AutoZone reports fiscal Q3 net income down 0.6% from a year ago at US$592.6M, with net sales up 5.9% to US$3.9B as domestic same store sales grow 2.6% for the quarter; company opened 24 new US stores, with commercial sales growing 26% from a year ago

Sample article from our Automobile Industry

MEMPHIS, Tennessee , May 25, 2022 (press release) –

AutoZone, Inc. (NYSE: AZO) today reported net sales of $3.9 billion for its third quarter (12 weeks) ended May 7, 2022, an increase of 5.9% from the third quarter of fiscal 2021 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 2.6% for the quarter.

“We are very proud to report solid same store sales growth on top of last year’s remarkable 28.9%. Both our retail and commercial sales performance exceeded our expectations this quarter. While our commercial sales growth accelerated to 26.0%, our retail sales also remained healthy considering the tough comparison from a year ago. We continue to believe the initiatives we have in place position us well for our upcoming fourth quarter,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

For the quarter, gross profit, as a percentage of sales, was 51.91%, a decrease of 54 basis points versus the prior year. The decrease in gross margin was primarily driven by accelerated growth in our lower margin Commercial business. Operating expenses, as a percentage of sales, were 31.58% versus 30.44% last year. The increase in operating expenses, as a percentage of sales, was driven by payroll deleverage as last year’s historic comparable store sales drove significant leverage.

Operating profit decreased 2.2% to $785.7 million. Net income for the quarter decreased 0.6% over the same period last year to $592.6 million, while diluted earnings per share increased 9.6% to $29.03 from $26.48 in the year-ago quarter.

Under its share repurchase program, AutoZone repurchased 449 thousand shares of its common stock for $900 million during the third quarter, at an average price of $2,006 per share. At the end of the third quarter, the Company had $2.058 billion remaining under its current share repurchase authorization.

The Company’s inventory increased 13.9% over the same period last year, primarily driven by inflation with the remaining growth driven by our growth initiatives, including megahubs, hubs and new stores. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $216 thousand versus negative $167 thousand last year and negative $198 thousand last quarter.

“We remain committed to providing the best and safest place to shop for everyone’s automotive needs. During these unique and challenging times, we strive to deliver exceptional customer service while focusing on our growth initiatives. We will take nothing for granted as we continue to prudently invest in our business and remain focused on generating solid returns on capital. We are committed to our long-term approach of increasing operating earnings and free cash flows while utilizing our balance sheet effectively,” said Rhodes.  

During the quarter ended May 7, 2022, AutoZone opened 24 new stores in the U.S., opened four stores in Mexico and three stores in Brazil. As of May 7, 2022, the Company had 6,115 stores in the U.S., 673 in Mexico and 58 in Brazil for a total store count of 6,846.

AutoZone is the leading retailer and distributor of automotive replacement parts and accessories in the Americas. 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, service stations and public sector accounts. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand automotive diagnostic, repair and shop management software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. We also provide product information on our Duralast branded products through www.duralastparts.com. AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, May 24, 2022, beginning at 10:00 a.m. (EST) to discuss its third quarter results. This call is being web cast and can be accessed, along with supporting slides, at AutoZone’s website at www.autozone.com and clicking on Investor Relations. Investors may also listen to the call by dialing (888) 506-0062, passcode AutoZone. In addition, a telephone replay will be available by dialing (877) 481-4010, replay passcode 45495 through June 7, 2022.

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 and adjusted debt to 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 capital structure in order to maintain its investment grade credit ratings. 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 constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” 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: product demand, due to changes in fuel prices, miles driven or otherwise; energy prices; weather; competition; credit market conditions; cash flows; access to available and feasible financing; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues, such as the ongoing global coronavirus pandemic; inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; anticipated impact of new accounting standards; and business interruptions. Certain of these risks and uncertainties are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of the Company’s Annual Report on Form 10-K for the year ended August 28, 2021, 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. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. 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.

Contact Information:
Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.com 
Media: David McKinney at (901) 495-7951, david.mckinney@autozone.com 

AutoZone's 3rd Quarter Highlights - Fiscal 2022      
               
Condensed Consolidated Statements of Operations          
3rd Quarter, FY2022              
(in thousands, except per share data)              
    GAAP Results      
    12 Weeks Ended   12 Weeks Ended      
    May 7, 2022   May 8, 2021      
               
Net sales   $ 3,865,222     $ 3,651,023        
Cost of sales     1,858,808       1,736,077        
Gross profit     2,006,414       1,914,946        
Operating, SG&A expenses     1,220,744       1,111,441        
Operating profit (EBIT)     785,670       803,505        
Interest expense, net     41,888       45,026        
Income before taxes     743,782       758,479        
Income tax expense(1)     151,211       162,315        
Net income   $ 592,571     $ 596,164        
Net income per share:              
Basic   $ 29.93     $ 27.15        
Diluted   $ 29.03     $ 26.48        
Weighted average shares outstanding:              
Basic     19,798       21,956        
Diluted     20,414       22,515        
               
