AUTOZONE INC

Previous wording

We are a leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at February 14, 2026, operated 6,709 stores in the U.S., 913 stores in Mexico and 152 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At February 14, 2026, in 6,310 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provides prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services. Our websites and the information contained therein or linked thereto are not intended to be incorporated into this report.

Current wording

We are a leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at May 9, 2026, operated 6,766 stores in the U.S., 933 stores in Mexico and 157 stores in Brazil. Each store carries an extensive product line for cars, sport utility vehicles, vans and light duty trucks, including new and remanufactured automotive hard parts, maintenance items, accessories and non-automotive products. At May 9, 2026, in 6,356 of our domestic stores as well as the vast majority of our stores in Mexico and Brazil, we had a commercial sales program that provides prompt delivery of parts and other products and commercial credit to local, regional and national repair garages, dealers, service stations, fleet owners and other accounts. We also sell automotive hard parts, maintenance items, accessories and non-automotive products through www.autozone.com, and our commercial customers can make purchases through www.autozonepro.com. Additionally, we sell the ALLDATA brand automotive diagnostic, repair, collision and shop management software through www.alldata.com. We also provide product information on our Duralast branded products through www.duralastparts.com. We do not derive revenue from automotive repair or installation services. Our websites and the information contained therein or linked thereto are not intended to be incorporated into this report.

Previous wording

Operating results for the twelve and twenty-four weeks ended February 14, 2026, are not necessarily indicative of the results that may be expected for the fiscal year ending August 29, 2026. Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consists of 16 or 17 weeks. The fourth quarters of fiscal 2026 and 2025 each have 16 weeks. Our business is somewhat seasonal in nature, with the highest sales generally occurring during the months of February through September, and the lowest sales generally occurring in the months of December and January.

Current wording

Operating results for the twelve and thirty-six weeks ended May 9, 2026, are not necessarily indicative of the results that may be expected for the fiscal year ending August 29, 2026. Each of the first three quarters of our fiscal year consists of 12 weeks, and the fourth quarter consists of 16 or 17 weeks. The fourth quarters of fiscal 2026 and 2025 each have 16 weeks. Our business is somewhat seasonal in nature, with the highest sales generally occurring during the months of February through September, and the lowest sales generally occurring in the months of December and January.

Previous wording

Net sales increased to $4.3 billion, an 8.1% increase over the comparable prior year period. Operating profit decreased 1.2% to $698.5 million. The second quarter operating profit comparison was negatively impacted by $59.0 million due to an unfavorable non-cash LIFO charge in the current quarter. Net income decreased 3.9% to $468.9 million and diluted earnings per share decreased 2.3% to $27.63 for the quarter.

Current wording

Net sales increased to $4.8 billion, an 8.4% increase over the comparable prior year period. Operating profit increased 6.6% to $923.8 million. The third quarter operating profit comparison was negatively impacted by a $36.0 million net unfavorable non-cash LIFO impact. Net income increased 5.4% to $641.5 million and diluted earnings per share increased 7.7% to $38.07 for the quarter.

Previous wording

During the second quarter of fiscal 2026, failure and maintenance related categories represented the largest portion of our sales mix at approximately 85% of total sales, whereas they represented approximately 86% of total sales in the comparable prior year period. Failure related categories continue to be the largest portion of our sales mix. We did not experience any fundamental shifts in our category sales mix as compared to the previous year. Our sales mix can be impacted by weather over a short-term period. Over the long-term, we believe the impact of weather on our sales mix is not significant.

Current wording

During the third quarter of fiscal 2026, failure and maintenance related categories represented the largest portion of our sales mix at approximately 85% of total sales, whereas they represented approximately 86% of total sales in the comparable prior year period. Failure related categories continue to be the largest portion of our sales mix. We did not experience any fundamental shifts in our category sales mix as compared to the previous year. Our sales mix can be impacted by weather over a short-term period. Over the long-term, we believe the impact of weather on our sales mix is not significant.

Previous wording

The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road. For the twelve-month period ended December 2025, miles driven in the U.S. increased 0.9% compared to the same period in the prior year, based on the latest information available from the U.S. Department of Transportation. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road in the U.S. was 12.8 years.

