AutoZone (AZO) Q4 2002 earnings summary

Executive summary

• FY02 net sales rose 10.5% to $5.326B; net income was $428.1M and diluted EPS $4.00, with stronger gross margin and lower interest expense.

• Operations ended FY02 with 3,068 U.S. stores and 39 Mexico stores; comparable-store sales rose 9%, adjusted to exclude the 53rd week.

Financial highlights

• Net sales increased $507.3M YoY; excluding TruckPro, sales rose 13%. New-store sales added 2 percentage points and the 53rd week added ~2 points.

• Operating profit was $771.0M vs. $387.7M; FY01 included $156.8M in restructuring and impairment charges, or $0.84 per share after tax.

• Net income was $428.1M vs. $175.5M; diluted EPS was $4.00 vs. $1.54. FY02 comprised 53 weeks vs. 52 weeks in FY01.

• Operating cash flow was $739.1M vs. $458.9M; capital expenditures were $117.2M vs. $169.3M.

Outlook and guidance

• Planned future capital needs are expected to be funded primarily by internally generated funds, with borrowings supporting the balance; funding needs include capital expenditures, working capital and repurchases.

• Store-count growth is not expected to continue at its historic pace; expansion remains subject to projected profitability and investment hurdles.

• Favorable supplier payment terms are expected to finance much of inventory growth, though continued availability is uncertain.