EX-99.1 2 exh_991.htm PRESS RELEASE EdgarFiling

EXHIBIT 99.1

AutoZone 3rd Quarter Same Store Sales increase 2.0%; EPS Increases 12.6% to $10.77

MEMPHIS, Tenn., May 24, 2016 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.6 billion for its third quarter (12 weeks) ended May 7, 2016, an increase of 4.0% from the third quarter of fiscal 2015 (12 weeks).  Domestic same store sales, or sales for stores open at least one year, increased 2.0% for the quarter.

Net income for the quarter increased 6.0% over the same period last year to $327.5 million, while diluted earnings per share increased 12.6% to $10.77 per share from $9.57 per share in the year-ago quarter. 

For the quarter, gross profit, as a percentage of sales, was 52.8% (versus 52.3% for last year’s quarter).  The improvement in gross margin was attributable to higher merchandise margins, partially offset by higher supply chain costs associated with current year inventory initiatives (-19 bps).  Operating expenses, as a percentage of sales, were 32.2% (versus 31.6% last year).  The increase in operating expenses, as a percentage of sales, was due to higher legal expense (-34 bps) and store payroll.  The legal expense was driven by a single, discrete item.

Under its share repurchase program, AutoZone repurchased 687 thousand shares of its common stock for $533 million during the third quarter, at an average price of $775 per share.  At the end of the third quarter, the Company had $765 million remaining under its current share repurchase authorization. 

The Company’s inventory increased 3.7% over the same period last year, driven primarily by new store openings over the last twelve months.  Inventory per location was $629 thousand, flat with last year, and $633 thousand last quarter.  Net inventory, defined as merchandise inventories less accounts payable, on a per location basis was a negative $69 thousand versus negative $68 thousand last year and negative $57 thousand last quarter.

“We would like to thank our entire organization for delivering another quarter of solid results: our thirty-ninth consecutive quarter of double digit earnings per share growth.  AutoZoners across the company remain committed to providing superior service to our customers and that dedication has resulted in consistent, solid performance.  During the quarter, we continued implementation of our inventory availability initiatives.  At the end of the quarter, we have expanded our increased frequency of distribution center deliveries initiative to 1,600 domestic AutoZone stores and expect by the end of the fiscal year to be servicing approximately 2,000 of our over 5,000 domestic AutoZone stores.  We also plan to open approximately four additional Mega Hubs by the end of the fiscal year to finish with a total of 11.  The results of our initiatives continue to meet or exceed our expectations, further confirming our new inventory deployment strategy.  Regarding the third quarter’s results, sales were below our expectations as weather negatively impacted sales primarily in Midwestern, Middle Atlantic, and Northeastern states.  Additionally, the quarter was impacted by a legal charge along with a discrete tax benefit, which netted to a reduction to earnings per share of $0.11 per share.  As we continue to strategically invest in our business in order to support our long term growth, remaining committed to our disciplined approach to growing operating earnings and utilizing our capital effectively, we are excited by our opportunities this summer,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended May 7, 2016, AutoZone opened 33 new stores in the U.S., opened seven new stores in Mexico, and opened one new IMC branch.  As of May 7, 2016, the Company had 5,226 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 458 stores in Mexico, 25 IMC branches, and eight stores in Brazil for a total count of 5,717.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each AutoZone 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.  IMC branches carry an extensive line of original equipment quality import replacement parts.  AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories, and non-automotive products through www.autozone.com, and accessories and performance parts through www.autoanything.com, and our commercial customers can make purchases through www.autozonepro.com and www.imcparts.net.  AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, May 24, 2016, beginning at 10:00 a.m. (EDT) to discuss its third 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, May 31, 2016, at 11:59 p.m. (EDT).

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.  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 are forward-looking statements. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” 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: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; the compromising of the confidentiality, availability or integrity of information, including cyber security attacks; and changes in laws or regulations. 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 29, 2015, 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.

