MEMPHIS, Tenn., May 26 /PRNewswire-FirstCall/ -- AutoZone, Inc.
(NYSE: AZO) today reported sales of $1.360 billion for its third fiscal
quarter (12 weeks) ended May 8, 2004, an increase of 5.6% from fiscal 2003.
Same store sales, or sales for domestic stores open at least one year,
increased 2% for the quarter. Retail same store sales were up 1% while
commercial same store sales were up 10%. Gross profit, as a percentage of
sales, for the quarter improved by 3.2 percentage points while operating
expenses, as a percentage of sales, increased by 2.0 percentage points. This
resulted in an operating margin of 18.5%, up 1.3 percentage points from last
year. Operating profit increased 13.3% over the prior year.
Net income for the quarter increased by 13.8% over the same period last
year to $143.4 million, and diluted earnings per share, reflecting net income
and the benefit of the company share repurchase program, increased 29.4% to
$1.68 per share from $1.30 per share reported in the year-ago quarter.
Return on invested capital for the trailing four quarters increased to
25.1% from 22.3% the previous year.
For the fiscal year-to-date period (36 weeks), sales were $3.801 billion,
an increase of 4.8% from the prior year, with a same store sales increase of
2% on flat growth in retail same store sales and 12% growth in commercial same
store sales. Year-to-date net income increased 15.0% to $356.8 million, while
diluted earnings per share for the period increased 30.2% to $4.06 from $3.12.
Under its ongoing share repurchase program, AutoZone repurchased 1.6
million shares of its common stock for $133 million during the third quarter.
Since 1998, cumulative share repurchases have totaled $3.4 billion, or 78.3
million shares at an average price of $42.89 per share.
For the quarter, gross profit, as a percentage of sales, was 49.7% while
operating expenses, as a percentage of sales, were 31.2%. During the quarter,
gross profit was affected by the accounting required by the Emerging Issues
Task Force Issue 02-16, "Accounting by a Customer (including a Reseller) for
Cash Consideration Received from a Vendor" (EITF Issue 02-16). AutoZone
adopted the new accounting effective January 1, 2003. Both this year's and
last year's quarters were affected by this change in classification. For the
twelve weeks ended May 8, 2004 and May 10, 2003, this resulted in a change in
classification of vendor funding from operating expenses to cost of goods sold
of $34.4 million and $15.6 million, respectively. Additionally, during this
year's quarter the Company experienced a gain from warranty negotiations of
$10.6 million or $0.08 per share while last year's quarter experienced a one-
time $4.7 million or $0.03 per share gain from the sale of the TruckPro
business unit. Excluding the impact of these events, gross margin for the
quarter would have been 46.4% (versus 45.5% last year) and operating selling,
general and administrative expenses as a percent of sales would have been
28.7% (versus 28.4% last year). This increase in operating selling, general
and administrative expenses as a percent of sales primarily reflects costs
associated with the Company's initiative to refresh 81 additional stores
during the quarter and to open 151 incremental commercial programs.
The Company reduced its gross inventory levels (the reported balance sheet
inventory, which is total inventory less Pay On Scan inventory) per store as
of May 8, 2004, to $447 thousand from $469 thousand last year. Net inventory,
defined as gross inventory less accounts payable, declined on a per store
level to $82 thousand from $128 thousand last year. For the quarter, the
Company reflected $61.3 million in Pay On Scan inventory.
AutoZone is the nation's leading retailer of automotive parts and
accessories with 3,337 domestic stores and 60 in Mexico. During the quarter
ended May 8, 2004, AutoZone opened 38 new stores, acquired 12 stores formerly
operated as ABC Auto Parts, a regional auto parts chain, and replaced 1 store
in the U.S. and opened 5 new stores in Mexico. 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 and accessories. Many domestic 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 http://www.autozone.com . AutoZone does
not derive revenue from automotive repair or installation.
