AutoZone(US:AZO)2024-12-20 21:44Financial Performance - Net sales for the twelve weeks ended November 23, 2024, increased by $89.4 million to $4.3 billion, representing a 2.1% growth compared to the prior year period[43] - Domestic commercial sales rose by $35.3 million to $1.1 billion, or 3.2% over the comparable prior year period[43] - Gross profit for the twelve weeks ended November 23, 2024, was $2.3 billion, with a gross margin of 53.0%, up from 52.8% in the prior year[44] - Operating profit decreased by 0.9% to $841.1 million, negatively impacted by $17.0 million due to unfavorable exchange rates[46] - Net income decreased by 4.8% to $564.9 million, with diluted earnings per share slightly down by 0.1% to $32.52[46] Capital Expenditures and Store Openings - Capital expenditures for the twelve weeks ended November 23, 2024, were $247.0 million, driven by growth initiatives including new stores[56] - The company opened 34 net new stores during the twelve weeks ended November 23, 2024, compared to 25 in the prior year[56] Tax and Interest Rates - The effective income tax rate for the twelve weeks ended November 23, 2024, was 23.0% of pretax income, up from 21.6% in the prior year[45] - Net interest expense increased to $107.6 million, with average borrowings at $8.9 billion and a weighted average borrowing rate of 4.43%[51] Debt Management - The adjusted debt to EBITDAR ratio as of November 23, 2024, was 2.5:1, indicating a stable debt management strategy[63] - The company expects to maintain its investment grade credit ratings by targeting a ratio of adjusted debt to EBITDAR[63] - Adjusted debt as of November 23, 2024, was $12,126,520, with an adjusted debt to EBITDAR ratio of 2.5[76] - The company had outstanding fixed rate debt of $8.4 billion as of November 23, 2024, with a potential reduction in fair value of $344.5 million from a one percentage point increase in interest rates[88] Compliance and Financial Measures - As of November 23, 2024, the company was in compliance with all covenants under its borrowing arrangements[65] - The company uses non-GAAP financial measures to evaluate performance and make business decisions[68] Investment and Returns - Adjusted after-tax return on invested capital (ROIC) for the trailing four quarters ended November 23, 2024, was 47.7%, down from 55.0% for the comparable prior year period[62] - The average invested capital for the trailing four quarters ended November 23, 2024, was $7,061,709 thousand[73] Lease and Rent Expenses - Total lease cost per ASC 842 for the trailing four quarters ended November 23, 2024, was $602,034, up from $536,217 for the previous year[79] - Rent expense for the trailing four quarters ended November 23, 2024, was $454,189, compared to $412,210 for the previous year[79] Other Financial Information - The accounts payable to inventory ratio was 119.5% at November 23, 2024, down from 124.4% at November 18, 2023[59] - The company reported a net decrease of $15.0 million in commercial paper since the last report[83] - The fair value of the company's debt was estimated at $8.9 billion as of November 23, 2024, reflecting a decrease of $120.8 million from its carrying value[88] - The company had $565.0 million of variable rate debt outstanding as of November 23, 2024, with a potential annual impact of $5.7 million on pre-tax earnings from a one percentage point increase in interest rates[88] - The average debt for the trailing four quarters ended November 23, 2024, was $8,849,457 thousand[73] - The company amended its Revolving Credit Agreement on November 15, 2024, extending the termination date to November 15, 2028[64]