UNITED STATES
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Washington, D.C. 20549
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FORM
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CURRENT REPORT
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On May 24, 2022, AutoZone, Inc. issued a press release announcing its earnings for the fiscal quarter ended May 7, 2022 which is furnished as Exhibit 99.1.
The following exhibits are furnished with this Current Report pursuant to Item 2.02:
(d) Exhibits
99.1 Press Release dated May 24, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AUTOZONE, INC. | ||
| Date: May 24, 2022 | By: | /s/ Jamere Jackson |
| Jamere Jackson | ||
| Chief Financial Officer and Executive Vice President - Finance and Store Development | ||
EXHIBIT 99.1
AutoZone 3rd Quarter Same Store Sales Increase 2.6%; EPS Increases to $29.03
MEMPHIS, Tenn., May 24, 2022 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $3.9 billion for its third quarter (12 weeks) ended May 7, 2022, an increase of 5.9% from the third quarter of fiscal 2021 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.6% for the quarter.
“We are very proud to report solid same store sales growth on top of last year’s remarkable 28.9%. Both our retail and commercial sales performance exceeded our expectations this quarter. While our commercial sales growth accelerated to 26.0%, our retail sales also remained healthy considering the tough comparison from a year ago. We continue to believe the initiatives we have in place position us well for our upcoming fourth quarter,” said Bill Rhodes, Chairman, President and Chief Executive Officer.
For the quarter, gross profit, as a percentage of sales, was 51.91%, a decrease of 54 basis points versus the prior year. The decrease in gross margin was primarily driven by accelerated growth in our lower margin Commercial business. Operating expenses, as a percentage of sales, were 31.58% versus 30.44% last year. The increase in operating expenses, as a percentage of sales, was driven by payroll deleverage as last year’s historic comparable store sales drove significant leverage.
Operating profit decreased 2.2% to $785.7 million. Net income for the quarter decreased 0.6% over the same period last year to $592.6 million, while diluted earnings per share increased 9.6% to $29.03 from $26.48 in the year-ago quarter.
Under its share repurchase program, AutoZone repurchased 449 thousand shares of its common stock for $900 million during the third quarter, at an average price of $2,006 per share. At the end of the third quarter, the Company had $2.058 billion remaining under its current share repurchase authorization.
The Company’s inventory increased 13.9% over the same period last year, primarily driven by inflation with the remaining growth driven by our growth initiatives, including megahubs, hubs and new stores. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $216 thousand versus negative $167 thousand last year and negative $198 thousand last quarter.
“We remain committed to providing the best and safest place to shop for everyone’s automotive needs. During these unique and challenging times, we strive to deliver exceptional customer service while focusing on our growth initiatives. We will take nothing for granted as we continue to prudently invest in our business and remain focused on generating solid returns on capital. We are committed to our long-term approach of increasing operating earnings and free cash flows while utilizing our balance sheet effectively,” said Rhodes.
During the quarter ended May 7, 2022, AutoZone opened 24 new stores in the U.S., opened four stores in Mexico and three stores in Brazil. As of May 7, 2022, the Company had 6,115 stores in the U.S., 673 in Mexico and 58 in Brazil for a total store count of 6,846.
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 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. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.com. Additionally, we sell 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. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a conference call this morning, Tuesday, May 24, 2022, beginning at 10:00 a.m. (EST) to discuss its third quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com and 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 45495 through June 7, 2022.
