December 10, 2013
Baird Equity Research
Consumer
AutoZone, Inc. (AZO)
EPS in Line Despite Struggling DIY Consumer
RAISING PRICE TARGET
1-Year Price Chart
500
400
350
- EPS met consensus ($6.29 vs. $6.28)
- Comp fell short of consensus (0.9% vs. 2.2%)
- Gross margin improved 10bp to 51.9%
- Vendor-financed inventory ratio climbed to
116%, generating cash to
repurchase stock
- New algorithms are driving targeted investments in inventory growth
- Commercial outpaced DIY
- AutoZone gained modest share
- Recent winter storms should boost Q2 results
■
■
Tough economy for DIY customer. We see two economies developing in the
United States. Consumers with assets (homes and investments) can afford to
spend again on big ticket discretionary items as monetary policy clears negative
equity from their balance sheet. But consumers without assets are living
paycheck-to-paycheck. The DIY auto part consumer fits in the latter category.
We are increasingly concerned that slow GDP and the impact of new costs,
especially the Affordable Care Act, will force struggling consumers to defer
spending on auto repairs. Among auto part retailers, we prefer exposure to DIFM
(commercial) sales, which benefit from a generally wealthier customer base.
AutoZone generates ~83% of revenue from DIY customers.
Stock Data
Rating:
Suitability:
Price Target/Previous:
Price (12/10/13):
Market Cap (mil):
Shares Out (mil):
Average Daily Vol (mil):
Dividend Yield:
F2014E Comp:
F2015E Comp:
Outperform
Average Risk
$500/$470
$475.52
$16,215
34.1
0.26
0.0%
+2.0%
+2.5%
Estimates
FY Aug
Q1
Q2
Q3
Q4
Fiscal EPS
Previous (FY)
Fiscal P/E
Calendar EPS
Previous (CY)
Calendar P/E
2013A
2014E
5.41 A
4.78 A
7.27 A
10.42 A
27.73 A
6.29 A
5.41 E
8.38 E
11.41 E
31.32 E
31.22 E
15.2x
32.24 E
32.25 E
14.7x
17.1x
28.76 A
29.00 A
16.5x
2015E
36.00 E
35.28 E
13.2x
Chart/Table Sources: Bloomberg and Baird Data
Raising price target to $500. AutoZone is positioned to deliver improved
comps, 13% EPS growth, and over 30% ROIC as a talented management team
executes a winning model in the auto part retail sector. At 14.3x EPS, valuation
is full, in our view, but EPS growth offers further upside. At the margin, we are
more concerned about exposure to the paycheck-to-paycheck consumer and
reliance on factor financing to fund share repurchases – especially with interest
rates poised to rise. Our valuation process supports a $500 price target and
lukewarm Outperform recommendation.
AutoZone is the leading automotive parts distributor, with over 5,000
locations in the U.S., Mexico, and Brazil, selling to consumers (DIY) and
professional installers (DIFM).
Craig R. Kennison, CFA
ckennison@rwbaird.com
414.765.3870
Alice L. Wycklendt
awycklendt@rwbaird.com
414.298.7596
Erin Welcenbach
ewelcenbach@rwbaird.com
414.298.1947
D-13
N-13
S-13
O-13
J-13
A-13
J-13
A-13
M-13
M-13
16% EPS growth. EPS met expectations despite slow growth. Demand for
automotive parts has improved after a difficult year, but has not snapped back as
quickly as anticipated due to a weak DIY consumer.
J-13
345
300
■
469
450
F-13
Raising target to $500. EPS met expectations despite soft demand. AutoZone is
taking share, but the category remains sluggish as DIY consumers defer spending.
Management struck an optimistic tone, citing lower gas prices and more miles
driven while the economy laps payroll tax increases. Meanwhile, investments in
commercial growth, inventory availability, and internet programs are gaining
momentum. We raised our estimates, but remain concerned that exposure to
paycheck-to-paycheck consumers and higher interest rates on factoring
arrangements will limit upside.
[
Please refer to Appendix
- Important Disclosures
and Analyst Certification
]
December 10, 2013 | AutoZone, Inc.
Details
Estimates
Estimates. We raised our FY14 estimate to $31.32 from $31.22 and increased our FY15
estimate to $36.00 from $35.28. Management does not offer formal guidance.
Our key assumptions are below:
Baird Estimates
2Q14E
2014E
2015E
Domestic Same-Store Sales
2.1%
2.0%
2.5%
Retail (DIY) Comp
Commercial (DIFM) Comp
1.5%
5.5%
1.4%
5.0%
2.0%
5.0%
Gross Margin
SG&A
51.9%
34.9%
EPS
Domestic New Stores
Mexico New Stores
3 bp
-5 bp
52.0%
32.4%
14 bp
-4 bp
52.1%
32.3%
10 bp
-11 bp
$5.41
$31.32
$36.00
37
8
293
36
282
16
Source: Baird estimates
Earnings Surprise History
AutoZone Earnings Surprise History
Source: FactSet
Robert W. Baird & Co.
2
December 10, 2013 | AutoZone, Inc.
Quarterly Results Variance
Sales Metrics
(thousands)
Actual
1Q14
Domestic Stores
Domestic Stores w ith Commercial Programs
4,843
3,546
4,866
3,486
(23)
60
Mexico Stores
Brazil Stores
363
4
364
3
(1)
1
Dom estic Sam e Store Sales
0.9%
2.0%
-1.1%
Incom e Statem ent
(thousands, except per share data)
1Q14
1Q14E
Variance
vs. Est.
Net Revenue
Cost of Revenue
Gross Profit
Variance
vs. Est.
$2,093,578
1,007,881
1,085,697
$2,111,182
1,017,590
1,093,592
(17,604)
(9,709)
(7,895)
Selling, General & Administrative Expenses
EBIT
701,971
383,726
721,088
372,504
(19,117)
11,222
Interest Expense, net
Income Before Income Taxes
(42,431)
341,295
(44,500)
328,004
2,069
13,291
Taxes
Net Incom e
123,208
$218,087
121,362
$206,643
1,846
$11,444
EPS - Basic
EPS - Diluted
$6.39
$6.29
$6.11
$5.99
$0.29
$0.30
Basic Shares
Diluted Shares
34,111
34,676
33,841
34,491
270
185
GROWTH (year/year)
Revenue
EPS - Diluted
MARGIN
Gross Margin
SG&A as % of Revenue
EBIT Margin %
Tax Rate
Net Income Margin %
KEY METRICS
Accounts Payable Ratio
Source: Company data, Baird research
Robert W. Baird & Co.
Estim ate
1Q14E
5.1%
16.2%
6.0%
10.7%
51.9%
33.5%
18.3%
36.1%
10.4%
51.8%
34.2%
17.6%
37.0%
9.8%
10 bp
-60 bp
70 bp
-90 bp
60 bp
115.6%
115.0%
60 bp
3
December 10, 2013 | AutoZone, Inc.
Quarterly Results Analysis
Q1 Highlights







EPS met consensus. EPS met consensus ($6.29 vs. $6.28), though exceeded our
estimate ($5.99).
Same-store sales fall short. Domestic same-store sales fell below StreetAccount
consensus expectations (+0.9% vs. +2.2%) and our estimate (+2.0%).
Total revenue. Total revenue improved 5.1%, consistent with our estimate ($2.1 billion).
Gross margin. Gross margin increased 10bp YOY to 51.9%, vs. our 51.8% estimate.
Operating margin. Operating margin improved 10bp YOY to 18.3%.
Share repurchases. AutoZone repurchased 678K shares in the quarter – below our 1.1
million estimate – for $292 million (average price of $430/share).
Balance sheet and cash flow. At the end of the quarter, AutoZone had $126 million in
cash and $4.2 billion in debt. Total inventory grew 9.1% YOY to $2.9 billion, while capex
were $83 million. LTM ROIC was 32.7%.
EPS met consensus. AutoZone reported earnings in line with consensus expectations ($6.29
vs. $6.28), though exceeded our $5.99 estimate. Relative to our model, lower SG&A and tax
rate more than offset weaker comps.
Same-store sales fall short. Domestic same-store sales were below StreetAccount
consensus expectations (+0.9% vs. +2.2%) and our estimate (+2.0%). Solid commercial sales
growth (+14%) continued in the quarter, as AutoZone continues to add commercial programs
to take advantage of the DIFM opportunity – 73% of domestic stores maintain a commercial
program versus 66% a year ago. Still, CEO William Rhodes cited macro headwinds such as
the “reinstatement of the payroll tax” and “the government shutdown during the quarter” as the
primary factors contributing to a weaker-than-anticipated comp.
Robert W. Baird & Co.
4
December 10, 2013 | AutoZone, Inc.
Total revenue grew 5.1% to $2.1 billion, in line with our $2.1 billion forecast. While same
store sales have been challenged, CEO William Rhodes also noted that the most “significant
change from historical trends has been a much slower growth rate in average ticket,” as
AutoZone has not “experienced the same rate of growth and commodity-based inflation that
we have experienced over the last several years.”
 Retail (DIY) sales improved just 2.9%
 Commercial (DIFM) sales improved 14%
Gross margin. Gross margin improved 10bp YOY to (51.9%), just above our 51.8% estimate.
Lower acquisition costs led to margin enhancement, partially offset by the inclusion of the
recent acquisition of AutoAnything (-37bp).
Operating expenses. Operating expenses decreased YOY as a percent of revenue (33.5%
vs. 33.6%) and came in below our estimate (34.2%), due to a shift in the timing of advertising
expenditures.
Share repurchases. AutoZone repurchased 678K shares (below our 1.1 million share
estimate) at an average price of $430. The buyback contributed ~8% to EPS growth.
Balance Sheet and Cash Flow





Robert W. Baird & Co.
At the end of the quarter, AutoZone had $126 million in cash and $4.2 billion of debt.
Total inventory grew 9.1% YOY to $2.9 billion but increased just 5.4% on a per-store
basis. CEO William Rhodes highlighted new initiatives targeting improved inventory
availability, noting that the company has “improved our algorithms that determine store
DKU placement” which focuses on “adding additional inventory while simultaneously
removing unproductive inventory.” Net, management believes that initiatives to build out
inventory availability will help AutoZone to become the first call among commercial
customer – a strategic component necessary to be among the winners in the auto part
retail industry, in our view.
Capital expenditures were $83 million, up 2.7% from last year.
LTM ROIC was 32.7%.
Adjusted debt to EBITDAR on a trailing-12 month basis was 2.5x – at the targeted level.
5
December 10, 2013 | AutoZone, Inc.
Company Details
Store growth. AutoZone added 9 stores in Q1, ending the quarter with 4,843 stores in the
U.S. (+7), 363 stores in Mexico (+1), and 4 stores in Brazil (+1). AutoZone added commercial
programs to 125 stores in the quarter, and 73% of domestic stores now have commercial
operations (vs. 66% last year).
