O'Reilly Automotive, Inc. Reports Third Quarter 2012 Results

• Record high third quarter operating margin of 16.4%
• 20% increase in third quarter diluted earnings per share to $1.32
• Third quarter comparable store sales increase of 1.3%

SPRINGFIELD, Mo., Oct. 24, 2012 (GLOBE NEWSWIRE) -- O'Reilly Automotive, Inc. (the "Company" or "O'Reilly") ORLY, a leading retailer in the automotive aftermarket industry, today announced record revenues and earnings for its third quarter ended September 30, 2012.

3^rd Quarter Financial Results

Sales for the third quarter ended September 30, 2012, increased $66 million, or 4%, to $1.60 billion from $1.54 billion for the same period one year ago. Gross profit for the third quarter increased to $805 million (or 50.3% of sales) from $754 million (or 49.1% of sales) for the same period one year ago, representing an increase of 7%. Selling, general and administrative expenses ("SG&A") for the third quarter, increased to $542 million (or 33.9% of sales) from $513 million (or 33.4% of sales) for the same period one year ago, representing an increase of 6%. Operating income for the third quarter, increased to $263 million (or 16.4% of sales) from $241 million (or 15.7% of sales) for the same period one year ago, representing an increase of 9%.

Net income for the third quarter ended September 30, 2012, increased $11 million, or 7%, to $159 million (or 9.9% of sales) from $148 million (or 9.7% of sales) for the same period one year ago. Diluted earnings per common share for the third quarter increased 20% to $1.32 on 121 million shares versus $1.10 for the same period one year ago on 135 million shares.

"We are pleased to report solid third quarter earnings, highlighted by a record high third quarter operating margin of 16.4%. Our diluted earnings per share increased 20% to $1.32, representing our 15th consecutive quarter of adjusted diluted earnings per share growth greater than 15%. I would like to take this opportunity to thank all of our Team Members for their hard work and their continued commitment to providing the highest levels of service in our industry," commented Greg Henslee, O'Reilly's CEO and Co-President. "During the third quarter, we continued to see our results impacted by mild weather at the start of the year and a challenging macro-environment, resulting in 1.3% comparable store sales growth, which was near the low end of our expectations for the quarter. However, we remain very confident in the long term outlook for our industry, and we will continue to focus on the fundamentals of providing industry leading parts availability and excellent customer service to both our professional and DIY customers, every day."

Year-to-Date Financial Results

Sales for the first nine months of 2012 increased $296 million, or 7%, to $4.69 billion from $4.40 billion for the same period one year ago. Gross profit for the first nine months of 2012 increased to $2.35 billion (or 50.0% of sales) from $2.14 billion (or 48.7% of sales) for the same period one year ago, representing an increase of 10%. SG&A for the first nine months of 2012 increased to $1.59 billion (or 33.9% of sales) from $1.48 billion (or 33.7% of sales) for the same period one year ago, representing an increase of 7%. Operating income for the first nine months of 2012 increased to $754 million (or 16.1% of sales) from $660 million (or 15.0% of sales) for the same period one year ago, representing an increase of 14%.

Net income for the first nine months of 2012 increased $68 million, or 18%, to $453 million (or 9.6% of sales) from $385 million (or 8.7% of sales) for the same period one year ago. Diluted earnings per common share for the first nine months of 2012 increased 30% to $3.60 on 126 million shares versus $2.76 for the same period one year ago on 139 million shares.

As previously announced, the Company's results for the first nine months of 2011 included one-time charges associated with the financing transactions the Company completed in January of 2011. The one-time charges included a non-cash charge to write off the balance of debt issuance costs related to the Company's previous credit facility in the amount of $22 million ($13 million, net of tax) and a charge related to the termination of the Company's interest rate swap agreements in the amount of $4 million ($3 million, net of tax). The charges related to the Company's financing transactions were included in "Other income (expense)" on the Company's Condensed Consolidated Statements of Income for the nine months ended September 30, 2011. The results discussed in the paragraph below are adjusted for these nonrecurring items for the first nine months of 2011, and are reconciled in the table accompanying this release. 

Adjusted net income for the first nine months of 2012 increased $52 million, or 13%, to $453 million (or 9.6% of sales) from $401 million (or 9.1% of sales) for the same period one year ago. Adjusted diluted earnings per common share for the first nine months of 2012 increased 25% to $3.60 from $2.88 for the same period one year ago.

Mr. Henslee stated, "We continue to see improved participation from our vendors in our financing programs, resulting in the increase in our accounts-payable-to-inventory ratio to 84.4%. With strong operating results, along with the improvements in our working capital, we have generated $816 million in free cash for the first nine months of 2012, representing a 37% improvement over the same period last year. We have used this free cash to directly return value to our shareholders by repurchasing over $1 billion of our shares year to date."

