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AutoZone 3rd Quarter Total Company Same Store Sales Increase 0.9%; Domestic Same Store Sales were flat; EPS Increases to $36.69

MEMPHIS, Tenn., May 21, 2024 (GLOBE NEWSWIRE) — AutoZone, Inc. (NYSE: AZO) today reported net sales of $4.2 billion for its third quarter (12 weeks) ended May 4, 2024, an increase of 3.5% from the third quarter of fiscal 2023 (12 weeks). Same store sales, or sales for our domestic and international stores open at least one year, are as follows:

       
      Constant Currency
  12 Weeks   12 Weeks*
       
Domestic 0.0 %   0.0 %
International 18.1 %   9.3 %
Total Company 1.9 %   0.9 %
* Excludes impacts from fluctuations of foreign exchange rates.
 

For the quarter, gross profit, as a percentage of sales, was 53.5%, an increase of 102 basis points versus the prior year. The increase in gross margin was primarily driven by higher merchandise margins and a 15 basis point ($7 million net) non-cash LIFO favorability. Operating expenses, as a percentage of sales, were 32.2% versus last year at 31.5%. Deleverage was driven primarily by higher store payroll as a percentage of sales versus the previous year.

Operating profit increased 4.9% to $900.2 million. Net income for the quarter was $651.7 million compared to $647.7 million in the same period last year, while diluted earnings per share increased 7.5% to $36.69.

Under its share repurchase program, AutoZone repurchased 242 thousand shares of its common stock at an average price per share of $3,036, for a total investment of $734.7 million. At the end of the third quarter, the Company had $1.4 billion remaining under its current share repurchase authorization.

“I want to thank and congratulate all AutoZoners for their efforts in delivering solid results for our third fiscal quarter. Our AutoZoners’ ongoing commitment to providing customers with Trustworthy Advice and WOW! Customer Service allowed us to deliver stronger than planned bottom line results. Domestically, our sales performance was negatively impacted at the start of the quarter due to the timing of tax refunds while the cooler than usual weather across several areas of the country negatively impacted our results later in the quarter. Conversely, we were pleased with the strong same store sales results we achieved in our international business. As we begin our all-important summer selling season, we are very excited about the initiatives we have in place to enhance our inventory availability, continue to accelerate our domestic Commercial business, and provide great customer service. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and delivering strong shareholder value,” said Phil Daniele, President and Chief Executive Officer.

During the quarter ended May 4, 2024, AutoZone opened 32 new stores in the U.S., 12 in Mexico and one in Brazil for a total of 45 net new stores. As of May 4, 2024, the Company had 6,364 stores in the U.S., 763 in Mexico and 109 in Brazil for a total store count of 7,236.

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 duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products. The majority of stores have a commercial sales program that provides prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. AutoZone also sells 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. Additionally, we sell the ALLDATA brand of automotive diagnostic, repair, collision and shop management software through www.alldata.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 services.

AutoZone will host a conference call this morning, Tuesday, May 21, 2024, beginning at 10:00 a.m. (ET) 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 by 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 50424 through June 4, 2024.

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 earnings before interest, taxes, depreciation, amortization, rent and share-based expense (“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 herein 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, including extreme temperatures, natural disasters and general weather conditions; competition; credit market conditions; cash flows; access to available and feasible financing on favorable terms; 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; inflation, including wage inflation; the ability to hire, train and retain qualified employees including members of management and other key personnel; construction delays; failure or interruption of our information technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges associated with doing business in and expanding into international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; impact of new accounting standards; our ability to execute our growth initiatives; and other 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 26, 2023, 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. 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 2024
               
Condensed Consolidated Statements of Operations
3rd Quarter, FY2024
(in thousands, except per share data)
      GAAP Results    
      12 Weeks Ended   12 Weeks Ended    
      May 4, 2024   May 6, 2023    
               
Net sales   $ 4,235,485     $ 4,090,541      
Cost of sales     1,969,963       1,944,415      
Gross profit     2,265,522       2,146,126      
Operating, SG&A expenses     1,365,341       1,287,645      
Operating profit (EBIT)     900,181       858,481      
Interest expense, net     104,422       74,313      
Income before taxes     795,759       784,168      
Income tax expense     144,033       136,445      
Net income   $ 651,726     $ 647,723      
Net income per share:            
  Basic   $ 37.73     $ 35.22      
  Diluted   $ 36.69     $ 34.12      
Weighted average shares outstanding:            
  Basic     17,273       18,389      
  Diluted     17,761       18,983      
               
               
               