Current wording

The two statistics we believe have the closest correlation to our market growth over the long-term are miles driven and the number of seven year old or older vehicles on the road. For the twelve-month period ended March 2026, miles driven in the U.S. increased 1.1% compared to the same period in the prior year, based on the latest information available from the U.S. Department of Transportation. According to the latest data provided by S&P Global Mobility, the average age of light vehicles on the road in the U.S. was 12.8 years.

Previous wording

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act. The President immediately introduced new tariffs under different statutory authority, though their scope and duration, and the likelihood and outcome of further legal challenges to these tariffs, remain uncertain. Tariff policy continues to evolve, and we are monitoring potential impacts on our business and results of operations.

Current wording

On February 20, 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). The President immediately introduced new tariffs under different statutory authority, though their scope and duration, and the likelihood and outcome of further legal challenges to these tariffs, remain uncertain. On April 20, 2026, the Company filed for refunds of IEEPA tariffs paid directly by the Company via the U.S. Customs and Border Protection’s consolidated administration and processing of entries tool in the automated commercial environment portal. Due to the uncertainty around the timing and amount of refunds to be received, the Company has not recognized any potential IEEPA tariff refunds within its Condensed Consolidated Financial Statements as of May 9, 2026. Tariff policy and legal challenges continue to evolve, and we will continue to monitor potential impacts on our business, financial condition and results of operations.

Previous wording

Net sales for the twelve weeks ended February 14, 2026, increased $322.1 million to $4.3 billion, or 8.1% over net sales of $4.0 billion for the comparable prior year period. This growth was driven by an increase in total company same store sales of 3.3% on a constant currency basis and net sales of $114.4 million from new domestic and international stores. Domestic commercial sales increased $103.0 million to $1.2 billion, or 9.8% over the comparable prior year.

Current wording

Net sales for the twelve weeks ended May 9, 2026, increased $376.6 million to $4.8 billion, or 8.4% over net sales of $4.5 billion for the comparable prior year period. This growth was primarily driven by an increase in total company same store sales of 3.9% on a constant currency basis and net sales of $129.0 million from new domestic and international stores. Domestic commercial sales increased $132.4 million to $1.4 billion, or 10.4% over the comparable prior year.

Previous wording

Gross profit for the twelve weeks ended February 14, 2026, was $2.2 billion, compared with $2.1 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 52.5% for the twelve weeks ended February 14, 2026, compared to 53.9% for the comparable prior year period. The decrease in gross margin was driven bya 138 basis point unfavorable non-cash LIFO charge.

Current wording

Gross profit for the twelve weeks ended May 9, 2026, was $2.5 billion, compared with $2.4 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 52.2% for the twelve weeks ended May 9, 2026, compared to 52.7% for the comparable prior year period. The decrease in gross margin was driven bya 77 basis point unfavorable net non-cash LIFO impact, partially offset by other margin improvements.

Previous wording

Operating, selling, general and administrative expenses for the twelve weeks ended February 14, 2026, were $1.5 billion compared with $1.4 billion during the comparable prior year period. As a percentage of sales, these expenses were 36.1% compared with 36.0% during the comparable prior year period. The increase was primarily driven by investments to support our growth initiatives.

Current wording

Operating, selling, general and administrative expenses for the twelve weeks ended May 9, 2026, were $1.6 billion compared with $1.5 billion during the comparable prior year period. As a percentage of sales, these expenses were 33.1% compared with 33.3% during the comparable prior year period, primarily driven by strong top line sales growth.

Previous wording

Net interest expense was $107.2 million and $108.8 million for the twelve weeks ended February 14, 2026, and February 15, 2025, respectively. Average borrowings were $8.8 billion and $9.1 billion, and weighted average borrowing rates were 4.49% and 4.43% for the twelve weeks ended February 14, 2026, and February 15, 2025, respectively.

Current wording

Net interest expense was $110.5 million and $111.3 million for the twelve weeks ended May 9, 2026, and May 10, 2025, respectively. Average borrowings were $8.9 billion and $9.2 billion, and weighted average borrowing rates were 4.52% and 4.48% for the twelve weeks ended May 9, 2026, and May 10, 2025, respectively.

Previous wording

Our effective income tax rate was 20.7% and 18.4% of pretax income for the twelve weeks ended February 14, 2026, and February 15, 2025, respectively. The increase is primarily due to a reduced benefit from stock options exercised compared to the prior year, and last year benefiting from favorable discrete items related to our international business. The benefit from stock options exercised was $7.3 million and $14.3 million for the twelve weeks ended February 14, 2026 and the comparable prior year period, respectively.

