MEMPHIS, Tenn., May 25, 2010 (GlobeNewswire via COMTEX) --AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.8 billion for its third quarter (12 weeks) ended May 8, 2010, an increase of 9.9% from the third quarter of fiscal 2009 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 7.1% for the quarter.
Net income for the quarter increased $29.1 million, or 16.7%, over the same period last year to $202.7 million, while diluted earnings per share increased 31.5% to $4.12 per share from $3.13 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 50.7% (versus 50.2% for last year's quarter). The improvement in gross margin benefited from higher merchandise margins and leveraging distribution costs due to higher sales. The merchandise margin improvement of 23 basis points was attributable to both a shift in mix to higher margin product and lower product acquisition costs. Operating expenses, as a percentage of sales, were 31.1% (versus 31.8% last year). The reduction in operating expenses, as a percentage of sales, reflected leverage of store operating expenses due to higher sales, partially offset by 17 basis points of expense from the continued investment in our hub store initiative and 16 basis points from higher pension expense.
Under its share repurchase program, AutoZone repurchased 1.5 million shares of its common stock for $266 million during the third quarter, at an average price of $172 per share. At quarter end, the Company had $251 million remaining under its current share repurchase authorization.
The Company's inventory increased 2.1% over the same period last year, driven by new store openings. Inventory per store was $506 thousand versus $516 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $12 thousand from $33 thousand last year.
"We are pleased to report our 15th consecutive quarter of double digit EPS growth. I would like to thank our AutoZoners for their commitment to meeting or exceeding our customers' expectations. Their commitment to exceptional customer service defines our organization and enables our success. Our plan remains consistent, as we focus on improving parts coverage supported by our enhanced hub store model, hiring, retaining and training the best automotive parts professionals, and growing our Commercial business. Additionally, we reported a 26.5% trailing four-quarter return on invested capital ratio this past quarter, as we remained committed to our disciplined approach of growing operating earnings while utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended May 8, 2010, AutoZone opened 21 new stores, closed one store and replaced one store in the U.S. and opened 10 new stores in Mexico. As of May 8, 2010, the Company had 4,309 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 212 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, service stations, and public sector accounts. 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, and as part of our commercial sales program, through www.autozonepro.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a conference call this morning, Tuesday, May 25, 2010, beginning at 10:00 a.m. (EDT) to discuss its third 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) 369-1211 through Tuesday, June 1, 2010 at 11:59 p.m. (EDT).
This release includes certain financial information not derived in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP measures include return on invested capital, adjusted debt, and adjusted debt/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 debt levels to a ratio of adjusted debt to EBITDAR 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 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: credit market conditions; the impact of recessionary conditions; competition; product demand; 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; construction delays; access to available and feasible financing; and changes in laws or regulations. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 29, 2009, 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. 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.
AutoZone's 3rd Quarter Highlights -
Fiscal 2010
Condensed Consolidated
Statements of
Operations
3rd Quarter
(in thousands, except
per share data)
GAAP Results
--------------------------
12 Weeks 12 Weeks
Ended Ended
May 8, 2010 May 9, 2009
------------ ------------
Net sales $ 1,821,990 $ 1,658,160
Cost of sales 898,869 825,253
------------ ------------
Gross profit 923,121 832,907
Operating, SG&A
expenses 567,256 527,675
------------ ------------
Operating profit
(EBIT) 355,865 305,232
Interest expense, net 36,833 31,482
------------ ------------
Income before taxes 319,032 273,750
