Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Oct. 31, 2022 | |
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 | Sep. 30, 2022 | |
Document fiscal year focus | 2022 | |
Document fiscal period focus | Q3 | |
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 | 62,575,911 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | [1] |
Assets | |||
Cash and cash equivalents | $ 67,060 | $ 362,113 | |
Accounts receivable, net | 338,122 | 272,562 | |
Amounts receivable from suppliers | 135,584 | 113,112 | |
Inventory | 4,137,945 | 3,686,383 | |
Other current assets | 82,045 | 70,092 | |
Total current assets | 4,760,756 | 4,504,262 | |
Property and equipment, at cost | 7,291,681 | 6,948,038 | |
Less: accumulated depreciation and amortization | 2,947,861 | 2,734,523 | |
Net property and equipment | 4,343,820 | 4,213,515 | |
Operating lease, right-of-use assets | 2,109,581 | 1,982,478 | |
Goodwill | 881,102 | 879,340 | |
Other assets, net | 142,769 | 139,112 | |
Total assets | 12,238,028 | 11,718,707 | |
Liabilities and shareholders' deficit | |||
Accounts payable | 5,574,098 | 4,695,312 | |
Self-insurance reserves | 142,390 | 128,794 | |
Accrued payroll | 109,095 | 107,588 | |
Accrued benefits and withholdings | 167,452 | 234,872 | |
Income taxes payable | 63,916 | 0 | |
Current portion of operating lease liabilities | 360,529 | 337,832 | |
Other current liabilities | 423,999 | 370,217 | |
Total current liabilities | 6,841,479 | 5,874,615 | |
Long-term debt | 4,370,772 | 3,826,978 | |
Operating lease liabilities, less current portion | 1,809,241 | 1,701,757 | |
Deferred income taxes | 218,087 | 175,212 | |
Other liabilities | 203,912 | 206,568 | |
Shareholders' (equity) deficit: | |||
Common stock, $0.01 par value: Authorized shares - 245,000,000 Issued and outstanding shares - 62,798,821 as of September 30, 2022, and 67,029,042 as of December 31, 2021 | 628 | 670 | |
Additional paid-in capital | 1,292,725 | 1,305,508 | |
Retained deficit | (2,494,833) | (1,365,802) | |
Accumulated other comprehensive loss | (3,983) | (6,799) | |
Total shareholders' deficit | (1,205,463) | (66,423) | |
Total liabilities and shareholders' deficit | $ 12,238,028 | $ 11,718,707 | |
[1]The balance sheet at December 31, 2021, 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 | Sep. 30, 2022 | Dec. 31, 2021 |
Condensed 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 | 62,798,821 | 67,029,042 |
Common stock, shares outstanding | 62,798,821 | 67,029,042 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Income | ||||
Sales | $ 3,798,619 | $ 3,479,570 | $ 10,765,367 | $ 10,036,070 |
Cost of goods sold, including warehouse and distribution expenses | 1,863,657 | 1,661,330 | 5,237,615 | 4,750,657 |
Gross profit | 1,934,962 | 1,818,240 | 5,527,752 | 5,285,413 |
Selling, general and administrative expenses | 1,130,768 | 1,063,641 | 3,255,478 | 3,044,126 |
Operating income | 804,194 | 754,599 | 2,272,274 | 2,241,287 |
Other income (expense): | ||||
Interest expense | (43,164) | (34,873) | (115,389) | (110,036) |
Interest income | 1,435 | 485 | 2,627 | 1,478 |
Other, net | (616) | 318 | (7,104) | 4,961 |
Total other expense | (42,345) | (34,070) | (119,866) | (103,597) |
Income before income taxes | 761,849 | 720,529 | 2,152,408 | 2,137,690 |
Provision for income taxes | 176,411 | 161,877 | 508,330 | 491,978 |
Net income | $ 585,438 | $ 558,652 | $ 1,644,078 | $ 1,645,712 |
Earnings per share-basic: | ||||
Earnings per share | $ 9.25 | $ 8.14 | $ 25.30 | $ 23.67 |
Weighted-average common shares outstanding - basic | 63,288 | 68,608 | 64,979 | 69,529 |
Earnings per share-assuming dilution: | ||||
Earnings per share | $ 9.17 | $ 8.07 | $ 25.08 | $ 23.45 |
Weighted-average common shares outstanding - assuming dilution | 63,860 | 69,240 | 65,566 | 70,174 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 585,438 | $ 558,652 | $ 1,644,078 | $ 1,645,712 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustments | (372) | (5,237) | 2,816 | (5,673) |
Total other comprehensive (loss) income | (372) | (5,237) | 2,816 | (5,673) |
Comprehensive income | $ 585,066 | $ 553,415 | $ 1,646,894 | $ 1,640,039 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - 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, 2020 | $ 711 | $ 1,280,841 | $ (1,139,139) | $ (2,155) | $ 140,258 | |
Balance (in shares) at Dec. 31, 2020 | 71,123,000 | |||||
Net income | 1,645,712 | 1,645,712 | ||||
Other comprehensive income | (5,673) | (5,673) | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | $ 1 | 14,152 | 14,153 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 32,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 3 | 54,488 | 54,491 | |||
Net issuance of common stock upon exercise of stock options, shares | 331,000 | |||||
Share-based compensation | 17,367 | 17,367 | ||||
Share repurchases, including fees | $ (38) | (70,490) | (1,936,633) | $ (2,007,161) | ||
Share repurchases, including fees, shares | (3,801,000) | (3,801,000) | ||||
Balance at end of period at Sep. 30, 2021 | $ 677 | 1,296,358 | (1,430,060) | (7,828) | $ (140,853) | |
Balance (in shares) at Sep. 30, 2021 | 67,685,000 | |||||
Balance at beginning 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 | |||||
Net income | 558,652 | 558,652 | ||||
Other comprehensive income | (5,237) | (5,237) | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | $ 1 | 4,722 | 4,723 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 10,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 1 | 20,718 | 20,719 | |||
Net issuance of common stock upon exercise of stock options, shares | 125,000 | |||||
Share-based compensation | 5,568 | 5,568 | ||||
Share repurchases, including fees | $ (16) | (30,013) | (912,943) | $ (942,972) | ||
Share repurchases, including fees, shares | (1,583,000) | (1,583,000) | ||||
Balance at end of period at Sep. 30, 2021 | $ 677 | 1,296,358 | (1,430,060) | (7,828) | $ (140,853) | |
Balance (in shares) at Sep. 30, 2021 | 67,685,000 | |||||
Balance at beginning of period at Dec. 31, 2021 | $ 670 | 1,305,508 | (1,365,802) | (6,799) | $ (66,423) | [1] |
Balance (in shares) at Dec. 31, 2021 | 67,029,000 | 67,029,042 | ||||
Net income | 1,644,078 | $ 1,644,078 | ||||
