MEMPHIS, Tenn., Mar 2, 2010 (GlobeNewswire via COMTEX) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.5 billion for its second quarter (12 weeks) ended February 13, 2010, an increase of 4.0% from the second quarter of fiscal 2009 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 1.0% for the quarter.
Net income for the quarter increased $7.5 million, or 6.4%, over the same period last year to $123.3 million, while diluted earnings per share increased 21.2% to $2.46 per share from $2.03 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 50.0% (versus 49.7% for last year's quarter). The improvement in gross margin of 36 basis points was positively impacted by a favorable shrink expense comparison of 17 basis points, a shift in mix of sales to higher margin product, and lower product acquisition costs. Operating expenses, as a percentage of sales, were 34.7% (versus 34.9% last year). The reduction in operating expenses, as a percentage of sales, was a result of tighter expense management, partially offset by 25 basis points of expense from the continued investment in our hub store initiative. Additionally, operating expenses for the quarter were negatively impacted by higher pension expense (20 basis points), partially offset by a favorable credit card class action settlement (17 basis points).
Under its share repurchase program, AutoZone repurchased 565 thousand shares of its common stock for $88 million during the second quarter, at an average price of $155 per share. The Company has $517 million remaining under its current share repurchase authorization.
The Company's inventory increased 3.3% over the same period last year, driven by new store openings. Inventory per store was $504 thousand versus $509 thousand last year. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $26 thousand from $50 thousand last year.
"We are pleased to report our 14th consecutive quarter of double digit EPS growth. I would like to thank all AutoZoners for their commitment to delivering superior customer service, which we believe remains a competitive advantage. We continued our focus on improving parts coverage, hiring, retaining and training the best automotive parts professionals, and growing our Commercial business. Additionally, we reported a 25.2% 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 February 13, 2010, AutoZone opened 24 new stores in the U.S. and 9 new stores in Mexico. As of February 13, 2010, the Company had 4,289 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 202 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, March 2, 2010, beginning at 10:00 a.m. (EST) to discuss its second 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, March 9, 2010 at 11:59 p.m. (EST).
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; availability of consumer transportation; 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 2nd Quarter Highlights - Fiscal 2010
Condensed Consolidated Statements of Operations
2nd Quarter
(in thousands, except
per share data)
GAAP Results
--------------------------
12 Weeks 12 Weeks
Ended Ended
Feb 13, 2010 Feb 14, 2009
------------ ------------
Net sales $ 1,506,225 $ 1,447,877
Cost of sales 752,489 728,579
------------ ------------
Gross profit 753,736 719,298
Operating, SG&A
expenses 523,355 504,602
------------ ------------
Operating profit
(EBIT) 230,381 214,696
Interest expense, net 36,309 31,907
------------ ------------
Income before taxes 194,072 182,789
Income taxes 70,739 66,925
------------ ------------
Net income $ 123,333 $ 115,864
============ ============
Net income per share:
Basic $ 2.49 $ 2.05
Diluted $ 2.46 $ 2.03
Weighted average
shares outstanding:
Basic 49,436 56,517
Diluted 50,186 57,165
Year-to-date 2nd Quarter, FY2010
(in thousands, except
per share data) GAAP Results
--------------------------
24 Weeks 24 Weeks
Ended Ended
Feb 13, 2010 Feb 14, 2009
------------ ------------
Net sales $ 3,095,469 $ 2,926,169
Cost of sales 1,541,809 1,465,681
------------ ------------
Gross profit 1,553,660 1,460,488
Operating, SG&A
expenses 1,062,850 1,007,254
------------ ------------
Operating profit
(EBIT) 490,810 453,234
Interest expense, net 72,650 63,072
------------ ------------
Income before taxes 418,160 390,162
Income taxes 151,527 142,927
------------ ------------
Net income $ 266,633 $ 247,235
============ ============
Net income per share:
Basic $ 5.36 $ 4.31
Diluted $ 5.28 $ 4.26
Weighted Average
Shares outstanding:
Basic 49,775 57,421
Diluted 50,505 58,040
Selected Balance Sheet Information
(in thousands)
Aug 29,
Feb 13, 2010 Feb 14, 2009 2009
------------ ------------ ----------
Cash and cash
equivalents $ 105,161 $ 107,973 $ 92,706
Merchandise
inventories 2,261,528 2,190,198 2,207,497
Current assets 2,648,713 2,580,867 2,561,730
Property and
equipment, net 2,383,143 2,267,404 2,354,357
Total assets 5,424,992 5,235,085 5,318,405
Accounts payable 2,144,995 1,974,747 2,118,746
Current liabilities 2,749,324 2,468,682 2,706,752
Total debt 2,774,700 2,690,755 2,726,900
