | 39,006 | 38,889 | |||||||||||
Income before taxes | 448,812 | 429,865 | |||||||||||
Income taxes * | 97,406 | 148,862 | |||||||||||
Net income | $ | 351,406 | $ | 281,003 | |||||||||
Net income per share: | |||||||||||||
Basic | $ | 13.71 | $ | 10.17 | |||||||||
Diluted | $ | 13.47 | $ | 10.00 | |||||||||
Weighted average shares outstanding: | |||||||||||||
Basic | 25,629 | 27,638 | |||||||||||
Diluted | 26,097 | 28,096 | |||||||||||
* The Company's effective tax rate was 21.7% for the 12 Weeks Ended November 17, 2018 and 34.6% for the comparable prior year period. | |||||||||||||
First quarter fiscal 2019 and 2018 include $11.2M and $2.2M in excess tax benefits from stock option exercises related to the adoption of ASU 2016-09, respectively. | |||||||||||||
Selected Balance Sheet Information | |||||||||||||
(in thousands) | |||||||||||||
November 17, 2018 | November 18, 2017 | August 25, 2018 | |||||||||||
Cash and cash equivalents | $ | 252,086 | $ | 257,677 | $ | 217,824 | |||||||
Merchandise inventories | 4,090,376 | 4,012,104 | 3,943,670 | ||||||||||
Current assets | 4,806,156 | 4,717,192 | 4,635,869 | ||||||||||
Property and equipment, net | 4,228,801 | 4,060,951 | 4,218,400 | ||||||||||
Total assets | 9,523,581 | 9,397,084 | 9,346,980 | ||||||||||
Accounts payable | 4,455,330 | 4,326,737 | 4,409,372 | ||||||||||
Current liabilities | 5,168,172 | 5,067,640 | 5,028,681 | ||||||||||
Total debt | 5,156,037 | 4,982,984 | 5,005,930 | ||||||||||
Stockholders' deficit | (1,658,616 | ) | (1,525,099 | ) | (1,520,355 | ) | |||||||
Working capital | (362,016 | ) | (350,448 | ) | (392,812 | ) | |||||||
Condensed Consolidated Statements of Operations | |||||||||||
Adjusted Debt / EBITDAR (Trailing 4 Qtrs) | |||||||||||
(in thousands, except adjusted debt to EBITDAR ratio) | |||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||
Net income | $ | 1,407,939 | $ | 1,283,747 | |||||||
Add: Impairment before tax | 193,162 | - | |||||||||
Pension termination charges before tax | 130,263 | - | |||||||||
Interest | 174,644 | 160,163 | |||||||||
Taxes | 247,337 | 646,011 | |||||||||
Adjusted EBIT | 2,153,345 | 2,089,921 | |||||||||
Add: Depreciation and amortization | 349,550 | 329,225 | |||||||||
Rent expense | 317,141 | 305,602 | |||||||||
Share-based expense | 43,115 | 39,543 | |||||||||
Adjusted EBITDAR | $ | 2,863,151 | $ | 2,764,291 | |||||||
Debt | $ | 5,156,037 | $ | 4,982,984 | |||||||
Capital lease obligations | 158,284 | 159,540 | |||||||||
Add: Rent x 6 | 1,902,846 | 1,833,612 | |||||||||
Adjusted debt | $ | 7,217,167 | $ | 6,976,136 | |||||||
Adjusted debt to EBITDAR | 2.5 | 2.5 | |||||||||
Selected Cash Flow Information | |||||||||||
(in thousands) | |||||||||||
12 Weeks Ended | 12 Weeks Ended | ||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||
Depreciation and amortization | $ | 82,452 | $ | 77,986 | |||||||
Capital spending | 98,168 | 110,278 | |||||||||
Cash flow before share repurchases: | |||||||||||
Increase/(decrease) in cash and cash equivalents | $ | 34,262 | $ | (35,593 | ) | ||||||
Less increase/(decrease) in debt | 149,378 | (99,000 | ) | ||||||||
Add back share repurchases | 497,060 | 352,572 | |||||||||
Cash flow before share repurchases and changes in debt | $ | 381,944 | $ | 415,979 | |||||||
Other Selected Financial Information | |||||||||||
(in thousands, except ROIC) | |||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||
Cumulative share repurchases ($ since fiscal 1998) | $ | 19,915,371 | $ | 18,178,870 | |||||||
Remaining share repurchase authorization ($) | 984,629 | 471,130 | |||||||||
Cumulative share repurchases (shares since fiscal 1998) | 145,342 | 142,888 | |||||||||
Shares outstanding, end of quarter | 25,216 | 27,262 | |||||||||
Trailing 4 Quarters | |||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||
Net income | $ | 1,407,939 | $ | 1,283,747 | |||||||
Adjustments: | |||||||||||
Impairment before tax | 193,162 | - | |||||||||
Pension termination charges before tax | 130,263 | - | |||||||||
Interest expense | 174,644 | 160,163 | |||||||||
Rent expense | 317,141 | 305,602 | |||||||||
Tax effect* | (201,217 | ) | (154,727 | ) | |||||||
Deferred tax liabilities, net of repatriation tax | (132,113 | ) | - | ||||||||
Adjusted After-tax return | $ | 1,889,819 | $ | 1,594,785 | |||||||
Average debt** | 5,028,638 | 5,073,275 | |||||||||
Average stockholders' deficit** | (1,479,244 | ) | (1,678,071 | ) | |||||||
Add: Rent x 6 | 1,902,846 | 1,833,612 | |||||||||
