MEMPHIS, Tenn., Dec. 4, 2007 (PRIME NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $1.5 billion for its first quarter (12 weeks) ended November 17, 2007, an increase of 4.5% from fiscal first quarter 2007. Domestic same store sales, or sales for stores open at least one year, increased 1.3% for the quarter.
Net income for the quarter increased 7.0% over the same period last year to $132.5 million, while diluted earnings per share increased 17.4% to $2.02 per share from $1.73 per share in the year-ago quarter.
For the quarter, gross profit, as a percentage of sales, was 49.9% (versus 49.2% last year). The improvement in gross margin was due to ongoing category management efforts as well as a shift in sales mix to higher margin categories. Additionally, operating expenses, as a percentage of sales, were 33.6% (versus 33.2% last year). The increase in operating expenses, as a percentage of sales, primarily reflected higher occupancy costs versus last year.
Under its share repurchase program, AutoZone repurchased 2.9 million shares of its common stock for $350.0 million during the first quarter, at an average price of $121 per share. The Company has $108 million remaining under its current share repurchase authorization.
The Company's GAAP inventory increased 8.9% over the same period last year. However, adjusted inventory per store, which includes supplier owned pay-on-scan inventory, as of November 17, 2007, was $507 thousand versus $503 thousand last year, an increase of less than 1%. Net inventory, defined as merchandise inventories less accounts payable, decreased on a per store basis to $50 thousand from $60 thousand last year.
"We were pleased to report record sales and earnings performance for this quarter, as we continued to build momentum with our ongoing efforts to improve the customer shopping experience. With the support of all our AutoZoners, we were able to drive sales increases across each of our strategic priorities: Domestic Retail, Domestic Commercial, Mexico and ALLDATA. As our operating model continues to be strong, we will maintain our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.
During the quarter ended November 17, 2007, AutoZone opened 40 new stores, replaced three stores, and closed one store in the U.S. and opened one store in Mexico. As of November 17, 2007, the Company had 3,972 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 124 stores in Mexico.
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, and service stations. AutoZone also sells the ALLDATA brand diagnostic and repair software. On the web, AutoZone sells diagnostic and repair information, and auto and light truck parts through www.autozone.com. AutoZone does not derive revenue from automotive repair or installation.
AutoZone will host a conference call this morning, Tuesday, December 4, 2007, beginning at 10:00 a.m. (EST) to discuss the 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 11, 2007 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 adjusted inventory, adjusted inventory per store, adjusted debt, and adjusted debt/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 debt levels to a ratio of adjusted debt to EBITDAR 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 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: competition; product demand; the economy; credit markets; 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; availability of consumer transportation; construction delays; access to available and feasible financing; and changes in laws or regulations. 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 such events 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. Please refer to the Risk Factors section of AutoZone's Form 10-K for the fiscal year ended August 25, 2007, for more information related to those risks.
AutoZone's 1st Quarter Highlights - Fiscal 2008
Condensed Consolidated Statements of Operations
1st Quarter
(in thousands, except per share data)
GAAP Results
----------------------------
12 Weeks 12 Weeks
Ended Ended
Nov. 17, 2007 Nov. 18, 2006
------------- -------------
Net sales $ 1,455,655 $ 1,393,069
Cost of sales 729,207 707,774
------------- -------------
Gross profit 726,448 685,295
Operating, SG&A expenses 489,073 462,299
------------- -------------
Operating profit (EBIT) 237,375 222,996
Interest expense, net 28,062 27,093
------------- -------------
Income before taxes 209,313 195,903
Income taxes 76,797 72,014
------------- -------------
Net income $ 132,516 $ 123,889
============= =============
Net income per share:
Basic $ 2.04 $ 1.74
Diluted $ 2.02 $ 1.73
Weighted average shares
outstanding:
Basic 64,855 71,082
Diluted 65,444 71,813
Selected Balance Sheet Information
(in thousands)
Nov. 17, 2007 Nov. 18, 2006 Aug. 25, 2007
------------- ------------- -------------
Merchandise inventories $ 2,051,524 $ 1,883,348 $ 2,007,430
Current assets 2,319,737 2,157,294 2,270,455
Property and equipment,
net 2,188,535 2,096,377 2,177,842
Total assets 4,874,217 4,611,685 4,804,709
Accounts payable 1,844,940 1,649,632 1,870,668
Current liabilities 2,319,270 2,047,289 2,285,894
Debt 2,161,070 1,858,921 1,935,618
Stockholders' equity 171,053 537,838 403,200
Working capital 467 110,005 (15,439)
------------------------------------------------------
Adjusted Debt / EBITDAR
(Trailing 4 Qtrs) Nov. 17, 2007 Nov. 18, 2006
----------------------- ------------- -------------
Net income $ 604,299 $ 578,790
Add: Interest 120,085 111,243
Taxes 345,261 337,595
------------- -------------
EBIT 1,069,645 1,027,628
Add: Depreciation 163,549 144,203
Rent expense 155,352 144,238
Option expense 18,342 17,933
------------- -------------
EBITDAR $ 1,406,888 $ 1,334,002
Debt $ 2,161,070 $ 1,858,921
Capital lease obligations 55,985 26,053
Add: adjusted rent x 6 932,112 823,425 *
------------- -------------
Adjusted debt $ 3,149,167 $ 2,708,399
============= =============
Adjusted debt to EBITDAR 2.2 2.0
* For fiscal 2007 adjusted rent is defined as GAAP rent expense less
the rent expense associated with operating leases converted to capital
leases in fiscal 2007.
