Executive Summary
AutoZone delivered a solid QQ3 2024 performance characterized by a modest total sales increase and meaningful margin expansion, supported by ongoing international growth and a ramp in commercial initiatives. The quarter showcased: (1) 3.5% total sales growth to approximately $4.2 billion with domestic comps flat and international comps up strongly (9.3% in constant currency), (2) gross margin of 53.5% driven by core gross margin improvements and a favorable LIFO credit backdrop that contributed roughly 102 basis points to gross margin, and (3) robust free cash flow generation ($434 million) and a sizable share repurchase (~$735 million) alongside disciplined capital allocation. The company also advanced key capacity projects (two US distribution centers nearing completion for FY25 and expansion of international DCs in Mexico and Monterrey) and expanded its mega hub network (103 mega hubs, with a plan to exceed 200 at full build-out). Management framed the results within a cautious near-term outlook, highlighting weather and tax-refund timing as near-term headwinds but remaining confident in longer-term growth through domestic commercial expansion, improved parts availability, faster delivery, and international scale." ,
Key Performance Indicators
Key Insights
Revenue: QQ3 2024 revenue of $4.235B, up 3.5% year over year as per management commentary; Domestic comps flat; International comps +9.3% in constant currency. Gross margin: 53.5%, up 102 bps versus prior year, with ex-LIFO gross margin up 87 bps; LIFO credit for the quarter: $24M (vs. $17M last year). Operating income: $900.18M, up 4.9%. Net income: $651.73M; EPS (diluted): $36.69. Tax rate: 18.1% for QQ3. Free cash flow: $434.38M; Operating cash flow: $669.48M; Capex: $235.10M; Cash balance: $...
Financial Highlights
Revenue: QQ3 2024 revenue of $4.235B, up 3.5% year over year as per management commentary; Domestic comps flat; International comps +9.3% in constant currency. Gross margin: 53.5%, up 102 bps versus prior year, with ex-LIFO gross margin up 87 bps; LIFO credit for the quarter: $24M (vs. $17M last year). Operating income: $900.18M, up 4.9%. Net income: $651.73M; EPS (diluted): $36.69. Tax rate: 18.1% for QQ3. Free cash flow: $434.38M; Operating cash flow: $669.48M; Capex: $235.10M; Cash balance: $275.36M. Inventory: $6.155B with days-of-inventory outstanding ≈ 281 days; Current ratio ≈ 0.79, quick ratio ≈ 0.03, cash ratio ≈ 0.03. Total debt: $11.959B; long-term debt: $8.496B; cash + investments: $275M; Leverage target: 2.5x EBITDAR; Negative stockholders’ equity: -$4.838B. Share repurchases: $735M in the quarter with $1.4B remaining under buyback authorization. Mega hubs: 103 in operation, with a plan to exceed 200 at full build-out. International footprint: 872 stores opened internationally (Mexico and Brazil growth: +12 stores in Mexico to 763 total; Brazil to 109). Management commentary notes that weather disruption and delayed tax refunds weighed on domestic momentum in QQ3 but expect improvements in Q4 and beyond through the ongoing commercial rollout and supply chain enhancements. Relevant ratios include gross margin 53.5%, operating margin 21.3%, and EBIT margin 21.3%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
4.24B |
-25.57% |
0.00% |
| Gross Profit |
2.27B |
-24.47% |
0.00% |
| Operating Income |
900.18M |
-26.37% |
0.00% |
| Net Income |
651.73M |
-24.64% |
0.00% |
| EPS |
37.73 |
-21.12% |
0.00% |
Key Financial Ratios
operatingProfitMargin
21.3%
Management Commentary
- Strategy and growth levers: Management emphasized WOW! Customer Service, expansion of domestic commercial and DIY offerings, and aggressive mega hub expansion to lift availability and delivery speed. The company plans to accelerate new mega hub openings well beyond 200 at full build-out, with 103 mega hubs in place and two new hubs opened in Q3. - International expansion: The QQ3 results showcased continued strength in international markets, with same-store sales up 9.3% on a constant-currency basis and 872 international stores as of the quarter, including 12 Mexican store openings (to 763) and 1 in Brazil (to 109). - Supply chain and margins: Gross margin expanded by 102 bps to 53.5% driven by core margin improvements and a favorable LIFO credit; ex-LIFO margin rose about 87 bps. The team noted ongoing opportunities to realize further deflationary benefits from supplier agreements as inflation normalizes. - Commercial momentum: Domestic DIFM (Do-It-For-Market) sales rose 3.3% and represented 31% of domestic auto part sales; 5,843 total commercial programs, with 92% store penetration. - Weather and tax refunds: Management attributed softer February sales to delayed tax refund inflows and colder/wetter weather impacting the Northeast and Midwest; outlook for Q4 calls for weather normalization and better category mix. - Capital allocation and leverage: AutoZone repurchased $735M of stock in the quarter and maintained a leverage target of 2.5x EBITDAR, signaling a balanced approach to growth investment and shareholder return. - Operational execution: Commentary highlighted progress in hub and mega hub capacity, faster delivery initiatives, and the ongoing DC developments in the US (Chao Chilla, CA and New Kent, VA) and expansion in Mexico (Tapeje DC) and Monterrey relocation. - Management tone: Leadership stressed a marathon, not a sprint, approach to growth, underscoring continued investment in capacity, service, and parts availability while maintaining disciplined pricing and operating expense management.
“For the third quarter, our total company same store sales were 0.9% on a constant currency basis. As we have mentioned, international has become a more important part of our growth story in this quarter. We delivered another strong quarter, up over 9.3% on a constant currency basis.”
— Phil Daniele
“We opened 20 net new programs, finishing with 5,843 total programs. Our mega hub locations are now 103 with two net new mega hub opened in Q3, and we expect to open well north of 200 mega hub at full build-out.”
— Jamere Jackson
Forward Guidance
- The company does not provide quantitative earnings guidance for FY24, but management indicated expectations for acceleration in sales through the remainder of the year as weather volatility subsides and commercial initiatives mature. - Near-term catalysts include the completion and ramp of two US distribution centers (Chao Chilla, CA and New Kent, VA) in FY25, expansion of the Tapeje Mexico DC, and the larger Monterrey DC relocation, all of which should improve parts availability and delivery times. - Mega hub program: AutoZone plans to exceed 200 mega hubs at full build-out, which should meaningfully boost commercial penetration and fulfillments across markets, providing a multi-year uplift to sales and efficiency. - International growth remains a cornerstone of the outlook with continued high CC performance (Mexico/Brazil) and store openings, contributing to a more diversified revenue base. - Inflation normalization is expected to dampen ticket-price inflation benefits, and management emphasizes pricing discipline as a complement to volume growth. - Key factors for investors to monitor: trajectory of domestic DIY and commercial comp trends, international same-store sales progression, mega hub and DC rollout cadence, LIFO-related gross margin dynamics and potential Q4 LIFO credits, cash flow generation (especially improvements in working capital and capex intensity), and leverage trajectory toward the 2.5x EBITDAR target.