AutoZone 2nd Quarter Total Company Same Store Sales Increase 1.5%; Domestic Same Store Sales Increase 0.3%; EPS Increases to $28.89

Feb 27, 2024

MEMPHIS, Tenn., Feb. 27, 2024 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $3.9 billion for its second quarter (12 weeks) ended February 10, 2024, an increase of 4.6% from the second quarter of fiscal 2023 (12 weeks). Same store sales, or sales for our domestic and international stores open at least one year, are as follows:

      Constant Currency       Constant Currency
  12 Weeks   12 Weeks*   24 Weeks   24 Weeks*
               
Domestic 0.3 %   0.3 %   0.8 %   0.8 %
International 23.9 %   10.6 %   24.5 %   10.7 %
Total Company 3.0 %   1.5 %   3.2 %   1.8 %
* Excludes impacts from fluctuations of foreign exchange rates.          

For the quarter, gross profit, as a percentage of sales, was 53.9%, an increase of 160 basis points versus the prior year. The increase in gross margin was driven by higher merchandise margins and a 63 basis point ($24 million net) non-cash LIFO favorability, with the remaining leverage primarily from favorable supply chain costs. Operating expenses, as a percentage of sales, were 34.6% versus last year at 34.1%. Deleverage was primarily driven by domestic store payroll and investment in technology related initiatives.

Operating profit increased 10.9% to $743.2 million. Net income for the quarter increased 8.1% over the same period last year to $515.0 million, while diluted earnings per share increased 17.2% to $28.89.

Under its share repurchase program, AutoZone repurchased 84 thousand shares of its common stock at an average price per share of $2,676, for a total investment of $223.8 million. At the end of the second quarter, the Company had $2.1 billion remaining under its current share repurchase authorization.

The Company’s inventory increased 4.2% over the same period last year driven by new store growth. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $164 thousand versus negative $227 thousand last year and negative $197 thousand last quarter.

“I want to thank our AutoZoners for delivering solid earnings in our second fiscal quarter. Their commitment to delivering superior customer service again drove our very solid quarterly performance. While a difficult holiday comparison for both Christmas and New Year’s negatively impacted quarterly sales performance, we continue to be encouraged with our sales initiatives, and believe we are well positioned for future growth. Additionally, we are pleased with our international business as we delivered another quarter of double-digit growth. We remain committed to prudently investing capital in our business, and we will be steadfast in our long-term, disciplined approach to increasing operating earnings and cash flows while utilizing our balance sheet effectively,” said Phil Daniele, President and Chief Executive Officer.

During the quarter ended February 10, 2024, AutoZone opened 19 new stores and closed three in the U.S., opened six new stores in Mexico and four in Brazil for a total of 26 net new stores. As of February 10, 2024, the Company had 6,332 stores in the U.S., 751 in Mexico and 108 in Brazil for a total store count of 7,191.

AutoZone is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. The majority of stores 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, fleet owners and other accounts. AutoZone also sells 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. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.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 services.

AutoZone will host a conference call this morning, Tuesday, February 27, 2024, beginning at 10:00 a.m. (ET) to discuss its second quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com by clicking on Investor Relations. Investors may also listen to the call by dialing (888) 506-0062, passcode AUTOZONE. In addition, a telephone replay will be available by dialing (877) 481-4010, replay passcode 49727 through March 12, 2024.

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 herein 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, due to changes in fuel prices, miles driven or otherwise; energy prices; weather, including extreme temperatures, natural disasters and general weather conditions; competition; credit market conditions; cash flows; access to available and feasible financing on favorable terms; 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; inflation, including wage inflation; the ability to hire, train and retain qualified employees including members of management and other key personnel; construction delays; failure or interruption of our information technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges associated with doing business in and expanding into international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; impact of new accounting standards; our ability to execute our growth initiatives; and other 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 26, 2023, 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. 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 2nd Quarter Highlights - Fiscal 2024      
                   
Condensed Consolidated Statements of Operations          
2nd Quarter, FY2024              
(in thousands, except per share data)              
        GAAP Results      
        12 Weeks Ended   12 Weeks Ended      
        February 10, 2024   February 11, 2023      
                   
Net sales   $ 3,859,126     $ 3,690,982        
Cost of sales     1,779,474       1,760,979        
Gross profit     2,079,652       1,930,003        
Operating, SG&A expenses     1,336,410       1,260,026        
Operating profit (EBIT)     743,242       669,977        
Interest expense, net     102,619       65,609        
Income before taxes     640,623       604,368        
Income tax expense     125,593       127,824        
Net income   $ 515,030     $ 476,544        
Net income per share:              
Basic     $ 29.74     $ 25.48        
Diluted     $ 28.89     $ 24.64        
Weighted average shares outstanding:              
Basic       17,319       18,705        
Diluted       17,828       19,337        
                   
                   
                   
