On July 24, 2024, O'Reilly Automotive Inc (ORLY, Financial) released its 8-K filing for the second quarter ended June 30, 2024. O'Reilly, a leading retailer in the automotive aftermarket industry, operates over 6,000 stores across the United States and Mexico, serving both do-it-yourself and professional markets.
Performance Overview
O'Reilly Automotive Inc (ORLY, Financial) reported a 5% increase in sales for the second quarter, reaching $4.27 billion, compared to $4.07 billion in the same period last year. This fell short of the analyst revenue estimate of $4.317 billion. However, the company's diluted earnings per share (EPS) for the quarter came in at $10.55, slightly below the analyst estimate of $11.09.
Despite the revenue growth, the company faced challenges with a soft demand environment early in the quarter, which persisted through May. CEO Brad Beckham noted, "Our comparable store sales results were below our expectations for the second quarter, as the soft demand environment we experienced at the beginning of the quarter persisted through May. Sales trends improved in June, in line with our expectations, aided by strong performance in summer weather-related categories in many of our markets."
Financial Achievements and Challenges
O'Reilly's gross profit for the second quarter increased by 4% to $2.17 billion, representing 50.7% of sales, compared to 51.3% in the same period last year. Selling, general, and administrative expenses (SG&A) rose by 6% to $1.30 billion, or 30.5% of sales, up from 30.3% last year. Operating income saw a modest increase of 1% to $863 million, or 20.2% of sales, compared to 21.0% in the previous year.
Net income for the quarter decreased by 1% to $623 million, or 14.6% of sales, from $627 million, or 15.4% of sales, in the same period last year. The company also reported a 7% increase in year-to-date earnings per share to $19.75.
Year-to-Date Financial Results
For the first six months of 2024, O'Reilly reported a 6% increase in sales to $8.25 billion, up from $7.78 billion in the same period last year. Gross profit for the first half of the year increased by 6% to $4.20 billion, or 50.9% of sales, compared to 51.1% last year. SG&A expenses rose by 7% to $2.59 billion, or 31.4% of sales, up from 30.9% last year. Operating income for the first half of the year increased by 3% to $1.62 billion, or 19.6% of sales, compared to 20.2% last year.
Net income for the first six months of 2024 increased by 2% to $1.17 billion, or 14.2% of sales, from $1.14 billion, or 14.7% of sales, in the same period last year. Diluted earnings per share for the first half of the year increased by 7% to $19.75.
Comparable Store Sales and Share Repurchase Program
Comparable store sales for the second quarter increased by 2.3%, following a 9.0% increase in the same period last year. For the first six months of 2024, comparable store sales increased by 2.8%, compared to a 9.8% increase in the same period last year.
During the second quarter, O'Reilly repurchased 0.8 million shares of its common stock at an average price of $1,012.14 per share, totaling $794 million. For the first six months of 2024, the company repurchased 1.0 million shares at an average price of $1,016.43 per share, totaling $1.06 billion. As of the date of the release, the company had approximately $1.28 billion remaining under its current share repurchase authorization.
Updated Full-Year 2024 Guidance
O'Reilly updated its full-year 2024 guidance, adjusting its comparable store sales growth expectation to a range of 2.0% to 4.0%, down from the previous range of 3.0% to 5.0%. The company expects total revenue to be between $16.6 billion and $16.9 billion, with diluted earnings per share ranging from $40.75 to $41.25.
| Metric | Updated Guidance |
|---|---|
| Net, new store openings | 190 to 200 |
| Comparable store sales | 2.0% to 4.0% |
| Total revenue | $16.6 billion to $16.9 billion |
| Gross profit as a percentage of sales | 51.0% to 51.5% |
| Operating income as a percentage of sales | 19.6% to 20.1% |
| Effective income tax rate | 22.4% |
| Diluted earnings per share | $40.75 to $41.25 |
| Net cash provided by operating activities | $2.7 billion to $3.1 billion |
| Capital expenditures | $900 million to $1.0 billion |
| Free cash flow |
Explore the complete 8-K earnings release (here) from O'Reilly Automotive Inc for further details.
