|
|
|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
|
Missouri
|
|
000-21318
|
|
27-4358837
|
(State or other jurisdiction
|
|
Commission file
|
|
(I.R.S. Employer
|
of incorporation or organization)
|
|
number
|
|
Identification No.)
|
|
|
|
Large accelerated filer
x
|
|
Accelerated filer
¨
|
Non-accelerated filer
¨
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
|
(Unaudited)
|
|
(Note)
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
26,528
|
|
|
$
|
146,598
|
|
Accounts receivable, net
|
203,673
|
|
|
197,274
|
|
||
Amounts receivable from suppliers
|
61,876
|
|
|
82,105
|
|
||
Inventory
|
2,959,315
|
|
|
2,778,976
|
|
||
Other current assets
|
38,197
|
|
|
53,022
|
|
||
Total current assets
|
3,289,589
|
|
|
3,257,975
|
|
||
|
|
|
|
||||
Property and equipment, at cost
|
5,035,242
|
|
|
4,832,342
|
|
||
Less: accumulated depreciation and amortization
|
1,805,844
|
|
|
1,708,911
|
|
||
Net property and equipment
|
3,229,398
|
|
|
3,123,431
|
|
||
|
|
|
|
||||
Goodwill
|
786,938
|
|
|
785,399
|
|
||
Other assets, net
|
39,773
|
|
|
37,384
|
|
||
Total assets
|
$
|
7,345,698
|
|
|
$
|
7,204,189
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,091,888
|
|
|
$
|
2,936,656
|
|
Self-insurance reserves
|
70,198
|
|
|
67,921
|
|
||
Accrued payroll
|
70,538
|
|
|
71,717
|
|
||
Accrued benefits and withholdings
|
59,099
|
|
|
74,454
|
|
||
Income taxes payable
|
31,803
|
|
|
—
|
|
||
Other current liabilities
|
242,607
|
|
|
249,901
|
|
||
Total current liabilities
|
3,566,133
|
|
|
3,400,649
|
|
||
|
|
|
|
||||
Long-term debt
|
2,604,062
|
|
|
1,887,019
|
|
||
Deferred income taxes
|
98,048
|
|
|
90,166
|
|
||
Other liabilities
|
208,143
|
|
|
199,219
|
|
||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares – 245,000,000
|
|
|
|
||||
Issued and outstanding shares –
|
|
|
|
||||
87,998,971 as of June 30, 2017, and
|
|
|
|
||||
92,851,815 as of December 31, 2016
|
880
|
|
|
929
|
|
||
Additional paid-in capital
|
1,296,674
|
|
|
1,336,707
|
|
||
Retained (deficit) earnings
|
(428,242
|
)
|
|
289,500
|
|
||
Total shareholders’ equity
|
869,312
|
|
|
1,627,136
|
|
||
|
|
|
|
||||
Total liabilities and shareholders’ equity
|
$
|
7,345,698
|
|
|
$
|
7,204,189
|
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Sales
|
$
|
2,290,829
|
|
|
$
|
2,176,689
|
|
|
$
|
4,447,088
|
|
|
$
|
4,272,839
|
|
Cost of goods sold, including warehouse and distribution expenses
|
1,090,767
|
|
|
1,049,510
|
|
|
2,115,879
|
|
|
2,048,081
|
|
||||
Gross profit
|
1,200,062
|
|
|
1,127,179
|
|
|
2,331,209
|
|
|
2,224,758
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
742,617
|
|
|
702,118
|
|
|
1,470,607
|
|
|
1,381,071
|
|
||||
Operating income
|
457,445
|
|
|
425,061
|
|
|
860,602
|
|
|
843,687
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(20,827
|
)
|
|
(18,701
|
)
|
|
(40,231
|
)
|
|
(33,522
|
)
|
||||
Interest income
|
470
|
|
|
1,193
|
|
|
1,176
|
|
|
1,945
|
|
||||
Other, net
|
(762
|
)
|
|
1,241
|
|
|
3
|
|
|
2,258
|
|
||||
Total other expense
|
(21,119
|
)
|
|
(16,267
|
)
|
|
(39,052
|
)
|
|
(29,319
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
