Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 02, 2021 | |
Document and Entity Information | ||
Document type | 10-Q | |
Document quarterly report | true | |
Document transition report | false | |
Amendment flag | false | |
Current fiscal year end date | --12-31 | |
Document period end date | Jun. 30, 2021 | |
Document fiscal year focus | 2021 | |
Document fiscal period focus | Q2 | |
Entity registrant name | O Reilly Automotive Inc | |
Entity central index key | 0000898173 | |
Entity incorporation, state | MO | |
Entity file number | 000-21318 | |
Entity tax identification number | 27-4358837 | |
Entity address, address | 233 South Patterson Avenue | |
Entity address, city | Springfield | |
Entity address, postal zip code | 65802 | |
Entity address, state | MO | |
City area code | 417 | |
Local phone number | 862-6708 | |
Title of 12(b) security | Common Stock | |
Trading symbol | ORLY | |
Security exchange name | NASDAQ | |
Entity current reporting status | Yes | |
Entity filer category | Large Accelerated Filer | |
Entity small business | false | |
Entity emerging growth company | false | |
Entity interactive data current | Yes | |
Entity shell company | false | |
Entity common stock, shares outstanding | 68,951,739 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | [1] |
Assets | |||
Cash and cash equivalents | $ 631,618 | $ 465,640 | |
Accounts receivable, net | 273,148 | 229,679 | |
Amounts receivable from suppliers | 113,174 | 100,615 | |
Inventory | 3,647,413 | 3,653,195 | |
Other current assets | 72,994 | 50,658 | |
Total current assets | 4,738,347 | 4,499,787 | |
Property and equipment, at cost | 6,767,596 | 6,559,911 | |
Less: accumulated depreciation and amortization | 2,603,442 | 2,464,993 | |
Net property and equipment | 4,164,154 | 4,094,918 | |
Operating lease, right-of-use assets | 2,028,329 | 1,995,127 | |
Goodwill | 881,207 | 881,030 | |
Other assets, net | 137,296 | 125,780 | |
Total assets | 11,949,333 | 11,596,642 | |
Liabilities and shareholders' equity | |||
Accounts payable | 4,583,570 | 4,184,662 | |
Self-insurance reserves | 118,259 | 109,199 | |
Accrued payroll | 129,025 | 88,875 | |
Accrued benefits and withholdings | 221,382 | 242,724 | |
Income taxes payable | 29,776 | 16,786 | |
Current portion of operating lease liabilities | 333,624 | 322,778 | |
Other current liabilities | 355,976 | 297,393 | |
Total current liabilities | 5,771,612 | 5,262,417 | |
Long-term debt | 3,825,177 | 4,123,217 | |
Operating lease liabilities, less current portion | 1,747,267 | 1,718,691 | |
Deferred income taxes | 177,118 | 155,899 | |
Other liabilities | 210,465 | 196,160 | |
Shareholders' equity: | |||
Common stock, $0.01 par value: Authorized shares - 245,000,000 Issued and outstanding shares - 69,132,589 as of June 30, 2021, and 71,123,109 as of December 31, 2020 | 691 | 711 | |
Additional paid-in capital | 1,295,363 | 1,280,841 | |
Retained deficit | (1,075,769) | (1,139,139) | |
Accumulated other comprehensive loss | (2,591) | (2,155) | |
Total shareholders' equity | 217,694 | 140,258 | |
Total liabilities and shareholders' equity | $ 11,949,333 | $ 11,596,642 | |
[1] | The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 69,132,589 | 71,123,109 |
Common stock, shares outstanding | 69,132,589 | 71,123,109 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Income | ||||
Sales | $ 3,465,601 | $ 3,091,595 | $ 6,556,500 | $ 5,568,082 |
Cost of goods sold, including warehouse and distribution expenses | 1,639,223 | 1,454,415 | 3,089,327 | 2,634,996 |
Gross profit | 1,826,378 | 1,637,180 | 3,467,173 | 2,933,086 |
Selling, general and administrative expenses | 1,030,795 | 900,690 | 1,980,485 | 1,773,035 |
Operating income | 795,583 | 736,490 | 1,486,688 | 1,160,051 |
Other income (expense): | ||||
Interest expense | (37,657) | (41,723) | (75,163) | (81,109) |
Interest income | 456 | 635 | 993 | 1,310 |
Other, net | 2,952 | 5,008 | 4,643 | (182) |
Total other expense | (34,249) | (36,080) | (69,527) | (79,981) |
Income before income taxes | 761,334 | 700,410 | 1,417,161 | 1,080,070 |
Provision for income taxes | 175,883 | 168,743 | 330,101 | 247,965 |
Net income | $ 585,451 | $ 531,667 | $ 1,087,060 | $ 832,105 |
Earnings per share-basic: | ||||
Earnings per share | $ 8.41 | $ 7.16 | $ 15.53 | $ 11.15 |
Weighted-average common shares outstanding - basic | 69,618 | 74,205 | 69,997 | 74,611 |
Earnings per share-assuming dilution: | ||||
Earnings per share | $ 8.33 | $ 7.10 | $ 15.39 | $ 11.06 |
Weighted-average common shares outstanding - assuming dilution | 70,264 | 74,833 | 70,640 | 75,246 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Consolidated Statements of Comprehensive Income | ||||
Net income | $ 585,451 | $ 531,667 | $ 1,087,060 | $ 832,105 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | 3,707 | 3,645 | (436) | (27,001) |
Total other comprehensive income (loss) | 3,707 | 3,645 | (436) | (27,001) |
Comprehensive income | $ 589,158 | $ 535,312 | $ 1,086,624 | $ 805,104 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common stock [Member] | Additional paid-in capital [Member] | Retained earnings (deficit) [Member] | Accumulated other comprehensive income (loss) [Member] | Total | |
Balance at beginning of period at Dec. 31, 2019 | $ 756 | $ 1,280,760 | $ (889,066) | $ 4,890 | $ 397,340 | |
Balance (in shares) at Dec. 31, 2019 | 75,619,000 | |||||
Net income | 832,105 | 832,105 | ||||
Total other comprehensive income (loss) | (27,001) | (27,001) | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 8,922 | 8,922 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 27,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 2 | 17,981 | 17,983 | |||
Net issuance of common stock upon exercise of stock options, shares | 121,000 | |||||
Share-based compensation | 10,778 | 10,778 | ||||
Share repurchases, including fees | $ (17) | (28,465) | (622,545) | $ (651,027) | ||
Share repurchases, including fees, shares | (1,669,000) | (1,669,000) | ||||
Balance at end of period at Jun. 30, 2020 | $ 741 | 1,289,976 | (679,506) | (22,111) | $ 589,100 | |
Balance (in shares) at Jun. 30, 2020 | 74,098,000 | |||||
Balance at beginning of period at Mar. 31, 2020 | $ 742 | 1,271,250 | (1,137,392) | (25,756) | 108,844 | |
Balance (in shares) at Mar. 31, 2020 | 74,199,000 | |||||
Net income | 531,667 | 531,667 | ||||
Total other comprehensive income (loss) | 3,645 | 3,645 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 4,818 | 4,818 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 15,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 1 | 11,846 | 11,847 | |||
Net issuance of common stock upon exercise of stock options, shares | 69,000 | |||||
Share-based compensation | 5,254 | 5,254 | ||||
Share repurchases, including fees | $ (2) | (3,192) | (73,781) | $ (76,975) | ||
Share repurchases, including fees, shares | (185,000) | (185,000) | ||||
Balance at end of period at Jun. 30, 2020 | $ 741 | 1,289,976 | (679,506) | (22,111) | $ 589,100 | |
Balance (in shares) at Jun. 30, 2020 | 74,098,000 | |||||
Balance at beginning of period at Dec. 31, 2020 | $ 711 | 1,280,841 | (1,139,139) | (2,155) | $ 140,258 | [1] |
Balance (in shares) at Dec. 31, 2020 | 71,123,000 | 71,123,109 | ||||
Net income | 1,087,060 | $ 1,087,060 | ||||
Total other comprehensive income (loss) | (436) | (436) | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 9,430 | 9,430 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 22,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 2 | 33,770 | 33,772 | |||
Net issuance of common stock upon exercise of stock options, shares | 206,000 | |||||
Share-based compensation | 11,799 | 11,799 | ||||
Share repurchases, including fees | $ (22) | (40,477) | (1,023,690) | $ (1,064,189) | ||
Share repurchases, including fees, shares | (2,218,000) | (2,218,000) | ||||
Balance at end of period at Jun. 30, 2021 | $ 691 | 1,295,363 | (1,075,769) | (2,591) | $ 217,694 | |
Balance (in shares) at Jun. 30, 2021 | 69,133,000 | 69,132,589 | ||||
Balance at beginning of period at Mar. 31, 2021 | $ 697 | 1,274,033 | (1,275,409) | (6,298) | $ (6,977) | |
Balance (in shares) at Mar. 31, 2021 | 69,735,000 | |||||
Net income | 585,451 | 585,451 | ||||
Total other comprehensive income (loss) | 3,707 | 3,707 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 5,340 | 5,340 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 11,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 1 | 23,926 | 23,927 | |||
Net issuance of common stock upon exercise of stock options, shares | 130,000 | |||||
Share-based compensation | 5,887 | 5,887 | ||||
Share repurchases, including fees | $ (7) | (13,823) | (385,811) | $ (399,641) | ||
Share repurchases, including fees, shares | (743,000) | (743,000) | ||||
Balance at end of period at Jun. 30, 2021 | $ 691 | $ 1,295,363 | $ (1,075,769) | $ (2,591) | $ 217,694 | |
Balance (in shares) at Jun. 30, 2021 | 69,133,000 | 69,132,589 | ||||
[1] | The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating activities: | ||
Net income | $ 1,087,060 | $ 832,105 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of property, equipment and intangibles | 158,917 | 151,873 |
Amortization of debt discount and issuance costs | 2,207 | 2,152 |
Deferred income taxes | 21,922 | 14,987 |
Share-based compensation programs | 12,575 | 11,480 |
Other | 1,382 | 1,906 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (45,359) | (34,966) |
Inventory | 6,357 | (78,086) |