Other comprehensive income | 2,816 | 2,816 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 15,272 | 15,272 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 26,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 2 | 42,786 | 42,788 | |||
Net issuance of common stock upon exercise of stock options, shares | 169,000 | |||||
Share-based compensation | 17,563 | 17,563 | ||||
Share repurchases, including fees | $ (44) | (88,404) | (2,773,109) | $ (2,861,557) | ||
Share repurchases, including fees, shares | (4,425,000) | (4,425,000) | ||||
Balance at end of period at Sep. 30, 2022 | $ 628 | 1,292,725 | (2,494,833) | (3,983) | $ (1,205,463) | |
Balance (in shares) at Sep. 30, 2022 | 62,799,000 | 62,798,821 | ||||
Balance at beginning of period at Jun. 30, 2022 | $ 638 | 1,286,651 | (2,391,108) | (3,611) | $ (1,107,430) | |
Balance (in shares) at Jun. 30, 2022 | 63,753,000 | |||||
Net income | 585,438 | 585,438 | ||||
Other comprehensive income | (372) | (372) | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 4,698 | 4,698 | ||||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 7,000 | |||||
Net issuance of common stock upon exercise of stock options | $ 1 | 16,765 | 16,766 | |||
Net issuance of common stock upon exercise of stock options, shares | 78,000 | |||||
Share-based compensation | 5,752 | 5,752 | ||||
Share repurchases, including fees | $ (11) | (21,141) | (689,163) | $ (710,315) | ||
Share repurchases, including fees, shares | (1,039,000) | (1,039,000) | ||||
Balance at end of period at Sep. 30, 2022 | $ 628 | $ 1,292,725 | $ (2,494,833) | $ (3,983) | $ (1,205,463) | |
Balance (in shares) at Sep. 30, 2022 | 62,799,000 | 62,798,821 | ||||
[1]The balance sheet at December 31, 2021, 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 | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities: | ||
Net income | $ 1,644,078 | $ 1,645,712 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of property, equipment and intangibles | 258,048 | 237,654 |
Amortization of debt discount and issuance costs | 3,490 | 3,294 |
Deferred income taxes | 42,673 | 18,053 |
Share-based compensation programs | 18,913 | 18,544 |
Other | 716 | 1,803 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (69,965) | (56,743) |
Inventory | (450,991) | 6,420 |
Accounts payable | 878,501 | 424,710 |
Income taxes payable | 73,853 | 141,273 |
Other | (46,296) | 124,607 |
Net cash provided by operating activities | 2,353,020 | 2,565,327 |
Investing activities: | ||
Purchases of property and equipment | (388,820) | (340,687) |
Proceeds from sale of property and equipment | 10,829 | 6,643 |
Investment in tax credit equity investments | (5,262) | (1,795) |
Other | (448) | (1,897) |
Net cash used in investing activities | (383,701) | (337,736) |
Financing activities: | ||
Proceeds from borrowings on revolving credit facility | 785,800 | 0 |
Payments on revolving credit facility | (785,800) | 0 |
Proceeds from the issuance of long-term debt | 847,314 | 0 |
Principal payments on long-term debt | (300,000) | (300,000) |
Payment of debt issuance costs | (6,442) | (3,404) |
Repurchases of common stock | (2,861,557) | (2,007,161) |
Net proceeds from issuance of common stock | 56,575 | 67,361 |
Other | (350) | (313) |
Net cash used in financing activities | (2,264,460) | (2,243,517) |
Effect of exchange rate changes on cash | 88 | (412) |
Net decrease in cash and cash equivalents | (295,053) | (16,338) |
Cash and cash equivalents at beginning of the period | 362,113 | 465,640 |
Cash and cash equivalents at end of the period | 67,060 | 449,302 |
Supplemental disclosures of cash flow information: | ||
Income taxes paid | 392,490 | 333,360 |
Interest paid, net of capitalized interest | $ 99,674 | $ 107,971 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
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 nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ended December 31, 2022. 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, 2021. 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 | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, 2022, the Company had invested in five 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 $25.0 million as of September 30, 2022, and was included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets. As of September 30, 2022, the Company had commitments to make certain additional capital contributions to one of its tax credit funds totaling approximately $122.0 million upon achievement of project milestones by the solar energy farms, the timing of which is uncertain and outside of the Company’s control. Subsequent to September 30, 2022, the Company entered into an agreement to invest in an additional tax credit fund, which promotes renewable energy through the development of solar energy farms, primarily for the purpose of receiving renewable energy tax credits. Per the terms of this agreement, the Company is required to make capital contributions totaling approximately $60.0 million upon achievement of project milestones by the solar energy farms, the timing of which is uncertain and outside of the Company’s control. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
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 10 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 September 30, 2022, and December 31, 2021. The Company recorded a decrease in fair value related to its marketable securities in the amount of $2.0 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively, which were included in “Other income (expense)” on the accompanying Condensed Consolidated Statements of Income. The Company recorded a decrease in fair value related to its marketable securities in the amount of $11.2 million and an increase in fair value related to its marketable securities in the amount of $3.8 million for the nine months ended September 30, 2022 and 2021, 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 September 30, 2022, and December 31, 2021 (in thousands): September 30, 2022 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 45,897 $ — $ — $ 45,897 December 31, 2021 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 52,456 $ — $ — $ 52,456 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 September 30, 2022, and December 31, 2021, 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” on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair value as of September 30, 2022, and December 31, 2021, was determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands): September 30, 2022 December 31, 2021 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 4,370,772 $ 4,022,512 $ 3,826,978 $ 4,135,629 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. See Note 5 for further information concerning the Company’s senior notes and unsecured revolving credit facility. 