AZO vs. AAP. Relative to Advance Auto Parts, AutoZone has underperformed by about 18%
in the last three months.
AZO vs. ORLY. Relative to O'Reilly Auto, AutoZone has outperformed by about 11% over the
last three months.
Robert W. Baird & Co.
6
December 10, 2013 | AutoZone, Inc.
Payables ratio and owned inventory. Accounts payable grew 12.8% YOY to $3.4 billion,
while inventory increased 9.1% to $2.9 billion. The accounts payable to inventory ratio grew
YOY to 116% from 112% a year ago. AutoZone maintains the best-in-class payables ratio,
and expects to continue to modestly increase its payables ratio over time. However, AutoZone
has much less room for improvement (and corresponding upside to cash flow) than its auto
part retail competitors.
The ability to reduce owned inventory contributes to cash flow available for stock repurchases - a significant contributor to growth at AutoZone in recent years. Owned inventory per store
stood at a negative $88K at the end of Q1. Owned inventory increased in the quarter due to a
combination of increased product placement in new stores and new store openings, but still
benefited cash flow on an LTM basis.
Robert W. Baird & Co.
7
December 10, 2013 | AutoZone, Inc.
Industry Overview
Auto part retailer competition. AutoZone remains the best-in-class retailer. O'Reilly is
growing aggressively and has a large exposure to the commercial side of the business.
Advance Auto has lagged from a comp and margin perspective – though recently acquired
Genuine Parts. Below is a comparison of the major players on recent comp trends, store
count, gross margin and SG&A per store.
Aging vehicle population. The need for automotive parts grows as vehicles age and enter
the post-warranty phase of their useful lives – generally peaking around 6-12 years old. The
“sweet spot” has migrated over time, with the range gradually moving higher and wider – but
vehicles 6-12 years old are now considered the key cohort for the aftermarket.
Robert W. Baird & Co.
8
December 10, 2013 | AutoZone, Inc.
Miles driven. Americans drive roughly 3 billion miles every year, fueling steady demand for
maintenance and repair parts. We expect miles driven to increase modestly, but with stubborn
unemployment and higher gas prices, we are not expecting a dramatic rebound.
Gas prices. Lower gas prices have a simulative effect on consumer spending, while higher
gas prices have a negative effect. We estimate that every $1 move in the price of gas
creates/destroys around $100 billion in discretionary spending, all else equal. Meanwhile,
lower gas prices stimulate more travel and reduce shipping and distribution costs for retailers.
Historically, consumers respond faster to rising prices – cutting back immediately – than to
falling prices.
Robert W. Baird & Co.
9
December 10, 2013 | AutoZone, Inc.
DIY. The DIY market, from which AutoZone derives approximately 80% of its revenue, was
$46 billion in 2012 – implying a 16% share. AutoZone has expanded its DIY sales 6.7%
annually over the last 5 years, outpacing the 1.9% industry growth.
DIFM. AutoZone generates just over 15% of revenue from the $57 billion DIFM (commercial)
market – implying a 2% share. Over the last several years AutoZone has not taken meaningful
share in the DIFM market, but the company has begun to pick up the pace of its commercial
store openings with its renewed focus on the DIFM market. Today, 65-70% of stores serve the
commercial market, up from ~55% over the last five years.
Geographic expansion. AutoZone is now the second largest automotive part retailer, after
Advance Auto Parts’ acquisition of GPI. It remains geographically diverse, ranking No.1 or No.
2 in most U.S. regions as well as No. 1 in Mexico. The company opened its first Brazil location
in 2012 and now has four locations there.
Robert W. Baird & Co.
10
December 10, 2013 | AutoZone, Inc.
Investment Thesis
Valuation. We value AutoZone at $500, representing 13-14x NTM EPS one year from now, based
primarily on our analysis of its historical price/earnings ratio relative to its same-stores sales growth
rate. We expect AutoZone to post ~2-3% comps over the next few quarters, supporting a 12-14x
multiple of earnings, near the 5-year average (13x). Based on this outlook, we believe shares could
trade as high as $520 (~14x EPS) and as low as $440 (~12x EPS) as the year unfolds on our
assumptions.
Growth plans. We expect 10-15% EPS growth on 4-6% revenue growth over the next 3-5 years,
driven by: 1) new store growth, 2) positive comps, 3) margin leverage, and 4) buyback activity. With
around 8% of the addressable combined DIY and DIFM part market, we see the potential to add
150-170 stores annually. Management does not provide guidance, but sees an opportunity to grow
stores, expand margin, and leverage SG&A (assuming 2-3% comps). Notably, we figure that buyback
activity drove a large portion of EPS growth over the last three years – a trend we expect to continue.
Aging vehicle population. The need for automotive parts grows as vehicles age and enter the
post-warranty phase of their useful lives – generally peaking around 6-12 years old, the so-called
“sweet spot” for the automotive aftermarket. The “sweet spot” has migrated over time, with the range
gradually moving higher and wider – but vehicles 6-12 years old are now considered the key cohort for
the aftermarket. While the number of vehicles in this age range is projected to decline, higher
spending on 10+ year old cars, the largest segment of the aftermarket, is expected to drive continued
growth in the automotive aftermarket over the next three years. Ultimately, the automotive aftermarket
is projected to grow at a +2.4% CAGR through 2015, providing ample opportunity for auto part
retailers to grow.
Miles driven. Americans drive roughly 3 billion miles every year, fueling steady demand for
maintenance and repair parts. The number of miles driven fell in 2011 as high gas prices and a weak
economy pressured vehicle miles traveled. We expect miles driven to increase modestly, but with
elevated unemployment and volatile gas prices, we are not expecting a dramatic rebound.
Robert W. Baird & Co.
11
December 10, 2013 | AutoZone, Inc.
Gas prices. Lower gas prices are good for automotive part retailers. At $3/gal - the typical household
spends over $3,000 on gas annually. Naturally, lower gas prices can have a stimulative effect on
consumer spending. We estimate that every $1 move in the price of gas creates/destroys around $100
billion in discretionary spending, all else equal. Meanwhile, lower gas prices stimulate more travel
and reduce shipping and distribution costs for retailers. Historically, consumers respond faster to
rising prices – cutting back immediately – than to falling prices, according to AutoZone.
Deferred maintenance. Although many automotive repairs are not discretionary, consumers may
defer maintenance spending in a weak economy. The Automotive Aftermarket Industry Association
(AAIA) has estimated the value of underperformed maintenance at $60 billion (e.g., delaying an oil
change by 1,000 miles). This figure seems like a stretch, but there is little doubt that deferrals
represent both risk and opportunity to automotive part retailers.
Demographics. Drivers that own older cars are more likely to shop at an automotive part retailer.
Relative to the broader population, this market segment includes a larger percentage of consumers
with less discretionary income, Hispanics and other minorities, urban drivers, and those with a knack
for fixing cars. Perhaps two-thirds are male.
Automotive Part Aftermarket (DIY and DIFM). AutoZone participates in both the retail and
commercial segments of the automotive part aftermarket – often called DIY and DIFM (Do-It-Yourself
and Do-It-For-Me). The $103 billion addressable automotive part aftermarket is large, stable, and
mature (1.8% 5YR CAGR) – owing to the consistency of its key drivers: 1) the number of vehicles on
the road, and 2) the number of miles driven (see above).
DIY. The DIY market, from which AutoZone derives approximately 80% of its revenue, was $46 billion
in 2012 – implying a 16% share. AutoZone has expanded its DIY sales 6.7% annually over the last 5
years, outpacing the 1.9% industry growth.
DIFM. AutoZone generates just over 15% of revenue from the $57 billion DIFM (commercial) market –
implying a 2% share. Over the last several years AutoZone has not taken meaningful share in the
DIFM market, but the company has begun to pick up the pace of its commercial store openings with its
renewed focus on the DIFM market. Today, 65-70% of stores serve the commercial market, up from
~55% over the last five years.
International growth. AutoZone has grown its Mexico footprint consistently since entering the market
10 years ago. Over the last 3 years, the company has added 40-50 stores a year, including 41 in
F2013. Naturally, Mexican sales and profits are translated back to the U.S. dollar – so currency
fluctuations are relevant. AutoZone now has three locations in Brazil, after opening two locations in
Brazil in FQ4 of 2013.
Robert W. Baird & Co.
12
December 10, 2013 | AutoZone, Inc.
Merchandising. Margin and revenue growth depend on the right product assortment. With scarce
working capital resources, having the right product in the right place at the right time and at the right
price separates the good from the bad. AutoZone sees merchandising as central to its market-leading
share and financial metrics. Product assortment includes a blend of hard parts, maintenance items,
accessories, and non-automotive merchandise. Naturally, some items are more discretionary while still
others are more deferrable. For example, wiper blades and headlights are not discretionary – but may
be deferrable – while starters and alternators sell based on need, not impulse. Meanwhile, economic
forces may influence consumer decisions involving price/value/brand. Beyond merchandising,
AutoZone is driving a better customer experience through efforts to train/retain employees and
streamline the checkout process.
Hard Parts
A/C Compressors
Alternators
Batteries & Accessories
Brake Drums, Rotors, Shoes & Pads
Carburetors
Clutches
CV Axles
Engines
Fuel Pumps
Mufflers
Shock Absorbers & Struts
Starters
Water Pumps
Maintenance Items
Antifreeze & Windshield Washer Fluid
Belts & Hoses
Chemicals, including Brake & Power
Steering Fluid, Oil & Fuel Additives
Fuses
Lighting
Oil & Transmission Fluid
Oil, Air, Fuel & Transmission Filters
Oxygen Senesors
Protectants & Cleaners
Refrigerant & Accessories
Sealants & Adhesives
Spark Plugs & Wires
Wash & Wax
Windshield Wipers
Accessories & Non-Automotive
Air Fresheners
Cell Phone Accessories
Drinks & Snacks
Floor Mats
Hand Cleaner
Neon Lighting
Mirrors
Paint & Accessories
Performance Products
Seat Covers
Steering Wheel Covers
Stereos
Tools
Private-label brands. Duralast is the No. 1 selling automotive aftermarket brand in the U.S.,
according to AutoZone. Other house brands include Duralast Gold, Valucraft, and C-Max.
Management has said that private-label brands represent over 50% of sales.
Geographic expansion. AutoZone is second largest automotive part retailer, after Advance Auto
Parts' acquisition of GPI. It ranks No.1 or No. 2 in most U.S. regions, as well as No. 1 in Mexico.
AutoZone now has three Brazil locations, after it opened its first Brazil location in 2012.
Operating leverage. We estimate that every 100bp change in same-store sales growth
adds/subtracts $60-70 million to/from revenue and $0.30-$0.40 to/from EPS annually.
