Common-Size Income Statement
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O’Reilly Automotive Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Cost of Goods Sold and Gross Profit Trends
- The cost of goods sold, including warehouse and distribution expenses, has remained relatively stable as a percentage of sales, oscillating slightly between -47.42% in 2017 and -47.33% in 2021. Correspondingly, gross profit margins have shown minor fluctuations, maintaining a range from 52.44% to 53.15% across the five-year period. This indicates consistent control over production and distribution costs relative to sales.
- Operating Expenses and Income
- Selling, general, and administrative expenses have exhibited a downward trend as a percentage of sales, decreasing from -33.36% in 2017 to -30.78% in 2021. This reduction in operating expenses has contributed to an improvement in operating income, which increased from 19.22% in 2017 to 21.89% in 2021. The data suggests effective management of operating costs and enhanced operational efficiency over the period.
- Interest Expense and Income
- Interest expense as a percentage of sales initially increased from -1.02% in 2017 to a peak of -1.39% in 2020, followed by a decline to -1.09% in 2021. Interest income, meanwhile, remained minimal and gradually declined from 0.03% in 2017 to 0.01% in 2021. The net impact of interest expenses and income denotes a slight reduction in financing costs in the most recent year, potentially indicating improved debt management or refinancing.
- Other Income (Expense) and Its Impact
- Other income (expense) remained negative throughout the period, fluctuating slightly but moving from -0.98% in 2017 to -1.01% in 2021. The consistent negative values suggest recurring costs or losses unrelated to core operations, with no significant improvement or deterioration over time.
- Profitability and Tax Provision
- Income before income taxes showed a positive trend, increasing from 18.24% of sales in 2017 to 20.87% in 2021, reflecting overall profitability enhancement. The provision for income taxes decreased sharply from -5.61% in 2017 to around -3.88% in 2018 and then stabilized between -3.93% and -4.63% through 2021. This stabilization implies a consistent effective tax rate after the initial reduction, supporting improved net income margins.
- Net Income Performance
- Net income as a percentage of sales demonstrated a solid upward trajectory, rising from 12.63% in 2017 to 16.24% in 2021. This increase is indicative of growing profitability, benefiting from stable gross margins, reduced operating expenses, and effective tax management. The trend suggests a strengthening financial position and enhanced shareholder value over the analyzed period.