Year-To-Date 2nd Quarter, FY2024              
(in thousands, except per share data)              
        GAAP Results      
        24 Weeks Ended   24 Weeks Ended      
        February 10, 2024   February 11, 2023      
                   
Net sales   $ 8,049,403     $ 7,676,049        
Cost of sales     3,755,735       3,751,424        
Gross profit     4,293,668       3,924,625        
Operating, SG&A expenses     2,701,822       2,531,615        
Operating profit (EBIT)     1,591,846       1,393,010        
Interest expense, net     194,004       123,332        
Income before taxes     1,397,842       1,269,678        
Income taxes     289,349       253,816        
Net income   $ 1,108,493     $ 1,015,862        
Net income per share:              
Basic     $ 63.29     $ 53.87        
Diluted     $ 61.48     $ 52.12        
Weighted average shares outstanding:              
Basic       17,514       18,856        
Diluted       18,031       19,491        
                   
                   
                   
                   
                   
Selected Balance Sheet Information              
(in thousands)              
        February 10, 2024   February 11, 2023   August 26, 2023  
                   
Cash and cash equivalents   $ 304,096     $ 301,286     $ 277,054    
Merchandise inventories     5,970,175       5,731,255       5,764,143    
Current assets     7,157,056       6,794,805       6,779,426    
Property and equipment, net     5,907,484       5,236,129       5,596,548    
Operating lease right-of-use assets     2,999,294       2,943,844       2,998,097    
Total assets     16,717,654       15,545,142       15,985,878    
Accounts payable     7,149,882       7,321,551       7,201,281    
Current liabilities     8,772,609       8,614,618       8,511,856    
Operating lease liabilities, less current portion     2,901,636       2,854,227       2,917,046    
Total debt     8,630,553       7,042,302       7,668,549    
Stockholders' deficit     (4,837,321 )     (4,184,170 )     (4,349,894 )  
Working capital     (1,615,553 )     (1,819,813 )     (1,732,430 )  
                   


AutoZone's 2nd Quarter Highlights - Fiscal 2024            
                         
Condensed Consolidated Statements of Operations                
                         
Adjusted Debt / EBITDAR                  
(in thousands, except adjusted debt to EBITDAR ratio)                  
          Trailing 4 Quarters          
          February 10, 2024   February 11, 2023          
Net income   $ 2,621,057     $ 2,418,476            
Add: Interest expense     377,044       229,215            
Income tax expense       674,721       634,803            
EBIT         3,672,822       3,282,494            
                         
Add: Depreciation and amortization     519,805       465,905            
Rent expense(1)       417,864       394,298            
Share-based expense       96,669       82,253            
EBITDAR     $ 4,707,160     $ 4,224,950            
                         
Debt       $ 8,630,553     $ 7,042,302            
Financing lease liabilities     328,955       290,858            
Add: Rent x 6(1)     2,507,184       2,365,788            
Adjusted debt   $ 11,466,692     $ 9,698,948            
                         
Adjusted debt to EBITDAR     2.4       2.3            
                         
Adjusted Return on Invested Capital (ROIC)                  
(in thousands, except ROIC)                  
          Trailing 4 Quarters          
          February 10, 2024   February 11, 2023          
Net income   $ 2,621,057     $ 2,418,476            
Adjustments:                  
Interest expense       377,044       229,215            
Rent expense(1)       417,864       394,298            
Tax effect(2)       (162,956 )     (129,691 )          
Adjusted after-tax return   $ 3,253,009     $ 2,912,298            
                         
Average debt(3)   $ 7,853,082     $ 6,278,213            
Average stockholders' deficit(3)     (4,577,327 )     (3,617,143 )          
Add: Rent x 6(1)     2,507,184       2,365,788            
Average financing lease liabilities(3)     295,494       294,337            
Invested capital   $ 6,078,433     $ 5,321,195            
                         
Adjusted After-Tax ROIC     53.5 %     54.7 %          
                         
(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 February 10, 2024 and February 11, 2023.
         
                                 
                         
          Trailing 4 Quarters          
(in thousands)     February 10, 2024   February 11, 2023          
Total lease cost, per ASC 842   $ 546,195     $ 498,970            
Less: Financing lease interest and amortization     (93,591 )     (77,302 )          
Less: Variable operating lease components, related to insurance and common area maintenance           (34,740 )     (27,370 )          
Rent expense   $ 417,864     $ 394,298            
                             
(2)Effective tax rate over the trailing four quarters ended February 10, 2024 and February 11, 2023 is 20.5% and 20.8%, respectively.          
(3)All averages are computed based on trailing five quarter balances.          
                         