436,326
|
|
|
408,794
|
|
|
821,550
|
|
|
814,368
|
|
||||
Provision for income taxes
|
153,505
|
|
|
151,000
|
|
|
273,795
|
|
|
301,200
|
|
||||
Net income
|
$
|
282,821
|
|
|
$
|
257,794
|
|
|
$
|
547,755
|
|
|
$
|
513,168
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share-basic:
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
$
|
3.14
|
|
|
$
|
2.69
|
|
|
$
|
6.02
|
|
|
$
|
5.31
|
|
Weighted-average common shares outstanding – basic
|
90,030
|
|
|
95,967
|
|
|
91,012
|
|
|
96,554
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share-assuming dilution:
|
|
|
|
|
|
|
|
||||||||
Earnings per share
|
$
|
3.10
|
|
|
$
|
2.65
|
|
|
$
|
5.93
|
|
|
$
|
5.24
|
|
Weighted-average common shares outstanding – assuming dilution
|
91,299
|
|
|
97,282
|
|
|
92,347
|
|
|
97,911
|
|
|
For the Six Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
|
|
|
(As Adjusted, Note)
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
547,755
|
|
|
$
|
513,168
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property, equipment and intangibles
|
114,959
|
|
|
106,430
|
|
||
Amortization of debt discount and issuance costs
|
1,344
|
|
|
1,173
|
|
||
Deferred income taxes
|
8,049
|
|
|
(6,811
|
)
|
||
Share-based compensation programs
|
10,353
|
|
|
9,853
|
|
||
Other
|
6,037
|
|
|
2,655
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(10,797
|
)
|
|
(28,837
|
)
|
||
Inventory
|
(179,866
|
)
|
|
(110,015
|
)
|
||
Accounts payable
|
155,124
|
|
|
306,410
|
|
||
Income taxes payable
|
58,173
|
|
|
25,170
|
|
||
Other
|
(624
|
)
|
|
9,538
|
|
||
Net cash provided by operating activities
|
710,507
|
|
|
828,734
|
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(227,506
|
)
|
|
(220,416
|
)
|
||
Proceeds from sale of property and equipment
|
752
|
|
|
1,971
|
|
||
Payments received on notes receivable
|
—
|
|
|
1,047
|
|
||
Other
|
(1,967
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(228,721
|
)
|
|
(217,398
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from borrowings on revolving credit facility
|
1,782,000
|
|
|
—
|
|
||
Payments on revolving credit facility
|
(1,066,000
|
)
|
|
—
|
|
||
Proceeds from the issuance of long-term debt
|
—
|
|
|
499,160
|
|
||
Payment of debt issuance costs
|
(1,827
|
)
|
|
(3,784
|
)
|
||
Repurchases of common stock
|
(1,342,591
|
)
|
|
(856,845
|
)
|
||
Net proceeds from issuance of common stock
|
26,718
|
|
|
32,296
|
|
||
Other
|
(156
|
)
|
|
(205
|
)
|
||
Net cash used in financing activities
|
(601,856
|
)
|
|
(329,378
|
)
|
||
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
(120,070
|
)
|
|
281,958
|
|
||
Cash and cash equivalents at beginning of the period
|
146,598
|
|
|
116,301
|
|
||
Cash and cash equivalents at end of the period
|
$
|
26,528
|
|
|
$
|
398,259
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Income taxes paid
|
$
|
203,780
|
|
|
$
|
279,099
|
|
Interest paid, net of capitalized interest
|
37,151
|
|
|
27,174
|
|
•
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
|
•
|
Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3 – Unobservable inputs for the asset or liability.