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 in this press release 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; competition; credit market conditions; cash flows; access to available and feasible financing; 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, such as the ongoing global coronavirus pandemic; inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; anticipated impact of new accounting standards; and 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 28, 2021, 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. 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 3rd Quarter Highlights - Fiscal 2022 | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| 3rd Quarter, FY2022 | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| GAAP Results | |||||||||||||||
| 12 Weeks Ended | 12 Weeks Ended | ||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||
| Net sales | $ | 3,865,222 | $ | 3,651,023 | |||||||||||
| Cost of sales | 1,858,808 | 1,736,077 | |||||||||||||
| Gross profit | 2,006,414 | 1,914,946 | |||||||||||||
| Operating, SG&A expenses | 1,220,744 | 1,111,441 | |||||||||||||
| Operating profit (EBIT) | 785,670 | 803,505 | |||||||||||||
| Interest expense, net | 41,888 | 45,026 | |||||||||||||
| Income before taxes | 743,782 | 758,479 | |||||||||||||
| Income tax expense(1) | 151,211 | 162,315 | |||||||||||||
| Net income | $ | 592,571 | $ | 596,164 | |||||||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 29.93 | $ | 27.15 | |||||||||||
| Diluted | $ | 29.03 | $ | 26.48 | |||||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 19,798 | 21,956 | |||||||||||||
| Diluted | 20,414 | 22,515 | |||||||||||||
| (1)The twelve weeks ended May 7, 2022 and the comparable prior year period include $21.1M and $16.0M in tax benefits from stock option exercises, respectively | |||||||||||||||
| Year-To-Date 3rd Quarter, FY2022 | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| GAAP Results | |||||||||||||||
| 36 Weeks Ended | 36 Weeks Ended | ||||||||||||||
| May 7, 2022 | May 8, 2021(2) | ||||||||||||||
| Net sales | $ | 10,903,875 | $ | 9,716,101 | |||||||||||
| Cost of sales | 5,187,075 | 4,566,155 | |||||||||||||
| Gross profit | 5,716,800 | 5,149,946 | |||||||||||||
| Operating, SG&A expenses | 3,549,885 | 3,249,449 | |||||||||||||
| Operating profit (EBIT) | 2,166,915 | 1,900,497 | |||||||||||||
| Interest expense, net | 127,642 | 137,217 | |||||||||||||
| Income before taxes | 2,039,273 | 1,763,280 | |||||||||||||
| Income taxes(1) | 419,712 | 378,737 | |||||||||||||
| Net income | $ | 1,619,561 | $ | 1,384,543 | |||||||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 79.26 | $ | 61.24 | |||||||||||
| Diluted | $ | 76.90 | $ | 59.80 | |||||||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 20,433 | 22,609 | |||||||||||||
| Diluted | 21,060 | 23,154 | |||||||||||||
| (1)The thirty-six weeks ended May 7, 2022 and the comparable prior year period include $55.9M and $35.2M in tax benefits from stock option exercises, respectively | |||||||||||||||
| (2)The thirty-six weeks ended May 8, 2021 was negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $46M (pre-tax) | |||||||||||||||
| Selected Balance Sheet Information | |||||||||||||||
| (in thousands) | |||||||||||||||
| May 7, 2022 | May 8, 2021 | August 28, 2021 | |||||||||||||
| Cash and cash equivalents | $ | 263,044 | $ | 975,646 | $ | 1,171,335 | |||||||||
| Merchandise inventories | 5,313,114 | 4,665,477 | 4,639,813 | ||||||||||||
| Current assets | 6,254,721 | 6,224,396 | 6,415,303 | ||||||||||||
| Property and equipment, net | 4,971,626 | 4,683,149 | 4,856,891 | ||||||||||||
| Operating lease right-of-use assets | 2,764,631 | 2,694,846 | 2,718,712 | ||||||||||||
| Total assets | 14,520,565 | 14,137,946 | 14,516,199 | ||||||||||||
| Accounts payable | 6,793,205 | 5,778,222 | 6,013,924 | ||||||||||||
