35th Annual Gabelli Automotive Aftermarket Symposium

35th Annual Gabelli Automotive
Aftermarket Symposium
November 1, 2011
Forward Looking Statements
The Company claims the protection of the safe-harbor for forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these
statements by forward-looking words such as “expect,” “believe,” “anticipate,” “should,”
“plan,” “intend,” “estimate,” “project,” “will” or similar words. In addition, statements
contained within this presentation that are not historical facts are forward-looking
statements, such as statements discussing among other things, expected growth, store
development, integration and expansion strategy, business strategies, future revenues and
future performance. These forward-looking statements are based on estimates, projections,
beliefs and assumptions and are not guarantees of future events and results. Such statements
are subject to risks, uncertainties and assumptions, including, but not limited to,
competition, product demand, the market for auto parts, the economy in general, inflation,
consumer debt levels, governmental approvals, the Company’s increased debt levels, credit
ratings on the Company’s public debt, the Company’s ability to hire and retain qualified
employees, risks associated with the performance of acquired businesses such as CSK,
weather, terrorist activities, war and the threat of war. Actual results may materially differ
from anticipated results described or implied in these forward-looking statements. Please
refer to the “Risk Factors” section of the annual report on Form 10-K for the year ended
December 31, 2010, for additional factors that could materially affect the Company’s
financial performance.
2
Company History
Founded in 1957
• by the O’Reilly family with 13
original team members
Initial public offering
• in 1993 – listed on the NASDAQ as
ORLY
Track record of consistent
performance
• 18 consecutive years of record
revenue, operating income, EBITDA
and comparable store sales growth
3
Company Overview
Store Count
• 3,707 stores in 39 states as of September 30, 2011
Distribution Centers
• 23 Distribution Centers
Team Members
• Over 49,000
Last-Twelve-Months Sales
• $5.7 billion as of September 30, 2011
Do-It-Yourself versus Do-It-For-Me Split
• 59% and 41% as of September 30, 2011
• 65% and 35% as of December 31, 2009
• 52% and 48% as of June 30, 2008 (prior to CSK acquisition)
Total Assets
• $5.4 billion as of September 30, 2011
Market Capitalization
• $9.8 billion at October 27, 2011
4
Industry Drivers
2002
10.5
2003
10
2004
2005
2006
2007
2008
2009
2010
Source: Dept. of Transportation and Dept. of Energy
Miles Driven
2010
2009
2008
2007
$0.00
2006
0.0
2005
$0.50
2004
0.5
2003
$1.00
2002
1.0
2001
$1.50
2000
1.5
1999
$2.00
1998
2.0
1997
$2.50
1996
2.5
1995
$3.00
1994
3.0
1993
$3.50
1992
3.5
1991
Miles driven in trillions
9.5
Falling new car sales – 2005 @ 17.5 million
and 2010 @ 11.5 million
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8.5
Better engineered vehicles and the
8
economically constrained consumer has led to
Cars
Light Trucks
a continued aging of the vehicle fleet.
Source: AAIA Factbook
38% increase in miles driven from 1991 to 2010
U.S. Miles Driven and Gas Prices: $3.42 - average gas price as of October 24, 2011
1.3% YTD decrease in miles driven as of August 31, 2011 – (26.0) billion miles
Gas prices in dollars per gallon
Average Age
Continued Aging of U.S. Vehicle
Population:
2001
11
Gas Prices
5
Industry Landscape
Fragmented Market:
Top Ten Auto Parts Chains
1. AutoZone Inc. (4,813)
2. O’Reilly Auto Parts
(3,707)
40,000
3. Advance Auto Parts
(3,627)
