2010 credit suisse holiday conference december 7, 2010 · 2010 credit suisse holiday conference...
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2010 Credit Suisse Holiday Conference
December 7, 2010
Forward Looking StatementsThe Company claims the protection of the safe-harbor for forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995. You canidentify 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 areforward-looking statements, such as statements discussing among other things,expected growth, store development, CSK DOJ investigation resolution, integration andexpansion strategy, business strategies, future revenues and future performance. Theseforward-looking statements are based on estimates, projections, beliefs and assumptionsand are not guarantees of future events and results. Such statements are subject to risks,uncertainties and assumptions, including, but not limited to, competition, productdemand, the market for auto parts, the economy in general, inflation, consumer debtlevels, governmental approvals, our ability to hire and retain qualified employees, risksassociated with the integration of acquired businesses such as the integration of CSK,weather, terrorist activities, war and the threat of war. Actual results may materiallydiffer 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 theyear ended December 31, 2009, for additional factors that could materially affect ourfinancial performance.
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Miles Driven Gas Prices
Industry Drivers
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8.5
9
9.5
10
10.5
11
Cars Light Trucks
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Av
era
ge
Ag
e
Source:
2010 Digital Aftermarket Factbook - AAIA 4
Source: AAIA Factbook
U.S. Miles Driven and Gas Prices:
Ga
s p
rice
s in
do
lla
rs p
er g
all
on
Mil
es d
riv
en i
n t
rill
ion
s
92% increase in miles driven from 1979 to 2009
$2.88 - average gas price as of November 30, 2010
0.5% YTD increase in miles driven as of September 30, 2010 – 11.1 billion miles
Continued Aging of U.S. Vehicle Population:
Falling new car sales – 2005 @ 17.5 million and 2009 @ 10.7 million
Tight consumer spending leads to investing in currently owned automobiles
0
10,000
20,000
30,000
40,000
2001 2002 2003 2004 2005 2006 2007 2008 2009
35,238 35,590 35,357 35,405 35,690 35,850 36,224 36,152 35,995
Top 10 Auto Parts Stores Industry
Industry Opportunities
30%
5
Source: AAIA Factbook or latest SEC filing
Source: AAIA Factbook
Top Ten Auto Parts Chains
1. AutoZone Inc. (4,627)
2. Advance Auto Parts (3,540)
3. O’Reilly Auto Parts (3,536)
4. General Parts Inc./CARQUEST (1,500)
5. Genuine Parts/NAPA (1,047)
6. Pep Boys (594)
7. Fisher Auto Parts (300)
8. Uni-Select (281)
9. Replacement Parts Inc. (155)
10. Auto-Wares Group (132)
Fragmented Market:
31% 32% 36%34% 38% 42% 42% 43%
150
175
200
225
250
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
In M
illi
on
s
Total U.S. Light Vehicle
Registrations:
20% increase in Total Light Vehicle
Registrations from 1999 to 2009
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Company History
• by the O’Reilly family – with 13 original team members
Founded in 1957
• in 1993 – listed on the NASDAQ as ORLY
Initial public offering
• 17 consecutive years of record revenue, operating income, EBITDA and comparable store sales growth
Track record of consistent
performance
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Company Overview
• 3,536 stores in 38 states as of September 30, 2010Store Count
• 23 Distribution CentersDistribution Centers
• Over 47,000Team Members
• $5.3 billion as of September 30, 2010Last-Twelve-Months Sales
• $8.6 billion at December 6, 2010Market Capitalization
• $5.0 billion as of September 30, 2010Total Assets
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Dual Market Strategy
