Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

O’Reilly Automotive Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income	2,164,685)	1,752,302)	1,391,042)	1,324,487)	1,133,804)
Depreciation and amortization of property, equipment and intangibles	328,217)	314,635)	270,875)	258,937)	233,845)
Amortization of debt discount and issuance costs	4,388)	4,580)	3,916)	3,470)	2,871)
Deferred income taxes	20,383)	12,381)	21,158)	20,160)	(4,593)
Share-based compensation programs	24,656)	22,747)	21,921)	20,176)	19,401)
Other	2,128)	4,686)	7,529)	9,895)	11,790)
Accounts receivable	(47,427)	(20,515)	(15,577)	18,138)	(27,742)
Inventory	(32,634)	(198,864)	(239,912)	(163,367)	(231,802)
Accounts payable	510,911)	580,608)	213,423)	177,676)	253,265)
Income taxes payable	152,339)	197,739)	(20,139)	22,903)	14,220)
Accrued payroll	18,714)	(11,941)	14,296)	9,373)	5,430)
Accrued benefits and withholdings	9,214)	189,332)	16,868)	28,022)	3,042)
Other	51,736)	(11,087)	23,079)	(2,315)	(9,844)
Changes in operating assets and liabilities	662,853)	725,272)	(7,962)	90,430)	6,569)
Adjustments to reconcile net income to net cash provided by operating activities	1,042,625)	1,084,301)	317,437)	403,068)	269,883)
Net cash provided by operating activities	3,207,310)	2,836,603)	1,708,479)	1,727,555)	1,403,687)
Purchases of property and equipment	(442,853)	(465,579)	(628,057)	(504,268)	(465,940)
Proceeds from sale of property and equipment	9,494)	15,770)	7,118)	4,784)	4,464)
Investment in tax credit equity investments	(180,333)	(164,111)	(33,781)	—)	—)
Other	(1,928)	(975)	(142,026)	(34,818)	(2,747)
Net cash used in investing activities	(615,620)	(614,895)	(796,746)	(534,302)	(464,223)
Proceeds from borrowings on revolving credit facility	—)	1,162,000)	2,708,000)	2,414,000)	3,101,000)
Payments on revolving credit facility	—)	(1,423,000)	(2,734,000)	(2,473,000)	(2,755,000)
Proceeds from the issuance of long-term debt	—)	997,515)	499,955)	498,660)	748,800)
Principal payments on long-term debt	(300,000)	(500,000)	—)	—)	—)
Payment of debt issuance costs	(3,412)	(7,929)	(3,990)	(3,923)	(7,590)
Repurchases of common stock	(2,476,048)	(2,087,194)	(1,432,791)	(1,714,013)	(2,172,530)
Net proceeds from issuance of common stock	84,915)	62,284)	60,206)	72,146)	45,762)
Other	(313)	(253)	(191)	(2,156)	(156)
Net cash used in financing activities	(2,694,858)	(1,796,577)	(902,811)	(1,208,286)	(1,039,714)
Effect of exchange rate changes on cash	(359)	103)	169)	—)	—)
Net increase (decrease) in cash and cash equivalents	(103,527)	425,234)	9,091)	(15,033)	(100,250)
Cash and cash equivalents at beginning of the period	465,640)	40,406)	31,315)	46,348)	146,598)
Cash and cash equivalents at end of the period	362,113)	465,640)	40,406)	31,315)	46,348)

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).

Net Income and Operating Performance: Net income exhibited a consistent upward trend over the five-year period, increasing from approximately $1.13 billion in 2017 to $2.16 billion by the end of 2021. This steady growth reflects expanding profitability. Depreciation and amortization also rose gradually, indicating continual investment in fixed assets and intangibles. Share-based compensation showed a modest rise, signalling stable expense management within employee compensation programs.
Working Capital Components: Components of working capital demonstrated volatility. Accounts receivable experienced fluctuations, with negative balances in some years indicating potential collection challenges or adjustments. Inventory levels showed a notable reduction in negative values by 2021, suggesting improved inventory management. Accounts payable saw significant spikes, particularly in 2020 and 2021, pointing to extended payment terms or increased procurement. Accrued liabilities such as income taxes payable and accrued payroll displayed irregular patterns, with income taxes payable notably increasing in 2020 and 2021, potentially reflecting higher tax obligations aligned with higher profitability.
Cash Flows from Operating Activities: Net cash provided by operating activities followed an increasing trajectory, growing from $1.4 billion in 2017 to over $3.2 billion by 2021. Adjustments to reconcile net income to cash flow from operations also increased substantially, particularly in 2020 and 2021, reinforcing the strong cash-generating capacity of operations.
Investing Activities: Cash used in investing activities remained consistently negative, reflecting ongoing investment in property and equipment, albeit with some decline in outflows in 2020 and 2021 compared to 2019. Proceeds from asset sales varied but generally remained modest relative to purchases. Noteworthy is the increasing investment in tax credit equity projects starting in 2019, indicating a strategic allocation of capital in this area.
Financing Activities: Financing activities typically resulted in net cash outflows across the years. Significant repurchases of common stock were evident, peaking in 2021 at nearly $2.48 billion, which suggests an aggressive approach to returning capital to shareholders. Borrowings on revolving credit facilities showed large inflows initially but tapered off and ceased by 2021. Issuance of long-term debt peaked in 2020, with principal payments on that debt commencing thereafter. The combination of debt repayments and large stock repurchases contributed to increasingly negative financing cash flows.
Cash Position and Liquidity: The cash and cash equivalents balance fluctuated over the period, dropping below $50 million through 2017 to 2019, then markedly increasing to $465.6 million at the end of 2020, before declining again to $362.1 million in 2021. The large cash build in 2020 aligns with elevated cash flows from operations and possibly financing activities. The cash decline in 2021 corresponds with high stock repurchases and other financing uses.
Summary of Financial Trends: The overall financial performance indicates a company with growing profitability and strong operational cash generation. Capital expenditure levels are substantial but well-supported by cash flow. The financing strategy appears focused on debt management and significant capital return to shareholders through stock repurchases. Working capital components show variability, which may require attention to ensure consistent liquidity and efficient asset use. The cash position remains comfortable but demonstrates sensitivity to financing decisions and investment activities.

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O’Reilly Automotive Inc. (NASDAQ:ORLY)

Cash Flow Statement