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. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | NOTE 4 – 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 nine months ended September 30, 2022 and 2021, 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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Operating lease cost $ 92,677 $ 87,601 $ 273,475 $ 262,183 Short-term operating lease cost 2,594 1,803 7,710 5,397 Variable operating lease cost 23,547 22,436 70,650 67,025 Sublease income (1,553) (1,177) (3,975) (3,560) Total lease cost $ 117,265 $ 110,663 $ 347,860 $ 331,045 The following table summarizes other lease-related information for the nine months ended September 30, 2022 and 2021: For the Nine Months Ended September 30, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 272,620 $ 256,282 Right-of-use assets obtained in exchange for new operating lease liabilities 341,272 216,825 |
FINANCING
FINANCING | 9 Months Ended |
Sep. 30, 2022 | |
Financing | |
Financing | NOTE 5 – FINANCING The following table identifies the amounts included in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2022, and December 31, 2021 (in thousands): September 30, 2022 December 31, 2021 3.800% Senior Notes due 2022, effective interest rate of 3.845% $ — $ 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 4.700% Senior Notes due 2032, effective interest rate of 4.740% 850,000 — Total principal amount of debt 4,400,000 3,850,000 Less: Unamortized discount and debt issuance costs 29,228 23,022 Total long-term debt $ 4,370,772 $ 3,826,978 Unsecured revolving credit facility: The Company is party to a credit agreement dated June 15, 2021 (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. As of September 30, 2022, and December 31, 2021, the Company had outstanding letters of credit, primarily to support obligations related to workers’ compensation, general liability and other insurance policies, under the Credit Agreement in the amounts of $5.1 million and $84.0 million, respectively, reducing the aggregate availability under the Credit Agreement by those amounts. Substantially all of these outstanding letters of credit have a one-year term from the date of issuance. As of September 30, 2022, and December 31, 2021, the Company had no outstanding borrowings under its Revolving Credit Facility. 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 September 30, 2022, 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 September 30, 2022, the Company remained in compliance with all covenants under the Credit Agreement. In addition to the letters of credit issued under the Credit Agreement described above, as of September 30, 2022, the Company had additional outstanding letters of credit, primarily to support obligations under workers’ compensation, general liability and other insurance policies, in the amount of $96.6 million. Substantially all of these letters of credit have a one-year term from the date of issuance and were not issued under the Company’s Credit Agreement or another committed facility. Senior notes: On June 15, 2022, the Company issued $850 million aggregate principal amount of unsecured 4.700% Senior Notes due 2032 (“4.700% Senior Notes due 2032”) at a price to the public of 99.684% of their face value with U.S. Bank Trust Company, National Association (f/k/a U.S. Bank National Association) (“U.S. Bank”) as trustee. Interest on the 4.700% Senior Notes due 2032 is payable on June 15 and December 15 of each year, beginning on December 15, 2022, and is computed on the basis of a 360–day year. On September 1, 2022, the Company’s $300 million aggregate principal amount of unsecured 3.800% Senior Notes due 2022 matured, and the Company repaid these notes using available cash on hand. As of September 30, 2022, the Company has issued and outstanding a cumulative $4.4 billion aggregate principal amount of unsecured senior notes, which are due between 2023 and 2032, with UMB Bank, N.A. and U.S. Bank as trustees. Interest on the senior notes, ranging from 1.750% to 4.700%, is payable semi-annually and is computed on the basis of a 360-day year. The $300 million aggregate principal amount of unsecured 3.850% Senior Notes due 2023 was included in “Long-term debt” on the accompanying Condensed Consolidated Balance Sheet as of September 30, 2022, as the Company has the ability and intent to refinance these notes on a long-term basis. 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 September 30, 2022. |
WARRANTIES
WARRANTIES | 9 Months Ended |
Sep. 30, 2022 | |
Warranties | |
Warranties | NOTE 6 – 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 September 30, 2022, and December 31, 2021; the following table identifies the changes in the Company’s aggregate product warranty liabilities for the nine months ended September 30, 2022 (in thousands): Warranty liabilities, balance at December 31, 2021 $ 77,199 Warranty claims (113,167) Warranty accruals 121,373 Foreign currency translation 8 Warranty liabilities, balance at September 30, 2022 $ 85,413 |
SHARE REPURCHASE PROGRAM
SHARE REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2022 | |
Share Repurchase Program | |
