O REILLY AUTOMOTIVE INC

Previous wording

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest North American automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of March 31, 2025, we operated 6,298 stores in 48 U.S. states and Puerto Rico, 93 stores in Mexico, and 25 stores in Canada.

Current wording

We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada. We are one of the largest North American automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings. The successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives. As of June 30, 2025, we operated 6,360 stores in 48 U.S. states and Puerto Rico, 98 stores in Mexico, and 25 stores in Canada.

Previous wording

The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 2.1% and 1.0% in 2023 and 2024, respectively, and year-to-date through March of 2025, miles driven have increased 0.6% despite 2024 containing one more day with Leap Day. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

Current wording

The number of total miles driven in the U.S. influences the demand for repair and maintenance products sold within the automotive aftermarket. In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S. Department of Transportation, the number of total miles driven in the U.S. increased 2.1% and 1.0% in 2023 and 2024, respectively, and year-to-date through April of 2025, miles driven have increased 0.8%, despite 2024 containing one more day with Leap Day. Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future.

Previous wording

The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by the Auto Care Association, the total number of U.S. registered vehicles increased 14.2% from 2013 to 2023, bringing the number of light vehicles on the road to 284 million by the end of 2023. For the year ended December 31, 2024, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 16.8 million vehicles, and for 2025, the SAAR is estimated to be approximately 17.8 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road. From 2013 to 2023, U.S. vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.7% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing 10.6%, from 11.3 years in 2013 to 12.5 years in 2023. While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from rising average new and used vehicle prices, as consumers are more willing to continue to invest in their current vehicle.

Current wording

The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry. As reported by the Auto Care Association, the total number of U.S. registered vehicles increased 13.4% from 2014 to 2024, bringing the number of light vehicles on the road to 286 million by the end of 2024. For the year ended December 31, 2024, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 16.8 million vehicles, and for 2025, the SAAR is estimated to be approximately 15.3 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road. From 2014 to 2024, U.S. vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.6% annually. As a result, over the past decade, the average age of the U.S. vehicle population has increased, growing 10.5%, from 11.4 years in 2014 to 12.6 years in 2024. While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from rising average new and used vehicle prices, as consumers are more willing to continue to invest in their current vehicle.

Previous wording

Sales for the three months ended March 31, 2025, increased $161 million, or 4%, to $4.14 billion from $3.98 billion for the same period one year ago. Comparable store sales for stores open at least one year increased 3.6% and 3.4% for the three months ended March 31, 2025 and 2024, respectively. Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members, as well as sales from Leap Day in the three months ended March 31, 2024. Online sales for ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 38 and 37 net, new stores during the three months ended March 31, 2025 and 2024, respectively. Additionally, we began operating 23 stores in Canada from the Groupe Del Vasto (Vast Auto) acquisition during the three months ended March 31, 2024. We anticipate total new store growth to be 200 to 210 net, new store openings in 2025.

Current wording

Sales for the three months ended June 30, 2025, increased $253 million, or 6%, to $4.53 billion from $4.27 billion for the same period one year ago. Sales for the six months ended June 30, 2025, increased $414 million, or 5%, to $8.66 billion from $8.25 billion for the same period one year ago. Comparable store sales for stores open at least one year increased 4.1% and 2.3% for the three months ended June 30, 2025 and 2024, respectively. Comparable store sales for stores open at least one year increased 3.9% and 2.8% for the six months ended June 30, 2025 and 2024, respectively. Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members, as well as sales from Leap Day in the six months ended June 30, 2024. Online sales for ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 67 and 105 net, new stores during the three and six months ended June 30, 2025, respectively, compared to opening 27 and 64 net, new stores during the three and six months ended June 30, 2024, respectively. Additionally, we began operating 23 stores in Canada from the Groupe Del Vasto (“Vast Auto”) acquisition during the six months ended June 30, 2024. We anticipate total new store growth to be 200 to 210 net, new store openings in 2025.

Previous wording

The increase in sales for the three months ended March 31, 2025, was primarily the result of the 3.6% increase in domestic comparable store sales, a $73 million increase in sales from new stores opened in 2024 and 2025 that are not considered comparable stores, partially offset by the effect of sales from one additional day in the prior year due to Leap Day. Our comparable store sales increase for the three months ended March 31, 2025, was driven by increases in average ticket values and transaction costs for both professional service provider and DIY customers. Average ticket values continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles. These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values.

