AutoZone 2nd Quarter EPS Increases 15.1% to $4.78

Tue Feb 26, 2013 7:00am EST

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130226:nGNXUXFVTa

MEMPHIS, Tenn., Feb. 26, 2013 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE:AZO) today reported net
sales of $1.9 billion for its second quarter (12 weeks) ended February 9, 2013, an increase of
2.8% from the second quarter of fiscal 2012 (12 weeks). Domestic same store sales, or sales for
stores open at least one year, decreased 1.8% for the quarter.

Net income for the quarter increased $9.3 million, or 5.6%, over the same period last year to
$176.2 million, while diluted earnings increased 15.1% to $4.78 per share from $4.15 per share in
the year-ago quarter.

For the quarter, gross profit, as a percentage of sales, was 51.9% (versus 51.3% for last year's
quarter). The improvement in gross margin was primarily driven by lower acquisition costs.
Operating expenses, as a percentage of sales, were 34.7% (versus 34.7% last year). Operating
expenses, as a percentage of sales, increased slightly due to the lower sales growth rates,
partially offset by lower incentive compensation (47 bps).

Under its share repurchase program, AutoZone repurchased 513 thousand shares of its common stock
for $185 million during the second quarter, at an average price of $361 per share. At quarter end,
the Company had $603 million remaining under its current share repurchase authorization.

The Company's inventory increased 7.0% over the same period last year, driven by an increase in
store count and continued strategic investments in hard parts assortment. Net inventory, defined
as merchandise inventories less accounts payable per store was a negative $54 thousand versus
negative $51 thousand last year.

"While we are pleased to report our twenty-sixth consecutive quarter of double digit earnings per
share growth, we were not pleased with our same store sales results for the quarter. 
Historically, we have seen our sales increase significantly during the final two weeks of our
second quarter.  However, this year our total domestic auto parts same store sales for the last
two weeks declined by eight percent.  Our belief is the approximate two week delay in processing
of income tax returns this year was the key contributor to this decline in sales.  Our expectation
is sales in the upcoming quarter should recover to more normalized sales volumes.  Excluding the
last two weeks, our sales were generally consistent with last quarter," said Bill Rhodes,
Chairman, President and Chief Executive Officer.  "I would like to thank and congratulate our
entire team of 70,000+ AutoZoners for their intense dedication and hard work which delivered
strong earnings per share and return on invested capital performance in the second quarter.  As we
enter our key spring and summer selling season, we are optimistic about our future.  We believe we
have the right initiatives in place to meet and exceed our customer's expectations.  We remain
committed to our disciplined approach of growing operating earnings while efficiently utilizing
our capital."

During the quarter ended February 9, 2013, AutoZone opened 32 new stores in the U.S. and opened
nine new stores in Mexico. As of February 9, 2013, the Company had 4,735 stores in 49 states, the
District of Columbia and Puerto Rico in the U.S., 334 stores in Mexico, and one store in Brazil
for a total store count of 5,070.

AutoZone is the leading retailer and a leading distributor of automotive replacement parts and
accessories in the United States. Each store carries an extensive product line for cars, sport
utility vehicles, vans and light trucks, including new and remanufactured automotive hard parts,
maintenance items, accessories, and non-automotive products.  Many stores also have a commercial
sales program that provides commercial credit and prompt delivery of parts and other products to
local, regional and national repair garages, dealers, service stations, and public sector
accounts.  AutoZone also sells the ALLDATA brand diagnostic and repair software through
www.alldata.com
http://www.globenewswire.com/newsroom/ctr?d=10022968&l=8&a=www.alldata.com&u=http%3A%2F%2Fwww.alldata.com%2F
. Additionally, we sell automotive hard parts, maintenance items, accessories, non-automotive
products and subscriptions to the ALLDATAdiy product through www.autozone.com
http://www.globenewswire.com/newsroom/ctr?d=10022968&l=8&a=www.autozone.com&u=http%3A%2F%2Fwww.autozone.com%2F
, accessories through www.autoanything.com
http://www.globenewswire.com/newsroom/ctr?d=10022968&l=8&a=www.autoanything.com&u=http%3A%2F%2Fwww.autoanything.com%2F
 and our commercial customers can make purchases through www.autozonepro.com
http://www.globenewswire.com/newsroom/ctr?d=10022968&l=8&a=www.autozonepro.com&u=http%3A%2F%2Fwww.autozonepro.com%2F
.    AutoZone does not derive revenue from automotive repair or installation.

