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AutoZone 4th Quarter Same Store Sales Increase 6.2%; 4th Quarter EPS Increases to $40.51; Annual Sales of $16.3 Billion
Source: Nasdaq GlobeNewswire / 19 Sep 2022 06:55:39 America/New_York
MEMPHIS, Tenn., Sept. 19, 2022 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $5.3 billion for its fourth quarter (16 weeks) ended August 27, 2022, an increase of 8.9% from the fourth quarter of fiscal 2021 (16 weeks). Domestic same store sales, or sales for stores open at least one year, increased 6.2% for the quarter.
“Our results are a testament to our AutoZoners’ ongoing commitment to delivering exceptional customer service every day. Our retail business performed well this quarter ending with positive same store sales on top of last year’s strong performance. And, our commercial business growth continued to be exceptionally strong at 22%. The investments we have made in both inventory availability and technology are enhancing our competitive positioning. We are optimistic about our growth prospects heading into our new fiscal year,” said Bill Rhodes, Chairman, President and Chief Executive Officer.
For the quarter, gross profit, as a percentage of sales, was 51.5%, a decrease of 73 basis points versus the prior year. The decrease in gross margin was driven by accelerated growth in our Commercial business and a 28 basis point non-cash LIFO charge driven largely by rising freight costs. Operating expenses, as a percentage of sales, were 30.9% versus 31.0% last year.
Operating profit increased 5.7% to $1.1 billion. Net income for the quarter increased 3.1% over the same period last year to $810.0 million, while diluted earnings per share increased 13.4% to $40.51 from $35.72 in the year-ago quarter.
For the fiscal year ended August 27, 2022, sales were $16.3 billion, an increase of 11.1% from the prior year, while domestic same store sales were up 8.4%. Gross profit, as a percentage of sales, was 52.1% versus 52.8%. The decrease in gross margin was primarily attributable to the initiatives to accelerate growth in our Commercial business. Operating expenses, as a percentage of sales, were 32.0% versus 32.6%. For fiscal 2022, net income increased 11.9% to $2.4 billion and diluted earnings per share increased 23.1% to $117.19 from $95.19. Return on invested capital finished at 52.9%.
Under its share repurchase program, AutoZone repurchased 474 thousand shares of its common stock for $1 billion during the fourth quarter, at an average price of $2,111 per share. For the fiscal year, the Company repurchased 2.2 million shares of its common stock for $4.4 billion, at an average price of $1,964 per share. At year end, the Company had $1.058 billion remaining under its current share repurchase authorization.
The Company’s inventory increased 21.5% over the same period last year, driven by our growth initiatives and inflation. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $240 thousand versus negative $203 thousand last year and negative $216 thousand last quarter.
“We are committed to being the best place to shop for everyone’s automotive needs while delivering on our ongoing promise to be a great place to work. We believe our initiatives will drive growth in the new fiscal year. As we continue to prudently invest capital in our business, we remain steadfast in our long-term, disciplined approach to increasing operating earnings and cash flows while utilizing our balance sheet effectively,” said Rhodes.
Additionally, AutoZone announced today that Doug Brooks is not standing for re-election to the Company’s Board of Directors at the Annual Meeting of Stockholders to be held December 14, 2022. “AutoZone has truly benefited from Doug’s insightful guidance, tutelage, and service these past nine years. Doug’s efforts have contributed to helping make our Company what it is today. I thank him for his leadership and commitment to our Company, and I wish him well in his future endeavors,” said Rhodes.
During the fiscal year ended August 27, 2022, AutoZone opened 118 new stores and closed one in the U.S., opened 39 stores in Mexico and 20 stores in Brazil. As of August 27, 2022, the Company had 6,168 stores in the U.S., 703 in Mexico and 72 in Brazil for a total store count of 6,943.AutoZone is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. 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. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a conference call this morning, Monday, September 19, 2022, beginning at 10:00 a.m. (ET) to discuss its fourth quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com and clicking on Investor Relations. Investors may also listen to the call by dialing (888) 506-0062, passcode 404601. In addition, a telephone replay will be available by dialing (877) 481-4010, replay passcode 46463 through October 3, 2022.
This release includes certain financial information not derived in accordance with generally accepted accounting principles (“GAAP”). These non-GAAP measures include adjustments to reflect return on invested capital, adjusted debt and adjusted debt to 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 capital structure in order to maintain its investment grade credit ratings. 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 constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” 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: product demand, due to changes in fuel prices, miles driven or otherwise; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues, such as the ongoing global coronavirus pandemic; inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; anticipated impact of new accounting standards; and business interruptions. Certain of these risks and uncertainties are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of the Company’s Annual Report on Form 10-K for the year ended August 28, 2021, 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. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. 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.
Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com
Media: David McKinney at (901) 495-7951, david.mckinney@autozone.comAutoZone's 4th Quarter Highlights - Fiscal 2022 Condensed Consolidated Statements of Operations 4th Quarter, FY2022 (in thousands, except per share data) GAAP Results 16 Weeks Ended 16 Weeks Ended August 27, 2022 August 28, 2021 Net sales $ 5,348,355 $ 4,913,484 Cost of sales 2,592,505 2,345,646 Gross profit 2,755,850 2,567,838 Operating, SG&A expenses 1,652,036 1,523,808 Operating profit (EBIT) 1,103,814 1,044,030 Interest expense, net 63,995 58,119 Income before taxes 1,039,819 985,911 Income tax expense 229,777 200,140 Net income $ 810,042 $ 785,771 Net income per share: Basic $ 41.81 $ 36.72 Diluted $ 40.51 $ 35.72 Weighted average shares outstanding: Basic 19,373 21,400 Diluted 19,996 22,000 Fiscal Year 2022 (in thousands, except per share data) GAAP Results 52 Weeks Ended 52 Weeks Ended August 27, 2022 August 28, 2021(1) Net sales $ 16,252,230 $ 14,629,585 Cost of sales 7,779,580 6,911,800 Gross profit 8,472,650 7,717,785 Operating, SG&A expenses 5,201,921 4,773,258 Operating profit (EBIT) 3,270,729 2,944,527 Interest expense, net 191,638 195,337 Income before taxes 3,079,091 2,749,190 Income taxes 649,487 578,876 Net income $ 2,429,604 $ 2,170,314 Net income per share: Basic $ 120.83 $ 97.60 Diluted $ 117.19 $ 95.19 Weighted average shares outstanding: Basic 20,107 22,237 Diluted 20,733 22,799 (1)The 52 weeks ended August 28, 2021 was negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $43.0M (pre-tax) Selected Balance Sheet Information (in thousands) August 27, 2022 August 28, 2021 Cash and cash equivalents $ 264,380 $ 1,171,335 Merchandise inventories 5,638,004 4,639,813 Current assets 6,627,984 6,415,303 Property and equipment, net 5,170,419 4,856,891 Operating lease right-of-use assets 2,918,817 2,718,712 Total assets 15,275,043 14,516,199 Accounts payable 7,301,347 6,013,924 Current liabilities 8,588,393 7,369,754 Operating lease liabilities, less current portion 2,837,973 2,632,842 Total debt 6,122,092 5,269,820 Stockholders' deficit (3,538,913 ) (1,797,536 ) Working capital (1,960,409 ) (954,451 )
AutoZone's 4th Quarter Highlights - Fiscal 2022 Condensed Consolidated Statements of Operations Adjusted Debt / EBITDAR (in thousands, except adjusted debt to EBITDAR ratio) Trailing 4 Quarters August 27, 2022 August 28, 2021 Net income $ 2,429,604 $ 2,170,314 Add: Interest expense 191,638 195,337 Income tax expense 649,487 578,876 EBIT 3,270,729 2,944,527 Add: Depreciation and amortization 442,223 407,683 Rent expense(1) 373,278 345,380 Share-based expense 70,612 56,112 EBITDAR $ 4,156,842 $ 3,753,702 Debt $ 6,122,092 $ 5,269,820 Financing lease liabilities 310,305 276,054 Add: Rent x 6(1) 2,239,668 2,072,280 Adjusted debt $ 8,672,065 $ 7,618,154 Adjusted debt to EBITDAR 2.1 2.0 Adjusted Return on Invested Capital (ROIC) (in thousands, except ROIC) Trailing 4 Quarters August 27, 2022 August 28, 2021 Net income $ 2,429,604 $ 2,170,314 Adjustments: Interest expense 191,638 195,337 Rent expense(1) 373,278 345,380 Tax effect(2) (119,197 ) (114,091 ) Adjusted after-tax return $ 2,875,323 $ 2,596,940 Average debt(3) $ 5,712,301 $ 5,416,471 Average stockholders' deficit(3) (2,797,181 ) (1,397,892 ) Add: Rent x 6(1) 2,239,668 2,072,280 Average financing lease liabilities(3) 284,453 237,267 Invested capital $ 5,439,241 $ 6,328,126 Adjusted After-Tax ROIC 52.9% 41.0% (1) The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the trailing four quarters ended August 27, 2022 and August 