Current wording

Our effective income tax rate was 21.1% and 19.4% of pretax income for the twelve weeks ended May 9, 2026, and May 10, 2025, respectively. The increase is primarily due to a reduced benefit from stock options exercised compared to the prior year. The benefit from stock options exercised was $4.0 million and $22.7 million for the twelve weeks ended May 9, 2026, and the comparable prior year period, respectively.

Previous wording

Net income for the twelve weeks ended February 14, 2026, decreased by $19.1 million from the comparable prior year period to $468.9 million due to the factors set forth above, and diluted earnings per share decreased by 2.3% to $27.63 from $28.29.

Current wording

Net income for the twelve weeks ended May 9, 2026, increased by $33.1 million from the comparable prior year period to $641.5 million due to the factors set forth above, and diluted earnings per share increased by 7.7% to $38.07 from $35.36.

Previous wording

Net sales for the twenty-four weeks ended February 14, 2026, increased $671.1 million to $8.9 billion, or 8.2% over net sales of $8.2 billion for the comparable prior year period. This growth was driven by an increase in total company same store sales of 4.0% on a constant currency basis and net sales of $225.0 million from new domestic and international stores. Domestic commercial sales increased $266.7 million to $2.4 billion, or 12.2% over the comparable prior year period.

Current wording

Net sales for the thirty-six weeks ended May 9, 2026, increased $1.0 billion to $13.7 billion, or 8.3% over net sales of $12.7 billion for the comparable prior year period. This growth was primarily driven by an increase in total company same store sales of 4.0% on a constant currency basis and net sales of $354.0 million from new domestic and international stores. Domestic commercial sales increased $399.1 million to $3.8 billion, or 11.6% over the comparable prior year period.

Previous wording

Gross profit for the twenty-four weeks ended February 14, 2026, was $4.6 billion, compared with $4.4 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 51.7% compared to 53.4% during the comparable prior year period. The decrease in gross margin was driven by a 176 basis point unfavorable non-cash LIFO charge.

Current wording

Gross profit for the thirty-six weeks ended May 9, 2026, was $7.1 billion, compared with $6.7 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 51.9% compared to 53.2% during the comparable prior year period. The decrease in gross margin was driven by a 142 basis point unfavorable net non-cash LIFO impact.

Previous wording

Operating, selling, general and administrative expenses for the twenty-four weeks ended February 14, 2026, were $3.1 billion compared with $2.8 billion during the comparable prior year period. As a percentage of sales, these expenses were 35.0% compared with 34.6% during the comparable prior year period. The increase was primarily driven by an increase in investments to support our growth initiatives.

Current wording

Operating, selling, general and administrative expenses for the thirty-six weeks ended May 9, 2026, were $4.7 billion compared with $4.3 billion during the comparable prior year period. As a percentage of sales, these expenses were 34.3% compared with 34.2% during the comparable prior year period. The increase was primarily driven by an increase in investments to support our growth initiatives.

Previous wording

Net interest expense was $213.5 million and $216.5 million for the twenty-four weeks ended February 14, 2026, and February 15, 2025, respectively. Average borrowings were $8.8 billion and $9.0 billion, and weighted average borrowing rates were 4.51% and 4.43% for the twenty-four week periods ended February 14, 2026, and February 15, 2025, respectively.

Current wording

Net interest expense was $323.9 million and $327.7 million for the thirty-six weeks ended May 9, 2026, and May 10, 2025, respectively. Average borrowings were $8.8 billion and $9.1 billion, and weighted average borrowing rates were 4.51% and 4.45% for the thirty-six week periods ended May 9, 2026, and May 10, 2025, respectively.

Previous wording

Our effective income tax rate was 21.2% and 20.9% of pretax income for the twenty-four weeks ended February 14, 2026, and February 15, 2025, respectively. The benefit from stock options exercised for the twenty-four week period ended February 14, 2026, was $19.9 million compared to $19.5 million in the comparable prior year period.

Current wording

Our effective income tax rate was 21.2% and 20.4% of pretax income for the thirty-six weeks ended May 9, 2026, and May 10, 2025, respectively. The benefit from stock options exercised for the thirty-six week period ended May 9, 2026, was $23.8 million compared to $42.3 million in the comparable prior year period.

