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Nevada
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1-10714
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62-1482048
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Precommencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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Precommencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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AUTOZONE,
INC.
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By:
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/s/
William T. Giles
William T. Giles
Executive Vice President
- Chief
Financial Officer, Information
Technology & Store
Development
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| Dated: February 27, 2007 |
EXHIBIT 99.1
AutoZone 2nd Quarter Sales up 3.7 Percent; EPS up 15.5 Percent
MEMPHIS, Tenn., Feb. 27, 2007 (PRIME NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.300 billion for its second quarter (12 weeks) ended February 10, 2007, up 3.7% from fiscal second quarter 2006. Same store sales, or sales for stores open at least one year, were down 0.3% for the quarter.
Net income for the quarter increased 6.2% over the same period last year to $103.0 million, while diluted earnings per share increased 15.5% to $1.45 per share from $1.25 per share reported in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 49.2% (versus 49.1% last year). We experienced improvements in leveraging product acquisition costs offset by a shift in sales mix toward lower margin, seasonally related product. Additionally, operating expenses, as a percentage of sales, were 34.6% (versus 34.9% last year). The favorable variance in operating expenses was primarily due to our store reset efforts in last year's second quarter and an ongoing focus to reduce expenditures throughout the organization.
Under its share repurchase program, AutoZone repurchased 1.0 million shares of its common stock for $128.9 million during the second quarter, at an average price of $123 per share. The Company virtually completed its remaining capacity under its previous share repurchase authorization, and today announces it has received approval from its Board of Directors to purchase an additional $500 million to take its cumulative repurchase program, begun in 1998, to $5.4 billion.
The Company's adjusted inventory per store, which includes supplier owned pay-on-scan inventory, as of February 10, 2007, was $496 thousand versus $494 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store level to $63 thousand from $79 thousand last year.
"I'd like to congratulate our AutoZoners across the country for delivering record second quarter net income and earnings per share results. Although overall sales performance has been below our expectations, we were successful in leveraging our operating model to deliver 15.5% growth in earnings per share. We believe we are taking appropriate actions to improve our overall sales performance. We are pleased with the progress we have made regarding our new merchandise assortment initiatives and believe we are well positioned heading into our busiest selling season. As our operating model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, President and Chief Executive Officer.
During the quarter ended February 10, 2007, AutoZone opened 34 new stores and replaced 5 stores in the U.S. Additionally, the Company re-opened 1 of the remaining 3 U.S. stores closed due to hurricane-related damage in last year's first quarter. As of February 10, 2007, the Company had 3,847 stores in 48 states plus the District of Columbia and Puerto Rico in the U.S. and 108 stores in Mexico.
AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each 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, and service stations. AutoZone also sells the ALLDATA brand diagnostic and repair software. On the web, AutoZone sells diagnostic and repair information, and auto and light truck parts through www.autozone.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a conference call this morning, Tuesday, February 27, 2007, beginning at 10:00 a.m. (EST) to discuss the second 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) 369-1831 through Monday, March 5, 2007, 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 adjusted inventory, adjusted inventory per store, adjusted debt, adjusted debt/EBITDAR, and adjusted rent expense. 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 debt levels to a ratio of adjusted debt to EBITDAR 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 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: competition; product demand; the economy; 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; availability of consumer trans portation; construction delays; access to available and feasible financing; and changes in laws or regulations. 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 such events 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. Please refer to the Risk Factors section of AutoZone's Form 10-K for the fiscal year ended August 26, 2006, for more information related to those risks.