Share repurchase program | NOTE 7 – 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 November 17, 2021, and May 16, 2022, the Company’s Board of Directors each time approved a resolution to increase the authorization amount under the share repurchase program by an additional $1.5 billion, resulting in a cumulative authorization amount of $20.3 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 nine months ended September 30, 2022 and 2021 (in thousands, except per share data): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Shares repurchased 1,039 1,583 4,425 3,801 Average price per share $ 683.09 $ 595.96 $ 646.61 $ 528.09 Total investment $ 710,304 $ 942,955 $ 2,861,513 $ 2,007,122 As of September 30, 2022, the Company had $644.0 million remaining under its share repurchase authorization. Subsequent to the end of the third quarter and through November 8, 2022, the Company repurchased 0.3 million additional shares of its common stock under its share repurchase program, at an average price of $735.72, for a total investment of $184.5 million. The Company has repurchased a total of 90.2 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through November 8, 2022, at an average price of $219.33, for a total aggregate investment of $19.8 billion. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2022 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | NOTE 8 – ACCUMULATED OTHER COMPREHENSIVE 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 nine months ended September 30, 2022 and 2021 (in thousands): Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at June 30, 2022 $ (3,611) $ (3,611) Change in accumulated other comprehensive loss (372) (372) Accumulated other comprehensive loss, balance at September 30, 2022 $ (3,983) $ (3,983) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at December 31, 2021 $ (6,799) $ (6,799) Change in accumulated other comprehensive income 2,816 2,816 Accumulated other comprehensive loss, balance at September 30, 2022 $ (3,983) $ (3,983) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Change in accumulated other comprehensive loss (5,237) (5,237) Accumulated other comprehensive loss, balance at September 30, 2021 $ (7,828) $ (7,828) 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 (5,673) (5,673) Accumulated other comprehensive loss, balance at September 30, 2021 $ (7,828) $ (7,828) (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 | 9 Months Ended |
Sep. 30, 2022 | |
Revenue | |
Revenue | NOTE 9 – REVENUE The table below identifies the Company’s revenues disaggregated by major customer type for the three and nine months ended September 30, 2022 and 2021 (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Sales to do-it-yourself customers $ 2,086,201 $ 1,992,778 $ 5,914,238 $ 5,773,345 Sales to professional service provider customers 1,630,571 1,408,747 4,601,111 4,032,050 Other sales and sales adjustments 81,847 78,045 250,018 230,675 Total sales $ 3,798,619 $ 3,479,570 $ 10,765,367 $ 10,036,070 See Note 6 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 | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Compensation and Benefit Plans | |
Share-based compensation and benefit plans | NOTE 10 – 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 nine months ended September 30, 2022 (in thousands, except per share data): Shares Weighted- Average (in thousands) Exercise Price Outstanding at December 31, 2021 1,206 $ 300.09 Granted 124 670.98 Exercised (169) 253.89 Forfeited or expired (12) 456.32 Outstanding at September 30, 2022 1,149 $ 345.21 Exercisable at September 30, 2022 808 $ 271.82 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 nine months ended September 30, 2022 and 2021: September 30, 2022 2021 Risk free interest rate 2.00 % 0.81 % Expected life 6.3 Years 6.0 Years Expected volatility 28.8 % 30.0 % Expected dividend yield — % — % The following table summarizes activity related to stock options awarded by the Company for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share data): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Compensation expense for stock options awarded $ 4,924 $ 4,736 $ 15,134 $ 15,103 Income tax benefit from compensation expense related to stock options 1,222 1,169 3,756 3,727 The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2022, was $219.30, compared to $144.99 for the nine months ended September 30, 2021. The remaining unrecognized compensation expense related to unvested stock option awards at September 30, 2022, was $40.4 million, and the weighted-average period of time over which this cost will be recognized is 2.7 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 nine months ended September 30, 2022 and 2021 (in thousands): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Compensation expense for shares issued under the ESPP $ 828 $ 832 $ 2,429 $ 2,264 Income tax benefit from compensation expense related to shares issued under the ESPP 205 205 603 559 Compensation expense for restricted shares awarded 459 401 1,350 1,177 Income tax benefit from compensation expense related to restricted awards $ 114 $ 99 $ 335 $ 291 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 nine months ended September 30, 2022 or 2021. The Company expensed matching contributions under the 401(k) Plan in the amount of $9.5 million and $8.7 million for the three months ended September 30, 2022 and 2021, 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 $27.3 million and $24.6 million for the nine months ended September 30, 2022 and 2021, 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 $45.9 million and $52.5 million as of September 30, 2022, and December 31, 2021, 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 for each of the three months ended September 30, 2022 and 2021, 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 $0.2 million for each of the nine months ended September 30, 2022 and 2021, 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 September 30, 2022, there were 12,867 stock appreciation rights outstanding, and during the nine months ended September 30, 2022, there were 3,056 stock appreciation rights granted. The liability for compensation to be paid for redeemed stock appreciation rights was $1.7 million and $1.3 million as of September 30, 2022, and December 31, 2021, respectively, which were included in “Other liabilities” on the Condensed Consolidated Balance Sheets. The Company recorded compensation expense for stock appreciation rights in the amount of $0.6 million and $0.2 million for the three months ended September 30, 2022 and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. The Company recorded compensation expense for stock appreciation rights in the amount of $0.4 million and $0.6 million for the nine months ended September 30, 2022 and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Condensed Consolidated Statements of Income. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share | |
