AUTOZONE INC

Previous wording

Certain statements contained herein constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” and similar expressions. These are based on assumptions and assessments made by our management in light of experience and perception of historical trends, current conditions, expected future developments and other factors that we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: product demand, due to changes in fuel prices, miles driven or otherwise; energy prices; weather, including extreme temperatures, natural disasters and general weather conditions; competition; credit market conditions; cash flows; access to available and feasible financing on favorable terms; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; the impact of public health issues; inflation, including wage inflation; the ability to hire, train and retain qualified employees including members of management and other key personnel; construction delays; failure or interruption of our information technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges associated with doing business in and expanding into international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; impact of tariffs; impact of new accounting standards; our ability to execute our growth initiatives; and other business interruptions. Certain of these risks and uncertainties are discussed in more detail in the “Risk Factors” section contained in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 26, 2023. These Risk Factors should be read carefully. Forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those contemplated by such forward-looking statements. Events described above and in the “Risk Factors” could materially and adversely affect our business. However, it should be understood that it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future event…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements herein constitute forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and typically use words such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “seek,” “may,” “could” and similar expressions. These are based on assumptions and assessments made by our management in light of experience, historical trends, current conditions, expected future developments and other factors that we believe appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including without limitation: product demand, due to changes in fuel prices, miles driven or otherwise; energy prices; weather, including extreme temperatures and natural disasters; competition; credit market conditions; cash flows; access to financing on favorable terms; future stock repurchases; the impact of recessionary conditions; consumer debt levels; changes in laws or regulations; risks associated with self-insurance; war and the prospect of war, including terrorist activity; public health issues; inflation, including wage inflation; the ability to hire, train and retain qualified employees, including members of management; construction delays; failure or interruption of our information technology systems; issues relating to the confidentiality, integrity or availability of information, including due to cyber-attacks; historic growth rate sustainability; downgrade of our credit ratings; damage to our reputation; challenges associated with doing business in and expanding into international markets; origin and raw material costs of suppliers; inventory availability; disruption in our supply chain; tariffs; new accounting standards; our ability to execute our growth initiatives; and other business interruptions. These and other risks and uncertainties could materially and adversely affect our business and are discussed in more detail in the “Risk Factors” section in Item 1A under Part 1 of our Annual Report on Form 10-K for the year ended August 26, 2023. Forward-looking statements are not guarantees of future performance and actual results may differ from those contemplated by such forward-looking statements. However, it is not possible to identify or predict all such risks and other factors that could affect these forward-looking statements. Forward-looking statements speak only as of the date made. Except as required by applicable law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Previous wording

We are the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at February 10, 2024, operated 6,332 stores in the U.S., 751 stores in Mexico and 108 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 10, 2024, in 5,823 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. Through our mobile application and websites, including autozone.com, we also sell automotive hard parts, maintenance items, accessories and non-automotive products, 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 the leading retailer and distributor of automotive replacement parts and accessories in the Americas. We began operations in 1979 and at May 4, 2024, operated 6,364 stores in the U.S., 763 stores in Mexico and 109 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 4, 2024, in 5,843 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. Through our mobile applications and websites, including www.autozone.com, we also sell automotive hard parts, maintenance items, accessories and non-automotive products, 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 10, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending August 31, 2024. 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 quarter of fiscal 2024 has 17 weeks, and the fourth quarter of fiscal 2023 had 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

12 weeks, and the fourth quarter consists of 16 or 17 weeks. The fourth quarter of fiscal 2024 has 17 weeks, and the fourth quarter of fiscal 2023 had 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 $3.9 billion, a 4.6% increase over the prior year period. Our retail and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives. Operating profit increased 10.9% to $743.2 million, net income for the quarter increased 8.1% to $515.0 million and diluted earnings per share increased 17.2% to $28.89.

Current wording

Net sales for the twelve weeks ended May 4, 2024 increased to $4.2 billion, a 3.5% increase over the comparable prior year period. Our retail and commercial sales in our domestic and international markets grew as we continue to make progress on our growth initiatives. Operating profit increased 4.9% to $900.2 million, net income increased 0.6% to $651.7 million and diluted earnings per share increased 7.5% to $36.69 for the quarter.