28, 2021 Trailing 4 Quarters (in thousands) August 27, 2022 August 28, 2021 Total lease cost, per ASC 842, for the trailing four quarters $ 470,563 $ 427,443 Less: Financing lease interest and amortization (69,564 ) (56,334 ) Less: Variable operating lease components, related to insurance and common area maintenance (27,721 ) (25,729 ) Rent expense for the trailing four quarters $ 373,278 $ 345,380 (2) Effective tax rate over trailing four quarters ended August 27, 2022 and August 28, 2021 was 21.1% (3)All averages are computed based on trailing five quarter balances Other Selected Financial Information (in thousands) August 27, 2022 August 28, 2021 Cumulative share repurchases ($ since fiscal 1998) $ 30,092,422 $ 25,732,431 Remaining share repurchase authorization ($) 1,057,578 417,569 Cumulative share repurchases (shares since fiscal 1998) 152,508 150,288 Shares outstanding, end of quarter 19,126 21,138 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended August 27, 2022 August 28, 2021 August 27, 2022 August 28, 2021 Depreciation and amortization $ 140,858 $ 129,639 $ 442,223 $ 407,683 Cash flow from operations 1,228,021 1,288,196 3,211,135 3,518,543 Capital spending 303,041 246,114 672,391 621,767 AutoZone's 4th Quarter Highlights - Fiscal 2022 Condensed Consolidated Statements of Operations Selected Operating Highlights Store Count & Square Footage 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended August 27, 2022 August 28, 2021 August 27, 2022 August 28, 2021 Domestic: Beginning stores 6,115 5,975 6,051 5,885 Stores opened 53 76 118 167 Stores closed - - (1 ) (1 ) Ending domestic stores 6,168 6,051 6,168 6,051 Relocated stores 5 1 13 12 Stores with commercial programs 5,342 5,179 5,342 5,179 Square footage (in thousands) 40,653 39,727 40,653 39,727 Mexico: Beginning stores 673 635 664 621 Stores opened 30 29 39 43 Ending Mexico stores 703 664 703 664 Brazil: Beginning stores 58 47 52 43 Stores opened 14 5 20 9 Ending Brazil stores 72 52 72 52 Total 6,943 6,767 6,943 6,767 Square footage (in thousands) 46,435 45,057 46,435 45,057 Square footage per store 6,688 6,658 6,688 6,658 Sales Statistics ($ in thousands, except sales per average square foot) 16 Weeks Ended 16 Weeks Ended Trailing 4 Quarters Trailing 4 Quarters Total AutoZone Stores (Domestic, Mexico and Brazil) August 27, 2022 August 28, 2021 August 27, 2022 August 28, 2021 Sales per average store $ 762 $ 720 $ 2,329 $ 2,160 Sales per average square foot $ 114 $ 108 $ 349 $ 325 Total Auto Parts (Domestic, Mexico and Brazil) Total auto parts sales $ 5,256,176 $ 4,830,136 $ 15,963,196 $ 14,381,712 % Increase vs. LY 8.8% 8.0% 11.0% 15.9% Domestic Commercial Total domestic commercial sales $ 1,442,313 $ 1,182,626 $ 4,230,414 $ 3,345,450 % Increase vs. LY 22.0% 21.2% 26.5% 22.6% Average sales per program per week $ 17.0 $ 14.4 $ 15.5 $ 12.6 % Increase vs. LY 18.1% 18.0% 23.0% 18.9% All Other, including ALLDATA All other sales $ 92,179 $ 83,348 $ 289,034 $ 247,873 % Increase vs. LY 10.6% 14.4% 16.6% 9.7% 16 Weeks Ended 16 Weeks Ended 52 Weeks Ended 52 Weeks Ended August 27, 2022 August 28, 2021 August 27, 2022 August 28, 2021 Domestic same store sales 6.2% 4.3% 8.4% 13.6% Inventory Statistics (Total Stores) as of as of August 27, 2022 August 28, 2021 Accounts payable/inventory 129.5% 129.6% ($ in thousands) Inventory $ 5,638,004 $ 4,639,813 Inventory per store 812 686 Net inventory (net of payables) (1,663,343 ) (1,374,111 ) Net inventory / per store (240 ) (203 ) Trailing 5 Quarters August 27, 2022 August 28, 2021 Inventory turns 1.5 x 1.5 x