Robert W. Baird & Co.
13
December 10, 2013 | AutoZone, Inc.
Z-net. AutoZone has invested in a robust platform to teach consumers and professionals how to
complete repair projects. Available only in AutoZone stores (thus, requiring a visit), Z-net provides key
job and part information, exploded views of automated systems, and step-by-step installation
instructions. We believe Z-net is a worthwhile long-term investment in the DIY market and loyalty to
AutoZone.
Risks & Caveats
Debt. After negotiating with its largest shareholder, ESL Investments, in June 2008, AutoZone agreed
to increase its adjusted Debt/EBITDAR target ratio to 2.5x from 2.1x to finance an aggressive
repurchase program. Since 2003, AutoZone has repurchased 63 million shares valued at over $10.3
billion. The buyback effort has added over 10 points to the ~20% annual EPS growth over that period.
Although we believe AutoZone generates ample cash flow to support the plan, contribution to EPS
growth from leverage should slow.
Energy prices. Higher energy prices tend to cause drivers to travel less - reducing wear and tear.
Meanwhile, a higher cost of energy raises the cost to do business - curtailing profits.
DIFM strategy. AutoZone has invested to expand its commercial business, but may fail to adequately
penetrate the market. The strategy may require additional investment that reduces profit or returns.
DIY market. The DIY market has experienced modest growth (1.9% five-year CAGR), providing a
tailwind for AutoZone. As vehicles become more complex, more consumers may lack the skills
necessary to perform repairs. AutoZone has developed Z-net to empower DIY consumers, but it is not
clear whether it would offset a downturn in the broader retail market.
Robert W. Baird & Co.
14
December 10, 2013 | AutoZone, Inc.
Inventory valuation. AutoZone may be forced to write down aged or obsolete inventory and also may
experience inventory shrink (lost or stolen product), reducing GAAP profit.
Prices. Some automotive aftermarket vendors have consolidated to build negotiation leverage over
retailers and distributors. Although AutoZone has substantial purchasing leverage, in our view, its
edge may erode over time. Meanwhile, shipping costs and other factors may limit profitability.
Inflation/deflation may have a material impact on comps and profit.
Competition. The automotive retail aftermarket is highly competitive, including several retailers with a
national presence. Failure to differentiate its retail concept and brand from these competitors may
result in lost market share and diminished profits.
Mexico. The economic and political environment in Mexico presents a unique challenge to AutoZone.
Many of these factors are beyond the company's control.
Seasonality. Weekly per-store sales peak in summer (June-August), running 15-25% higher than
winter (December-February). Naturally, factors that adversely affect sales during the peak season
(e.g., weather, discretionary spending, etc.) would have a disproportionate impact.
Other risk factors. Vendor consolidation, miles driven, gas prices, acquisition risk, labor costs,
transportation costs, immigration policy, higher scrappage rates, weather, supplier disruptions, patent
laws, litigation, new store growth, and competition.
Company Description
AutoZone is the leading distributor of automotive parts, with over 5,000 retail stores in the U.S.,
Mexico, and Brazil. Its stores sell a broad assortment of hard parts, maintenance items, and
accessories to consumers and professional installers. The company sells national brands as well as
private label products under the Duralast and Valucraft brands, which it owns. AutoZone targets retail
consumers in the $47 billion U.S. do-it-yourself (DIY) market (~83% of revenue; 15.6% share) and
repair shops in the $57 billion U.S. do-it-for-me (DIFM) market (~15%; 2.3%). The company also
operates several retail locations in Mexico. Other revenue includes e-commerce sales and sales of
diagnostic and repair software under the ALLDATA brand.
Robert W. Baird & Co.
15
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
AutoZone, Inc.
Quarterly Income Statement
12/10/2013
Fiscal Year End
Income Statement
Retail
August
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
Recent Price: $474.82
4Q13
1Q14
2Q14E
3Q14E
4Q14E
$1,611,358
$1,496,356
$1,744,029
$2,274,999
$1,642,601
$1,506,365
$1,771,852
$2,335,546
$1,670,872
$1,550,005
$1,832,501
$2,409,610
272,780
266,547
324,614
431,877
306,068
289,915
356,257
478,931
348,698
332,964
403,485
537,624
40,203
41,166
43,223
56,709
42,371
58,918
77,769
103,215
74,008
74,826
80,102
107,343
1,924,341
1,804,069
2,111,866
2,763,585
1,991,040
1,855,198
2,205,878
3,095,414
2,093,578
1,957,795
2,316,089
3,054,577
Cost of Revenue
940,714
877,854
1,022,067
1,331,191
959,174
893,217
1,063,165
1,491,038
1,007,881
941,699
1,110,796
1,464,975
Gross Profit
983,627
926,215
1,089,799
1,432,394
1,031,866
961,981
1,142,713
1,604,376
1,085,697
1,016,095
1,205,293
1,589,602
Selling, General & Administrative Expenses
642,693
625,564
662,549
872,338
668,590
644,410
686,683
968,156
701,971
683,793
721,599
946,210
EBIT
340,934
300,651
427,250
560,056
363,276
317,571
456,030
636,220
383,726
332,303
483,693
643,392
Interest Expense, net
(39,094)
(38,923)
(39,743)
(58,145)
(41,104)
(41,323)
(42,091)
(60,896)
(42,431)
(44,000)
(44,000)
(58,000)
Income Before Income Taxes
301,840
261,728
387,507
501,911
322,172
276,248
413,939
575,324
341,295
288,303
439,693
585,392
Commercial
Other
Net Revenue
Taxes
Net Income
EPS - Diluted
GAAP EPS
Diluted Shares
110,715
94,798
138,921
178,178
118,720
100,001
148,356
204,125
123,208
103,789
158,290
210,741
$191,125
$166,930
$248,586
$323,733
$203,452
$176,247
$265,583
$371,199
$218,087
$184,514
$281,404
$374,651
$4.68
$4.15
$6.28
$8.46
$5.41
$4.78
$7.27
$10.42
$6.29
$5.41
$8.38
$11.41
4.68
4.15
6.28
8.46
5.41
4.78
7.27
10.42
6.29
5.41
8.38
11.41
40,864
40,237
39,590
38,262
37,586
36,904
36,529
35,625
34,676
34,106
33,575
32,842
Shares Repurchased
(954)
(501)
(1,055)
(1,284)
(855)
(513)
(833)
(1,310)
(678)
(600)
(600)
(1,000)
Margin Analysis
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
51.1%
51.3%
51.6%
51.8%
51.8%
51.9%
51.8%
51.8%
51.9%
51.9%
52.0%
52.0%
33.4%
34.7%
31.4%
31.6%
33.6%
34.7%
31.1%
31.3%
33.5%
34.9%
31.2%
31.0%
EBIT Margin
17.7%
16.7%
20.2%
20.3%
18.2%
17.1%
20.7%
20.6%
18.3%
17.0%
20.9%
21.1%
Pretax Margin
15.7%
14.5%
18.3%
18.2%
16.2%
14.9%
18.8%
18.6%
16.3%
14.7%
19.0%
19.2%
36.7%
36.2%
35.8%
35.5%
36.8%
36.2%
35.8%
35.5%
36.1%
36.0%
36.0%
36.0%
9.9%
9.3%
11.8%
11.7%
10.2%
9.5%
12.0%
12.0%
10.4%
9.4%
12.1%
12.3%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
4.6%
5.9%
3.9%
2.1%
0.2%
-1.8%
-0.1%
1.0%
0.9%
2.1%
2.4%
2.3%
3.0%
4.2%
2.7%
1.4%
-0.4%
-2.2%
-0.6%
0.6%
0.3%
1.5%
2.0%
1.8%
DIFM (est.)
15.7%
16.5%
11.5%
6.8%
4.4%
2.0%
3.5%
3.6%
5.0%
5.5%
4.5%
5.0%
Changes YOY
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
Gross Margin
Operating Expenses
Tax Rate
Net Margin
Comps
Domestic Same Store Sales (as reported)
DIY (est.)
Retail
5.1%
6.1%
4.3%
2.7%
1.9%
0.7%
1.6%
2.7%
1.7%
2.9%
3.4%
3.2%
22.6%
24.6%
21.4%
15.9%
12.2%
8.8%
9.7%
10.9%
13.9%
14.8%
13.3%
12.3%
Other
9.6%
11.3%
10.1%
6.3%
5.4%
43.1%
79.9%
82.0%
74.7%
27.0%
3.0%
4.0%
Net Revenue
7.4%
8.6%
6.7%
4.6%
3.5%
2.8%
4.5%
12.0%
5.1%
5.5%
5.0%
-1.3%
Gross Margin %
45bp
43bp
37bp
64bp
71bp
51bp
20bp
bp
3bp
5bp
24bp
21bp
Operating Expenses
8.4%
9.5%
7.5%
5.9%
4.9%
3.9%
4.9%
12.0%
5.2%
5.6%
5.5%
-0.9%
EBIT Margin %
63bp
30bp
37bp
43bp
53bp
45bp
44bp
29bp
8bp
-14bp
21bp
51bp
Pretax Margin %
68bp
53bp
51bp
36bp
50bp
38bp
42bp
42bp
12bp
-16bp
22bp
58bp
Tax Rate
68bp
-1bp
26bp
-38bp
17bp
-2bp
-1bp
-2bp
-75bp
-20bp
16bp
52bp
Net Income
11.1%
12.7%
9.3%
7.4%
6.4%
5.6%
6.8%
14.7%
7.2%
4.7%
6.0%
0.9%
EPS
24.0%
24.4%
18.6%
17.8%
15.7%
15.1%
15.8%
23.1%
16.2%
13.3%
15.3%
9.5%
GAAP EPS
24.0%
24.4%
18.6%
17.8%
15.7%
15.1%
15.8%
23.1%
16.2%
13.3%
15.3%
9.5%
-10.5%
-9.3%
-7.8%
-8.9%
-8.0%
-8.3%
-7.7%
-6.9%
-7.7%
-7.6%
-8.1%
-7.8%
Commercial
Diluted Shares
Please refer to Appendix - Important Disclosures and Analyst Certification. Source: Company reports and Robert W. Baird & Co. estimates
Robert W. Baird & Co.
16
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
Fiscal Year End
Selected Metrics
AutoZone, Inc.