AutoZone will host a conference call this morning, Tuesday, February 26, 2013, beginning at 10:00
a.m. (EST) to discuss its second quarter results. Investors may listen to the conference call live
and review supporting slides on the AutoZone corporate website, www.autozoneinc.com
http://www.globenewswire.com/newsroom/ctr?d=10022968&l=9&a=www.autozoneinc.com&u=http%3A%2F%2Fwww.autozone.com%2F
 by clicking "Investor Relations," "Conference Calls." The call will also be available by dialing
(210) 839-8923. A replay of the call and slides will be available on AutoZone's website. In
addition, a replay of the call will be available by dialing (203) 369-1211 through Tuesday, March
5, 2013 at 11:59 p.m. (EST).

This release includes certain financial information not derived in accordance with generally
accepted accounting principles ("GAAP"). These non-GAAP measures include return on invested
capital, adjusted debt, adjusted debt to EBITDAR, and cash flow before share repurchases. The
Company believes that the presentation of these non-GAAP measures provides information that is
useful to investors as it indicates more clearly the Company's comparative year-to-year operating
results, but this information should not be considered a substitute for any measures derived in
accordance with GAAP. Management targets the Company's capital structure in order to maintain its
investment grade credit ratings and manages cash flows available for share repurchase by
monitoring cash flows before share repurchases, as shown on the attached tables. The Company
believes this is important information for the management of its debt levels and share
repurchases. We have included a reconciliation of this additional information to the most
comparable GAAP measures in the accompanying reconciliation tables.

Certain statements contained in this press release are forward-looking statements. Forward-looking
statements typically use words such as "believe," "anticipate," "should," "intend," "plan,"
"will," "expect," "estimate," "project," "positioned," "strategy" and similar expressions. These
are based on assumptions and assessments made by our management in light of experience and
perception of historical trends, current conditions, expected future developments and other
factors that we believe to be appropriate. These forward-looking statements are subject to a
number of risks and uncertainties, including without limitation: credit market conditions; the
impact of recessionary conditions; competition; product demand; the ability to hire and retain
qualified employees; consumer debt levels; inflation; weather; raw material costs of our
suppliers; energy prices; war and the prospect of war, including terrorist activity; construction
delays; access to available and feasible financing; and changes in laws or regulations. Certain of
these risks are discussed in more detail in the "Risk Factors" section contained in Item 1A under
Part 1 of our Annual Report on Form 10-K for the year ended August 25, 2012, and these Risk
Factors should be read carefully. Forward-looking statements are not guarantees of future
performance and actual results; developments and business decisions may differ from those
contemplated by such forward-looking statements, and events described above and in the "Risk
Factors" could materially and adversely affect our business. Forward-looking statements speak only
as of the date made. Except as required by applicable law, we undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information, future events or
otherwise. Actual results may materially differ from anticipated results.

 AutoZone's 2nd Quarter Highlights - Fiscal 2013                                                                                                                                        
                                                                                                                                                                                 
 Condensed Consolidated Statements of Operations                                                                                                                                          
 2nd Quarter, FY2013                                                                                                                                                                      
 (in thousands, except per share data)                                                                                                                                                    
                                             GAAP Results                                                                                                                         
                                             12 Weeks Ended                              12 Weeks Ended                                                                          
                                             February 9, 2013                            February 11, 2012                                                                       
                                                                                                                                                                                 
