Aftermarket automotive parts specialist O'Reilly Automotive (ORLY 0.19%) reported mixed fourth-quarter and full-year 2024 earnings on Wednesday, Feb. 5. While Q4 revenue surpassed analysts' consensus estimates, reaching $4.1 billion compared to the expected $4.05 billion, the earnings per share (EPS) of $9.50 underperformed relative to the $9.75 forecast.
Despite the earnings miss, the company had some solid earnings achievements and maintained a positive outlook for the quarter.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| EPS (diluted) | $9.50 | $9.75 | $9.26 | 2.6% |
| Revenue | $4.10 billion | $4.05 billion | $3.83 billion | 7% |
| Operating income | $739 million | - | $719 million | 2.8% |
| Net income | $551 million | - | $553 million | (0.4%) |
| Comparable store sales growth | 4.4% | - | 3.4% | 1 pps |
Source: O'Reilly Automotive. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Understanding O'Reilly Automotive
O'Reilly Automotive is a major retail and distribution company specializing in automotive aftermarket parts, equipment, and supplies. It is known for its dual focus on serving both do-it-yourself (DIY) customers and professional service providers. This strategic approach diversifies its customer base and provides a stable revenue stream from professionals, who often have more frequent needs for parts.
Recently, O'Reilly has been emphasizing expansion through new store openings and bolstering its distribution network. The company aims to strengthen its market presence in a fragmented industry by enhancing omnichannel capabilities, ensuring product availability, and providing superior customer service.
Quarterly Highlights
During the fourth quarter, O'Reilly noted a 7% year-over-year increase in revenue and a steady gross profit margin of 51.3%, balancing increased market pressures. Notably, comparable store sales rose by 4.4%, driven by growth in both the DIY and professional segments, with professionals showing faster growth.
Despite revenue strength, EPS fell short of estimates at $9.50, primarily due to a $35 million charge related to insurance liabilities. This impacted the overall earnings, causing net income to slightly decrease to $551 million from $553 million the previous year.
The company successfully opened 198 new stores in 2024, enhancing its footprint in both U.S. and Mexico markets. This expansion aligns with its growth strategy, consolidating its market share and leveraging economies of scale. It also focuses on optimizing its distribution network, highlighted by the strategic relocation of its Atlanta distribution center to improve service quality.
However, the quarter was not without challenges. Selling, general, and administrative expenses increased by 9% year over year, partly due to unexpected insurance adjustments. This indicates a need for cautious expense management moving forward.
Outlook and Expectations
Looking ahead, O'Reilly management said the company plans to open between 200 and 210 new stores in 2025, aiming for a comparable store sales growth range of 2% to 4%. It projects total revenue for the year to reach between $17.4 billion and $17.7 billion, indicative of cautious optimism regarding future growth.
Management's strategic priorities remain on fortifying its distribution network and enhancing its omnichannel strategy to accommodate consumer behavior changes. Investors should watch for any adjustments in guidance or strategic initiatives that may emerge as O'Reilly navigates economic conditions in the upcoming quarters.