Quarterly Metrics
12/10/2013
August
Recent Price: $474.82
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
4,534
4,551
4,580
4,613
4,685
4,703
4,735
4,767
4,836
4,843
4,873
4,913
17
29
33
72
19
32
33
69
7
30
40
Domestic Stores
Beginning
Opened
Closed
-
-
-
-
Ending Domestic Stores
4,551
4,580
4,613
4,685
4,703
4,735
Stores with commercial programs
2,733
2,825
2,946
3,053
3,090
3,146
29,424
29,636
29,854
29,301
30,480
6,465
6,471
6,472
6,254
279
281
287
2
6
10
281
287
4,832
4,867
Square Footage (in thousands)
Square Footage per Store
(1)
-
(1)
65
-
-
-
-
-
4,767
4,836
4,843
4,873
4,913
4,978
3,248
3,421
3,546
3,611
3,676
3,761
30,713
30,934
31,411
31,458
31,653
31,913
32,335
6,481
6,486
6,489
6,495
6,496
6,496
6,496
6,496
297
321
325
334
341
362
363
371
383
24
4
9
7
21
1
8
12
15
297
321
325
334
341
362
363
371
383
398
4,910
5,006
5,029
5,070
5,109
5,201
5,210
5,248
5,300
5,380
Mexico Stores
Beginning
Opened
Ending Mexico Stores
Total Stores Chainwide
Same Store Sales (as reported)
4.6%
5.9%
3.9%
2.1%
0.2%
-1.8%
-0.1%
1.0%
0.9%
2.1%
2.4%
2.3%
Retail - DIY
Total Revenue
$1,611,358
$1,496,356
$1,744,029
$2,274,999
$1,642,601
$1,506,365
$1,771,852
$2,335,546
$1,670,872
$1,550,005
$1,832,501
$2,409,610
Revenue Growth
5.1%
6.1%
4.3%
2.7%
1.9%
0.7%
1.6%
2.7%
1.7%
2.9%
3.4%
3.2%
Store Growth
4.0%
4.1%
3.8%
4.0%
4.1%
4.2%
4.1%
3.9%
3.6%
3.5%
3.7%
Same Store Revenue
Revenue per Store
Same Store Sales (Baird est.)
New Store Revenue
Revenue per New Store
New Store Productivity
1,578,074
1,469,586
1,716,556
2,246,923
1,605,441
1,462,731
1,733,023
2,289,584
1,646,812
1,528,960
1,807,289
3.4%
2,376,419
340
315
365
471
333
302
355
462
328
303
355
461
3.0%
4.2%
2.7%
1.4%
-0.4%
-2.2%
-0.6%
0.6%
0.3%
1.5%
2.0%
1.8%
33,284
26,770
27,473
28,076
37,160
43,634
38,829
45,962
24,060
21,044
25,212
178
141
147
150
191
218
193
233
128
151
178
33,191
230
52.4%
44.7%
40.1%
31.8%
57.2%
72.3%
54.5%
50.5%
39.0%
50.0%
50.0%
50.0%
Commercial - DIFM
Total Revenue
$272,780
$266,547
$324,614
$431,877
$306,068
$289,915
$356,257
$478,931
$348,698
$332,964
$403,485
$537,624
Revenue Growth
22.6%
24.6%
21.4%
15.9%
12.2%
8.8%
9.7%
10.9%
13.9%
14.8%
13.3%
12.3%
Store Growth
10.3%
12.1%
15.3%
14.8%
13.1%
11.4%
10.3%
12.1%
14.8%
14.8%
13.2%
Same Store Revenue
Revenue per Store
Same Store Sales (Baird est.)
New Store Revenue
Revenue per New Store
New Store Productivity
Sales per Average Store
Growth
Sales per Average Sq. Foot
Growth
257,300
249,052
298,222
397,839
284,723
272,007
336,065
447,217
321,311
305,860
372,289
9.9%
502,877
105
100
118
153
106
98
116
149
105
98
116
151
15.7%
16.5%
11.5%
6.8%
4.4%
2.0%
3.5%
3.6%
5.0%
5.5%
4.5%
5.0%
15,480
17,495
26,392
34,038
21,345
17,908
20,192
31,713
27,387
27,104
31,197
63
63
76
87
57
53
65
95
66
59
70
60.0%
60.0%
60.0%
60.0%
60.0%
351
412
423
546
388
0.0%
3.8%
2.7%
0.6%
10.5%
60.0%
356
-13.6%
54
60.0%
357
-15.6%
55
60.0%
60.0%
60.0%
60.0%
34,747
90
60.0%
546
394
386
455
592
0.0%
1.5%
8.5%
27.5%
8.4%
54
63
65
84
59
84
60
0.0%
3.3%
3.2%
1.2%
9.3%
-14.3%
-15.4%
0.0%
1.7%
10.2%
59
27.4%
70
8.5%
91
$40,203
$41,166
$43,223
$56,709
$42,371
$58,918
$77,769
$103,215
$74,008
$74,826
$80,102
$107,343
9.6%
11.3%
10.1%
6.3%
5.4%
43.1%
79.9%
82.0%
74.7%
27.0%
3.0%
4.0%
Other
Total Revenue
Revenue Growth
Robert W. Baird & Co.
17
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
AutoZone, Inc.
Quarterly Balance Sheet
12/10/2013
Fiscal Year End
August
Balance Sheet
1Q12
Cash and Cash Equivalents
Accounts Receivable
Merchandise Inventories
Other Current Assets
Total Current Assets
Gross PP&E
$96,676
2Q12
$103,207
3Q12
$103,100
4Q12
$103,093
1Q13
$99,864
2Q13
$115,548
Recent Price: $474.82
3Q13
$133,685
4Q13
$142,191
1Q14
$125,852
2Q14E
$100,000
3Q14E
$100,000
4Q14E
$100,000
135,695
144,790
133,941
161,375
173,338
160,420
155,550
171,638
194,854
165,206
152,291
167,374
2,531,210
2,577,704
2,629,821
2,627,983
2,702,103
2,758,543
2,796,782
2,861,014
2,947,556
3,044,397
3,165,008
3,050,360
79,092
82,863
77,410
86,495
86,986
88,857
92,306
103,170
101,973
88,101
92,644
106,910
2,842,673
2,908,564
2,944,272
2,978,946
3,062,291
3,123,368
3,178,323
3,278,013
3,370,235
3,397,704
3,509,942
3,424,644
4,408,429
4,488,383
4,565,947
4,659,761
4,735,703
4,839,902
4,934,713
5,058,525
5,168,252
5,251,252
5,356,252
5,501,252
(1,741,324)
(1,763,987)
(1,798,849)
(1,803,833)
(1,845,434)
(1,895,353)
(1,931,890)
(1,987,164)
(2,059,482)
(2,112,326)
(2,165,714)
(2,233,338)
2,667,105
2,724,396
2,767,098
2,855,928
2,890,269
2,944,549
3,002,823
3,071,361
3,108,770
3,138,926
3,190,538
3,267,914
302,645
302,645
302,645
302,645
302,645
385,985
386,085
367,829
367,829
367,829
367,829
367,829
19,312
19,685
22,390
33,796
36,547
40,579
47,435
4,069
31,404
23,494
27,793
9,164
100,845
101,174
112,449
94,324
106,287
167,707
168,375
170,817
145,185
117,468
104,224
91,637
5,932,580
6,056,464
6,148,854
6,265,639
6,398,039
6,662,188
6,783,041
6,892,089
7,023,423
7,045,420
7,200,326
7,161,188
2,843,741
2,824,873
2,866,580
2,926,740
3,021,916
3,034,017
3,116,557
3,307,535
3,407,286
3,531,501
3,671,409
3,538,417
444,538
430,588
443,161
478,085
455,762
462,858
469,942
467,831
486,757
489,449
486,379
528,442
Income Taxes Payable
85,222
62,150
80,718
17,053
80,532
69,063
63,161
17,129
92,117
66,565
92,644
30,546
Deferred Income Taxes
170,048
169,618
169,625
183,833
186,282
181,337
186,389
202,922
186,409
176,202
150,546
198,548
Less: Accumulated Depreciation & Amortization
Net PP&E
Goodwill, net of accumulated amortization
Deferred Income Taxes, Net
Other long-term Assets
Total Assets
Accounts Payable
Accrued Expenses & Other Current Liabilities
Current portion of LT debt & ST borrowings
Total Current Liabilities
Long-term debt
Other long-term liabilities
Total Liabilities
Total stockholders' equity
Total liabilities and stockholders' equity
Balance Sheet Ratios
35,417
29,560
7,309
49,881
173,733
160,256
61,509
62,176
64,170
3,578,966
3,516,789
3,567,393
3,655,592
3,744,492
-
4,231,808
484,533
3,836,049
-
4,169,150
4,332,825
4,325,225
4,463,153
4,360,122
3,318,900
3,434,800
3,599,000
3,718,302
3,802,705
3,513,273
4,001,100
4,013,267
4,013,244
4,039,088
4,082,895
4,213,825
381,813
400,399
399,290
439,770
442,211
467,216
478,234
396,991
398,574
469,871
416,896
427,641
7,279,679
7,351,988
7,565,683
7,813,664
7,989,408
8,212,297
8,315,383
8,579,408
8,744,643
8,834,184
8,962,945
9,001,588
(1,347,099)
(1,295,524)
(1,416,829)
(1,548,025)
(1,591,369)
(1,550,109)
(1,532,342)
(1,687,319)
(1,721,220)
(1,788,764)
(1,762,618)
(1,840,400)
5,932,580
6,056,464
6,148,854
6,265,639
6,398,039
6,662,188
6,783,041
6,892,089
7,023,423
7,045,420
7,200,326
7,161,188
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
.8x
.8x
.8x
.8x
.8x
.7x
.8x
.8x
.8x
.8x
.8x
.8x
Total Debt/Total Capital (Debt + Equity)
168.3%
160.6%
164.9%
171.3%
172.0%
179.0%
162.1%
172.5%
175.1%
179.5%
176.0%
177.5%
Net Debt/Total Capital
163.4%
0.00
155.7%
0.00
160.2%
0.00
166.6%
0.00
167.4%
0.00
173.1%
0.00
156.7%
0.00
166.4%
0.00
169.6%
0.00
175.0%
0.00
171.7%
0.00
173.3%
0.00
223.7
245.1
214.6
221.8
234.0
257.5
220.1
226.4
242.7
268.0
235.4
238.2
6.4
7.3
5.8
5.3
7.9
7.9
6.4
5.1
8.5
7.7
6.0
5.0
275.8
293.6
255.9
200.6
287.5
310.0
267.5
202.4
308.5
342.2
301.6
220.4
(45.7)
0.00
(41.2)
0.00
(35.6)
0.00
26.5
0.00
(45.5)
0.00
(44.6)
0.00
(41.0)
0.00
29.0
0.00
(57.3)
0.00
(66.5)
0.00
(60.2)
0.00
22.8
0.00
1.6x
1.5x
1.7x
1.6x
1.6x
1.4x
1.7x
1.6x
1.5x
1.4x
1.6x
1.5x
($832,969)
($711,432)
($726,221)
($779,739)
($782,065)
($1,223,988)
($791,411)
($1,033,328)
($1,088,442)
($1,027,521)
($1,053,211)
($1,035,478)
Current Ratio
0
Inventory Days
Receivable Days
Payable Days
Cash Cycle Days
0
Inventory Turnover
Working Capital (excluding cash)
Cash per share
Book Value
ROA
4Q14E
$2.37
$2.56
$2.60
$2.69
$2.66
$3.13
$3.66
$3.99
$3.63
$2.93
$2.98
$3.04
($32.97)
($32.20)
($35.79)
($40.46)
($42.34)
($42.00)
($41.95)
($47.36)
($49.64)
($52.45)
($52.50)
($56.04)
3.2%
2.8%
4.1%
5.2%
3.2%
2.7%
4.0%
5.4%
3.1%
2.6%
4.0%
5.2%
DuPont Analysis
Net Margin (N/S)
Asset Turnover (S/A)
Leverage (A/E)
Return on Equity - LTM
Robert W. Baird & Co.