Previous wording

During the second quarter of fiscal 2024, failure and maintenance related categories represented the largest portion of our sales mix at approximately 86% of total sales, which is consistent with 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 2024, failure and maintenance related categories represented the largest portion of our sales mix at approximately 85% of total sales, which is consistent with 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. While over the long-term we have seen a close correlation between our net sales and the number of miles driven, we have also seen time frames of minimal correlation in sales performance and miles driven. During the periods of minimal correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road. The average age of the U.S. light vehicle fleet remains in our industry’s favor as the average age has exceeded 11 years since 2012, according to the latest data provided by S&P Global Mobility. As of January 1, 2023, the average age of light vehicles on the road was 12.5 years. Since the beginning of the fiscal year and through December 2023 (latest publicly available information), miles driven in the U.S. were up 1.7% compared to the same period in the prior year.

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. While over the long-term we have seen a close correlation between our net sales and the number of miles driven, we have also seen time frames of minimal correlation in sales performance and miles driven. During the periods of minimal correlation between net sales and miles driven, we believe net sales have been positively impacted by other factors, including macroeconomic factors and the number of seven year old or older vehicles on the road. The average age of the U.S. light vehicle fleet remains in our industry’s favor as the average age has exceeded 11 years since 2012, according to the latest data provided by S&P Global Mobility. As of January 1, 2024, the average age of light vehicles on the road was 12.6 years. Since the beginning of the fiscal year and through March 2024 (latest publicly available information from the U.S. Department of Transportation), miles driven in the U.S. were up 1.2% compared to the same period in the prior year.

Previous wording

Net sales for the twelve weeks ended February 10, 2024 increased $168.1 million to $3.9 billion, or 4.6% over net sales of $3.7 billion for the comparable prior year period. This growth was primarily driven by net sales of $62.0 million from new domestic and international stores and an increase in total company same store sales of 1.5% on a constant currency basis. Domestic commercial sales increased $25.6 million to $980.1 million, or 2.7% over the comparable prior year.

Current wording

Net sales for the twelve weeks ended May 4, 2024 increased $144.9 million to $4.2 billion, or 3.5% over net sales of $4.1 billion for the comparable prior year period. This growth was primarily driven by net sales of $76.9 million from new domestic and international stores and an increase in total company same store sales of 0.9% on a constant currency basis. Domestic commercial sales increased $36.6 million to $1.1 billion, or 3.3% over the comparable prior year.

Previous wording

Gross profit for the twenty-four weeks ended February 10, 2024 was $4.3 billion, compared with $3.9 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 53.3% compared to 51.1% during the comparable prior year period. The increase in gross margin was driven by 138 basis point ($107.0 million net) non-cash LIFO favorability, with the remaining increase resulting primarily from higher merchandise margins and favorable supply chain costs.

Current wording

Gross profit for the twelve weeks ended May 4, 2024 was $2.3 billion, compared with $2.1 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 53.5% compared to 52.5% during the comparable prior year period. The increase in gross margin was driven by higher merchandise margins and a 15 basis point ($7.0 million net) non-cash LIFO favorability.

Previous wording

Operating, selling, general and administrative expenses for the twelve weeks ended February 10, 2024 and the comparable prior year period were $1.3 billion. As a percentage of sales, these expenses were 34.6% compared with 34.1% during the comparable prior year period. The increase was driven primarily by domestic store payroll and investments in technology related initiatives.

Current wording

Operating, selling, general and administrative expenses for the twelve weeks ended May 4, 2024 were $1.4 billion compared with $1.3 billion during the comparable prior year period. As a percentage of sales, these expenses were 32.2% compared with 31.5% during the comparable prior year period. The increase was primarily driven by domestic store payroll.

Previous wording

Net interest expense was $102.6 million and $65.6 million for the twelve weeks ended February 10, 2024 and February 11, 2023, respectively. Average borrowings were $8.7 billion and $6.9 billion and weighted average borrowing rates were 4.40% and 3.70% for the twelve weeks ended February 10, 2024 and February 11, 2023, respectively.

Current wording

Net interest expense was $104.4 million and $74.3 million for the twelve weeks ended May 4, 2024 and May 6, 2023, respectively. Average borrowings were $8.8 billion and $7.2 billion and weighted average borrowing rates were 4.43% and 3.85% for the twelve weeks ended May 4, 2024 and May 6, 2023, respectively.

Previous wording

Our effective income tax rate was 19.6% and 21.2% of pretax income for the twelve weeks ended February 10, 2024 and February 11, 2023, respectively. The benefit from stock options exercised for the twelve week period ended February 10, 2024 was $23.0 million compared to $13.4 million in the comparable prior year period.

