-
AutoZone 2nd Quarter Total Company Same Store Sales Increase 1.5%; Domestic Same Store Sales Increase 0.3%; EPS Increases to $28.89
Source: Nasdaq GlobeNewswire / 27 Feb 2024 06:55:00 America/New_York
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.comAutoZone'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