Selected Cash Flow Information
(in thousands)
12 Weeks 12 Weeks
Ended Ended
Nov. 17, 2007 Nov. 18, 2006
------------- -------------
Depreciation $ 39,692 $ 35,554
Capital spending $ 44,887 $ 52,198
Cash flow before share
repurchases:
Net increase (decrease)
in cash and cash
equivalents $ (6,841) $ (18,199)
Subtract increase
(decrease) in debt 225,452 1,764
Subtract share repurchases (349,990) (90,767)
------------- -------------
Cash flow before share
repurchases and changes
in debt $ 117,697 $ 70,804
============= =============
Other Selected Financial Information
(in thousands)
Nov. 17, 2007 Nov. 18, 2006
------------- -------------
Cumulative share
repurchases ($) $ 5,791,708 $ 4,770,598
Remaining share
authorization ($) $ 108,292 $ 129,402
Cumulative share
repurchases (shares) 102,152 94,038
Shares outstanding, end
of quarter 63,177 70,659
------------------------------------------------------
Trailing 4 Quarters
Nov. 17, 2007 Nov. 18, 2006
------------- -------------
Net income $ 604,299 $ 578,790
Add: After-tax interest 76,422 70,261
After-tax rent 98,866 91,100
------------- -------------
After-tax return 779,587 740,151
Average* debt 1,984,002 1,910,896
Average capital lease
obligations 39,044 6,187
Average equity 431,947 534,372
Add: rent x 6 932,112 865,425
------------- -------------
Pre-tax invested capital $ 3,387,105 $ 3,316,880
============= =============
Return on Invested Capital
(ROIC) 23.0% 22.3%
------------------------------------------------------
* All averages are computed by taking trailing 14 periods balances.
AutoZone's 1st Quarter Fiscal 2008
Selected Operating Highlights
Store Count & Square Footage
----------------------------
12 Weeks 12 Weeks
Ended Ended
Nov. 17, Nov. 18,
2007 2006
----------- -----------
Domestic stores:
Store count:
Stores opened 40 40
Stores closed 1 --
Replacement
stores 3 5
Total domestic
stores 3,972 3,812
Stores with
commercial
programs 2,188 2,140
Square footage
(in thousands): 25,397 24,300
Square footage
per store 6,394 6,375
Mexico stores:
Stores opened 1 --
Total stores in
Mexico 124 100
Total stores
chainwide 4,096 3,912
Sales Statistics (Domestic Stores Only)
---------------------------------------
12 Weeks 12 Weeks Trailing Trailing
Ended Ended 4 quarters 4 quarters
Nov. 17, Nov. 18, Nov. 17, Nov. 18,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Total retail sales
($ in thousands) $ 1,213,082 $ 1,171,084 $ 5,202,509 $ 5,033,718
% Increase vs.
LY retail sales 3.6% 3.9% 3.4% 4.0%
Total commercial
sales ($ in
thousands) $ 167,572 $ 160,682 $ 712,457 $ 708,971
% Increase vs.
LY commercial
sales 4.3% 0.2% 0.5% (0.8%)
Sales per average
store ($ in
thousands) $ 349 $ 351 $ 1,520 $ 1,547
Sales per average
square foot $ 55 $ 55 $ 238 $ 243
12 Weeks 12 Weeks
Ended Ended
Nov. 17, Nov. 18,
2007 2006
----------- -----------
Same store sales 1.3% 0.3%
Inventory Statistics (Total Stores)
-----------------------------------
as of as of
Nov. 17, Nov. 18,
2007 2006
----------- -----------
Accounts payable/
inventory 89.9% 87.6%
($ in thousands)
Inventory* $ 2,051,524 $ 1,883,348
Pay-on-scan
inventory 23,232 85,146
----------- -----------
Adjusted inventory $ 2,074,756 $ 1,968,494
Adjusted inventory
per store $ 507 $ 503
Net inventory (net
of payables) $ 206,584 $ 233,716
Net inventory /
store $ 50 $ 60
Trailing 4 quarters
Nov. 17, Nov. 18,
2007 2006
----------- -----------
Inventory turns** 1.6 x 1.7 x
* This is reported balance sheet inventory
** Inventory turns is calculated as cost of sales divided by the
average of the beginning and ending merchandise inventories. The
calculation includes cost of sales related to pay-on-scan sales, which
were $59.2MM for the trailing 52 weeks ended November 17, 2007 and
$169.4MM for the trailing 52 weeks ended November 18, 2006.