O’Reilly Automotive(ORLY) - 2024 Q4 - Annual Report

Store Operations - As of December 31, 2024, the company operated 6,265 stores in the U.S. and Puerto Rico, 87 stores in Mexico, and 26 stores in Canada[167]. - The company opened 198 net new stores during the year ended December 31, 2024, and 186 in 2023, with an anticipated growth of 200 to 210 net new store openings in 2025[184]. - The company acquired Groupe Del Vasto in January 2024, adding 23 stores to its count[188]. Vehicle Statistics - The total number of registered vehicles in the U.S. increased by 14.2% from 2013 to 2023, reaching 284 million vehicles by the end of 2023[173]. - The average age of the U.S. vehicle population increased by 10.6%, from 11.3 years in 2013 to 12.5 years in 2023[173]. - The seasonally adjusted annual rate of light vehicle sales in the U.S. for the year ended December 31, 2024, was approximately 16.8 million vehicles[173]. - The number of total miles driven in the U.S. increased by 0.9% in 2022, 2.1% in 2023, and 1.0% year-to-date through November 2024[172]. Financial Performance - Sales for the year ended December 31, 2024, increased by $896 million, or 6%, to$ 16.71 billion from $15.81 billion for the same period in 2023[184]. - Comparable store sales for stores open at least one year increased by 2.9% for the year ended December 31, 2024, compared to a 7.9% increase in 2023[184]. - Gross profit for the year ended December 31, 2024, was$ 8,554,489, compared to $8,104,803 in 2023[184]. - Operating income for the year ended December 31, 2024, was$ 3,251,157, an increase from $3,186,376 in 2023[184]. - Net income for the year ended December 31, 2024, was$ 2,386,680, compared to $2,346,581 in 2023[184]. - Earnings per share (basic) for the year ended December 31, 2024, was$ 40.91, up from $38.80 in 2023[184]. - Gross profit for the year ended December 31, 2024, increased 6% to$ 8.55 billion, representing 51.2% of sales, compared to $8.10 billion or 51.3% of sales in 2023[188]. - Operating income increased 2% to$ 3.25 billion, or 19.5% of sales, compared to $3.19 billion or 20.2% of sales in 2023[190]. - Net income for the year ended December 31, 2024, increased to$ 2.39 billion, or 14.3% of sales, from $2.35 billion or 14.8% of sales in 2023[193]. - Diluted earnings per share increased 6% to$ 40.66 on 59 million shares, up from $38.47 on 61 million shares in 2023[194]. Cash Flow and Debt - The company reported a free cash flow of$ 1,987,808 for the year ended December 31, 2024, compared to $1,987,720 in 2023[184]. - Free cash flow for the year ended December 31, 2024, was$ 1,99 billion, compared to $1.99 billion in 2023[206]. - Total cash provided by operating activities was$ 3.05 billion in 2024, slightly up from $3.03 billion in 2023[206]. - Total assets as of December 31, 2024, were$ 14,893,741, compared to $13,872,995 in 2023[184]. - Total debt as of December 31, 2024, was$ 5,520,932, a slight decrease from $5,570,125 in 2023[184]. - The company had outstanding fixed rate debt of$ 5.4 billion as of December 31, 2024, compared to $4.9 billion in 2023[230]. - The fair value of fixed rate debt was estimated at$ 5.2 billion as of December 31, 2024, up from $4.7 billion in 2023[230]. - The company had outstanding borrowings under its commercial paper program amounting to$ 200 million at a weighted-average variable interest rate of 4.750% as of December 31, 2024[229]. Cost Management and Economic Factors - The company has successfully managed inflationary cost pressures by leveraging supplier incentive programs and economies of scale, allowing it to pass on cost increases through higher selling prices[175]. - Macroeconomic factors such as inflation, fuel costs, and unemployment trends may impact consumer disposable income and, consequently, the company's business[170]. - Selling, general and administrative expenses (SG&A) rose 8% to $5.30 billion, accounting for 31.7% of sales, up from$ 4.92 billion or 31.1% of sales in 2023[189]. - Total other expense increased 13% to $206 million, or 1.2% of sales, due to higher interest expenses[191]. Customer Engagement and Product Strategy - The company aims to gain market share in existing markets and expand into new markets by focusing on its dual market strategy and core values of hard work and customer service[176]. - The company offers a wide range of products differentiated by quality and price, with the highest sales and gross profit typically coming from the "best" quality category[168]. - The company has ongoing initiatives to educate customers on the benefits of vehicle maintenance and encourage them to purchase higher-quality products[168]. Currency Exposure - The net asset exposure in Mexican subsidiaries was$ 343.6 million as of December 31, 2024, with an 18.5% depreciation of the Mexican peso against the U.S. dollar from the previous year[233]. - The net asset exposure in Canadian subsidiaries was $162.8 million as of December 31, 2024, with a 7.9% depreciation of the Canadian dollar against the U.S. dollar from the previous year[234]. Insurance and Reserves - The self-insurance reserve estimate increased by$ 54 million from 2023 to 2024, primarily due to inflation in claim development costs[226]. Financial Ratios - The consolidated fixed charge coverage ratio was 6.11 times for the year ended December 31, 2024, compared to 6.42 times for 2023[217]. - The consolidated leverage ratio decreased to 1.89 times as of December 31, 2024, from 1.93 times in 2023[217].