Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Feb. 19, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document type | 10-K | ||
Document annual report | true | ||
Document transition report | false | ||
Amendment flag | false | ||
Current fiscal year end date | --12-31 | ||
Document period end date | Dec. 31, 2023 | ||
Document fiscal year focus | 2023 | ||
Document fiscal period focus | FY | ||
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 well-known seasoned issuer | Yes | ||
Entity voluntary filers | No | ||
Entity filer category | Large Accelerated Filer | ||
Entity small business | false | ||
Entity emerging growth company | false | ||
Entity interactive data current | Yes | ||
ICFR auditor attestation flag | true | ||
Entity shell company | false | ||
Entity public float | $ 48,266,172,701 | ||
Entity common stock, shares outstanding | 59,036,585 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | Kansas City, Missouri | ||
Document Financial Statement Error Correction [Flag] | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 279,132 | $ 108,583 |
Accounts receivable, less allowance for doubtful accounts $15,834 in 2023 and $14,695 in 2022 | 375,049 | 343,155 |
Amounts receivable from suppliers | 140,443 | 127,019 |
Inventory | 4,658,367 | 4,359,126 |
Other current assets | 105,311 | 110,376 |
Total current assets | 5,558,302 | 5,048,259 |
Property and equipment, at cost | 8,312,367 | 7,438,065 |
Less: accumulated depreciation and amortization | 3,275,387 | 3,014,024 |
Net property and equipment | 5,036,980 | 4,424,041 |
Operating lease, right-of-use assets | 2,200,554 | 2,112,267 |
Goodwill | 897,696 | 884,445 |
Other assets, net | 179,463 | 158,967 |
Total assets | 13,872,995 | 12,627,979 |
Liabilities and shareholders' deficit | ||
Accounts payable | 6,091,700 | 5,881,157 |
Self-insurance reserves | 128,548 | 138,926 |
Accrued payroll | 138,122 | 126,888 |
Accrued benefits and withholdings | 174,650 | 166,433 |
Income taxes payable | 7,860 | 0 |
Current portion of operating lease liabilities | 389,536 | 366,721 |
Other current liabilities | 730,937 | 383,692 |
Total current liabilities | 7,661,353 | 7,063,817 |
Long-term debt | 5,570,125 | 4,371,653 |
Operating lease liabilities, less current portion | 1,881,344 | 1,806,656 |
Deferred income taxes | 295,471 | 245,347 |
Other liabilities | 203,980 | 201,258 |
Shareholders' (equity) deficit: | ||
Preferred stock, $0.01 par value: Authorized shares - 5,000,000; Issued and outstanding shares - none | 0 | 0 |
Common stock, $0.01 par value: Authorized shares - 245,000,000 Issued and outstanding shares - 59,072,792 as of December 31, 2023, and 62,353,221 as of December 31, 2022 | 591 | 624 |
Additional paid-in capital | 1,352,275 | 1,311,488 |
Retained deficit | (3,131,532) | (2,375,860) |
Accumulated other comprehensive income | 39,388 | 2,996 |
Total shareholders' deficit | (1,739,278) | (1,060,752) |
Total liabilities and shareholders' deficit | $ 13,872,995 | $ 12,627,979 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 15,834 | $ 14,695 |
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 245,000,000 | 245,000,000 |
Common stock, shares issued | 59,072,792 | 62,353,221 |
Common stock, shares outstanding | 59,072,792 | 62,353,221 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Income | |||
Sales | $ 15,812,250 | $ 14,409,860 | $ 13,327,563 |
Cost of goods sold, including warehouse and distribution expenses | 7,707,447 | 7,028,154 | 6,307,614 |
Gross profit | 8,104,803 | 7,381,706 | 7,019,949 |
Selling, general and administrative expenses | 4,918,427 | 4,427,215 | 4,102,781 |
Operating income | 3,186,376 | 2,954,491 | 2,917,168 |
Other income (expense): | |||
Interest expense | (201,668) | (157,720) | (144,768) |
Interest income | 4,900 | 4,763 | 1,971 |
Other, net | 15,142 | (2,879) | 7,543 |
Total other expense | (181,626) | (155,836) | (135,254) |
Income before income taxes | 3,004,750 | 2,798,655 | 2,781,914 |
Provision for income taxes | 658,169 | 626,005 | 617,229 |
Net income | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Earnings per share-basic: | |||
Earnings per share | $ 38.80 | $ 33.75 | $ 31.39 |
Weighted-average common shares outstanding - basic | 60,475 | 64,372 | 68,967 |
Earnings per share-assuming dilution: | |||
Earnings per share | $ 38.47 | $ 33.44 | $ 31.10 |
Weighted-average common shares outstanding - assuming dilution | 60,998 | 64,962 | 69,611 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Consolidated Statements of Comprehensive Income | |||
Net Income (Loss) | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustments | 36,392 | 9,795 | (4,644) |
Total other comprehensive income (loss) | 36,392 | 9,795 | (4,644) |
Comprehensive income | $ 2,382,973 | $ 2,182,445 | $ 2,160,041 |
CONSOLIDATED STATEMENTS OF SHAR
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 (Loss) | 2,164,685 | 2,164,685 | |||
Other comprehensive income (loss) | (4,644) | (4,644) | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 18,511 | 18,511 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 39,000 | ||||
