AutoZone 2nd Quarter Same Store Sales Increase 15.2%; EPS Increases to $14.93

March 2, 2021 6:55 AM EST

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MEMPHIS, Tenn., March 02, 2021 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO) today reported net sales of $2.9 billion for its second quarter (12 weeks) ended February 13, 2021, an increase of 15.8% from the second quarter of fiscal 2020 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 15.2% for the quarter.

For the quarter, gross profit, as a percentage of sales, was 53.6%, a decrease of 77 basis points versus the prior year. The decrease in gross margin was attributable to increased supply chain costs, pricing initiatives, accelerated loyalty program participation and a shift in mix. Operating expenses, as a percentage of sales, improved to 37.0% versus 38.1% for last year’s quarter, with leverage primarily due to higher sales volumes, offset by additional emergency time-off benefits and other pandemic-related expenses totaling approximately $40 million (137 basis points).

Operating profit increased 18.1% to $481.8 million. Net income for the quarter increased 15.6% over the same period last year to $345.9 million, while diluted earnings per share increased 20.5% to $14.93 per share from $12.39 per share in the year-ago quarter. The increase in net income was driven by strong topline growth.

AutoZone repurchased 752,004 shares of its common stock for $900 million during the second quarter, at an average price of $1,197 per share. At the end of the second quarter, the Company had $717.6 million remaining under its current share repurchase authorization.

The Company’s inventory increased 2.8% over the same period last year, driven by new stores and improved product assortment. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was approximately negative $93 thousand versus negative $41 thousand last year and negative $99 thousand last quarter.“This quarter, we were again able to deliver exceptionally strong same store sales and earnings growth, and many performance metrics remained at historically high levels. While our strong (DIY) sales have been aided by government stimulus and changes to consumer behavior as a result of the pandemic, our growth initiatives continue to deliver strong share gains with both DIY and Commercial customers. In Commercial, our business was up 15% this quarter as the investments we are making in pricing, service and assortment are strengthening our competitive position in this large, fragmented market. We intend to accelerate our Company’s historical growth rate as we increase our penetration in this market.

Our outstanding performance is also driven by the exceptional and heroic efforts of our AutoZoners, particularly those in our stores and distribution centers who have been there every day for our customers during these extraordinary times. We recently announced a financial incentive for our employees to receive the COVID-19 vaccine and we will continue to invest appropriately in a safe and productive work environment for our people,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended February 13, 2021, AutoZone opened 27 new stores in the U.S., seven in Mexico and one in Brazil. As of February 13, 2021, the Company had 5,951 stores in the U.S., 628 stores in Mexico, and 46 stores in Brazil for a total store count of 6,625.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the Americas. 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. We also have commercial programs in all stores in Mexico and Brazil. AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com and www.alldatadiy.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, March 2, 2021, beginning at 10:00 a.m. (EST) to discuss its second 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 (210) 839-8923 and entering the participant passcode 9697984. In addition, a telephone replay will be available by dialing (203) 369-1211 through April 2, 2021, 11:59 pm (EST).

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 debit 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; 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 pandemic of a novel strain of the coronavirus (“COVID-19”); inflation; the ability to hire, train and retain qualified employees; construction delays; the compromising of confidentiality, availability or integrity of information, including cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damages to our reputation; challenges in international markets; failure or interruption of our information technology systems; origin and raw material costs of suppliers; disruption in our supply chain, due to public health epidemics or otherwise; 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 29, 2020, 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.comMedia: David McKinney at (901) 495-7951, david.mckinney@autozone.com

AutoZone's 2nd Quarter Highlights - Fiscal 2021 
          
Condensed Consolidated Statements of Operations 
2nd Quarter, FY2021 
(in thousands, except per share data) 
    GAAP Results   
    12 Weeks Ended 12 Weeks Ended   
    February 13, 2021(2) February 15, 2020   
          
Net sales $2,910,818  $2,513,663    
Cost of sales  1,351,435   1,147,600    
Gross profit  1,559,383   1,366,063    
Operating, SG&A expenses  1,077,616   958,125    
Operating profit (EBIT)  481,767   407,938    
Interest expense, net  46,012   44,335    
Income before taxes  435,755   363,603    
Income taxes(1)  89,809   64,321    
Net income $345,946  $299,282    
Net income per share:       
 Basic $15.27  $12.70    
 Diluted $14.93  $12.39    
Weighted average shares outstanding:       
 Basic  22,648   23,570    
 Diluted  23,168   24,160    
          
(1)The twelve weeks ended February 13, 2021 and the comparable prior year period include $11.6M and $15.0M in tax benefits from stock option exercises, respectively    
   
(2)The twelve weeks ended February 13, 2021 was negatively impacted by charges for Emergency Time-Off benefits and other Pandemic related expenses in response to COVID-19, approximately $40M (pre-tax)   
   