Earnings per share | NOTE 11 – EARNINGS PER SHARE The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share data): For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator (basic and diluted): Net income $ 585,438 $ 558,652 $ 1,644,078 $ 1,645,712 Denominator: Weighted-average common shares outstanding – basic 63,288 68,608 64,979 69,529 Effect of stock options (1) 572 632 587 645 Weighted-average common shares outstanding – assuming dilution 63,860 69,240 65,566 70,174 Earnings per share: Earnings per share-basic $ 9.25 $ 8.14 $ 25.30 $ 23.67 Earnings per share-assuming dilution $ 9.17 $ 8.07 $ 25.08 $ 23.45 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 139 133 145 48 Weighted-average exercise price per share of antidilutive stock options (1) $ 660.74 $ 467.03 $ 658.74 $ 502.49 (1) See Note 10 for further information concerning the terms of the Company’s share-based compensation plans. For the three and nine months ended September 30, 2022 and 2021, 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. See Note 7 for information concerning the Company’s subsequent share repurchases. |
LEGAL MATTERS
LEGAL MATTERS | 9 Months Ended |
Sep. 30, 2022 | |
Legal Matters | |
Legal matters | NOTE 12 – LEGAL MATTERS The Company is currently involved in litigation incidental to the ordinary conduct of the Company’s business. Based on existing facts and historical patterns, the Company accrues for litigation losses in instances where an adverse outcome is probable and the Company is able to reasonably estimate the probable loss in accordance with Accounting Standard Codification 450-20. The Company also accrues for an estimate of legal costs to be incurred for litigation matters. Although the Company cannot ascertain the amount of liability that it may incur from legal 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 | 9 Months Ended |
Sep. 30, 2022 | |
Recent Accounting Pronouncements | |
Recent accounting pronouncements | NOTE 13 – RECENT ACCOUNTING PRONOUNCEMENTS In September of 2022, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standard Update (“ASU”) No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” ASU 2022-04 enhances the transparency of supplier finance programs. Under ASU 2022-04, a buyer in a supplier finance program would be required to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period and potential magnitude. ASU 2022-04 is effective for annual reporting periods beginning after December 15, 2022, including interim periods within that reporting period, except for the amendent on rollforward information, which is effective for fiscal years beginning after December 15, 2023. ASU 2022-04 allows for early adoption and requires retrospective adoption, except on rollforward information, which should be applied prospectively. The Company will adopt this guidance beginning with its first quarter ending March 31, 2023. The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations or cash flows, as the guidance pertains to disclosure. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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) | 9 Months Ended |
Sep. 30, 2022 | |
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 September 30, 2022, the Company had invested in five 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 $25.0 million as of September 30, 2022, and was included in “Other assets, net” on the accompanying Condensed Consolidated Balance Sheets. As of September 30, 2022, the Company had commitments to make certain additional capital contributions to one of its tax credit funds totaling approximately $122.0 million upon achievement of project milestones by the solar energy farms, the timing of which is uncertain and outside of the Company’s control. Subsequent to September 30, 2022, the Company entered into an agreement to invest in an additional tax credit fund, which promotes renewable energy through the development of solar energy farms, primarily for the purpose of receiving renewable energy tax credits. Per the terms of this agreement, the Company is required to make capital contributions totaling approximately $60.0 million upon achievement of project milestones by the solar energy farms, the timing of which is uncertain and outside of the Company’s control. |
FAIR VALUE MEASUREMENTS (Polici
FAIR VALUE MEASUREMENTS (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Fair value of financial instruments | 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. |
WARRANTIES (Policies)
WARRANTIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Measurements | |
Valuation of marketable securities | 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 September 30, 2022, and December 31, 2021 (in thousands): September 30, 2022 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 45,897 $ — $ — $ 45,897 December 31, 2021 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 52,456 $ — $ — $ 52,456 |
Valuation of senior notes | September 30, 2022 December 31, 2021 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 4,370,772 $ 4,022,512 $ 3,826,978 $ 4,135,629 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Summary of total lease cost | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Operating lease cost $ 92,677 $ 87,601 $ 273,475 $ 262,183 Short-term operating lease cost 2,594 1,803 7,710 5,397 Variable operating lease cost 23,547 22,436 70,650 67,025 Sublease income (1,553) (1,177) (3,975) (3,560) Total lease cost $ 117,265 $ 110,663 $ 347,860 $ 331,045 |
Other lease related information | For the Nine Months Ended September 30, 2022 2021 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 272,620 $ 256,282 Right-of-use assets obtained in exchange for new operating lease liabilities 341,272 216,825 |
FINANCING (Tables)
FINANCING (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Financing | |
Outstanding financing facilities | September 30, 2022 December 31, 2021 3.800% Senior Notes due 2022, effective interest rate of 3.845% $ — $ 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 4.700% Senior Notes due 2032, effective interest rate of 4.740% 850,000 — Total principal amount of debt 4,400,000 3,850,000 Less: Unamortized discount and debt issuance costs 29,228 23,022 Total long-term debt $ 4,370,772 $ 3,826,978 |
WARRANTIES (Tables)
WARRANTIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Warranties | |
