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O REILLY AUTOMOTIVE INC (ORLY)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 delivered solid top-line and comps but margin pressure and SG&A overshoot kept profitability flat to down YoY: sales $4.14B (+4% YoY), comps +3.6% (high end of plan), gross margin 51.3% (+12 bps YoY), operating margin 17.9% (-100 bps YoY), EPS $9.35 (+2% YoY on lower share count/tax rate) .
  • Results were modestly below S&P Global consensus: revenue ~$4.17B* vs actual $4.14B and EPS 0.658 post-split basis* (≈$9.87 pre-split) vs $9.35 reported, implying small revenue and EPS misses; same‑SKU inflation remained minimal (<0.5%) and tariffs had immaterial Q1 impact * .
  • Management raised FY25 EPS guidance to $42.90–$43.40 (from $42.60–$43.10) on Q1 performance, a lower tax rate, and completed buybacks; all other guidance metrics (comps, revenue, margin, FCF, capex) were maintained .
  • Key narrative: professional outperformed DIY, SG&A per store ran high in Q1 (now tracking toward top end of full-year plan), tariff path remains fluid but company expects rational industry pricing; a 15‑for‑1 stock split (pending shareholder approval) could broaden employee ownership and improve retail accessibility .

Note: Asterisked consensus values are from S&P Global; see Estimates Context section for basis/footnote.

What Went Well and What Went Wrong

  • What Went Well

    • Comps +3.6% at high end of guide; pro mid‑single‑digit, DIY low‑single‑digit, with ticket counts the primary driver; March was strongest month .
    • Gross margin 51.3% (+12 bps YoY) in line with plan; tariff effects were not material in Q1; acquisition cost/pricing remained rational .
    • FY EPS guidance raised; tax rate outlook reduced to 22.4%; free cash flow of $455M vs $439M LY; robust repurchases (431k shares, $559M) .

    Management quote: “We are increasing our diluted earnings per share guidance to a range of $42.90 to $43.40,” driven by Q1 sales, lower tax rate, and buybacks .

  • What Went Wrong

    • Operating margin compressed to 17.9% (vs 18.9% LY) as SG&A per store grew 4.1% and ran above plan (pay/benefits, medical, maintenance/occupancy), now tracking near the high end of full‑year per‑store SG&A growth .
    • EPS growth (+2%) lagged net income (-2%) and margin trends; tax benefit and share count offset operating deleverage .
    • Revenue and EPS modestly missed S&P Global consensus; same‑SKU inflation was <0.5% and slightly below expectations, limiting price tailwind * .

Financial Results

Quarterly performance (oldest → newest):

MetricQ2 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Billions)4.27 4.36 4.10 4.14
Diluted EPS ($)10.55 11.41 9.50 9.35
Gross Margin %50.7% 51.6% 51.3% 51.3%
Operating Margin %20.2% 20.5% 18.0% 17.9%
Net Income Margin %14.6% 15.2% 13.5% 13.0%
Comparable Store Sales YoY %2.3% 1.5% 4.4% 3.6%

Q1 2025 actual vs S&P Global consensus:

MetricActual Q1 2025Consensus (S&P Global)
Revenue ($USD Billions)4.14 4.174*
Diluted EPS ($)9.35 0.658 (post‑split basis)*
  • EPS consensus appears on a post‑split basis (15‑for‑1). On a reported pre‑split basis, 0.658 post‑split ≈ $9.87 implied, versus actual $9.35 (qualitative miss). Values with asterisk retrieved from S&P Global.

Segment breakdown (mix and trend):

MetricQ4 2024Q1 2025
Sales to DIY customers ($USD Billions)2.09 2.05
Sales to Professional customers ($USD Billions)1.89 2.00
Other/Adjustments ($USD Billions)0.11 0.09

Key KPIs

KPIQ4 2024Q1 2025
Free Cash Flow ($USD Millions)331 455
Inventory per Store ($USD Thousands)799 806
Inventory Turns (x)1.7 1.6
AP-to-Inventory (%)128.0% 126.4%
Net New Stores (Quarter)—38
Ending Store Count6,378 6,416

Guidance Changes

MetricPeriodPrevious Guidance (Feb 5, 2025)Current Guidance (Apr 23, 2025)Change
Comparable Store SalesFY 20252.0%–4.0% 2.0%–4.0% Maintained
Total RevenueFY 2025$17.4B–$17.7B $17.4B–$17.7B Maintained
Gross Margin %FY 202551.2%–51.7% 51.2%–51.7% Maintained
Operating Margin %FY 202519.2%–19.7% 19.2%–19.7% Maintained
Effective Tax RateFY 202522.6% 22.4% Lowered
Diluted EPSFY 2025$42.60–$43.10 $42.90–$43.40 Raised
Net Cash from OpsFY 2025$2.8B–$3.2B $2.8B–$3.2B Maintained
Capital ExpendituresFY 2025$1.2B–$1.3B $1.2B–$1.3B Maintained
Free Cash FlowFY 2025$1.6B–$1.9B $1.6B–$1.9B Maintained
Net New StoresFY 2025200–210 200–210 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs/Inflation & PricingAcknowledged tariff risk; same‑SKU inflation just under 1% in Q4; industry rational on pricing .Tariffs fluid; minimal Q1 impact; same‑SKU inflation <0.5%; expect rational pricing; working exemptions/negotiations with suppliers .Elevated focus; watch risk but manageable.
Pro vs DIY demandQ3 softer environment, pro led growth; Q4 both positive, DIY improved with winter categories .Pro mid‑single‑digit comps; DIY low‑single‑digit; tickets drove comp on both .Pro leading; DIY steady.
SG&A/Operating LeverageQ4 hit by auto liability reserve; framed FY25 SG&A per store +2–2.5% (ex‑charge 2.5–3%) .Q1 SG&A per store +4.1% (above plan) from payroll/benefits/medical/maintenance; tracking toward high end of FY guide .Near‑term pressure; managing spend.
Supply Chain/InventoryInvestments in DCs; automation added; inventory per store to rise ~5% in 2025 .Fill rates highest since pre‑COVID; inventory/store $806k; turns 1.6x; confident sourcing optionality (China exposure ~¼) .Availability advantage intact.
Competitive landscape/M&AIndustry consolidation, selective opportunities; monitoring West Coast closures .Some independent disruption; selective wins; tempering materiality; opportunistic small tuck-ins .Ongoing share-gain opportunity.
Technology/AutomationAdded goods‑to‑person in new DCs; case-by-case ROI focus .No new tech updates; reiterates distribution/hub investments (capex $1.2–$1.3B) .Continue executing.
Corporate actions—15‑for‑1 stock split proposed for team accessibility pending shareholder approval .Potentially supportive for retail access.