 Net sales                                   $ 1,855,198                                 $ 1,804,069                                                                             
 Cost of sales                               893,217                                     877,854                                                                                 
 Gross profit                                961,981                                     926,215                                                                                 
 Operating, SG&A expenses                    644,410                                     625,564                                                                                 
 Operating profit (EBIT)                     317,571                                     300,651                                                                                 
 Interest expense, net                       41,323                                      38,923                                                                                  
 Income before taxes                         276,248                                     261,728                                                                                 
 Income taxes                                100,001                                     94,798                                                                                  
 Net income                                  $ 176,247                                   $ 166,930                                                                               
 Net income per share:                                                                                                                                                           
 Basic                                       $ 4.86                                      $ 4.25                                                                                  
 Diluted                                     $ 4.78                                      $ 4.15                                                                                  
 Weighted average shares outstanding:                                                                                                                                            
 Basic                                       36,258                                      39,281                                                                                  
 Diluted                                     36,904                                      40,237                                                                                  
                                                                                                                                                                                 
                                                                                                                                                                                 
 Year-To-Date 2nd Quarter, FY2013                                                                                                                                                         
 (in thousands, except per share data)       GAAP Results                                                                                                                         
                                             24 Weeks Ended                              24 Weeks Ended                                                                          
                                             February 9, 2013                            February 11, 2012                                                                       
                                                                                                                                                                                 
 Net sales                                   $ 3,846,238                                 $ 3,728,411                                                                             
 Cost of sales                               1,852,391                                   1,818,569                                                                               
 Gross profit                                1,993,847                                   1,909,842                                                                               
 Operating, SG&A expenses                    1,312,999                                   1,268,257                                                                               
 Operating profit (EBIT)                     680,848                                     641,585                                                                                 
 Interest expense, net                       82,428                                      78,017                                                                                  
 Income before taxes                         598,420                                     563,568                                                                                 
 Income taxes                                218,722                                     205,513                                                                                 
 Net income                                  $ 379,698                                   $ 358,055                                                                               
 Net income per share:                                                                                                                                                           
 Basic                                       $ 10.39                                     $ 9.05                                                                                  
 Diluted                                     $ 10.19                                     $ 8.83                                                                                  
 Weighted average shares outstanding:                                                                                                                                            
 Basic                                       36,552                                      39,573                                                                                  
 Diluted                                     37,246                                      40,551                                                                                  
                                                                                                                                                                                 
 Selected Balance Sheet Information                                                                                                                                                       
 (in thousands)                                                                                                                                                                           
                                             February 9, 2013                            February 11, 2012                           August 25, 2012                             
                                                                                                                                                                                 
 Cash and cash equivalents                   $ 115,548                                   $ 103,207                                   $ 103,093                                   
 Merchandise inventories                     2,758,543                                   2,577,704                                   2,627,983                                   
 Current assets                              3,123,368                                   2,908,564                                   2,978,946                                   
 Property and equipment, net                 2,944,549                                   2,724,396                                   2,855,928                                   
 Total assets                                6,662,188                                   6,056,464                                   6,265,639                                   
 Accounts payable                            3,034,017                                   2,824,873                                   2,926,740                                   
 Current liabilities*                        4,231,808                                   3,516,789                                   3,655,592                                   
 Total debt*                                 3,997,806                                   3,464,360                                   3,768,183                                   
 Stockholders' (deficit)                     (1,550,109)                                 (1,295,524)                                 (1,548,025)                                 
 Working capital                             (1,108,440)                                 (608,225)                                   (676,646)                                   
                                                                                                                                                                                 
 * Current liabilities and total debt both include short-term borrowings of $484,533 at February 9, 2013; $29,560 at February 11, 2012 and $49,881 at August 25, 2012.              


                                                                                                                                                          
 Adjusted Debt / EBITDAR (Trailing 4 Qtrs)                                                                                                                            
 (in thousands, except adjusted debt to EBITDAR ratio)                                                                                                                
                                                          February 9, 2013        February 11, 2012                                                       
 Net income                                               $ 952,016               $ 886,898                                                               
 Add:  Interest                                           180,316                 171,745                                                                 
 Taxes                                                    535,822                 499,877                                                                 
 EBIT                                                     1,668,154               1,558,520                                                               
                                                                                                                                                          
 Add:  Depreciation                                       218,705                 203,962                                                                 
 Rent expense                                             235,611                 220,875                                                                 
 Share-based expense                                      34,934                  29,551                                                                  
 EBITDAR                                                  $ 2,157,404             $ 2,012,908                                                             
                                                                                                                                                          
