MEMPHIS, Tenn., Sept. 21 /PRNewswire-FirstCall/ -- AutoZone, Inc.
(NYSE: AZO) today reported sales of $1.836 billion for its fourth fiscal
quarter (16 weeks) ended August 28, 2004, an increase of 0.3% from fiscal
2003. Same store sales, or sales for domestic stores open at least one year,
decreased 3% for the quarter. Gross profit, as a percentage of sales, for the
quarter improved by 1.6 percentage points while operating expenses, as a
percentage of sales, increased by 1.5 percentage points. This resulted in an
operating margin of 19.8%, up 0.1 percentage points from last year. Operating
profit increased 1.0% over the prior year.
Net income for the quarter increased by 0.9% over the same period last
year to $209 million, and diluted earnings per share, reflecting net income
and the benefit of the company share repurchase program, increased 11.2% to
$2.53 per share from $2.27 per share reported in the year-ago quarter.
Return on invested capital for the trailing four quarters increased to
25.1% from 23.4% the previous year.
For the fiscal year ended August 28, 2004, sales were $5.637 billion, an
increase of 3.3% from the prior year, while same store sales were flat.
Operating profit increased 8.8% on an operating margin of 17.7%. Year-to-date
net income increased 9.4% to $566 million, while diluted earnings per share
for the period increased 22.8% to $6.56 from $5.34.
Under its ongoing share repurchase program, AutoZone repurchased 3.9
million shares of its common stock for $318 million during the fourth quarter.
During the fiscal year ended August 28, 2004 share repurchases totaled $848
million, or 10.2 million shares at an average price of $83.20 per share.
For the quarter, gross profit, as a percentage of sales, was 49.2% while
operating expenses, as a percentage of sales, were 29.4%. AutoZone has
adopted 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), effective January 1, 2003. As a
result, both this year's and last year's fourth quarters were affected by this
change in classification. For the sixteen weeks ended August 28, 2004 and
August 30, 2003, this resulted in a change in classification of vendor funding
from operating expenses to cost of goods sold of $52.7 million and $37.0
million, respectively. Additionally, during this year's fourth quarter the
Company experienced a gain from warranty negotiations of $15.5 million or
$0.12 per share while last year's fourth quarter reflected a gain from
warranty negotiations of $8.7 million or $0.06 per share as well as $4.6
million or $0.03 per share gain from the reversal of a restructuring reserve
the Company established back in fiscal 2001 primarily for the closure of
AutoZone stores. Excluding the impact of these events, gross margin for the
quarter would have been 45.5% (versus 45.5% last year) and operating selling,
general and administrative expenses as a percent of sales would have been
26.5% (versus 26.1% last year). The opening of 84 new AutoZone stores and the
Company's initiative to refresh 71 additional stores during the quarter
contributed to the increase in operating selling, general and administrative
expenses as a percent of sales.
The Company reduced its gross inventory levels (the reported balance sheet
inventory, which is total inventory less supplier owned Pay On Scan inventory)
per store as of August 28, 2004, to $448 thousand from $462 thousand last
year. Net inventory, defined as gross inventory less accounts payable,
declined on a per store level to $38 thousand from $46 thousand last year. As
of August 28, 2004, the Company achieved $147 million in Pay On Scan
inventory.
During the quarter ended August 28, 2004, AutoZone opened 77 new stores,
closed 1 store, re-opened 7 stores under the AutoZone brand formerly operated
as ABC Auto Parts, a regional auto parts chain, and replaced 2 stores in the
U.S. while additionally opening 3 new stores in Mexico. As of August 28,
2004, the Company had 3,420 domestic stores and 63 stores in Mexico. AutoZone
is the nation's leading retailer of automotive parts and accessories. 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 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 afternoon, Tuesday,
September 21, 2004, beginning at 4:00 p.m. (CDT) to discuss the fourth 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 Tuesday, September 28, 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 4th Quarter Highlights - Fiscal 2004
Condensed Consolidated Statements of Operations
4th Quarter
(in thousands, except per share data)
GAAP Results Adjustments
16 Weeks 16 Weeks 16 Weeks 16 Weeks
Ended Ended Ended Ended
August 28, August 30, August August
2004 2003 28, 2004 30, 2003
Net sales $1,835,728 $1,829,347 $- $-
Cost of Sales 932,737 958,550 68,135 38,295
Gross profit 902,991 870,797 (68,135) (38,295)
Operating SG&A expenses 539,236 510,707 (52,666) (32,400)
Operating profit (EBIT) 363,755 360,090 (15,469) (5,895)
Interest expense, net 28,713 26,699 - -
Income before taxes 335,042 333,391 (15,469) (5,895)
Taxes 125,650 125,950 (5,801) (2,227)
Net income $209,392 $207,441 $(9,668) $(3,668)
Net income per share:
Basic $2.56 $2.32 $(0.12) $(0.04)
Diluted $2.53 $2.27 $(0.12) $(0.04)
Weighted Average Shares
outstanding:
Basic 81,755 89,504
Diluted 82,887 91,320
*Adjusted Statement of Operations for F2003 and F2004 excludes EITF Issue
02-16 impact.
