O’Reilly Automotive announced record revenues and earnings for its fourth quarter and full year ended Dec. 31, 2017. The results represent 25 consecutive years of comparable store sales growth and record revenue and operating income for O’Reilly since becoming a public company in April of 1993.
4th quarter financial results
Greg Henslee, O’Reilly’s CEO, said, “We generated comparable store sales of 1.3 percent for the fourth quarter, as we faced tough comparisons from a very favorable demand environment in the prior year, as well as calendar headwinds. As we discussed on our third quarter earnings call, December of 2016 was a very strong month, driven by extreme winter weather across the country. We also faced unfavorable calendar shifts in the fourth quarter of 2017, due to the timing of the Christmas holiday, which fell on a Monday in 2017 versus a Sunday in 2016, and one additional Sunday during the fourth quarter of 2017. Sunday represents our lowest volume day, and these combined calendar shifts resulted in a 70-basis point headwind to our fourth quarter 2017 comparable store sales results. Despite these challenges, Team O’Reilly’s hard work and dedication to providing unsurpassed levels of customer service drove our comparable store sales results above the mid-point of our guidance range, and I would like to thank all of our team members for their unwavering commitment to our long-term success.”
Sales for the fourth quarter ended Dec. 31, 2017, increased $92 million, or 4 percent, to $2.19 billion from $2.1 billion for the same period one year ago. Gross profit for the fourth quarter increased to $1.16 billion (or 52.9 percent of sales) from $1.11 billion (or 53.1 percent of sales) for the same period one year ago, representing an increase of 4 percent.
Net income for the fourth quarter ended Dec. 31, 2017, increased $56 million, or 23 percent, to $302 million (or 13.8 percent of sales) from $246 million (or 11.7 percent of sales) for the same period one year ago. Diluted earnings per common share for the fourth quarter increased 36 percent to $3.52 on 86 million shares versus $2.59 on 95 million shares for the same period one year ago. The U.S. Tax Cuts and Jobs Act, enacted in December 2017, significantly reduced the federal corporate income tax rate, and required the company to revalue its deferred income tax liabilities based on the lower enacted federal corporate income tax rate. The company’s net income for the fourth quarter includes a one-time $53 million benefit related to the revaluation of its deferred income tax liabilities, and the company’s diluted earnings per common share of $3.52 for the fourth quarter also includes a one-time 62 cent benefit from the revaluation. The company adopted a required new share-based compensation accounting standard during the first quarter of 2017, which requires excess tax benefits from share-based compensation payments to be recorded in the income statement. The company’s diluted earnings per common share of $3.52 for the fourth quarter ended Dec. 31, 2017, includes a 15-cent benefit from the adoption of the new accounting standard.
Full-year financial results
“Despite industry challenges, O’Reilly generated our 25th consecutive year of comparable store sales growth and record revenue and operating income as a result of the commitment and dedication of our team to providing unsurpassed levels of customer service,” said Henslee. “During 2017, we also achieved another significant milestone with the opening of our 5,000th store. The performance of our new stores continues to exceed our expectations, driven by well-trained and knowledgeable teams of professional parts people who provide outstanding customer service the moment a store opens. As we look ahead, we are excited to continue to drive our growth through the 200 net, new stores we plan to open in 2018.”