·

First quarter comparable store sales decrease of 1.9%, total sales growth of 2.7%

·

Full-year 2020 guidance withdrawn due to the uncertainty related to COVID-19

For further information contact:

Investor & Media Contacts

Mark Merz (417) 829-5878

Eric Bird (417) 868-4259

March 31, 2020

March 31, 2019

December 31, 2019

(Unaudited)

(Unaudited)

(Note)

Assets

Current assets:

Cash and cash equivalents

$

287,067

$

56,717

$

40,406

Accounts receivable, net

221,167

250,680

214,915

Amounts receivable from suppliers

83,446

66,452

79,492

Inventory

3,556,723

3,228,901

3,454,092

Other current assets

53,397

46,896

44,757

Total current assets

4,201,800

3,649,646

3,833,662

Property and equipment, at cost

6,314,339

5,761,729

6,191,427

Less:  accumulated depreciation and amortization

2,305,695

2,085,019

2,243,224

Net property and equipment

4,008,644

3,676,710

3,948,203

Operating lease, right-of-use assets

1,935,295

1,886,364

1,928,369

Goodwill

910,141

808,717

936,814

Other assets, net

52,982

40,125

70,112

Total assets

$

11,108,862

$

10,061,562

$

10,717,160

Liabilities and shareholders’ equity

Current liabilities:

Accounts payable

$

3,758,199

$

3,438,679

$

3,604,722

Self-insurance reserves

83,262

77,359

79,079

Accrued payroll

103,804

94,192

100,816

Accrued benefits and withholdings

72,561

65,106

98,539

Income taxes payable

12,884

92,816

 —

Current portion of operating lease liabilities

316,932

296,605

316,061

Other current liabilities

277,290

261,575

270,210

Total current liabilities

4,624,932

4,326,332

4,469,427

Long-term debt

4,471,248

3,460,921

3,890,527

Operating lease liabilities, less current portion

1,661,991

1,629,311

1,655,297

Deferred income taxes

73,212

109,480

133,280

Other liabilities

168,635

163,153

171,289

Shareholders’ equity:

Common stock, $0.01 par value:

Authorized shares – 245,000,000

Issued and outstanding shares –

74,199,261 as of March 31, 2020,

78,262,099 as of March 31, 2019, and

75,618,659 as of December 31, 2019

742

783

756

Additional paid-in capital

1,271,250

1,268,032

1,280,760

Retained deficit

(1,137,392)

(896,450)

(889,066)

Accumulated other comprehensive (loss) income

(25,756)

 —

4,890

Total shareholders’ equity

108,844

372,365

397,340

Total liabilities and shareholders’ equity

$

11,108,862

$

10,061,562

$

10,717,160

For the Three Months Ended

March 31, 

2020

2019

Sales

$

2,476,487

$

2,410,608

Cost of goods sold, including warehouse and distribution expenses

1,180,581

1,131,318

Gross profit

1,295,906

1,279,290

Selling, general and administrative expenses

872,345

834,504

Operating income

423,561

444,786

Other income (expense):

Interest expense

(39,386)

(34,291)

Interest income

675

554

Other, net

(5,190)

3,103

Total other expense

(43,901)

(30,634)

Income before income taxes

379,660

414,152

Provision for income taxes

79,222

93,000

Net income

$

300,438

$

321,152

Earnings per share-basic:

Earnings per share

$

4.00

$

4.09

Weighted-average common shares outstanding – basic

75,022

78,484

Earnings per share-assuming dilution:

Earnings per share

$

3.97

$

4.05

Weighted-average common shares outstanding – assuming dilution

75,663

79,297

For the Three Months Ended

March 31, 

2020

2019

Operating activities:

Net income

$

300,438

$

321,152

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of property, equipment and intangibles

73,963

63,964

Amortization of debt discount and issuance costs

1,035

918

Deferred income taxes

(58,732)

4,312

Share-based compensation programs

5,875

5,424

Other

1,739

2,245

Changes in operating assets and liabilities:

Accounts receivable

(12,208)

(60,914)

Inventory

(106,937)

(35,405)

Accounts payable

156,584

60,918

Income taxes payable

131,949

82,476

Other

(34,613)

(4,468)

Net cash provided by operating activities

459,093

440,622

Investing activities:

Purchases of property and equipment

(133,284)

(152,914)

Proceeds from sale of property and equipment

1,901

1,811

Investment in tax credit equity investments

(95,259)

 —

Other

 —

(295)

Net cash used in investing activities

(226,642)

(151,398)

Financing activities:

Proceeds from borrowings on revolving credit facility

1,052,000

874,000

Payments on revolving credit facility

(969,000)

(831,000)

Proceeds from the issuance of long-term debt

499,795

 —

Payment of debt issuance costs

(2,990)

 —

Repurchases of common stock

(574,052)

(321,856)

Net proceeds from issuance of common stock

9,800

15,224

Other

(253)

(190)

Net cash provided by (used in) financing activities

15,300

(263,822)

Effect of exchange rate changes on cash

(1,090)