Additionally, gains from warranty reserve reversal were excluded in both
Fiscal 2004 and Fiscal 2003. F2004 excludes a $15.5MM gain while F2003
excludes a $8.7MM gain.
F2003 also excludes the income deferral of $7.4MM to the Balance Sheet due
to EITF Issue 02-16, and a $4.6 million Operating SG&A credit due to
Restructuring Accrual reversal.
AutoZone's 4th Quarter Highlights - Fiscal 2004
Condensed Consolidated Statements of Operations
4th Quarter
(in thousands, except per share data)
*Adjusted
16 Weeks Ended 16 Weeks Ended
August 28, 2004 August 30, 2003
Net sales $1,835,728 $1,829,347
Cost of Sales 1,000,872 996,845
Gross profit 834,856 832,502
Operating SG&A expenses 486,570 478,307
Operating profit (EBIT) 348,286 354,195
Interest expense, net 28,713 26,699
Income before taxes 319,573 327,496
Taxes 119,849 123,723
Net income $199,724 $203,773
Net income per share:
Basic $2.44 $2.28
Diluted $2.41 $2.23
Weighted Average Shares outstanding:
Basic 81,755 89,504
Diluted 82,887 91,320
*Adjusted Statement of Operations for F2003 and F2004 excludes EITF Issue
02-16 impact.
Additionally, gains from warranty reserve reversal were excluded in both
Fiscal 2004 and Fiscal 2003. F2004 excludes a $15.5MM gain while F2003
excludes a $8.7MM gain.
F2003 also excludes the income deferral of $7.4MM to the Balance Sheet due
to EITF Issue 02-16, and a $4.6 million Operating SG&A credit due to
Restructuring Accrual reversal.
Full Year
GAAP Results Adjustments
52 Weeks 52 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
August 28, August 30, August August
2004 2003 28, 2004 30, 2003
Net sales $5,637,025 $5,457,123 $- $-
Cost of Sales 2,880,446 2,942,114 180,340 51,295
Gross profit 2,756,579 2,515,009 (180,340) (51,295)
Operating SG&A expenses 1,757,873 1,597,212 (138,246) (43,300)
Operating profit (EBIT) 998,706 917,797 (42,094) (7,995)
Interest expense, net 92,804 84,790 - -
Income before taxes 905,902 833,007 (42,094) (7,995)
Taxes 339,700 315,403 (15,785) (3,027)
Net income $566,202 $517,604 $(26,309) $(4,968)
Net income per share:
Basic $6.66 $5.45 $(0.31) $(0.05)
Diluted $6.56 $5.34 $(0.30) $(0.05)
Weighted Average Shares
outstanding:
Basic 84,993 94,906
Diluted 86,350 96,963
*Adjusted Statement of Operations for F2003 and F2004 excludes EITF Issue
02-16 impact.
Additionally, Fiscal 2004 excludes a $42MM gain from warranty, and F2003
excludes an $8.7MM gain from warranty.
F2003 excludes both a one time gain from the sale of TruckPro and reversal
of restructuring accrual.
Full Year
*Adjusted
52 Weeks Ended 52 Weeks Ended
August 28, 2004 August 30, 2003
Net sales $5,637,025 $5,457,123
Cost of Sales 3,060,786 2,993,409
Gross profit 2,576,239 2,463,714
Operating SG&A expenses 1,619,627 1,553,912
Operating profit (EBIT) 956,612 909,802
Interest expense, net 92,804 84,790
Income before taxes 863,808 825,012
Taxes 323,915 312,376
Net income $539,893 $512,636
Net income per share:
Basic $6.35 $5.40
Diluted $6.25 $5.29
Weighted Average Shares outstanding:
Basic 84,993 94,906
Diluted 86,350 96,963
*Adjusted Statement of Operations for F2003 and F2004 excludes EITF Issue
02-16 impact.
Additionally, Fiscal 2004 excludes a $42MM gain from warranty, and F2003
excludes an $8.7MM gain from warranty.
F2003 excludes both a one time gain from the sale of TruckPro and reversal
of restructuring accrual.