(1)The twelve weeks ended May 7, 2022 and the comparable prior year period include $21.1M and $16.0M in tax benefits from stock option exercises, respectively    
         
               
Year-To-Date 3rd Quarter, FY2022              
(in thousands, except per share data)              
    GAAP Results      
    36 Weeks Ended   36 Weeks Ended      
    May 7, 2022   May 8, 2021(2)      
               
Net sales   $ 10,903,875     $ 9,716,101        
Cost of sales     5,187,075       4,566,155        
Gross profit     5,716,800       5,149,946        
Operating, SG&A expenses     3,549,885       3,249,449        
Operating profit (EBIT)     2,166,915       1,900,497        
Interest expense, net     127,642       137,217        
Income before taxes     2,039,273       1,763,280        
Income taxes(1)     419,712       378,737        
Net income   $ 1,619,561     $ 1,384,543        
Net income per share:              
Basic   $ 79.26     $ 61.24        
Diluted   $ 76.90     $ 59.80        
Weighted average shares outstanding:              
Basic     20,433       22,609        
Diluted     21,060       23,154        
               
(1)The thirty-six weeks ended May 7, 2022 and the comparable prior year period include $55.9M and $35.2M in tax benefits from stock option exercises, respectively      
(2)The thirty-six weeks ended May 8, 2021 was negatively impacted by pandemic related expenses, including Emergency Time-Off of approximately $46M (pre-tax)      
               
Selected Balance Sheet Information              
(in thousands)              
    May 7, 2022   May 8, 2021   August 28, 2021  
               
Cash and cash equivalents   $ 263,044     $ 975,646     $ 1,171,335    
Merchandise inventories     5,313,114       4,665,477       4,639,813    
Current assets     6,254,721       6,224,396       6,415,303    
Property and equipment, net     4,971,626       4,683,149       4,856,891    
Operating lease right-of-use assets     2,764,631       2,694,846       2,718,712    
Total assets     14,520,565       14,137,946       14,516,199    
Accounts payable     6,793,205       5,778,222       6,013,924    
Current liabilities     8,064,076       7,013,249       7,369,754    
Operating lease liabilities, less current portion     2,659,535       2,594,506       2,632,842    
Total debt     6,057,444       5,267,896       5,269,820    
Stockholders' deficit     (3,387,230 )     (1,763,392 )     (1,797,536 )  
Working capital     (1,809,355 )     (788,853 )     (954,451 )  
                   


 

AutoZone's 3rd Quarter Highlights - Fiscal 2022                  
                   
Condensed Consolidated Statements of Operations                  
                   
Adjusted Debt / EBITDAR                  
(in thousands, except adjusted debt to EBITDAR ratio)   Trailing 4 Quarters          
    May 7, 2022   May 8, 2021          
Net income   $ 2,405,332     $ 2,125,000            
Add: Interest expense     185,762       202,854            
    Income tax expense     619,851       590,688            
EBIT     3,210,945       2,918,542            
                   
Add: Depreciation and amortization     431,004       403,395            
    Rent expense(1)     360,076       339,193            
    Share-based expense     67,109       50,645            
EBITDAR   $ 4,069,134     $ 3,711,775            
                   
Debt   $ 6,057,444     $ 5,267,896            
Financing lease liabilities     288,483       228,597            
Add: Rent x 6(1)     2,160,456       2,035,158            
Adjusted debt   $ 8,506,383     $ 7,531,651            
                   
Adjusted debt to EBITDAR     2.1       2.0            
                   
Adjusted Return on Invested Capital (ROIC)                  
(in thousands, except ROIC)                  
    Trailing 4 Quarters          
    May 7, 2022   May 8, 2021          
Net income   $ 2,405,332     $ 2,125,000            
Adjustments:                  
Interest expense     185,762       202,854            
Rent expense(1)     360,076       339,193            
Tax effect(2)     (111,896 )     (118,167 )          
Adjusted after-tax return   $ 2,839,274     $ 2,548,880            
                   
Average debt(3)   $ 5,541,462     $ 5,446,162            
Average stockholders' deficit(3)     (2,442,077 )     (1,364,932 )          
Add: Rent x 6(1)     2,160,456       2,035,158            
Average financing lease liabilities(3)     268,111       227,061            
Invested capital   $ 5,527,952     $ 6,343,449            
                   
Adjusted After-Tax ROIC     51.4 %     40.2 %          
                   
(1) The table below outlines the calculation of rent expense and reconciles rent expense to total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the trailing four quarters ended May 7, 2022 and May 8, 2021          
                           
