UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): July 26, 2006

 

 

O'REILLY AUTOMOTIVE, INC.

(Exact name of registrant as specified in its charter)

 

 

Missouri

44-0618012

(State or other jurisdiction

of incorporation or

organization)

(I.R.S. Employer Identification No.)

 

 

233 South Patterson

Springfield, Missouri 65802

(Address of principal executive offices, Zip code)

 

 

(417) 862-6708

(Registrant's telephone number, including area code)

 

 

(Not Applicable)

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Section 7 – Regulation FD

 

Item 7.01 Regulation FD Disclosure

 

On July 26, 2006, O’Reilly Automotive, Inc. issued a press release announcing their 2006 second quarter earnings. The text of the press release is attached hereto as Exhibit 99.1.

 

Section 9 – Financial Statements and Exhibits

 

Item 9.01 Financial Statements and Exhibits

 

Exhibit Number

Description

99.1

Press Release dated July 26, 2006

 

 

The information in this Current Report on Form 8-K, including the exhibit hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

 

 

 

SIGNATURES

 

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.

 

 

Date: July 26, 2006

O’REILLY AUTOMOTIVE, INC.

 

 

 

By: /s/ Thomas McFall

 

Thomas McFall

 

Senior Vice President of Finance

 

Chief Financial Officer

 

(principal financial officer)

 

 

 

 

 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

For further information contact:

Greg Henslee

 

 

Tom McFall

 

 

(417) 862-3333

___________________________________________________________________________________________________________

 

O’REILLY AUTOMOTIVE, INC. REPORTS RECORD

2006 SECOND QUARTER RESULTS

14.9% INCREASE IN NET INCOME

13.2% INCREASE IN EARNINGS PER SHARE

____________________________________________________________________________________________________________

 

Springfield, MO, July 26, 2006 -- O’Reilly Automotive, Inc. (“O’Reilly” or “the Company”) (Nasdaq: ORLY) today announced record revenues and earnings for the second quarter of 2006, representing 51 quarters of record revenues and earnings for O’Reilly since becoming a public company in April 1993.

 

Net income for the second quarter ended June 30, 2006, totaled $49.3 million, up 14.9% from $42.9 million for the same period in 2005. Diluted earnings per common share for the second quarter of 2006 increased 13.2% to $0.43 on 115.2 million shares compared to $0.38 for the second quarter of 2005 on 113.1 million shares. Product sales for the three months ended June 30, 2006, totaled $591 million, up 13.4% from $521 million for the same period a year ago. Gross profit for the second quarter of 2006 increased to $261 million (or 44.1% of product sales) from $229 million (or 43.9% of product sales) for the second quarter of 2005, representing an increase of 14.0%. Operating, Selling, General and Administrative (“OSG&A”) expenses increased to $183 million (or 30.9% of product sales) for the second quarter of 2006 from $161 million (or 30.9% of product sales) for the second quarter of 2005, representing an increase of 13.6%.

 

Net income for the first six months of 2006 totaled $89.9 million, up 18.0% from $76.1 million for the same period a year ago. Diluted earnings per common share for the first six months of 2006 increased 16.4% to $0.78 on 114.9 million shares compared to $0.67 a year ago on 112.8 million shares. Product sales for the first six months of 2006 totaled $1,128 million, up 14.2% from $987 million for the same period a year ago. Gross profit for the first six months of 2006 increased to $494 million (or 43.8% of product sales) from $425 million (or 43.1% of product sales) for the same period a year ago, representing an increase of 16.3%. OSG&A expenses increased to $351 million (or 31.1% of product sales) for the first six months of 2006 from $303 million (or 30.7% of product sales) for the same period a year ago, representing an increase of 15.7%.

 

Comparable store product sales for stores open at least one year increased 3.5% and 3.6% for the second quarter and first six months of 2006 respectively.

 

“We are pleased with another successful quarter for Team O’Reilly,” stated Greg Henslee, CEO and Co-President. “We were able to achieve strong gross and operating margins and considering the difficult 9.6% comparable store sales comparison in the second quarter 2005, are satisfied with the solid 3.5% comparable store sales growth. These results reflect the daily commitment by Team O’Reilly to provide the absolute best customer service levels in the industry.”

 

Ted Wise, COO and Co-President, stated, “The quarter was highlighted by the opening of 49 new stores and our newest distribution center in Indianapolis. This new DC opening has been very successful and is supporting our expansion into this new market.

 

 

 

 

The Company will host a conference call Thursday, July 27, 2006, at 10:00 a.m. central time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company’s web site, www.oreillyauto.com, by clicking on “Investor Relations” then “News Room.”

 

O’Reilly Automotive, Inc. is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional installer markets. Founded in 1957 by the O’Reilly family, the Company operated 1,555 stores within the states of Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Virginia, Wisconsin and Wyoming as of June 30, 2006.

 

The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by forward-looking words such as “expect,” “believe,” “anticipate,” “should,” “plan,” “intend,” “estimate,” “project,” “will” or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the Risk Factors sections of the Company’s Form 10-K for the year ended December 31, 2005, for more details.

