Name: AutoZone Inc. (NYSE:AZO) | Cash Flow Statement
Creator: Stock Analysis on Net

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.

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AutoZone Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020	Aug 31, 2019	Aug 25, 2018
Net income	2,528,426)	2,429,604)	2,170,314)	1,732,972)	1,617,221)	1,337,536)
Depreciation and amortization of property and equipment	497,577)	442,223)	407,683)	397,466)	369,957)	345,084)
Other non-cash charges	44,000)	15,000)	—)	—)	—)	—)
Amortization of debt origination fees	9,264)	11,276)	12,858)	10,730)	8,162)	8,393)
Deferred income taxes	(25,707)	185,594)	(34,432)	51,077)	35,051)	(124,261)
Share-based compensation expense	93,087)	70,612)	56,112)	44,835)	43,255)	43,674)
Pension plan contributions	—)	—)	—)	—)	—)	(11,596)
Pension termination charges (refund)	—)	—)	—)	—)	(6,796)	130,263)
Asset impairment	—)	—)	—)	—)	—)	193,162)
Accounts receivable	(6,674)	(125,732)	(11,039)	(58,564)	(48,512)	7,534)
Merchandise inventories	(89,180)	(1,005,686)	(138,517)	(184,174)	(394,147)	(188,782)
Accounts payable and accrued expenses	(183,679)	1,224,692)	1,029,912)	531,131)	464,176)	319,609)
Income taxes	92,832)	(10,517)	29,467)	90,172)	(10,489)	(6,438)
Other, net	(19,158)	(25,931)	(3,815)	104,463)	50,635)	26,114)
Changes in operating assets and liabilities	(205,859)	56,826)	906,008)	483,028)	61,663)	158,037)
Adjustments to reconcile net income to net cash provided by operating activities	412,362)	781,531)	1,348,229)	987,136)	511,292)	742,756)
Net cash provided by operating activities	2,940,788)	3,211,135)	3,518,543)	2,720,108)	2,128,513)	2,080,292)
Capital expenditures	(796,657)	(672,391)	(621,767)	(457,736)	(496,050)	(521,788)
Proceeds from sale of assets	—)	—)	—)	—)	—)	35,279)
Purchase of marketable debt securities	(66,917)	(56,040)	(63,676)	(90,949)	(55,538)	(104,536)
Proceeds from sale of marketable debt securities	58,357)	53,882)	95,393)	84,237)	53,140)	69,644)
Investment in tax credit equity investments	(98,003)	(31,537)	(41,712)	(45,190)	—)	—)
Proceeds (payments) from disposal of capital assets and other, net	27,042)	57,987)	29,984)	11,763)	6,602)	(459)
Net cash used in investing activities	(876,178)	(648,099)	(601,778)	(497,875)	(491,846)	(521,860)
Net proceeds from (payments of) commercial paper	606,200)	603,400)	—)	(1,030,000)	(295,300)	170,200)
Proceeds from issuance of debt	1,750,000)	750,000)	—)	1,850,000)	750,000)	—)
Repayment of debt	(800,000)	(500,000)	(250,000)	(500,000)	(250,000)	(250,000)
Net proceeds from sale of common stock	182,494)	113,934)	187,757)	68,392)	188,819)	89,715)
Purchase of treasury stock	(3,699,552)	(4,359,991)	(3,378,321)	(930,903)	(2,004,896)	(1,592,013)
Repayment of principal portion of finance lease liabilities	(81,055)	(67,182)	(59,853)	(52,158)	(53,307)	(49,004)
Other, net	(18,169)	(10,658)	—)	(48,967)	(9,404)	(1,052)
Net cash used in financing activities	(2,060,082)	(3,470,497)	(3,500,417)	(643,636)	(1,674,088)	(1,632,154)
Effect of exchange rate changes on cash	8,146)	506)	4,172)	(4,082)	(4,103)	(1,724)
Net increase (decrease) in cash and cash equivalents	12,674)	(906,955)	(579,480)	1,574,515)	(41,524)	(75,446)
Cash and cash equivalents at beginning of period	264,380)	1,171,335)	1,750,815)	176,300)	217,824)	293,270)
Cash and cash equivalents at end of period	277,054)	264,380)	1,171,335)	1,750,815)	176,300)	217,824)

Based on: 10-K (reporting date: 2023-08-26), 10-K (reporting date: 2022-08-27), 10-K (reporting date: 2021-08-28), 10-K (reporting date: 2020-08-29), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-25).

The financial data reveals a consistent growth trajectory in profitability and operational cash generation, which is systematically utilized to fund aggressive share repurchases and capital investments. Operating cash flows have remained robust throughout the period, providing the primary liquidity source for the company's capital allocation strategy.

Operating Cash Flow Dynamics: Net income demonstrates a steady upward trend, increasing from 1,337,536 thousand US dollars in 2018 to 2,528,426 thousand US dollars in 2023. Net cash provided by operating activities followed a similar growth pattern, peaking in 2021 at 3,518,543 thousand US dollars before stabilizing at 2,940,788 thousand US dollars by 2023. This growth is supported by increasing depreciation and amortization charges, which rose from 345,084 thousand US dollars to 497,577 thousand US dollars over the same period, indicating a growing base of fixed assets.
Investing Activity and Capital Expenditure: A consistent increase in capital expenditures is observed, rising from 521,788 thousand US dollars in 2018 to 796,657 thousand US dollars in 2023. The net cash used in investing activities has trended upward in magnitude, reaching 876,178 thousand US dollars in 2023. This suggests a sustained commitment to infrastructure and asset expansion, while investments in marketable debt securities remained relatively stable with frequent cycles of purchase and sale.
Financing Strategy and Shareholder Returns: The most prominent feature of the financing activities is the aggressive purchase of treasury stock. Outflows for share repurchases accelerated significantly, peaking in 2022 at 4,359,991 thousand US dollars. To support these buybacks and operational needs, the company utilized a combination of commercial paper and long-term debt issuance. For instance, proceeds from the issuance of debt reached 1,750,000 thousand US dollars in 2023. The net cash used in financing activities remained heavily negative across all years, reflecting a priority on returning capital to shareholders over maintaining high cash reserves.
Working Capital and Liquidity: Changes in operating assets and liabilities exhibit significant volatility. A notable spike occurred in 2021 with a positive contribution of 906,008 thousand US dollars, whereas 2023 saw a negative impact of 205,859 thousand US dollars. Cash and cash equivalents at the end of the period fluctuated considerably, largely due to the timing of large-scale debt issuances and treasury stock purchases, ending at 277,054 thousand US dollars in 2023.

Overall, the analysis indicates a business model characterized by strong cash conversion from operations. The company maintains a disciplined increase in capital spending while simultaneously leveraging its balance sheet through debt to maximize shareholder value via substantial equity buybacks.

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