2020 Annual Report - O'Reilly Auto Parts

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2020

Annual Report

$8,593

$8,978

$9,536

$10,150

$11,604

$10.73

$12.67

$16.10

$17.88

$23.53

34.3%

35.1%

39.5%

38.7%

48.6%

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

2016

2017

2018

2019

2020

SALES

(in millions)

DILUTED EARNINGS

per SHARE

RETURN on

INVESTED CAPITAL

FINANCIAL HIGHLIGHTS

In thousands, except earnings per share and ratio data and store count

YEAR ENDED DECEMBER 31,

2020

2019

2018

2017

2016

Store Count

5,616

5,460

5,219

5,019

4,829

Percentage Increase in Comparable Store Sales

10.9%

4.0%

3.8%

1.4%

4.8%

9,536,428 $

8,977,726 $

8,593,096

$

Sales

11,604,493 $

10,149,985 $

Operating Income

2,419,336

1,920,726

1,815,184

1,725,400

1,699,206

Net Income

1,752,302

1,391,042

1,324,487

1,133,804

1,037,691

114.5%

104.4%

105.7%

106.0%

105.7%

(762,630)

(635,765)

(350,918)

(249,694)

(142,674)

Total Assets

11,596,642

10,717,160

7,980,789

7,571,885

7,204,189

Total Debt

4,123,217

3,890,527

3,417,122

2,978,390

1,887,019

140,258

397,340

353,667

653,046

1,627,136

Accounts Payable to Inventory

Working Capital

Shareholders�� Equity

Earnings Per Share (assuming dilution)

$

23.53 $

74,462

Weighted-Average Common Shares

Outstanding (assuming dilution)

17.88 $

77,788

16.10 $

12.67 $

82,280

89,502

10.73

96,720

COMPARISON OF TEN-YEAR CUMULATIVE RETURN

This graph shows the cumulative total shareholder return assuming the investment of $100 on December 31, 2010, and the

reinvestment of dividends thereafter, if any, in the common stock of O��Reilly Automotive, Inc., the Standard and Poor��s S&P 500

Retail Index and the Standard and Poor��s S&P 500 Index.

$ 100

$132

$148

2010

2011

2012

$213

2013

$319

2014

$570

$419

$461

$398

2015

2016

2017

O��Reilly Automotive, Inc.

2018

S&P 500 Retail Index

$725

$749

2019

2020

S&P 500 Index

Our commitment to our customers and our team members:

We are enthusiastic, hardworking professionals who are dedicated to teamwork,

safety/wellness, and excellent customer service. We will practice expense control while

setting an example of respect, honesty, and a win-win attitude in everything we do.

"O��Reilly

Strong"

is a key

foundation

for our

success

and cannot

be easily

duplicated.

Andres Quiroz-Marin, Installer Service Specialist, O��Reilly 5796-Aurora, IL.

TO OUR FELLOW

SHAREHOLDERS:

2020

GREG JOHNSON

Chief Executive Officer

and Co-President

was one of the most challenging years in the 63year history of our Company, and words simply

cannot express the gratitude we have for the selfless dedication

and hard work demonstrated by our Team of over 77,000 Team

Members in our stores, distribution centers and corporate offices.

At the beginning of the year, we could never have anticipated

the obstacles we would face during 2020 as a result of the

COVID-19 pandemic, natural disasters and social unrest, and the

disruptions and changes these would impose on every facet of

our daily lives. In trying times, a company��s true merit is put on

full display, and we were, and continue to be, extremely proud

to see our Team demonstrate the O��Reilly Culture to its fullest,

showing that being ��O��Reilly Strong�� is a key foundation for

our success and cannot be easily duplicated. Our commitment

to protecting the health and safety of our Team Members and

customers has remained paramount, and it will continue to be

our top priority as we meet the critical needs of our customers

as an essential service provider. Thank you, Team O��Reilly, for

your commitment to our Culture, our Customers, and to each

other; you continue to be our greatest competitive advantage and

the fuel for our future success.

JEFF SH AW

Chief Operating Officer

and Co-President

BR AD BECKH AM

Executive Vice President of

Store Operations and Sales

BRENT KIRBY

Executive Vice President of

Supply Chain

THOM AS MCFALL

Executive Vice President

and Chief Financial Officer

O��REILLY AUTOMOTIVE 2020 ANNUAL REPORT ? 1

Eduardo Damian Garcia Jimenez, Assistant Store Manager, and Ana Karen Velasco, Store Manager,

at the opening of our new ORMA store, Guadalajara, Jalisco, Mexico, in December 2020.

In the face of unprecedented

challenges, Team O��Reilly

delivered record-breaking

operating performance,

highlighted by full-year

comparable store sales growth

of 10.9% and an incredible

26% increase in operating

profit. The significance of

these outstanding results

cannot be understated, but it

is also extremely important

to note that these results were

achieved by executing our

time-tested business model

of excellent customer service

by our professional parts

people, supported by our

robust distribution network

supplying industry-leading

parts availability. Our mission

is to be the dominant supplier

of auto parts in all of our

markets, and while the strong

results in 2020 were supported

by significant macroeconomic

tailwinds and government

stimulus, our Team��s performance allowed us to gain significant

market share.