Stockholders' equity
(deficit) (421,671) (187,302) (433,074)
Working capital (100,611) 112,185 (145,022)
Adjusted Debt /
EBITDAR (Trailing 4
Qtrs) Feb 13, 2010 Feb 14, 2009
--------------------- ------------ ------------
Net income $ 676,448 $ 649,620
Add: Interest 151,893 123,167
Taxes 385,296 370,321
------------ ------------
EBIT 1,213,637 1,143,108
Add: Depreciation 185,568 172,916
Rent expense 188,045 173,897
Option expense 18,697 19,269
------------ ------------
EBITDAR $ 1,605,947 $ 1,509,190
Debt $ 2,774,700 $ 2,690,755
Capital lease
obligations 51,713 58,812
Add: rent x 6 1,128,273 1,043,382
------------ ------------
Adjusted debt $ 3,954,686 $ 3,792,949
============ ============
Adjusted debt to
EBITDAR 2.5 2.5
Selected Cash Flow
Information
(in thousands)
24 Weeks 24 Weeks
12 Weeks 12 Weeks Ended Ended
Ended Ended Feb 13, Feb 14,
Feb 13, 2010 Feb 14, 2009 2010 2009
------------ ------------ ---------- ----------
Depreciation $ 44,533 $ 41,811 $ 87,099 $81,964
Capital spending $ 57,687 $ 47,047 $ 111,126 $98,146
--------------------- ------------ ------------ ---------- ----------
Cash flow before
share repurchases:
Net
increase/(decrease)
in cash and cash
equivalents $ 25,558 $ 22,217 $ 12,455 $(134,488)
Subtract increase in
debt 35,200 422,555 47,800 440,755
Subtract share
repurchases (87,509) (375,042) (291,888) (647,166)
------------ ------------ ---------- ----------
Cash flow before
share repurchases
and changes
in debt $ 77,867 $ (25,296) $ 256,543 $71,923
============ ============ ========== ==========
Other Selected
Financial
Information
(in thousands)
Feb 13, 2010 Feb 14, 2009
------------ ------------
Cumulative share
repurchases ($ since
fiscal
1998) $ 7,882,805 $ 6,938,080
Remaining share
authorization ($) $ 517,195 $ 461,920
Cumulative share
repurchases (shares
since
fiscal 1998) 117,352 111,108
Shares outstanding,
end of quarter 49,081 54,861
Trailing 4 Quarters
Feb 13, 2010 Feb 14, 2009
------------ ------------
Net income $ 676,448 $ 649,620
Add: After-tax
interest 96,841 78,334
After-tax rent 119,867 110,598
------------ ------------
After-tax return 893,156 838,552
Average debt* 2,671,074 2,151,577
Average capital lease
obligations* 55,530 62,417
Average equity* (304,318) 231,865
Add: pre-tax rent x 6 1,128,270 1,043,382
------------ ------------
Invested capital $ 3,550,556 $ 3,489,241
============ ============
Return on Invested
Capital (ROIC) 25.2% 24.0%
_________________________________________________
_________________________
* All averages are computed by taking trailing 14
periods balances.
AutoZone's 2nd Quarter Fiscal 2010
Selected Operating Highlights
Store Count & Square Footage
-----------------------------
12 Weeks 12 Weeks 24 Weeks 24 Weeks
Ended Ended Ended Ended
Feb 13, 2010 Feb 14, 2009 Feb 13, 2010 Feb 14, 2009
------------ ------------ ------------ ------------
Domestic stores:
Store count:
Stores opened 24 20 62 50
Stores closed -- 1 2 1
Replacement stores -- -- 1 2
Total domestic stores 4,289 4,141 4,289 4,141
Stores with commercial
programs 2,321 2,252 2,321 2,252
Square footage (in
thousands): 27,607 26,573 27,607 26,573
Mexico stores:
Stores opened 9 8 14 10
Total stores in Mexico 202 158 202 158
Total stores chainwide 4,491 4,299 4,491 4,299
Square footage (in
thousands): 29,069 27,703 29,069 27,703
Square footage per store 6,473 6,444 6,473 6,444
Sales Statistics
-----------------------------
($ in thousands, except sales
per average
square foot)
12 Weeks 12 Weeks Trailing 4 Trailing 4
Total Auto Parts (Domestic Ended Ended quarters quarters
and Mexico) Feb 13, 2010 Feb 14, 2009 Feb 13, 2010 Feb 14, 2009
------------ ------------ ------------ ------------
Total auto parts sales $ 1,472,958 $ 1,414,850 $ 6,840,707 $ 6,510,593
% Increase vs. LY 4.1% 8.1% 5.1% 6.0%
% Increase vs. LY (excl
53rd week) 7.1% 4.0%
Sales per average store $ 329 $ 330 $ 1,556 $ 1,545
Sales per average square
foot $ 51 $ 51 $ 241 $ 240
Domestic Commercial
Total domestic commercial
sales $ 176,515 $ 162,732 800,045 $ 763,434
% Increase vs. LY 8.5% 4.3% 4.8% 6.4%
% Increase vs. LY (excl
53rd week) 6.6% 4.6%
All Other (ALLDATA and
E-Commerce)
All other sales $ 33,267 $ 33,027 145,418 $ 143,383
% Increase vs. LY 0.7% 7.5% 1.4% 10.0%
% Increase vs. LY (excl
53rd week) 3.4% 7.9%
12 Weeks 12 Weeks 24 Weeks 24 Weeks
Ended Ended Ended Ended
Feb 13, 2010 Feb 14, 2009 Feb 13, 2010 Feb 14, 2009
------------ ------------ ------------ ------------
Domestic same store sales 1.0% 6.0% 3.4% 2.1%
Inventory Statistics (Total
Stores)
-----------------------------
as of as of
Feb 13, 2010 Feb 14, 2009
------------ ------------
Accounts payable/inventory 94.8% 90.2%
($ in thousands)
Inventory $ 2,261,528 $ 2,190,198
Inventory per store $ 504 $ 509
Net inventory (net of
payables) $ 116,533 $ 215,451
Net inventory / per store $ 26 $ 50
Trailing 4 quarters
Feb 13, 2010 Feb 14, 2009
------------ ------------
Inventory turns 1.6x 1.6x
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
(901) 495-7962
ray.pohlman@autozone.com