Net issuance of common stock upon exercise of stock options | $ 4 | 67,757 | 67,761 | ||
Net issuance of common stock upon exercise of stock options, shares | 404,000 | ||||
Share-based compensation | 23,054 | 23,054 | |||
Share repurchases, including fees | $ (45) | (84,655) | (2,391,348) | (2,476,048) | |
Share repurchases, including fees, shares | (4,537,000) | ||||
Balance at end of period at Dec. 31, 2021 | $ 670 | 1,305,508 | (1,365,802) | (6,799) | (66,423) |
Balance (in shares) at Dec. 31, 2021 | 67,029,000 | ||||
Net Income (Loss) | 2,172,650 | 2,172,650 | |||
Other comprehensive income (loss) | 9,795 | 9,795 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 19,864 | 19,864 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 34,000 | ||||
Net issuance of common stock upon exercise of stock options | $ 3 | 60,974 | 60,977 | ||
Net issuance of common stock upon exercise of stock options, shares | 251,000 | ||||
Share-based compensation | 24,650 | 24,650 | |||
Share repurchases, including fees | $ (49) | (99,508) | (3,182,708) | $ (3,282,265) | |
Share repurchases, including fees, shares | (4,961,000) | (4,961,000) | |||
Balance at end of period at Dec. 31, 2022 | $ 624 | 1,311,488 | (2,375,860) | 2,996 | $ (1,060,752) |
Balance (in shares) at Dec. 31, 2022 | 62,353,000 | 62,353,221 | |||
Net Income (Loss) | 2,346,581 | $ 2,346,581 | |||
Other comprehensive income (loss) | 36,392 | 36,392 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes | 21,691 | 21,691 | |||
Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes, shares | 28,000 | ||||
Net issuance of common stock upon exercise of stock options | $ 3 | 71,150 | 71,153 | ||
Net issuance of common stock upon exercise of stock options, shares | 260,000 | ||||
Share-based compensation | 25,642 | 25,642 | |||
Share repurchases, including fees | $ (36) | (77,696) | (3,073,423) | $ (3,151,155) | |
Share repurchases, including fees, shares | (3,568,000) | (3,568,000) | |||
Excise tax on share repurchases | (28,830) | $ (28,830) | |||
Balance at end of period at Dec. 31, 2023 | $ 591 | $ 1,352,275 | $ (3,131,532) | $ 39,388 | $ (1,739,278) |
Balance (in shares) at Dec. 31, 2023 | 59,073,000 | 59,072,792 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities: | |||
Net Income (Loss) | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization of property, equipment and intangibles | 409,061 | 357,933 | 328,217 |
Amortization of debt discount and issuance costs | 4,954 | 4,704 | 4,388 |
Deferred income taxes | 48,232 | 69,575 | 20,383 |
Share-based compensation programs | 27,511 | 26,458 | 24,656 |
Other | 2,116 | 885 | 2,128 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (35,539) | (75,859) | (47,427) |
Inventory | (288,323) | (669,046) | (32,634) |
Accounts payable | 207,061 | 1,184,858 | 510,911 |
Income taxes payable | 33,889 | 151,063 | 152,339 |
Accrued payroll | 11,234 | 19,300 | 18,714 |
Accrued benefits and withholdings | (12,763) | (60,072) | 9,214 |
Other | 280,070 | (34,199) | 51,736 |
Net cash provided by operating activities | 3,034,084 | 3,148,250 | 3,207,310 |
Investing activities: | |||
Purchases of property and equipment | (1,006,264) | (563,342) | (442,853) |
Proceeds from sale of property and equipment | 17,689 | 14,803 | 9,494 |
Investment in tax credit equity investments | (4,150) | (188,282) | (180,333) |
Other | (3,211) | (3,164) | (1,928) |
Net cash used in investing activities | (995,936) | (739,985) | (615,620) |
Financing activities: | |||
Proceeds from borrowings on revolving credit facility | 3,227,000 | 785,800 | 0 |
Payments on revolving credit facility | (3,227,000) | (785,800) | 0 |
Net proceeds from commercial paper | 746,789 | 0 | 0 |
Proceeds from the issuance of long-term debt | 749,655 | 847,314 | 0 |
Principal payments on long-term debt | (300,000) | (300,000) | (300,000) |
Payment of debt issuance costs | (4,989) | (6,591) | (3,412) |
Repurchases of common stock | (3,151,155) | (3,282,265) | (2,476,048) |
Net proceeds from issuance of common stock | 91,316 | 79,356 | 84,915 |
Other | (354) | (350) | (313) |
Net cash used in financing activities | (1,868,738) | (2,662,536) | (2,694,858) |
Effect of exchange rate changes on cash | 1,139 | 741 | (359) |
Net decrease in cash and cash equivalents | 170,549 | (253,530) | (103,527) |
Cash and cash equivalents at beginning of the period | 108,583 | 362,113 | 465,640 |
Cash and cash equivalents at end of the period | 279,132 | 108,583 | 362,113 |
Supplemental disclosures of cash flow information: | |||
Income taxes paid | 315,060 | 415,165 | 450,935 |