Income taxes 116,287 100,061
------------ ------------
Net income $ 202,745 $ 173,689
============ ============
Net income per share:
Basic $ 4.19 $ 3.18
Diluted $ 4.12 $ 3.13
Weighted average
shares outstanding:
Basic 48,377 54,652
Diluted 49,212 55,456
Year-to-date 3rd
Quarter, FY2010
(in thousands, except
per share data) GAAP Results
--------------------------
36 Weeks 36 Weeks
Ended Ended
May 8, 2010 May 9, 2009
------------ ------------
Net sales $ 4,917,459 $ 4,584,330
Cost of sales 2,440,678 2,290,934
------------ ------------
Gross profit 2,476,781 2,293,396
Operating, SG&A
expenses 1,630,106 1,534,930
------------ ------------
Operating profit
(EBIT) 846,675 758,466
Interest expense, net 109,483 94,554
------------ ------------
Income before taxes 737,192 663,912
Income taxes 267,814 242,989
------------ ------------
Net income $ 469,378 $ 420,923
============ ============
Net income per share:
Basic $ 9.52 $ 7.45
Diluted $ 9.37 $ 7.36
Weighted Average
Shares outstanding:
Basic 49,309 56,498
Diluted 50,087 57,179
Selected Balance Sheet
Information
(in thousands)
August 29,
May 8, 2010 May 9, 2009 2009
------------ ------------ ----------
Cash and cash
equivalents $ 95,762 $ 94,287 $ 92,706
Merchandise
inventories 2,288,364 2,240,511 2,207,497
Current assets 2,578,948 2,607,984 2,561,730
Property and
equipment, net 2,425,043 2,301,794 2,354,357
Total assets 5,452,770 5,296,176 5,318,405
Accounts payable 2,235,766 2,098,308 2,118,746
Current liabilities* 2,872,076 3,135,961 2,706,752
Total debt 2,698,500 2,405,900 2,726,900
Stockholders' equity
(deficit) (461,950) (45,119) (433,074)
Working capital (293,128) (527,977) (145,022)
* Current liabilities at May 9, 2009 included $456.6 million
of short term debt obligations ($300.0 million bank term loan
and $156.6 million in commercial paper borrowings).
Subsequent to May 9, 2009, our short term debt obligations
were classified as long-term as we had the ability and intent
to replace these short term obligations with long-term
financing under our $800 million of revolving credit
facilities, expiring in July 2012.
Adjusted Debt /
EBITDAR (Trailing 4
Qtrs)
(in thousands, except
adjusted debt to
EBITDAR ratio)
May 8, 2010 May 9, 2009
------------ ------------
Net income $ 705,504 $ 664,669
Add: Interest 157,245 129,319
Taxes 401,522 381,317
------------ ------------
EBIT 1,264,271 1,175,305
Add: Depreciation 187,078 176,073
Rent expense 191,616 179,055
Option expense 18,858 19,250
------------ ------------
EBITDAR $ 1,661,823 $ 1,549,683
Debt $ 2,698,500 $ 2,405,900
Capital lease
obligations 63,337 57,227
Add: rent x 6 1,149,700 1,074,322
------------ ------------
Adjusted debt $ 3,911,537 $ 3,537,449
============ ============
Adjusted debt to
EBITDAR 2.4 2.3
Selected Cash Flow
Information
(in thousands)
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8,
May 8, 2010 May 9, 2009 2010 May 9, 2009
------------ ------------ ---------- ------------
Depreciation $ 42,820 $ 41,309 $ 129,918 $ 123,273
Capital spending $ 68,940 $ 61,941 $ 180,066 $ 160,087
---------------------- ------------ ------------ ---------- ------------
Cash flow before share
repurchases:
Net
increase/(decrease)
in cash and cash
equivalents $ (9,399) $ (13,686) $ 3,056 $ (148,174)
Subtract increase in
debt (76,200) (284,855) (28,400) 155,900
Subtract share
repurchases (266,381) (65,440) (558,269) (712,606)
------------ ------------ ---------- ------------
Cash flow before share
repurchases and
changes in debt $ 333,182 $ 336,609 $ 589,725 $ 408,532
============ ============ ========== ============
Other Selected
Financial Information
(in thousands, except
ROIC)
May 8, 2010 May 9, 2009
------------ ------------
Cumulative share
repurchases ($ since
fiscal 1998) $ 8,149,186 $ 7,003,520
Remaining share
authorization ($) $ 250,814 $ 396,480
Cumulative share
repurchases (shares
since fiscal 1998) 118,902 111,558
------------ ------------
Shares outstanding,
end of quarter 47,648 54,567
Trailing 4 Quarters
May 8, 2010 May 9, 2009
------------ ------------
Net income $ 705,504 $ 664,669
Adjustments:
Interest expense 157,245 129,319
Rent expense 191,616 179,055
Tax effect* (126,531) (112,418)
------------ ------------
After-tax return 927,834 860,625
Average debt** 2,669,100 2,309,371
Average equity** (369,156) 102,618
Add: Rent x 6 1,149,700 1,074,322
Average capital lease
obligations** 56,009 62,537
------------ ------------
Pre-tax invested
capital $ 3,505,653 $ 3,548,848
============ ============
Return on Invested
Capital (ROIC) 26.5% 24.3%
---------------------- ------------ ------------
* Effective tax rate over trailing four quarters
ended May 8, 2010 and May 9, 2009 is 36.3% and
36.5%, respectively.