 

 

 

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

June 30,

2006

 

December 31,

2005

 

(Unaudited)

 

(Note)

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

55,247

 

$

31,384

Accounts receivable, net

 

82,612

 

 

73,849

Amounts receivable from vendors, net

 

62,334

 

 

57,224

Inventory

 

800,459

 

 

726,390

Other current assets

 

15,211

 

 

22,845

Total current assets

 

1,015,863

 

 

911,692

 

 

 

 

 

 

Property and equipment, at cost

 

1,108,717

 

 

992,899

Accumulated depreciation and amortization

 

300,867

 

 

274,533

Net property and equipment

 

807,850

 

 

718,366

 

 

 

 

 

 

Notes receivable, less current portion

 

32,532

 

 

29,062

Other assets, net

 

60,081

 

 

60,827

Total assets

$

1,916,326

 

$

1,719,947

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Income taxes payable

$

9,360

 

$

--

Accounts payable

 

358,090

 

 

292,667

Accrued payroll

 

20,323

 

 

19,356

Accrued benefits and withholdings

 

47,287

 

 

49,794

Deferred income taxes

 

3,119

 

 

2,451

Other current liabilities

 

48,374

 

 

47,137

Current portion of long-term debt

 

265

 

 

75,313

Total current liabilities

 

486,818

 

 

486,718

 

 

 

 

 

 

Long-term debt, less current portion

 

100,678

 

 

25,461

Deferred income taxes

 

44,809

 

 

42,516

Other liabilities

 

22,319

 

 

19,483

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

Common stock, $0.01 par value:

 

 

 

 

 

Authorized shares – 245,000,000

 

 

 

 

 

Issued and outstanding shares – 113,394,091

at June 30, 2006, and

 

 

 

 

 

112,389,002 at December 31, 2005

 

1,134

 

 

1,124

Additional paid-in capital

 

386,371

 

 

360,325

Retained earnings

 

874,197

 

 

784,320

Total shareholders’ equity

 

1,261,702

 

 

1,145,769

Total liabilities and shareholders’ equity

$

1,916,326

 

$

1,719,947

 

 

Note: The balance sheet at December 31, 2005, has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

 

 

 

 

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2006

 

2005

 

2006

 

2005

 

 

 

 

 

 

 

 

 

 

 

 

Product sales

$

591,199

 

$

521,209

 

$

1,127,746

 

$

987,448

Cost of goods sold, including warehouse and distribution expenses

 

330,271

 

 

292,239

 

 

633,390

 

 

 

562,309

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

260,928

 

 

228,970

 

 

494,356

 

 

425,139

Operating, selling, general and administrative expenses

 

182,692

 

 

160,843

 

 

351,154

 

 

303,431

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

78,236

 

 

68,127

 

 

143,202

 

 

121,708

Other income (expense), net

 

162

 

 

195

 

 

(290)

 

 

(473)

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

78,398

 

 

68,322

 

 

142,912

 

 

121,235

Provision for income taxes

 

29,085

 

 

25,399

 

 

53,035

 

 

45,099

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

49,313

 

$

42,923

 

$

89,877

 

$

76,136

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

$

0.44

 

$

0.39

 

$

0.80

 

$

0.68

Net income per common share-assuming dilution

$

0.43

 

$

0.38

 

$

0.78

 

$

0.67

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares – basic

 

113,253

 

 

111,448

 

 

112,890

 

 

111,174

Adjusted weighted-average common shares

outstanding – assuming dilution

 

115,196

 

 

113,138

 

 

114,908

 

 

 

112,827

 

 

 

 

O'REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES

SELECTED FINANCIAL INFORMATION

(Unaudited)

 

 

 

June 30,

 

2006

 

2005

 

 

 

 

Inventory turnover (1)

1.6

 

1.6

Inventory turnover, net of payables (2)

2.8

 

2.7

 

 

 

 

AP to inventory (3)

44.7%

 

39.1%

Debt-to-capital (4)

7.4%

 

8.8%

Return on equity (5)

15.0%

 

14.4%

Return on assets (6)

9.8%

 

9.3%

 

 

 

 

 

 

Three Months Ended

June 30,

 

2006

 

2005

Other Information (in thousands):

 

 

 

 

 

Capital expenditures

$

71,986

 

$

56,924

Depreciation and amortization

$

15,717

 

$

13,768

Interest expense

$

1,064

 

$

1,037

Lease and rental expense

$

12,353

 

$

10,615

 

 

 

 

 

 

Sales per weighted-average square foot (7)(8)

$

56.64

 

$

58.21

Sales per weighted-average store

(in thousands) (8)(9)

$

379

 

$

388

Square footage (in thousands)(8)

 

10,404

 

 

8,860

 

 

 

 

 

 

Store count:

 

 

 

 

 

New stores, net (10)

 

49

 

 

113

Total stores

 

1,555

 

 

1,399

 

 

 

 

 

 

Total employment

 

21,277

 

 

19,426

 

(1)

Calculated as cost of sales for the last 12 months divided by average inventory. Average inventory is calculated as the simple average of beginning and ending inventory for the same period used in determining the numerator.

(2)

Calculated as cost of sales for the last 12 months divided by average inventory less accounts payable. Average inventory is calculated as the simple average of beginning and ending inventory for the same period used in determining the numerator.

(3)

Accounts payable divided by inventory.

 

(4)

The sum of long-term debt and current portion of long-term debt, divided by the sum of long-term debt, current portion of long-term debt and total shareholders’ equity.

(5)

Last 12 months net income divided by average shareholders’ equity. Average shareholders’ equity is calculated by taking a simple average of the beginning and ending shareholders’ equity for the same period used in determining the numerator.

(6)

Last 12 months net income divided by average total assets. Average total assets is calculated by taking a simple average of the beginning and ending total assets for the same period used in determining the numerator.

(7)

Total sales less jobber sales, divided by weighted-average square feet. Weighted-average sales per square foot is weighted to consider the approximate dates of store openings or expansions.

(8)

Weighted-average square feet, weighted-average store count and total square footage for the three months ended June 30, 2005 exclude the 72 Midwest Auto Parts stores acquired May 31, 2005.

(9)

Total sales less jobber sales, divided by weighted-average stores. Weighted-average sales per store is weighted to consider the approximate dates of store openings or expansions.

(10)

Net new stores in the three months ended June 30, 2005, includes 72 Midwest Auto Parts stores acquired May 31, 2005.