Current wording

Our effective income tax rate was 18.1% and 17.4% of pretax income for the twelve weeks ended May 4, 2024 and May 6, 2023, respectively. The benefit from stock options exercised for the twelve week period ended May 4, 2024 was $38.1 million compared to $46.7 million in the comparable prior year period.

Previous wording

Net income for the twelve weeks ended February 10, 2024 increased by $38.5 million from the comparable prior year period to $515.0 million due to the factors set forth above, and diluted earnings per share increased by 17.2% to $28.89 from $24.64. The impact on current quarter diluted earnings per share from stock repurchases since the end of the comparable prior year period was an increase of $0.49 per share.

Current wording

Net income for the twelve weeks ended May 4, 2024 increased by $4.0 million from the comparable prior year period to $651.7 million due to the factors set forth above, and diluted earnings per share increased by 7.5% to $36.69 from $34.12. The impact on current quarter diluted earnings per share from stock repurchases since the end of the comparable prior year period was an increase of $0.55 per share.

Previous wording

Net sales for the twenty-four weeks ended February 10, 2024 increased $373.4 million to $8.0 billion, or 4.9% over net sales of $7.7 billion for the comparable prior year period. This growth was driven primarily by net sales of $137.7 million from new domestic and international stores and an increase in total company same store sales of 1.8% on a constant currency basis. Domestic commercial sales increased $84.1 million to $2.1 billion, or 4.2% over the comparable prior year period.

Current wording

Net sales for the thirty-six weeks ended May 4, 2024 increased $518.3 million to $12.3 billion, or 4.4% over net sales of $11.8 billion for the comparable prior year period. This growth was driven primarily by net sales of $220.4 million from new domestic and international stores and an increase in total company same store sales of 1.5% on a constant currency basis. Domestic commercial sales increased $120.8 million to $3.2 billion, or 3.9% over the comparable prior year period.

Previous wording

Gross profit for the twelve weeks ended February 10, 2024 was $2.1 billion, compared with $1.9 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 53.9% compared to 52.3% during the comparable prior year period. The increase in gross margin was driven by higher merchandise margins and a 63 basis point ($24.0 million net) non-cash LIFO favorability, with the remaining increase primarily from favorable supply chain costs.

Current wording

Gross profit for the thirty-six weeks ended May 4, 2024 was $6.6 billion, compared with $6.1 billion during the comparable prior year period. Gross profit, as a percentage of sales, was 53.4% compared to 51.6% during the comparable prior year period. The increase in gross margin was driven by a 95 basis point ($114.0 million net) non-cash LIFO favorability, with the remaining increase resulting primarily from higher merchandise margins and favorable supply chain costs.

Previous wording

Operating, selling, general and administrative expenses for the twenty-four weeks ended February 10, 2024, were $2.7 billion compared with $2.5 billion during the comparable prior year period. As a percentage of sales, these expenses were 33.6% compared with 33.0% during the comparable prior year period. The increase was driven primarily by domestic store payroll and investment in technology related initiatives.

Current wording

Operating, selling, general and administrative expenses for the thirty-six weeks ended May 4, 2024, were $4.1 billion compared with $3.8 billion during the comparable prior year period. As a percentage of sales, these expenses were 33.1% compared with 32.5% during the comparable prior year period. The increase was primarily driven by domestic store payroll.

Previous wording

Net interest expense was $194.0 million and $123.3 million for the twenty-four weeks ended February 10, 2024 and February 11, 2023, respectively. Average borrowings were $8.4 billion and $6.5 billion and weighted average borrowing rates were 4.31% and 3.58% for the twenty-four week periods ended February 10, 2024 and February 11, 2023, respectively.

Current wording

Net interest expense was $298.4 million and $197.6 million for the thirty-six weeks ended May 4, 2024 and May 6, 2023, respectively. Average borrowings were $8.5 billion and $6.8 billion and weighted average borrowing rates were 4.35% and 3.67% for the thirty-six week periods ended May 4, 2024 and May 6, 2023, respectively.

Previous wording

Our effective income tax rate was 20.7% and 20.0% of pretax income for the twenty-four weeks ended February 10, 2024 and February 11, 2023, respectively. The benefit from stock options exercised for the twenty-four week period ended February 10, 2024 was $34.2 million compared to $43.1 million in the comparable prior year period.