Other Selected Financial Information                  
(in thousands)                    
          February 10, 2024   February 11, 2023          
Cumulative share repurchases ($ since fiscal 1998)   $ 35,540,758     $ 31,898,212            
Remaining share repurchase authorization ($)     2,109,242       1,751,788            
                         
Cumulative share repurchases (shares since fiscal 1998)     154,696       153,273            
                         
Shares outstanding, end of quarter     17,312       18,467            
                         
          12 Weeks Ended February 10, 2024   12 Weeks Ended February 11, 2023   24 Weeks Ended February 10, 2024   24 Weeks Ended February 11, 2023  
                         
Depreciation and amortization   $ 124,968     $ 113,711     $ 245,192   $ 222,964  
                         
Cash flow from operations     434,127       354,474       1,264,386     1,148,061  
                         
Capital spending     255,379       144,837       490,807     259,234  
                         


AutoZone's 2nd Quarter Highlights - Fiscal 2024              
Condensed Consolidated Statements of Operations                    
Selected Operating Highlights                        
                               
Store Count & Square Footage                        
                               
          12 Weeks Ended     12 Weeks Ended     24 Weeks Ended     24 Weeks Ended  
          February 10, 2024     February 11, 2023     February 10, 2024     February 11, 2023  
Domestic:                          
Beginning stores       6,316         6,196         6,300         6,168    
Stores opened       19         30         36         58    
Stores closed       (3 )       -         (4 )       -    
Ending domestic stores       6,332         6,226         6,332         6,226    
                               
Relocated stores       3         1         3         4    
                               
Stores with commercial programs       5,823         5,500         5,823         5,500    
                               
Square footage (in thousands)       41,853         41,103         41,853         41,103    
                               
Mexico:                            
Beginning stores       745         706         740         703    
Stores opened       6         1         11         4    
Ending Mexico stores       751         707         751         707    
                               
Brazil:                            
Beginning stores       104         76         100         72    
Stores opened       4         5         8         9    
Ending Brazil stores       108         81         108         81    
                               
Total         7,191         7,014         7,191         7,014    
                               
Total Company stores opened, net     26         36         51         71    
                               
Square footage (in thousands)       48,240         46,982         48,240         46,982    
Square footage per store       6,708         6,698         6,708         6,698    
                               
Sales Statistics                        
($ in thousands, except sales per average square foot)                        
          12 Weeks Ended     12 Weeks Ended     Trailing 4 Quarters     Trailing 4 Quarters  
Total AutoZone Stores (Domestic, Mexico and Brazil) February 10, 2024     February 11, 2023     February 10, 2024     February 11, 2023  
Sales per average store     $ 527       $ 518       $ 2,465       $ 2,399    
Sales per average square foot     $ 79       $ 77       $ 368       $ 359    
                               
Auto Parts (Domestic, Mexico and Brazil)                        
Total auto parts sales     $ 3,786,339       $ 3,623,110       $ 17,508,154       $ 16,590,483    
% Increase vs. LY       4.5 %       9.6 %       5.5 %       8.2 %  
                               
Domestic Commercial                        
Total domestic commercial sales     $ 980,134       $ 954,584       $ 4,682,570       $ 4,475,546    
% Increase vs. LY       2.7 %       13.1 %       4.6 %       19.2 %  
                               
Average sales per program per week     $ 14.1       $ 14.5       $ 15.9       $ 16.0    
% Increase vs. LY       (2.8 %)       7.4 %       (0.6 %)       14.3 %  
                               
All Other, including ALLDATA                        
All other sales     $ 72,787       $ 67,872       $ 322,408       $ 299,144    
% Increase vs. LY       7.2 %       6.8 %       7.8 %       10.4 %  
                 
          12 Weeks Ended     12 Weeks Ended     24 Weeks Ended     24 Weeks Ended  
Same store sales(4)   February 10, 2024     February 11, 2023     February 10, 2024     February 11, 2023  
Domestic         0.3 %       5.3 %       0.8 %       5.5 %  
International       23.9 %       30.6 %       24.5 %       27.1 %  
Total Company       3.0 %       7.6 %       3.2 %       7.3 %  
                               
International - Constant Currency       10.6 %       21.1 %       10.7 %       21.0 %  
Total Company - Constant Currency       1.5 %       6.7 %       1.8 %       6.8 %  
                               
(4)Same store sales are based on sales for all stores open at least one year. Constant Currency same store sales exclude the impact of fluctuations of foreign currency exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.  
                                           
                               
                               
Inventory Statistics (Total Stores)                        
          as of     as of              
          February 10, 2024     February 11, 2023              
Accounts payable/inventory       119.8 %       127.7 %              
                               
($ in thousands)                            
Inventory       $ 5,970,175       $ 5,731,255                
Inventory per store       830         817                
Net inventory (net of payables)       (1,179,707 )       (1,590,296 )              
Net inventory/per store       (164 )       (227 )              
                               
          Trailing 5 Quarters              
          February 10, 2024     February 11, 2023              
Inventory turns       1.4   x     1.5   x            
                               

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Source: AutoZone, Inc.