AutoZone's 2nd Quarter Highlights - Fiscal 2007
Condensed Consolidated Statements of Operations
2nd Quarter
(in thousands, except
per share data) GAAP Results
--------------------------------------
12 Weeks Ended 12 Weeks Ended
February 10, 2007 February 11, 2006
----------------- -----------------
Net sales $ 1,300,357 $ 1,253,815
Cost of sales 661,145 637,625
----------- -----------
Gross profit 639,212 616,190
Operating, SG&A expenses 450,289 437,845
----------- -----------
Operating profit (EBIT) 188,923 178,345
Interest expense, net 26,818 24,333
----------- -----------
Income before taxes 162,105 154,012
Income taxes 59,089 56,990
----------- -----------
Net income $ 103,016 $ 97,022
=========== ===========
Net income per share:
Basic $ 1.46 $ 1.26
Diluted $ 1.45 $ 1.25
Weighted average shares
outstanding:
Basic 70,476 76,784
Diluted 71,227 77,474
---------------------------------------------------------------------
Year-to-date 2nd Quarter,
FY2007
(in thousands, except GAAP Results
per share data) --------------------------------------
24 Weeks Ended 24 Weeks Ended
February 10, 2007 February 11, 2006
----------------- -----------------
Net sales $ 2,693,426 $ 2,591,891
Cost of sales 1,368,918 1,320,172
----------- -----------
Gross profit 1,324,508 1,271,719
Operating, SG&A expenses 912,589 888,081
----------- -----------
Operating profit (EBIT) 411,919 383,638
Interest expense, net 53,911 48,072
----------- -----------
Income before taxes 358,008 335,566
Income taxes 131,103 124,170
----------- -----------
Net income $ 226,905 $ 211,396
=========== ===========
Net income per share:
Basic $ 3.21 $ 2.76
Diluted $ 3.17 $ 2.73
Weighted Average Shares
outstanding:
Basic 70,779 76,686
Diluted 71,520 77,313
---------------------------------------------------------------------
Selected Balance Sheet Information
(in thousands)
February 10, February 11, August 26,
2007 2006 2006
----------- ----------- -----------
Merchandise inventories $ 1,910,849 $ 1,722,681 $ 1,846,650
Current assets 2,180,348 2,034,992 2,118,927
Property and equipment, net 2,110,937 1,992,415 2,051,308
Total assets 4,646,506 4,401,853 4,526,306
Accounts payable 1,662,989 1,427,672 1,699,667
Current liabilities 2,080,379 1,794,801 2,054,568
Debt 1,854,304 1,779,300 1,857,157
Stockholders' equity 543,590 641,158 469,528
Working capital 99,969 240,191 64,359
---------------------------------------------------------------------
Adjusted Debt/EBITDAR February 10, February 11,
(Trailing 4 Qtrs) 2007 2006
--------------------- ---------- ----------
Net income $ 584,784 $ 565,799
Add: Interest 113,728 105,080
Taxes 339,694 323,391
---------- ----------
EBIT 1,038,206 994,270
Add: Depreciation 148,815 126,582
Rent expense 144,477 135,712
Option expense 18,146 7,982
---------- ----------
EBITDAR $1,349,644 $1,264,546
Debt $1,854,304 $1,779,300
Capital lease obligations* 25,748 --
Add : Adjusted rent x 6** 837,466 814,272
---------- ----------
Adjusted debt $2,717,518 $2,593,572
Adjusted debt to EBITDAR 2.0 2.1
* At the beginning of fiscal 2007, the Company converted the
majority of its vehicles accounted for as operating leases to
capital leases.
** Adjusted rent is defined as GAAP rent expense less the rent expense
associated with operating leases converted to capital leases in
fiscal 2007.
Selected Cash Flow Information
(in thousands) 12 Weeks Ended 24 Weeks Ended
------------------- -------------------
Feb. 10, Feb. 11, Feb. 10, Feb. 11,
2007 2006 2007 2006
-------- -------- -------- --------
Depreciation $ 36,105 $ 31,493 $ 71,659 $ 62,309
Capital spending $ 50,064 $ 57,405 $102,262 $115,862
Cash flow before
share repurchases:
Net increase (decrease)
in cash and cash
equivalents $ 12,703 $ (6) $ (5,496) $ 6,562
Subtract increase in debt (4,617) (10,475) (2,853) (82,550)
Subtract share repurchases (128,891) -- (219,658) (9,787)
-------- -------- -------- --------
Cash flow before share
repurchases and changes
in debt $146,211 $ 10,469 $217,015 $ 98,899
======== ======== ======== ========
Other Selected Financial Information
(in thousands)
February 10, February 11,
2007 2006
---------- ----------
Cumulative share repurchases ($) $4,899,489 $4,111,553
Cumulative share repurchases (shares) 95,085 87,158
Shares outstanding, end of quarter 69,926 76,910
--------------------------------------------------------------------
Trailing 4 Quarters
February 10, February 11,
2007 2006
---------- ----------
Net income $ 584,784 $ 565,799
Add: After-tax interest 71,944 66,831
After-tax rent 91,396 86,313
---------- ----------
After-tax return 748,124 718,943
Average debt 1,917,117 1,945,764
Average capital lease obligations*** 11,157 --
Average equity 537,016 424,949
Rent x 6 866,862 814,272
---------- ----------
Pre-tax invested capital 3,332,152 3,184,985
Return on Invested Capital (ROIC) 22.5% 22.6%
---------------------------------------------------------------------
*** Average of the capital lease obligations relating to vehicle
capital leases entered into at the beginning of fiscal 2007 is
computed as the average over the trailing 4 quarters. Rent
expense associated with the vehicles prior to the conversion to
capital leases is included in the rent for purposes of
calculating return on invested capital.
