Forward Looking Statements

Transcription

1 Presentation 1

2 Forward Looking Statements The Company claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of The Company intends these forward-looking statements to speak only as of the time of the presentation and does not undertake to update or revise them, as more information becomes available. These statements discuss, among other things, expected growth, store development and expansion strategy, business strategies, future revenues and future performance. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events and results. Such statements are subject to risks, uncertainties and assumptions, including, but not limited to, competition, product demand, the market for auto parts, the economy in general, inflation, consumer debt levels, governmental approvals, our ability to hire and retain qualified employees, risks associated with the integration of acquired businesses, weather, terrorist activities, war and the threat of war. Actual results may materially differ from anticipated results described in these forward-looking statements. Please refer to the Risk Factors section of the Company s Form 10-K for the year ended December 31, 2005, for more details. Page 2

3 Company Overview America s #4 retailer of automotive parts and accessories Annual sales of $2.05 billion in 2005, heading to $4 billion in 2010 Retail Do-It-Yourself (DIY) Commercial / professional installers Only publicly traded company with approximate 50/50 mix in each sector 1,506 stores in 25 states, real estate 60% leased / 40% owned at March 31, 2006 Founded in 1957 by the O Reilly family Listed on NASDAQ: ORLY since 1993 Page 3

4 Industry Overview Page 4

5 Automotive Aftermarket Industry Overview $115 billion market (AAIA 2005E) Growth driven by: 2.9 trillion miles driven annually Variety and sophistication of vehicle types Growing SUV and light truck population Over 233 million vehicles registered More vehicles entering prime repair age annually, avg age now 9.3 years DIY Growth is 3 to 5% $36 billion $79 billion Professional Installers Growth is 4 to 6% Source: 2005/2006 AAIA Factbook Page 5

6 $60 Billion in Estimated Unperformed Maintenance Promote routine maintenance through advertising efforts Educate customers about unperformed maintenance $60 $36 Current DIY Current DIFM $79 Unperformed maintenance Note: Dollars in billions Page 6

7 Millions Increasing Number of Vehicles on the Road Source: 2005/2006 AAIA Factbook E Page 7

8 Stores Operated Accelerating Industry Consolidation Industry s top 10 participants are increasing their share of the total stores operated in the industry 14,000 13,000 12,000 11,000 10,000 9,000 Top 10 Auto Parts Chains 10,587 10,019 9,218 8,570 10,921 11,270 12,049 12,882 13,024 8,000 7,000 6,000 5,492 6,105 6,966 5, Q1 13.5% 20.7% 26.9% 33.9% 36.7%E Page 8

9 Fewer U.S. Auto Parts Stores 42,000 41,000 40,000 39,000 38,000 37,000 36,000 35,000 34,000 33,000 32,000 41,400 40,700 39,300 35, Page 9

10 Top 10 Auto Parts Chains (2005) 1. AutoZone Inc. (3,612) 2. Advance Auto Parts (2,872) 3. General Parts Inc./CARQUEST (1,639) 4. O Reilly Auto Parts (1,506) 5. CSK Auto Corporation (1,151) 6. Genuine Parts/NAPA (1,029) 7. Pep Boys (593) 8. Fisher Auto Parts (300) 9. Uni-Select Inc./Parts Plus IAPA (170) 10. Replacement Parts Inc./Crow-Burlingame Co. (152) Source: January 2005 Aftermarket Business Magazine or most recent SEC filing Page 10

11 O Reilly Strengths Page 11

12 Superior Customer Service Superior service provided by Professional Parts People Leading point-of-sale systems Electronic cataloging Bar code scanning High-speed internal network access Broad inventory availability Stores average 21,000 SKUs Stores have overnight access to 107,000 SKUs Competitive pricing Convenient store locations and modern, attractive store design Page 12

13 Professional Parts People Technically proficient store personnel Average store has 80% of its employees full-time Provide expert assistance to professional installers Enhances customer service to DIY customers Receive extensive and ongoing training Intensive orientation program Six-month automotive systems training course New Parts Specialists complete ASE certification Involves successful completion of advanced training course Page 13

14 Strategic Distribution System Distribute to stores daily not weekly Stock over 107,000 SKUs more than competitors Computerized inventory management system Master Inventory Hub stores Thirteen strategically located distribution centers - Houston, TX - Des Moines, IA - Knoxville, TN - Springfield, MO - Dallas, TX - Mobile, AL - Oklahoma City, OK - Little Rock, AR - Atlanta, GA - Kansas City, MO - Nashville, TN - St. Paul, MN - Billings, MT - Indianapolis, IN (Summer 2006) Two bulk warehouses - Springfield, MO - McAllen,TX Page 14

15 Inventory Focus on increasing inventory turnover / return on investment Powerful inventory management systems Global inventory system SCORE forecasting system New store modeling system Vendor factoring program - Pay On Scan Improving vendor payment terms (A/P to Inventory Ratio) Page 15

16 Dual Market Strategy Established track record of serving both DIY customers and professional installers Greater market penetration and reduced vulnerability to competition Leverages our existing retail and distribution infrastructure Can profitably operate in large and small markets Enhances service levels offered to our DIY customers Significant barriers to success in professional installer market Page 16

