O’Reilly Automotive announced record revenues and earnings for its first quarter ended March 31, 2016.
First quarter financial results
Sales for the first quarter ended March 31, 2016, increased $194 million, or 10%, to $2.10 billion from $1.90 billion for the same period one year ago. Gross profit for the first quarter increased to $1.10 billion (or 52.4% of sales) from $987 million (or 51.9% of sales) for the same period one year ago, representing an increase of 11%. Selling, general and administrative expenses for the first quarter increased to $679 million (or 32.4% of sales) from $637 million (or 33.5% of sales) for the same period one year ago, representing an increase of 7%. Operating income for the first quarter increased to $419 million (or 20.0% of sales) from $350 million (or 18.4% of sales) for the same period one year ago, representing an increase of 19%.
Net income for the first quarter ended March 31, 2016, increased $43 million, or 20%, to $255 million (or 12.2% of sales) from $213 million (or 11.2% of sales) for the same period one year ago. Diluted earnings per common share for the first quarter increased 26% to $2.59 on 99 million shares versus $2.06 on 103 million shares for the same period one year ago.
Commenting on the company’s first quarter results, O’Reilly’s President and CEO, Greg Henslee said, “We are very proud to report a strong start to 2016, highlighted by a 6.1% increase in comparable store sales, which represents our 10th consecutive quarter of comparable store sales growth greater than 5%, and a 26% increase in first quarter diluted earnings per share to $2.59, which is our 29th consecutive quarter of diluted earnings per share growth greater than 15%. As we previously discussed, our first quarter 2016 results included one additional day due to Leap Day, which is excluded from our comparable store sales results, but benefited our first quarter EPS by approximately $0.05 per share. Our consistently strong performance is the direct result of the unwavering commitment of our over 73,000 Team Members dedicated to providing excellent customer service, and I would like to thank each of our hard working Team Members for our strong first quarter performance and their relentless focus on our long-term success.”
Henslee continued, “As we have commented on in the past, our gross margin results can face headwinds relating to merchandise acquisition cost improvements, which is a positive driver to our long-term gross margin expansion, but can create short term pressure on our gross margin results due to reducing our inventory value to the lower acquisition cost in accordance with our LIFO accounting. Our second quarter earnings per share guidance includes an expected non-cash impact from a specific new supplier contract resulting in LIFO headwinds of approximately $23 million. While this item impacts our second quarter gross margin expectations, we still anticipate full-year gross margin to be within our previously guided range of 52.3% to 52.7% of sales as our gross margin benefits from these cost reductions for the remainder of 2016.”
Share repurchase program
During the first quarter ended March 31, 2016, the company repurchased 1.2 million shares of its common stock, at an average price per share of $254.02, for a total investment of $313 million. Subsequent to the end of the first quarter and through the date of this release, the company repurchased an additional 0.3 million shares of its common stock, at an average price per share of $270.61, for a total investment of $71 million. The company has repurchased a total of 52.7 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through the date of this release, at an average price of $108.84, for a total aggregate investment of $5.74 billion. As of the date of this release, the company had approximately $509 million remaining under its current share repurchase authorization.
First quarter comparable store sales results
Comparable store sales are calculated based on the change in sales for stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members, as well as the sales from Leap Day in the three months ended March 31, 2016. Comparable store sales increased 6.1% for the first quarter ended March 31, 2016, versus 7.2% for the same period one year ago.
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