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AutoZone 3rd Quarter Same Store Sales Increase 28.9%; EPS Increases to $26.48

MEMPHIS, Tenn., May 25, 2021 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $3.7 billion for its third quarter (12 weeks) ended May 8, 2021, an increase of 31.4% from the third quarter of fiscal 2020 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 28.9% for the quarter.

For the quarter, gross profit, as a percentage of sales, was 52.4%, a decrease of 118 basis points versus the prior year. The decrease in gross margin was primarily driven by the accelerated growth in our Commercial business and our investment in pricing initiatives. Operating expenses, as a percentage of sales, was 30.4% versus 35.9% for last year’s quarter. The decrease in operating expenses, as a percentage of sales, was driven by strong sales growth and approximately $75 million in prior year pandemic related expenses, including Emergency Time-Off (“ETO”) for our AutoZoners.

Operating profit increased 63.4% to $803.5 million. Net income for the quarter increased 73.9% over the same period last year to $596.2 million, while diluted earnings per share increased 84.0% to $26.48 per share from $14.39 per share in the year-ago quarter. The increase in net income was driven by strong topline growth and operating expense leverage.

AutoZone repurchased 663,328 shares of its common stock for $900.0 million during the third quarter, at an average price of $1,357 per share. At the end of the third quarter, the Company had $1.3 billion remaining under its current share repurchase authorization.

The Company’s inventory increased 5.1% 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 negative $167 thousand versus negative $56 thousand last year and negative $93 thousand last quarter.

“We are very proud to report another quarter of exceptionally strong same store sales and earnings growth. The AutoZone team has done a wonderful job of managing, and leading, throughout this pandemic. While our DIY business was again very strong this quarter, our Commercial business’ 44% sales growth stood out as exceptional. The investments we are making in Commercial pricing, service and assortment are strengthening our competitive position in this large, fragmented market. We intend to accelerate our Company’s historical Commercial growth rate as we increase our penetration in this market. While we understand sales trends will slow, we must work diligently during this fourth quarter to maintain the share gains we have achieved. As always, we cannot take anything for granted, but we remain excited about the ongoing sales opportunities in front of us. Additionally, we remain committed to investing appropriately in a safe and productive environment for our customers and AutoZoners. As we opportunistically invest capital in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and of utilizing our balance sheet and capital effectively,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended May 8, 2021, AutoZone opened 25 new stores and closed one store in the U.S. and opened seven stores in Mexico and one store in Brazil. As of May 8, 2021, the Company had 5,975 stores in the U.S., 635 in Mexico and 47 in Brazil for a total store count of 6,657.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the Americas. 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. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com and www.alldatadiy.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, May 25, 2021, beginning at 10:00 a.m. (EDT) to discuss its third quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com and clicking on Investor Relations. Investors may also listen to the call by dialing (877) 407-8031. In addition, a telephone replay will be available by dialing (203) 369-1211 through June 25, 2021, 11:59 pm (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 and adjusted debt 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. 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 coronavirus pandemic; 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; 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 year ended August 29, 2020, 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. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. 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.

Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com
Media: David McKinney at (901) 495-7951, david.mckinney@autozone.com

AutoZone's 3rd Quarter Highlights - Fiscal 2021      
                   
Condensed Consolidated Statements of Operations          
3rd Quarter, FY2021              
(in thousands, except per share data)              
        GAAP Results      
        12 Weeks Ended   12 Weeks Ended      
        May 8, 2021   May 9, 2020(2)      
                   
Net sales   $ 3,651,023     $ 2,779,299        
Cost of sales     1,736,077       1,288,651        
Gross profit     1,914,946       1,490,648        
Operating, SG&A expenses     1,111,441       998,975        
Operating profit (EBIT)     803,505       491,673        
Interest expense, net     45,026       47,450        
Income before taxes     758,479       444,223        
Income taxes(1)     162,315       101,327        
Net income   $ 596,164     $ 342,896        
Net income per share:              
  Basic   $ 27.15     $ 14.66        
  Diluted   $ 26.48     $ 14.39        
Weighted average shares outstanding:              
  Basic     21,956       23,386        
  Diluted     22,515       23,828        
                   
(1)The twelve weeks ended May 8, 2021 and the comparable prior year period include $16.0M and $1.1M in tax benefits from stock option exercises, respectively  
                           
(2)The twelve weeks ended May 9, 2020 were negatively impacted by approximately $75M (pre-tax) of pandemic related expenses, including Emergency Time-Off  
                           
                   
Year-To-Date 3rd Quarter, FY2021              
(in thousands, except per share data)              
        GAAP Results      
        36 Weeks Ended   36 Weeks Ended      
        May 8, 2021(2)   May 9, 2020(2)      
                   