          
Year-To-Date 2nd Quarter, FY2021 
(in thousands, except per share data) 
    GAAP Results   
    24 Weeks Ended 24 Weeks Ended   
    February 13, 2021(2) February 15, 2020   
          
Net sales $6,065,078  $5,306,700    
Cost of sales  2,830,078   2,439,569    
Gross profit  3,235,000   2,867,131    
Operating, SG&A expenses  2,138,008   1,959,170    
Operating profit (EBIT)  1,096,992   907,961    
Interest expense, net  92,191   88,078    
Income before taxes  1,004,801   819,883    
Income taxes(1)  216,422   170,263    
Net income $788,379  $649,620    
Net income per share:       
 Basic $34.37  $27.38    
 Diluted $33.59  $26.70    
Weighted average shares outstanding:       
 Basic  22,935   23,722    
 Diluted  23,473   24,326    
          
(1)The twenty-four weeks ended February 13, 2021 and the comparable prior year period include $19.2M and $16.5M in tax benefits from stock option exercises, respectively   
   
(2)The twenty-four weeks ended February 13, 2021 was negatively impacted by charges for Emergency Time-Off benefits and other Pandemic related expenses in response to COVID-19, approximately $45M (pre-tax)   
   
          
Selected Balance Sheet Information 
(in thousands) 
    February 13, 2021 February 15, 2020 August 29, 2020 
Cash and cash equivalents $1,026,164  $152,970  $1,750,815  
Merchandise inventories  4,736,826   4,606,211   4,473,282  
Current assets  6,326,845   5,300,547   6,811,872  
Property and equipment, net  4,627,993   4,476,426   4,509,221  
Operating lease right-of-use assets  2,660,667   2,579,217   2,581,677  
Total assets  14,159,993   12,863,749   14,423,872  
Accounts payable  5,351,096   4,869,914   5,156,324  
Current liabilities  6,554,271   5,779,560   6,283,091  
Operating lease liabilities, less current portion  2,566,974   2,494,840   2,501,560  
Total debt  5,516,396   5,451,471   5,513,371  
Stockholders' deficit  (1,523,573)  (1,711,119)  (877,977) 
Working capital  (227,426)  (479,013)  528,781  
          

AutoZone's 2nd Quarter Highlights - Fiscal 2021 
             
Condensed Consolidated Statements of Operations 
             
Adjusted Debt / EBITDAR 
(in thousands, except adjusted debt to EBITDAR ratio) Trailing 4 Quarters     
     February 13, 2021 February 15, 2020     
Net income  $1,871,731  $1,620,797      
Add: Interest expense  205,278   192,513      
Income tax expense  529,701   422,949      
EBIT    2,606,710   2,236,259      
             
Add: Depreciation and amortization  401,073   384,147      
Rent expense(1)  335,969   339,117      
Share-based expense  46,906   43,804      
EBITDAR  $3,390,658  $3,003,327      
             
Debt(2)  $4,684,979  $5,451,471      
Financing lease liabilities  225,411   196,047      
Add: rent x 6(1)  2,015,814   2,034,702      
Adjusted debt $6,926,204  $7,682,220      
             
Adjusted debt to EBITDAR  2.0   2.6      
             
Adjusted Return on Invested Capital (ROIC) 
(in thousands, except ROIC) 
     Trailing 4 Quarters     
     February 13, 2021 February 15, 2020     
Net income  $1,871,731  $1,620,797      
Adjustments:         
Interest expense  205,278   192,513      
Rent expense(1)  335,969   339,117      
Tax effect(3)  (119,616)  (110,048)     
Adjusted after-tax return $2,293,362  $2,042,379      
             
Average debt(4)(5) $4,648,593  $5,241,651      
Average stockholders' deficit(5)  (1,354,477)  (1,676,987)     
Add: Rent x 6(1)  2,015,814   2,034,702      
Average financing lease liabilities(5)  220,550   178,416      
Invested capital $5,530,480  $5,777,782      
             
Adjusted After-Tax ROIC  41.5%  35.3%     
             
(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 February 13, 2021 and February 15, 2020 (in thousands):    
    
    
    
             
  Total lease cost, per ASC 842, for the trailing four quarters ended February 13, 2021 $418,100      
  Less:Financing lease interest and amortization  (55,880)     
  Less:Variable operating lease components, related to insurance and common area maintenance  (26,251)     
        
  Rent expense for the trailing four quarters ended February 13, 2021 $335,969      
               
  Total lease cost, per ASC 842, for the 24 weeks ended February 15, 2020 $190,390      
  Less:Financing lease interest and amortization    (28,195)     
  Less:Variable operating lease components, related to insurance and common area maintenance  (11,444)     
        
  Rent expense for the 24 weeks ended February 15, 2020 $150,751      
  Add:Rent expense for the 29 weeks ended August 31, 2019 as previously reported prior to the adoption of ASC 842  188,366      
        