Average capital lease obligations** | 157,763 | 152,517 | |||||||||
Pre-tax invested capital | $ | 5,610,003 | $ | 5,381,333 | |||||||
Adjusted Return on Invested Capital (ROIC) | 33.7 | % | 29.6 | % | |||||||
* Effective tax rate over trailing four quarters ended November 17, 2018 is 24.2% for impairment, 28.1% for pension termination and 23.4% for interest and rent expense. Effective tax rate over trailing four quarters ended November 18, 2017 was 33.5%. | |||||||||||
** All averages are computed based on trailing 5 quarter balances. | |||||||||||
AutoZone's 1st Quarter Fiscal 2019 | |||||||||||||||||||||||
Selected Operating Highlights | |||||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
Location Count & Square Footage | |||||||||||||||||||||||
12 Weeks Ended | 12 Weeks Ended | ||||||||||||||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||||||||||||||
AutoZone Domestic stores: | |||||||||||||||||||||||
Store count: | |||||||||||||||||||||||
Beginning domestic stores | 5,618 | 5,465 | |||||||||||||||||||||
Stores opened | 13 | 16 | |||||||||||||||||||||
Stores closed | - | 1 | |||||||||||||||||||||
Ending domestic stores | 5,631 | 5,480 | |||||||||||||||||||||
Relocated stores | 1 | 1 | |||||||||||||||||||||
Stores with commercial programs | 4,766 | 4,622 | |||||||||||||||||||||
Square footage (in thousands) | 36,836 | 35,813 | |||||||||||||||||||||
AutoZone Mexico stores: | |||||||||||||||||||||||
Stores opened | 3 | 5 | |||||||||||||||||||||
Total stores in Mexico | 567 | 529 | |||||||||||||||||||||
AutoZone Brazil stores: | |||||||||||||||||||||||
Stores opened | - | - | |||||||||||||||||||||
Total stores in Brazil | 20 | 14 | |||||||||||||||||||||
Total AutoZone stores | 6,218 | 6,023 | |||||||||||||||||||||
Square footage (in thousands) | 41,180 | 39,822 | |||||||||||||||||||||
Square footage per store | 6,623 | 6,612 | |||||||||||||||||||||
IMC branches: | |||||||||||||||||||||||
Total IMC branches | - | 26 | |||||||||||||||||||||
Total locations chainwide | 6,218 | 6,049 | |||||||||||||||||||||
Sales Statistics | |||||||||||||||||||||||
($ in thousands, except sales per average square foot) | |||||||||||||||||||||||
12 Weeks Ended | 12 Weeks Ended | Trailing 4 Quarters | Trailing 4 Quarters | ||||||||||||||||||||
Total AutoZone Parts (Domestic, Mexico and Brazil) | November 17, 2018 | November 18, 2017 | November 17, 2018 | November 18, 2017 | |||||||||||||||||||
Sales per average store | $ | 418 | $ | 411 | $ | 1,792 | $ | 1,770 | |||||||||||||||
Sales per average square foot | $ | 63 | $ | 62 | $ | 271 | $ | 268 | |||||||||||||||
Total Auto Parts (Domestic, Mexico, Brazil and IMC) | |||||||||||||||||||||||
Total auto parts sales | $ | 2,593,440 | $ | 2,510,128 | $ | 11,034,810 | (1) | $ | 10,643,838 | ||||||||||||||
% Increase vs. LY | 3.3 | % | 5.0 | % | 3.7 | % | 2.9 | % | |||||||||||||||
Domestic Commercial | |||||||||||||||||||||||
Total domestic commercial sales | $ | 546,908 | $ | 491,252 | $ | 2,269,864 | $ | 2,093,457 | |||||||||||||||
% Increase vs. LY | 11.3 | % | 6.7 | % | 8.4 | % | 5.8 | % | |||||||||||||||
All Other (ALLDATA and AutoAnything) | |||||||||||||||||||||||
All other sales | $ | 48,293 | $ | 79,003 | $ | 238,870 | (2) | $ | 366,123 | ||||||||||||||
% Increase vs. LY | (38.9 | %) | 0.9 | % | (34.8 | %) | (1.3 | %) | |||||||||||||||
(1) | Results include IMC, which was sold during the third quarter of fiscal 2018 (effective April 4, 2018). | ||||||||||||||||||||||
(2) | Results include AutoAnything, which was sold during the third quarter of fiscal 2018 (effective February 26, 2018). | ||||||||||||||||||||||
12 Weeks Ended | 12 Weeks Ended | ||||||||||||||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||||||||||||||
Domestic same store sales | 2.7 | % | 2.3 | % | |||||||||||||||||||
Inventory Statistics (Total Locations) | |||||||||||||||||||||||
as of | as of | ||||||||||||||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||||||||||||||
Accounts payable/inventory | 108.9 | % | 107.8 | % | |||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||
Inventory | $ | 4,090,376 | $ | 4,012,104 | |||||||||||||||||||
Inventory per location | 658 | 663 | |||||||||||||||||||||
Net inventory (net of payables) | (364,954 | ) | (314,633 | ) | |||||||||||||||||||
Net inventory/per location | (59 | ) | (52 | ) | |||||||||||||||||||
Trailing 5 Quarters | |||||||||||||||||||||||
November 17, 2018 | November 18, 2017 | ||||||||||||||||||||||
Inventory turns | 1.3 | x | 1.3 | x | |||||||||||||||||||
Source: AutoZone, Inc.