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AutoZone 3rd Quarter Same Store Sales Increase 1.9%; EPS Increases to $34.12
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AutoZone 3rd Quarter Same Store Sales Increase 1.9%; EPS Increases to $34.12






MEMPHIS, Tenn., May 23, 2023 (GLOBE NEWSWIRE) — AutoZone, Inc. (NYSE: AZO) today reported net sales of $4.1 billion for its third quarter (12 weeks) ended May 6, 2023, an increase of 5.8% from the third quarter of fiscal 2022 (12 weeks). Domestic same store sales, or sales for stores open at least one year, increased 1.9% for the quarter.

“I would like to congratulate and thank our entire organization for delivering solid earnings in our third fiscal quarter. The hard work of our AutoZoners and their dedication to providing superior customer service, again drove our quarterly performance. While weaker than expected sales for the month of March meaningfully affected our results this quarter, we are excited about our initiatives and believe we are well positioned for future growth,” said Bill Rhodes, Chairman, President and Chief Executive Officer.

For the quarter, gross profit, as a percentage of sales, was 52.5%, an increase of 56 basis points versus the prior year. The increase in gross margin was impacted by a 42 basis point ($17 million) non-cash LIFO benefit, with the remaining leverage primarily from higher merchandise margins. Operating expenses, as a percentage of sales, were 31.5% versus last year at 31.6%.

Operating profit increased 9.3% to $858.5 million. Net income for the quarter increased 9.3% over the same period last year to $647.7 million, while diluted earnings per share increased 17.5% to $34.12 from $29.03 in the year-ago quarter.

Under its share repurchase program, AutoZone repurchased 356 thousand shares of its common stock for $908.2 million during the third quarter, at an average price of $2,551 per share. At the end of the third quarter, the Company had $843.6 million remaining under its current share repurchase authorization.

The Company’s inventory increased 7.4% over the same period last year, driven by inflation and its growth initiatives. Net inventory, defined as merchandise inventories less accounts payable, on a per store basis, was negative $215 thousand versus negative $216 thousand last year and negative $227 thousand last quarter.

During the quarter ended May 6, 2023, AutoZone opened 22 new stores in the U.S., six in Mexico and two in Brazil. As of May 6, 2023, the Company had 6,248 stores in the U.S., 713 in Mexico and 83 in Brazil for a total store count of 7,044.
        
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 the majority of our 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 services.

AutoZone will host a conference call this morning, Tuesday, May 23, 2023, 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 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 48303 through June 6, 2023.

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 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; 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; 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 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 27, 2022, and Part II, Item 1A, of our Quarterly Report on Form 10-Q for the quarterly period ended November 19, 2022. 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 2023      
                   
Condensed Consolidated Statements of Operations          
3rd Quarter, FY2023              
(in thousands, except per share data)              
        GAAP Results      
        12 Weeks Ended   12 Weeks Ended      
        May 6, 2023   May 7, 2022      
                   
Net sales   $ 4,090,541     $ 3,865,222        
Cost of sales     1,944,415       1,858,808        
Gross profit     2,146,126       2,006,414        
Operating, SG&A expenses     1,287,645       1,220,744        
Operating profit (EBIT)     858,481       785,670        
Interest expense, net     74,313       41,888        
Income before taxes     784,168       743,782        
Income tax expense     136,445       151,211        
Net income   $ 647,723     $ 592,571        
Net income per share:              
Basic   $ 35.22     $ 29.93        
Diluted   $ 34.12     $ 29.03        
Weighted average shares outstanding:              
Basic     18,389       19,798        
Diluted     18,983       20,414        
                   
Year-To-Date 3rd Quarter, FY2023              
(in thousands, except per share data)              
        GAAP Results      
        36 Weeks Ended   36 Weeks Ended      
        May 6, 2023   May 7, 2022      
                   
