AutoZone 1st Quarter Same Store Sales Increase 2.7%; EPS Increases 34.7% to $13.47

Globe Newswire 4-Dec-2018 6:59 AM

MEMPHIS, Tenn., Dec. 04, 2018 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.6 billion for its first quarter (12 weeks) ended November 17, 2018, an increase of 2.0% from the first quarter of fiscal 2018 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.7% for the quarter. 

Net income for the quarter increased 25.1% over the same period last year to $351.4 million, while diluted earnings per share increased 34.7% to $13.47 per share from $10.00 per share in the year-ago quarter. Net income and diluted earnings per share benefitted from a lower effective income tax rate, primarily due to Tax Reform.

For the quarter, gross profit, as a percentage of sales, was 53.7% (versus 52.8% for the same period last year). The increase in gross margin was primarily attributable to the impact of the sale of two businesses completed in the prior year (65 bps) and higher merchandise margins. Operating expenses, as a percentage of sales, were 35.2% (versus 34.6% the same period last year), with deleverage primarily driven by domestic store payroll (56 bps).

Under its share repurchase program, AutoZone repurchased 654 thousand shares of its common stock for $497.1 million during the first quarter, at an average price of $760 per share. At the end of the first quarter, the Company had $985 million remaining under its current share repurchase authorization.

The Company's inventory increased 2.0% over the same period last year, driven by new stores and increased product placement, partially offset by the impact of the sale of two businesses completed in the prior year. Inventory per location was $658 thousand versus $663 thousand last year and $636 thousand last quarter. Net inventory, defined as merchandise inventories less accounts payable, on a per location basis, was a negative $59 thousand versus negative $52 thousand last year and negative $75 thousand last quarter. 

"I want to thank all AutoZoners across the company for their tremendous efforts during our first fiscal quarter. Their dedication and commitment to superior service resulted in a strong start to our new year. As we entered the quarter, we knew we had difficult comparisons to last year's first quarter due to the prior year's sales benefit from three major hurricanes. Our team delivered very solid performance in DIY and our Commercial growth accelerated again reaching our highest growth since 2015. Our industry fundamentals remain strong and we continue to be excited about the initiatives we have underway to further enhance our inventory availability, to continue to accelerate commercial and to meet our customers how, when and where they want to be met with our omni-channel initiatives. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and utilizing our balance sheet and capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended November 17, 2018, AutoZone opened 13 new stores and relocated one store in the U.S. and opened three new stores in Mexico. As of November 17, 2018, the Company had 5,631 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 567 stores in Mexico, and 20 stores in Brazil for a total store count of 6,218.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. 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. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com and www.alldatadiy.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. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, December 4, 2018, beginning at 10:00 a.m. (EST) to discuss its first quarter results. Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing (210) 839-8923. A replay of the call and slides will be available on AutoZone's website. In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, December 25, 2018, at 11:59 p.m. (EST). 

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, adjusted debt to EBITDAR and cash flow before share repurchases. These calculations include adjustments for impairment charges, pension termination charges and adjustments related to Tax Reform. 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 and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables. 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; energy prices; weather; competition; credit market conditions; access to available and feasible financing; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; war and the prospect of war, including terrorist activity; inflation; the ability to hire and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber attacks; and raw material costs of suppliers. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of the Annual Report on Form 10-K for the year ended August 25, 2018, 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. 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. Actual results may materially differ from anticipated results.

Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com 
Media: Ray Pohlman at (866) 966-3017, ray.pohlman@autozone.com