** All averages are computed based on trailing 5
quarter balances.
AutoZone's 3rd Quarter Fiscal 2010
Selected Operating Highlights
Store Count & Square Footage
-----------------------------
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8, 2010 May 9, 2009 May 8, 2010 May 9, 2009
------------ ------------ ------------ ------------
Domestic stores:
Store count:
Stores opened 21 32 83 82
Stores closed 1 1 3 2
Replacement stores 1 4 2 6
Total domestic stores 4,309 4,172 4,309 4,172
Stores with commercial
programs 2,340 2,276 2,340 2,276
Square footage (in
thousands): 27,744 26,805 27,744 26,805
Mexico stores:
Stores opened 10 10 24 20
Total stores in Mexico 212 168 212 168
Total stores chainwide 4,521 4,340 4,521 4,340
Square footage (in
thousands): 29,280 28,012 29,280 28,012
Square footage per store 6,476 6,454 6,476 6,454
Sales Statistics
-----------------------------
($ in thousands, except sales
per average square foot and
percentages)
12 Weeks 12 Weeks Trailing 4 Trailing 4
Ended Ended quarters quarters
Total Auto Parts (Domestic
and Mexico) May 8, 2010 May 9, 2009 May 8, 2010 May 9, 2009
------------ ------------ ------------ ------------
Total auto parts sales $ 1,787,069 $ 1,624,806 $ 7,002,970 $ 6,649,892
% Increase vs. LY 10.0% 9.4% 5.3% 7.6%
% Increase vs. LY (excl
53rd week) 7.3% 5.6%
Sales per average store $ 397 $ 376 $ 1,581 $ 1,564
Sales per average square
foot $ 61 $ 58 $ 244 $ 243
Domestic Commercial
Total domestic commercial
sales $ 217,811 $ 188,636 $ 829,220 $ 772,296
% Increase vs. LY 15.5% 4.9% 7.4% 6.1%
% Increase vs. LY (excl
53rd week) 9.2% 4.3%
All Other (ALLDATA and
E-Commerce)
All other sales $ 34,921 $ 33,355 $ 146,984 $ 144,951
% Increase vs. LY 4.7% 4.9% 1.4% 8.8%
% Increase vs. LY (excl
53rd week) 3.3% 6.8%
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8, 2010 May 9, 2009 May 8, 2010 May 9, 2009
------------ ------------ ------------ ------------
Domestic same store sales 7.1% 7.4% 4.7% 3.9%
Inventory Statistics (Total
Stores)
-----------------------------
as of as of
May 8, 2010 May 9, 2009
------------ ------------
Accounts payable/inventory 97.7% 93.7%
($ in thousands)
Inventory $ 2,288,364 $ 2,240,511
Inventory per store $ 506 $ 516
Net inventory (net of
payables) $ 52,598 $ 142,203
Net inventory / per store $ 12 $ 33
Trailing 4 Quarters
May 8, 2010 May 9, 2009
------------ ------------
Inventory turns 1.6 x 1.6 x
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: AutoZone, Inc.
CONTACT: AutoZone, Inc.
Financial:
Brian Campbell
(901) 495-7005
brian.campbell@autozone.com
Media:
Ray Pohlman
(866) 966-3017
ray.pohlman@autozone.com