10.6%
10.6%
10.7%
10.8%
10.9%
10.9%
11.0%
11.1%
11.1%
11.1%
11.2%
11.2%
140.0%
140.6%
141.3%
141.0%
139.5%
136.9%
135.1%
136.9%
135.2%
134.8%
134.4%
132.6%
-492.8%
-473.3%
-451.8%
-435.2%
-425.0%
-417.2%
-419.6%
-420.3%
-421.5%
-412.3%
-404.6%
-399.7%
-73.0%
-70.7%
-68.4%
-66.4%
-64.4%
-62.4%
-62.3%
-63.9%
-63.5%
-61.8%
-60.6%
-59.5%
18
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
AutoZone, Inc.
Quarterly Cash Flow
12/10/2013
Fiscal Year End
August
Cash Flow Statement
1Q12
Net Income
2Q12
3Q12
4Q12
$191,125
$166,930
$248,586
$323,732
48,647
47,523
49,007
4,384
12,245
(2,105)
-
-
4,856
1Q13
2Q13
$203,452
$176,246
66,654
50,700
2,283
(16,293)
-
-
(8,652)
10,352
Recent Price: $474.82
3Q13
4Q13
1Q14
$218,087
2Q14E
3Q14E
$184,514
4Q14E
$265,583
$371,199
$281,404
$374,651
52,344
52,888
71,319
55,772
(9,803)
(12,219)
36,813
(15,436)
52,844
53,388
67,624
110,590
(74,229)
-
-
-
-
-
-
-
75,696
-
(27,832)
(12,362)
16,731
4,782
(17,347)
(23,216)
29,648
12,915
(15,083)
Adjustments to net income:
Depreciation & Amortization
Other
Working Capital
Accounts Receivable
Inventory
(75,122)
(38,328)
(56,128)
1,664
(74,808)
(48,369)
(31,882)
(77,787)
(86,542)
(96,841)
(120,611)
114,649
Accounts Payable & Accrued Expenses
87,317
(38,222)
53,754
94,557
72,594
(3,153)
86,764
200,730
118,677
126,907
136,839
(90,929)
Income Taxes Payable
81,087
(22,576)
33,927
(35,684)
94,970
8,594
19,105
(65,780)
74,988
(25,552)
26,079
(62,098)
Total Working Capital
98,138
(107,778)
41,905
32,705
80,394
(26,197)
78,769
39,816
83,907
34,161
55,221
(53,462)
342,294
118,920
337,393
425,374
318,253
192,590
385,021
519,147
342,330
382,109
315,784
464,509
Capital expenditures
(61,924)
(70,506)
(95,847)
(149,777)
(80,430)
(89,183)
(89,242)
(155,596)
(82,607)
(83,000)
(105,000)
(145,000)
Purchase of Marketable Securities
(11,091)
(7,879)
(15,162)
(11,533)
(11,802)
(10,486)
(4,520)
(17,661)
-
-
-
-
Proceeds from Sale of Investments
10,069
6,334
13,903
12,079
6,179
10,033
4,078
17,654
-
-
-
-
Disposal of Capital Assets & Other
1,057
4,746
67
703
462
(114,554)
5,358
2,415
-
-
-
(61,889)
(67,305)
(204,190)
(84,326)
(82,607)
(83,000)
Cash Flow From Operations
Cash Flow From Investment Activity
Increase (Decrease) in Interest Bearing Debt
5,796
Increase (Decrease) in Equity Accounts
(280,047)
Payments of Capital Lease Obligations/Other
Cash Flow From Financing Activity
Effect of Exchange Rate on Cash
EBITDA
EBITDA Margin
Free Cash Flow (LTM)
107,856
142,955
162,122
34,448
195,069
(147,380)
(367,514)
(429,544)
(254,196)
(194,729)
3,238
(242,098)
(153,188)
(13,500)
(72,903)
44,474
132,924
(251,988)
(252,058)
(255,258)
(452,433)
(15,794)
(9,398)
(16,111)
26,452
(44,885)
(7,721)
(240,353)
(276,820)
(235,859)
26,792
(283,745)
(354,210)
477
(108)
$103,207
$6,531
(33)
$103,100
($107)
($7)
(32)
$103,093
492
1,187
$99,864
$115,548
(145,000)
185,897
(6,037)
$96,676
-
(105,000)
(532,386)
(45,561)
($930)
Ending Cash Balance
(85,591)
(6,448)
$97,606
Additions to (Subtractions from) Cash
(148,528)
(280,699)
(636)
Beginning Cash Balance
(97,039)
-
(3,243)
$133,685
-
(265,488)
-
(324,961)
-
-
$142,191
($5,765)
-
(210,784)
(319,509)
-
$125,852
-
$100,000
($25,852)
$100,000
($3,229)
$15,684
$18,137
$8,506
$0
$0
$96,676
$103,207
$103,100
$103,093
$99,864
$115,548
$133,685
$142,191
$136,426
$100,000
$100,000
$100,000
$389,581
$348,174
$476,257
$626,710
$413,976
$369,915
$508,918
$707,539
$439,498
$385,147
$537,081
$711,016
20.2%
19.3%
22.6%
22.7%
20.8%
19.9%
23.1%
22.9%
21.0%
19.7%
23.2%
23.3%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
Net Income (LTM)
868,023
886,898
908,110
930,373
942,700
952,016
969,013
CAPEX-D&A (LTM)
(137,152)
(141,715)
(141,258)
(166,223)
(182,676)
(196,532)
(186,046)
(187,200)
(184,305)
(177,622)
(192,880)
(185,979)
Change in WC (LTM)
167,527
174,682
34,413
64,970
47,226
128,807
165,671
172,782
176,295
236,654
213,106
119,828
Free Cash Flow (LTM)
898,398
-
919,865
-
801,265
-
829,120
-
807,250
-
884,291
-
948,638
-
1,002,062
-
1,023,105
-
1,098,414
-
1,075,429
-
992,504
-
Yield (MV)
Valuation
1,016,480
1,031,115
1,039,383
1,055,204
1,058,655
6.7%
6.2%
5.5%
5.9%
5.6%
6.2%
6.7%
6.7%
6.2%
6.8%
6.7%
6.4%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14E
3Q14E
4Q14E
Price High
$341.89
$367.59
$399.10
$391.46
$386.80
$390.11
$413.28
$452.19
$470.47
Price Low
$304.31
$313.11
$356.54
$353.38
$351.27
$341.98
$369.47
$401.93
$408.90
Price Close
$328.38
$366.09
$370.38
$365.08
$380.50
$385.89
$386.89
$422.35
$461.60
PE on NTM EPS
EV / LTM EBITDA
14x
20x
$474.82
12x
15x
10x
8x
10x
6x
5x
4x
2002
NTM EPS
PE on NTM EPS
Market Capitalization
2003
2004
2005
2006
$23.57
13.9x
$13,418,920
2007
2008
2009
$24.30
15.1x
$14,730,363
2010
2011
$24.93
14.9x
$14,663,344
2012
2013
$25.92
14.1x
$13,968,691
2002
$27.88
13.6x
$14,301,473
2003
$28.76
13.4x
$14,240,885
2004
2005
$29.39
13.2x
$14,132,705
2006
2007
$30.50
13.8x
$15,046,219
2008
2009
$31.49
14.7x
$16,006,442
2010
2011
14.7x
$16,194,378
96,676
103,207
103,100
103,093
99,864
99,864
99,864
142,191
125,852
100,000
Debt
3,354,317
3,464,360
3,606,309
3,768,183
3,768,183
3,768,183
3,768,183
4,187,000
4,187,000
4,187,000
$16,676,561
$18,091,516
$18,166,553
$17,633,781
$17,969,792
$17,909,204
$17,801,024
$19,091,028
$20,067,590
$20,281,378
LTM EBITDA
Enterprise Value to LTM EBITDA
2013
$32.37
Cash
Enterprise Value
2012
1,730,182
1,762,482
1,800,884
1,840,722
1,865,117
1,865,117
1,865,117
2,000,348
2,025,870
2,041,102
9.6x
10.3x
10.1x
9.6x
9.6x
9.6x
9.5x
9.5x
9.9x
9.9x
8.7
Robert W. Baird & Co.
19
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
Fiscal Year End
AutoZone, Inc.