 Debt                                                     $ 3,997,806             $ 3,464,360                                                             
 Capital lease obligations                                99,369                  103,774                                                                 
 Add: rent x 6                                            1,413,666               1,325,250                                                               
 Adjusted debt                                            $ 5,510,841             $ 4,893,384                                                             
                                                                                                                                                          
 Adjusted debt to EBITDAR                                 2.6                     2.4                                                                     
                                                                                                                                                            
                                                                                                                                                          
 Selected Cash Flow Information                                                                                                                                       
 (in thousands)                                                                                                                                                       
                                                          12 Weeks Ended          12 Weeks Ended          24 Weeks Ended          24 Weeks Ended          
                                                          February 9, 2013        February 11, 2012       February 9, 2013        February 11, 2012       
                                                                                                                                                          
 Depreciation                                             $ 52,344                $ 47,523                $ 103,044               $ 96,170                
 Capital spending                                         $ 89,183                $ 70,506                $ 169,613               $ 132,430               
                                                                                                                                                          
 Cash flow before share repurchases:                                                                                                                      
 Increase in cash and cash equivalents                    $ 15,684                $ 6,531                 $ 12,455                $ 5,601                 
 Subtract increase in debt                                195,069                 107,856                 229,517                 113,652                 
 Add back share repurchases                               185,016                 172,505                 502,348                 482,270                 
 Cash flow before share repurchases and changes in debt   $ 5,631                 $ 71,180                $ 285,286               $ 374,219               
                                                                                                                                                          
                                                                                                                                                          
 Other Selected Financial Information                                                                                                                                 
 (in thousands, except ROIC)                                                                                                                                          
                                                          February 9, 2013        February 11, 2012                                                       
                                                                                                                                                          
                                                                                                                                                          
 Cumulative share repurchases ($ since fiscal 1998)       $ 12,046,591            $ 10,663,643                                                            
 Remaining share authorization ($)                        $ 603,409               $ 486,357                                                               
                                                                                                                                                          
 Cumulative share repurchases (shares since fiscal 1998)  132,506                 128,799                                                                 
                                                                                                                                                          
 Shares outstanding, end of quarter                       36,079                  38,951                                                                  
                                                                                                                                                          
                                                          Trailing 4 Quarters                                                                              
                                                          February 9, 2013        February 11, 2012                                                       
 Net income                                               $ 952,016               $ 886,898                                                               
 Adjustments:                                                                                                                                             
 Interest expense                                         180,316                 171,745                                                                 
 Rent expense                                             235,611                 220,875                                                                 
 Tax effect*                                              (149,733)               (141,523)                                                               
 After-tax return                                         1,218,210               1,137,995                                                               
                                                                                                                                                          
 Average debt**                                           3,727,872               3,328,075                                                               
 Average stockholders' deficit**                          (1,480,371)             (1,210,962)                                                             
 Add: Rent x 6                                            1,413,666               1,325,250                                                               
 Average capital lease obligations**                      101,446                 88,413                                                                  
 Pre-tax invested capital                                 $ 3,762,613             $ 3,530,776                                                             
                                                                                                                                                          
 Return on Invested Capital (ROIC)                        32.4%                   32.2%                                                                   
                                                                                                                                                          
 * Effective tax rate over the trailing four quarters ended February 9, 2013 and February 11, 2012 is 36.0%.                                                      
 ** All averages are computed based on trailing 5 quarter balances.                                                                                                   


                                                                                                                                                            
 AutoZone's 2nd Quarter Fiscal 2013                                                                                                                                     
 Selected Operating Highlights                                                                                                                                          
                                                                                                                                                            
 Store Count & Square Footage                                                                                                                                           
                                                                                                                                                            
                                                                         12 Weeks Ended     12 Weeks Ended      24 Weeks Ended        24 Weeks Ended        
                                                                         February 9, 2013   February 11, 2012   February 9, 2013      February 11, 2012     
 Domestic stores:                                                                                                                                           
 Store count:                                                                                                                                               
 Beginning domestic stores                                               4,703              4,551               4,685                 4,534                 
 Stores opened                                                           32                 29                  51                    46                    
 Stores closed                                                           --                 --                  1                     --                    
 Ending domestic stores                                                  4,735              4,580               4,735                 4,580                 
 Relocated stores                                                        3                  4                   3                     5                     
                                                                                                                                                            
