Auto Parts Retailers

Presented by:
Keith Phillips
Iftakher Russo
Devina Sutiono
Dylan Greene

Founded:1979
Headquarter: Memphis, TN
Products: New & remanufactured auto parts
Inventory Valuation: LIFO
Stores: 4,836 US, 362 Mexico, 3 Brazil
Employees: 71,000 employees
Revenue: 7.8B
NYSE: AZO

Founded: 1957
Headquarter: Springfield, MO
Products: Specialty tools, aftermarket parts, new & used
Inventory Valuation: LIFO
Stores: 4,166 stores
Employees: 62,000
Revenue: 6.1B
NASDAQ: ORLY

Founded: 1932
Headquarter: Roanoke, VA
Products: Specialty dealer of auto parts and accessories
Inventory Valuation: LIFO
Stores: 4,049 stores in US
Employees: 74,000+ employees
Revenue: $6.2B
NYSE: AAP

Industry at a Glance
Industry has drastically
increased revenue since 2008
recession
When customers are more cost
conscious, many choose to repair
their own vehicles rather than
pay a repair shop
Age of vehicles and mileage are
huge factors affecting the
industry

Common-Size Balance Sheets

Advance Auto
Parts

AutoZone

Oreilly

ASSETS

2010

2011

2012

2010

2011

2012

2010

2011

2012

Cash & Equivalents

5.5%

5.4%

18.0%

4.0%

4.1%

4.2%

4.2% 10.3%

7.5%

55.6% 55.9%

50.0%

41.4% 42.0%

41.9%

Inventory
Other Current Assets
Net PPE

2.3%

1.4%

1.0%

34.0% 33.5%

28.0%

1.5%

40.1% 36.1% 39.6%

1.5%

1.4%

1.3%

1.0%

0.5%

45.2% 45.5%

45.6%

38.2% 38.1% 38.5%

14.7% 13.5% 13.2%

Goodwill

1.0%

2.1%

1.7%

5.4%

5.2%

4.8%

Other Assets

1.6%

1.7%

1.3%

2.5%

1.8%

2.1%

100.0% 100.0% 100.0%

100.0%

100.0% 100.0% 100.0%

17.7% 23.3% 33.6%

Total Assets

100.0% 100.0%
LIABILITIES AND STOCKHOLDERS
EQUITY

1.4%

1.0%

0.8%

Accounts Payable

38.5% 45.1%

44.0%

43.7% 47.0%

46.7%

Other Current Liabilities

16.6% 14.7%

11.4%

11.3% 11.5%

11.6%

6.6%

Long Term Debt

8.7% 11.4%

13.2%

51.7% 56.5%

59.3%

7.1% 14.5% 19.1%

Other LT Liabilities

5.2%

5.6%

5.2%

6.5%

6.4%

7.0%

5.0%

5.5%

5.1%

6.0%

4.7%

Total Liabilities

69.0% 76.8%

73.8% 113.3% 121.4%

124.7%

36.4% 48.3% 63.3%

Total Stockholders Eq.

31.0% 23.2%

26.2%

-13.3% -21.4%

-24.7%

63.6% 51.7% 36.7%

100.0% 100.0% 100.0%

100.0%

100.0% 100.0% 100.0%

Total Liability & Stock Eq.

100.0% 100.0%

Common Size Income Statements

Advance Auto Parts
2011

Sales

100.00%

100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

COGS

50.00%

50.30%

50.10%

49.59% 48.97% 48.49%

51.44% 50.99% 49.90%

Gross Profit

50.00%

49.70%

49.90%

50.41% 51.03% 51.51%

48.56% 49.00% 50.10%

SG&A Expenses

40.10%

39.00%

39.30%

32.49% 32.51% 32.58%

35.36% 34.04% 34.29%

9.90%

10.70%

10.60%

17.92% 18.52% 18.93%

13.21% 14.97% 15.81%

-0.50%

-0.50%

-0.50%

2.16%

2.11%

2.04%

-0.73%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

0.30%

9.40%

10.20%

10.10%

3.60%

3.90%

3.80%

5.80%

6.30%

6.30%

Interest Expense
Other Income
(Expense)
Earning Before
Income Tax
Income Tax
Expense
Net Income

2010

2011

Oreilly

2010

Operating Income

2012

AutoZone
2012

15.76% 16.41% 16.89%

5.73%

5.89%

2010

2011

2012

-0.49% -0.65%
-0.39%

0.07%

12.78% 14.09% 15.23%

6.07%

5.00%

5.32%

5.75%

10.03% 10.52% 10.82%

7.78%

8.77%

9.48%

Store and Sales

Revenue per Store (in 000's)