Accounts payable | 398,785 | 334,503 |
Income taxes payable | 12,408 | 210,855 |
Other | 56,578 | 112,269 |
Net cash provided by operating activities | 1,712,832 | 1,559,078 |
Investing activities: | ||
Purchases of property and equipment | (222,607) | (244,471) |
Proceeds from sale of property and equipment | 4,566 | 4,846 |
Investment in tax credit equity investments | (1,768) | (95,292) |
Other | (1,083) | (311) |
Net cash used in investing activities | (220,892) | (335,228) |
Financing activities: | ||
Proceeds from borrowings on revolving credit facility | 0 | 1,162,000 |
Payments on revolving credit facility | 0 | (1,423,000) |
Proceeds from the issuance of long-term debt | 0 | 499,795 |
Principal payments on long-term debt | (300,000) | 0 |
Payment of debt issuance costs | (3,299) | (3,840) |
Repurchases of common stock | (1,064,189) | (651,027) |
Net proceeds from issuance of common stock | 41,921 | 25,593 |
Other | (313) | (253) |
Net cash used in financing activities | (1,325,880) | (390,732) |
Effect of exchange rate changes on cash | (82) | (1,101) |
Net increase in cash and cash equivalents | 165,978 | 832,017 |
Cash and cash equivalents at beginning of the period | 465,640 | 40,406 |
Cash and cash equivalents at end of the period | 631,618 | 872,423 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 292,673 | 20,187 |
Interest paid, net of capitalized interest | $ 76,788 | $ 73,091 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation | |
Basis of presentation | NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of O’Reilly Automotive, Inc. and its subsidiaries (the “Company” or “O’Reilly”) have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2021, are not necessarily indicative of the results that may be expected for the year ended December 31, 2021. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Principles of consolidation: The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 6 Months Ended |
Jun. 30, 2021 | |
Variable Interest Entities | |
Variable interest entities | NOTE 2 – VARIABLE INTEREST ENTITIES The Company invests in certain tax credit funds that promote renewable energy. These investments generate a return primarily through the realization of federal tax credits and other tax benefits. The Company accounts for the tax attributes of its renewable energy investments using the deferral method. Under this method, realized investment tax credits and other tax benefits are recognized as a reduction of the renewable energy investments. The Company has determined its investment in these tax credit funds were investments in variable interest entities (“VIEs”). The Company analyzes any investments in VIEs at inception and again if certain triggering events are identified to determine if it is the primary beneficiary. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIEs’ economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. As of June 30, 2021, the Company had invested in four unconsolidated tax credit fund entities that were considered to be VIEs and concluded it was not the primary beneficiary of any of the entities, as it did not have the power to control the activities that most significantly impact the entities, and has therefore accounted for these investments using the equity method. The Company’s maximum exposure to losses associated with these VIEs is generally limited to its net investment, which was $20.3 million as of June 30, 2021, and was included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets. During the six months ended June 30, 2020, the Company recognized investment tax credits in the amount of $108.3 million, all of which were realized through reductions in cash income taxes paid and were reflected as a component of the change in Income taxes payable on the accompanying Condensed Consolidated Statements of Cash Flows for the respective periods. During the second quarter ended June 30, 2021, the Company entered into an agreement to make certain additional capital contributions to one of its tax credit funds, which promotes renewable energy through the development of solar energy farms, for the primary purpose of receiving renewable energy tax credits. Per the terms of the agreement, the Company is required to make capital contributions totaling approximately $160.0 million upon achievement of project milestones by the solar energy farms, the timing of which is variable and outside of the Company’s control. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Fair value measurements | NOTE 3 – FAIR VALUE MEASUREMENTS The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company uses the income and market approaches to determine the fair value of its assets and liabilities. The three levels of the fair value hierarchy are set forth below: ● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. ● Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly. ● Level 3 – Unobservable inputs for the asset or liability. Financial assets and liabilities measured at fair value on a recurring basis: The Company invests in various marketable securities with the intention of selling these securities to fulfill its future unsecured obligations under the Company’s nonqualified deferred compensation plan. See Note 11 for further information concerning the Company’s benefit plans. The Company’s marketable securities were accounted for as trading securities and the carrying amount of its marketable securities were included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 2020. The Company recorded an increase in fair value related to its marketable securities in the amount of $2.5 million and $4.5 million for the three months ended June 30, 2021 and 2020, respectively, which were included in “Other income (expense)” on the accompanying Condensed Consolidated Statements of Income. The Company recorded an increase in fair value related to its marketable securities in the amount of $4.0 million and a decrease in fair value to its marketable securities in the amount of $0.7 million for the six months ended June 30, 2021 and 2020, respectively, which were included in “Other income (expense)” on the accompanying Condensed Consolidated Statements of Income. The tables below identify the estimated fair value of the Company’s marketable securities, determined by reference to quoted market prices (Level 1), as of June 30, 2021, and December 31, 2020 (in thousands): June 30, 2021 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 49,818 $ — $ — $ 49,818 December 31, 2020 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 40,411 $ — $ — $ 40,411 Non-financial assets and liabilities measured at fair value on a nonrecurring basis: Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. These non-financial assets and liabilities may include assets acquired in a business combination or property and equipment that are determined to be impaired. As of June 30, 2021, and December 31, 2020, the Company did not have any non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition. Fair value of financial instruments: The carrying amounts of the Company’s senior notes and unsecured revolving credit facility borrowings are included in “Long-term debt” and “Current portion of long-term debt” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 2020. See Note 6 for further information concerning the Company’s senior notes and unsecured revolving credit facility. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair value as of June 30, 2021, and December 31, 2020, was determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands): June 30, 2021 December 31, 2020 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 3,825,177 $ 4,173,269 $ 4,123,217 $ 4,647,595 The carrying amount of the Company’s unsecured revolving credit facility approximates fair value (Level 2), as borrowings under the facility bear variable interest at current market rates. The accompanying Condensed Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts receivable, amounts receivable from suppliers and accounts payable. Due to the short-term nature of these financial instruments, the Company believes that the carrying values of these instruments approximate their fair values. |
ALLOWANCE FOR DOUBTFUL ACCOUNTS
ALLOWANCE FOR DOUBTFUL ACCOUNTS | 6 Months Ended |
Jun. 30, 2021 | |
Allowance for Doubtful Accounts | |