|
|
June 30, 2017
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Instruments
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total
|
||||||||
Marketable securities
|
$
|
23,355
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,355
|
|
|
December 31, 2016
|
||||||||||||||
|
Quoted Prices in Active Markets for Identical Instruments
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total
|
||||||||
Marketable securities
|
$
|
20,462
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,462
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Carrying Amount
|
|
Estimated Fair Value
|
||||||||
Senior Notes
|
$
|
1,888,062
|
|
|
$
|
1,997,080
|
|
|
$
|
1,887,019
|
|
|
$
|
1,977,510
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Revolving Credit Facility, weighted-average variable interest rate of 2.065%
|
$
|
716,000
|
|
|
$
|
—
|
|
$500 million, 4.875% Senior Notes due 2021
(1)
, effective interest rate of 4.958%
|
497,161
|
|
|
496,758
|
|
||
$300 million, 4.625% Senior Notes due 2021
(2)
, effective interest rate of 4.646%
|
298,820
|
|
|
298,679
|
|
||
$300 million, 3.800% Senior Notes due 2022
(3)
, effective interest rate of 3.845%
|
298,039
|
|
|
297,868
|
|
||
$300 million, 3.850% Senior Notes due 2023
(4)
, effective interest rate of 3.851%
|
298,468
|
|
|
298,355
|
|
||
$500 million, 3.550% Senior Notes due 2026
(5)
, effective interest rate of 3.570%
|
495,574
|
|
|
495,359
|
|
||
Long-term debt
|
$
|
2,604,062
|
|
|
$
|
1,887,019
|
|
(1)
|
Net of unamortized discount of
$1.2 million
as of
June 30, 2017
, and
$1.4 million
as of
December 31, 2016
, and debt issuance costs of
$1.6 million
as of
June 30, 2017
, and
$1.8 million
as of
December 31, 2016
.
|
(2)
|
Net of unamortized discount of
$0.2 million
as of
June 30, 2017
, and
December 31, 2016
, and debt issuance costs of
$1.0 million
as of
June 30, 2017
, and
$1.1 million
as of
December 31, 2016
.
|
(3)
|
Net of unamortized discount of
$0.6 million
as of
June 30, 2017
, and
$0.7 million
as of
December 31, 2016
, and debt issuance costs of
$1.3 million
as of
June 30, 2017
, and
$1.5 million
as of
December 31, 2016
.
|
(4)
|
Net of unamortized discount of less than
$0.1 million
as of
June 30, 2017
, and
December 31, 2016
, and debt issuance costs of
$1.5 million
as of
June 30, 2017
, and
$1.6 million
as of
December 31, 2016
.
|
(5)
|
Net of unamortized discount of
$0.7 million
as of
June 30, 2017
, and
$0.8 million
as of
December 31, 2016
, and debt issuance costs of
$3.7 million
as of
June 30, 2017
, and
$3.9 million
as of
December 31, 2016
.
|
Warranty liabilities, balance at December 31, 2016
|
$
|
36,623
|
|
Warranty claims
|
(37,600
|
)
|
|
Warranty accruals
|
42,718
|
|
|
Warranty liabilities, balance at June 30, 2017
|
$
|
41,741
|
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Shares repurchased
|
3,475
|
|
|
2,075
|
|
|
5,304
|
|
|
3,306
|
|
||||
Average price per share
|
$
|
245.26
|
|
|
$
|
262.17
|
|
|
$
|
253.13
|
|
|
$
|
259.14
|
|
Total investment
|
$
|
852,226
|
|
|
$
|
544,165
|
|
|
$
|
1,342,538
|
|
|
$
|
856,802
|
|
|
Shares
|
|
Weighted-Average
Exercise Price
|
|||
Outstanding at December 31, 2016
|
2,800
|
|
|
$
|
104.90
|
|
Granted
|
209
|
|
|
264.45
|
|
|
Exercised
|
(418
|
)
|
|
48.77
|
|
|
Forfeited
|
(16
|
)
|
|
203.83
|
|
|
Outstanding at June 30, 2017
|
2,575
|
|
|
$
|
126.41
|
|
Exercisable at June 30, 2017
|
1,761
|
|
|
$
|
75.20
|
|
•
|
Risk-free interest rate
– The United States Treasury rates in effect at the time the options are granted for the options’ expected life.
|
•
|
|
•
|
Expected life
– Represents the period of time that options granted are expected to be outstanding. The Company uses historical experience to estimate the expected life of options granted.
|
•
|
Expected volatility
– Measure of the amount, by which the Company’s stock price is expected to fluctuate, based on a historical trend.
|
•
|
Expected dividend yield –
The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends.