                   
    Trailing 4 Quarters          
(in thousands)   May 7, 2022   May 8, 2021          
Total lease cost, per ASC 842   $ 451,601     $ 421,750            
Less: Finance lease interest and amortization     (65,128 )     (55,725 )          
Less: Variable operating lease components, related to insurance and common area maintenance     (26,397 )     (26,832 )          
         
Rent expense   $ 360,076     $ 339,193            
                       
                   
(2) Effective tax rate over trailing four quarters ended May 7, 2022 and May 8, 2021 is 20.5% and 21.8%, respectively          
(3) All averages are computed based on trailing five quarter balances          
                   
Other Selected Financial Information                  
(in thousands)                  
    May 7, 2022   May 8, 2021          
Cumulative share repurchases ($ since fiscal 1998)   $ 29,092,425     $ 24,832,432            
Remaining share repurchase authorization ($)     2,057,575       1,317,568            
                   
Cumulative share repurchases (shares since fiscal 1998)     152,035       149,696            
                   
Shares outstanding, end of quarter     19,576       21,620            
                   
                   
    12 Weeks Ended   12 Weeks Ended     36 Weeks Ended   36 Weeks Ended
    May 7, 2022   May 8, 2021     May 7, 2022   May 8, 2021
                   
Depreciation and amortization   $ 102,083     $ 94,017       $ 301,365   $ 278,044
                   
Capital spending     161,207       137,009         369,350     375,653
                   

 

AutoZone's 3rd Quarter Highlights - Fiscal 2022                           
Selected Operating Highlights                        
Condensed Consolidated Statements of Operations                    
                            
Store Count & Square Footage                        
                            
       12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended  
       May 7, 2022     May 8, 2021     May 7, 2022     May 8, 2021  
Domestic:                        
  Beginning stores     6,091         5,951         6,051         5,885    
  Stores opened     24         25         65         91    
  Stores closed     -         (1 )       (1 )       (1 )  
  Ending domestic stores     6,115         5,975         6,115         5,975    
                             
  Relocated stores     4         6         8         11    
                             
  Stores with commercial programs     5,276         5,107         5,276         5,107    
                             
  Square footage (in thousands)     40,230         39,175         40,230         39,175    
                             
Mexico:                        
  Beginning stores     669         628         664         621    
  Stores opened     4         7         9         14    
  Ending Mexico stores     673         635         673         635    
                             
Brazil:                        
  Beginning stores     55         46         52         43    
  Stores opened     3         1         6         4    
  Ending Brazil stores     58         47         58         47    
                             
Total     6,846         6,657         6,846         6,657    
                             
  Square footage (in thousands)     45,680         44,253         45,680         44,253    
  Square footage per store     6,673         6,648         6,673         6,648    
                             
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, 2022     May 8, 2021     May 7, 2022     May 8, 2021  
  Sales per average store   $ 556       $ 541       $ 2,301       $ 2,134    
  Sales per average square foot   $ 83       $ 81       $ 346       $ 321    
                             
Total Auto Parts (Domestic, Mexico and Brazil)                        
  Total auto parts sales   $ 3,795,290       $ 3,590,281       $ 15,537,156       $ 14,024,674    
     % Increase vs. LY     5.7 %       31.8 %       10.8 %       18.4 %  
                             
Domestic Commercial                        
  Total domestic commercial sales   $ 1,044,293       $ 828,569       $ 3,970,727       $ 3,138,398    
     % Increase vs. LY     26.0 %       44.4 %       26.5 %       18.9 %  
                             
  Average sales per program per week   $ 16.6       $ 13.5       $ 14.7       $ 12.0    
     % Increase vs. LY     23.0 %       39.2 %       22.5 %       17.6 %  
                             
All Other, including ALLDATA                        
  All other sales   $ 69,932       $ 60,742       $ 280,203       $ 237,395    
     % Increase vs. LY     15.1 %       11.1 %       18.0 %       5.7 %  
                             
                 
        12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended  
        May 7, 2022     May 8, 2021     May 7, 2022     May 8, 2021  
Domestic same store sales     2.6 %       28.9 %       9.5 %       19.0 %  
                             
Inventory Statistics (Total Stores)                        
        as of     as of              
        May 7, 2022     May 8, 2021              
  Accounts payable/inventory     127.9 %       123.9 %              
                             
  ($ in thousands)                        
  Inventory    $ 5,313,114       $ 4,665,477                
  Inventory per store     776         701                
  Net inventory (net of payables)     (1,480,091 )       (1,112,745 )              
  Net inventory / per store     (216 )       (167 )              
                             
        Trailing 5 Quarters              
        May 7, 2022     May 8, 2021              
  Inventory turns     1.5 x       1.5              

 


Source: AutoZone, Inc.

 

 

 

 

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