Executive Summary

Q4 delivered steady top-line and unit demand: revenue rose 7% to $4.10B with comps +4.4%, balanced across Pro and DIY; EPS was $9.50, up 3% despite a $0.46 headwind from a $35M self‑insurance reserve true‑up tied to historic auto liability claims .
Mix and one-time items weighed on margins: gross margin held flat at 51.3% while SG&A delevered to 33.3% (vs. 32.6% LY), driving operating margin down 80 bps to 18.0% .
2025 guide introduced: comps +2–4%, revenue $17.4–$17.7B, GM% 51.2–51.7%, OM% 19.2–19.7%, EPS $42.60–$43.10, FCF $1.6–$1.9B; capex lifted to $1.2–$1.3B to fund 200–210 net new stores and distribution/hub expansion .
Strategic tone: management highlighted resilient maintenance demand, continued Pro share gains, and inventory/DC investments; flagged tariff uncertainty but expects rational pass‑through if enacted .
Estimates context: S&P Global consensus data was unavailable due to an API limit, so we cannot quantify beats/misses; focus shifts to execution against 2025 targets and tariff path. Values retrieved from S&P Global were unavailable due to rate limits.

What Went Well and What Went Wrong

What Went Well
- Broad-based comp strength: Q4 comps +4.4%, with Pro mid-single-digit and DIY just over 3%, aided by maintenance categories and more typical winter-weather timing .
- Gross margin resilience: GM% was 51.3% (flat YoY) despite Canada mix headwind and Pro mix; management expects 2025 GM expansion (51.2–51.7%) on acquisition cost gains and distribution efficiencies .
- Strategic capacity build: seamless opening of the new Atlanta DC (690k sq ft), progress on Stafford, VA DC for 2H25, and increased hub store investments to bolster availability and share gains .
What Went Wrong
- SG&A deleverage: SG&A rose to 33.3% of sales (+68 bps YoY), reflecting a $35M pre‑tax self‑insurance reserve charge (85 bps) tied to adverse claim development on prior‑year accidents .
- Operating margin compression: OM% declined to 18.0% (−80 bps YoY) on SG&A pressure; distribution transition/transport costs and mix also weighed across the back half .
- Consumer softness in discretionary: continued weakness in tools/accessories/performance categories and slight DIY traffic pressure on a two‑year stack, consistent with cautious consumer backdrop .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024	Vs. S&P Global Consensus
Revenue ($USD Billions)	$3.83	$4.36	$4.10	N/A – unavailable (see note)
Gross Margin %	51.3%	51.6%	51.3%	N/A – unavailable
SG&A % of Sales	32.6%	31.0%	33.3%	N/A – unavailable
Operating Income ($USD Billions)	$0.72	$0.90	$0.74	N/A – unavailable
Operating Margin %	18.8%	20.5%	18.0%	N/A – unavailable
Net Income ($USD Billions)	$0.55	$0.67	$0.55	N/A – unavailable
Diluted EPS ($)	$9.26	$11.41	$9.50	N/A – unavailable
Comparable Store Sales (%)	+3.4%	+1.5%	+4.4%	N/A – unavailable

Note: S&P Global consensus estimates could not be retrieved due to a request limit; as a result, beat/miss analysis versus consensus is not available. Values retrieved from S&P Global were unavailable due to rate limits.

Segment/Channel Revenue Disaggregation (Sales)

Channel	Q4 2023 ($MM)	Q4 2024 ($MM)
DIY Customers	$1,993.2	$2,092.4
Professional Service Provider	$1,765.5	$1,894.7
Other/Adjustments/Vast Auto	$73.2	$108.5
Total Sales	$3,832.0	$4,095.6

Key Operating Metrics (Quarter-End/Quarter)

KPI	Q4 2023	Q4 2024
Inventory Turnover (LTM)	1.7x	1.7x
Avg Inventory per Store ($000s)	$757	$799
AP / Inventory	130.8%	128.0%
Sales/Weighted-Average Sq Ft (Quarter)	$81.06	$82.70
Total Ending Store Count	6,157	6,378

Cash Flow and Capital Returns (FY context)

FY24 CFO $3.05B; FCF $1.99B; FY24 buybacks $2.08B (1.9M shares at $1,072 avg) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Comparable Store Sales	FY 2025	—	2.0% to 4.0%	New
Total Revenue	FY 2025	—	$17.4B to $17.7B	New
Gross Margin %	FY 2025	—	51.2% to 51.7%	New
Operating Margin %	FY 2025	—	19.2% to 19.7%	New
Effective Tax Rate	FY 2025	—	22.6%	New
Diluted EPS	FY 2025	—	$42.60 to $43.10	New
Net Cash from Ops	FY 2025	—	$2.8B to $3.2B	New
Free Cash Flow	FY 2025	—	$1.6B to $1.9B	New
Capital Expenditures	FY 2025	—	$1.2B to $1.3B	New
Net New Store Openings	FY 2025	—	200 to 210	New

Management noted the 2025 EPS guide implies ~5.4% YoY growth at midpoint; higher tax rate largely offsets lapping the Q4’24 insurance charge benefit, while capex/working capital are headwinds to FCF in 2025 .