|
|
For the Six Months Ended
June 30, |
||||
|
2017
|
|
2016
|
||
Risk free interest rate
|
2.02
|
%
|
|
1.52
|
%
|
Expected life
|
5.6 Years
|
|
|
5.7 Years
|
|
Expected volatility
|
22.3
|
%
|
|
22.4
|
%
|
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Compensation expense for stock options awarded
|
$
|
3,938
|
|
|
$
|
3,804
|
|
|
$
|
8,147
|
|
|
$
|
8,140
|
|
Income tax benefit from compensation expense related to stock options
|
1,500
|
|
|
1,421
|
|
|
3,103
|
|
|
3,040
|
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Compensation expense for shares issued under the ESPP
|
$
|
573
|
|
|
$
|
549
|
|
|
$
|
1,114
|
|
|
$
|
1,072
|
|
Income tax benefit from compensation expense related to shares issued under the ESPP
|
218
|
|
|
205
|
|
|
424
|
|
|
400
|
|
||||
Compensation expense for restricted shares awarded
|
414
|
|
|
322
|
|
|
1,092
|
|
|
641
|
|
||||
Income tax benefit from compensation expense related to restricted awards
|
$
|
158
|
|
|
$
|
120
|
|
|
$
|
416
|
|
|
$
|
239
|
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator (basic and diluted):
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
282,821
|
|
|
$
|
257,794
|
|
|
$
|
547,755
|
|
|
$
|
513,168
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding – basic
|
90,030
|
|
|
95,967
|
|
|
91,012
|
|
|
96,554
|
|
||||
Effect of stock options
(1)
|
1,269
|
|
|
1,315
|
|
|
1,335
|
|
|
1,357
|
|
||||
Weighted-average common shares outstanding – assuming dilution
|
91,299
|
|
|
97,282
|
|
|
92,347
|
|
|
97,911
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Earnings per share-basic
|
$
|
3.14
|
|
|
$
|
2.69
|
|
|
$
|
6.02
|
|
|
$
|
5.31
|
|
Earnings per share-assuming dilution
|
$
|
3.10
|
|
|
$
|
2.65
|
|
|
$
|
5.93
|
|
|
$
|
5.24
|
|
|
|
|
|
|
|
|
|
||||||||
Antidilutive potential common shares not included in the calculation of diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Stock options
(1)
|
581
|
|
|
285
|
|
|
524
|
|
|
312
|
|
||||
Weighted-average exercise price per share of antidilutive stock options
(1)
|
$
|
262.25
|
|
|
$
|
262.49
|
|
|
$
|
265.02
|
|
|
$
|
259.46
|
|
(1)
|
See Note 6 for further information concerning the terms of the Company’s share-based compensation plans.
|
•
|
an overview of the key drivers of the automotive aftermarket industry;
|
•
|
our liquidity and capital resources;
|
•
|
any contractual obligations, to which we are committed;
|
•
|
our critical accounting estimates;
|
•
|
the inflation and seasonality of our business; and
|
•
|
Number of Miles Driven
– The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately
three trillion
miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the Department of Transportation, the number of total miles driven in the U.S. increased 2.4%, 3.5% and 1.8% in 2016, 2015 and 2014, respectively, and through
May
of 2017, year-to-date miles driven increased
1.7%
. We would expect to continue to see modest improvements in total miles driven in the U.S., supported by an increasing number of registered vehicles on the road, resulting in continued demand for automotive aftermarket products.
|
•
|
Number of U.S. Registered Vehicles, New Light Vehicle Registrations and Average Vehicle Age
– The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by The Auto Care Association, the total number of registered vehicles increased
7%
from 2006 to 2016, bringing the number of light vehicles on the road to
264 million
by the end of 2016. For the year ended December 31, 2016, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately
18.3 million
, and for 2017, the SAAR is estimated to be approximately
16.4 million
, contributing to the continued growth in the total number of registered vehicles on the road. In the past decade, vehicle scrappage rates have remained relatively stable, ranging from
4.3%
to
5.7
% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing
22%
, from
9.5
years in 2006 to
11.6
years in 2016. We believe this increase in average age can be attributed to better engineered and manufactured vehicles, which can be reliably driven at higher mileages due to better quality power trains and interiors and exteriors, and the consumer’s willingness to invest in maintaining these higher-mileage, better built vehicles. As the average age of vehicles on the road increases, a larger percentage of miles are being driven by vehicles that are outside of a manufacturer warranty. These out-of-warranty, older vehicles generate strong demand for automotive aftermarket products as they go through more routine maintenance cycles, have more frequent mechanical failures and generally require more maintenance than newer vehicles. We believe consumers will continue to invest in these reliable, higher-quality, higher-mileage vehicles and these investments, along with an increasing total light vehicle fleet, will support continued demand for automotive aftermarket products.