AutoZone will host a one-hour conference call this morning, Wednesday,
May 26, 2004, beginning at 9:00 a.m. (CDT) to discuss the third quarter
results. Investors may listen to the conference call live and review
supporting slides on the AutoZone corporate
website, http://www.autozoneinc.com by clicking "Investor Relations,"
"Conference Calls." The call will also be available by dialing (210) 234-
0004. 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 (402)
220-4124 through Wednesday, June 2, 2004, at 10:59 p.m. (CDT).
This release includes certain financial information not derived in
accordance with generally accepted accounting principles ("GAAP"). This
information should not be considered a substitute for any measures derived in
accordance with GAAP. The Company believes that this information is useful to
investors as it indicates more clearly the Company's comparative year-to-year
operating results. The financial impact of the adoption of EITF Issue 02-16
was identified as an "adjustment" for comparative purposes. The Company's
management uses comparative information regarding the adoption of EITF Issue
02-16 to analyze and compare the Company's underlying operating results.
Management also manages the Company's debt levels to a ratio of adjusted debt
to EBITDAR, as shown on the attached tables. This is important information
for the Company's management of its debt levels. 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. These statements discuss, among other things, business strategies
and future performance. These forward-looking statements are subject to
risks, uncertainties and assumptions, including, without limitation,
competition, product demand, the economy, inflation, gasoline prices, consumer
debt levels, war and the prospect of war, including terrorist activity, and
the availability of commercial transportation. 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 30, 2003, for more
information related to those risks. AutoZone undertakes no obligation to
publicly release any revisions to any forward-looking statements contained in
this press release to reflect events or circumstances occurring after the date
of this release or to reflect the occurrence of unanticipated events.
AutoZone's 3rd Quarter Highlights - Fiscal 2004
Condensed Consolidated Statements of Operations
3rd Quarter, F2004 Only
(in thousands, except per share data)
GAAP Results Adjustments
12 Weeks 12 Weeks 12 Weeks 12 Weeks
Ended Ended Ended Ended
May 8, May 10, May 8, May 10,
2004 2003 2004 2003
Net sales $1,360,022 $1,288,445 $- $-
Cost of Sales 683,835 689,622 44,977 13,016
Gross profit 676,187 598,823 (44,977) (13,016)
Operating SG&A expenses 424,866 376,940 (34,352) (10,900)
Operating profit (EBIT) 251,321 221,883 (10,625) (2,116)
Interest expense, net 21,910 19,353 - -
Income before taxes 229,411 202,530 (10,625) (2,116)
Taxes 86,000 76,553 (3,983) (800)
Net income $143,411 $125,977 $(6,642) $(1,316)
Net income per share:
Basic $1.71 $1.33 $(0.08) $(0.01)
Diluted $1.68 $1.30 $(0.08) $(0.01)
Weighted Average Shares
outstanding:
Basic 83,897 94,666
Diluted 85,202 96,811
*Adjusted
12 Weeks Ended 12 Weeks Ended
May 8, 2004 May 10, 2003
Net sales $1,360,022 $1,288,445
Cost of Sales 728,812 702,638
Gross profit 631,210 585,807
Operating SG&A expenses 390,514 366,040
Operating profit (EBIT) 240,696 219,767
Interest expense, net 21,910 19,353
Income before taxes 218,786 200,414
Taxes 82,017 75,753
Net income $136,769 $124,661