Allowance for doubtful accounts | NOTE 4 – ALLOWANCE FOR DOUBTFUL ACCOUNTS The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current expectations of future economic and industry trends, changes in customer payment terms and management’s expectations. Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable. The Company grants credit to certain professional service provider and jobber customers who meet the Company’s pre-established credit requirements. Concentrations of credit risk with respect to these receivables are limited because the Company’s customer base consists of a large number of small customers, spreading the credit risk across a broad base regarded as a single class of financing receivable by the Company. The Company also controls this credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures. Generally, the Company does not require security when credit is granted to customers. Credit is granted to customers on a short-term basis, consisting primarily of daily, weekly or monthly accounts. Credit losses are provided for in the Company’s condensed consolidated financial statements and have consistently been within management’s expectations. The Company’s allowance for doubtful accounts are included in “Accounts receivable, net” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 2020. The following table identifies the changes in the Company’s allowance for doubtful accounts for the six months ended June 30, 2021 (in thousands): Allowance for doubtful accounts, balance at December 31, 2020 $ 12,670 Reserve accruals 2,027 Uncollectable accounts written-off (2,400) Foreign currency translation (2) Allowance for doubtful accounts, balance at June 30, 2021 $ 12,295 The Company receives concessions from its suppliers through a variety of programs and arrangements, including allowances for new stores and warranties, volume purchase rebates and co-operative advertising. Co-operative advertising allowances that are incremental to the Company’s advertising program, specific to a product or event and identifiable for accounting purposes are reported as a reduction of advertising expense in the period in which the advertising occurred. All other supplier concessions are recognized as a reduction to the cost of sales. Amounts receivable from suppliers also include amounts due to the Company for changeover merchandise and product returns. The Company regularly reviews supplier receivables for collectability and assesses the need for a reserve for uncollectable amounts based on an evaluation of the Company’s suppliers’ financial positions and corresponding abilities to meet financial obligations. Management does not believe there is a reasonable likelihood that the Company will be unable to collect the aggregate amounts receivable from suppliers, and the Company did not record a reserve for uncollectable amounts from suppliers in the condensed consolidated financial statements as of June 30, 2021, and December 31, 2020. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Leases | NOTE 5 – LEASES The Company leases certain office space, retail stores, distribution centers and equipment under long-term, non-cancelable operating leases. The following table summarizes Total lease cost for the three and six months ended June 30, 2021 and 2020, which were primarily included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income (in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Operating lease cost $ 87,363 $ 83,461 $ 174,582 $ 166,656 Short-term operating lease cost 1,661 941 3,594 2,725 Variable operating lease cost 22,645 20,776 44,589 41,109 Sublease income (1,185) (1,187) (2,383) (2,362) Total lease cost $ 110,484 $ 103,991 $ 220,382 $ 208,128 The following table summarizes other lease-related information for the six months ended June 30, 2021: For the Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 169,864 $ 165,665 Right-of-use assets obtained in exchange for new operating lease liabilities 165,193 125,160 |
FINANCING
FINANCING | 6 Months Ended |
Jun. 30, 2021 | |
Financing | |
Financing | NOTE 6 – FINANCING The following table identifies the amounts included in “Current portion of long-term debt” and “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 2020 (in thousands): June 30, 2021 December 31, 2020 4.625% Senior Notes due 2021, effective interest rate of 4.643% $ — $ 300,000 3.800% Senior Notes due 2022, effective interest rate of 3.845% 300,000 300,000 3.850% Senior Notes due 2023, effective interest rate of 3.851% 300,000 300,000 3.550% Senior Notes due 2026, effective interest rate of 3.570% 500,000 500,000 3.600% Senior Notes due 2027, effective interest rate of 3.619% 750,000 750,000 4.350% Senior Notes due 2028, effective interest rate of 4.383% 500,000 500,000 3.900% Senior Notes due 2029, effective interest rate of 3.901% 500,000 500,000 4.200% Senior Notes due 2030, effective interest rate of 4.205% 500,000 500,000 1.750% Senior Notes due 2031, effective interest rate of 1.798% 500,000 500,000 Total principal amount of debt 3,850,000 4,150,000 Less: Unamortized discount and debt issuance costs 24,823 26,783 Total long-term debt $ 3,825,177 $ 4,123,217 Unsecured revolving credit facility: On June 15, 2021, the Company entered into a new credit agreement (the “Credit Agreement”). The Credit Agreement provides for a five-year $1.8 billion unsecured revolving credit facility (the “Revolving Credit Facility”) arranged by JPMorgan Chase Bank, N.A., which is scheduled to mature in June of 2026. The Credit Agreement includes a $200 million sub-limit for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility. As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $900 million, provided that the aggregate amount of the commitments does not exceed $2.7 billion at any time. In conjunction with the closing of the Credit Agreement, the Company’s previous credit agreement, which was originally entered into on April 5, 2017, was terminated (the “Terminated Credit Agreement”), and all outstanding loans and commitments under the Terminated Credit Agreement were terminated and replaced by the loans and commitments under the Credit Agreement. As of June 30, 2021, and December 31, 2020, the Company had outstanding letters of credit, primarily to support obligations related to workers’ compensation, general liability and other insurance policies, in the amounts of $84.0 million and $66.4 million, respectively, reducing the aggregate availability under the credit agreements by those amounts. As of June 30, 2021, and December 31, 2020, the Company had no outstanding borrowings under its revolving credit facilities. Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at either an Alternate Base Rate or an Adjusted LIBO Rate (both as defined in the Credit Agreement) plus an applicable margin. The Credit Agreement includes customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate. Swing line loans made under the Revolving Credit Facility bear interest at an Alternate Base Rate plus the applicable margin for Alternate Base Rate loans. In addition, the Company pays a facility fee on the aggregate amount of the commitments under the Credit Agreement in an amount equal to a percentage of such commitments. The interest rate margins and facility fee are based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s Ratings Services, subject to limited exceptions. As of June 30, 2021, based upon the Company’s current credit ratings, its margin for Alternate Base Rate loans was 0.000%, its margin for Eurodollar Revolving Loans was 0.900% and its facility fee was 0.100%. The Credit Agreement contains certain covenants, including limitations on subsidiary indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00. The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense to fixed charges. Fixed charges include interest expense, capitalized interest and rent expense. The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense. Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that the Company should default on any covenant (subject to customary grace periods, cure rights and materiality thresholds) contained in the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement and litigation from lenders. As of June 30, 2021, the Company remained in compliance with all covenants under the Credit Agreement. Senior notes: On June 15, 2021, the Company redeemed its $300 million aggregate principal amount of unsecured 4.625% Senior Notes due 2021 at a redemption price of $300 million, plus accrued and unpaid interest up to, but not including, the date of redemption. As of June 30, 2021, the Company has issued and outstanding a cumulative $3.9 billion aggregate principal amount of unsecured senior notes, which are due between 2022 and 2031, with UMB Bank, N.A. and U.S. Bank as trustees. Interest on the senior notes, ranging from 1.750% to 4.350%, is payable semi-annually and is computed on the basis of a 360-day year. None of the Company’s subsidiaries is a guarantor under the senior notes. Each of the senior notes is subject to certain customary covenants, with which the Company complied as of June 30, 2021. |
WARRANTIES
WARRANTIES | 6 Months Ended |
Jun. 30, 2021 | |
Warranties | |
Warranties | NOTE 7 – WARRANTIES The Company provides warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company, in lieu of warranty obligations and estimated warranty expense, are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 2020; the following table identifies the changes in the Company’s aggregate product warranty liabilities for the six months ended June 30, 2021 (in thousands): Warranty liabilities, balance at December 31, 2020 $ 65,886 Warranty claims (58,628) Warranty accruals 62,378 Foreign currency translation (2) Warranty liabilities, balance at June 30, 2021 $ 69,634 |
SHARE REPURCHASE PROGRAM
SHARE REPURCHASE PROGRAM | 6 Months Ended |
Jun. 30, 2021 | |
Share Repurchase Program | |