|
•
|
Unemployment
– Unemployment, underemployment, the threat of future joblessness and the uncertainty surrounding the overall economic health of the U.S. have a negative impact on consumer confidence and the level of consumer discretionary spending. Long-term trends of high unemployment have historically impeded the growth of annual miles driven, as well as decrease consumer discretionary spending, both of which negatively impact demand for products sold in the automotive aftermarket industry. As of December 31, 2016, the U.S. unemployment rate was 4.7%, and as of
June 30, 2017
, the U.S. unemployment rate was
4.4%
. We believe total employment should remain at healthy levels with marginal improvements, and we would expect to see an increase in commuter traffic with a growing work force, further aiding the positive trend of growth of total miles driven in the U.S. and demand for automotive aftermarket products.
|
|
Increase in Sales for the Three Months Ended
June 30, 2017, Compared to the Same Period in 2016 |
|
Increase in Sales for the Six Months Ended
June 30, 2017, Compared to the Same Period in 2016 |
||||
Store sales:
|
|
|
|
||||
Comparable store sales, including sales from the 48 acquired Bond stores
|
$
|
54
|
|
|
$
|
87
|
|
Non-comparable store sales:
|
|
|
|
||||
Sales for stores opened throughout 2016, excluding stores open at least one year that are included in comparable store sales
|
39
|
|
|
88
|
|
||
Sales for stores opened throughout 2017
|
21
|
|
|
27
|
|
||
Sales from Leap Day in 2016
|
—
|
|
|
(25
|
)
|
||
Sales in 2016 for stores that have closed
|
(1
|
)
|
|
(2
|
)
|
||
Non-store sales:
|
|
|
|
||||
Includes sales of machinery and sales to independent parts stores and Team Members
|
1
|
|
|
(1
|
)
|
||
Total increase in sales
|
$
|
114
|
|
|
$
|
174
|
|
|
For the Six Months Ended
June 30, |
||||||
Liquidity:
|
2017
|
|
2016
|
||||
Total cash provided by/(used in):
|
|
|
|
||||
Operating activities
(1)
|
$
|
710,507
|
|
|
$
|
828,734
|
|
Investing activities
|
(228,721
|
)
|
|
(217,398
|
)
|
||
Financing activities
(1)
|
(601,856
|
)
|
|
(329,378
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
$
|
(120,070
|
)
|
|
$
|
281,958
|
|
|
|
|
|
||||
Capital expenditures
|
$
|
227,506
|
|
|
$
|
220,416
|
|
Free cash flow
(2)
|
$
|
450,522
|
|
|
$
|
578,182
|
|
(1)
|
Prior period amount has been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017.
|
(2)
|
Calculated as net cash provided by operating activities, less capital expenditures and excess tax benefit from share-based compensation payments for the period.
|
|
For the Twelve Months Ended
June 30, |
||||||
|
2017
|
|
2016
|
||||
GAAP net income
|
$
|
1,072,278
|
|
|
$
|
998,012
|
|
Add: Interest expense
|
77,640
|
|
|
61,930
|
|
||
Rent expense
|
290,620
|
|
|
277,088
|
|
||
Provision for income taxes
|
572,095
|
|
|
566,850
|
|
||
Depreciation expense
|
225,338
|
|
|
208,782
|
|
||
Amortization expense
|
1,057
|
|
|
1,897
|
|
||
Non-cash share-based compensation
|
19,359
|
|
|
20,448
|
|
||
Non-GAAP EBITDAR
|
$
|
2,258,387
|
|
|
$
|
2,135,007
|
|
|
|
|
|
||||
Interest expense
|
$
|
77,640
|
|
|
$
|
61,930
|
|
Capitalized interest
|
8,021
|
|
|
7,860
|
|
||
Rent expense
|
290,620
|
|
|
277,088
|
|
||
Total fixed charges
|
$
|
376,281
|
|
|
$
|
346,878
|
|
|
|
|
|
||||
Consolidated fixed charge coverage ratio
|
6.00
|
|
6.15
|
||||
|
|
|
|
||||
GAAP debt
|
$
|
2,604,062
|
|
|
$
|
1,886,324
|
|
Stand-by letters of credit
|
41,196
|
|
|
39,010
|
|
||
Discount on senior notes
|
2,854
|
|
|
3,441
|
|
||
Debt issuance costs
|
9,083
|
|
|
10,235
|
|
||
Five-times rent expense
|
1,453,100
|
|
|
1,385,440
|
|
||
Non-GAAP adjusted debt
|
$
|
4,110,295
|
|
|
$
|
3,324,450
|
|
|
|
|
|
||||
Consolidated leverage ratio
|
1.82
|
|
1.56
|
|
|
For the Six Months Ended
June 30, |
||||||
|
|
2017
|
|
2016
|
||||
Cash provided by operating activities
(1)
|
$
|
710,507
|
|
|
$
|
828,734
|
|
|
Less:
|
Capital expenditures
|
227,506
|
|
|
220,416
|
|
||
|
Excess tax benefit from share-based compensation
|
32,479
|
|
|
30,136
|
|
||
Free cash flow
|
$
|
450,522
|
|
|
$
|
578,182
|
|
(1)
|
Prior period amount has been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017.