Net income per share:
Basic $1.63 $1.32
Diluted $1.61 $1.29
Weighted Average Shares outstanding:
Basic 83,897 94,666
Diluted 85,202 96,811
* Adjusted Statement of Operations for F2003 and F2004 excludes EITF Issue
02-16 impact. F2003 also excludes the income deferral of $2.6MM to the
Balance Sheet due to EITF Issue 02-16
Additionally, Fiscal 2004 excludes $10.6MM gain from warranty and F2003
excludes one time $4.7MM gain from sale of TruckPro
Year-to-date 3rd Quarter, F2004
GAAP Results Adjustments
36 Weeks 36 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8, May 10, May 8, May 10,
2004 2003 2004 2003
Net sales $3,801,298 $3,627,776 $- $-
Cost of Sales 1,947,710 1,983,564 112,205 13,016
Gross profit 1,853,588 1,644,212 (112,205) (13,016)
Operating SG&A expenses 1,218,637 1,086,505 (85,580) (10,900)
Operating profit (EBIT) 634,951 557,707 (26,625) (2,116)
Interest expense, net 64,092 58,091 - -
Income before taxes 570,859 499,616 (26,625) (2,116)
Taxes 214,050 189,453 (9,983) (800)
Net income $356,809 $310,163 $(16,642) $(1,316)
Net income per share:
Basic $4.13 $3.19 $(0.19) $(0.01)
Diluted $4.06 $3.12 $(0.19) $(0.01)
Weighted Average Shares
outstanding:
Basic 86,432 97,307
Diluted 87,890 99,470
*Adjusted
36 Weeks Ended 36 Weeks Ended
May 8, 2004 May 10, 2003
Net sales $3,801,298 $3,627,776
Cost of Sales 2,059,915 1,996,580
Gross profit 1,741,383 1,631,196
Operating SG&A expenses 1,133,057 1,075,605
Operating profit (EBIT) 608,326 555,591
Interest expense, net 64,092 58,091
Income before taxes 544,234 497,500
Taxes 204,067 188,653
Net income $340,167 $308,847
Net income per share:
Basic $3.94 $3.17
Diluted $3.87 $3.10
Weighted Average Shares outstanding:
Basic 86,432 97,307
Diluted 87,890 99,470
*Adjusted Statement of Operations for F2003 and F2004 excludes EITF
Issue 02-16 impact. F2003 also excludes the income deferral of $2.6MM
to the Balance Sheet due to EITF Issue 02-16
Additionally, Fiscal 2004 excludes $26.6MM gain from warranty and F2003
excludes one time gain from sale of TruckPro
Selected Balance Sheet Information
(in thousands)
May 8, May 10, August 30,
2004 2003 2003
Merchandise inventories $1,517,071 $1,497,643 $1,511,316
Current assets 1,643,453 1,605,303 1,584,994
Property and equipment, net 1,752,474 1,671,917 1,715,753
Total assets 3,788,556 3,647,848 3,680,466
Accounts payable 1,240,154 1,090,158 1,321,905
Current liabilities 1,652,747 1,570,879 1,675,566
Debt 1,798,917 1,419,967 1,546,845
Stockholders' equity 260,141 601,618 373,758
Working capital (9,294) 34,424 (90,572)
Adjusted Debt/EBITDAR (Trailing 4 Qtrs)
May 8, 2004 May 10, 2003
Net income $564,250 $488,149
Add: Interest 90,790 82,827
Taxes 340,000 298,653
EBIT 995,040 869,629
Add: Depreciation/Amortization 107,063 111,284
Rent Expense 115,958 107,477
EBITDAR 1,218,061 1,088,390
Debt 1,798,917 1,419,967
Add : Rent x 6 695,747 644,862
Adjusted Debt 2,494,664 2,064,829
Adjusted Debt to EBITDAR 2.0 1.9
Selected Cash Flow Information
(in thousands)
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8, May 10, May 8, May 10,
2004 2003 2004 2003
Depreciation $24,499 $24,690 $72,841 $75,526
Capital spending $42,700 $36,968 $112,178 $98,800
Cash flow before share
repurchase:
Net increase (decrease) in
cash and cash equivalents $47 $79 $16 $140
Subtract increase (decrease)
in debt 11,972 80,425 252,072 225,450
Subtract share repurchases (132,640) (285,063) (530,303) (444,558)
Cash flow before share
repurchases $120,715 $204,717 $278,247 $219,248