Year-To-Date 3rd Quarter, FY2024
(in thousands, except per share data)
      GAAP Results    
      36 Weeks Ended   36 Weeks Ended    
      May 4, 2024   May 6, 2023    
               
Net sales   $ 12,284,888     $ 11,766,591      
Cost of sales     5,725,698       5,695,840      
Gross profit     6,559,190       6,070,751      
Operating, SG&A expenses     4,067,163       3,819,261      
Operating profit (EBIT)     2,492,027       2,251,490      
Interest expense, net     298,426       197,645      
Income before taxes     2,193,601       2,053,845      
Income taxes     433,382       390,260      
Net income   $ 1,760,219     $ 1,663,585      
Net income per share:            
  Basic   $ 100.96     $ 88.96      
  Diluted   $ 98.11     $ 86.10      
Weighted average shares outstanding:            
  Basic     17,434       18,700      
  Diluted     17,941       19,322      
               
               
               
               
               
Selected Balance Sheet Information
(in thousands)
      May 4, 2024   May 6, 2023   August 26, 2023
               
Cash and cash equivalents   $ 275,358     $ 274,916     $ 277,054  
Merchandise inventories     6,155,300       5,703,688       5,764,143  
Current assets     7,289,452       6,708,872       6,779,426  
Property and equipment, net     6,049,059       5,334,023       5,596,548  
Operating lease right-of-use assets     3,097,047       2,959,488       2,998,097  
Total assets     17,108,432       15,597,922       15,985,878  
Accounts payable     7,369,673       7,215,566       7,201,281  
Current portion of debt     500,000              
Current liabilities     9,192,587       8,464,947       8,511,856  
Operating lease liabilities, less current portion     2,963,026       2,862,152       2,917,046  
Debt, less current portion     8,496,288       7,340,484       7,668,549  
Stockholders’ deficit     (4,838,237 )     (4,301,577 )     (4,349,894 )
Working capital     (1,903,135 )     (1,756,075 )     (1,732,430 )
               
                                   
AutoZone’s 3rd Quarter Highlights – Fiscal 2024
                   
Condensed Consolidated Statements of Operations
                   
Adjusted Debt / EBITDAR
(in thousands, except adjusted debt to EBITDAR ratio)
      Trailing 4 Quarters        
      May 4, 2024   May 6, 2023        
Net income   $ 2,625,060     $ 2,473,628          
Add: Interest expense     407,153       261,641          
  Income tax expense     682,310       620,035          
EBIT     3,714,523       3,355,304          
                   
Add: Depreciation and amortization     532,906       479,945          
  Rent expense(1)     425,291       403,412          
  Share-based expense     102,012       83,943          
EBITDAR   $ 4,774,732     $ 4,322,604          
                   
Debt   $ 8,996,288     $ 7,340,484          
Financing lease liabilities     344,966       284,896          
Add: Rent x 6(1)     2,551,746       2,420,472          
Adjusted debt   $ 11,893,000     $ 10,045,852          
                   
Adjusted debt to EBITDAR     2.5       2.3          
                   
Adjusted Return on Invested Capital (ROIC)
(in thousands, except ROIC)
      Trailing 4 Quarters        
      May 4, 2024   May 6, 2023        
Net income   $ 2,625,060     $ 2,473,628          
Adjustments:                
  Interest expense     407,153       261,641          
  Rent expense(1)     425,291       403,412          
  Tax effect(2)     (171,484 )     (133,010 )        
Adjusted after-tax return   $ 3,286,020     $ 3,005,671          
                   
Average debt(3)   $ 8,243,879     $ 6,578,133          
Average stockholders’ deficit(3)     (4,708,140 )     (3,849,963 )        
Add: Rent x 6(1)     2,551,746       2,420,472          
Average financing lease liabilities(3)     306,316       296,772          
Invested capital   $ 6,393,801     $ 5,445,414          
                   
Adjusted After-Tax ROIC     51.4 %     55.2 %        
                   
(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 4, 2024 and May 6, 2023.
                   
      Trailing 4 Quarters        
(in thousands)   May 4, 2024   May 6, 2023        
Total lease cost, per ASC 842   $ 558,627     $ 513,857          
Less: Financing lease interest and amortization     (97,717 )     (81,871 )        
Less: Variable operating lease components, related to insurance and common area maintenance     (35,619 )     (28,574 )        
Rent expense   $ 425,291     $ 403,412          
                   
(2)Effective tax rate over the trailing four quarters ended May 4, 2024 and May 6, 2023 was 20.6% and 20.0%, respectively.
(3)All averages are computed based on trailing five quarter balances.
                   