AutoZone's 2nd Quarter Fiscal 2007
Selected Operating Highlights
Store Count & Square Footage
----------------------------
(in thousands) 12 Weeks Ended 24 Weeks Ended
------------------- -------------------
Feb. 10, Feb. 11, Feb. 10, Feb. 11,
2007 2006 2007 2006
-------- -------- -------- --------
Domestic stores:
Store count:
Stores opened 34 41 74 74
Stores closed -- 1 -- 1
Re-opened hurricane stores 1 3 2 3
Hurricane-related
store closures -- 10 -- 13
Replacement stores 5 4 10 7
Total domestic stores 3,847 3,655 3,847 3,655
Stores with commercial
sales 2,154 2,107 2,154 2,107
Square footage
(in thousands): 24,543 23,221 24,543 23,221
Square footage per store 6,380 6,353 6,380 6,353
Mexico stores:
Stores opened 8 4 8 7
Total stores in Mexico 108 88 108 88
Total stores chainwide 3,955 3,743 3,955 3,743
Sales Statistics (Domestic Stores Only)
--------------------------------------
12 Weeks Ended Trailing 4 quarters
----------------------- -----------------------
Feb. 10, Feb. 11, Feb. 10, Feb. 11,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Total retail sales
($ in thousands) $1,078,608 $1,040,931 $5,071,395 $4,876,160
% Increase vs
LY retail sales 3.6% 3.5% 4.0% 2.3%
Total commercial
sales ($ in
thousands) $ 150,896 $ 154,729 $ 705,138 $ 715,282
% Increase vs
LY commercial
sales (2.5%) 0.2% (1.4%) (3.0%)
Sales per average
store ($ in
thousands) $ 321 $ 329 $ 1,540 $ 1,569
Sales per average
square foot 50 52 242 247
12 Weeks Ended 24 Weeks Ended
----------------------- -----------------------
Feb. 10, Feb. 11, Feb. 10, Feb. 11,
2007 2006 2007 2006
---------- ---------- ---------- ----------
Same store sales (0.3%) 0.4% 0.0% 0.6%
Inventory Statistics (Total Stores)
----------------------------------
as of as of
February 10, 2007 February 11, 2006
----------------- -----------------
Accounts payable/inventory 87.0% 82.9%
($ in thousands)
Inventory* $ 1,910,849 $ 1,722,681
Pay-on-scan inventory 50,492 126,607
--------------- --------------
Adjusted inventory $ 1,961,341 $ 1,849,288
Adjusted inventory per store $ 496 $ 494
Net inventory (net of payables) $ 247,860 $ 295,009
Net inventory / store $ 63 $ 79
Trailing 4 Quarters
February 10, 2007 February 11, 2006
----------------- -----------------
Inventory turns** 1.7 x 1.8 x
* This is reported balance sheet inventory.
** Inventory turns is calculated as cost of sales divided by the
average of the beginning and ending merchandise inventories. The
calculation includes cost of sales related to pay-on-scan sales,
which were $152.4MM for the trailing 52 weeks ended February 10,
2007 and $122.2MM for the trailing 52 weeks ended February 11,
2006.
CONTACT: AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(901) 495-7962
ray.pohlman@autozone.com