Previous wording

Net income for the twenty-four weeks ended February 14, 2026, decreased by $53.2 million from the comparable prior year period to $999.7 million due to the factors set forth above, and diluted earnings per share decreased by 3.5% to $58.68 from $60.83.

Current wording

Net income for the thirty-six weeks ended May 9, 2026, decreased by $20.1 million from the comparable prior year period to $1.6 billion due to the factors set forth above, and diluted earnings per share increased by 0.5% to $96.69 from $96.17.

Previous wording

The primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities and available credit, supplemented with our long-term borrowings, will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of February 14, 2026, we held $285.5 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our Revolving Credit Agreement. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. However, decreased demand for our products or changes in customer buying patterns would negatively impact our ability to generate cash from operating activities. Decreased demand or changes in buying patterns could also impact our ability to meet the debt covenants of our credit agreements and, therefore, negatively impact the funds available under our Revolving Credit Agreement. In the event our liquidity is insufficient, we may be required to limit our spending. All of our material borrowing arrangements are described in greater detail in “Note I – Financing” in the Notes to Condensed Consolidated Financial Statements. Except for the $102.4 million increase in commercial paper, there have been no material changes to our contractual obligations as described in our Annual Report on Form 10-K for the year ended August 30, 2025.

Current wording

The primary source of our liquidity is our cash flows realized through the sale of automotive parts, products and accessories. We believe that our cash generated from operating activities and available credit, supplemented with our long-term borrowings, will provide ample liquidity to fund our operations while allowing us to make strategic investments to support growth initiatives and return excess cash to shareholders in the form of share repurchases. As of May 9, 2026, we held $253.7 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our Revolving Credit Agreement. We believe our sources of liquidity will continue to be adequate to fund our operations and investments to grow our business, repay our debt as it becomes due and fund our share repurchases over the short-term and long-term. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary. However, decreased demand for our products or changes in customer buying patterns would negatively impact our ability to generate cash from operating activities. Decreased demand or changes in buying patterns could also impact our ability to meet the debt covenants of our credit agreements and, therefore, negatively impact the funds available under our Revolving Credit Agreement. In the event our liquidity is insufficient, we may be required to limit our spending. All of our material borrowing arrangements are described in greater detail in “Note I – Financing” in the Notes to Condensed Consolidated Financial Statements. Except for the $609.4 million increase in commercial paper and repayment of our outstanding $400 million 3.125% Senior Notes due April 2026, there have been no material changes to our contractual obligations as described in our Annual Report on Form 10-K for the year ended August 30, 2025.

Previous wording

Our net cash flows used in investing activities for the twenty-four weeks ended February 14, 2026, were $667.5 million as compared to $563.4 million in the comparable prior year period. Capital expenditures for the twenty-four weeks ended February 14, 2026, were $652.0 million compared to $539.7 million in the comparable prior year period. The increase in capital expenditures was primarily driven by our growth initiatives, includingnew stores, hub and mega hub store expansion projects. During the twenty-four week periods ended February 14, 2026, and February 15, 2025, we opened 117 and 79 net new stores, respectively. Investing cash flows were impacted by our wholly-owned captive, which purchased $23.0 million and $31.3 million, and sold $8.8 million and $30.1 million in marketable debt securities during the twenty-four weeks ended February 14, 2026, and the comparable prior year period, respectively. Our net investment in tax credit equity investments was $9.7 million and $37.4 million during the twenty-four weeks ended February 14, 2026, and the comparable prior year period, respectively.

Current wording

Our net cash flows used in investing activities for the thirty-six weeks ended May 9, 2026, were $1.0 billion as compared to $917.3 million in the comparable prior year period. Capital expenditures for the thirty-six weeks ended May 9, 2026, were $997.5 million compared to $885.6 million in the comparable prior year period. The increase in capital expenditures was primarily driven by our growth initiatives, includingnew stores, hub and mega hub store expansion projects. During the thirty-six week periods ended May 9, 2026, and May 10, 2025, we opened 199 and 163 net new stores, respectively. Investing cash flows were impacted by our wholly-owned captive, which purchased $35.4 million and $54.3 million, and sold $17.7 million and $54.8 million in marketable debt securities during the thirty-six weeks ended May 9, 2026, and the comparable prior year period, respectively. Our net investment in tax credit equity investments was $9.2 million and $50.4 million during the thirty-six weeks ended May 9, 2026, and the comparable prior year period, respectively.

