O’Reilly Automotive (ORLY) Q1 2021 earnings summary

Executive summary

• Record Q1 sales rose 25% YoY to $3.09B; comparable-store sales increased 24.8%, and diluted EPS rose 78% to $7.06.

• Demand benefited from broad-based DIY and professional strength, customer spending on vehicle maintenance, reopening, government stimulus, and favorable winter and spring weather.

Financial highlights

• Gross profit increased 27% to $1.64B; gross margin rose to 53.1% from 52.3%.

• Operating income rose 63% to $691M; operating margin increased to 22.4% from 17.1%.

• Net income increased 67% to $502M; diluted EPS was $7.06 versus $3.97, with diluted weighted-average shares of 71.0M versus 75.7M.

• SG&A rose 9% to $950M but fell to 30.7% of sales from 35.2%; the effective tax rate increased to 23.5% from 20.9%.

Outlook and guidance

• FY2021 comparable-store sales guidance increased to +1% to +3% from -2% to flat; April performance was robust to date.

• FY2021 diluted EPS guidance rose to $24.75-$24.95, a $2.05 increase at the midpoint; revenue guidance was $11.8B-$12.1B.

• FY2021 guidance included gross margin of 52.2%-52.7%, operating margin of 19.9%-20.4%, and an effective tax rate of 23.0%.

• Operating cash flow guidance was $1.8B-$2.3B, capex $550M-$650M, and free cash flow $1.1B-$1.4B; results could remain volatile amid pandemic uncertainty.

• Long-term demand drivers included miles driven, vehicle-fleet size and age; confidence cited in gaining share and expanding through the dual-market strategy and customer service.