 —

Net increase in cash and cash equivalents

246,661

25,402

Cash and cash equivalents at beginning of the year

40,406

31,315

Cash and cash equivalents at end of the year

$

287,067

$

56,717

Supplemental disclosures of cash flow information:

Income taxes paid

$

4,975

$

5,335

Interest paid, net of capitalized interest

46,282

47,796

For the Twelve Months Ended

March 31, 

Adjusted Debt to EBITDAR:

2020

2019

(In thousands, except adjusted debt to EBITDAR ratio)

GAAP debt

$

4,471,248

$

3,460,921

Add:

Letters of credit

39,083

39,201

Discount on senior notes

3,510

4,090

Debt issuance costs

19,242

14,989

Six-times rent expense

2,057,448

1,937,286

Adjusted debt

$

6,590,531

$

5,456,487

GAAP net income

$

1,370,328

$

1,340,733

Add:

Interest expense

145,070

128,203

Provision for income taxes

385,509

372,100

Depreciation and amortization

280,874

252,981

Share-based compensation expense

22,372

20,424

Rent expense (i)

342,908

322,881

EBITDAR

$

2,547,061

$

2,437,322

Adjusted debt to EBITDAR

2.59

2.24

⁽ⁱ⁾

The table below outlines the calculation of Rent expense and reconciles Rent expense to Total lease cost, per ASC 842, the most directly comparable GAAP financial measure, for the twelve months ended March 31, 2020 and 2019 (in thousands):

Total lease cost, per ASC 842, for the twelve months ended March 31, 2020

$

404,138

Less:

Variable non-contract operating lease components, related to property taxes and insurance, for the twelve months ended March 31, 2020

61,230

Rent expense for the twelve months ended March 31, 2020

$

342,908

Total lease cost, per ASC 842, for the three months ended March 31, 2019

$

98,293

Less:

Variable non-contract operating lease components, related to property taxes and insurance, for the three months ended March 31, 2019

14,567

Rent expense for the three months ended March 31, 2019

83,726

Add:

Rent expense for the nine months ended December 31, 2019, as previously reported prior to the adoption of ASC 842

239,155

Rent expense for the twelve months ended March 31, 2019

$

322,881

March 31, 

2020

2019

Selected Balance Sheet Ratios:

Inventory turnover (1)

1.4

1.4

Average inventory per store (in thousands) (2)

$

643

$

609

Accounts payable to inventory (3)

105.7

%

106.5

%

For the Three Months Ended

March 31, 

2020

2019

Reconciliation of Free Cash Flow (in thousands):

Net cash provided by operating activities

$

459,093

$

440,622

Less:

Capital expenditures

133,284

152,914

Excess tax benefit from share-based compensation payments

3,380

8,513

Investment in tax credit equity investments

95,259

 —

Free cash flow

$

227,170

$

279,195

For the Three Months Ended

For the Twelve Months Ended

March 31, 

March 31, 

2020

2019

2020

2019

Store Count:

Beginning store count

5,439

5,219

5,306

5,097

New stores opened

76

64

214

192

Bennett stores acquired, net of stores merged (4)

 —

25

(5)

25

Stores closed

(3)

(2)

(3)

(8)

Ending domestic store count

5,512

5,306

5,512

5,306

Mexico stores (5)

21

 —

21

 —

Ending total store count

5,533

5,306

5,533

5,306

For the Three Months Ended

For the Twelve Months Ended

March 31, 

March 31, 

2020

2019

2020

2019

Store and Team Member Information: (6)

Total employment

79,778

80,366

Square footage (in thousands)

40,908

39,110

Sales per weighted-average square foot (7)

$

59.82

$

61.41

$

253.12

$

251.29

Sales per weighted-average store (in thousands) (8)

$

443

$

452

$

1,871

$

1,847

⁽¹⁾

Calculated as cost of goods sold for the last 12 months divided by average inventory. Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.

⁽²⁾

Calculated as inventory divided by store count at the end of the reported period.

⁽³⁾

Calculated as accounts payable divided by inventory.

⁽⁴⁾

O’Reilly acquired 33 Bennett Auto Supply, Inc. (“Bennett”) stores after the close of business on December 31, 2018, which were not included in the December 31, 2018, store count, as they were not operated by the Company for any portion of 2018. During the first quarter ended March 31, 2019, O’Reilly merged eight of the acquired Bennett stores into existing O’Reilly locations, and during the second quarter ended June 30, 2019, O’Reilly merged an additional five acquired Bennett stores into existing O’Reilly locations.

⁽⁵⁾

O’Reilly acquired Mayoreo de Autopartes y Aceites, S.A. de C.V. (“Mayasa”), headquartered in Guadalajara, Jalisco, Mexico, after the close of business on November 29, 2019.

⁽⁶⁾

Represents O’Reilly’s U.S. operations only.

⁽⁷⁾

Calculated as sales less jobber sales, divided by weighted-average square footage. Weighted-average square footage is determined by weighting store square footage based on the approximate dates of store openings, acquisitions, expansions or closures.

⁽⁸⁾

Calculated as sales less jobber sales, divided by weighted-average stores. Weighted-average stores is determined by weighting stores based on their approximate dates of openings, acquisitions or closures.