  Rent expense for the trailing four quarters ended February 15, 2020 $339,117      
             
(2)The Company ended Q2 FY21 with excess cash of $831.4M. Debt is presented net of excess cash    
(3) Effective tax rate over trailing four quarters ended February 13, 2021 and February 15, 2020 is 22.1% and 20.7%, respectively    
(4)Average debt for the trailing four quarters ended February 13, 2021 is presented net of average excess cash of $834.3M     
(5)All averages are computed based on trailing 5 quarter balances    
             
Other Selected Financial Information 
(in thousands)     
     February 13, 2021 February 15, 2020     
Cumulative share repurchases ($ since fiscal 1998) $23,932,433  $22,188,053      
Remaining share repurchase authorization ($)  717,567   961,947      
             
Cumulative share repurchases (shares since fiscal 1998)  149,033   147,540      
             
Shares outstanding, end of quarter  22,183   23,488      
             
             
             
     12 Weeks Ended 12 Weeks Ended 24 Weeks Ended 24 Weeks Ended 
     February 13, 2021 February 15, 2020 February 13, 2021 February 15, 2020 
             
Depreciation and amortization $94,476  $90,671  $184,027 $180,420 
             
Capital spending  125,608   89,156   238,644  190,563 
             

AutoZone's 2nd Quarter Highlights - Fiscal 2021 
Selected Operating Highlights 
Condensed Consolidated Statements of Operations 
                
Store Count & Square Footage 
                
     12 Weeks Ended  12 Weeks Ended  24 Weeks Ended  24 Weeks Ended 
     February 13, 2021  February 15, 2020  February 13, 2021  February 15, 2020 
Domestic:             
 Beginning stores  5,924    5,790    5,885    5,772  
 Stores opened  27    25    66    43  
 Ending domestic stores  5,951    5,815    5,951    5,815  
                
 Relocated stores  1    -    5    -  
                
 Stores with commercial programs  5,088    4,942    5,088    4,942  
                
 Square footage (in thousands)  39,003    38,077    39,003    38,077  
                
Mexico:              
 Beginning stores  621    606    621    604  
 Stores opened  7    2    7    4  
 Ending Mexico stores  628    608    628    608  
                
Brazil:              
 Beginning stores  45    37    43    35  
 Stores opened  1    1    3    3  
 Ending Brazil stores  46    38    46    38  
                
Total     6,625    6,461    6,625    6,461  
                
 Square footage (in thousands)  44,021    42,885    44,021    42,885  
 Square footage per store  6,645    6,638    6,645    6,638  
                
Sales Statistics            
($ in thousands, except sales per average square foot)            
     12 Weeks Ended  12 Weeks Ended  Trailing 4 Quarters  Trailing 4 Quarters(1) 
Total AutoZone Stores (Domestic, Mexico and Brazil)February 13, 2021  February 15, 2020  February 13, 2021  February 15, 2020 
 Sales per average store $433   $382   $2,011   $1,867  
 Sales per average square foot $65   $58   $303   $282  
                
Total Auto Parts (Domestic, Mexico and Brazil)             
 Total auto parts sales $2,859,698   $2,464,988   $13,158,997   $11,857,188  
 % Increase vs. LY  16.0%   2.6%   11.0%   6.8% 
                
Domestic Commercial             
 Total domestic commercial sales $638,913   $556,924   $2,883,615   $2,679,732  
 % Increase vs. LY  14.7%   8.2%   7.6%   15.1% 
                
 Average sales per program per week $10.5   $9.4   $11.1   $10.4  
 % Increase vs. LY  11.7%   4.4%   6.7%   9.5% 
                
All Other, including ALLDATA            
 All other sales $51,120   $48,675   $231,348   $220,953  
 % Increase vs. LY  5.0%   2.0%   4.7%   7.7% 
                
(1) Fiscal 2019 results include an additional week of sales of approximately $234.5M for Total Auto Parts, $51.3M for Domestic Commercial and $4.1M for All Other. Sales per average store and sales per average square foot benefited from the additional week by $37K and $6K, respectively  
         
         
     12 Weeks Ended  12 Weeks Ended  24 Weeks Ended  24 Weeks Ended 
     February 13, 2021  February 15, 2020  February 13, 2021  February 15, 2020 
Domestic same store sales  15.2%   (0.8%)   13.6%   1.4% 
                
Inventory Statistics (Total Stores)            
     as of  as of       
     February 13, 2021  February 15, 2020       
 Accounts payable/inventory  113.0%   105.7%       
                
 ($ in thousands)             
 Inventory  $4,736,826   $4,606,211        
 Inventory per store  715    713        
 Net inventory (net of payables)  (614,270)   (263,703)       
 Net inventory / per store  (93)   (41)       
                
     Trailing 5 Quarters       
     February 13, 2021  February 15, 2020       
 Inventory turns  1.4   1.3       
                

 

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Source: AutoZone, Inc.


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