MEMPHIS, Tenn., March 01, 2016 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net sales of $2.3 billion for its second quarter (12 weeks) ended February 13, 2016, an increase of 5.3% from the second quarter of fiscal 2015 (12 weeks).  Domestic same store sales, or sales for stores open at least one year, increased 3.6% for the quarter.

Net income for the quarter increased 8.0% over the same period last year to $228.6 million, while diluted earnings per share increased 14.2% to $7.43 per share from $6.51 per share in the year-ago quarter. 

For the quarter, gross profit, as a percentage of sales, was 52.7% (versus 52.2% for last year's quarter).  The improvement in gross margin was attributable to higher merchandise margins, partially offset by higher supply chain costs associated with current year inventory initiatives (-21 bps).  Operating expenses, as a percentage of sales, were 35.8% (versus 35.4% last year).  The increase in operating expenses, as a percentage of sales, was primarily due to a favorable credit card litigation settlement recognized during last year's quarter (-25 bps), and higher domestic store payroll (-13 bps).

Under its share repurchase program, AutoZone repurchased 197 thousand shares of its common stock for $150 million during the second quarter, at an average price of $761 per share.  At the end of the second quarter, the Company had $548 million remaining under its current share repurchase authorization. 

The Company's inventory increased 3.9% over the same period last year, driven primarily by new store openings over the last twelve months.  Inventory per location was $633 thousand versus $631 thousand last year and $624 thousand last quarter.  Net inventory, defined as merchandise inventories less accounts payable, on a per location basis was a negative $57 thousand versus negative $47 thousand last year and negative $66 thousand last quarter.

"We would like to thank our entire organization for delivering another quarter of solid results: our thirty-eighth consecutive quarter of double digit earnings per share growth.  Our strong culture of providing exceptional customer service continues to be a key point of differentiation.  During the quarter, we continued implementation of our inventory availability initiatives.  At the end of the quarter, we have expanded our increased frequency of distribution center deliveries initiative to 1,300 domestic AutoZone stores and expect by the end of the fiscal year to be servicing approximately 2,000 of our over 5,000 domestic AutoZone stores.  We also plan to open approximately five additional Mega Hubs by the end of the fiscal year.  Our results to date continue to meet or exceed our expectations, further confirming our new inventory deployment strategy.  While we continue to strategically invest in our business in order to support our growth, we remain committed to our disciplined approach to growing operating earnings and utilizing our capital effectively," said Bill Rhodes, Chairman, President and Chief Executive Officer.

During the quarter ended February 13, 2016, AutoZone opened 30 new stores and relocated two stores in the U.S., opened nine new stores in Mexico, and opened two new IMC branches.  As of February 13, 2016, the Company had 5,193 stores in 50 states in the U.S., the District of Columbia and Puerto Rico, 451 stores in Mexico, 24 IMC branches, and eight stores in Brazil for a total count of 5,676.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and accessories in the United States. Each AutoZone 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.  IMC branches carry an extensive line of original equipment quality import replacement parts.  AutoZone also sells the ALLDATA brand diagnostic and repair software through www.alldata.com. Additionally, we sell automotive hard parts, maintenance items, accessories, and non-automotive products through www.autozone.com, and accessories and performance parts through www.autoanything.com, and our commercial customers can make purchases through www.autozonepro.com and www.imcparts.net.  AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, March 1, 2016, beginning at 10:00 a.m. (EST) to discuss its second quarter results.  Investors may listen to the conference call live and review supporting slides on the AutoZone corporate website, www.autozoneinc.com by clicking "Investor Relations," "Conference Calls."  The call will also be available by dialing (210) 839-8923.  A replay of the call and slides will be available on AutoZone's website.  In addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, March 8, 2016, at 11:59 p.m. (EST).

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, adjusted debt to EBITDAR, and cash flow before share repurchases.  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 and manages cash flows available for share repurchase by monitoring cash flows before share repurchases, as shown on the attached tables.  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 in this press release are forward-looking statements. Forward-looking statements typically use words such as "believe," "anticipate," "should," "intend," "plan," "will," "expect," "estimate," "project," "positioned," "strategy" 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: credit market conditions; the impact of recessionary conditions; competition; product demand; the ability to hire and retain qualified employees; consumer debt levels; inflation; weather; raw material costs of our suppliers; energy prices; war and the prospect of war, including terrorist activity; construction delays; access to available and feasible financing; the compromising of the confidentiality, availability or integrity of information, including cyber security attacks; and changes in laws or regulations. Certain of these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under Part 1 of this Annual Report on Form 10-K for the year ended August 29, 2015, and 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, and events described above and in the "Risk Factors" could materially and adversely affect our business. 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. Actual results may materially differ from anticipated results.