Share repurchase program | NOTE 8 – SHARE REPURCHASE PROGRAM In January of 2011, the Company’s Board of Directors approved a share repurchase program. Under the program, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements and overall market conditions. The Company’s Board of Directors may increase or otherwise modify, renew, suspend or terminate the share repurchase program at any time, without prior notice. As announced on February 10, 2021, and May 27, 2021, the Company’s Board of Directors each time approved a resolution to increase the authorization amount under the share repurchase program by an additional $1.0 billion and $1.5 billion, respectively, resulting in a cumulative authorization amount of $17.3 billion. The additional authorizations are effective for three years, beginning on their respective announcement date. The following table identifies shares of the Company’s common stock that have been repurchased as part of the Company’s publicly announced share repurchase program for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share data): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Shares repurchased 743 185 2,218 1,669 Average price per share $ 537.25 $ 417.79 $ 479.69 $ 390.14 Total investment $ 399,634 $ 76,974 $ 1,064,167 $ 651,011 As of June 30, 2021, the Company had $1.9 billion remaining under its share repurchase authorizations. Subsequent to the end of the second quarter and through August 6, 2021, the Company repurchased 0.3 million additional shares of its common stock under its share repurchase program, at an average price of $596.11, for a total investment of $169.0 million. The Company has repurchased a total of 83.5 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through August 6, 2021, at an average price of $185.60, for a total aggregate investment of $15.5 billion. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | NOTE 9 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) includes adjustments for foreign currency translations. The tables below summarize activity for changes in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020 (in thousands): Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at March 31, 2021 $ (6,298) $ (6,298) Change in accumulated other comprehensive income 3,707 3,707 Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at December 31, 2020 $ (2,155) $ (2,155) Change in accumulated other comprehensive loss (436) (436) Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at March 31, 2020 $ (25,756) $ (25,756) Change in accumulated other comprehensive income 3,645 3,645 Accumulated other comprehensive loss, balance at June 30, 2020 $ (22,111) $ (22,111) Foreign Total Accumulated Other Currency (1) Comprehensive Income (Loss) Accumulated other comprehensive income, balance at December 31, 2019 $ 4,890 $ 4,890 Change in accumulated other comprehensive loss (27,001) (27,001) Accumulated other comprehensive loss, balance at June 30, 2020 $ (22,111) $ (22,111) (1) Foreign currency translation is not shown net of additional U.S. tax, as other basis differences of non-U.S. subsidiaries are intended to be permanently reinvested. |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2021 | |
Revenue | |
Revenue | NOTE 10 – REVENUE The table below identifies the Company’s revenues disaggregated by major customer type for the three and six months ended June 30, 2021 and 2020 (in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Sales to do-it-yourself customers $ 1,999,401 $ 1,853,115 $ 3,780,567 $ 3,198,597 Sales to professional service provider customers 1,384,217 1,175,030 2,623,303 2,245,229 Other sales and sales adjustments 81,983 63,450 152,630 124,256 Total sales $ 3,465,601 $ 3,091,595 $ 6,556,500 $ 5,568,082 As of June 30, 2021, and December 31, 2020, the Company had recorded a deferred revenue liability of $4.8 million and $4.5 million, respectively, related to its loyalty program, which were included in “Other liabilities” on the accompanying Condensed Consolidated Balance Sheets. During the three months ended June 30, 2021 and 2020, the Company recognized $3.8 million of deferred revenue related to its loyalty program, which were included in “Sales” on the accompanying Condensed Consolidated Statements of Income. During the six months ended June 30, 2021 and 2020, the Company recognized $7.2 million and $6.9 million, respectively, of deferred revenue related to its loyalty program, which were included in “Sales” on the accompanying Condensed Consolidated Statements of Income. See Note 7 for information concerning the expected costs associated with the Company’s assurance warranty obligations. |
SHARE-BASED COMPENSATION AND BE
SHARE-BASED COMPENSATION AND BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation and Benefit Plans | |
Share-based compensation and benefit plans | NOTE 11 – SHARE-BASED COMPENSATION AND BENEFIT PLANS The Company recognizes share-based compensation expense based on the fair value of the grants, awards or shares at the time of the grant, award or issuance. Share-based compensation includes stock option awards, restricted stock awards and stock appreciation rights issued under the Company’s incentive plans and stock issued through the Company’s employee stock purchase plan. Stock options: The Company’s incentive plans provide for the granting of stock options for the purchase of common stock of the Company to certain key employees of the Company. Employee stock options are granted at an exercise price that is equal to the closing market price of the Company’s common stock on the date of the grant. Employee stock options granted under the plans expire after 10 years and typically vest 25% per year, over four years. The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period or minimum required service period. The table below identifies stock option activity under these plans during the six months ended June 30, 2021 (in thousands, except per share data): Shares Weighted- Average (in thousands) Exercise Price Outstanding at December 31, 2020 1,500 $ 248.52 Granted 110 467.05 Exercised (206) 163.63 Forfeited or expired (9) 337.54 Outstanding at June 30, 2021 1,395 $ 277.79 Exercisable at June 30, 2021 959 $ 229.94 The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes model requires the use of assumptions, including the risk free rate, expected life, expected volatility and expected dividend yield. ● Risk-free interest rate – The United States Treasury rates in effect at the time the options are granted for the options’ expected life. ● Expected life – Represents the period of time that options granted are expected to be outstanding. The Company uses historical experience to estimate the expected life of options granted. ● Expected volatility – Measure of the amount, by which the Company’s stock price is expected to fluctuate, based on a historical trend. ● Expected dividend yield – The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends. The table below identifies the weighted-average assumptions used for grants awarded during the six months ended June 30, 2021 and 2020: June 30, 2021 2020 Risk free interest rate 0.83 % 0.96 % Expected life 6.2 Years 6.2 Years Expected volatility 30.0 % 25.8 % Expected dividend yield — % — % The following table summarizes activity related to stock options awarded by the Company for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share data): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Compensation expense for stock options awarded $ 5,105 $ 4,557 $ 10,367 $ 9,435 Income tax benefit from compensation expense related to stock options 1,314 1,148 2,668 2,377 The weighted-average grant-date fair value of options granted during the six months ended June 30, 2021, was $144.30, compared to $105.54 for the six months ended June 30, 2020. The remaining unrecognized compensation expense related to unvested stock option awards at June 30, 2021, was $37.4 million, and the weighted-average period of time over which this cost will be recognized is 2.6 years. Other share-based compensation plans: The Company sponsors other share-based compensation plans: an employee stock purchase plan and incentive plans that provide for the awarding of shares of restricted stock to certain key employees and directors. The Company’s employee stock purchase plan (the “ESPP”) permits eligible employees to purchase shares of the Company’s common stock at 85% of the fair market value. The fair value of shares issued under the ESPP is based on the average of the high and low market prices of the Company’s common stock during the offering periods, and compensation expense is recognized based on the discount between the fair value and the employee purchase price for the shares sold to employees. Restricted stock awarded under the incentive plans to certain key employees and directors vests after one-year or evenly over a three-year period and is held in escrow until such vesting has occurred. The fair value of shares awarded under the incentive plans is based on the closing market price of the Company’s common stock on the date of the award, and compensation expense is recorded evenly over the vesting period or the minimum required service period. The table below summarizes activity related to the Company’s other share-based compensation plans for the three and six months ended June 30, 2021 and 2020 (in thousands): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Compensation expense for shares issued under the ESPP $ 782 $ 697 $ 1,432 $ 1,343 Income tax benefit from compensation expense related to shares issued under the ESPP 201 176 368 338 Compensation expense for restricted shares awarded 396 351 776 702 Income tax benefit from compensation expense related to restricted awards $ 102 $ 88 $ 200 $ 177 Profit sharing and savings plan: The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age and have completed one year of service. The Company makes matching contributions equal to 100% of the first 2% of each employee’s wages that are contributed and 25% of the next 4% of each employee’s wages that are contributed. An employee generally