AutoZone's 3rd Quarter Highlights - Fiscal 2016   
         
Condensed Consolidated Statements of Operations    
3rd Quarter, FY2016      
(in thousands, except per share data)      
    GAAP Results  
    12 Weeks Ended 12 Weeks Ended  
    May 7, 2016 May 9, 2015  
         
Net sales $2,593,672  $2,493,021   
Cost of sales  1,223,214   1,190,232   
Gross profit  1,370,458   1,302,789   
Operating, SG&A expenses  834,084   788,840   
Operating profit  (EBIT)  536,374   513,949   
Interest expense, net  34,051   31,779   
Income before taxes  502,323   482,170   
Income taxes  174,808   173,099   
Net income $327,515  $309,071   
Net income per share:      
 Basic $10.99  $9.77   
 Diluted $10.77  $9.57   
Weighted average shares outstanding:      
 Basic  29,809   31,643   
 Diluted  30,405   32,301   
         
         
Year-To-Date 3rd Quarter, FY2016      
(in thousands, except per share data) GAAP Results  
    36 Weeks Ended 36 Weeks Ended  
    May 7, 2016 May 9, 2015  
         
Net sales $7,236,907  $6,896,936   
Cost of sales  3,422,919   3,297,453   
Gross profit  3,813,988   3,599,483   
Operating, SG&A expenses  2,456,959   2,315,704   
Operating profit  (EBIT)  1,357,029   1,283,779   
Interest expense, net  101,893   103,374   
Income before taxes  1,255,136   1,180,405   
Income taxes  440,897   421,301   
Net income $814,239  $759,104   
Net income per share:      
 Basic $27.00  $23.80   
 Diluted $26.46  $23.33   
Weighted average shares outstanding:      
 Basic  30,159   31,893   
 Diluted  30,773   32,534   
         
Selected Balance Sheet Information      
(in thousands)      
    May 7, 2016 May 9, 2015 August 29, 2015
         
Cash and cash equivalents $213,380  $153,288  $175,309 
Merchandise inventories  3,597,251   3,468,249   3,421,635 
Current assets  4,225,486   3,950,490   3,970,294 
Property and equipment, net  3,619,305   3,426,388   3,505,632 
Total assets (1)  8,464,105   8,009,445   8,102,349 
Accounts payable  3,991,030   3,845,129   3,864,168 
Current liabilities  4,647,589   4,693,102   4,712,873 
Total debt (1)   4,953,697   4,510,334   4,624,876 
Stockholders' deficit  (1,863,282)  (1,643,245)  (1,701,390)
Working capital  (422,103)  (742,612)  (742,579)
         
(1) Certain balance sheet reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation due to the adoption of a new accounting standard at the end of FY15.
         

 

Condensed Consolidated Statements of Operations           
           
Adjusted Debt / EBITDAR (Trailing 4 Qtrs)        
(in thousands, except adjusted debt to EBITDAR ratio)          
  May 7, 2016 May 9, 2015      
Net income $1,215,376  $1,132,774       
Add:  Interest  148,958   152,800       
Taxes  661,967   628,406       
EBIT  2,026,301   1,913,980       
           
Add:  Depreciation and amortization  290,173   262,192       
Rent expense  274,660   267,247       
Share-based expense  39,759   40,093       
EBITDAR $2,630,893  $2,483,512       
           
Debt (1) $4,953,697  $4,510,334       
Capital lease obligations  128,870   132,016       
Add: rent x 6  1,647,960   1,603,482       
Adjusted debt $6,730,527  $6,245,832       
           
Adjusted debt to EBITDAR  2.6   2.5       
      
           
Selected Cash Flow Information          
(in thousands)          
  12 Weeks Ended 12 Weeks Ended  36 Weeks Ended 36 Weeks Ended 
  May 7, 2016 May 9, 2015  May 7, 2016 May 9, 2015 
           
Depreciation and amortization $68,529  $62,299   $203,465  $183,211  
Capital spending $113,331  $106,571   $299,922  $292,745  
           
Cash flow before share repurchases:          
Increase in cash and cash equivalents $5,422  $1,749   $38,071  $28,803  
Subtract increase in debt, excluding deferred financing  112,400   86,200    330,900   190,700  
Add back share repurchases  532,668   515,251    1,082,725   840,918  
Cash flow before share repurchases and changes in debt $425,690  $430,800   $789,896  $679,021  
           
           
Other Selected Financial Information          
(in thousands, except ROIC)          
  May 7, 2016 May 9, 2015      
           
           
Cumulative share repurchases ($ since fiscal 1998) $16,384,912  $14,871,688       
Remaining share repurchase authorization ($) $765,088  $778,312       
           
Cumulative share repurchases (shares since fiscal 1998)  140,312   138,258       
           
Shares outstanding, end of quarter  29,501   31,239       
           
  Trailing 4 Quarters      
  May 7, 2016 May 9, 2015     
Net income $1,215,376  $1,132,774       
Adjustments:          
Interest expense  148,958   152,800       
Rent expense  274,660   267,247       
Tax effect*  (149,538)  (149,957)      
After-tax return  1,489,456   1,402,864       
           