Current wording

Our effective income tax rate was 19.8% and 19.0% of pretax income for the thirty-six weeks ended May 4, 2024 and May 6, 2023, respectively. The benefit from stock options exercised for the thirty-six week period ended May 4, 2024 was $72.3 million compared to $89.8 million in the comparable prior year period.

Previous wording

Net income for the twenty-four weeks ended February 10, 2024 increased by $92.6 million from the comparable prior year period to $1.1 billion due to the factors set forth above, and diluted earnings per share increased by 18.0% to $61.48 from $52.12. The impact on current year to date diluted earnings per share from stock repurchases since the end of the comparable prior year period was an increase of $0.82.

Current wording

Net income for the thirty-six weeks ended May 4, 2024 increased by $96.6 million from the comparable prior year period to $1.8 billion due to the factors set forth above, and diluted earnings per share increased by 14.0% to $98.11 from $86.10. The impact on current year to date diluted earnings per share from stock repurchases since the end of the comparable prior year period was an increase of $0.80.

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 long-term growth initiatives and return excess cash to shareholders in the form of share repurchases. As of February 10, 2024, we held $304.1 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our Revolving Credit Agreement, before giving effect to commercial paper borrowings. 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.

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 long-term growth initiatives and return excess cash to shareholders in the form of share repurchases. As of May 4, 2024, we held $275.4 million of cash and cash equivalents, as well as $2.2 billion in undrawn capacity on our Revolving Credit Agreement, before giving effect to commercial paper borrowings. 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.

Previous wording

For the twenty-four week periods ended February 10, 2024 and February 11, 2023, our net cash flows from operating activities provided $1.3 billion and $1.1 billion, respectively. Cash flows from operations are favorable to last year primarily due to changes in working capital and higher net income.

Current wording

For the each of the thirty-six week periods ended May 4, 2024 and May 6, 2023, our net cash flows from operating activities provided $1.9 billion. Cash flows from operations are slightly favorable to last year primarily due to higher net income.

Previous wording

Our net cash flows used in investing activities for the twenty-four weeks ended February 10, 2024 were $544.0 million as compared with $270.0 million in the comparable prior year period. Capital expenditures for the twenty-four weeks ended February 10, 2024 were $490.8 million compared to $259.2 million in the comparable prior year period. The increase in capital expenditures was primarily driven by our growth initiatives, including investments in distribution centers and stores to be opened in subsequent periods as well as stores opened in the current twenty-four week period. During the twenty-four week periods ended February 10, 2024 and February 11, 2023, we opened 51 and 71 net new stores, respectively. Investing cash flows were impacted by our wholly-owned captive, which purchased $14.0 million and sold $12.6 million in marketable debt securities during the twenty-four weeks ended February 10, 2024. During the comparable prior year period, the captive purchased $14.0 million and sold $3.5 million in marketable debt securities. Our investment in tax credit equity investments was $42.5 million during the twenty-four weeks ended February 10, 2024 compared to $12.1 million during the comparable prior year period.

Current wording

Our net cash flows used in investing activities for the thirty-six weeks ended May 4, 2024 were $916.3 million as compared with $479.0 million in the comparable prior year period. Capital expenditures for the thirty-six weeks ended May 4, 2024 were $725.9 million compared to $430.4 million in the comparable prior year period. The increase in capital expenditures was primarily driven by our growth initiatives, including investments in distribution centers and stores to be opened in subsequent periods as well as stores opened in the current thirty-six week period. During the thirty-six week periods ended May 4, 2024 and May 6, 2023, we opened 96 and 101 net new stores, respectively. Investing cash flows were impacted by our wholly-owned captive, which purchased $17.6 million and sold $21.2 million in marketable debt securities during the thirty-six weeks ended May 4, 2024. During the comparable prior year period, the captive purchased $48.4 million and sold $37.5 million in marketable debt securities. Our investment in tax credit equity investments was $193.3 million during the thirty-six weeks ended May 4, 2024 compared to $50.7 million during the comparable prior year period.

