O’Reilly Automotive(US:ORLY)2021-10-28 20:57Financial Data and Key Metrics Changes - The company reported a 6.7% increase in comparable store sales, following a 16.9% increase in the same quarter last year [8][21] - Diluted earnings per share (EPS) increased by 14% to $8.07, building on a 39% growth in the same quarter of the previous year [8][36] - Year-to-date free cash flow reached $2.2 billion, up from $1.9 billion for the same period in 2020 [72] Business Line Data and Key Metrics Changes - The professional side of the business showed strong growth, while the DIY segment also performed well despite challenging comparisons from the previous year [15][20] - Total ticket count for the third quarter was slightly negative due to pressures on DIY transaction counts, but professional ticket counts grew [16][18] Market Data and Key Metrics Changes - The company anticipates full-year total revenue to be between $12.9 billion and $13.2 billion, up from previous guidance of $12.3 billion to $12.6 billion [64] - The average ticket increase was aided by a 5.5% rise in same SKU selling prices, reflecting broader inflationary trends [18][25] Company Strategy and Development Direction - The company is increasing its full-year comparable store sales guidance to a range of 10% to 12% from a previous range of 5% to 7% [25] - Plans to open between 175 and 185 net new stores in the U.S. and Mexico in 2022, continuing to focus on both new and existing markets [53][54] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding inflation and its potential impact on consumer behavior, noting that while demand remains strong, rising prices could lead to deferred maintenance [19][24] - The company is optimistic about maintaining strong sales volumes due to the ongoing shortage of new and used vehicles, which encourages consumers to invest in vehicle maintenance [22][89] Other Important Information - The company reported a gross margin of 52.3%, a slight decrease from the previous year, attributed to higher acquisition and distribution costs [27][36] - The adjusted debt-to-EBITDA ratio improved to 1.75 times, down from 20.3 times at the end of 2020, reflecting reduced debt and increased EBITDAR [78] Q&A Session Summary Question: Impact of pricing on consumer demand - Management noted no significant movement in consumer behavior despite rising prices, but acknowledged potential future impacts if economic conditions worsen [84][85] Question: Factors driving sales performance compared to pre-pandemic levels - Management highlighted the scarcity of new and used vehicles as a key driver for maintaining existing vehicles, alongside a trend of consumers performing DIY maintenance [88][90] Question: Expectations for gross margin in the upcoming quarters - Management indicated that while there are many moving parts affecting margins, they do not anticipate dramatic changes in overall gross margin moving forward [102][103] Question: Supply chain pressures and their impact - Management acknowledged ongoing supply chain challenges, including staffing issues and increased freight costs, but noted improvements in distribution center operations [106][110] Question: Market share gains sustainability - Management expressed confidence in continuing to gain market share, citing strong performance relative to competitors and the company's ability to navigate supply chain challenges [95][127]