Average debt**(1)  4,737,645   4,404,446       
Average stockholders' deficit**  (1,745,470)  (1,640,964)      
Add: Rent x 6  1,647,960   1,603,482       
Average capital lease obligations**  127,954   121,705       
Pre-tax invested capital $4,768,089  $4,488,669       
           
Return on Invested Capital (ROIC)  31.2%  31.3%      
           
(1) Certain balance sheet reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation due to the adoption of a new accounting standard at the end of FY15.
* Effective tax rate over trailing four quarters ended May 7, 2016 is 35.3% and May 9, 2015 is 35.7%.
** All averages are computed based on trailing 5 quarter balances.
           

 

AutoZone's 3rd Quarter Fiscal 2016            
Selected Operating Highlights             
Condensed Consolidated Statements of Operations           
                
Location Count & Square Footage             
                
    12 Weeks Ended   12 Weeks Ended  36 Weeks Ended   36 Weeks Ended
    May 7, 2016   May 9, 2015  May 7, 2016   May 9, 2015
AutoZone Domestic stores (Domestic):             
 Store count:             
 Beginning domestic stores  5,193     5,042    5,141     4,984 
 Stores opened  33     27    85     86 
 Stores closed  -     -    -     1 
 Ending domestic stores  5,226     5,069    5,226     5,069 
                
 Relocated stores  1     1    4     3 
                
 Stores with commercial programs  4,274     4,007    4,274     4,007 
                
 Square footage (in thousands)  34,094     33,025    34,094     33,025 
                
AutoZone Mexico stores:             
 Stores opened  7     7    17     16 
 Total stores in Mexico  458     418    458     418 
                
AutoZone Brazil stores:             
 Stores opened  -     2    1     2 
 Total stores in Brazil  8     7    8     7 
                
Total AutoZone stores  5,692     5,494    5,692     5,494 
 Square footage (in thousands)  37,528     36,157    37,528     36,157 
 Square footage per store  6,593     6,581    6,593     6,581 
                
IMC branches:              
 Branches opened  1     -    5     1 
 Branches acquired  -     -    -     17 
 Total IMC branches  25     18    25     18 
                
Total locations chainwide  5,717     5,512    5,717     5,512 
                
Sales Statistics              
($ in thousands, except sales per average square foot)             
    12 Weeks Ended   12 Weeks Ended  Trailing 4 Quarters   Trailing 4 Quarters
Total AutoZone stores (Domestic, Mexico and Brazil)May 7, 2016   May 9, 2015  May 7, 2016   May 9, 2015
 Sales per average store $434    $432   $1,785    $1,761 
 Sales per average square foot $66    $66   $271    $268 
                
Total Auto Parts (Domestic, Mexico, Brazil, and IMC)             
 Total auto parts sales $2,503,108    $2,404,469   $10,157,577    $9,586,307 
 % Increase vs. LY  4.1%    6.5%   6.0%    4.5%
                
Domestic Commercial (Excludes IMC)             
 Total domestic commercial sales $481,444    $452,153   $1,920,418    $1,752,211 
 % Increase vs. LY  6.5%    11.4%   9.6%    10.4%
                
All Other (ALLDATA, E-Commerce, and AutoAnything)            
 All other sales $90,564    $88,552   $369,734    $360,326 
 % Increase vs. LY  2.3%    6.5%   2.6%    4.8%
                
    12 Weeks Ended   12 Weeks Ended  36 Weeks Ended   36 Weeks Ended
    May 7, 2016   May 9, 2015  May 7, 2016   May 9, 2015
Domestic same store sales   2.0%    2.3%   3.0%    3.4%
                
Inventory Statistics (Total Locations)             
    as of   as of       
    May 7, 2016   May 9, 2015       
 Accounts payable/inventory  110.9%    110.9%       
                
 ($ in thousands)              
 Inventory  $3,597,251    $3,468,249        
 Inventory per location $629    $629        
 Net inventory (net of payables) $(393,779)   $(376,880)       
 Net inventory  / per location $(69)   $(68)       
                
    Trailing 5 Quarters       
    May 7, 2016   May 9, 2015       
 Inventory turns  1.4 x   1.4 x      
                

 

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