Previous wording

Our net cash flows used in financing activities for the twenty-four weeks ended February 10, 2024 were $692.8 million compared to $844.7 million in the comparable prior year period. During the twenty-four weeks ended February 10, 2024, we received $1.0 billion in debt issuances. During the comparable prior year period, we received $1.0 billion in debt issuances and repaid our $300 million 2.875% Senior Notes due January 2023. Stock repurchases were $1.7 billion in the current twenty-four week period as compared with $1.8 billion in the comparable prior year period. The treasury stock repurchases were primarily funded by cash flows from operations and increased borrowings. For the twenty-four week period ended February 10, 2024, we had $32.2 million in net payments of commercial paper compared to $227.6 million in net proceeds from commercial paper in the comparable prior year period. Proceeds from the issuance of common stock from exercises of stock options for the twenty-four weeks ended February 10, 2024 and February 11, 2023 provided $98.3 million and $72.8 million, respectively.

Current wording

Our net cash flows used in financing activities for the thirty-six weeks ended May 4, 2024 were $1.0 billion compared to $1.4 billion in the comparable prior year period. During each of the thirty-six week periods ended May 4, 2024 and May 6, 2023, we received $1.0 billion in debt issuances. We repaid our $300 million 3.125% Senior Notes due April 2024 and our $300 million 2.875% Senior Notes due January 2023 during the thirty-six weeks ended May 4, 2024 and May 6, 2023, respectively. Stock repurchases were $2.4 billion in the current thirty-six week period as compared with $2.7 billion in the comparable prior year period. The stock repurchases were primarily funded by cash flows from operations and increased borrowings. For the thirty-six week period ended May 4, 2024 and the comparable prior year period, we had $631.3 million and $524.0 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 4, 2024 and May 6, 2023 provided $154.4 million and $154.9 million, respectively.

Previous wording

During fiscal 2024, we expect to increase the investment in our business as compared to fiscal 2023. Our investments are expected to be directed primarily to new stores and our supply chain initiatives, which include new distribution centers as well as expanded hubs and mega hubs. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.

Current wording

During fiscal 2024, we are increasing the investment in our business as compared to fiscal 2023. Our investment increases are primarily due to our supply chain initiatives, which include new distribution centers as well as expanded hubs and mega hubs, and new stores. The amount of investments in our new stores is impacted by different factors, including whether the building and land are purchased (requiring higher investment) or leased (generally lower investment) and whether such buildings are located in the U.S., Mexico or Brazil, or located in urban or rural areas.

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’ willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, reducing our working capital required resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.8% at February 10, 2024 and 127.7% at February 11, 2023.

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 ratings or changes in the financial markets could limit the financial institutions’ willingness to participate in these arrangements. We plan to continue negotiating extended terms with our suppliers, benefitting our required working capital and resulting in a high accounts payable to inventory ratio. We had an accounts payable to inventory ratio of 119.7% at May 4, 2024 and 126.5% at May 6, 2023.

Previous wording

For the trailing four quarters ended February 10, 2024, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 53.5% as compared to 54.7% 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 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

For the trailing four quarters ended May 4, 2024, our adjusted after-tax return on invested capital (“ROIC”), which is a non-GAAP measure, was 51.4% as compared to 55.2% 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 capitalize operating leases). We use adjusted ROIC to evaluate whether we are effectively using our capital resources

Previous wording

In addition to the outstanding letters of credit issued under the committed facilities discussed above, we had $128.4 million in letters of credit outstanding as of February 10, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis.

Current wording

In addition to the outstanding letters of credit issued under the committed facilities discussed above, we had $128.5 million in letters of credit outstanding as of May 4, 2024. These letters of credit have various maturity dates and were issued on an uncommitted basis.

Previous wording

As of February 10, 2024, the $1.2 billion commercial paper borrowings and the $300 million 3.125% Senior Notes due April 2024 were included in Long-term debt in the accompanying Condensed Consolidated Balance Sheets as we currently have the ability and intent to refinance them on a long-term basis through available capacity under our Revolving Credit Agreement. As of February 10, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility.

Current wording

As of May 4, 2024, the $1.8 billion commercial paper borrowings and the $400 million 3.250% Senior Notes due April 2025 were included in Long-term debt in the accompanying Condensed Consolidated Balance Sheets as we currently have the ability and intent to refinance them on a long-term basis through available capacity under our Revolving Credit Agreement. As of May 4, 2024, we had $2.2 billion of availability under our Revolving Credit Agreement, without giving effect to commercial paper borrowings, which would allow us to replace these short-term obligations with a long-term financing facility.

