O’Reilly Automotive Inc. (NASDAQ:ORLY)

Accounts payable

The proportion of accounts payable as a percentage of total liabilities and shareholders’ equity declined sharply from around 42% in early 2017 through 2018 to a low near 33% in late 2019. Since then, it has steadily increased, reaching approximately 45.55% by the third quarter of 2022, indicating a rising reliance on supplier credit as part of the company’s financing structure.

Self-insurance reserves

This item remained relatively stable, hovering close to 1% of total liabilities and equity throughout the period. A slight upward trend is visible from around 0.75% in early 2020 to about 1.16% in late 2022, suggesting minor growth in self-insurance obligations relative to total financing.

Accrued payroll

Accrued payroll as a percentage fluctuated between 0.76% and 1.14%, showing no clear long-term trend but some variability quarter to quarter. The values were generally stable, indicating consistent short-term employee-related liabilities.

Accrued benefits and withholdings

This component showed a mild rising trend beginning in early 2020, growing from below 1% in earlier years to about 1.37% by the third quarter of 2022. There was a notable peak in late 2020, possibly reflecting increased employee benefits or withholding liabilities during that period.

Income taxes payable

Income taxes payable displayed considerable volatility, with frequently missing data points and values fluctuating between 0.02% and 1.34%. The lack of consistent trend and gaps suggest timing differences or variability in tax payments or recording.

Current portion of operating lease liabilities

This liability first appears in early 2019 around 2.95% and remained fairly stable, slightly fluctuating just below 3%. This consistency suggests steady repayment or recognition of current lease commitments.

Other current liabilities

A gradual decline in proportion occurred from approximately 3.3% in early 2017 to about 2.5% by late 2019, followed by a recovery to around 3.46% by mid-2022, indicating variability in other short-term obligations over time.

Current liabilities (total)

The total current liabilities as a percentage declined from roughly 48.6% in 2017 to about 41.6% by early 2020, then increased steadily, reaching close to 55.9% in the third quarter of 2022. This increasing share suggests a growing emphasis on short-term liabilities within the company’s overall financing mix.

Long-term debt, less current portion

Long-term debt showed an initial increase from 27.45% in early 2017 to a peak above 42% by the end of 2018, followed by a substantial decline to a low near 32.27% in early 2021. In 2022, there was a moderate rebound back toward mid-to-high 30% levels. This trend indicates the company’s active management of long-term debt, possibly reducing debt ahead of the pandemic and increasing leverage thereafter.

Operating lease liabilities, less current portion

Reported from early 2019, these liabilities steadily declined from 16.19% to around 13.95% by mid-2022, reflecting either lease terminations or amortization reducing the long-term lease obligations.

Deferred income taxes

This item remained relatively stable, ranging around 1.1% to 1.7% across the full period, with a small gradual increase toward 1.78% by late 2022, indicating a modest rise in deferred tax liabilities over time.

Other liabilities

Other liabilities as a percentage declined from about 2.85% in early 2017 to around 1.5%–1.8% during 2019–2022, signaling a reduction in miscellaneous long-term obligations relative to total financing.

Noncurrent liabilities (total)

Noncurrent liabilities increased significantly from 31.59% in early 2017 to a peak over 57% in early 2020, before decreasing to the low 50% range by 2022. This pattern illustrates shifts between long and short-term financing, with a concentration of liabilities in the long term before the pandemic and some deleveraging afterward.

Total liabilities

Total liabilities rose steadily from 80.25% in early 2017 to surpass 109% by the end of 2021 and throughout 2022, indicating that total reported liabilities exceed shareholders’ equity, reflecting a highly leveraged financial structure. This increasing leverage trend may raise financial risk considerations.

Common stock, $0.01 par value

This component remained constant at an insignificant level of 0.01%, showing no changes in common stock par value relative to total financing.

Additional paid-in capital

A steady decline occurred from approximately 18.5% of total financing in early 2017 to about 10.56% by late 2022, indicating that equity from paid-in capital has diminished relative to total liabilities and equity over time.

Retained earnings (deficit)

Retained earnings were negative for the majority of the period, deteriorating from a slight positive of 1.25% in early 2017 to a significant deficit reaching -20.39% by late 2022. This reflects accumulated losses or shareholder distributions exceeding earnings over time, exerting downward pressure on equity.

Accumulated other comprehensive income (loss)

While data are only available from late 2019, this component fluctuated slightly around zero, generally negative but close to neutral, suggesting minimal impact on total equity.

Shareholders’ equity (deficit)

Equity levels declined markedly from nearly 20% in early 2017 to negative territory intermittently from 2021 onward, bottoming around -9.85% by the third quarter of 2022. This indicates that liabilities have exceeded equity for extended periods, implying negative net assets and heightened leverage risk.

Total liabilities and shareholders’ equity (deficit)

By definition, this total is stable at 100% throughout, serving as the base for percentage calculations.

In summary, the firm’s financial structure has shifted toward higher leverage over the analyzed period, with total liabilities increasing relative to equity and equity declining into negative territory. Current liabilities have become a larger component of total liabilities and equity, while long-term debt saw fluctuations likely reflecting active debt management. Operating lease liabilities decreased over time, and other liability categories showed varying but generally stable or declining trends. The reduction in shareholders’ equity, particularly through retained earnings deficits, is a notable concern regarding the firm’s financial resilience.