O'Reilly Automotive 10-Q 2022-06-30

Filed 2022-08-08. 2 sections, 114K 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 June 30, 2022

☐	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 - 63,318,293 shares outstanding as of August 1, 2022.

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

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		16
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		23
ITEM 4 - CONTROLS AND PROCEDURES		23
PART II - OTHER INFORMATION		25
ITEM 1 - LEGAL PROCEEDINGS		25
ITEM 1A - RISK FACTORS		25
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		25
ITEM 6 - EXHIBITS		26
SIGNATURE PAGES		27

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)


	June 30, 2022		December 31, 2021
	(Unaudited)		(Note)
Assets
Current assets:
Cash and cash equivalents	$	253,904	$	362,113
Accounts receivable, net		330,672		272,562
Amounts receivable from suppliers		123,112		113,112
Inventory		4,005,384		3,686,383
Other current assets		86,800		70,092
Total current assets		4,799,872		4,504,262

Property and equipment, at cost		7,160,583		6,948,038
Less: accumulated depreciation and amortization		2,878,170		2,734,523
Net property and equipment		4,282,413		4,213,515

Operating lease, right-of-use assets		1,965,941		1,982,478
Goodwill		881,299		879,340
Other assets, net		138,164		139,112
Total assets	$	12,067,689	$	11,718,707

Liabilities and shareholders’ deficit
Current liabilities:
Accounts payable	$	5,258,712	$	4,695,312
Self-insurance reserves		137,281		128,794
Accrued payroll		106,814		107,588
Accrued benefits and withholdings		148,805		234,872
Income taxes payable		2,080		—
Current portion of operating lease liabilities		341,705		337,832
Other current liabilities		417,792		370,217
Total current liabilities		6,413,189		5,874,615

Long-term debt		4,669,833		3,826,978
Operating lease liabilities, less current portion		1,683,216		1,701,757
Deferred income taxes		203,744		175,212
Other liabilities		205,137		206,568

Shareholders’ equity (deficit):
Common stock, $0.01 par value:
Authorized shares – 245,000,000
Issued and outstanding shares –
63,752,833 as of June 30, 2022, and
67,029,042 as of December 31, 2021		638		670
Additional paid-in capital		1,286,651		1,305,508
Retained deficit		(2,391,108)		(1,365,802)
Accumulated other comprehensive loss		(3,611)		(6,799)
Total shareholders’ deficit		(1,107,430)		(66,423)

Total liabilities and shareholders’ deficit	$	12,067,689	$	11,718,707

Note: The balance sheet at December 31, 2021, 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 Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Sales	$	3,670,737	$	3,465,601	$	6,966,748	$	6,556,500
Cost of goods sold, including warehouse and distribution expenses		1,786,019		1,639,223		3,373,958		3,089,327
Gross profit		1,884,718		1,826,378		3,592,790		3,467,173

Selling, general and administrative expenses		1,086,168		1,030,795		2,124,710		1,980,485
Operating income		798,550		795,583		1,468,080		1,486,688

Other income (expense):
Interest expense		(37,384)		(37,657)		(72,225)		(75,163)
Interest income		682		456		1,192		993
Other, net		(4,550)		2,952		(6,488)		4,643
Total other expense		(41,252)		(34,249)		(77,521)		(69,527)

Income before income taxes		757,298		761,334		1,390,559		1,417,161
Provision for income taxes		180,538		175,883		331,919		330,101
Net income	$	576,760	$	585,451	$	1,058,640	$	1,087,060

Earnings per share-basic:
Earnings per share	$	8.86	$	8.41	$	16.08	$	15.53
Weighted-average common shares outstanding – basic		65,116		69,618		65,840		69,997

Earnings per share-assuming dilution:
Earnings per share	$	8.78	$	8.33	$	15.94	$	15.39
Weighted-average common shares outstanding – assuming dilution		65,686		70,264		66,434		70,640

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 Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	576,760	$	585,451	$	1,058,640	$	1,087,060
Other comprehensive income (loss):
Foreign currency translation adjustments		(1,875)		3,707		3,188		(436)
Total other comprehensive (loss) income		(1,875)		3,707		3,188		(436)

Comprehensive income	$	574,885

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