35,000
30,000
4. General Parts Inc./
CARQUEST (1,500)*
25,000
20,000
15,000
30%
31%
32%
34%
36%
38%
41%
42%
10,000
44%
45%
5. Genuine Parts/
NAPA (1,035)*
6. Pep Boys (725)
5,000
7. Fisher Auto Parts (406)
-
8. Uni-Select (300)
Top 10 Auto Parts Stores
Source: AAIA Factbook or latest SEC filing
Industy
9. Replacement Parts Inc.
(155)
10. Auto-Wares Group
(128)
* Company owned stores
Source: AAIA Factbook or latest SEC filing
6
Industry Opportunities
31%
Labor share
of DIFM
sales,
$65,812
37%
Auto Parts
share of
DIFM sales,
$80,436
Size of Automotive Aftermarket
12%
Tire sales,
$26,100
Total Market:
$215 Billion
DIY sales,
$43,044
O’Reilly Addressable Market:
$123 Billion
20%
Source: AAIA Factbook
250
15% increase in Total Light
Vehicle Registrations from
2001 to 2010
214
218
232
237
241
242
242
240
200
In Millions
Total U.S. Light
Vehicle
Registrations
209
225
150
100
50
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: AAIA Factbook
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Dual Market Strategy
Established track record of serving both DIY
and DIFM customers
Greater market penetration and reduced
vulnerability to competition
Leverages our existing retail store locations
and extensive distribution infrastructure
Allows us to profitably operate in large and
small markets
Enhances service levels offered to our DIY
customers
Sales force comprised of over 500 dedicated
outside sales people
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Strategic Distribution Systems
Distribute to stores daily
from 23 regional
distribution centers
Multiple deliveries per
day to stores in metroDC area
State-of-the-art facilities
and systems
Stock an average of
118,000 SKUs
184 master inventory
“Hub” stores
9
CSK Systems Conversions
Minneapolis
/ Lubbock
Denver
Seattle
Stockton
• 210 stores
• 194 stores
• 92 stores
• 278 stores
• Began: Sep. 2008
• Began: Nov. 2009
• Began: Mar. 2010
• Began: Sep. 2010
• Complete: Jun. 2009
• Complete: Jan. 2010
• Complete: Apr. 2010
• Complete: Oct. 2010
09/2008
11/2009
01/2009
Detroit
03/2010
01/2010
Moreno
Valley
09/2010
05/2010
Salt Lake
City
11/2010
Phoenix
• 79 stores
• 240 stores
• 81 stores
• 151 stores
• Began: Jan. 2009
• Began: Jan. 2010
• Began: May 2010
• Complete: Overnight
Nov. 2010
• Complete: Jun. 2009
• Complete: Mar. 2010
• Complete: Jun. 2010
10
CSK Conversion Process – To Be Accomplished
Finish resetting West Coast stores to O’Reilly retail format
Complete store décor and graphic package installations
Complete exterior sign changes
Continue to improve Team Member parts knowledge
Refine product mix based on markets
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Store & Revenue Growth
1,600
Store Growth
2011 Guidance
Full Year:
$5.75 to $5.85 Billion in Sales
170 New Stores
$6,000
1,492
Sales (in millions)
1,400
$5,000
1,200
$4,000
1,000
800
$3,000
600
$2,000
400
232
200
23
31
40
80
101
121
106
128
140
149
170
190
150
150
170
0
$1,000
$0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E
Major acquisitions: 1998 Hi/LO – 182 stores acquired; 2001 Midstate – 82 stores acquired;
2005 Midwest - 72 stores acquired; 2008 CSK Auto – 1,342 stores acquired
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2011 Guidance
Comparable Store Sales
12%
4th Quarter:
3% - 5%
(4Q 2010 – 9.2%)
Full Year:
4% - 5.5%
(2010 - 8.8%)
11.1%
10%
8.8%
8.8%
7.8%
8%
8.6%
7.5%
6.8%
6%
5.3%
5.2%
3.7%
4%
3.3%
4.9%
4.8%
4.6%
3.7%
2%
1.5%
0%
2001
2002
2003
2004
2005
2006
2007
2008 ¹
2009
2010
Q3
2009
Q3
2010
Q3
2011
YTD
'09
YTD
'10
YTD
'11
¹ Includes CSK from July 11 through year end
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2011 Guidance
Adjusted Operating Margin
Full Year:
14.4% to 14.6%
15.7%
16.0%
15.0%
15.0%
14.4%
13.9%
14.0%
13.6%
13.0%
12.3% 12.4%
12.1%
11.9%
12.0%
11.2%
11.1%
11.0% 10.9% 11.0% 11.1%
11.0%
10.0%
9.4%
9.0%
2001
2002
2003
2004
2005
2006
2007 2008 ¹ 2009 2010 ²
¹ Includes CSK from July 11 through year end
² Excludes the impact of CSK DOJ investigation charges
Q3
Q3
Q3
2009 2010 ² 2011
YTD
'09
YTD
'10 ²
YTD
'11
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2011 Guidance
Adjusted EPS Growth
$3.25
4th Quarter:
$0.80 - $0.84
Full Year:
Adjusted $3.68 - $3.72 1
$3.05
$2.88
$3.00
$2.75
$2.50
$2.37
$2.26
$2.25
$2.00
$1.75
$1.45
$1.50
$1.55
$1.10
$1.67 $1.64
$1.25
$1.10
$1.25
$0.92
$1.00
$0.75
$0.63
$0.76
$0.86
$0.63
$0.50
$0.25
$1
Adjusted diluted earnings per share, excluding the impact of debt issuance and interest rate swap write off charges
Adjusted diluted earnings per share, excluding the impact of CSK acquisition related charges
3 Adjusted diluted earnings per share, excluding the impact of CSK DOJ investigation charges, and CSK notes receivable recovery
4 Adjusted diluted earnings per share, excluding the impact of CSK DOJ investigation charges
2
15
2011 Guidance (in millions):
Free Cash
Full Year:
Cap Ex: $290 - $320
Free Cash Flow: $575 - $610
Change in Net Inventory Investment
$500,000
Cap Ex
Free Cash Flow
$400,000
$300,000
$200,000
$100,000
$0
($100,000)
($200,000)
2001
2002
AP to Inventory 13.8% 16.9%
Ratio
2003
27.9%
2004
2005
38.5% 40.3%
2006
39.2%
2007
2008
43.2% 46.9%
2009
42.8%
2010 YTD '09 YTD '10 YTD '11
44.3% 47.9% 47.2% 59.3%
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O’Reilly Culture Statement
"We are ENTHUSIASTIC, HARDWORKING
PROFESSIONALS who are DEDICATED to
TEAMWORK, SAFETY, and EXCELLENT
CUSTOMER SERVICE. We will practice EXPENSE
CONTROL while setting an example of RESPECT,
HONESTY, and a WIN-WIN ATTITUDE in everything
we do!"
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