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Established track record of serving both DIY and DIFM customers
Greater market penetration and reduced vulnerability to competition
Leverages our existing retail and distribution infrastructure
Can profitably operate in large and small markets
Enhances service levels offered to our DIY customers
Significant barriers to success in DIFM market
3rd Quarter 2010 Highlights
10
Opened 48 New Stores
11.1% Comparable Store Sales Increase
Adjusted Operating Margin Increased to 14.4%
37% increase in Adjusted Diluted Earnings Per Share to $0.86
$143 million in Free Cash Flow
Raised 2010 Full Year Comparable Store Sales Guidance to 7% - 8%
4th Quarter EPS Guidance of $0.56 - $0.60
Increased 2010 Adjusted EPS Guidance to $2.94 -$2.98--30% to 32% increase over 2009
11
CSK Store Conversions
Seattle
• 194 stores
• Began: Nov. 2009
• Completed: Jan. 2010
Moreno Valley
• 240 stores
• Began: Jan. 2010
• Completed: Mar. 2010
Denver
• 92 stores
• Began: Mar. 2010
• Completed: April 2010
Salt Lake City
• 81 stores
• Began: May 2010
• Completed: Jun. 2010
Stockton
• 278 stores
• Began: Sept. 2010
• Completed: Oct. 2010
Phoenix
• 151 stores
• Completed Overnight November 6, 2010
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November 2009 thru fall of 2010
13
• Convert Phoenix DC to O’Reilly systems and convert surrounding Checker stores
• Finish resetting West coast stores to O’Reilly retail format
• Complete store décor and graphic package installations
• Complete exterior sign changes
• Complete commercial programs rollout
• Enhance and expand the professional sales team
• Continue to improve Team Member parts knowledge
• Transition to O’Reilly Incentive Pay and Commission Plans
• Refine product mix based on markets
• Increase import OE coverage offerings
CSK Conversion Process – To Be Accomplished
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23 31 40
232
80 101 121 106 128 140 149 170 190
1,492
150 150
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
0
200
400
600
800
1,000
1,200
1,400
1,600
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E
Store Growth Sales (in thousands)
Store & Revenue Growth
15
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
2010 Guidance$5.3 to $5.4 billion
Consolidated Comparable Store Sales
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14.9%
8.9%8.9%
14.4%
6.8%6.8%
9.6%
5.0%
8.8%
3.7%
7.8%
6.8%
7.5%
3.3%3.7%
1.5%
4.6%
5.7%
6.9%
4.8%
7.9%
5.3%
11.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1
2009
Q1
2010
Q2
2009
Q2
2010
Q3
2009
Q3
2010
2010 Guidance4th Quarter: 4% - 6%
Full Year: 7% - 8%
Consolidated Operating Margin
17
10.8% 11.0% 10.9% 11.0% 11.1%
12.3% 12.4%12.1% 12.0%
7.8%
11.1%
9.7%
13.2%
12.0%
14.2%
11.9%
14.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
1H
2008
2H
2009 Q1
2009
Q1
2010
Q2
2009
Q2
2010*
Q3
2009
Q3
2010** Adjusted operating margin, excluding the impact of acquisition related charges
Fueling EPS Growth
18
$0.50
$0.63
$0.77
$0.92
$1.09
$1.41
$1.55
$1.67
$1.48
$2.26
$0.46
$0.70 $1.64
$0.81
$0.63
$0.86
$-
$0.25
$0.50
$0.75
$1.00
$1.25
$1.50
$1.75
$2.00
$2.25
$2.50
2000 2001 2002 2003 2004 2005 2006 2007 2008* 2009* Q1
2009
Q1
2010
Q2
2009
Q2
2010*
Q3
2009
Q3
2010*
2010 Guidance4th Quarter: $0.50 - $0.60
Full Year:
Adjusted $2.94 - $2.98*
GAAP $2.79 - $2.83
* Adjusted diluted earnings per share, excluding the impact of acquisition related charges
Free Cash
($200,000)
($100,000)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
2004 2005 2006 2007 2008 2009 YTD
2009
YTD
2010
Change in Net Inventory
Investment
Cap Ex
Free Cash Flow
19
In thousands
2010 Guidance (in millions):
Cap Ex: $375 - $400
Free Cash Flow: $250 - $275
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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!"