O'Reilly Automotive 10-Q 2021-09-30

Filed 2021-11-08. 2 sections, 132K characters. Original on sec.gov · Markdown · JSON

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

O’REILLY AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

Missouri		000-21318		27-4358837
(State or other jurisdiction of		Commission file number		(I.R.S. Employer Identification No.)
incorporation or organization)

233 South Patterson Avenue

Springfield**,** Missouri 65802

(Address of principal executive offices, Zip code)

(417) 862-6708

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock	$0.01 par value	ORLY	The NASDAQ Stock Market LLC
			(NASDAQ Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: Common stock, $0.01 par value - 67,378,396 shares outstanding as of November 1, 2021.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		2
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)		2
Condensed Consolidated Balance Sheets		2
Condensed Consolidated Statements of Income		3
Condensed Consolidated Statements of Comprehensive Income		4
Condensed Consolidated Statements of Shareholders’ Equity		5
Condensed Consolidated Statements of Cash Flows		6
Notes to Condensed Consolidated Financial Statements		7
ITEM 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		17
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		26
ITEM 4 - CONTROLS AND PROCEDURES		26
PART II - OTHER INFORMATION		28
ITEM 1 - LEGAL PROCEEDINGS		28
ITEM 1A - RISK FACTORS		28
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		28
ITEM 6 - EXHIBITS		29
SIGNATURE PAGES		30

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	September 30, 2021		December 31, 2020
	(Unaudited)		(Note)
Assets
Current assets:
Cash and cash equivalents	$	449,302	$	465,640
Accounts receivable, net		282,883		229,679
Amounts receivable from suppliers		110,882		100,615
Inventory		3,646,988		3,653,195
Other current assets		72,154		50,658
Total current assets		4,562,209		4,499,787

Property and equipment, at cost		6,874,639		6,559,911
Less: accumulated depreciation and amortization		2,672,954		2,464,993
Net property and equipment		4,201,685		4,094,918

Operating lease, right-of-use assets		2,011,115		1,995,127
Goodwill		878,872		881,030
Other assets, net		135,504		125,780
Total assets	$	11,789,385	$	11,596,642

Liabilities and shareholders’ equity (deficit)
Current liabilities:
Accounts payable	$	4,608,549	$	4,184,662
Self-insurance reserves		122,551		109,199
Accrued payroll		89,095		88,875
Accrued benefits and withholdings		288,134		242,724
Income taxes payable		158,481		16,786
Current portion of operating lease liabilities		336,962		322,778
Other current liabilities		385,982		297,393
Total current liabilities		5,989,754		5,262,417

Long-term debt		3,826,073		4,123,217
Operating lease liabilities, less current portion		1,729,013		1,718,691
Deferred income taxes		172,807		155,899
Other liabilities		212,591		196,160

Shareholders’ equity (deficit):
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares –
67,684,615 as of September 30, 2021, and
71,123,109 as of December 31, 2020		677		711
Additional paid-in capital		1,296,358		1,280,841
Retained deficit		(1,430,060)		(1,139,139)
Accumulated other comprehensive loss		(7,828)		(2,155)
Total shareholders’ (deficit) equity		(140,853)		140,258

Total liabilities and shareholders’ equity (deficit)	$	11,789,385	$	11,596,642

Note: The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements.

See accompanying Notes to condensed consolidated financial statements.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(In thousands, except per share data)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Sales	$	3,479,570	$	3,207,638	$	10,036,070	$	8,775,720
Cost of goods sold, including warehouse and distribution expenses		1,661,330		1,527,170		4,750,657		4,162,166
Gross profit		1,818,240		1,680,468		5,285,413		4,613,554

Selling, general and administrative expenses		1,063,641		955,455		3,044,126		2,728,490
Operating income		754,599		725,013		2,241,287		1,885,064

Other income (expense):
Interest expense		(34,873)		(41,668)		(110,036)		(122,777)
Interest income		485		582		1,478		1,892
Other, net		318		2,479		4,961		2,297
Total other expense		(34,070)		(38,607)		(103,597)		(118,588)

Income before income taxes		720,529		686,406		2,137,690		1,766,476
Provision for income taxes		161,877		159,154		491,978		407,119
Net income	$	558,652	$	527,252	$	1,645,712	$	1,359,357

Earnings per share-basic:
Earnings per share	$	8.14	$	7.13	$	23.67	$	18.28
Weighted-average common shares outstanding – basic		68,608		73,916		69,529		74,377

Earnings per share-assuming dilution:
Earnings per share	$	8.07	$	7.07	$	23.45	$	18.12
Weighted-average common shares outstanding – assuming dilution		69,240		74,586		70,174		75,026

See accompanying Notes to condensed consolidated financial statements.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In thousands)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Net income	$	558,652	$	527,252	$	1,645,712	$	1,359,357
Other comprehensive income (loss):
Foreign currency translation adjustments		(5,237)		5,076		(5,673)		(21,925)
Total other comprehensive (loss) income		(5,237)		5,076		(5,673)		(21,925)

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