Changes in product warranty liabilities | Warranty liabilities, balance at December 31, 2021 $ 77,199 Warranty claims (113,167) Warranty accruals 121,373 Foreign currency translation 8 Warranty liabilities, balance at September 30, 2022 $ 85,413 |
SHARE REPURCHASE PROGRAM (Table
SHARE REPURCHASE PROGRAM (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share Repurchase Program | |
Schedule of shares repurchased | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Shares repurchased 1,039 1,583 4,425 3,801 Average price per share $ 683.09 $ 595.96 $ 646.61 $ 528.09 Total investment $ 710,304 $ 942,955 $ 2,861,513 $ 2,007,122 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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 June 30, 2022 $ (3,611) $ (3,611) Change in accumulated other comprehensive loss (372) (372) Accumulated other comprehensive loss, balance at September 30, 2022 $ (3,983) $ (3,983) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at December 31, 2021 $ (6,799) $ (6,799) Change in accumulated other comprehensive income 2,816 2,816 Accumulated other comprehensive loss, balance at September 30, 2022 $ (3,983) $ (3,983) Foreign Total Accumulated Other Currency (1) Comprehensive Loss Accumulated other comprehensive loss, balance at June 30, 2021 $ (2,591) $ (2,591) Change in accumulated other comprehensive loss (5,237) (5,237) Accumulated other comprehensive loss, balance at September 30, 2021 $ (7,828) $ (7,828) 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 (5,673) (5,673) Accumulated other comprehensive loss, balance at September 30, 2021 $ (7,828) $ (7,828) (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) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue | |
Disaggregation of revenue | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Sales to do-it-yourself customers $ 2,086,201 $ 1,992,778 $ 5,914,238 $ 5,773,345 Sales to professional service provider customers 1,630,571 1,408,747 4,601,111 4,032,050 Other sales and sales adjustments 81,847 78,045 250,018 230,675 Total sales $ 3,798,619 $ 3,479,570 $ 10,765,367 $ 10,036,070 |
SHARE-BASED COMPENSATION AND _2
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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, 2021 1,206 $ 300.09 Granted 124 670.98 Exercised (169) 253.89 Forfeited or expired (12) 456.32 Outstanding at September 30, 2022 1,149 $ 345.21 Exercisable at September 30, 2022 808 $ 271.82 |
Black-Scholes option pricing model | September 30, 2022 2021 Risk free interest rate 2.00 % 0.81 % Expected life 6.3 Years 6.0 Years Expected volatility 28.8 % 30.0 % Expected dividend yield — % — % |
Summary of activity of share-based compensation and benefit plans | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Compensation expense for stock options awarded $ 4,924 $ 4,736 $ 15,134 $ 15,103 Income tax benefit from compensation expense related to stock options 1,222 1,169 3,756 3,727 |
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 Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Compensation expense for shares issued under the ESPP $ 828 $ 832 $ 2,429 $ 2,264 Income tax benefit from compensation expense related to shares issued under the ESPP 205 205 603 559 Compensation expense for restricted shares awarded 459 401 1,350 1,177 Income tax benefit from compensation expense related to restricted awards $ 114 $ 99 $ 335 $ 291 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | For the Three Months Ended For the Nine Months Ended September 30, September 30, 2022 2021 2022 2021 Numerator (basic and diluted): Net income $ 585,438 $ 558,652 $ 1,644,078 $ 1,645,712 Denominator: Weighted-average common shares outstanding – basic 63,288 68,608 64,979 69,529 Effect of stock options (1) 572 632 587 645 Weighted-average common shares outstanding – assuming dilution 63,860 69,240 65,566 70,174 Earnings per share: Earnings per share-basic $ 9.25 $ 8.14 $ 25.30 $ 23.67 Earnings per share-assuming dilution $ 9.17 $ 8.07 $ 25.08 $ 23.45 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 139 133 145 48 Weighted-average exercise price per share of antidilutive stock options (1) $ 660.74 $ 467.03 $ 658.74 $ 502.49 (1) See Note 10 for further information concerning the terms of the Company’s share-based compensation plans. |
VARIABLE INTEREST ENTITIES (Nar
VARIABLE INTEREST ENTITIES (Narrative) (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 USD ($) entity | Nov. 08, 2022 USD ($) | |
Variable Interest Entities | ||
Number of unconsolidated tax credit fund entities that were considered to be Variable Interest Entities | entity | 5 | |
Equity method investment in VIEs, net | $ 25 | |
Capital contributions | $ 122 | |
Subsequent event [Member] | ||
Variable Interest Entities | ||
Capital contributions | $ 60 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Fair Value Measurements | |||||
(Decrease) increase in fair value of marketable securities | $ (2) | $ (0.2) | $ (11.2) | $ 3.8 | |
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 | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 45,897 | $ 52,456 |
Fair value, inputs, Level 1 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 45,897 | $ 52,456 |
FAIR VALUE MEASUREMENTS (Fair_2
FAIR VALUE MEASUREMENTS (Fair Value of Senior Notes) (Details) - Fair value, inputs, Level 2 [Member] - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Carrying amount of senior notes | $ 4,370,772 | $ 3,826,978 |
Estimated fair value of senior notes | $ 4,022,512 | $ 4,135,629 |
LEASES (Summary of Total Lease
LEASES (Summary of Total Lease Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||||
Operating lease cost | $ 92,677 | $ 87,601 | $ 273,475 | $ 262,183 |
Short-term operating lease cost | 2,594 | 1,803 | 7,710 | 5,397 |
Variable operating lease cost | 23,547 | 22,436 | 70,650 | 67,025 |
Sublease income | (1,553) | (1,177) | (3,975) | (3,560) |
Total lease cost | $ 117,265 | $ 110,663 | $ 347,860 | $ 331,045 |
LEASES (Supplemental Cash Flow
LEASES (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Leases | ||
Cash paid for amounts included in the measurement of operating lease liabilities, operating cash flows from operating leases | $ 272,620 | $ 256,282 |
Right-of-use asset obtained in exchange for new operating lease liability | $ 341,272 | $ 216,825 |
FINANCING (Unsecured Revolving