must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. The Company may also make additional discretionary profit sharing contributions to the plan on an annual basis as determined by the Board of Directors. The Company did not make any discretionary contributions to the 401(k) Plan during the six months ended June 30, 2021 or 2020. The Company expensed matching contributions under the 401(k) Plan in the amount of $8.7 million and $7.3 million for the three months ended June 30, 2021 and 2020, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. The Company expensed matching contributions under the 401(k) Plan in the amount of $15.9 million and $14.4 million for the six months ended June 30, 2021 and 2020, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. Nonqualified deferred compensation plan: The Company sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitations under the Internal Revenue Code. The Deferred Compensation Plan provides these employees with the opportunity to defer the full 6% of matched compensation, including salary and incentive based compensation that was precluded under the Company’s 401(k) Plan, which is then matched by the Company using the same formula as the 401(k) Plan. An employee generally must be employed on December 31 to receive that year’s Company matching contribution, with the matching contribution funded annually at the beginning of the subsequent year following the year in which the matching contribution was earned. In the event of bankruptcy, the assets of this plan are available to satisfy the claims of general creditors. The Company has an unsecured obligation to pay, in the future, the value of the deferred compensation and Company match, adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. The liability for compensation deferred under the Deferred Compensation Plan was $49.8 million and $40.4 million as of June 30, 2021, and December 31, 2020, respectively, which was included in “Other liabilities” on the accompanying Condensed Consolidated Balance Sheets. The Company expensed matching contributions under the Deferred Compensation Plan in the amount of $0.1 million and less than $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. The Company expensed matching contributions under the Deferred Compensation Plan in the amount of $0.1 million for the six months ended June 30, 2021 and 2020, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. Stock appreciation rights: The Company’s incentive plans provide for the granting of stock appreciation rights, which expire after 10 years and vest 25% per year, over four years, and are settled in cash. As of June 30, 2021, there were 9,576 stock appreciation rights outstanding, and during the six months ended June 30, 2021, there were 1,427 stock appreciation rights granted. The liability for compensation to be paid for redeemed stock appreciation rights was $0.6 million and $0.3 million as of June 30, 2021, and December 31, 2020, respectively, which were included in “Other liabilities” on the Condensed Consolidated Balance Sheets. Compensation expense for stock appreciation rights was $0.2 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. Compensation expense for stock appreciation rights was $0.4 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share | |
Earnings per share | NOTE 12 – EARNINGS PER SHARE The following table illustrates the computation of basic and diluted earnings per share for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share data): For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator (basic and diluted): Net income $ 585,451 $ 531,667 $ 1,087,060 $ 832,105 Denominator: Weighted-average common shares outstanding – basic 69,618 74,205 69,997 74,611 Effect of stock options (1) 646 628 643 635 Weighted-average common shares outstanding – assuming dilution 70,264 74,833 70,640 75,246 Earnings per share: Earnings per share-basic $ 8.41 $ 7.16 $ 15.53 $ 11.15 Earnings per share-assuming dilution $ 8.33 $ 7.10 $ 15.39 $ 11.06 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 122 341 187 348 Weighted-average exercise price per share of antidilutive stock options (1) $ 463.76 $ 378.84 $ 449.20 $ 378.29 (1) See Note 11 for further information concerning the terms of the Company’s share-based compensation plans. For the three and six months ended June 30, 2021 and 2020, the computation of diluted earnings per share did not include certain securities. These securities represent underlying stock options not included in the computation of diluted earnings per share, because the inclusion of such equity awards would have been antidilutive. Subsequent to the end of the second quarter and through August 6, 2021, the Company repurchased 0.3 million additional shares of its common stock under its share repurchase program, at an average price of $596.11, for a total investment of 169.0 million. |
LEGAL MATTERS
LEGAL MATTERS | 6 Months Ended |
Jun. 30, 2021 | |
Legal Matters | |
Legal matters | NOTE 13 – LEGAL MATTERS O’Reilly is currently involved in litigation incidental to the ordinary conduct of the Company’s business. The Company accrues for litigation losses in instances where a material adverse outcome is probable and the Company is able to reasonably estimate the probable loss. The Company accrues for an estimate of material legal costs to be incurred in pending litigation matters. Although the Company cannot ascertain the amount of liability that it may incur from any of these matters, it does not currently believe that, in the aggregate, these matters, taking into account applicable insurance and accruals, will have a material adverse effect on its consolidated financial position, results of operations or cash flows in a particular quarter or annual period. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2021 | |
Recent Accounting Pronouncements | |
Recent accounting pronouncements | NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS No recent accounting pronouncements or changes in accounting pronouncements have occurred since those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, that are of material significance, or have potential material significance, to the Company. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Basis of Presentation. | |
Principles of consolidation, policy | Principles of consolidation: The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All inter-company balances and transactions have been eliminated in consolidation. |
VARIABLE INTEREST ENTITIES (Pol
VARIABLE INTEREST ENTITIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Variable Interest Entities | |
Variable interest entities, policy | The Company invests in certain tax credit funds that promote renewable energy. These investments generate a return primarily through the realization of federal tax credits and other tax benefits. The Company accounts for the tax attributes of its renewable energy investments using the deferral method. Under this method, realized investment tax credits and other tax benefits are recognized as a reduction of the renewable energy investments. The Company has determined its investment in these tax credit funds were investments in variable interest entities (“VIEs”). The Company analyzes any investments in VIEs at inception and again if certain triggering events are identified to determine if it is the primary beneficiary. The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIEs’ economic performance including, but not limited to, the ability to direct financing, leasing, construction and other operating decisions and activities. As of June 30, 2021, the Company had invested in four unconsolidated tax credit fund entities that were considered to be VIEs and concluded it was not the primary beneficiary of any of the entities, as it did not have the power to control the activities that most significantly impact the entities, and has therefore accounted for these investments using the equity method. The Company’s maximum exposure to losses associated with these VIEs is generally limited to its net investment, which was $20.3 million as of June 30, 2021, and was included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets. During the six months ended June 30, 2020, the Company recognized investment tax credits in the amount of $108.3 million, all of which were realized through reductions in cash income taxes paid and were reflected as a component of the change in Income taxes payable on the accompanying Condensed Consolidated Statements of Cash Flows for the respective periods. During the second quarter ended June 30, 2021, the Company entered into an agreement to make certain additional capital contributions to one of its tax credit funds, which promotes renewable energy through the development of solar energy farms, for the primary purpose of receiving renewable energy tax credits. Per the terms of the agreement, the Company is required to make capital contributions totaling approximately $160.0 million upon achievement of project milestones by the solar energy farms, the timing of which is variable and outside of the Company’s control. |
FAIR VALUE MEASUREMENTS (Polici
FAIR VALUE MEASUREMENTS (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements, policy | The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The Company uses the income and market approaches to determine the fair value of its assets and liabilities. The three levels of the fair value hierarchy are set forth below: ● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. ● Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly. ● Level 3 – Unobservable inputs for the asset or liability. |
