O’Reilly’s Q3 2018 sales
In the third quarter of 2018, O’Reilly Automotive (ORLY) reported revenues of $2.48 billion, an increase of 6.1% from $2.34 billion in the third quarter of 2017. Its comparable-store sales growth rose to 3.9% in the third quarter compared to 1.8% in Q3 2017. With that, ORLY managed to meet the higher range of its third-quarter comparable-store sales growth rate guidance of 2%–4%.
In its third-quarter earnings conference call, ORLY’s CEO Gregory Johnson said, “We saw strong performance throughout the quarter on weather-related categories, such as batteries and air conditioning, as a result of the hot summer weather. We also continued to see solid performance in key hard parts categories, such as brakes and ride control, in line with our expectations of typical maintenance and failure-related demand following a normal winter.”
Guidance for Q4 2018
Going forward, O’Reilly’s management expects its same-store sales growth in the third quarter to be 2%–4%. Commenting on that, Johnson said, “Our business can also be more variable in the fourth quarter, based on the holiday season and weather volatility, and we face difficult comparisons at the end of our quarter as the last 2 Decembers have benefited from favorable winter weather.” This weak guidance for the fourth quarter could be one of the key reasons investors reacted negatively after the third-quarter earnings release.
A cold, wet winter season tends to increase the demand for auto parts due to the damage a harsh winter causes vehicles.
In the last few of years, US auto companies (FXD) such as Ford (F) and General Motors (GM) have benefited from higher US sales of trucks and utility vehicles.
The average age of on-road vehicles rose to ~11.6 years in 2017. That positive growth boosted the future growth potential for US auto parts retailers such as O’Reilly Automotive, AutoZone (AZO), and Advance Auto Parts (AAP).
In the next part of this series, we’ll look at O’Reilly Automotive’s profit margins for the third quarter.