Management Commentary

  • “Our comp growth of 3.6% in the quarter was at the high end of our expectations… Professional mid‑single digit; DIY low‑single digit… ticket count was the primary driver” — Brad Beckham .
  • “Our first quarter gross margin of 51.3% was a 12 basis point increase… not materially impacted by the changing tariff environment” — Brent Kirby .
  • “We are maintaining our 2025 full year gross margin guidance range of 51.2% to 51.7%” — Brent Kirby .
  • “Our first quarter average SG&A per store growth of 4.1% was above our expectations… puts us on track to finish at the high end of our 2% to 2.5% full year guidance” — Brent Kirby .
  • “For 2025, we now expect an effective tax rate of 22.4%… Free cash flow guidance remains $1.6 to $1.9 billion” — Jeremy Fletcher .
  • “We are increasing our diluted EPS guidance to $42.90 to $43.40” — Brad Beckham .
  • “Board approved a 15:1 split of our common stock, subject to shareholder approval” — Brad Beckham; see split details (record 6/2, distribution 6/9, trading 6/10) .

Q&A Highlights

  • Tariffs: Management would not quantify impact given moving pieces (90‑day pause, auto parts exemptions); committed to negotiating with suppliers and maintaining rate; industry resiliency and pricing power reiterated .
  • Pricing/Elasticity: ORLY views itself as competitively priced on both sides of the business; high‑service model and availability support a reasonable premium where warranted; elasticity risk mainly if broader consumer pressure spikes .
  • SG&A discipline: Q1 SG&A disappointment driven by timing/pay plan enhancements and maintenance; no intent to “invest in price” to chase share; cadence for 2Q/3Q at ~2.5–3% per‑store SG&A growth .
  • Inventory strategy: No pull‑forward demand from customers tied to tariffs; fill rates/in‑stocks strongest since pre‑COVID; continued inventory investment with discipline .
  • Competitive closures/M&A: Pursuing jump‑ball opportunities but tempering magnitude; selective conversions/tuck-ins; pipeline in Mid‑Atlantic/Northeast .

Estimates Context

  • S&P Global consensus for Q1 2025: revenue ~$4.174B*, EPS 0.6579 (post‑split basis)* vs actual $4.1369B and $9.35 reported; this indicates slight revenue and EPS misses. The EPS consensus appears stated on a post‑split basis (15‑for‑1); on a pre‑split basis that equates to ≈$9.87 implied, versus $9.35 reported * .
  • FY 2025 S&P Global revenue consensus ~$17.76B* sits slightly above the top of company guidance ($17.4–$17.7B), while management raised EPS guidance on tax/share count *.

Values with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • Near‑term: Expect modest estimate recalibration toward management’s unchanged revenue/margin ranges but higher EPS bar on tax/share count; watch SG&A cadence after Q1 overshoot and any tariff pass‑through timing; modestly negative read‑through from Q1 revenue/EPS vs S&P consensus *.
  • Narrative supports share‑gain: Pro continues to lead; DIY stable; ORLY’s availability, hub/DC investments and pricing discipline underpin durable gross margin within guide despite tariff noise .
  • Tariffs a known swing factor: Q1 impact de minimis; company expects rational industry pricing and active supplier negotiations; inflation tailwind minimal (<0.5%) so far .
  • Cash returns intact: Strong FCF and continued buybacks (>$559M in Q1) support EPS; leverage 2.03x Debt/EBITDAR with fresh $2.25B revolver capacity .
  • Stock split could broaden participation: 15‑for‑1 split (pending approval) may improve retail/employee accessibility; not fundamental but potentially supportive for liquidity/ownership .
  • Medium term: Capex $1.2–$1.3B funds store/DC expansion; management reaffirmed 200–210 net new stores with emphasis on Mid‑Atlantic/Northeast density and Mexico; supply chain optionality (China ~¼ of products) offers tariff mitigation levers .
Sources: Press release, 8‑K, and Q1 2025 earnings call (with prior quarters for trend).
  • Q1 press release and financials -; 8‑K furnishing with exhibits -.
  • Q1 earnings call transcript (prepared remarks and Q&A) - -.
  • Prior quarters: Q2 2024 PR -; Q3 2024 PR -; Q4 2024 PR -; Q4 2024 call -.
  • Stock split PR .
  • S&P Global consensus estimates marked with asterisks.