Annual Income Statement
12/10/2013
August
Income Statement
Retail
2002
2003
2004
2005
2006
2007
Recent Price: $474.82
2008
2009
2010
2011
2012
2013
2014E
2015E
$4,621,234
$4,638,361
$4,727,402
$4,795,648
$4,989,265
$5,160,511
$5,421,775
$5,898,892
$6,333,771
$6,830,321
$7,126,742
$7,256,364
$7,462,988
$7,724,617
Commercial
531,776
670,010
740,480
718,150
708,714
705,567
741,011
773,047
879,982
1,076,370
1,295,818
1,431,171
1,622,771
1,790,127
Other
172,500
148,752
169,144
197,083
250,376
303,726
367,828
144,884
148,864
166,281
181,301
282,273
336,279
346,368
Net Revenue
5,325,510
5,457,123
5,637,026
5,710,881
5,948,355
6,169,804
6,522,706
6,816,823
7,362,618
8,072,973
8,603,861
9,147,530
9,422,039
9,861,112
Cost of Revenue
2,950,123
2,942,114
2,880,447
2,918,333
3,009,834
3,105,554
3,254,645
3,400,374
3,650,874
3,953,510
4,171,826
4,406,594
4,525,352
4,726,377
Gross Profit
2,375,387
2,515,009
2,756,579
2,792,548
2,938,521
3,064,250
3,268,061
3,416,449
3,711,744
4,119,463
4,432,035
4,740,936
4,896,687
5,134,735
Selling, General & Administrative Expenses
1,604,379
1,597,212
1,757,872
1,816,884
1,928,596
2,008,985
2,143,928
2,240,386
2,392,330
2,624,659
2,803,144
2,967,839
3,053,573
3,184,587
EBIT
771,008
917,797
998,707
975,664
1,009,925
1,055,265
1,124,133
1,176,063
1,319,414
1,494,804
1,628,891
1,773,097
1,843,114
1,950,148
Interest Expense, net
(79,860)
(84,790)
(92,805)
(102,443)
(107,889)
(119,116)
Income Before Income Taxes
691,148
833,007
905,902
873,221
902,036
936,149
Taxes
(116,745)
1,007,388
(142,317)
1,033,746
(158,909)
1,160,505
(170,558)
1,324,246
(175,905)
1,452,986
(185,414)
1,587,683
(188,431)
1,654,683
(190,000)
1,760,148
263,000
315,403
339,700
302,201
332,761
340,478
365,783
376,696
422,194
475,272
522,612
571,202
596,028
633,653
$428,148
$517,604
$566,202
$571,020
$569,275
$595,671
$641,605
$657,050
$738,311
$848,974
$930,374
$1,016,481
$1,058,655
$1,126,495
EPS - Diluted
$3.98
$5.31
$6.54
$7.17
$7.48
$8.50
$10.04
$11.69
$14.93
$19.41
$23.41
$27.73
$31.32
$36.00
GAAP EPS
$3.98
$5.31
$6.54
$7.17
$7.48
$8.50
$10.04
$11.69
$14.93
$19.41
$23.41
$27.73
$31.32
$36.00
107,468
97,433
86,635
79,669
76,086
70,057
63,875
56,215
49,441
43,738
39,738
36,661
33,800
31,290
Net Income
Diluted Shares
Shares Repurchased
(8,019)
(10,086)
(10,194)
(4,821)
(6,187)
(6,032)
(6,802)
(9,314)
(6,375)
(5,599)
(3,794)
(3,511)
(2,878)
(2,500)
Margin Analysis
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
44.6%
46.1%
48.9%
48.9%
49.4%
49.7%
50.1%
50.1%
50.4%
51.0%
51.5%
51.8%
52.0%
52.1%
30.1%
29.3%
31.2%
31.8%
32.4%
32.6%
32.9%
32.9%
32.5%
32.5%
32.6%
32.4%
32.4%
32.3%
EBIT Margin
14.5%
16.8%
17.7%
17.1%
17.0%
17.1%
17.2%
17.3%
17.9%
18.5%
18.9%
19.4%
19.6%
19.8%
Pretax Margin
13.0%
15.3%
16.1%
15.3%
15.2%
15.2%
15.4%
15.2%
15.8%
16.4%
16.9%
17.4%
17.6%
17.8%
98.5%
118.1%
127.2%
113.2%
124.6%
127.5%
137.0%
141.1%
158.1%
178.0%
195.8%
214.0%
223.3%
237.4%
8.0%
9.5%
10.0%
10.0%
9.6%
9.7%
9.8%
9.6%
10.0%
10.5%
10.8%
11.1%
11.2%
11.4%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
8.8%
3.2%
0.1%
-2.2%
0.5%
0.0%
0.4%
4.4%
5.3%
6.2%
3.9%
0.1%
2.0%
2.5%
DIY (est.)
-1.7%
0.8%
0.3%
0.0%
4.6%
4.5%
4.8%
2.6%
-0.5%
1.4%
2.0%
DIFM (est.)
-5.3%
-2.1%
-1.6%
3.3%
2.9%
11.3%
16.3%
11.7%
3.4%
5.0%
5.0%
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
Gross Margin
Operating Expenses
Tax Rate
Net Margin
Comps
Domestic Same Store Sales (as reported)
Changes YOY
2002
Retail
Commercial
Other
2003
2004
0.4%
1.9%
1.4%
4.0%
3.4%
5.1%
8.8%
7.4%
7.8%
4.3%
1.8%
2.8%
3.5%
26.0%
10.5%
-3.0%
-1.3%
-0.4%
5.0%
4.3%
13.8%
22.3%
20.4%
10.4%
13.4%
10.3%
3.0%
-13.8%
13.7%
16.5%
27.0%
21.3%
21.1%
-60.6%
2.7%
11.7%
9.0%
55.7%
19.1%
Net Revenue
10.5%
2.5%
3.3%
1.3%
4.2%
3.7%
5.7%
4.5%
8.0%
9.6%
6.6%
6.3%
3.0%
4.7%
Gross Margin %
282bp
148bp
281bp
bp
50bp
26bp
44bp
2bp
30bp
61bp
48bp
32bp
14bp
10bp
Operating Expenses
7.0%
-0.4%
10.1%
3.4%
6.1%
4.2%
6.7%
4.5%
6.8%
9.7%
6.8%
5.9%
2.9%
4.3%
EBIT Margin %
38bp
23bp
9bp
-6bp
-1bp
1bp
1bp
bp
7bp
6bp
4bp
5bp
2bp
2bp
Pretax Margin %
44bp
23bp
8bp
-8bp
-1bp
bp
3bp
-3bp
6bp
6bp
5bp
5bp
2bp
3bp
Tax Rate
567bp
196bp
91bp
-140bp
114bp
29bp
95bp
41bp
170bp
199bp
177bp
182bp
93bp
141bp
Net Income
41.7%
20.9%
9.4%
0.9%
-0.3%
4.6%
7.7%
2.4%
12.4%
15.0%
9.6%
9.3%
4.1%
6.4%
EPS
50.3%
33.3%
23.0%
9.7%
4.4%
13.6%
18.1%
16.4%
27.8%
30.0%
20.6%
18.4%
13.0%
14.9%
GAAP EPS
50.3%
33.3%
23.0%
9.7%
4.4%
13.6%
18.1%
16.4%
27.8%
30.0%
20.6%
18.4%
13.0%
14.9%
Diluted Shares
-5.7%
-9.3%
-11.1%
-8.0%
-4.5%
-7.9%
-8.8%
-12.0%
-12.0%
-11.5%
-9.1%
-7.7%
-7.8%
-7.4%
Robert W. Baird & Co.
20
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
Fiscal Year End
AutoZone, Inc.
Annual Metrics
12/10/2013
August
Selected Metrics
Recent Price: $474.82
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
Domestic Stores
Beginning
3,019
3,068
3,219
3,420
3,592
3,771
3,933
4,092
4,229
4,389
4,534
4,685
4,836
4,978
Opened
102
160
202
175
194
160
160
140
163
147
151
153
142
140
Closed
(43)
Ending Domestic Stores
Stores with commercial programs
3,068
(9)
3,219
(1)
3,420
(3)
3,592
(37)
3,771
(1)
3,933
(1)
4,092
(3)
4,229
(3)
4,389
(2)
4,534
4,685
(2)
4,836
-
-
4,978
5,118
2,009
1,941
2,009
2,104
2,134
2,182
2,236
2,303
2,424
2,659
3,053
3,421
3,761
4,061
19,683
20,500
21,689
22,808
24,016
25,135
26,236
27,193
28,294
29,301
29,301
31,411
32,335
33,244
6,416
6,368
6,342
6,350
6,369
6,391
6,412
6,464
6,447
6,463
6,254
6,495
6,496
6,496
Beginning
21
39
49
63
81
100
123
148
188
238
279
321
362
398
Opened
18
10
14
18
19
23
25
40
50
41
42
41
36
16
Ending Mexico Stores
39
49
63
81
100
123
148
188
238
279
321
362
398
414
3,107
3,268
3,483
3,673
3,871
4,056
4,240
4,417
4,627
4,813
5,006
5,201
5,380
5,536
Square Footage (in thousands)
Square Footage per Store
Mexico Stores
Total Stores Chainwide
Domestic Same Store Sales
8.8%
3.2%
0.1%
-2.2%
0.5%
0.0%
0.4%
4.4%
5.3%
6.2%
3.9%
0.1%
2.0%
2.5%
Retail
Total Revenue
4,727,402
4,795,648
4,989,265
5,160,511
5,421,775
5,898,892
6,333,771
6,830,321
7,126,742
7,256,364
7,462,988
Revenue Growth
1.4%
4.0%
3.4%
5.1%
8.8%
7.4%
7.8%
4.3%
1.8%
2.8%
Store Growth
5.0%
5.0%
4.3%
4.0%
3.3%
3.8%
3.3%
3.3%
3.2%
2.9%
Same Store Revenue
Revenue per Store
Same Store Sales (est.)
New Store Productivity
2.8%
4,835,306
5,002,646
5,158,152
5,671,781
6,165,132
6,639,501
7,011,139
7,090,778
7,359,480
7,612,248
1,404
1,386
1,363
1,339
1,387
1,428
1,474
1,492
1,451
1,447
1,444
147,067
Revenue per New Store
3.5%
4,648,581
-1.7%
New Store Revenue
7,724,617
0.8%
153,959
0.3%
157,865
0.0%
263,623
4.6%
227,111
4.5%
168,639
4.8%
190,820
2.6%
115,603
-0.5%
165,586
1.4%
103,508
2.0%
112,369
827
857
854
833
737
891
983
616
835
687
722
58.9%
61.8%
62.6%
62.2%
53.2%
62.4%
66.7%
41.3%
57.6%
47.5%
50.0%
Commercial
Total Revenue
740,480
Revenue Growth
Store Growth
Same Store Revenue
718,150
Same Store Sales (est.)
New Store Revenue
705,567
741,011
773,047
879,982
1,076,370
1,295,818
1,431,171
1,622,771
-1.3%
-0.4%
5.0%
4.3%
13.8%
22.3%
20.4%
10.4%
13.4%
4.7%
1.4%
2.2%
2.5%
3.0%
5.3%
9.7%
14.8%
12.1%
9.9%
701,319
Revenue per Store
708,714
-3.0%
703,401
697,330
728,748
762,850
860,598
1,023,317
1,202,413
1,340,013
1,502,337
1,790,127
10.3%
8.0%
1,703,910
341
336
330
338
344
380
437
475
469
470
471
-5.3%
-2.1%
-1.6%
3.3%
2.9%
11.3%
16.3%
11.7%
3.4%
5.0%
5.0%
5,313
8,237
12,263
10,197
19,384
53,053
93,405
91,158
120,434
209
200
216
248
274
288
269
286
283
63.5%
59.1%
62.7%
65.1%
62.7%
60.8%
57.4%
60.8%
60.0%
16,831
Revenue per New Store
New Store Productivity
86,217
Other
Total Revenue
Revenue Growth
Robert W. Baird & Co.
169,144
197,083
16.5%
250,376
27.0%
303,726
21.3%
367,828
21.1%
144,884
-60.6%
148,864
2.7%
166,281
11.7%
181,301
9.0%
282,273
55.7%
336,279
19.1%
346,368
3.0%
21
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
AutoZone, Inc.