Selected Balance Sheet Information
(in thousands)
August 28, 2004 August 30, 2003
Merchandise inventories $1,561,479 $1,511,316
Current assets 1,755,757 1,671,354
Property and equipment, net 1,790,089 1,715,753
Total assets 3,912,565 3,766,826
Accounts payable 1,429,128 1,360,482
Current liabilities 1,818,115 1,761,926
Debt 1,869,250 1,546,845
Stockholders' equity 171,393 373,758
Working capital (62,358) (90,572)
Adjusted Debt / EBITDAR (Trailing 4
Qtrs) August 28, 2004 August 30, 2003
Net income 566,202 517,604
Add: Interest 92,804 84,790
Taxes 339,700 315,403
EBIT 998,706 917,797
Add: Depreciation 106,891 109,748
Rent Expense 116,937 110,665
EBITDAR 1,222,534 1,138,210
Debt 1,869,250 1,546,845
Add : Rent x 6 701,622 663,990
Adjusted Debt 2,570,872 2,210,835
Adjusted Debt to EBITDAR 2.1 1.9
Selected Cash Flow Information
(in thousands)
16 Weeks 16 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
August 28, August 30, August August
2004 2003 28, 2004 30, 2003
Depreciation $34,050 $34,222 $106,891 $109,748
Capital spending $72,692 $83,442 $184,870 $182,242
Cash flow before share repurchase:
Net increase (decrease) in cash
and cash equivalents $(10,951) $9,372 $(16,250) $22,796
Subtract increase in debt 70,333 126,878 322,405 352,328
Subtract share repurchases (317,799) (446,537) (848,102) (891,095)
Cash flow before share repurchases
and changes in debt $236,515 $329,031 $509,447 $561,563
Other Selected Financial Information
(in thousands)
August 28, 2004 August 30, 2003
Cumulative share repurchases ($): $3,674,913 $2,826,811
Cumulative share repurchases (shares): 82,214 72,020
Shares outstanding, end of quarter 79,628 88,708
August 28, 2004 August 30, 2003
Return on Equity (ROE) 207.7% 97.4%
Trailing 4 Trailing 4
Quarters August Quarters August
28, 2004 30, 2003
Return on Invested Capital (ROIC) 25.1% 23.4%
AutoZone's 4th Quarter Fiscal 2004
Selected Operating Highlights
Store Count & Square Footage
16 Weeks 16 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
August August August August
28, 2004 30, 2003 28, 2004 30, 2003
Domestic stores:
Store count:
Stores opened 84 68 202 160
Stores closed 1 1 1 9
Replacement stores 2 2 4 6
Total domestic stores 3,420 3,219 3,420 3,219
Stores with commercial sales 2,009 1,941 2,009 1,941
Square footage (in thousands): 21,689 20,500 21,689 20,500
Square footage per store 6,342 6,368 6,342 6,368
Stores in Mexico:
Stores opened 3 6 14 10
Total stores in Mexico 63 49 63 49
Total Stores Chainwide: 3,483 3,268 3,483 3,268
Sales Statistics (Domestic Stores Only):
16 Weeks 52 Weeks
Ended 16 Weeks Ended Ended 52 Weeks Ended
August 28, August 30, August 28, August 30,
2004 2003 2004 2003
Total Retail Sales
($ in thousands) $1,540,854 $1,552,065 $4,727,402 $4,638,361
% Increase vs. LY
Retail Sales (1%) 3% * 2% 2% *
Total Commercial Sales
($ in thousands) $239,715 $228,843 $740,480 $670,010
% Increase vs. LY
Commercial Sales 5% 25% * 11% 29% *
Sales per average
store ($ in
thousands) $527 $559 $1,647 $1,689
Sales per average
square foot 83 88 259 264
16 Weeks 16 Weeks 52 Weeks 52 Weeks
Ended Ended Ended Ended
August 28, August 30, August 28, August 30,
2004 2003 2004 2003
Same store sales -
rolling 13 periods (3%) 3% * 0% 3% *
* For comparison purposes, excludes 53rd week in fiscal 2002.
Inventory Statistics (Total Stores):
as of as of
August 28, 2004 August 30, 2003
Accounts payable/inventory 92% 90%
($ in thousands)
Gross Inventory** $1,561,479 $1,511,316
Gross Inventory** / Store $448 $462
Net Inventory (net of payables) $132,351 $150,834
Net Inventory / Store $38 $46
** Gross inventory excludes Pay On
Scan inventory. This is the
reported balance sheet number.
Trailing 4 Trailing 4
Quarters Quarters
Inventory turns: August 28, 2004 August 30, 2003
Based on average inventories 1.9 x 2.0 x
Based on ending inventories 1.8 x 1.9 x
Inventory turns, net of payables:
Based on average inventories 9.7 x 7.7 x
Based on ending inventories 21.8 x 19.5 x
SOURCE AutoZone, Inc.
09/21/2004
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.
Web site: http://www.autozone.com
http://www.autozoneinc.com
(AZO)