Net sales   $ 9,716,101     $ 8,085,999        
Cost of sales     4,566,155       3,728,221        
Gross profit     5,149,946       4,357,778        
Operating, SG&A expenses     3,249,449       2,958,144        
Operating profit (EBIT)     1,900,497       1,399,634        
Interest expense, net     137,217       135,528        
Income before taxes     1,763,280       1,264,106        
Income taxes(1)     378,737       271,591        
Net income   $ 1,384,543     $ 992,515        
Net income per share:              
  Basic   $ 61.24     $ 42.04        
  Diluted   $ 59.80     $ 41.08        
Weighted average shares outstanding:              
  Basic     22,609       23,610        
  Diluted     23,154       24,160        
                   
(1)The thirty-six weeks ended May 8, 2021 and the comparable prior year period include $35.2M and $17.6M in tax benefits from stock option exercises, respectively  
                           
(2)The thirty-six weeks ended May 8, 2021 and the comparable prior year period were negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $46M (pre-tax) and $75M (pre-tax), respectively  
                           
                   
Selected Balance Sheet Information              
(in thousands)              
        May 8, 2021   May 9, 2020   August 29, 2020  
Cash and cash equivalents   $ 975,646     $ 509,118     $ 1,750,815    
Merchandise inventories     4,665,477       4,440,602       4,473,282    
Current assets     6,224,396       5,397,993       6,811,872    
Property and equipment, net     4,683,149       4,384,586       4,509,221    
Operating lease right-of-use assets     2,694,846       2,613,849       2,581,677    
Total assets     14,137,946       12,902,131       14,423,872    
Accounts payable     5,778,222       4,806,329       5,156,324    
Current liabilities     7,013,249       5,769,076       6,283,091    
Operating lease liabilities, less current portion     2,594,506       2,481,280       2,501,560    
Total debt     5,267,896       5,418,272       5,513,371    
Stockholders' deficit     (1,763,392 )     (1,632,736 )     (877,977 )  
Working capital     (788,853 )     (371,083 )     528,781    
                   


AutoZone's 3rd Quarter Highlights - Fiscal 2021                        
                         
Condensed Consolidated Statements of Operations                  
                         
Adjusted Debt / EBITDAR                  
(in thousands, except adjusted debt to EBITDAR ratio)   Trailing 4 Quarters          
          May 8, 2021   May 9, 2020          
Net income     $ 2,125,000     $ 1,557,744            
Add: Interest expense     202,854       196,724            
 Income tax expense     590,688       425,941            
EBIT         2,918,542       2,180,409            
                         
Add: Depreciation and amortization     403,395       390,954            
 Rent expense(1)     339,193       335,794            
 Share-based expense     50,645       43,977            
EBITDAR     $ 3,711,775     $ 2,951,134            
                         
Debt       $ 5,267,896     $ 5,418,272            
Financing lease liabilities     228,597       184,276            
Add: Rent x 6(1)     2,035,158       2,014,764            
Adjusted debt   $ 7,531,651     $ 7,617,312            
                         
Adjusted debt to EBITDAR     2.0       2.6            
                         
Adjusted Return on Invested Capital (ROIC)                  
(in thousands, except ROIC)                  
          Trailing 4 Quarters          
          May 8, 2021   May 9, 2020          
Net income     $ 2,125,000     $ 1,557,744            
Adjustments:                    
Interest expense     202,854       196,724            
Rent expense(1)     339,193       335,794            
Tax effect(2)     (118,167 )     (114,492 )          
Adjusted after-tax return   $ 2,548,880     $ 1,975,770            
                         
Average debt(3)   $ 5,446,162     $ 5,303,066            
Average stockholders' deficit(3)     (1,364,932 )     (1,684,662 )          
Add: Rent x 6(1)     2,035,158       2,014,764            
Average financing lease liabilities(3)     227,061       184,286            
Invested capital   $ 6,343,449     $ 5,817,454            
                         
Adjusted After-Tax ROIC     40.2 %     34.0 %          
                         
(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 trailing four quarters ended May 8, 2021 and May 9, 2020 (in thousands):  
                         
    Total lease cost, per ASC 842, for the trailing four quarters ended May 8, 2021   $ 421,750            
    Less: Financing lease interest and amortization     (55,725 )          
    Less: Variable operating lease components, related to insurance and common area maintenance     (26,832 )          
    Rent expense for the trailing four quarters ended May 8, 2021   $ 339,193            
                             
    Total lease cost, per ASC 842, for the 36 weeks ended May 9, 2020   $ 286,626            
    Less: Financing lease interest and amortization         (42,172 )          
    Less: Variable operating lease components, related to insurance and common area maintenance     (17,127 )          
    Rent expense for the 36 weeks ended May 9, 2020   $ 227,327            
    Add: Rent expense for the 17 weeks ended August 31, 2019 as previously reported prior to the adoption of ASC 842     108,467            
    Rent expense for the trailing four quarters ended May 9, 2020   $ 335,794            
                             
