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O’Reilly Automotive, Inc. (ORLY)
Q1 2010 Earnings Call Transcript
April 29, 2010 11:00 am ET
Tom McFall – EVP, Finance and CFO
Greg Henslee – CEO and Co-President
Ted Wise – COO and Co-President
Tony Cristello – BB&T Capital Markets
Alan Rifkin – Banc of America
Stephen Chick – FBR Capital Markets
Dan Wewer – Raymond James & Associates
William Truelove – UBS
Scot Ciccarelli – RBC Capital Markets
Mark Becks – Longbow Research
Christopher Horvers – JPMorgan
Michael Lasser – Barclays Capital
Previous Statements by ORLY
» O’Reilly Automotive, Inc. Q4 2009 Earnings Call Transcript
» O’Reilly Automotive Inc. Q3 2009 Earnings Call Transcript
» O’Reilly Automotive Inc. Q2 2009 Earnings Call Transcript
Thank you. Mr. McFall, you may begin your conference.
Thank you, Lisa. Good morning, everyone and welcome to our conference call. Before I introduce Greg Henslee, our CEO, I’d like to read a brief statement. The company claims the protections of the Safe Harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements can be identified by forward-looking words such as expect, believe, anticipate, should, plan, intend, estimate, project, will or similar words. In addition, statements contained within this conference call that are not historical facts are forward-looking statements. Such statements, discussing among other things expected growth, store developments, integration and expansion strategies, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions that 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, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses including the acquisition of CSK Auto Corporation, weather, terrorists 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 company’s Form 10-K for the year ended December 31, 2009 for more details.
At this time, I’d like to introduce Greg Henslee.
Thanks Tom. Good morning, everyone and welcome to our first quarter conference call. Participating on the call with me this morning is, of course Tom McFall, our Chief Financial Officer; and Ted Wise, our Chief Operating Officer; David O’Reilly, our Executive Chairman is also present.
I would like to start off again by saying thanks to all our dedicated team members who work so hard each and every day to make sure our loyal customers receive the very best service in our business. This past quarter was an outstanding quarter for team O’Reilly, and I want to recognize each and every one of you for the great job you are doing, taking care of our customers, and systematically working us through the integration of CSK.
Clearly, we have a very bright future ahead of us as we complete this integration and focus on expansion and executing our dual market strategy coast to coast. Congratulations to all of you on the great performance in the first quarter.
Looking back to our fourth quarter conference call, it is clear that we underestimated the amount of demand that was pent-up as a result of the relatively soft sales our industry experienced for much of the winter. As I mentioned on the call, we attributed the softness in the fourth quarter to the continued strain the economic conditions in the US has placed on consumer budgets.
We believe this was amplified during the holiday season has many spent their discretionary cash on guests and holiday activities and deferred spending on auto repairs that didn't need absolute immediate attention. Comparable store sales are always difficult to forecast, and we’ve once again proven that sales trends can change relatively quickly. As you know, we were forecasting consolidated comparable store sales in the 2% to 4% range for the first quarter.
As it turned out, early spring weather arrived in many markets, and sales in the last half of the quarter accelerated dramatically and we were able to generate a robust 6.9% growth in consolidated comparable store sales for the quarter, on top of comparable store sales increase of 5.7% in the first quarter of 2009.
As previously mentioned, the fourth quarter of last year was the last time we were willing to disclose the details of our comparable store sales by store type. From this point forward, we plan to provide only our consolidated total company comparable store sales performance. However, I do want to reflect and add some color to our comp store sales performance for the quarter.
The stronger trends we saw in the last half of the quarter were present in the majority of our markets across the country. We saw retail traffic in our stores and our installer business picked up significantly. Again, I relate some portion of this strong increase in business to maintenance and repairs that were deferred last winter and with the early spring weather we benefited from this pent-up demand.
It would be very difficult for us to forecast the expectation that sales will continue for the full second quarter at the strong pace we saw in the last half of the first quarter. However, we do anticipate continued solid business trends. We're off to a good start to the quarter in April, and as a result are providing guidance of comparable store sales in the range of 4% to 6% for both the second quarter and for the year.
We will continue to update our annual guidance quarterly as we progress through this year. July 11 will be the second anniversary of our purchase of CSK. As you know, following the purchase will put in place an aggressive plan to implement our distribution model in the western half of the country, which establishes the foundation for us to execute our dual market strategy.
We also put in place an aggressive plan to convert the inventories and store layouts to fit our model. Many team members have worked extremely hard to execute this plan. And I'm very happy to announce that we are completing the integration plan on time and we are seeing very positive performance results as our efforts and investments gain traction.