Net sales   $ 11,766,591     $ 10,903,875        
Cost of sales     5,695,840       5,187,075        
Gross profit     6,070,751       5,716,800        
Operating, SG&A expenses     3,819,261       3,549,885        
Operating profit (EBIT)     2,251,490       2,166,915        
Interest expense, net     197,645       127,642        
Income before taxes     2,053,845       2,039,273        
Income tax expense     390,260       419,712        
Net income   $ 1,663,585     $ 1,619,561        
Net income per share:              
Basic   $ 88.96     $ 79.26        
Diluted   $ 86.10     $ 76.90        
Weighted average shares outstanding:              
Basic     18,700       20,433        
Diluted     19,322       21,060        
                   
Selected Balance Sheet Information              
(in thousands)              
        May 6, 2023   May 7, 2022   August 27, 2022  
                   
Cash and cash equivalents   $ 274,916     $ 263,044     $ 264,380    
Merchandise inventories     5,703,688       5,313,114       5,638,004    
Current assets     6,708,872       6,254,721       6,627,984    
Property and equipment, net     5,334,023       4,971,626       5,170,419    
Operating lease right-of-use assets     2,959,488       2,764,631       2,918,817    
Total assets     15,597,922       14,520,565       15,275,043    
Accounts payable     7,215,566       6,793,205       7,301,347    
Current liabilities     8,464,947       8,064,076       8,588,393    
Operating lease liabilities, less current portion     2,862,152       2,659,535       2,837,973    
Total debt     7,340,484       6,057,444       6,122,092    
Stockholders’ deficit     (4,301,577 )     (3,387,230 )     (3,538,913 )  
Working capital     (1,756,075 )     (1,809,355 )     (1,960,409 )  
                   

AutoZone’s 3rd Quarter Highlights – Fiscal 2023                            
                             
Condensed Consolidated Statements of Operations                      
                             
Adjusted Debt / EBITDAR                      
(in thousands, except adjusted debt to EBITDAR ratio)                      
          Trailing 4 Quarters              
          May 6, 2023   May 7, 2022              
Net income     $ 2,473,628     $ 2,405,332                
Add: Interest expense     261,641       185,762                
Income tax expense     620,035       619,851                
EBIT         3,355,304       3,210,945                
                             
Add: Depreciation and amortization     479,945       431,004                
Rent expense(1)     403,412       360,076                
Share-based expense     83,943       67,109                
EBITDAR     $ 4,322,604     $ 4,069,134                
                             
Debt       $ 7,340,484     $ 6,057,444                
Financing lease liabilities     284,896       288,483                
Add: Rent x 6(1)     2,420,472       2,160,456                
Adjusted debt   $ 10,045,852     $ 8,506,383                
                             
Adjusted debt to EBITDAR     2.3       2.1                
                             
Adjusted Return on Invested Capital (ROIC)                      
(in thousands, except ROIC)                      
          Trailing 4 Quarters              
          May 6, 2023   May 7, 2022              
Net income     $ 2,473,628     $ 2,405,332                
Adjustments:                      
Interest expense     261,641       185,762                
Rent expense(1)     403,412       360,076                
Tax effect(2)     (133,010 )     (111,896 )              
Adjusted after-tax return   $ 3,005,671     $ 2,839,274                
                             
Average debt(3)   $ 6,578,133     $ 5,541,462                
Average stockholders’ deficit(3)     (3,849,963 )     (2,442,077 )              
Add: Rent x 6(1)     2,420,472       2,160,456                
Average financing lease liabilities(3)     296,772       268,111                
Invested capital   $ 5,445,414     $ 5,527,952                
                             
Adjusted After-Tax ROIC     55.2 %     51.4 %              
                             
(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 6, 2023 and May 7, 2022  
                                     
                             
          Trailing 4 Quarters              
(in thousands)     May 6, 2023   May 7, 2022              
Total lease cost, per ASC 842   $ 513,857     $ 451,601                
Less: Financing lease interest and amortization     (81,871 )     (65,128 )              
Less: Variable operating lease components, related to insurance and common area maintenance           (28,574 )     (26,397 )              
Rent expense   $ 403,412     $ 360,076                
                                 
(2)Effective tax rate over trailing four quarters ended May 6, 2023 and May 7, 2022 was 20.0% and 20.5%, respectively              
(3)All averages are computed based on trailing five quarter balances              
                             