Current wording

The increase in sales for the three months ended June 30, 2025, was primarily the result of the 4.1% increase in domestic comparable store sales and an $86 million increase in sales from new stores opened in 2024 and 2025 that are not considered comparable stores. The increase in sales for the six months ended June 30, 2025, was primarily the result of the 3.9% increase in domestic comparable store sales and a $159 million increase in sales from new stores opened in 2024 and 2025 that are not considered comparable stores, partially offset by the effect of sales from one additional day in the prior year due to Leap Day. Our comparable store sales increases for the three and six months ended June 30, 2025, were driven by increases in average ticket values and transaction counts for both professional service provider and DIY customers. Average ticket values continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles. These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time. The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values.

Previous wording

Gross profit for the three months ended March 31, 2025, increased 4% to $2.12 billion (or 51.3% of sales) from $2.03 billion (or 51.2% of sales) for the same period one year ago. The increase in gross profit dollars for the three months ended March 31, 2025, was primarily the result of the increase in comparable store sales at existing stores and sales from new stores, partially offset by prior year gross profit dollars generated from one additional day due to Leap Day. The increase in gross profit as a percentage of sales for the three months ended March 31, 2025, was primarily due to improved acquisition costs, partially offset by a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin percentage than DIY sales.

Current wording

Gross profit for the three months ended June 30, 2025, increased 7% to $2.33 billion (or 51.4% of sales) from $2.17 billion (or 50.7% of sales) for the same period one year ago. Gross Profit for the six months ended June 30, 2025, increased 6% to $4.45 billion (or 51.4% of sales) from $4.20 billion (or 50.9% of sales) for the same period one year ago. The increase in gross profit dollars for the three months ended June 30, 2025, was primarily the result of the increase in comparable store sales at existing stores and sales from new stores. The increase in gross profit dollars for the six months ended June 30, 2025, was primarily the result of the increase in comparable store sales at existing stores and sales from new stores, partially offset by prior year gross profit dollars generated from one additional day due to Leap Day. The increase in gross profit as a percentage of sales for the three and six months ended June 30, 2025, was primarily due to improved acquisition costs and distribution operating efficiencies, partially offset by a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin percentage than DIY sales.

Previous wording

Selling, general and administrative expenses (“SG&A”) for the three months ended March 31, 2025, increased 8% to $1.38 billion (or 33.4% of sales) from $1.28 billion (or 32.2% of sales) for the same period one year ago. The increase in total SG&A dollars for the three months ended March 31, 2025, was primarily the result of additional Team Members and operating expenses to support our increased sales and store count and enhancements to store level pay plans, partially offset by prior year incremental SG&A expenses incurred from one additional day due to Leap Day. The increase in SG&A as a percentage of sales for the three months ended March 31, 2025, was principally due to enhancements to store level pay plans, inflationary pressures in medical plan costs, maintenance and refreshment of stores, and information technology investments.

Current wording

Selling, general and administrative expenses (“SG&A”) for the three months ended June 30, 2025, increased 8% to $1.41 billion (or 31.2% of sales) from $1.30 billion (or 30.5% of sales) for the same period one year ago. SG&A for the six months ended June 30, 2025, increased 8% to $2.79 billion (or 32.2% of sales) from $2.59 billion (or 31.4% of sales) for the same period one year ago. The increase in total SG&A dollars for the three months ended June 30, 2025, was primarily the result of additional Team Members and operating expenses to support our increased sales and store count. The increase in total SG&A dollars for the six months ended June 30, 2025, was primarily the result of additional Team Members and operating expenses to support our increased sales and store count, partially offset by prior year incremental SG&A expenses incurred from one additional day due to Leap Day. The increase in SG&A as a percentage of sales for the three and six months ended June 30, 2025, was principally due to enhancements to store level compensation and benefits and broad inflationary pressure in costs.

Previous wording

As a result of the impacts discussed above, operating income for the three months ended March 31, 2025, was $741 million (or 17.9% of sales), from $752 million (or 18.9% of sales) for the same period one year ago.

Current wording

As a result of the impacts discussed above, operating income for the three months ended June 30, 2025, increased 5.9% to $914 million (or 20.2% of sales), from $863 million (or 20.2% of sales) for the same period one year ago. As a result of the impacts discussed above,

Previous wording

Our provision for income taxes for the three months ended March 31, 2025, decreased 5% to $146 million (21.3% effective tax rate) from $153 million (21.9% effective tax rate) for the same period one year ago. The decrease in our provision for income taxes and our effective tax rate for the three months ended March 31, 2025, was the result of timing of recognizing tax credits in the current period, as compared to the same period in 2024, partially offset by lower excess tax benefits from share-based compensation in the current period, as compared to the same period one year ago. The decrease in our provision for income taxes for the three months ended March 31, 2025, was also reduced by lower income before income taxes.