ALLOWANCE FOR DOUBTFUL ACCOUN_2
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Allowance for Doubtful Accounts | |
Allowances for doubtful accounts, policy | The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current expectations of future economic and industry trends, changes in customer payment terms and management’s expectations. Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable. The Company grants credit to certain professional service provider and jobber customers who meet the Company’s pre-established credit requirements. Concentrations of credit risk with respect to these receivables are limited because the Company’s customer base consists of a large number of small customers, spreading the credit risk across a broad base regarded as a single class of financing receivable by the Company. The Company also controls this credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures. Generally, the Company does not require security when credit is granted to customers. Credit is granted to customers on a short-term basis, consisting primarily of daily, weekly or monthly accounts. Credit losses are provided for in the Company’s condensed consolidated financial statements and have consistently been within management’s expectations. |
Amounts receivable from suppliers, policy | The Company receives concessions from its suppliers through a variety of programs and arrangements, including allowances for new stores and warranties, volume purchase rebates and co-operative advertising. Co-operative advertising allowances that are incremental to the Company’s advertising program, specific to a product or event and identifiable for accounting purposes are reported as a reduction of advertising expense in the period in which the advertising occurred. All other supplier concessions are recognized as a reduction to the cost of sales. Amounts receivable from suppliers also include amounts due to the Company for changeover merchandise and product returns. The Company regularly reviews supplier receivables for collectability and assesses the need for a reserve for uncollectable amounts based on an evaluation of the Company’s suppliers’ financial positions and corresponding abilities to meet financial obligations. |
WARRANTIES (Policies)
WARRANTIES (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Warranties | |
Warranties, policy | The Company provides warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties. The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers. Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims. For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims. Differences between supplier allowances received by the Company, in lieu of warranty obligations and estimated warranty expense, are recorded as an adjustment to cost of sales. Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line. The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Measurements | |
Valuation of marketable securities | June 30, 2021 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 49,818 $ — $ — $ 49,818 December 31, 2020 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 40,411 $ — $ — $ 40,411 |
Valuation of senior notes | June 30, 2021 December 31, 2020 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 3,825,177 $ 4,173,269 $ 4,123,217 $ 4,647,595 |
ALLOWANCE FOR DOUBTFUL ACCOUN_3
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Allowance for Doubtful Accounts | |
Changes in allowance for doubtful accounts | Allowance for doubtful accounts, balance at December 31, 2020 $ 12,670 Reserve accruals 2,027 Uncollectable accounts written-off (2,400) Foreign currency translation (2) Allowance for doubtful accounts, balance at June 30, 2021 $ 12,295 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases | |
Summary of total lease cost | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Operating lease cost $ 87,363 $ 83,461 $ 174,582 $ 166,656 Short-term operating lease cost 1,661 941 3,594 2,725 Variable operating lease cost 22,645 20,776 44,589 41,109 Sublease income (1,185) (1,187) (2,383) (2,362) Total lease cost $ 110,484 $ 103,991 $ 220,382 $ 208,128 |
Other lease related information | For the Six Months Ended June 30, 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 169,864 $ 165,665 Right-of-use assets obtained in exchange for new operating lease liabilities 165,193 125,160 |
FINANCING (Tables)
FINANCING (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Financing | |
Outstanding financing facilities | June 30, 2021 December 31, 2020 4.625% Senior Notes due 2021, effective interest rate of 4.643% $ — $ 300,000 3.800% Senior Notes due 2022, effective interest rate of 3.845% 300,000 300,000 3.850% Senior Notes due 2023, effective interest rate of 3.851% 300,000 300,000 3.550% Senior Notes due 2026, effective interest rate of 3.570% 500,000 500,000 3.600% Senior Notes due 2027, effective interest rate of 3.619% 750,000 750,000 4.350% Senior Notes due 2028, effective interest rate of 4.383% 500,000 500,000 3.900% Senior Notes due 2029, effective interest rate of 3.901% 500,000 500,000 4.200% Senior Notes due 2030, effective interest rate of 4.205% 500,000 500,000 1.750% Senior Notes due 2031, effective interest rate of 1.798% 500,000 500,000 Total principal amount of debt 3,850,000 4,150,000 Less: Unamortized discount and debt issuance costs 24,823 26,783 Total long-term debt $ 3,825,177 $ 4,123,217 |
WARRANTIES (Tables)
WARRANTIES (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Warranties | |
Changes in product warranty liabilities | Warranty liabilities, balance at December 31, 2020 $ 65,886 Warranty claims (58,628) Warranty accruals 62,378 Foreign currency translation (2) Warranty liabilities, balance at June 30, 2021 $ 69,634 |
SHARE REPURCHASE PROGRAM (Table
SHARE REPURCHASE PROGRAM (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Share Repurchase Program | |
Schedule of shares repurchased | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Shares repurchased 743 185 2,218 1,669 Average price per share $ 537.25 $ 417.79 $ 479.69 $ 390.14 Total investment $ 399,634 $ 76,974 $ 1,064,167 $ 651,011 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accumulated Other Comprehensive Income (Loss) | |
Summary of activity for changes in accumulated other comprehensive income (loss) | Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at March 31, 2021 $ (6,298) $ (6,298) Change in accumulated other comprehensive income 3,707 3,707 Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at December 31, 2020 $ (2,155) $ (2,155) Change in accumulated other comprehensive loss (436) (436) Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at March 31, 2020 $ (25,756) $ (25,756) Change in accumulated other comprehensive income 3,645 3,645 Accumulated other comprehensive loss, balance at June 30, 2020 $ (22,111) $ (22,111) Foreign Total Accumulated Other Currency (1) Comprehensive Income (Loss) Accumulated other comprehensive income, balance at December 31, 2019 $ 4,890 $ 4,890 Change in accumulated other comprehensive loss (27,001) (27,001) Accumulated other comprehensive loss, balance at June 30, 2020 $ (22,111) $ (22,111) (1) Foreign currency translation is not shown net of additional U.S. tax, as other basis differences of non-U.S. subsidiaries are intended to be permanently reinvested. |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Revenue | |
Disaggregation of revenue | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Sales to do-it-yourself customers $ 1,999,401 $ 1,853,115 $ 3,780,567 $ 3,198,597 Sales to professional service provider customers 1,384,217 1,175,030 2,623,303 2,245,229 Other sales and sales adjustments 81,983 63,450 152,630 124,256 Total sales $ 3,465,601 $ 3,091,595 $ 6,556,500 $ 5,568,082 |
SHARE-BASED COMPENSATION AND _2
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Employee stock option [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of stock options | Shares Weighted- Average (in thousands) Exercise Price Outstanding at December 31, 2020 1,500 $ 248.52 Granted 110 467.05 Exercised (206) 163.63 Forfeited or expired (9) 337.54 Outstanding at June 30, 2021 1,395 $ 277.79 Exercisable at June 30, 2021 959 $ 229.94 |
Black-Scholes option pricing model | June 30, 2021 2020 Risk free interest rate 0.83 % 0.96 % Expected life 6.2 Years 6.2 Years Expected volatility 30.0 % 25.8 % Expected dividend yield — % — % |
Summary of activity of share-based compensation and benefit plans | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Compensation expense for stock options awarded $ 5,105 $ 4,557 $ 10,367 $ 9,435 Income tax benefit from compensation expense related to stock options 1,314 1,148 2,668 2,377 |