We remain optimistic regarding the health and strength of

the automotive aftermarket industry and the ability of our

Team to produce strong top-line results. Miles driven is the

fundamental long-term driver of demand in our industry,

and we expect to benefit as miles driven returns to normal

levels and more consumers return to work. With these miles

being driven by a growing and aging vehicle fleet, we remain

confident consumers will continue to see value in repairing and

O��REILLY AUTOMOTIVE 2020 ANNUAL REPORT ? 2

Krishna Lakkamraju, Outbound Materials Handler, at the opening of our new DC-Lebanon, TN, on March 9, 2020.

Ricardo Bernabe Hernandez, Retail Service Specialist, O��Reilly 281-Des Moines, IA.

maintaining their vehicles, particularly as economic uncertainty

persists. These drivers provide both a short-term and long-term

positive outlook for our industry.

On top of the impressive operating results, our Team was able

to make investments in the continued growth of our business.

During 2020, we successfully opened 156 net, new stores,

including our first greenfield new store opening in Mexico.

For 2021, we have established a growth target of 165 to 175

net, new store openings, which includes an additional five

new stores in Mexico. During 2020, we further expanded our

industry-leading distribution

network with the opening

of our Lebanon, Tennessee,

distribution center in 2020,

and we made significant

progress on our new Horn

Lake, Mississippi, distribution

center, which is expected

to open during the second

quarter of 2021. In addition,

we continue to invest heavily

in enhancing our omnichannel

capabilities to meet our

customers on their terms,

whether they visit a store, call

or click.

As we seek the highest return

for our shareholders�� capital,

reinvesting in our business

remains the top priority. Our

capital strategy continues to

be to enhance our existing

store base and distribution

network, grow organically

through new store openings,

and consolidate the market

Tonny Nguyen, Retail Service Specialist, O'Reilly 396-Lincoln, NE.

O��REILLY AUTOMOTIVE 2020 ANNUAL REPORT ? 3

CUSTOMER SERVICE Coast To Coast

Store Count

200-700+

Distribution Center

Future Distribution Center

100-199

1-99

through prudent acquisitions of existing auto

parts chains. We continue to be pleased with

the strong performance of our new stores,

driven by our Teams of Professional Parts

People delivering excellent customer service

from the day the doors are opened. 2020 also

represented our first full year with operations

in Mexico, after completing the acquisition of

Mayasa Auto Parts at the end of 2019, and we

are delighted with our Team and the expansion

opportunities that lie ahead in the Mexican

automotive aftermarket.

Our Team��s dedication to excellent customer

service and expense control drove free cash

flow of $2.2 billion in 2020, an increase of

$1.2 billion over 2019. After investing $466

million in capital projects across our business,

we were able to return $2.1 billion, to you,

our shareholders, through prudent execution

of our share repurchase program during 2020.

We continue to view share repurchases as an

effective means of returning excess capital

to our shareholders after we have exhausted

O��REILLY AUTOMOTIVE 2020 ANNUAL REPORT ? 4

United States

Alabama...............152

Alaska....................15

Arizona.................142

Arkansas............... 117

California............. 562

Colorado............. 109

Connecticut............ 26

Florida................. 246

Georgia............... 224

Hawaii....................13

Idaho.................... 48

Illinois..................213

Indiana.................156

Iowa...................... 80

Kansas.................. 86

Kentucky............. 105

Louisiana..............127

Maine.................... 34

Massachusetts........51

Michigan..............181

Minnesota.............124

Mississippi............. 82

Missouri............... 204

Montana................ 28

Nebraska............... 49

Nevada.................. 57

New Hampshire...... 33

New Mexico........... 60

New York .............. 20

North Carolina...... 199

North Dakota..........15

Ohio.....................211

Oklahoma.............124

Oregon.................. 71

Pennsylvania......... 37

Rhode Island...........12

South Carolina......115

South Dakota..........19

Tennessee.............185

Texas................... 755

Utah...................... 66

Vermont ................ 24

Virginia.................. 90

Washington..........158

West Virginia...........18

Wisconsin.............128

Wyoming............... 23

Mexico

Guanajuato.............. 3

Jalisco...................19

opportunities to profitably grow our business

and generate strong returns. We remain

committed to a capital structure that upholds

our investment-grade credit ratings and

provides us the ability to take advantage of

growth opportunities, while also optimizing

returns for our shareholders.

We conclude this year��s shareholder letter

by renewing our commitment to you, our

shareholders, to perpetuate the O��Reilly Culture

that has been the driver of our success, and

ensuring it remains the foundation for every

decision we make. 2021 will mark 64 years of

dedication to excellent customer service, and

we consider it an honor to continue to build

on our strong legacy. We are thankful for the

trust and confidence our shareholders place

in the O��Reilly Team, and we look forward to

extending our long record of profitable growth

in 2021, while we continue to navigate the

challenges presented by the pandemic and focus

on protecting the health and safety of our Team

Members and customers.

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