Selected Cash Flow Information
(in thousands)
Trailing 4 Trailing 4
Quarters Quarters
May 8, 2004 May 10, 2003
Depreciation $107,063 $111,284
Capital spending $195,620 $134,194
Cash flow before share repurchase:
Net increase (decrease) in cash and
cash equivalents $120 $(604)
Subtract increase (decrease) in debt 356,422 168,833
Subtract share repurchases (976,840) (731,099)
Cash flow before share repurchases $620,538 $561,662
Other Selected Financial Information
(in thousands)
May 8, 2004 May 10, 2003
Cumulative share repurchases ($):
On balance sheet $3,357,114 $2,380,274
Forward contracts - 295,390
Total $3,357,114 $2,675,664
Cumulative share repurchases
(shares):
On balance sheet 78,269 66,233
Forward contracts - 4,008
Total 78,269 70,241
Shares outstanding, end of quarter 83,381 93,961
May 8, 2004 May 10, 2003
Return on Equity (ROE) 131.0% 70.9%
Trailing 4 Trailing 4
Quarters Quarters
May 8, 2004 May 10, 2003
Return on Invested Capital (ROIC) 25.1% 22.3%
AutoZone's 3rd Quarter Fiscal 2004
Selected Operating Highlights
Store Count & Square Footage
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Ended Ended Ended Ended
May 8, May 10, May 8, May 10,
2004 2003 2004 2003
Domestic stores:
Store count:
Stores opened 38 31 118 92
Stores closed 0 1 0 8
Replacement
stores 1 - 2 4
Total domestic
stores 3,337 3,152 3,337 3,152
Stores with
commercial sales 2,199 1,942 2,199 1,942
Square footage
(in thousands): 21,171 20,148 21,171 20,148
Square footage
per store 6,344 6,392 6,344 6,392
Stores in Mexico:
Stores opened 5 2 11 4
Total stores in
Mexico 60 43 60 43
Total Stores
Chainwide: 3,397 3,195 3,397 3,195
Sales & Inventory Statistics (Domestic Stores Only):
12 Weeks 12 Weeks Trailing 4 Trailing 4
Ended Ended Quarters Quarters
May 8, 2004 May 10, 2003 May 8, 2004 May 10, 2003
Total Retail Sales
($ in thousands) $1,140,763 $1,093,188 $4,738,613 $4,596,160 *
% Increase vs. LY
Retail Sales 4% 2% 3% 4%
Total Commercial
Sales ($ in
thousands) $179,712 $161,235 $729,608 $623,964 *
% Increase vs. LY
Commercial Sales 11% 31% 17% 27%
Sales per average
store ($ in
thousands) $398 $400 $1,685 $1,683 *
Sales per average
square foot 63 63 265 263 *
12 Weeks 12 Weeks 36 Weeks 36 Weeks
Same store sales - Ended Ended Ended Ended
rolling 13 periods May 8, May 10, May 8, May 10,
2004 2003 2004 2003
Total 2% 3% 2% 3% *
Retail 1% 0% 0% 0% *
Commercial 10% 30% 12% 29% *
* For comparison
purposes, excludes
53rd week in fiscal
2002.
Trailing 4 Trailing 4
Quarters Quarters
Inventory turns: May 8, 2004 May 10, 2003
Based on average
inventories 1.9 x 2.1 x
Based on ending
inventories 1.9 x 2.0 x
Inventory turns, net
of payables:
Based on average
inventories 11.7 x 8.6 x
Based on ending
inventories 11.6 x 7.6 x
Inventory Statistics (Total Stores):
as of as of
May 8, 2004 May 10, 2003
Accounts
payable/inventory
(total company) 82% 73%
($ in thousands)
Total Inventory* $1,578,391 $1,497,643
Total Inventory*/
Store $465 $469
Gross Inventory** $1,517,071 $1,497,643
Gross Inventory**/
Store $447 $469
Net Inventory (net
of payables) $276,917 $407,485
Net Inventory/
Store $82 $128
* Total inventory is defined as GAAP inventory plus Pay On Scan inventory
added back.
** Gross inventory is defined as Total inventory excluding Pay On Scan
inventory. This is GAAP.
SOURCE AutoZone, Inc.
CONTACT: Financial, Brian Campbell, +1-901-495-7005, or
brian.campbell@autozone.com , or Media, Ray Pohlman, +1-901-495-7962, or
ray.pohlman@autozone.com , both of AutoZone, Inc.