Restricted stock [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of activity of share-based compensation and benefit plans | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Compensation expense for shares issued under the ESPP $ 782 $ 697 $ 1,432 $ 1,343 Income tax benefit from compensation expense related to shares issued under the ESPP 201 176 368 338 Compensation expense for restricted shares awarded 396 351 776 702 Income tax benefit from compensation expense related to restricted awards $ 102 $ 88 $ 200 $ 177 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | For the Three Months Ended For the Six Months Ended June 30, June 30, 2021 2020 2021 2020 Numerator (basic and diluted): Net income $ 585,451 $ 531,667 $ 1,087,060 $ 832,105 Denominator: Weighted-average common shares outstanding – basic 69,618 74,205 69,997 74,611 Effect of stock options (1) 646 628 643 635 Weighted-average common shares outstanding – assuming dilution 70,264 74,833 70,640 75,246 Earnings per share: Earnings per share-basic $ 8.41 $ 7.16 $ 15.53 $ 11.15 Earnings per share-assuming dilution $ 8.33 $ 7.10 $ 15.39 $ 11.06 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 122 341 187 348 Weighted-average exercise price per share of antidilutive stock options (1) $ 463.76 $ 378.84 $ 449.20 $ 378.29 (1) See Note 11 for further information concerning the terms of the Company’s share-based compensation plans. |
VARIABLE INTEREST ENTITIES (Nar
VARIABLE INTEREST ENTITIES (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2020 | |
Variable Interest Entities | ||
Equity method investment in VIEs, net | $ 20.3 | |
Investment tax credit amount | $ 108.3 | |
Additional capital contributions | $ 160 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Fair Value Measurements | |||||
Increase (decrease) in fair value of marketable securities | $ 2.5 | $ 4.5 | $ 4 | $ (0.7) | |
Non-financial assets and liabilities measured at fair value on a nonrecurring basis | $ 0 | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value of Marketable Securities) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 49,818 | $ 40,411 |
Fair value, inputs, Level 1 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 49,818 | $ 40,411 |
FAIR VALUE MEASUREMENTS (Fair_2
FAIR VALUE MEASUREMENTS (Fair Value of Senior Notes) (Details) - Fair value, inputs, Level 2 [Member] - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value Measurements | ||
Carrying amount of senior notes | $ 3,825,177 | $ 4,123,217 |
Estimated fair value of senior notes | $ 4,173,269 | $ 4,647,595 |
ALLOWANCE FOR DOUBTFUL ACCOUN_4
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Changes in Allowance for Doubtful Accounts) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Allowance for Doubtful Accounts | |
Allowance for doubtful accounts, balance at December 31, 2020 | $ 12,670 |
Reserve accruals | 2,027 |
Uncollectable accounts written-off | (2,400) |
Foreign currency translation | (2) |
Allowance for doubtful accounts, balance at June 30, 2021 | $ 12,295 |
LEASES (Summary of Total Lease
LEASES (Summary of Total Lease Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases | ||||
Operating lease cost | $ 87,363 | $ 83,461 | $ 174,582 | $ 166,656 |
Short-term operating lease cost | 1,661 | 941 | 3,594 | 2,725 |
Variable operating lease cost | 22,645 | 20,776 | 44,589 | 41,109 |
Sublease income | (1,185) | (1,187) | (2,383) | (2,362) |
Total lease cost | $ 110,484 | $ 103,991 | $ 220,382 | $ 208,128 |
LEASES (Supplemental Cash Flow
LEASES (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Leases | ||
Cash paid for amounts included in the measurement of operating lease liabilities, operating cash flows from operating leases | $ 169,864 | $ 165,665 |
Right-of-use asset obtained in exchange for new operating lease liability | $ 165,193 | $ 125,160 |
FINANCING (Unsecured Revolving
FINANCING (Unsecured Revolving Credit Facility) (Narrative) (Details) - Line of credit facility [Member] - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Financing | ||
Unsecured revolving credit facility | $ 0 | $ 0 |
Unsecured debt [Member] | ||
Financing | ||
Credit agreement inception date | Jun. 15, 2021 | |
Number of years in credit facility, term | 5 years | |
Current maximum borrowing capacity under credit facility | $ 1,800 | |
Maximum aggregate increase to credit facility allowable | 900 | |
Maximum aggregate capacity of credit facility allowable | 2,700 | |
Letters of credit | $ 84 | $ 66.4 |
Line of credit facility fee percentage | 0.10% | |
Minimum debt instrument consolidated fixed charge coverage ratio covenant | 2.50 | |
Maximum debt instrument consolidated leverage ratio covenant | 3.50 | |
Unsecured debt [Member] | Spread over Alternate Base rate [Member] | ||
Financing | ||
Line of credit current interest rate | 0.00% | |
Unsecured debt [Member] | Spread over Eurodollar Revolving rate [Member] | ||
Financing | ||
Line of credit current interest rate | 0.90% | |
Unsecured debt [Member] | Letter of credit [Member] | ||
Financing | ||
Line of credit facility sublimit | $ 200 | |
Unsecured debt [Member] | Swing line revolver [Member] | ||
Financing | ||
Line of credit facility sublimit | $ 75 |
FINANCING (Senior Notes) (Narra
FINANCING (Senior Notes) (Narrative) (Details) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021USD ($)D | Jun. 15, 2021USD ($) | Dec. 31, 2020USD ($) | |
Financing | |||
Face amount of senior notes | $ 3,850,000 | $ 4,150,000 | |
Senior notes [Member] | |||
Financing | |||
Face amount of senior notes | $ 3,900,000 | ||
Number of days in annual interest calculation period | D | 360 | ||
Minimum [Member] | Senior notes [Member] | |||
Financing | |||
Interest rate of senior notes | 1.75% | ||
Maximum [Member] | Senior notes [Member] | |||
Financing | |||
Interest rate of senior notes | 4.35% | ||
4.625% Senior Notes due 2021 [Member] | Senior notes [Member] | |||
Financing | |||
Face amount of senior notes | $ 300,000 | $ 300,000 | |
Interest rate of senior notes | 4.625% | 4.625% | |
Debt redemption price | $ 300,000 |
FINANCING (Outstanding Financin
FINANCING (Outstanding Financing Facilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 15, 2021 | Dec. 31, 2020 | |
Financing | ||||
Senior notes, principal amount | $ 3,850,000 | $ 4,150,000 | ||
Less: Unamortized discount and debt issuance costs | 24,823 | 26,783 | ||
Total long-term debt | 3,825,177 | 4,123,217 | [1] | |
Senior notes [Member] | ||||
Financing | ||||
Senior notes, principal amount | 3,900,000 | |||
Senior notes [Member] | 4.625% Senior Notes due 2021 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 300,000 | $ 300,000 | ||
Interest rate of senior notes | 4.625% | 4.625% | ||
Senior notes, effective interest rate | 4.643% | |||
Senior notes [Member] | 3.800% Senior Notes due 2022 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 300,000 | $ 300,000 | ||
Interest rate of senior notes | 3.80% | 3.80% | ||
Senior notes, effective interest rate | 3.845% | 3.845% | ||
Senior notes [Member] | 3.850% Senior Notes due 2023 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 300,000 | $ 300,000 | ||
Interest rate of senior notes | 3.85% | 3.85% | ||
Senior notes, effective interest rate | 3.851% | 3.851% | ||
Senior notes [Member] | 3.550% Senior Notes due 2026 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 500,000 | $ 500,000 | ||
Interest rate of senior notes | 3.55% | 3.55% | ||
Senior notes, effective interest rate | 3.57% | 3.57% | ||
Senior notes [Member] | 3.600% Senior Notes due 2027 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 750,000 | $ 750,000 | ||
Interest rate of senior notes | 3.60% | 3.60% | ||
Senior notes, effective interest rate | 3.619% | 3.619% | ||
Senior notes [Member] | 4.350% Senior Notes due 2028 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 500,000 | $ 500,000 | ||
Interest rate of senior notes | 4.35% | 4.35% | ||
Senior notes, effective interest rate | 4.383% | 4.383% | ||
Senior notes [Member] | 3.900% Senior Notes due 2029 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 500,000 | $ 500,000 | ||
Interest rate of senior notes | 3.90% | 3.90% | ||
Senior notes, effective interest rate | 3.901% | 3.901% | ||
Senior notes [Member] | 4.200% Senior Notes due 2030 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 500,000 | $ 500,000 | ||
Interest rate of senior notes | 4.20% | 4.20% | ||
Senior notes, effective interest rate | 4.205% | 4.205% | ||
Senior notes [Member] | 1.750% Senior Notes due 2031 [Member] | ||||
Financing | ||||
Senior notes, principal amount | $ 500,000 | $ 500,000 | ||
Interest rate of senior notes | 1.75% | 1.75% | ||
Senior notes, effective interest rate | 1.798% | 1.798% | ||
[1] | The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
WARRANTIES (Product Warranty Li
WARRANTIES (Product Warranty Liabilities) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2021USD ($) | |
Warranties | |
Warranty liabilities, balance at December 31, 2020 | $ 65,886 |
Warranty claims | (58,628) |
Warranty accruals | 62,378 |
Foreign currency translation | (2) |
Warranty liabilities, balance at June 30, 2021 | $ 69,634 |
SHARE REPURCHASE PROGRAM (Narra
SHARE REPURCHASE PROGRAM (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | May 27, 2021 | Feb. 10, 2021 | Aug. 06, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Aug. 06, 2021 |
Share Repurchase Program | ||||||||
Increase in authorized amount | $ 1,500,000 | $ 1,000,000 | ||||||
Cumulative authorized amount | $ 17,300,000 | |||||||
Authorization effective period | 3 years | 3 years | ||||||
Remaining balance under share repurchase program | $ 1,900,000 | $ 1,900,000 | ||||||
Common stock repurchased, shares | 743 | 185 | 2,218 | 1,669 | ||||
Common stock repurchased, average price per share | $ 537.25 | $ 417.79 | $ 479.69 | $ 390.14 | ||||
Common stock repurchased, value | $ 399,634 | $ 76,974 | $ 1,064,167 | $ 651,011 | ||||
Subsequent event [Member] | ||||||||
Share Repurchase Program | ||||||||