                         
(2) Effective tax rate over trailing four quarters ended May 8, 2021 and May 9, 2020 is 21.8% and 21.5%, respectively        
(3)All averages are computed based on trailing 5 quarter balances        
                         
Other Selected Financial Information                  
(in thousands)                    
          May 8, 2021   May 9, 2020          
Cumulative share repurchases ($ since fiscal 1998)   $ 24,832,432     $ 22,354,110            
Remaining share repurchase authorization ($)     1,317,568       795,890            
                         
Cumulative share repurchases (shares since fiscal 1998)     149,696       147,696            
                         
Shares outstanding, end of quarter     21,620       23,348            
                         
                         
                         
          12 Weeks Ended   12 Weeks Ended   36 Weeks Ended   36 Weeks Ended  
          May 8, 2021   May 9, 2020   May 8, 2021   May 9, 2020  
                         
Depreciation and amortization   $ 94,017     $ 91,695     $ 278,044   $ 272,115  
                         
Capital spending     137,009       83,325       375,653     273,888  
                         



AutoZone's 3rd Quarter Highlights - Fiscal 2021                
Selected Operating Highlights                        
Condensed Consolidated Statements of Operations                    
                               
Store Count & Square Footage                        
                               
          12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended  
          May 8, 2021     May 9, 2020     May 8, 2021     May 9, 2020  
Domestic:                          
  Beginning stores     5,951         5,815         5,885         5,772    
  Stores opened     25         21         91         64    
  Stores closed     (1 )       -         (1 )       -    
  Ending domestic stores     5,975         5,836         5,975         5,836    
                .              
  Relocated stores     6         1         11         1    
                               
  Stores with commercial programs     5,107         4,950         5,107         4,950    
                               
  Square footage (in thousands)     39,175         38,223         39,175         38,223    
                               
Mexico:                            
  Beginning stores     628         608         621         604    
  Stores opened     7         2         14         6    
  Ending Mexico stores     635         610         635         610    
                               
Brazil:                            
  Beginning stores     46         38         43         35    
  Stores opened     1         -         4         3    
  Ending Brazil stores     47         38         47         38    
                               
Total         6,657         6,484         6,657         6,484    
                               
  Square footage (in thousands)     44,253         43,045         44,253         43,045    
  Square footage per store     6,648         6,639         6,648         6,639    
                               
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, Mexico and Brazil) May 8, 2021     May 9, 2020     May 8, 2021     May 9, 2020  
  Sales per average store   $ 541       $ 421       $ 2,134       $ 1,856    
  Sales per average square foot   $ 81       $ 63       $ 321       $ 280    
                               
Total Auto Parts (Domestic, Mexico and Brazil)                        
  Total auto parts sales   $ 3,590,281       $ 2,724,604       $ 14,024,674       $ 11,849,892    
  % Increase vs. LY     31.8 %       -0.3 %       18.4 %       5.5 %  
                               
Domestic Commercial                        
  Total domestic commercial sales   $ 828,569       $ 573,786       $ 3,138,398       $ 2,638,710    
  % Increase vs. LY     44.4 %       -6.7 %       18.9 %       9.6 %  
                               
  Average sales per program per week   $ 13.5       $ 9.7       $ 12.0       $ 10.2    
  % Increase vs. LY     39.2 %       -9.3 %       17.6 %       5.2 %  
                               
All Other, including ALLDATA                        
  All other sales   $ 60,742       $ 54,695       $ 237,395       $ 224,542    
  % Increase vs. LY     11.1 %       7.0 %       5.7 %       8.7 %  
                               
(1)Fiscal 2019 results include an additional week of sales of approximately $234.5M for Total Auto Parts, $51.3M for Domestic Commercial and $4.1M for All Other. Sales per average store and sales per average square foot benefited from the additional week by $37K and $6K, respectively
 
                 
          12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended  
          May 8, 2021     May 9, 2020     May 8, 2021     May 9, 2020  
Domestic same store sales     28.9 %       (1.0 %)       19.0 %       0.5 %  
                               
Inventory Statistics (Total Stores)                        
          as of     as of              
          May 8, 2021     May 9, 2020              
  Accounts payable/inventory     123.9 %       108.2 %              
                               
  ($ in thousands)                          
  Inventory     $ 4,665,477       $ 4,440,602                
  Inventory per store     701         685                
  Net inventory (net of payables)     (1,112,745 )       (365,727 )              
  Net inventory / per store     (167 )       (56 )              
                               
          Trailing 5 Quarters              
          May 8, 2021     May 9, 2020              
  Inventory turns     1.5   x     1.3   x            
                               

 


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Source: AutoZone, Inc.

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