Mr. Henslee continued, "Our year-to-date comparable store sales increased 3.7%, on top of a 4.9% increase in the prior year, and we have seen an improvement in our comparable store sales trends during the first several weeks of October over the results we saw in the third quarter, reinforcing our confidence in the long term outlook for our industry. While we remain cautious about these improving trends, we expect our fourth quarter comparable store sales to increase in the range of two to four percent."

"During the third quarter, we opened 37 net, new stores covering 20 states. Our year-to-date store expansion of 156 net, new stores brings our total store count to 3,896, which is only 24 stores shy of our 2012 full-year guidance," commented Ted Wise, O'Reilly's COO and Co-President. "We plan to open 190 net, new stores in 2013–surpassing the 4,000 store mark during the year. In order to support our growth in the southeast, we are pleased to announce plans for our 24th distribution center in Lakeland, Florida, which is scheduled to open in the first quarter of 2014. This additional distribution center will support our existing store base in Florida and will allow us to expand throughout the entire state. I would like to thank each of our nearly 53,000 Team Members for their dedication to the O'Reilly Team, your hard work is the reason for our past success and will be the catalyst for the continued profitable growth of O'Reilly Auto Parts."

Share Repurchase Program

As previously announced, on August 10, 2012, the Company's Board of Directors approved a resolution to increase the authorization under the Company's share repurchase program by an additional $500 million, raising the cumulative authorization under the share repurchase program to $2.5 billion. During the third quarter ended September 30, 2012, the Company repurchased 6.4 million shares of its common stock at an average price per share of $84.76 for a total investment of $539 million. During the first nine months of 2012, the Company repurchased 12.6 million shares of its common stock at an average price per share of $89.62 for a total investment of $1.13 billion. Subsequent to the end of the third quarter and through the date of this release, the Company repurchased an additional 1.5 million shares of its common stock at an average price per share of $83.49 for a total investment of $128 million. The Company has repurchased a total of 30.1 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 through the date of this release, at an average price of $74.45, for a total investment of $2.24 billion. As of the date of this release, the Company had approximately $263 million remaining under its share repurchase program.

3^rd Quarter and Year-to-Date Comparable Store Sales Results

Comparable store sales are calculated based on the change in sales for stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores and sales to Team Members. Comparable store sales increased 1.3% for the third quarter ended September 30, 2012, versus 4.8% for the same period one year ago. Comparable store sales increased 3.7% for the first nine months of 2012, versus 4.9% for the same period one year ago.

4^th Quarter and Updated Full-Year 2012 Guidance

The table below outlines the Company's guidance for selected fourth quarter and updated full-year 2012 financial data:

Non-GAAP Information

This release contains certain financial information not derived in accordance with United States generally accepted accounting principles ("GAAP"). These items include adjusted net income, adjusted diluted earnings per common share, free cash flow, and rent-adjusted debt to adjusted earnings before interest, taxes, depreciation, amortization, share-based compensation and rent ("EBITDAR"). The Company does not, nor does it suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. The Company believes that the presentation of financial results and estimates excluding the impact of the former CSK Auto Corporation ("CSK") officer clawback, the non-cash charge to write off the balance of debt issuance costs, the charge related to the termination of interest rate swap agreements, the nonrecurring, non-operating gain related to the settlement of a note receivable acquired in the acquisition of CSK, as well as the presentation of adjusted debt to adjusted EBITDAR and free cash flow, provide meaningful supplemental information to both management and investors that is indicative of the Company's core operations. The Company excludes these items in judging its performance and believes this non-GAAP information is useful to investors as well. The Company has included a reconciliation of this additional information to the most comparable GAAP measure in the tables accompanying this release.

Earnings Conference Call Information

The Company will host a conference call on Thursday, October 25, 2012, at 10:00 a.m. central time to discuss its results as well as future expectations. Investors may listen to the conference call live on the Company's website at www.oreillyauto.com by clicking on "Investor Relations" and then "News Room". Interested analysts are invited to join the call. The dial-in number for the call is (706) 679-5789; the conference call identification number is 32483014. A replay of the call will be available on the Company's website following the conference call.

About O'Reilly Automotive, Inc.

O'Reilly Automotive, Inc. is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional service provider markets. Founded in 1957 by the O'Reilly family, the Company operated 3,896 stores in 39 states as of September 30, 2012.

The O'Reilly Automotive, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5430

Forward-Looking Statements

The Company claims the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as "expect," "believe," "anticipate," "should," "plan," "intend," "estimate," "project," "will" or similar words. In addition, statements contained within this press release that are not historical facts are forward-looking statements, such as statements discussing among other things, expected growth, store development, integration and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental regulations, the Company's increased debt levels, credit ratings on the Company's public debt, the Company's ability to hire and retain qualified employees, risks associated with the performance of acquired businesses such as CSK, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described or implied in these forward-looking statements. Please refer to the "Risk Factors" section of the annual report on Form 10-K for the year ended December 31, 2011, for additional factors that could materially affect the Company's financial performance. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.