FINANCING (Unsecured Revolving Credit Facility) (Narrative) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Letter of credit [Member] | ||
Financing | ||
Letters of credit | $ 96.6 | |
Line of credit facility [Member] | ||
Financing | ||
Unsecured revolving credit facility | $ 0 | $ 0 |
Line of credit facility covenant compliance | As of September 30, 2022, the Company remained in compliance with all covenants under the Credit Agreement. | |
Line of credit facility [Member] | 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 | $ 5.1 | $ 84 |
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 | |
Line of credit facility [Member] | Unsecured debt [Member] | Spread over Alternate Base rate [Member] | ||
Financing | ||
Line of credit current interest rate | 0% | |
Line of credit facility [Member] | Unsecured debt [Member] | Spread over Eurodollar Revolving rate [Member] | ||
Financing | ||
Line of credit current interest rate | 0.90% | |
Line of credit facility [Member] | Unsecured debt [Member] | Letter of credit [Member] | ||
Financing | ||
Line of credit facility sublimit | $ 200 | |
Line of credit facility [Member] | 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 | 9 Months Ended | ||||
Sep. 01, 2022 USD ($) | Jun. 15, 2022 USD ($) D | Sep. 30, 2022 USD ($) entity D | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Financing | |||||
Face amount of senior notes | $ 4,400,000 | $ 3,850,000 | |||
Repayment of senior notes | 300,000 | $ 300,000 | |||
Senior notes [Member] | |||||
Financing | |||||
Face amount of senior notes | $ 4,400,000 | ||||
Number of days in annual interest calculation period | D | 360 | ||||
Number of guarantors under the senior notes | entity | 0 | ||||
Debt instrument covenant compliance | Each of the senior notes is subject to certain customary covenants, with which the Company complied as of September 30, 2022. | ||||
Minimum [Member] | Senior notes [Member] | |||||
Financing | |||||
Interest rate of senior notes | 1.75% | ||||
Maximum [Member] | Senior notes [Member] | |||||
Financing | |||||
Interest rate of senior notes | 4.70% | ||||
3.800% Senior Notes due 2022 [Member] | Senior notes [Member] | |||||
Financing | |||||
Face amount of senior notes | $ 300,000 | ||||
Interest rate of senior notes | 3.80% | 3.80% | |||
Repayment of senior notes | $ 300,000 | ||||
3.850% Senior Notes due 2023 [Member] | Senior notes [Member] | |||||
Financing | |||||
Face amount of senior notes | $ 300,000 | $ 300,000 | |||
Interest rate of senior notes | 3.85% | 3.85% | |||
4.700% Senior Notes due 2032 [Member] | Senior notes [Member] | |||||
Financing | |||||
Issuance date of senior notes | Jun. 15, 2022 | ||||
Face amount of senior notes | $ 850,000 | $ 850,000 | |||
Interest rate of senior notes | 4.70% | 4.70% | |||
Percentage of face value of debt instrument | 99.684% | ||||
Number of days in annual interest calculation period | D | 360 |
FINANCING (Outstanding Financin
FINANCING (Outstanding Financing Facilities) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Sep. 01, 2022 | Jun. 15, 2022 | Dec. 31, 2021 | |
Financing | |||||
Senior notes, principal amount | $ 4,400,000 | $ 3,850,000 | |||
Less: Unamortized discount and debt issuance costs | 29,228 | 23,022 | |||
Total long-term debt | 4,370,772 | 3,826,978 | [1] | ||
Senior notes [Member] | |||||
Financing | |||||
Senior notes, principal amount | 4,400,000 | ||||
Senior notes [Member] | 3.800% Senior Notes due 2022 [Member] | |||||
Financing | |||||
Senior notes, principal amount | $ 300,000 | ||||
Interest rate of senior notes | 3.80% | 3.80% | |||
Senior notes, effective interest rate | 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% | |||
Senior notes [Member] | 4.700% Senior Notes due 2032 [Member] | |||||
Financing | |||||
Senior notes, principal amount | $ 850,000 | $ 850,000 | |||
Interest rate of senior notes | 4.70% | 4.70% | |||
Senior notes, effective interest rate | 4.74% | ||||
[1]The balance sheet at December 31, 2021, 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 | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Warranties | |
Warranty liabilities, beginning balance | $ 77,199 |
Warranty claims | (113,167) |
Warranty accruals | 121,373 |
Foreign currency translation | 8 |
Warranty liabilities, ending balance | $ 85,413 |
SHARE REPURCHASE PROGRAM (Narra
SHARE REPURCHASE PROGRAM (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 142 Months Ended | ||||
May 16, 2022 | Nov. 17, 2021 | Nov. 08, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Nov. 08, 2022 | |
Share Repurchase Program | ||||||||
Increase in authorized amount | $ 1,500,000 | $ 1,500,000 | ||||||
Cumulative authorized amount | $ 20,300,000 | |||||||
Authorization effective period | 3 years | 3 years | ||||||
Remaining balance under share repurchase program | $ 644,000 | $ 644,000 | ||||||
Common stock repurchased, shares | 1,039 | 1,583 | 4,425 | 3,801 | ||||
Common stock repurchased, average price per share | $ 683.09 | $ 595.96 | $ 646.61 | $ 528.09 | ||||
Common stock repurchased, value | $ 710,304 | $ 942,955 | $ 2,861,513 | $ 2,007,122 | ||||
Subsequent event [Member] | ||||||||
Share Repurchase Program | ||||||||
Common stock repurchased, shares | 300 | 90,200 | ||||||
Common stock repurchased, average price per share | $ 735.72 | $ 219.33 | ||||||
Common stock repurchased, value | $ 184,500 | $ 19,800,000 |
SHARE REPURCHASE PROGRAM (Sched
SHARE REPURCHASE PROGRAM (Schedule of Shares Repurchased) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share Repurchase Program | ||||
Shares repurchased | 1,039 | 1,583 | 4,425 | 3,801 |
Average price per share | $ 683.09 | $ 595.96 | $ 646.61 | $ 528.09 |
Total investment | $ 710,304 | $ 942,955 | $ 2,861,513 | $ 2,007,122 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | ||
Balance at beginning of period | $ (1,107,430) | $ 217,694 | $ (66,423) | [1] | $ 140,258 |
Change in accumulated other comprehensive income (loss) | (372) | (5,237) | 2,816 | (5,673) | |
Balance at end of period | (1,205,463) | (140,853) | (1,205,463) | (140,853) | |
Accumulated other comprehensive income (loss) [Member] | |||||
Balance at beginning of period | (3,611) | (2,591) | (6,799) | (2,155) | |
Change in accumulated other comprehensive income (loss) | (372) | (5,237) | 2,816 | (5,673) | |
Balance at end of period | (3,983) | (7,828) | (3,983) | (7,828) | |