Interest paid, net of capitalized interest | $ 189,611 | $ 155,853 | $ 144,293 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of significant accounting policies | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of business: O’Reilly Automotive, Inc. and Subsidiaries, collectively, “O’Reilly” or the “Company,” is a specialty retailer and supplier of automotive aftermarket parts. The Company’s stores carry an extensive product line, including new and remanufactured automotive hard parts, maintenance items, and various automotive accessories. As of December 31, 2023, the Company owned and operated 6,095 stores in 48 U.S. states and Puerto Rico and 62 stores in Mexico, servicing both do-it-yourself (“DIY”) and the professional service provider customers. The Company’s robust distribution system provides stores with same-day or overnight access to an extensive inventory of hard-to-find items not typically stocked in the stores of other auto parts retailers. Segment reporting: The Company is managed and operated by a single single Principles of consolidation: The 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. Use of estimates: The preparation of the consolidated financial statements, in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. Cash equivalents: Cash equivalents include investments with maturities of 90 days or less on the date of purchase. Foreign Currency: The Company accounts for its Mexican operations using the local market currency, the Mexican peso, and converts its financial statements compiled for these operations from the Mexican peso to U.S. dollars. The cumulative gain or loss on currency translation is included as a component of “Accumulated other comprehensive income” on the accompanying Consolidated Balance Sheets. See Note 11 for further information concerning the Company’s accumulated other comprehensive income. Accounts receivable: 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 relatively 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 consolidated financial statements and have consistently been within management’s expectations. Amounts due to the Company from its Team Members are included in “Accounts receivable” on the accompanying Consolidated Balance Sheets. These amounts consist primarily of purchases of merchandise on Team Member accounts. Accounts receivable due from Team Members was approximately $0.9 million and $0.8 million as of December 31, 2023 and 2022, respectively. Amounts receivable from suppliers: 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 consolidated financial statements as of December 31, 2023 or 2022. Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories, and tools, is stated at the lower of cost or market. Inventory also includes capitalized costs related to procurement, warehousing, and distribution centers (“DCs”). Cost has been determined using the last-in, first-out (“LIFO”) method, which more accurately matches costs with related revenues. The replacement cost of inventory was $4.94 billion and $4.70 billion as of December 31, 2023 and 2022, respectively. 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. See Note 2 for further information concerning the Company’s financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis. Property and equipment: Property and equipment are carried at cost. Depreciation is calculated using the straight-line method, generally over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the estimated economic life of the assets. The lease term includes renewal options determined by management at lease inception, for which failure to execute renewal options would result in a substantial economic penalty to the Company. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is recognized in the Company’s Consolidated Statements of Income. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. See Note 4 for further information concerning the Company’s property and equipment. Goodwill and other intangibles: The accompanying Consolidated Balance Sheets at December 31, 2023 and 2022, include goodwill and other intangible assets recorded as the result of acquisitions. The Company operates a single reporting unit and evaluates goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter, or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. The goodwill impairment test includes an optional qualitative assessment. The Company’s qualitative assessment found no evidence to suggest it is more likely than not that its fair value is less than its carrying amount, including goodwill, as of December 31, 2023 and 2022. As such, no goodwill impairment adjustment was required as of December 31, 2023 and 2022. Finite-lived intangibles are carried at amortized cost and amortization is calculated using the straight-line method, generally over the estimated useful lives of the intangibles. See Note 6 for further information concerning the Company’s goodwill and other intangibles. Leases: The Company leases certain office space, retail stores, distribution centers, and equipment under long-term, non-cancelable operating leases. The Company does not separate non-lease components from lease components for any current lease contracts. Leases generally include renewal options and some include options to purchase, provisions for percentage rent based on sales, and/or incremental step increase provisions. The exercise of renewal options is typically at