 Stores with commercial programs                                         3,146              2,825               3,146                 2,825                 
                                                                                                                                                            
 Square footage (in thousands):                                          30,713             29,636              30,713                29,636                
                                                                                                                                                            
 Mexico stores:                                                                                                                                             
 Stores opened                                                           9                  6                   13                    8                     
 Total stores in Mexico                                                  334                287                 334                   287                   
                                                                                                                                                            
 Brazil stores:                                                                                                                                             
 Stores opened                                                           --                 --                  1                     --                    
 Total stores in Brazil                                                  1                  --                  1                     --                    
                                                                                                                                                            
 Total stores chainwide                                                  5,070              4,867               5,070                 4,867                 
                                                                                                                                                            
 Square footage (in thousands):                                          33,155             31,727              33,155                31,727                
 Square footage per store                                                6,539              6,519               6,539                 6,519                 
                                                                                                                                                            
 Sales Statistics                                                                                                                                                       
 ($ in thousands, except sales per average square foot and percentages)                                                                                     
 Total Auto Parts (Domestic, Mexico and Brazil)                          12 Weeks Ended     12 Weeks Ended      Trailing 4 Quarters   Trailing 4 Quarters   
                                                                         February 9, 2013   February 11, 2012   February 9, 2013      February 11, 2012     
 Total auto parts sales                                                  $ 1,796,280        $ 1,762,903         $ 8,520,522           $ 8,174,796           
 % Increase vs. LY                                                       1.9%               8.6%                4.2%                  8.1%                  
                                                                                                                                                            
 Sales per average store                                                 $ 356              $ 364               $ 1,715               $ 1,714               
 Sales per average square foot                                           $ 54               $ 56                $ 263                 $ 263                 
                                                                                                                                                            
 Domestic Commercial                                                                                                                                        
 Total domestic commercial sales                                         $ 289,915          $ 266,547           $ 1,352,473           $ 1,179,408           
 % Increase vs. LY                                                       8.8%               24.6%               14.7%                 23.4%                 
                                                                                                                                                            
 All Other (ALLDATA, E-Commerce and AutoAnything)                                                                                                           
 All other sales                                                         $ 58,918           $ 41,166            $ 201,166             $ 173,980             
 % Increase vs. LY                                                       43.1%              11.3%               15.6%                 11.3%                 
                                                                                                                                                            
                                                                         12 Weeks Ended     12 Weeks Ended      24 Weeks Ended        24 Weeks Ended        
                                                                         February 9, 2013   February 11, 2012   February 9, 2013      February 11, 2012     
 Domestic same store sales                                               (1.8%)             5.9%                (0.7%)                5.2%                  
                                                                                                                                                            
                                                                                                                                                            
 Inventory Statistics (Total Stores)                                                                                                                                    
                                                                         as of              as of                                                           
                                                                         February 9, 2013   February 11, 2012                                               
 Accounts payable/inventory                                              110.0%             109.6%                                                          
                                                                                                                                                            
 ($ in thousands)                                                                                                                                           
 Inventory                                                               $ 2,758,543        $ 2,577,704                                                     
 Inventory per store                                                     $ 544              $ 530                                                           
 Net inventory (net of payables)                                         $ (275,474)        $ (247,169)                                                     
 Net inventory / per store                                               $ (54)             $ (51)                                                          
                                                                                                                                                            
                                                                         Trailing 5 Quarters                                                                 
                                                                         February 9, 2013   February 11, 2012                                               
 Inventory turns                                                         1.6 x              1.6 x                                                           


1.6 x

CONTACT: Financial: Brian Campbell at (901) 495-7005
         brian.campbell@autozone.com
         
         Media: Ray Pohlman at (866) 966-3017
         ray.pohlman@autozone.com

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