17 Commercial Strategy O Reilly started exclusively in the commercial business in 1957 Unsurpassed availability of quality brand name parts through distribution system and hub store network National account supplier Strong commercial sales force through First Call program Sophisticated pricing system to maximize gross margin Full service provider of all business needs of professional installers Page 17

18 Growth Strategies Aggressively open new stores (expect 170 to 175 stores in 2006) Continually enhance store design and location to drive comps Continue to expand margins through operating efficiencies Actively pursue acquisition of jobber and independently owned franchise stores. Selectively pursue strategic acquisitions, such as Hi/LO, Midstate, Midwest and numerous independent parts stores Page 18

19 New store openings at 13%-15% Aggressively Open New Stores Expand in clusters around distribution centers and master inventory stores Expand aggressively around the Atlanta DC and the new Indianapolis DC which is slated to open in June % 31 Expect new stores in % 18.3% 19.3% 16.3% 17.7% 30.2% 12.1% 13.1% 12.6% Page 19

20 Expanding Footprint Billings Distribution Center St. Paul Distribution Center Indianapolis, IN June 2006 Des Moines Dist ribution Center Kansas City Dist ribution Center Oklahoma City Distribution Center Springfield Distribution Center Little Rock Distribution Center Nashville Distribution Center Knoxville Distribution Center Atlanta Distribution Center Dallas Dist ribution Center Mobile Distribution Center Houston Distribution Center Page 20

21 Building the Brand Page 21

22 Sports Marketing Page 22

23 Sports Marketing Page 23

24 Sports Marketing Page 24

25 Reasons to Own Page 25

26 Reasons to Own Summary Best and most consistent track record in the auto parts retailing sector Proven dual market strategy with 50% professional installer sales #1 or #2 market position in existing markets Well positioned to capitalize on industry trends At least 80% of sales are non-discretionary Acquisition of independent parts stores is highly accretive Senior management has on average over 15 years industry experience Page 26

27 Uninterrupted EPS Growth $1.50 $ Guidance $1.57 to $1.63 (1) (1) With stock option expense $1.09 $1.41 $1.00 $0.92 $0.75 $0.63 $0.77 $0.50 $0.25 $0.20 $0.23 $0.27 $0.36 $0.46 $0.50 $0.35 $ % 15% 17% 33% 28% 9% 26% 22% 19% 15% 32% Q1 Comparable EPS for all periods presented Page 27

28 Product Sales ($ in millions) $2,100 $1,800 $1, Guidance $2,310 to $2,375 $2,045 $1,721 $1,512 $1,313 $1,200 $900 $600 $300 $202 $259 $316 $616 $754 $890 $1,092 $537 $0 20.6% 28.7% 22.0% 94.8% 22.4% 18.1% 22.7% 20.2% 15.2% 13.9% 18.8% Q1 Page 28

29 Operating Income ($ in millions) $275.0 $250.0 $225.0 $200.0 $175.0 $150.0 $125.0 $100.0 $75.0 $50.0 $25.0 $0.0 $22.0 $28.9 $37.1 $56.9 $76.6 $90.0 $113.8 $138.3 $165.3 $190.5 $ % 11.1% 11.7% 9.2% 10.2% 10.1% 10.4% 10.6% 10.9% 11.1% 12.3% $ Q1 Page 29

30 Net Income ($ in millions) $180.0 $164.3 $160.0 $140.0 $120.0 $100.0 $80.0 $60.0 $40.0 $20.0 $0.0 $14.1 $19.0 $23.1 $30.8 $45.6 $51.7 $66.4 $82.0 $100.1 $ % 7.3% 7.3% 5.0% 6.1% 5.8% 6.1% 6.6% 6.3% 6.8% 8.0% $ Q1 Page 30

31 Same Store Sales 16% 14% 14.9% 14.4% 14 Year Average - 8.2% 12% 11.4% 10% 8% 9.2% 8.9% 8.9% 6.8% 6.8% 9.6% 8.8% 7.8% 6.8% 7.5% 6% 5.0% 4% 3.7% 3.8% 2% 0% Q1 Same-store product sales data are calculated based on the change in product sales of stores open at least one year. Prior to 2000, same-store product sales data were calculated based on the change in product sales of only those stores open during both full periods being compared. Page 31

32 Capitalization ($ in millions) 12/31/03 12/31/04 12/31/05 3/31/06 Total Debt $121.9 $100.9 $100.8 $100.6 Shareholders Equity , ,206.5 Total Capitalization $906.2 $1,048.7 $1,246.6 $1,307.1 Credit Ratios: Total Debt/Capitalization 13.5% 9.6% 8.1% 7.7X Total Debt/EBITDA (LTM) 0.7x 0.4x 0.3x 0.3x Page 32

33 Corporate Governance Company has active hands on Board of Directors Currently 5 outside, independent directors, 4 inside directors Audit, Compensation and Corporate Governance Committees Code of Ethics In compliance with all NASDAQ listing standards Clean reports for 2004 & 2005 Sarbanes Oxley Section 404 Page 33

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