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O'Reilly Auto Parts: U.S. Passenger Vehicle Fleet Out for a Long Drive, so More Break & Fix Ahead

Thomas Paulson
Aug 5, 2022
O'Reilly Auto Parts: U.S. Passenger Vehicle Fleet Out for a Long Drive, so More Break & Fix Ahead

Key O'Reilly Auto Parts Metrics


  • O'Reilly Auto Parts' 2Q22 comparable-store sales increased +4.3% with CEO Greg Johnson saying, "After experiencing volatility in our sales results in the first quarter, the trends in our business improved and were steady throughout the second quarter." However, based upon a softer outlook for its DIY business, management nudged down its outlook for annual sales growth.
  • The 2- and 3-year comp CAGRs didn’t improve as the impact of auto part inflation on sales is being offset by lower transactions (DIY). Average ticket was up +10% during the quarter. DIFM was up both in comp transactions and ticket, with the overall comp increasing by a double-digit clip. Chief Operating Officer Brad Beckham stated, "We believe our ability to post significant professional sales growth in this environment against extremely difficult comparisons reflects the momentum we're generating through our professional pricing initiative, though it's only one piece of our value proposition."
  • Stepping back, the auto part industry, broadly speaking, is benefiting from the average vehicle on the road being older (weak new car sales and more durable vehicles), the household migration to less dense areas (which extends miles driven), and the still healthy employment market (wages going up and jobs plentiful).
  • O'Reilly's trailing-twelve-month (TTM) sales of $311, increased $5 QoQ and is likely to increase by the mid-single-digits over the next twelve months.
  • TTM EBITDA and free cash flow of $3.5B and $2.4B (representing an EBITDA/FCF conversion rate of almost 70%) were up from $3.1B and $2.5B in the year ago period. These metrics are likely to increase by a mid-single-digit clip over the next twelve months.
  • 2Q22 profitability declined due to lower gross margins which was down due to customer mix (DIFM strong, DIY weaker) and the company’s strategic price investments to drive market share growth (which is to pressure smaller regional chains that may be facing business and profitability challenges due to broader cost inflation). Johnson noted the retailer continues to "be pleased with the early returns from our professional pricing initiative."
  • O’Reilly opened 62 new stores in the US during 2Q22, ending the period with 5,873. The company remains on pace to open 175-185 stores for the year.

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Thomas Paulson

Director of Research and Business Development,

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more. He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

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