Foreign currency [Member] | |||||
Balance at beginning of period | (3,611) | (2,591) | (6,799) | (2,155) | |
Change in accumulated other comprehensive income (loss) | (372) | (5,237) | 2,816 | (5,673) | |
Balance at end of period | $ (3,983) | $ (7,828) | $ (3,983) | $ (7,828) | |
[1]The balance sheet at December 31, 2021, 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 (Disaggregation of Reve
REVENUE (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue | ||||
Sales | $ 3,798,619 | $ 3,479,570 | $ 10,765,367 | $ 10,036,070 |
DIY customer [Member] | ||||
Disaggregation of Revenue | ||||
Sales | 2,086,201 | 1,992,778 | 5,914,238 | 5,773,345 |
Professional service provider customer [Member] | ||||
Disaggregation of Revenue | ||||
Sales | 1,630,571 | 1,408,747 | 4,601,111 | 4,032,050 |
Other customers and sales adjustments [Member] | ||||
Disaggregation of Revenue | ||||
Sales | $ 81,847 | $ 78,045 | $ 250,018 | $ 230,675 |
SHARE-BASED COMPENSATION AND _3
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Option) (Narrative) (Details) - Stock option [Member] - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation and Benefit Plans | ||
Options, weighted-average grant-date fair value | $ 219.30 | $ 144.99 |
Remaining unrecognized compensation expense | $ 40.4 | |
Weighted-average period for cost recognition | 2 years 8 months 12 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% |
SHARE-BASED COMPENSATION AND _4
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Other Share-Based Compensation) (Narrative) (Details) - Employee stock purchase plan [Member] | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Compensation and Benefit Plans | |
Employee stock purchase plan stock purchase percentage | 85% |
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, employer discretionary contribution | $ 0 | $ 0 | ||
Profit sharing and savings plan, cost recognized | $ 9,500 | $ 8,700 | $ 27,300 | $ 24,600 |
Employee's first 2% of contributed wages [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, Company match | 100% | |||
Employee's next 4% of contributed wages [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Profit sharing and savings plan, Company match | 25% |
SHARE-BASED COMPENSATION AND _6
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Nonqualified Deferred Compensation Plan) (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||||
Maximum annual contributions per employee, percent | 6% | ||||
Nonqualified Deferred Compensation Plan [Member] | |||||
Share-Based Compensation and Benefit Plans | |||||
Deferred compensation plan obligation | $ 45.9 | $ 45.9 | $ 52.5 | ||
Deferred compensation plan cost recognized | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
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 | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||||
Stock appreciation rights expiration period | 10 years | ||||
Stock appreciation rights vesting rate per year | 25% | ||||
Vesting period | 4 years | ||||
Stock appreciation rights outstanding | 12,867 | 12,867 | |||
Stock appreciation rights granted during the period, units | 3,056 | ||||
Liability for compensation to be paid for redeemed stock appreciation rights | $ 1.7 | $ 1.7 | $ 1.3 | ||
Compensation expense for share-based compensation | $ 0.6 | $ 0.2 | $ 0.4 | $ 0.6 |
SHARE-BASED COMPENSATION AND _8
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Summary of Stock Options) (Details) - Employee stock option [Member] - $ / shares shares in Thousands | 9 Months Ended |
Sep. 30, 2022 | |
Share-Based Compensation and Benefit Plans | |
Outstanding shares, beginning balance | 1,206 |
Outstanding weighted-average exercise price, beginning balance | $ 300.09 |
Granted, shares | 124 |
Granted, weighted-average exercise price | $ 670.98 |
Exercised, shares | (169) |
Exercised, weighted-average exercise price | $ 253.89 |
Forfeited or expired, shares | (12) |
Forfeited or expired, weighted-average exercise price | $ 456.32 |
Outstanding shares, ending balance | 1,149 |
Outstanding weighted-average exercise price, ending balance | $ 345.21 |
Exercisable shares, ending balance | 808 |
Exercisable weighted-average exercise price, ending balance | $ 271.82 |
SHARE-BASED COMPENSATION AND _9
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Black-Scholes Option Pricing Model) (Details) - Employee stock option [Member] | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation and Benefit Plans | ||
Risk-free interest rate | 2% | 0.81% |
Expected life | 6 years 3 months 18 days | 6 years |
Expected volatility | 28.80% | 30% |
Expected dividend yield | 0% | 0% |
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | $ 4,924 | $ 4,736 | $ 15,134 | $ 15,103 |
Income tax benefit from compensation expense for share-based compensation | $ 1,222 | $ 1,169 | $ 3,756 | $ 3,727 |
SHARE-BASED COMPENSATION AND_11
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Other Share-Based Compensation Activity) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Employee stock purchase plan [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | $ 828 | $ 832 | $ 2,429 | $ 2,264 |
Income tax benefit from compensation expense for share-based compensation | 205 | 205 | 603 | 559 |
Restricted stock [Member] | ||||
Share-Based Compensation and Benefit Plans | ||||
Compensation expense for share-based compensation | 459 | 401 | 1,350 | 1,177 |
Income tax benefit from compensation expense for share-based compensation | $ 114 | $ 99 | $ 335 | $ 291 |
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 | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator (basic and diluted): | ||||
Net income | $ 585,438 | $ 558,652 | $ 1,644,078 | $ 1,645,712 |
Denominator: | ||||
Denominator for basic earnings per share - weighted-average shares | 63,288 | 68,608 | 64,979 | 69,529 |
Effect of stock options | 572 | 632 | 587 | 645 |
Denominator for diluted earnings per share - weighted-average shares and assumed conversion | 63,860 | 69,240 | 65,566 | 70,174 |
Earnings per share - basic | $ 9.25 | $ 8.14 | $ 25.30 | $ 23.67 |
Earnings per share - assuming dilution | $ 9.17 | $ 8.07 | $ 25.08 | $ 23.45 |
Antidilutive stock options | 139 | 133 | 145 | 48 |
Weighted-average exercise price per share of antidilutive stock options | $ 660.74 | $ 467.03 | $ 658.74 | $ 502.49 |