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O’Reilly Automotive Inc. (NASDAQ:ORLY)

This company has been moved to the archive! The financial data has not been updated since November 8, 2022.

Common-Size Income Statement

O’Reilly Automotive Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Sales 100.00 100.00 100.00 100.00 100.00
Cost of goods sold, including warehouse and distribution expenses -47.33 -47.56 -46.85 -47.15 -47.42
Gross profit 52.67% 52.44% 53.15% 52.85% 52.58%
Selling, general and administrative expenses -30.78 -31.59 -34.23 -33.82 -33.36
Operating income 21.89% 20.85% 18.92% 19.03% 19.22%
Interest expense -1.09 -1.39 -1.38 -1.28 -1.02
Interest income 0.01 0.02 0.03 0.03 0.03
Other, net 0.06 0.05 0.07 -0.02 0.02
Other income (expense) -1.01% -1.32% -1.28% -1.27% -0.98%
Income before income taxes 20.87% 19.53% 17.64% 17.76% 18.24%
Provision for income taxes -4.63 -4.43 -3.93 -3.88 -5.61
Net income 16.24% 15.10% 13.70% 13.89% 12.63%

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).

The financial trajectory from 2017 to 2021 reflects a consistent improvement in overall profitability, characterized by stable gross margins and enhancing operational efficiency.

Gross Profitability
Gross profit margins remained remarkably stable throughout the analyzed period, fluctuating within a narrow range between 52.44% and 53.15%. Cost of goods sold, including warehouse and distribution expenses, consistently represented approximately 47% of sales, indicating a steady pricing strategy and consistent management of direct costs.
Operating Efficiency
A significant shift in operational cost management is observed starting in 2020. Selling, general and administrative expenses rose slightly from 33.36% in 2017 to a peak of 34.23% in 2019, before declining to 30.78% by 2021. This reduction in overhead as a percentage of sales contributed directly to the expansion of the operating income margin, which grew from 19.22% in 2017 to 21.89% in 2021.
Non-Operating Items and Tax Impact
Interest expenses as a percentage of sales remained relatively contained, peaking at 1.39% in 2020 before retreating to 1.09% in 2021. The provision for income taxes showed variability, dropping from 5.61% in 2017 to a low of 3.88% in 2018, and subsequently stabilizing around 4.63% by 2021. These factors combined resulted in a steady increase in income before income taxes, reaching 20.87% in the final year.
Net Profitability Trends
The net income margin exhibited a sustained upward trend, increasing from 12.63% in 2017 to 16.24% in 2021. This growth indicates that a higher percentage of sales was converted into bottom-line profit over the five-year period, primarily driven by operational leverage and the reduction of selling, general, and administrative expenses relative to total revenue.

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