AutoZone Inc. 2024 Q3 Financial Results

Ticker: AZO | Exchange: NYSE | Sector: Consumer Cyclical | Industry: Specialty Retail

Report Type: Financial results for AutoZone Inc. | Today's Date: June 10, 2024 | Filing Date: June 07, 2024

Link: AutoZone Q3 2024 10-Q Report

Executive Summary

The third quarter of AutoZone's fiscal year 2024 demonstrated resilience amidst a challenging macroeconomic environment. Despite facing delayed tax refunds and unfavorable weather conditions, the company delivered a total sales increase of 3.5%, operating profit growth of 4.9%, and earnings per share (EPS) boost of 7.5%.

Financial Overview

AutoZone Inc. reported revenue of $4.24 billion for Q3 2024. The cost of revenue stood at $1.97 billion, resulting in a gross profit of $2.27 billion. Selling, general, and administrative expenses amounted to $1.37 billion. Key highlights include:

• Operating Income: $900.18 million
• Net Income: $651.73 million
• Earnings Per Share (EPS): $37.73
• Weighted Average Shares Outstanding: 17.27 million
• Gross Profit Margin: 53.49%
• Operating Income Ratio: 21.25%
• Net Income Ratio: 15.39%

Cash Flow Analysis

The company's net cash provided by operating activities was notably strong. Operating cash flow for the quarter was $669.48 million, resulting in a free cash flow of $434.38 million after capital expenditures of $235.10 million. Key cash flow elements include:

• Operating Cash Flow: $669.48 million
• Capital Expenditure: $235.10 million
• Free Cash Flow: $434.38 million
• Common Stock Repurchased: $728.14 million
• Net Cash Used in Financing Activities: $326.12 million

Balance Sheet Summary

AutoZone's balance sheet reflected solid asset management and financial health. Total assets stood at $17.11 billion, while total liabilities were $21.95 billion. Notable components include:

• Cash and Cash Equivalents: $275.36 million
• Net Receivables: $586.78 million
• Inventory: $6.16 billion
• Property, Plant, and Equipment (Net): $9.15 billion
• Total Debt: $12.26 billion
• Total Stockholders' Equity: $-4.84 billion

Market Performance and Ratios

According to recent market data, AutoZone Inc. has performed exceptionally well compared to its peers. Key performance metrics include:

• Gross Profit Margin (TTM): 53.18% (Best Performing Peers: Petco Health & Wellness, 37.38%)
• Operating Profit Margin (TTM): 20.66% (Best Performing Peers: Petco Health & Wellness, -19.28%)
• Net Profit Margin (TTM): 14.60% (Best Performing Peers: Petco Health & Wellness, -21.27%)
• Return on Equity (TTM): -54.58% (Worst Performing Peers: Advance Auto Parts, 1.59%)
• Current Ratio (TTM): 79.30% (Best Performing Peers: Petco Health & Wellness, 84.54%)
• Price-to-Sales Ratio (TTM): 267.12% (Best Performing Peers: DICK'S Sporting Goods, 135.64%)

Executive Comments

Phil Daniele, CEO: "We are well-positioned to grow sales across our domestic and international store bases with both our retail and commercial customers. Our gross margins are solid, and our operating expense structure is appropriate for future growth. We are putting our capital investments where they matter most, leveraging technology to build a superior customer service experience."

Jamere Jackson, CFO: "We remain committed to driving long-term shareholder value by investing in our growth initiatives, driving robust earnings and free cash flow, and returning excess cash to our shareholders. The efforts of our AutoZoners in our stores and distribution centers continue to enable us to drive earnings growth in a meaningful way."

Operational Highlights

Despite various economic and weather-related challenges, AutoZone achieved several milestones:

• Opened 20 net new commercial programs, now covering 92% of domestic stores.
• Continued expansion of hubs and mega hubs, with focus on increasing parts availability and delivery speeds.
• Significant improvement in gross margin by 87 basis points, excluding LIFO adjustments.
• International same-store sales grew impressively at 18.1% on an actual basis and 9.3% on a constant currency basis.
• New distribution centers in Chao Chilla, CA, and New Kent, VA, are on track for FY25 opening.

Outlook

Looking ahead, AutoZone remains cautiously optimistic. The company is focused on growing its domestic commercial business and improving its supply chain efficiencies. While macroeconomic uncertainties persist, the strategic investments in technology, customer service, and infrastructure provide a strong foundation for continued growth.

Conclusion

AutoZone Inc.'s Q3 2024 financial results highlight the company's ability to navigate through external challenges while maintaining strong operational performance. With a solid foundation, strategic growth initiatives, and a relentless focus on customer satisfaction, AutoZone is well-positioned for sustained long-term success.