Common stock repurchased, shares | 300 | 83,500 | ||||||
Common stock repurchased, average price per share | $ 596.11 | $ 185.60 | ||||||
Common stock repurchased, value | $ 169,000 | $ 15,500,000 |
SHARE REPURCHASE PROGRAM (Sched
SHARE REPURCHASE PROGRAM (Schedule of Shares Repurchased) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share Repurchase Program | ||||
Shares repurchased | 743 | 185 | 2,218 | 1,669 |
Average price per share | $ 537.25 | $ 417.79 | $ 479.69 | $ 390.14 |
Total investment | $ 399,634 | $ 76,974 | $ 1,064,167 | $ 651,011 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | ||
Balance at beginning of period | $ (6,977) | $ 108,844 | $ 140,258 | [1] | $ 397,340 |
Change in accumulated other comprehensive income (loss) | 3,707 | 3,645 | (436) | (27,001) | |
Balance at end of period | 217,694 | 589,100 | 217,694 | 589,100 | |
Accumulated other comprehensive income (loss) [Member] | |||||
Balance at beginning of period | (6,298) | (25,756) | (2,155) | 4,890 | |
Change in accumulated other comprehensive income (loss) | 3,707 | 3,645 | (436) | (27,001) | |
Balance at end of period | (2,591) | (22,111) | (2,591) | (22,111) | |
Foreign currency [Member] | |||||
Balance at beginning of period | (6,298) | (25,756) | (2,155) | 4,890 | |
Change in accumulated other comprehensive income (loss) | 3,707 | 3,645 | (436) | (27,001) | |
Balance at end of period | $ (2,591) | $ (22,111) | $ (2,591) | $ (22,111) | |
[1] | The balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. |
REVENUE (Narrative) (Details)
REVENUE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Revenue | |||||
Revenue recognized | $ 3,465,601 | $ 3,091,595 | $ 6,556,500 | $ 5,568,082 | |
Loyalty program [Member] | |||||
Revenue | |||||
Deferred revenue liability | 4,800 | 4,800 | $ 4,500 | ||
Revenue recognized | $ 3,800 | $ 3,800 | $ 7,200 | $ 6,900 |
REVENUE (Disaggregation of Reve
REVENUE (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Disaggregation of Revenue | ||||
Sales | $ 3,465,601 | $ 3,091,595 | $ 6,556,500 | $ 5,568,082 |
DIY customer [Member] | ||||
Disaggregation of Revenue | ||||
Sales | 1,999,401 | 1,853,115 | 3,780,567 | 3,198,597 |
Professional service provider customer [Member] | ||||
Disaggregation of Revenue | ||||
Sales | 1,384,217 | 1,175,030 | 2,623,303 | 2,245,229 |
Other customers and sales adjustments [Member] | ||||
Disaggregation of Revenue | ||||
Sales | $ 81,983 | $ 63,450 | $ 152,630 | $ 124,256 |
SHARE-BASED COMPENSATION AND _3
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Option) (Narrative) (Details) - Stock option [Member] - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-Based Compensation and Benefit Plans | ||
Weighted-average grant date fair value of options awarded | $ 144.30 | $ 105.54 |
Remaining unrecognized compensation expense | $ 37.4 | |
Weighted-average period for cost recognition | 2 years 7 months 6 days | |
Employee stock option [Member] | ||
Share-Based Compensation and Benefit Plans | ||
Options expiration period | 10 years | |
Vesting period | 4 years | |
Option vesting rate per year | 25.00% |
SHARE-BASED COMPENSATION AND _4
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Other Share-Based Compensation) (Narrative) (Details) - Employee stock purchase plan [Member] | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation and Benefit Plans | |
Employee stock purchase plan stock purchase percentage | 85.00% |
Restricted stock [Member] | Minimum [Member] | |
Share-Based Compensation and Benefit Plans | |
Vesting period | 1 year |
Restricted stock [Member] | Maximum [Member] | |
Share-Based Compensation and Benefit Plans | |
Vesting period | 3 years |
SHARE-BASED COMPENSATION AND _5
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Profit Sharing and Savings Plan) (Narrative) (Detail) - Profit sharing and savings plan [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, employer discretionary contribution | $ 0 | $ 0 | ||
Profit sharing and savings plan, cost recognized | $ 8,700 | $ 7,300 | $ 15,900 | $ 14,400 |
Employee's first 2% of contributed wages [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, Company match | 100.00% | |||
Employee's next 4% of contributed wages [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, Company match | 25.00% |
SHARE-BASED COMPENSATION AND _6
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Nonqualified Deferred Compensation Plan) (Narrative) (Details) - Nonqualified Deferred Compensation Plan [Member] - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Share-Based Compensation and Benefit Plans | |||||
Deferred compensation plan obligation | $ 49.8 | $ 49.8 | $ 40.4 | ||
Deferred compensation plan cost recognized | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
SHARE-BASED COMPENSATION AND _7
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Appreciation Rights) (Narrative) (Details) - Stock appreciation rights (SARs) [Member] - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Share-Based Compensation and Benefit Plans | |||||
Stock appreciation rights expiration period | 10 years | ||||
Stock appreciation rights vesting rate per year | 25.00% | ||||
Vesting period | 4 years | ||||
Stock appreciation rights outstanding | 9,576 | 9,576 | |||
Stock appreciation rights granted during the period, units | 1,427 | ||||
Liability for compensation to be paid for redeemed stock appreciation rights | $ 0.6 | $ 0.6 | $ 0.3 | ||
Compensation expense for share-based compensation | $ 0.2 | $ 0.1 | $ 0.4 | $ 0.1 |
SHARE-BASED COMPENSATION AND _8
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Summary of Stock Options) (Details) - Employee stock option [Member] - $ / shares shares in Thousands | 6 Months Ended |
Jun. 30, 2021 | |
Share-Based Compensation and Benefit Plans | |
Outstanding at December 31, 2020, shares | 1,500 |
Outstanding at December 31, 2020, weighted-average exercise price | $ 248.52 |
Granted, shares | 110 |
Granted, weighted-average exercise price | $ 467.05 |
Exercised, shares | (206) |
Exercised, weighted-average exercise price | $ 163.63 |
Forfeited or expired, shares | (9) |
Forfeited or expired, weighted-average exercise price | $ 337.54 |
Outstanding at June 30, 2021, shares | 1,395 |
Outstanding at June 30, 2021, weighted-average exercise price | $ 277.79 |
Exercisable at June 30, 2021, shares | 959 |
Exercisable at June 30, 2021, weighted-average exercise price | $ 229.94 |
SHARE-BASED COMPENSATION AND _9
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Black-Scholes Option Pricing Model) (Details) - Employee stock option [Member] | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Share-Based Compensation and Benefit Plans | ||
Risk-free interest rate | 0.83% | 0.96% |
Expected life | 6 years 2 months 12 days | 6 years 2 months 12 days |
Expected volatility | 30.00% | 25.80% |
Expected dividend yield | 0.00% | 0.00% |
SHARE-BASED COMPENSATION AND_10
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Option Activity) (Details) - Employee stock option [Member] - Stock option [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | $ 5,105 | $ 4,557 | $ 10,367 | $ 9,435 |
Income tax benefit from compensation expense for share-based compensation | $ 1,314 | $ 1,148 | $ 2,668 | $ 2,377 |
SHARE-BASED COMPENSATION AND_11
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Other Share-Based Compensation Activity) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Employee stock purchase plan [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | $ 782 | $ 697 | $ 1,432 | $ 1,343 |
Income tax benefit from compensation expense for share-based compensation | 201 | 176 | 368 | 338 |
Restricted stock [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | 396 | 351 | 776 | 702 |
Income tax benefit from compensation expense for share-based compensation | $ 102 | $ 88 | $ 200 | $ 177 |
EARNINGS PER SHARE (Computation
EARNINGS PER SHARE (Computation of Basic and Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator (basic and diluted): | ||||
Net income | $ 585,451 | $ 531,667 | $ 1,087,060 | $ 832,105 |
Denominator: | ||||
Denominator for basic earnings per share - weighted-average shares | 69,618 | 74,205 | 69,997 | 74,611 |
Effect of stock options | 646 | 628 | 643 | 635 |
Denominator for diluted earnings per share - weighted-average shares and assumed conversion | 70,264 | 74,833 | 70,640 | 75,246 |
Earnings per share - basic | $ 8.41 | $ 7.16 | $ 15.53 | $ 11.15 |
Earnings per share - assuming dilution | $ 8.33 | $ 7.10 | $ 15.39 | $ 11.06 |
Antidilutive stock options | 122 | 341 | 187 | 348 |
Weighted-average exercise price per share of antidilutive stock options | $ 463.76 | $ 378.84 | $ 449.20 | $ 378.29 |
EARNINGS PER SHARE (Computati_2
EARNINGS PER SHARE (Computation of Basic and Diluted Earnings Per Share) (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 127 Months Ended | ||
Aug. 06, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Aug. 06, 2021 | |
Earnings Per Share | ||||||
Shares repurchased | 743 | 185 | 2,218 | 1,669 | ||
Common stock repurchased, average price per share | $ 537.25 | $ 417.79 | $ 479.69 | $ 390.14 | ||
Common stock repurchased, value | $ 399,634 | $ 76,974 | $ 1,064,167 | $ 651,011 | ||
Subsequent event [Member] | ||||||
Earnings Per Share | ||||||
Shares repurchased | 300 | 83,500 | ||||
Common stock repurchased, average price per share | $ 596.11 | $ 185.60 | ||||
Common stock repurchased, value | $ 169,000 | $ 15,500,000 |