Other Selected Financial Information                      
(in thousands)                        
          May 6, 2023   May 7, 2022              
Cumulative share repurchases ($ since fiscal 1998)   $ 32,806,437     $ 29,092,425                
Remaining share repurchase authorization ($)     843,563       2,057,575                
                             
Cumulative share repurchases (shares since fiscal 1998)     153,629       152,035                
                             
Shares outstanding, end of quarter     18,225       19,576                
                             
          12 Weeks Ended   12 Weeks Ended       36 Weeks Ended   36 Weeks Ended  
          May 6, 2023   May 7, 2022       May 6, 2023   May 7, 2022  
                             
Depreciation and amortization   $ 116,123     $ 102,083         $ 339,087   $ 301,365  
                             
Cash flow from operations     724,715       843,368           1,872,776     1,983,114  
                             
Capital spending     171,207       161,207           430,441     369,350  
                             
AutoZone’s 3rd Quarter Highlights – Fiscal 2023                             
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 6, 2023     May 7, 2022     May 6, 2023     May 7, 2022  
Domestic:
                           
  Beginning stores         6,226         6,091         6,168         6,051    
  Stores opened         22         24         80         65    
  Stores closed                                 (1 )  
  Ending domestic stores         6,248         6,115         6,248         6,115    
                               
  Relocated stores         1         4         5         8    
                               
  Stores with commercial programs         5,526         5,276         5,526         5,276    
                               
  Square footage (in thousands)         41,253         40,230         41,253         40,230    
                               
Mexico:
                           
  Beginning stores         707         669         703         664    
  Stores opened         6         4         10         9    
  Ending Mexico stores         713         673         713         673    
                               
Brazil:
                           
  Beginning stores         81         55         72         52    
  Stores opened         2         3         11         6    
  Ending Brazil stores         83         58         83         58    
                               
Total
        7,044         6,846         7,044         6,846    
                               
  Square footage (in thousands)         47,191         45,680         47,191         45,680    
  Square footage per store         6,699         6,673         6,699         6,673    
                               
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 6, 2023     May 7, 2022     May 6, 2023     May 7, 2022  
  Sales per average store       $ 571       $ 556       $ 2,421       $ 2,301    
  Sales per average square foot       $ 85       $ 83       $ 362       $ 346    
                               
Total Auto Parts (Domestic, Mexico and Brazil)
                           
  Total auto parts sales       $ 4,016,692       $ 3,795,290       $ 16,811,885       $ 15,537,156    
  % Increase vs. LY         5.8 %       5.7 %       8.2 %       10.8 %  
                               
Domestic Commercial
                           
  Total domestic commercial sales       $ 1,110,476       $ 1,044,293       $ 4,541,729       $ 3,970,727    
  % Increase vs. LY         6.3 %       26.0 %       14.4 %       26.5 %  
                               
  Average sales per program per week       $ 16.8       $ 16.6       $ 16.2       $ 14.7    
  % Increase vs. LY         1.2 %       23.0 %       10.2 %       22.5 %  
                               
All Other, including ALLDATA
                           
  All other sales       $ 73,849       $ 69,932       $ 303,061       $ 280,203    
  % Increase vs. LY         5.6 %       15.1 %       8.2 %       18.0 %  
                                       
          12 Weeks Ended     12 Weeks Ended     36 Weeks Ended     36 Weeks Ended  
          May 6, 2023     May 7, 2022     May 6, 2023     May 7, 2022  
Domestic same store sales
        1.9 %       2.6 %       4.2 %       9.5 %  
                               
Inventory Statistics (Total Stores)
                           
          as of     as of              
          May 6, 2023     May 7, 2022              
  Accounts payable/inventory         126.5 %       127.9 %              
                               
  ($ in thousands)                            
  Inventory       $ 5,703,688       $ 5,313,114                
  Inventory per store         810         776                
  Net inventory (net of payables)         (1,511,878 )       (1,480,091 )              
  Net inventory/per store         (215 )       (216 )              
                               
          Trailing 5 Quarters              
          May 6, 2023     May 7, 2022              
  Inventory turns         1.5   x     1.5   x            
                               

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