Previous wording

Our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.4:1 as of February 10, 2024 and was 2.3:1 as of February 11, 2023. We calculate adjusted debt as the sum of total debt, financing lease liabilities and rent times six; and we calculate EBITDAR by adding interest, taxes, depreciation, amortization, rent, and share-based compensation expense to net income. Adjusted debt to EBITDAR is calculated on a trailing four quarter basis. We target our debt levels to a ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings. We believe this is important information for the management of our debt levels. To the extent EBITDAR increases, we expect our debt levels to increase; conversely, if EBITDAR decreases, we would expect our debt levels to decrease. Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

Current wording

Our adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and share-based compensation expense (“EBITDAR”) ratio was 2.5:1 as of May 4, 2024 and was 2.3:1 as of May 6, 2023. We calculate adjusted debt as the sum of total debt, financing lease liabilities and rent times six; and we calculate EBITDAR by adding interest, taxes, depreciation, amortization, rent, and share-based compensation expense to net income. Adjusted debt to EBITDAR is calculated on a trailing four quarter basis. We target our debt levels to a ratio of adjusted debt to EBITDAR in order to maintain our investment grade credit ratings. We believe this is important information for the management of our debt levels. To the extent EBITDAR increases, we expect our debt levels to increase; conversely, if EBITDAR decreases, we would expect our debt levels to decrease. Refer to the “Reconciliation of Non-GAAP Financial Measures” section for further details of our calculation.

Previous wording

From January 1, 1998 to February 10, 2024, we have repurchased a total of 154.7 million shares of our common stock at an aggregate cost of $35.5 billion, including 663.4 thousand shares of our common stock at an aggregate cost of $1.7 billion during the twenty-four week period ended February 10, 2024.

Current wording

From January 1, 1998 to May 4, 2024, we have repurchased a total of 154.9 million shares of our common stock at an aggregate cost of $36.3 billion, including 905.4 thousand shares of our common stock at an aggregate cost of $2.5 billion during the thirty-six week period ended May 4, 2024.

Previous wording

On December 20, 2023, the Board voted to authorize the repurchase of an additional $2.0 billion of our common stock in connection with our ongoing share repurchase program, which raised the total value of shares authorized to be repurchased to $37.7 billion. Considering the cumulative repurchases as of February 10, 2024, we had $2.1 billion remaining under the Board’s authorization to repurchase our common stock.

Current wording

On December 20, 2023, the Board voted to authorize the repurchase of an additional $2.0 billion of our common stock in connection with our ongoing share repurchase program, which raised the total value of shares authorized to be repurchased to $37.7 billion. Considering the cumulative repurchases as of May 4, 2024, we had $1.4 billion remaining under the Board’s authorization to repurchase our common stock.

Previous wording

Subsequent to February 10, 2024 and through March 8, 2024, we have repurchased 63.0 thousand shares of our common stock at an aggregate cost of $180.7 million.

Current wording

Subsequent to May 4, 2024 and through May 31, 2024, we have repurchased 65.6 thousand shares of our common stock at an aggregate cost of $188.0 million.

Previous wording

Since our fiscal year end, we have canceled, issued and modified stand-by letters of credit that are primarily renewed on an annual basis to cover deductible payments to our casualty insurance carriers. Our total stand-by letters of credit commitment at February 10, 2024, was $146.2 million, compared with $134.0 million at August 26, 2023, and our total surety bonds commitment at February 10, 2024, was $47.8 million, compared with $43.1 million at August 26, 2023.

Current wording

Since our fiscal year end, we have canceled, issued and modified stand-by letters of credit that are primarily renewed on an annual basis to cover deductible payments to our casualty insurance carriers. Our total stand-by letters of credit commitment at May 4, 2024, was $146.4 million, compared with $134.0 million at August 26, 2023, and our total surety bonds commitment at May 4, 2024, was $47.7 million, compared with $43.1 million at August 26, 2023.

Previous wording

Except for the $500 million 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 debt issuances and the $32.2 net decrease in commercial paper, there were no significant changes to our contractual obligations as described in our Annual Report on Form 10-K for the year ended August 26, 2023.

Current wording

Except for the $500 million 6.250% Senior Notes due November 2028 and $500 million 6.550% Senior Notes due November 2033 debt issuances, the $300 million 3.125% Senior Notes debt repayment and the $631.3 million net increase in commercial paper, there were no significant changes to our contractual obligations as described in our Annual Report on Form 10-K for the year ended August 26, 2023.