Published on Yahoo! Finance | April 26, 2018 | By Zacks Equity Research

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O’Reilly Automotive Inc.’s ORLY earnings per share in first-quarter 2018 jumped around 28% year over year to $3.61. The figure also beat the Zacks Consensus Estimate of $3.59. Notably, the company’s shares inched up around 1.4% to close at $227.67 yesterday after the announcement.

 

Net income improved 15% to $305 million (13.4% of sales) in first-quarter 2018 from $265 million (12.3% of sales) recorded in the year-ago period.

 

The company’s quarterly sales rose 6% year over year to $2.28 billion, mainly driven by 3.4% growth in store sales. In the year-ago quarter, store sales had recorded an increase of just 0.8%. The revenue figure in the first quarter came in line with the Zacks Consensus Estimate.

 

Gross profit went up 6% to $1.20 billion (52.6% of sales) from $1.13 billion (52.5% of sales) reported in the year-earlier quarter. Selling, general and administrative expenses were up 7% year over year to $778 million (34.1% of sales) from $728 million (33.8% of sales). Operating income increased 5% to $423 million (or 18.5% of sales) from $403 million (or 18.7% of sales) reported a year ago.

 

Store Information

During the first quarter, O’Reilly opened 78 stores. Total store count was 5,097 as of Mar 31, 2018. Sales per weighted-average store increased to $447,000 from $440,000 in first-quarter 2017.

 

Share Repurchases

During the reported quarter, O’Reilly repurchased 2.2 million shares for $549 million, reflecting an average price of $251.08 per share. Subsequent to the end of the quarter, the company purchased additional 0.4 million shares, for an investment of $87 million.

 

Since the company’s share-repurchase program inception in January 2011, O’Reilly has repurchased 68.8 million shares, for $9.67 billion, indicating an average price of $140.55 per share.

 

Financial Position

O’Reilly reported cash and cash equivalents of $38.5 million at the end of the first quarter, up from $27.5 million at the end of the year-ago quarter. Its long-term debt increased to $3.19 billion as of Mar 31, 2018, compared to $1.98 billion as of Mar 31, 2017.

 

The company generated $432.3 million in cash from operating activities during the quarter compared with $376.7 million recorded in the prior-year period. Capital expenditures increased to $114.8 million in the reported quarter from $110.6 million in the year-ago quarter. At the end of the first quarter, its free cash flow also improved to $311.1 million from $242.8 million witnessed in the year-ago period.

 

Guidance

For second-quarter 2018, O’Reilly projects diluted earnings per share of $3.95-$4.05. The company expects consolidated comparable store sales to climb 2-4% in the second quarter.

 

For full-year 2018, O’Reilly raised its earnings per share outlook to $15.3-$15.4 from $15.1-$15.2. The company, however, reiterated total revenue guidance at $9.4-$9.6 billion for the year. It also reaffirmed the consolidated comparable store-sales growth of 2-4% and gross margin view of 52.5-53% for 2018. It also confirmed the operating margin outlook of 18.5-19%.

 

Further, O’Reilly maintained its capital expenditure range of $490-$520 million. Also, for 2018, the company kept its free cash flow view unchanged between $1.1 billion and $1.2 billion.

 

Share Price Performance

Over the past six months, O’Reilly has outperformed the industry with respect to price performance. The stock has gained around 5%, while the industry recorded merely 0.4% growth during the same time frame.