     
AutoZone's 2nd Quarter Highlights - Fiscal 2016
               
Condensed Consolidated Statements of Operations
2nd Quarter, FY2016
(in thousands, except per share data)
      GAAP Results    
      12 Weeks Ended   12 Weeks Ended    
      February 13, 2016   February 14, 2015    
               
Net sales   $ 2,257,192     $ 2,143,651      
Cost of sales     1,066,596       1,023,618      
Gross profit     1,190,596       1,120,033      
Operating, SG&A expenses     807,936       758,764      
Operating profit  (EBIT)     382,660       361,269      
Interest expense, net     32,832       34,536      
Income before taxes     349,828       326,733      
Income taxes     121,215       115,010      
Net income   $ 228,613     $ 211,723      
Net income per share:            
  Basic   $ 7.58     $ 6.64      
  Diluted   $ 7.43     $ 6.51      
Weighted average shares outstanding:            
  Basic     30,170       31,903      
  Diluted     30,778       32,540      
               
               
Year-To-Date 2nd Quarter, FY2016
(in thousands, except per share data)   GAAP Results    
      24 Weeks Ended   24 Weeks Ended    
      February 13, 2016   February 14, 2015    
               
Net sales   $ 4,643,235     $ 4,403,916      
Cost of sales     2,199,705       2,107,222      
Gross profit     2,443,530       2,296,694      
Operating, SG&A expenses     1,622,875       1,526,863      
Operating profit  (EBIT)     820,655       769,831      
Interest expense, net     67,842       71,596      
Income before taxes     752,813       698,235      
Income taxes     266,088       248,202      
Net income   $ 486,725     $ 450,033      
Net income per share:            
  Basic   $ 16.05     $ 14.06      
  Diluted   $ 15.72     $ 13.78      
Weighted average shares outstanding:            
  Basic     30,334       32,018      
  Diluted     30,958       32,651      
               
Selected Balance Sheet Information
(in thousands)
      February 13, 2016   February 14, 2015   August 29, 2015
               
Cash and cash equivalents   $ 207,958     $ 151,539     $ 175,309  
Merchandise inventories     3,590,687       3,456,812       3,421,635  
Current assets     4,209,813       3,913,863       3,970,294  
Property and equipment, net     3,544,882       3,376,480       3,505,632  
Total assets (1)     8,366,414       7,931,430       8,102,349  
Accounts payable     3,912,107       3,716,519       3,864,168  
Current liabilities (2)     4,994,661       4,623,323       4,712,873  
Total debt (1) (2)     4,845,215       4,429,765       4,624,876  
Stockholders' deficit     (1,741,313 )     (1,468,679 )     (1,701,390 )
Working capital     (784,848 )     (709,460 )     (742,579 )
               
(1) Certain balance sheet reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation due to the adoption of a new accounting standard at the end of FY15.
(2) Current liabilities and total debt both include short-term borrowings of $457,404 at February 13, 2016; $87,156 at February 14, 2015 and $0 at August 29, 2015. These amounts represent current debt maturities that are in excess of our revolving credit facility available capacity.
               

 
Condensed Consolidated Statements of Operations
                   
Adjusted Debt / EBITDAR (Trailing 4 Qtrs)
(in thousands, except adjusted debt to EBITDAR ratio)
    February 13, 2016   February 14, 2015          
Net income   $ 1,196,933     $ 1,108,860            
Add: Interest     146,685       157,184            
  Taxes     660,257       612,940            
EBIT     2,003,875       1,878,984            
                   
Add: Depreciation and amortization     283,943       258,025            
  Rent expense     273,804       262,859            
  Share-based expense     39,342       38,874            
EBITDAR   $ 2,600,964     $ 2,438,742            
                   
Debt (1)   $ 4,845,215     $ 4,429,765            
Capital lease obligations     127,468       125,795            
Add: rent x 6     1,642,824       1,577,154            
Adjusted debt   $ 6,615,507     $ 6,132,714            
                   
Adjusted debt to EBITDAR     2.5       2.5            
         
                   
Selected Cash Flow Information                  
(in thousands)                  
    12 Weeks Ended   12 Weeks Ended     24 Weeks Ended   24 Weeks Ended
    February 13, 2016   February 14, 2015     February 13, 2016   February 14, 2015
                   
Depreciation and amortization   $ 68,653     $ 59,867       $ 134,936     $ 120,912  
Capital spending   $ 99,933     $ 93,759       $ 186,591     $ 186,174  
                   
Cash flow before share repurchases:                  
Increase in cash and cash equivalents   $ 42,472     $ 34,347       $ 32,649     $ 27,054  
Subtract increase in debt, excluding deferred financing     90,200       26,200         218,500       104,500  
Add back share repurchases     149,957       26,061         550,057       325,667  
Cash flow before share repurchases and changes in debt   $ 102,229     $ 34,208       $ 364,206     $ 248,221  
                   
                   
Other Selected Financial Information                  
(in thousands, except ROIC)                  
    February 13, 2016   February 14, 2015          
                   
                   
Cumulative share repurchases ($ since fiscal 1998)   $ 15,852,243     $ 14,356,437            
Remaining share repurchase authorization ($)   $ 547,757     $ 543,563            
                   