Earnings Call Themes & Trends

Topic	Q2 2024 (Prior-2)	Q3 2024 (Prior-1)	Q4 2024 (Current)	Trend
Demand/Mix	Soft backdrop; Q2 comps +2.3% with Pro mid-single-digit; noted below-plan DIY	Comps +1.5%; Pro mid-single-digit; DIY −~1%; maintenance solid, discretionary weak	Comps +4.4%; Pro and DIY positive; maintenance strong; discretionary still pressured	Improvement in Q4 vs Q3; maintenance-led; discretionary remains a drag
Pricing/Inflation	GM 50.7% (Q2); stable pricing	Same-SKU inflation ~1%; pricing rational	Same-SKU inflation just under 1%; 2025 assumes ~1%; discipline expected if tariffs rise	Modest inflation embedded; industry pricing discipline reiterated
Supply Chain/Capacity	Capex $900M–$1.0B; DC expansions underway	New Springfield DC; Atlanta DC opening in Q4	Atlanta DC launched; Stafford, VA DC opening 2H25; hub expansion; inventory per store +5.5% YoY	Continued network build and inventory investment
Tariffs/Macro	—	Early tariff risk noted; pass‑through expected based on history	China sourcing mid-20s%; expects rational pass‑through; consumer impact a watch item	Heightened monitoring; confidence in pass‑through, macro elasticity in focus
Technology (Ops)	—	—	Goods‑to‑person automation added in new DCs; case‑by‑case ROI focus	Targeted automation to drive efficiency/accuracy
Insurance/Safety	—	Self‑insurance costs pressured by storms and claims	$35M pre‑tax reserve adjustment for prior years; focus on safety and claims mitigation	One‑time true‑up; ongoing mitigation actions
New Store Growth	190–200 net stores in 2024	2025 target 200–210; strong unit economics	2025 200–210; shift to ~60% owned, 40% leased; higher capex	Accelerating organic growth with owned bias

Management Commentary

“We are pleased to report a strong finish to 2024 in the fourth quarter, highlighted by 4.4% growth in comparable store sales, driven by solid growth in both professional and DIY.” – CEO Brad Beckham .
“SG&A expenses for the fourth quarter included a charge of $35 million to adjust reserves relating to our self-insurance liabilities for historic auto liability claims... net EPS impact $0.46.” .
“We expect to see further expansion of gross margin in 2025... guidance 51.2% to 51.7%.” – President Brent Kirby .
“Our capital expenditures for 2025 are set at $1.2 to $1.3 billion... planning 200 to 210 net new store openings... and increased hub store network investments.” – CEO Brad Beckham .
“China [sourcing is] in the 25‑ish range... Mexico high teens... we’re not the importer of record in many cases… we’ll work with suppliers; industry is rational.” – President Brent Kirby .

Q&A Highlights

Tariff exposure and pass‑through: China sourcing mid‑20s% of COGS; Mexico high teens; management expects industry‑wide rational pass‑through similar to 2018–19 tariffs, while monitoring broader consumer impact .
Comp guide and flow‑through: 2025 comps set at 2–4% on caution around discretionary and consumer; flow‑through depends on mix of pricing vs. share gains and potential tariff dynamics .
Automation ROI: Goods‑to‑person automation added selectively in DCs; focus on efficiency and accuracy, deployed case by case rather than uniform network rollout .
Insurance reserve: $35M pre‑tax reserve true‑up reflects higher severity and slower development timelines; actions underway to improve safety and manage future loss exposure .
Store ownership economics: Owned builds typically $3–4M vs. $0.4–0.6M for leased; returns remain attractive; 2025 cohort tilted ~60% owned .

Estimates Context

We attempted to pull S&P Global consensus for Q4 2024 and the prior two quarters but could not retrieve data due to an API request limit. Therefore, we cannot quantify beat/miss versus consensus for revenue or EPS this quarter. Values retrieved from S&P Global were unavailable due to rate limits.
Implications: With EPS of $9.50 including a $0.46 headwind from the insurance reserve, underlying run‑rate earnings power was stronger than reported; 2025 EPS guide of $42.60–$43.10 targets ~5.4% growth YoY at midpoint, a reasonable base absent tariff shocks and with modest ~1% inflation embedded .

Key Takeaways for Investors

Q4 quality: Healthy mid‑single‑digit comp and balanced Pro/DIY performance with maintenance strength; the EPS “miss risk” from a one‑time reserve is behind the company, and GM% held firm .
2025 set‑up: Guide embeds caution but targets GM expansion and stable OM% despite higher capex/inventory to fuel growth; watch cadence as Q1 faces tougher multi‑year compares and weather variability .
Share gains durable: Pro continues to outgrow, supported by DC/hub build‑out and higher local availability; DIY stable with slight traffic pressure but pricing/complexity supports ticket .
Tariff watch: Mid‑20s China sourcing exposure; management expects rational pass‑through, but broad inflation shocks could pressure DIY discretionary—key near‑term macro swing factor .
Capital deployment: Elevated 2025 capex ($1.2–$1.3B) and 200–210 stores (60% owned) underline confidence in store economics; buybacks remain significant (FY24 $2.08B), with leverage at ~2.0x EBITDAR below 2.5x target .
KPIs stable: Inventory per store up to $799k with AP/inventory at 128%; sales per square foot edged higher; distribution transitions managed without GM erosion .
Trading lens: Near‑term catalysts include winter/spring weather, tariff headlines, and evidence of discretionary recovery; medium‑term thesis hinges on Pro share gains, supply chain advantages, and disciplined pricing.

O REILLY AUTOMOTIVE INC (ORLY)·Q4 2024 Earnings Summary