| Current liabilities | 8,064,076 | 7,013,249 | 7,369,754 | ||||||||||||
| Operating lease liabilities, less current portion | 2,659,535 | 2,594,506 | 2,632,842 | ||||||||||||
| Total debt | 6,057,444 | 5,267,896 | 5,269,820 | ||||||||||||
| Stockholders' deficit | (3,387,230 | ) | (1,763,392 | ) | (1,797,536 | ) | |||||||||
| Working capital | (1,809,355 | ) | (788,853 | ) | (954,451 | ) | |||||||||
| AutoZone's 3rd Quarter Highlights - Fiscal 2022 | |||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||
| Adjusted Debt / EBITDAR | |||||||||||||||
| (in thousands, except adjusted debt to EBITDAR ratio) | Trailing 4 Quarters | ||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||
| Net income | $ | 2,405,332 | $ | 2,125,000 | |||||||||||
| Add: Interest expense | 185,762 | 202,854 | |||||||||||||
| Income tax expense | 619,851 | 590,688 | |||||||||||||
| EBIT | 3,210,945 | 2,918,542 | |||||||||||||
| Add: Depreciation and amortization | 431,004 | 403,395 | |||||||||||||
| Rent expense(1) | 360,076 | 339,193 | |||||||||||||
| Share-based expense | 67,109 | 50,645 | |||||||||||||
| EBITDAR | $ | 4,069,134 | $ | 3,711,775 | |||||||||||
| Debt | $ | 6,057,444 | $ | 5,267,896 | |||||||||||
| Financing lease liabilities | 288,483 | 228,597 | |||||||||||||
| Add: Rent x 6(1) | 2,160,456 | 2,035,158 | |||||||||||||
| Adjusted debt | $ | 8,506,383 | $ | 7,531,651 | |||||||||||
| Adjusted debt to EBITDAR | 2.1 | 2.0 | |||||||||||||
| Adjusted Return on Invested Capital (ROIC) | |||||||||||||||
| (in thousands, except ROIC) | |||||||||||||||
| Trailing 4 Quarters | |||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||
| Net income | $ | 2,405,332 | $ | 2,125,000 | |||||||||||
| Adjustments: | |||||||||||||||
| Interest expense | 185,762 | 202,854 | |||||||||||||
| Rent expense(1) | 360,076 | 339,193 | |||||||||||||
| Tax effect(2) | (111,896 | ) | (118,167 | ) | |||||||||||
| Adjusted after-tax return | $ | 2,839,274 | $ | 2,548,880 | |||||||||||
| Average debt(3) | $ | 5,541,462 | $ | 5,446,162 | |||||||||||
| Average stockholders' deficit(3) | (2,442,077 | ) | (1,364,932 | ) | |||||||||||
| Add: Rent x 6(1) | 2,160,456 | 2,035,158 | |||||||||||||
| Average financing lease liabilities(3) | 268,111 | 227,061 | |||||||||||||
| Invested capital | $ | 5,527,952 | $ | 6,343,449 | |||||||||||
| Adjusted After-Tax ROIC | 51.4 | % | 40.2 | % | |||||||||||
| (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 May 7, 2022 and May 8, 2021 | |||||||||||||||
| Trailing 4 Quarters | |||||||||||||||
| (in thousands) | May 7, 2022 | May 8, 2021 | |||||||||||||
| Total lease cost, per ASC 842 | $ | 451,601 | $ | 421,750 | |||||||||||
| Less: Finance lease interest and amortization | (65,128 | ) | (55,725 | ) | |||||||||||
| Less: Variable operating lease components, related to insurance and common area maintenance | (26,397 | ) | (26,832 | ) | |||||||||||
| Rent expense | $ | 360,076 | $ | 339,193 | |||||||||||
| (2) Effective tax rate over trailing four quarters ended May 7, 2022 and May 8, 2021 is 20.5% and 21.8%, respectively | |||||||||||||||
| (3) All averages are computed based on trailing five quarter balances | |||||||||||||||
| Other Selected Financial Information | |||||||||||||||
| (in thousands) | |||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||
| Cumulative share repurchases ($ since fiscal 1998) | $ | 29,092,425 | $ | 24,832,432 | |||||||||||
| Remaining share repurchase authorization ($) | 2,057,575 | 1,317,568 | |||||||||||||
| Cumulative share repurchases (shares since fiscal 1998) | 152,035 | 149,696 | |||||||||||||
| Shares outstanding, end of quarter | 19,576 | 21,620 | |||||||||||||
| 12 Weeks Ended | 12 Weeks Ended | 36 Weeks Ended | 36 Weeks Ended | ||||||||||||
| May 7, 2022 | May 8, 2021 | May 7, 2022 | May 8, 2021 | ||||||||||||
| Depreciation and amortization | $ | 102,083 | $ | 94,017 | $ | 301,365 | $ | 278,044 | |||||||