Cumulative share repurchases (shares since fiscal 1998)     139,625       137,495            
                   
Shares outstanding, end of quarter     30,101       31,902            
                   
    Trailing 4 Quarters          
    February 13, 2016   February 14, 2015        
Net income   $ 1,196,933     $ 1,108,860            
Adjustments:                  
Interest expense     146,685       157,184            
Rent expense     273,804       262,859            
Tax effect*     (149,694 )     (149,535 )          
After-tax return     1,467,728       1,379,368            
                   
Average debt** (1)     4,632,858       4,362,118            
Average stockholders' deficit**     (1,666,550 )     (1,654,368 )          
Add: Rent x 6     1,642,824       1,577,154            
Average capital lease obligations**     127,339       116,747            
Pre-tax invested capital   $ 4,736,471     $ 4,401,651            
                   
Return on Invested Capital (ROIC)     31.0 %     31.3 %          
                   
(1 Certain balance sheet reclassifications have been made to the prior periods' financial information in order to conform to the current period's presentation due to the adoption of a new accounting standard at the end of FY15.
*Effective tax rate over trailing four quarters ended February 13, 2016 is 35.6% and February 14, 2015 is 35.6%.
**All averages are computed based on trailing 5 quarter balances.
                   

 
AutoZone's 2nd Quarter Fiscal 2016  
Selected Operating Highlights
Condensed Consolidated Statements of Operations
                                 
Location Count & Square Footage
                                 
          12 Weeks Ended       12 Weeks Ended     24 Weeks Ended       24 Weeks Ended
          February 13, 2016       February 14, 2015     February 13, 2016       February 14, 2015
AutoZone Domestic stores (Domestic):                          
  Store count:                          
  Beginning domestic stores     5,163           5,006         5,141           4,984  
  Stores opened     30           37         52           59  
  Stores closed     -           1         -           1  
  Ending domestic stores     5,193           5,042         5,193           5,042  
                                 
  Relocated stores     2           1         3           2  
                                 
  Stores with commercial programs     4,228           3,935         4,228           3,935  
                                 
  Square footage (in thousands)     33,874           32,841         33,874           32,841  
                                 
AutoZone Mexico stores:                          
  Stores opened     9           5         10           9  
  Total stores in Mexico     451           411         451           411  
                                 
AutoZone Brazil stores:                          
  Stores opened     -           -         1           -  
  Total stores in Brazil     8           5         8           5  
                                 
Total AutoZone stores     5,652           5,458         5,652           5,458  
  Square footage (in thousands)     37,255           35,891         37,255           35,891  
  Square footage per store     6,591           6,576         6,591           6,576  
                                 
IMC branches:                            
  Branches opened     2           1         4           1  
  Branches acquired     -           -         -           17  
  Total IMC branches     24           18         24           18  
                                 
Total locations chainwide     5,676           5,476         5,676           5,476  
                                 
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) February 13, 2016       February 14, 2015     February 13, 2016       February 14, 2015
  Sales per average store   $ 379         $ 372       $ 1,780         $ 1,753  
  Sales per average square foot   $ 58         $ 57       $ 270         $ 267  
                                 
Total Auto Parts (Domestic, Mexico, Brazil, and IMC)                          
  Total auto parts sales   $ 2,170,986         $ 2,059,711       $ 10,058,938         $ 9,440,251  
  % Increase vs. LY     5.4 %         7.6 %       6.6 %         4.3 %
                                 
Domestic Commercial (Excludes IMC)                          
  Total domestic commercial sales   $ 402,014         $ 372,247       $ 1,891,127         $ 1,706,096  
  % Increase vs. LY     8.0 %         14.5 %       10.8 %         11.0 %
                                 
All Other (ALLDATA, E-Commerce, and AutoAnything)                        
  All other sales   $ 86,206         $ 83,940       $ 367,721         $ 354,906  
  % Increase vs. LY     2.7 %         9.2 %       3.6 %         4.9 %
                                 
          12 Weeks Ended       12 Weeks Ended     24 Weeks Ended       24 Weeks Ended
          February 13, 2016       February 14, 2015     February 13, 2016       February 14, 2015
Domestic same store sales       3.6 %         3.6 %       3.6 %         4.1 %
                                 
Inventory Statistics (Total Locations)                          
          as of       as of              
          February 13, 2016       February 14, 2015              
  Accounts payable/inventory     109.0 %         107.5 %              
                                 
  ($ in thousands)                            
  Inventory     $ 3,590,687         $ 3,456,812                
  Inventory per location   $ 633         $ 631                
  Net inventory (net of payables)   $ (321,420 )       $ (259,707 )              
  Net inventory  / per location   $ (57 )       $ (47 )              
                                 
          Trailing 5 Quarters              
          February 13, 2016       February 14, 2015              
  Inventory turns     1.4   x       1.5   x            
                                 

Contact Information:Financial: Brian Campbell at (901) 495-7005, brian.campbell@autozone.comMedia: Ray Pohlman at (866) 966-3017, ray.pohlman@autozone.com

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