Current wording

Our provision for income taxes for the three months ended June 30, 2025, increased 2% to $193 million (22.4% effective tax rate) from $189 million (23.3% effective tax rate) for the same period one year ago. Our provision for income taxes for the six months ended June 30, 2025, decreased 1% to $339 million (21.9% effective tax rate) from $342 million (22.6% effective tax rate) for the same period one year ago. The increase in our provision for income taxes for the three months ended June 30, 2025, was the result of the higher taxable income. The decrease in our provision for income taxes for the six months ended June 30, 2025, was the result of the timing of the recognition of tax credits, partially offset by higher taxable income. The decreases in our effective tax rate for the three and six months ended June 30, 2025, were primarily the result of the timing of the recognition of tax credits.

Previous wording

Our diluted earnings per common share for the three months ended March 31, 2025, increased 2% to $9.35 on 58 million shares from $9.20 on 59 million shares for the same period one year ago.

Current wording

Our diluted earnings per common share for the three months ended June 30, 2025, increased 11% to $0.78 on 858 million shares from $0.70 on 886 million shares for the same period one year ago. Our diluted earnings per common share for the six months ended June 30, 2025, increased 6% to $1.40 on 861 million shares from $1.32 on 889 million shares for the same period one year ago.

Previous wording

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

The increase in net cash provided by operating activities during the three months ended March 31, 2025, compared to the same period in 2024, was primarily due to an increase in accrued payroll and benefits and a smaller increase in net inventory investment.

Current wording

The decrease in net cash provided by operating activities during the six months ended June 30, 2025, compared to the same period in 2024, was primarily due to the timing of payment for transferrable federal renewable energy tax credits, partially offset by an increase in operating income.

Previous wording

The decrease in net cash used in investing activities during the three months ended March 31, 2025, compared to the same period in 2024, was the result of the acquisition of Vast Auto in the prior year, partially offset by an increase in capital expenditures. The increase in capital expenditures was primarily due to distribution enhancement and expansion projects and an increase in investments in new store capital growth, as compared to the same period in the prior year.

Current wording

The decrease in net cash used in investing activities during the six months ended June 30, 2025, compared to the same period in 2024, was the result of the acquisition of Vast Auto in the prior year, partially offset by an increase in capital expenditures. The increase in capital expenditures was primarily due to distribution enhancement and expansion projects and an increase in investments in new store growth.

Previous wording

The decrease in net cash used in financing activities during the three months ended March 31, 2025, compared to the same period in 2024, was attributable to a net borrowings on the Company’s commercial paper program in the current period versus net paydown on the Company’s commercial paper issuances during the same period in 2024, partially offset by an increase in repurchases of our common stock.

Current wording

The decrease in net cash used in financing activities during the six months ended June 30, 2025, compared to the same period in 2024, was attributable to net borrowings on the Company’s commercial paper program in the current period versus net paydown on the Company’s commercial paper issuances during the same period in 2024, partially offset by an increase in repurchases of our common stock.

Previous wording

We had a consolidated fixed charge coverage ratio of 6.03 times and 6.31 times as of March 31, 2025 and 2024, respectively, and a consolidated leverage ratio of 1.92 times and 1.84 times as of March 31, 2025 and 2024, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

Current wording

We had a consolidated fixed charge coverage ratio of 6.02 times and 6.22 times as of June 30, 2025 and 2024, respectively, and a consolidated leverage ratio of 1.95 times and 1.87 times as of June 30, 2025 and 2024, respectively, remaining in compliance with all covenants related to the borrowing arrangements.

Previous wording

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the three months ended March 31, 2025 and 2024 (in thousands):

Current wording

The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the six months ended June 30, 2025 and 2024 (in thousands):

Previous wording

Free cash flow, the consolidated fixed charge coverage ratio, and the consolidated leverage ratio discussed and presented in the tables above are not derived in accordance with United States generally accepted accounting principles (“GAAP”). We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio, and consolidated leverage ratio provides meaningful supplemental information to both management and investors and reflects the required covenants under the Credit Agreement. We include these items in judging our performance and believe this non-GAAP information is useful to investors as well. Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts. We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures.

Current wording

Free cash flow, the consolidated fixed charge coverage ratio, and the consolidated leverage ratio discussed and presented in the tables above are not derived in accordance with United States generally accepted accounting principles (“GAAP”). We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio, and consolidated leverage