$1,850
$1,800

New Store Openings

$1,750

250

$1,700
$1,650

200

Advance Auto Parts

$1,600

150

Advance Auto Parts

100

AutoZone

$1,550

Oreillys

$1,500

AutoZone

$1,450

Oreillys

$1,400
$1,350

50

2010

2011

2012

0
2010

2011

2012

Revenue per Sq. Footage

$300

$250
$200
Advance Auto Parts
$150

AutoZone
Oreillys

$100
$50
$0
2010

2011

2012

Liquidity

Inventory Turnover
1.80
1.60
1.40

AP Turnover

1.20

3.50
3.00
2.50

1.00

Advance Auto Parts

0.80

Autozone
O'reilly

2.00

Advance Auto Parts

0.60

1.50

Autozone

0.40

1.00

O'reilly

0.20

0.50

0.00

0.00

2010
2010

2011

2.00

0.45

1.80

0.40

1.60

0.35

1.40

0.30

1.20

0.25

Advance Auto Parts

1.00

0.20

Autozone

0.80

0.15

O'reilly

0.60

0.10

0.40

0.05

0.20

0.00

0.00
2011

2012

Current Ratio
Quick Ratio

2010

2011

2012

2012

Advance Auto Parts

Autozone
O'reilly

2010

2011

2012

Long Term Debt Paying Ability

Debt Ratio
1.40
1.20
1.00
0.80

Advance Auto Parts

0.60

Autozone
O'reilly

0.40

Debt to Equity

0.20
0.00

4.00

2010
2.00
0.00
2010
-2.00

2011

2012
Advance Auto Parts
Autozone

-4.00
-6.00
-8.00

-10.00

O'reilly

2011

2012

Profitability
Return on Assets

Return on Total Equity

18.00%

60.00%

16.00%

40.00%

14.00%

20.00%

12.00%

0.00%
-20.00%

2010

2011

2012

Advance Auto Parts

-40.00%

Autozone

-60.00%

O'reilly

Advance Auto Parts

10.00%
8.00%

Autozone

6.00%

O'reilly

4.00%

-80.00%

2.00%

-100.00%

0.00%

-120.00%

2010

2011

-140.00%

Earning per Share

$30.00
$25.00
$20.00
Advance Auto Parts
$15.00

Autozone

$10.00

O'reilly

$5.00
$2010

2011

2012

2012

Investor Analysis
Book Value per Share
$30.00
$20.00
$10.00
$$(10.00)

Advance Auto Parts

2010

$(20.00)
$(30.00)
$(40.00)

OCF per Share

$(50.00)

$35.00
$30.00
$25.00
$20.00

Advance Auto Parts

$15.00

Autozone
O'reilly

$10.00
$5.00
$2010

2011

2012

2011

2012

Autozone
O'reilly

Key Ratios
AAP

AZO

ORLY

2010

2011

2012

2010

2011

2012

2010

2011

2012

Inventory Turnover

1.70

1.59

1.43

1.62

1.66

1.64

1.41

1.47

1.45

AP Turnover

2.62

2.11

1.69

1.60

1.52

1.47

3.24

2.71

1.92

Current Ratio

1.15

1.05

1.24

0.85

0.81

0.81

1.87

1.65

1.20

Quick Ratio

0.14

0.11

0.34

0.10

0.10

0.10

0.23

0.39

0.20

Debt Ratio

0.69

0.77

0.74

1.13

1.21

1.25

0.36

0.48

0.63

Debt to Equity Ratio

2.23

3.31

2.81

-8.54

-5.68

-5.05

0.57

0.93

1.73

Return on Assets
Return on Total
Equity

10.77%

11.26%

9.38%

29.81%

41.83% 37.66% -126.01% -85.20% -66.40% 14.54% 17.53% 23.65%

Gross Profit Margin

49.98%

49.74% 49.93%

13.56% 14.84% 15.33%

8.72% 10.06% 10.41%

50.41% 51.03% 51.51% 48.56% 49.01% 50.10%

Net Profit Margin

5.84%

6.40%

6.25%

10.03% 10.52% 10.81%

7.94%

9.17%

9.47%

Earnings per Shares

$4.00

$5.21

$5.29 $ 15.23 $ 19.91 $ 24.04

$3.02

$3.77

$4.83

Book Value per Share

12.07

11.21

16.56

-15.24

-29.42

-40.00

23.15

21.13

17.40

7.64

10.75

9.25

24.26

29.62

30.89

4.96

8.17

10.15

OCF per Share

Our Recommendation

Highest:

Rapidly Increasing:

AP Turnover

Lowest:

Debt Ratio
Debt/Equity Ratio
Total Liabilities
Accounts Payable

Positive Trends:

Revenue per store

Revenue per sq ft
Return on Assets
Return on Total Equity

Number of stores
Gross Profit Margin
Net Profit Margin
Operating Cash Flow

Stable:
Inventory turnover
EPS

Post Period Analysis