Previous wording

Our net cash flows used in financing activities for the twenty-four weeks ended February 14, 2026, were $642.9 million compared to $826.4 million in the comparable prior year period. Stock repurchases were $741.7 million in the current twenty-four week period versus $866.5 million in the comparable prior year period. The treasury stock repurchases were primarily funded by cash flows from operations. For the twenty-four week periods ended February 14, 2026, and February 15, 2025, we had $102.4 million and $22.0 million in net proceeds from commercial paper, respectively. Proceeds from the issuance of common stock from exercises of stock options for the twenty-four weeks ended February 14, 2026, and February 15, 2025, provided $51.5 million and $64.3 million, respectively.

Current wording

Our net cash flows used in financing activities for the thirty-six weeks ended May 9, 2026, were $1.1 billion compared to $1.3 billion in the comparable prior year period. During the thirty-six weeks ended May 9, 2026, we had no debt issuances, versus $500 million in debt issuances in the comparable prior year period. During the thirty-six week periods ended May 9, 2026, and May 10, 2025, we had $400 million and $900 million in debt repayments, respectively. Stock repurchases were $1.3 billion in the current thirty-six week period versus $1.1 billion in the comparable prior year period. The treasury stock repurchases were primarily funded by cash flows from operations. For the thirty-six week periods ended May 9, 2026, and May 10, 2025, we had $609.4 million and $225.5 million in net proceeds from commercial paper, respectively. Proceeds from the issuance of common stock from exercises of stock options for the thirty-six weeks ended May 9, 2026, and May 10, 2025, provided $67.7 million and $111.0 million, respectively.

Previous wording

In addition to the building and land costs, our new stores require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers’ ability to factor their receivables from us. The Company has arrangements with third-party financial institutions to confirm invoice balances owed by the Company to certain suppliers and pay the financial institutions the confirmed amounts on the invoice due dates. These arrangements allow the Company’s inventory suppliers, at their sole discretion, to enter into agreements with these financial institutions to finance the Company’s obligations to the suppliers at terms negotiated between the suppliers and the financial institutions. Supplier participation is optional and our obligations to our suppliers, including the amount and dates due, are not impacted by our suppliers’ decision to enter into an agreement with a third-party financial institution. A downgrade in our credit or changes in the financial markets could limit the financial institutions’ and our suppliers’ willingness to participate in these arrangements; however, we do not believe such risk would have a material impact on our working capital or cash flows. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 110.9% at February 14, 2026, and 118.2% at February 15, 2025.

Current wording

In addition to the building and land costs, our new stores require working capital, predominantly for inventories. Historically, we have negotiated extended payment terms from suppliers, reducing the working capital required and resulting in a high accounts payable to inventory ratio. We plan to continue leveraging our inventory purchases; however, our ability to do so may be limited by our suppliers’ ability to factor their receivables from us. The Company has arrangements with third-party financial institutions to confirm invoice balances owed by the Company to certain suppliers and pay the financial institutions the confirmed amounts on the invoice due dates. These arrangements allow the Company’s inventory suppliers, at their sole discretion, to enter into agreements with these financial institutions to finance the Company’s obligations to the suppliers at terms negotiated between the suppliers and the financial institutions. Supplier participation is optional and our obligations to our suppliers, including the amount and dates due, are not impacted by our suppliers’ decision to enter into an agreement with a third-party financial institution. A downgrade in our credit or changes in the financial markets could limit the financial institutions’ and our suppliers’ willingness to participate in these arrangements; however, we do not believe such risk would have a material impact on our working capital or cash flows. We plan to continue negotiating extended terms with our suppliers, benefitting our working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 111.1% at May 9, 2026, and 115.6% at May 10, 2025.

Previous wording

For the trailing four quarters ended February 14, 2026, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 37.6% as compared to 45.5% for the comparable prior year period. Adjusted ROIC is calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to

Current wording

For the trailing four quarters ended May 9, 2026, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 36.3% as compared to 43.5% for the comparable prior year period. Adjusted ROIC is

Previous wording

capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

Current wording

calculated as after-tax operating profit (excluding rent charges) divided by invested capital (which includes a factor to capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources and believe it is an important indicator of our overall operating performance. Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.