Annual Balance Sheet
12/10/2013
Fiscal Year End
August
Balance Sheet
2002
Cash and Cash Equivalents
Accounts Receivable
Merchandise Inventories
Other Current Assets
Total Current Assets
Land
6,498
2003
93,102
2004
76,852
2005
74,810
2006
91,558
2007
86,654
Recent Price: $474.82
2008
242,461
2009
92,706
2010
98,280
2011
97,606
2012
103,093
2013
142,191
2014E
100,000
2015E
100,000
23,782
43,746
68,372
118,263
80,363
59,876
71,241
126,514
125,802
140,690
161,375
171,638
167,374
175,046
1,375,584
1,511,316
1,561,479
1,663,860
1,846,650
2,007,430
2,150,109
2,207,497
2,304,579
2,466,107
2,627,983
2,861,014
3,050,360
3,116,512
44,264
23,190
49,054
72,526
100,356
116,495
122,490
135,013
83,160
88,022
86,495
103,170
106,910
95,838
1,450,128
1,671,354
1,755,757
1,929,459
2,118,927
2,270,455
2,586,301
2,561,730
2,611,821
2,792,425
2,978,946
3,278,013
3,424,644
3,487,396
502,302
525,473
538,920
559,231
588,444
625,992
643,699
656,516
690,098
740,276
800,175
862,565
-
-
1,228,604
1,325,759
1,370,079
1,450,814
1,566,002
1,720,172
1,814,668
1,900,610
2,013,301
2,177,476
2,400,895
2,607,751
-
-
Equipment
533,121
551,465
574,882
662,495
729,426
780,199
850,679
887,521
923,595
994,369
1,016,835
1,122,821
-
-
Leasehold Improvements
114,317
125,592
137,562
150,846
165,577
183,601
202,098
219,606
247,748
275,299
314,559
341,182
-
-
Construction in Progress
53,786
44,871
87,694
155,251
134,359
85,581
128,133
145,161
192,519
184,452
127,297
124,206
-
2,432,130
2,573,160
2,709,137
2,978,637
3,183,808
3,395,545
3,639,277
3,809,414
4,067,261
4,371,872
4,659,761
5,058,525
5,501,252
5,841,252
Buildings and Improvements
Gross PP&E
Less: Accumulated Depreciation & Amortization
(1,041,022)
(1,132,500)
(1,217,703)
(1,349,621)
(1,455,057)
(1,547,315)
(1,702,997)
(1,803,833)
(1,987,164)
(2,233,338)
(2,464,965)
1,661,728
-
1,715,753
-
1,790,089
-
1,937,615
-
2,051,308
-
2,177,842
-
2,289,656
-
2,354,357
-
2,519,946
-
2,668,875
-
2,855,928
-
3,071,361
-
3,267,914
-
3,376,286
-
305,390
294,348
301,015
302,699
302,645
302,645
302,645
302,645
302,645
302,645
302,645
367,829
367,829
367,829
60,304
25,543
-
32,917
20,643
21,331
38,283
59,067
46,223
10,661
33,796
4,069
9,164
35,141
241
59,828
65,704
42,567
32,783
32,436
40,227
40,606
90,959
94,996
94,324
170,817
91,637
95,838
3,477,791
-
3,766,826
-
3,912,565
-
4,245,257
-
4,526,306
-
4,804,709
-
5,257,112
-
5,318,405
-
5,571,594
-
5,869,602
-
6,265,639
-
6,892,089
-
7,161,188
-
7,362,490
-
1,145,533
1,360,482
1,429,128
1,539,776
1,699,667
1,870,668
2,043,271
2,118,746
2,433,050
2,755,853
2,926,740
3,307,535
3,538,417
3,615,154
344,600
361,466
243,816
255,672
280,419
307,633
327,664
381,271
432,368
449,327
478,085
467,831
528,442
511,135
Income Taxes Payable
43,438
39,978
72,096
4,753
24,378
25,442
11,582
35,145
25,385
25,185
17,053
17,129
30,546
30,349
Deferred Income Taxes
-
-
6,011
10,958
50,104
82,152
136,803
171,590
146,971
166,449
183,833
202,922
198,548
167,716
Net PP&E
Goodwill, net of accumulated amortization
Deferred Income Taxes, Net
Other long-term Assets
Total Assets
Accounts Payable
Accrued Expenses & Other Current Liabilities
Total Current Liabilities
Long-term debt
Other long-term liabilities
Total Liabilities
Common Stock
(770,402)
(857,407)
(919,048)
-
1,533,571
-
1,761,926
-
1,751,051
-
1,811,159
-
2,054,568
-
2,285,895
-
2,519,320
-
2,706,752
-
3,063,960
-
3,430,896
-
3,655,592
-
4,169,150
-
4,360,122
-
4,391,170
-
1,194,517
1,546,845
1,869,250
1,861,850
1,857,157
1,935,618
2,250,000
2,726,900
2,882,300
3,317,600
3,718,302
4,013,267
4,213,825
4,387,540
60,576
84,297
120,871
181,241
145,053
179,996
258,105
317,827
364,099
375,338
439,770
396,991
427,641
415,298
2,788,664
3,393,068
3,741,172
3,854,250
4,056,778
4,401,509
5,027,425
5,751,479
6,310,359
7,123,834
7,813,664
8,579,408
9,001,588
9,194,007
1,100
1,007
894
811
772
713
636
579
501
441
399
368
-
-
Additional Paid-in Capital
370,457
410,962
414,231
462,289
500,880
545,404
537,005
549,326
557,955
591,384
689,890
814,457
-
-
Retained Earnings
974,141
869,739
580,147
370,276
559,208
546,049
206,099
136,935
(245,344)
(643,998)
(1,033,197)
(1,378,936)
-
-
Accumulated Other Comprehensive Loss
(11,603)
(37,297)
(15,653)
(36,581)
(15,500)
(9,550)
(4,135)
(92,035)
(106,468)
(119,691)
(152,013)
(120,788)
-
-
Treasury Stock, at Cost
(644,968)
(870,653)
(808,226)
(405,788)
(575,832)
(679,416)
(509,918)
(1,027,879)
(945,409)
(1,082,368)
(1,053,104)
(1,002,420)
-
Total stockholders' equity
689,127
373,758
171,393
391,007
469,528
403,200
229,687
(433,074)
(738,765)
(1,254,232)
(1,548,025)
(1,687,319)
(1,840,400)
(1,831,517)
3,477,791
3,766,826
3,912,565
4,245,257
4,526,306
4,804,709
5,257,112
5,869,602
6,265,639
6,892,089
7,161,188
7,362,490
Total liabilities and stockholders' equity
Balance Sheet Ratios
Current Ratio
Total Debt/Total Capital (Debt + Equity)
Net Debt/Total Capital
0
Inventory Days
Receivable Days
Payable Days
Cash Cycle Days
0
Inventory Turnover
Working Capital (excluding cash)
Cash per share
Book Value
ROA
5,318,405
5,571,594
-
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
.9x
.9x
1.0x
1.1x
1.0x
1.0x
1.0x
.9x
.9x
.8x
.8x
.8x
.8x
2015E
.8x
63.4%
80.5%
91.6%
82.6%
79.8%
82.8%
90.7%
118.9%
134.5%
160.8%
171.3%
172.5%
177.5%
171.7%
63.1%
0.00
75.7%
0.00
87.8%
0.00
79.3%
0.00
75.9%
0.00
79.1%
0.00
81.0%
0.00
114.8%
0.00
129.9%
0.00
156.1%
0.00
166.6%
0.00
166.4%
0.00
173.3%
0.00
167.7%
0.00
170.2
187.5
197.9
208.1
223.9
235.9
241.1
237.0
230.4
227.7
229.9
237.0
246.0
240.7
1.6
2.9
4.4
7.6
4.9
3.5
4.0
6.8
6.2
6.4
6.8
6.8
6.5
6.5
141.7
168.8
181.1
192.6
206.1
219.9
229.1
227.4
243.2
254.4
256.1
274.0
285.4
279.2
30.1
0.00
21.6
0.00
21.2
0.00
23.1
0.00
22.8
0.00
19.6
0.00
16.0
0.00
16.3
0.00
(32.0)
0.00
2.3x
2.0x
1.9x
($89,941)
($183,674)
($72,146)
1.8x
$43,490
(6.6)
0.00
(20.4)
0.00
(19.3)
0.00
(30.1)
0.00
(32.9)
0.00
1.7x
1.6x
1.6x
1.6x
1.6x
1.7x
1.6x
1.6x
1.5x
1.5x
($27,199)
($102,094)
($175,480)
($237,728)
($550,419)
($736,077)
($779,739)
($1,033,328)
($1,035,478)
($1,003,773)
$0.06
$0.96
$0.89
$0.94
$1.20
$1.24
$3.80
$1.65
$1.99
$2.23
$2.59
$3.88
$2.96
$3.20
$32.36
$38.66
$45.16
$53.29
$59.49
$68.58
$82.30
$94.61
$112.69
$134.20
$157.67
$188.00
$211.87
$235.30
12.4%
0.0%
14.3%
0.0%
14.7%
0.0%
14.0%
0.0%
13.0%
0.0%
12.8%
0.0%
12.8%
0.0%
12.4%
0.0%
13.6%
0.0%
14.8%
0.0%
15.3%
0.0%
15.5%
0.0%
15.1%
0.0%
15.5%
0.0%
DU PONT FORMULA (LTM)
Net Margin (N/S)
8.0%
9.5%
10.0%
10.0%
9.6%
9.7%
9.8%
9.6%
10.0%
10.5%
10.8%
11.1%
11.2%
11.4%
Asset Turnover (S/A)
153.1%
144.9%
144.1%
134.5%
131.4%
128.4%
124.1%
128.2%
132.1%
137.5%
137.3%
132.7%
131.6%
133.9%
Leverage (A/E)
504.7%
1007.8%
2282.8%
1085.7%
964.0%
1191.6%
2288.8%
-1228.1%
-754.2%
-468.0%
-404.8%
-408.5%
-389.1%
-402.0%
62.1%
138.5%
330.4%
146.0%
121.2%
147.7%
279.3%
-151.7%
-99.9%
-67.7%
-60.1%
-60.2%
-57.5%
-61.5%
Return on Equity - LTM
Robert W. Baird & Co.
22
Craig R. Kennison, CFA
Alice L. Wycklendt
Erin A. Welcenbach
BAIRD 777 EAST WISCONSIN AVENUE, MILWAUKEE, WI 53202
Date Printed:
AutoZone, Inc.
