AutoZone(US:AZO)2024-09-24 10:55Executive Summary & Business Overview This section outlines AutoZone's Q4 and annual financial highlights, CEO commentary, strategic focus, and business description Fourth Quarter & Annual Financial Highlights AutoZone reported a 9.0% increase in net sales to $6.2 billion for Q4 FY2024, with adjusted sales up 2.6% excluding an extra week, while annual sales reached $18.5 billion, a 5.9% increase, and diluted EPS grew 11.0% to $51.58 for the quarter and 13.0% to $149.55 for the fiscal year Fourth Quarter & Annual Financial Highlights (Q4 FY2024) | Metric | Q4 FY2024 (17 weeks) | Q4 FY2023 (16 weeks) | YoY Change | | :--------------------- | :------------------- | :------------------- | :--------- | | Net Sales | $6.2 billion | $5.69 billion | 9.0% | | Adjusted Sales (16 wks) | $5.84 billion | $5.69 billion | 2.6% | | Gross Profit % of Sales | 52.5% | 52.71% | -21 bps | | Operating Profit | $1.3 billion | $1.22 billion | 6.1% | | Net Income | $902.2 million | $864.8 million | 4.3% | | Diluted EPS | $51.58 | $46.46 | 11.0% | Fourth Quarter & Annual Financial Highlights (FY2024) | Metric | FY2024 (53 weeks) | FY2023 (52 weeks) | YoY Change | | :--------------------- | :---------------- | :---------------- | :--------- | | Net Sales | $18.5 billion | $17.46 billion | 5.9% | | Gross Profit % of Sales | 53.1% | 52.0% | +110 bps | | Operating Profit | $3.8 billion | $3.47 billion | 9.1% | | Net Income | $2.7 billion | $2.53 billion | 5.3% | | Diluted EPS | $149.55 | $132.36 | 13.0% | - Gross profit as a percentage of sales decreased by 21 basis points in Q4 due to a non-cash LIFO impact, partially offset by higher merchandise margins, while for the full fiscal year, gross profit as a percentage of sales increased by 110 basis points, impacted by a non-cash net LIFO favorability23 CEO Commentary & Strategic Focus CEO Phil Daniele reported solid fiscal 2024 performance, highlighting accelerating Commercial sales and strong international growth amidst domestic challenges, while outlining key strategic initiatives - Domestic business is challenged by deferrals across discretionary merchandise categories, but Commercial sales performance is accelerating5 - International businesses performed well, up approximately 10% on a constant currency basis, despite currency rate moves slowing sales and earnings growth5 - Key strategic initiatives include improving inventory availability, accelerating domestic commercial business, growing international businesses, and focusing on customer service, while committing to increasing earnings and cash flow and delivering shareholder value56 Business Description AutoZone is a leading retailer and distributor of automotive replacement parts and accessories in the Americas, operating retail, commercial, and online sales channels - AutoZone is the leading retailer and distributor of automotive replacement parts and accessories in the Americas7 - The company's product line includes new and remanufactured automotive hard parts, maintenance items, accessories, and non-automotive products7 - AutoZone operates a commercial sales program, online retail (autozone.com), commercial online sales (autozonepro.com), and sells ALLDATA diagnostic software (alldata.com)7 Financial Performance - Fourth Quarter This section details AutoZone's financial results for the fourth quarter, presenting both GAAP and adjusted figures for comparable analysis GAAP Results (17 Weeks) For the 17-week fourth quarter of fiscal 2024, AutoZone reported GAAP net sales of $6.2 billion, a gross profit of $3.26 billion, and net income of $902.2 million, resulting in diluted EPS of $51.58, with this quarter including an additional week compared to the prior year Condensed Consolidated Statements of Operations (GAAP, 17 Weeks) | Metric | 17 Weeks Ended Aug 31, 2024 (in thousands) | 16 Weeks Ended Aug 26, 2023 (in thousands) | | :----------------------- | :----------------------------------------- | :----------------------------------------- | | Net sales | $6,205,380 | $5,690,618 | | Cost of sales | $2,947,517 | $2,690,947 | | Gross profit | $3,257,863 | $2,999,671 | | Operating, SG&A expenses | $1,961,183 | $1,777,175 | | Operating profit (EBIT) | $1,296,680 | $1,222,496 | | Interest expense, net | $153,151 | $108,727 | | Income before taxes | $1,143,529 | $1,113,769 | | Income tax expense | $241,321 | $248,928 | | Net income | $902,208 | $864,841 | | Diluted EPS | $51.58 | $46.46 | | Diluted Shares O/S | 17,491 | 18,613 | Adjusted Results (16 Weeks) After adjusting for the additional week in Q4 fiscal 2024, net sales were $5.84 billion, and diluted EPS was $48.11, providing a more comparable view against the prior year's 16-week quarter Condensed Consolidated Statements of Operations (Adjusted, 16 Weeks) | Metric | 16 Weeks Ended Aug 31, 2024 (in thousands) | 16 Weeks Ended Aug 26, 2023 (in thousands) | | :----------------------- | :----------------------------------------- | :----------------------------------------- | | Net sales | $5,839,501 | $5,690,618 | | Cost of sales | $2,770,662 | $2,690,947 | | Gross profit | $3,068,839 | $2,999,671 | | Operating, SG&A expenses | $1,858,905 | $1,777,175 | | Operating profit (EBIT) | $1,209,934 | $1,222,496 | | Interest expense, net | $144,142 | $108,727 | | Income before taxes | $1,065,792 | $1,113,769 | | Income tax expense | $224,297 | $248,928 | | Net income | $841,495 | $864,841 | | Diluted EPS | $48.11 | $46.46 | | Diluted Shares O/S | 17,491 | 18,613 | - Adjusted net sales for the 16-week Q4 FY2024 increased by 2.6% compared to the prior year's 16-week quarter115 Financial Performance - Fiscal Year This section presents AutoZone's full fiscal year financial results, including both GAAP and adjusted figures for comprehensive annual performance analysis GAAP Results (53 Weeks) For the 53-week fiscal year 2024, AutoZone reported GAAP net sales of $18.49 billion, gross profit of $9.82 billion, and net income of $2.66 billion, with diluted EPS reaching $149.55, reflecting the impact of an additional week in the fiscal year Condensed Consolidated Statements of Operations (GAAP, 53 Weeks) | Metric | 53 Weeks Ended Aug 31, 2024 (in thousands) | 52 Weeks Ended Aug 26, 2023 (in thousands) | | :----------------------- | :----------------------------------------- | :----------------------------------------- | | Net sales | $18,490,268 | $17,457,209 | | Cost of sales | $8,673,216 | $8,386,787 | | Gross profit | $9,817,052 | $9,070,422 | | Operating, SG&A expenses | $6,028,344 | $5,596,436 | | Operating profit (EBIT) | $3,788,708 | $3,473,986 | | Interest expense, net | $451,578 | $306,372 | | Income before taxes | $3,337,130 | $3,167,614 | | Income tax expense | $674,703 | $639,188 | | Net