Other Selected Financial Information
(in thousands)
      May 4, 2024   May 6, 2023        
Cumulative share repurchases ($ since fiscal 1998)   $ 36,275,471     $ 32,806,437          
Remaining share repurchase authorization ($)     1,374,529       843,563          
                   
Cumulative share repurchases (shares since fiscal 1998)     154,938       153,629          
                   
Shares outstanding, end of quarter     17,144       18,225          
                   
      12 Weeks Ended   12 Weeks Ended   36 Weeks Ended   36 Weeks Ended
      May 4, 2024   May 6, 2023   May 4, 2024   May 6, 2023
                   
Depreciation and amortization   $ 129,224     $ 116,123     $ 374,416     $ 339,087  
                   
Cash flow from operations     669,480       724,715       1,933,866       1,872,776  
                   
Capital spending     235,103       171,207       725,910       430,441  
                   
                                 
AutoZone’s 3rd Quarter Highlights – Fiscal 2024
Condensed Consolidated Statements of Operations
Selected Operating Highlights
                         
Store Count & Square Footage
                         
      12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended
      May 4, 2024     May 6, 2023     May 4, 2024     May 6, 2023
Domestic:                      
  Beginning stores     6,332         6,226         6,300         6,168  
  Stores opened     32         22         68         80  
  Stores closed                     (4 )        
  Ending domestic stores     6,364         6,248         6,364         6,248  
                         
  Relocated stores             1         3         5  
                         
  Stores with commercial programs     5,843         5,526         5,843         5,526  
                         
  Square footage (in thousands)     42,078         41,253         42,078         41,253  
                         
Mexico:                      
  Beginning stores     751         707         740         703  
  Stores opened     12         6         23         10  
  Ending Mexico stores     763         713         763         713  
                         
Brazil:                      
  Beginning stores     108         81         100         72  
  Stores opened     1         2         9         11  
  Ending Brazil stores     109         83         109         83  
                         
Total     7,236         7,044         7,236         7,044  
                         
Total Company stores opened, net     45         30         96         101  
                         
  Square footage (in thousands)     48,567         47,191         48,567         47,191  
  Square footage per store     6,712         6,699         6,712         6,699  
                         
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 4, 2024     May 6, 2023     May 4, 2024     May 6, 2023
  Sales per average store   $ 576       $ 571       $ 2,472       $ 2,421  
  Sales per average square foot   $ 86       $ 85       $ 369       $ 362  
                         
Auto Parts (Domestic, Mexico and Brazil)                      
  Total auto parts sales   $ 4,156,411       $ 4,016,692       $ 17,647,873       $ 16,811,885  
  % Increase vs. LY     3.5 %       5.8 %       5.0 %       8.2 %
                         
Domestic Commercial                      
  Total domestic commercial sales   $ 1,147,113       $ 1,110,476       $ 4,719,208       $ 4,541,729  
  % Increase vs. LY     3.3 %       6.3 %       3.9 %       14.4 %
                         
  Average sales per program per week   $ 16.4       $ 16.8       $ 16.0       $ 16.2  
  % Increase vs. LY     (2.4 %)       1.2 %       (1.2 %)       10.2 %
                         
All Other, including ALLDATA                      
  All other sales   $ 79,074       $ 73,849       $ 327,633       $ 303,061  
  % Increase vs. LY     7.1 %       5.6 %       8.1 %       8.2 %
               
      12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended
Same store sales(4)   May 4, 2024     May 6, 2023     May 4, 2024     May 6, 2023
  Domestic     0.0 %       1.9 %       0.5 %       4.2 %
  International     18.1 %       26.8 %       22.2 %       26.6 %
  Total Company     1.9 %       4.0 %       2.7 %       6.1 %
                         
  International – Constant Currency     9.3 %       14.7 %       10.2 %       18.5 %
  Total Company – Constant Currency     0.9 %       3.0 %       1.5 %       5.4 %
                         
(4)Same store sales are based on sales for all stores open at least one year. Constant Currency same store sales exclude the impact of fluctuations of foreign currency exchange rates by converting both the current year and prior year international results at the prior year foreign currency exchange rate.
                         
Inventory Statistics (Total Stores)
      as of     as of            
      May 4, 2024     May 6, 2023            
  Accounts payable/inventory     119.7 %       126.5 %            
                         
  ($ in thousands)                      
  Inventory   $ 6,155,300       $ 5,703,688              
  Inventory per store     851         810              
  Net inventory (net of payables)     (1,214,373 )       (1,511,878 )            
  Net inventory/per store     (168 )       (215 )            
                         
      Trailing 5 Quarters            
      May 4, 2024     May 6, 2023            
  Inventory turns     1.4   x     1.5   x          
                         


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