Annual Cash Flow
12/10/2013
Fiscal Year End
August
Cash Flow Statement
Net Income
2002
2003
2004
2005
2006
2007
Recent Price: $474.82
2008
2009
2010
2011
2012
2013
2014E
2015E
$428,148
$517,604
$566,202
$571,019
$569,275
$595,672
$641,606
$657,049
$738,311
$848,974
$930,373
$1,016,480
$1,058,655
$1,126,495
118,255
109,748
106,891
135,597
139,465
159,411
169,509
180,433
192,084
196,209
211,831
227,251
229,628
231,628
74,645
88,410
5,336
66,520
45,235
26,589
87,099
60,690
39,236
16,807
96,620
(62,280)
Adjustments to net income:
Depreciation & Amortization
Other
(5,659)
(1,502)
Working Capital
Accounts Receivable
Inventory
Accounts Payable & Accrued Expenses
(12,879)
(19,964)
(42,485)
37,900
20,487
(11,145)
(56,823)
(14,605)
(21,276)
(8,196)
(168,150)
(135,732)
(119,539)
3,759
(124,566)
(182,790)
(160,780)
(137,841)
(76,337)
(96,077)
782
(155,421)
(167,914)
(232,846)
(189,346)
4,264
(66,152)
(7,672)
282,408
164,201
175,733
59,430
43,612
109,341
184,986
186,228
126,532
354,337
342,826
197,406
356,935
291,493
Income Taxes Payable
13,743
(3,460)
32,118
(67,343)
28,676
17,587
(3,861)
32,264
12,474
34,319
56,754
56,889
13,417
(197)
Total Working Capital
115,122
5,045
(40,050)
(125,053)
68,772
63,522
22,886
25,636
271,516
207,119
64,970
172,782
119,828
(14,591)
1,196,252
1,291,538
1,223,981
1,415,011
1,504,731
Cash Flow From Operations
Capital expenditures
736,170
720,807
638,379
648,083
822,747
845,194
921,100
923,808
(117,239)
(182,242)
(196,311)
(286,568)
(263,580)
(224,474)
(243,594)
(272,247)
(315,400)
(321,604)
(378,054)
(414,451)
(415,607)
1,281,252
(340,000)
Purchase of Marketable Securities
-
-
-
-
(159,957)
(94,615)
(54,282)
(48,444)
(56,156)
(43,772)
(45,665)
(44,469)
-
-
Proceeds from Sale of Investments
27,634
-
-
-
145,369
86,921
50,712
46,306
52,620
43,081
42,385
37,944
-
-
Disposal of Capital Assets & Other
25,094
14,443
2,590
3,797
9,845
3,453
4,014
10,663
11,489
3,301
6,573
(106,319)
-
(64,511)
(167,799)
(263,722)
(307,447)
Cash Flow From Investment Activity
Increase (Decrease) in Interest Bearing Debt
Increase (Decrease) in Equity Accounts
Payments of Capital Lease Obligations/Other
Cash Flow From Financing Activity
Effect of Exchange Rate on Cash
Beginning Cash Balance
Additions to (Subtractions from) Cash
Ending Cash Balance
EBITDA
EBITDA Margin
Free Cash Flow (LTM)
Net Income (LTM)
CAPEX-D&A (LTM)
(27,247)
301,276
354,571
(648,121)
(831,488)
(815,479)
(675,368)
(530,212)
-
(268,323)
(4,700)
(4,693)
(362,654)
(532,983)
(367,354)
-
(537,676)
-
$3,577
$26,373
$10,123
$8,081
($3,709)
$22,796
($16,250)
($2,042)
$3,577
$26,373
$10,123
$8,081
$889,263
-
$1,027,545
$1,105,598
$1,111,261
(228,715)
(243,150)
78,461
313,473
(688,484)
(820,275)
476,900
(1,251,740)
181,586
(1,048,482)
(318,994)
442,201
(1,376,011)
(374,761)
418,729
(1,224,485)
(527,295)
418,652
(1,223,409)
(11,360)
(15,880)
(32,056)
(16,597)
(39,961)
(37,677)
(42,265)
(621,383)
(522,682)
(806,896)
(883,493)
(973,771)
(843,433)
(847,022)
-
539
(2,945)
262
553
$25,977
$31,551
(300)
$24,829
$19,925
$175,732
$16,748
($4,904)
$155,807
($149,755)
$5,574
$24,829
$19,925
$175,732
$25,977
$31,551
$30,877
$1,149,390
$1,214,676
$1,293,642
$1,356,496
$1,511,498
$1,691,013
$1,840,722
($674)
(1,596)
(415,607)
90,995
(1,211,736)
(1,120,741)
-
(340,000)
176,360
(1,117,612)
(941,252)
-
$30,877
$36,364
$75,462
$43,845
$5,487
$39,098
($31,617)
$36,364
$75,462
$43,845
$43,845
$2,000,348
$2,072,742
$2,181,776
($0)
16.7%
18.8%
19.6%
19.5%
19.3%
19.7%
19.8%
19.9%
20.5%
20.9%
21.4%
21.9%
22.0%
22.1%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014E
2015E
428,148
1,016
517,604
566,202
571,019
569,275
595,672
641,606
657,049
738,311
848,974
930,373
(72,494)
(89,420)
(150,971)
(124,115)
(65,063)
(74,085)
(91,814)
(123,316)
(125,395)
(166,223)
(187,200)
(185,979)
(40,050)
(125,053)
68,772
63,522
22,886
25,636
271,516
207,119
64,970
172,782
119,828
436,732
294,995
513,932
594,131
590,407
590,871
886,511
930,698
829,120
1,002,062
992,504
115,122
5,045
Free Cash Flow (LTM)
544,286
450,155
Robert W. Baird & Co.
(460,908)
(282,771)
$7,286
Change in WC (LTM)
Yield (MV)
(193,721)
7.3%
5.4%
7.1%
4.0%
7.8%
7.3%
6.9%
7.5%
8.8%
7.8%
5.9%
1,016,480
6.7%
1,058,655
6.4%
1,126,495
(108,372)
(14,591)
1,003,531
6.9%
23
December 10, 2013 | AutoZone, Inc.
Appendix - Important Disclosures and Analyst Certification
Covered Companies Mentioned
All stock prices below are the December 9, 2013 closing price.
Advance Auto Parts, Inc. (AAP - $104.33 - Outperform)
AutoZone, Inc. (AZO - $475.52 - Outperform)
O'Reilly Automotive, Inc. (ORLY - $123.86 - Neutral)
(See recent research reports for more information)
Rating and Price Target History for: AutoZone, Inc. (AZO) as of 12-09-2013
03/01/11
O:$290
05/24/11
O:$320
09/20/11
O:$360
12/06/11
O:$370
02/28/12
O:$415
06/27/12
O:$400
05/21/13
O:$470
480
400
320
240
Q3
Q1
Q2
Q3
2011
Q1
Q2
Q3
2012
Q1
Q2
Q3
2013
160
2014
Created by BlueMatrix
Rating and Price Target History for: Advance Auto Parts, Inc. (AAP) as of 12-09-2013
11/10/11
O:$78
02/16/12
O:$98
05/17/12
O:$88
06/27/12
O:$84
10/22/12
O:$78
11/02/12
O:$90
10/17/13
O:$108
120
100
80
60
40
Q3
Q1
2011
Q2
Q3
Q1
2012
Q2
Q3
Q1
2013
Q2
Q3
20
2014
Created by BlueMatrix
Robert W. Baird & Co.
24
December 10, 2013 | AutoZone, Inc.
Rating and Price Target History for: O'Reilly Automotive, Inc. (ORLY) as of 12-09-2013
04/28/11
O:$70
07/28/11
O:$72
10/27/11
O:$80
02/10/12
N:$88
04/26/12
N:$110
06/27/12
N:$95
07/26/12
N:$100
02/07/13
N:$110
04/25/13
N:$115
07/25/13
N:$130
10/24/13
N:$150
140
120
100
80
60
Q3
Q1
2011
Q2
Q3
Q1
2012
Q2
Q3
Q1
2013
Q2
Q3
40
2014
Created by BlueMatrix
1 Robert W. Baird & Co. Incorporated makes a market in the securities of AZO, AAP and ORLY.
Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensation
from the company or companies mentioned in this report within the next three months.
Robert W. Baird & Co. Incorporated may not be licensed to execute transactions in all foreign listed securities directly. Transactions in
foreign listed securities may be prohibited for residents of the United States. Please contact a Baird representative for more information.
Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader U.S. equity market
over the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity market over the next 12 months.
Underperform (U) - Expected to underperform on a total return, risk-adjusted basis the broader U.S. equity market over the next 12
months.
Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with an emphasis on
safety. Company characteristics may include: stable earnings, conservative balance sheets, and an established history of revenue and
earnings. A - Average Risk - Growth situations for investors seeking capital appreciation with an emphasis on safety. Company
characteristics may include: moderate volatility, modest balance-sheet leverage, and stable patterns of revenue and earnings. H Higher Risk - Higher-growth situations appropriate for investors seeking capital appreciation with the acceptance of risk. Company
characteristics may include: higher balance-sheet leverage, dynamic business environments, and higher levels of earnings and price
volatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to accept a high degree of volatility and risk.
Company characteristics may include: unpredictable earnings, small capitalization, aggressive growth strategies, rapidly changing
market dynamics, high leverage, extreme price volatility and unknown competitive challenges.
Valuation, Ratings and Risks. The recommendation and price target contained within this report are based on a time horizon of 12
months but there is no guarantee the objective will be achieved within the specified time horizon. Price targets are determined by a
subjective review of fundamental and/or quantitative factors of the issuer, its industry, and the security type. A variety of methods may be
used to determine the value of a security including, but not limited to, discounted cash flow, earnings multiples, peer group comparisons,
and sum of the parts. Overall market risk, interest rate risk, and general economic risks impact all securities. Specific information
regarding the price target and recommendation is provided in the text of our most recent research report.
Distribution of Investment Ratings. As of November 29,2013, Baird U.S. Equity Research covered 717 companies, with 51%
ratedOutperform/Buy, 48% rated Neutral/Hold and 1% rated Underperform/Sell. Withinthese rating categories, 18% of
Outperform/Buy-rated and 10% ofNeutral/Hold-rated companies have compensated Baird for investment bankingservices in the past 12
months and/or Baird managed or co-managed a publicoffering of securities for these companies in the past 12 months.
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You can also call 1-800-792-2473 or write: Robert W. Baird & Co., Equity Research, 24th Floor, 777 E. Wisconsin Avenue, Milwaukee,
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Analyst Certification. The senior research analyst(s) certifies that the views expressed in this research report and/or financial model
accurately reflect such senior analyst's personal views about the subject securities or issuers and that no part of his or her compensation
was, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report.
Robert W. Baird & Co.
25
December 10, 2013 | AutoZone, Inc.
Disclaimers
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This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect
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cannot guarantee the accuracy.
ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUEST
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Copyright 2013 Robert W. Baird & Co. Incorporated
Other Disclosures
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