| Capital spending | 161,207 | 137,009 | 369,350 | 375,653 | |||||||||||
| AutoZone's 3rd Quarter Highlights - Fiscal 2022 | |||||||||||||||||||||||
| Selected Operating Highlights | |||||||||||||||||||||||
| Condensed Consolidated Statements of Operations | |||||||||||||||||||||||
| Store Count & Square Footage | |||||||||||||||||||||||
| 12 Weeks Ended | 12 Weeks Ended | 36 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||
| May 7, 2022 | May 8, 2021 | May 7, 2022 | May 8, 2021 | ||||||||||||||||||||
| Domestic: | |||||||||||||||||||||||
| Beginning stores | 6,091 | 5,951 | 6,051 | 5,885 | |||||||||||||||||||
| Stores opened | 24 | 25 | 65 | 91 | |||||||||||||||||||
| Stores closed | - | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||||
| Ending domestic stores | 6,115 | 5,975 | 6,115 | 5,975 | |||||||||||||||||||
| Relocated stores | 4 | 6 | 8 | 11 | |||||||||||||||||||
| Stores with commercial programs | 5,276 | 5,107 | 5,276 | 5,107 | |||||||||||||||||||
| Square footage (in thousands) | 40,230 | 39,175 | 40,230 | 39,175 | |||||||||||||||||||
| Mexico: | |||||||||||||||||||||||
| Beginning stores | 669 | 628 | 664 | 621 | |||||||||||||||||||
| Stores opened | 4 | 7 | 9 | 14 | |||||||||||||||||||
| Ending Mexico stores | 673 | 635 | 673 | 635 | |||||||||||||||||||
| Brazil: | |||||||||||||||||||||||
| Beginning stores | 55 | 46 | 52 | 43 | |||||||||||||||||||
| Stores opened | 3 | 1 | 6 | 4 | |||||||||||||||||||
| Ending Brazil stores | 58 | 47 | 58 | 47 | |||||||||||||||||||
| Total | 6,846 | 6,657 | 6,846 | 6,657 | |||||||||||||||||||
| Square footage (in thousands) | 45,680 | 44,253 | 45,680 | 44,253 | |||||||||||||||||||
| Square footage per store | 6,673 | 6,648 | 6,673 | 6,648 | |||||||||||||||||||
| 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) | May 7, 2022 | May 8, 2021 | May 7, 2022 | May 8, 2021 | |||||||||||||||||||
| Sales per average store | $ | 556 | $ | 541 | $ | 2,301 | $ | 2,134 | |||||||||||||||
| Sales per average square foot | $ | 83 | $ | 81 | $ | 346 | $ | 321 | |||||||||||||||
| Total Auto Parts (Domestic, Mexico and Brazil) | |||||||||||||||||||||||
| Total auto parts sales | $ | 3,795,290 | $ | 3,590,281 | $ | 15,537,156 | $ | 14,024,674 | |||||||||||||||
| % Increase vs. LY | 5.7 | % | 31.8 | % | 10.8 | % | 18.4 | % | |||||||||||||||
| Domestic Commercial | |||||||||||||||||||||||
| Total domestic commercial sales | $ | 1,044,293 | $ | 828,569 | $ | 3,970,727 | $ | 3,138,398 | |||||||||||||||
| % Increase vs. LY | 26.0 | % | 44.4 | % | 26.5 | % | 18.9 | % | |||||||||||||||
| Average sales per program per week | $ | 16.6 | $ | 13.5 | $ | 14.7 | $ | 12.0 | |||||||||||||||
| % Increase vs. LY | 23.0 | % | 39.2 | % | 22.5 | % | 17.6 | % | |||||||||||||||
| All Other, including ALLDATA | |||||||||||||||||||||||
| All other sales | $ | 69,932 | $ | 60,742 | $ | 280,203 | $ | 237,395 | |||||||||||||||
| % Increase vs. LY | 15.1 | % | 11.1 | % | 18.0 | % | 5.7 | % | |||||||||||||||
| 12 Weeks Ended | 12 Weeks Ended | 36 Weeks Ended | 36 Weeks Ended | ||||||||||||||||||||
| May 7, 2022 | May 8, 2021 | May 7, 2022 | May 8, 2021 | ||||||||||||||||||||
| Domestic same store sales | 2.6 | % | 28.9 | % | 9.5 | % | 19.0 | % | |||||||||||||||
| Inventory Statistics (Total Stores) | |||||||||||||||||||||||
| as of | as of | ||||||||||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||||||||||
| Accounts payable/inventory | 127.9 | % | 123.9 | % | |||||||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||
| Inventory | $ | 5,313,114 | $ | 4,665,477 | |||||||||||||||||||
| Inventory per store | 776 | 701 | |||||||||||||||||||||
| Net inventory (net of payables) | (1,480,091 | ) | (1,112,745 | ) | |||||||||||||||||||
| Net inventory / per store | (216 | ) | (167 | ) | |||||||||||||||||||
| Trailing 5 Quarters | |||||||||||||||||||||||
| May 7, 2022 | May 8, 2021 | ||||||||||||||||||||||
| Inventory turns | 1.5 | x | 1.5 | x | |||||||||||||||||||