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