|
|
For the Three Months Ended
June 30, |
|
For the Six Months Ended
June 30, |
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Shares repurchased
|
3,475
|
|
|
2,075
|
|
|
5,304
|
|
|
3,306
|
|
||||
Average price per share
|
$
|
245.26
|
|
|
$
|
262.17
|
|
|
$
|
253.13
|
|
|
$
|
259.14
|
|
Total investment
|
$
|
852,226
|
|
|
$
|
544,165
|
|
|
$
|
1,342,538
|
|
|
$
|
856,802
|
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Programs
|
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs
(1)
|
||||||
April 1, 2017, through April 30, 2017
|
|
325
|
|
|
$
|
259.93
|
|
|
325
|
|
|
$
|
313,056
|
|
May 1, 2017, through May 31, 2017
|
|
1,575
|
|
|
249.63
|
|
|
1,575
|
|
|
919,848
|
|
||
June 1, 2017, through June 30, 2017
|
|
1,575
|
|
|
237.86
|
|
|
1,575
|
|
|
$
|
545,288
|
|
|
Total as of June 30, 2017
|
|
3,475
|
|
|
$
|
245.26
|
|
|
3,475
|
|
|
|
(1)
|
Under the Company’s share repurchase program, as approved by its Board of Directors, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall market conditions. The Company’s Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on
May 10, 2017
, the Company’s Board of Directors approved a resolution to increase the authorization amount under the share repurchase program by an additional
$1.0 billion
, resulting in a cumulative authorization amount of
$8.8 billion
. The additional $1.0 billion authorization is effective for a
three
-year period, beginning on its announcement date. The authorization under the share repurchase program that currently has capacity is scheduled to expire on
May 10, 2020
. No other share repurchase programs existed during the
six
months ended
June 30, 2017
.
|
|
|
O’REILLY AUTOMOTIVE, INC.
|
|
|
|
|
|
August 7, 2017
|
|
/s/
|
Greg L. Henslee
|
Date
|
|
Greg L. Henslee
|
|
|
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
August 7, 2017
|
|
/s/
|
Thomas McFall
|
Date
|
|
Thomas McFall
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
Termination:
|
The Option shall terminate on the Expiration Date set forth above or, if earlier, in accordance with the terms of the Agreement.
|
O’REILLY AUTOMOTIVE, INC.
|
|
OPTIONEE
|
|||||||
|
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
|
By:
|
|
|
|
Print Name:
|
|
|
Print Name:
|
|
|||||
Title:
|
|
|
|
|
|
|
|
|
|
Address:
|
|
|
|
Address:
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
I have reviewed this report on Form 10-Q of O’Reilly Automotive, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 7, 2017
|
/s/
|
Greg L. Henslee
|
|
Greg L. Henslee
|
|
|
Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this report on Form 10-Q of O’Reilly Automotive, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 7, 2017
|
/s/
|
Thomas McFall
|
|
Thomas McFall
|
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/
|
Greg L. Henslee
|
Greg L. Henslee
|
|
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/
|
Thomas McFall
|
Thomas McFall
|
|
Chief Financial Officer
|