O'Reilly Automotive (ORLY)
Q1 2013 Earnings Call
April 25, 2013 11:00 am ET
Thomas G. McFall - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance
Gregory L. Henslee - Chief Executive Officer and President
Jeff M. Shaw - Executive Vice-President of Store Operations and Sales
Matthew J. Fassler - Goldman Sachs Group Inc., Research Division
Michael Lasser - UBS Investment Bank, Research Division
Christopher Horvers - JP Morgan Chase & Co, Research Division
Scot Ciccarelli - RBC Capital Markets, LLC, Research Division
Michael Montani - ISI Group Inc., Research Division
Sam Reid - Barclays Capital, Research Division
Previous Statements by ORLY
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Thomas G. McFall
Thank you, Latasha. Good morning, everyone, and welcome to our conference call. Before I introduce Greg Henslee, our CEO, we have a brief statement.
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 the earnings release and on this conference call, 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 revenue 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 regulations, 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, 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, 2012, for additional factors that could materially affect the company's financial performance. These forward-looking statements speak only as of the date they were made, and the company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
At this time, I'd like to introduce Greg Henslee.
Gregory L. Henslee
Thanks, Tom. Good morning, everyone, and welcome to the O'Reilly Auto Parts first quarter conference call. Participating on the call with me this morning is Tom McFall, of course, our Chief Financial Officer; and Jeff Shaw, our Executive Vice President of Store Operations and Sales. David O'Reilly, our Executive Chairman; and Ted Wise, our Executive Vice President of Expansion, are also present.
I would like to begin today's discussion by thanking our 56,000 Team Members for their continued hard work and dedication to our company's success. As we expected heading into 2013, the first quarter was a challenging quarter to drive robust sales growth increases due to the difficult comparisons to 2012. To remind everyone on the call, in the first quarter of last year, we delivered a 7.4% comparable store sales increase, driven by the pull-forward of spring business into the first quarter as a result of the early warm weather in most of our markets and the 1.3% benefit from Leap Day.
In addition to the weather-related headwinds, the expiration of the payroll tax holiday and the timing of Easter falling into the first quarter of this year versus the second quarter of 2012 made it tough to generate strong comparable store sales increases. Despite these significant headwinds, through our team's continued focus on superior customer service, we were able to sustain the solid sales trends from the fourth quarter of 2012 into this quarter and generate a positive comp of 0.6%, which was within our comparable store sales guidance range for the quarter of flat to 2%. We estimate that the impact from the calendar shift in the first quarter for both Leap Day and Easter negatively impacted our comps by approximately 1.5%. So on an adjusted basis, our team delivered a 2.1% comp on top of a similarly adjusted 6.1% comp from the first quarter of last year. So we are reasonably pleased with our performance against these tough comparisons.
Our first quarter operating profit, as a percent of sales, decreased 34 basis points. But as we previously stated on last year's call, operating profit in the first quarter of 2012 benefited approximately 15 to 20 basis points from Leap Day since we realized the sales benefit of Leap Day with essentially no additional fixed costs. Excluding the Leap Day comparison, the remaining deleverage is the result of comparing to a strong SG&A leverage in 2012 on robust sales as our SG&A spend in the first quarter of 2013 was in line with our expectations.
We are pleased with our team's ability to generate a 1% increase in operating profits over last year, considering the significant comparison headwinds we faced in the first quarter. This solid operating performance, coupled with a reduced share count from last year's buybacks and a lower tax rate, which Tom will discuss later in the call, drove a robust increase in first quarter earnings per share of 19% and sets us on the path for a strong year in 2013.