the Company’s sole discretion and all operating lease expense is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company rents or subleases certain surplus real estate to third parties. Right-of-use assets and corresponding operating lease liabilities are recognized for all leases with an initial term greater than 12 months. See Note 5 for further information concerning the Company’s operating leases. Impairment of long-lived assets: The Company reviews its long-lived assets, including its right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset (asset group) with the carrying amounts of the asset. If the undiscounted expected future cash flows are less than the carrying value of the assets, the Company measures the amount of impairment loss as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not historically recorded any material impairment charges to its long-lived assets. See Note 4 for further information concerning the Company’s impairment of long-lived assets activities. Valuation of investments: The Company has an unsecured obligation to pay, in the future, the value of deferred compensation and a Company match relating to employee participation in the Company’s nonqualified deferred compensation plan (the “Deferred Compensation Plan”). The future obligation is adjusted to reflect the performance, whether positive or negative, of selected investment measurement options, chosen by each participant. The Company invests in various marketable securities with the intention of selling these securities to fulfill its future obligations under the Deferred Compensation Plan. The investments in this plan were stated at fair value based on quoted market prices, were accounted for as trading securities, and were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. See Note 2 for further information concerning the fair value measurements of the Company’s marketable securities. See Note 13 for further information concerning the Company’s benefit plans. 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 December 31, 2023, the Company had invested in six 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 $34.7 million as of December 31, 2023, and was included in “Other assets, net” on the accompanying Consolidated Balance Sheets. During the year ended December 31, 2023, 2022, and 2021, the Company recognized investment tax credits from association with these VIEs in the amounts of $0.5 million, $167.6 million and $177.1 million, respectively, 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 Consolidated Statements of Cash Flows for the respective years. Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability, and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation, and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure. The Company estimates its self-insurance liabilities by considering a number of factors, including historical claims experience and trend-lines, projected cost inflation, growth patterns, and exposure forecasts. Certain of these liabilities were recorded at an estimate of their net present value. The following table identifies the components of the Company’s self-insurance reserves as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Self-insurance reserves (undiscounted) $ 225,740 $ 245,562 Self-insurance reserves (discounted) 214,116 233,017 The current portion of the Company’s discounted self-insurance reserves totaled $128.5 million and $138.9 million as of December 31, 2023 and 2022, respectively, which was included in “Self-insurance reserves” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. 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. See Note 9 for further information concerning the Company’s aggregate product warranty liabilities. Litigation accruals: 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. Share repurchases: 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. All shares repurchased under the share repurchase program are retired and recorded under the par value method on the accompanying Consolidated Balance Sheets. See Note 10 for further information concerning the Company’s share repurchase program. Revenue recognition: The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for transferring goods to the customer. Generally, the Company’s performance obligations are satisfied when the customer takes possession of the merchandise, which normally occurs immediately at the point of sale or through same day delivery of the merchandise. All sales are recorded net of estimated returns allowances, discounts, and taxes. The Company does not recognize revenue related to product warranties, as these are considered assurance warranty obligations. Over-the-counter retail sales to DIY customers are recorded when the customer takes possession of the merchandise. Internet retail sales, included in sales to DIY customers, are recorded when the merchandise is shipped or when the customer picks up the merchandise at a store. Sales to professional service provider customers, also referred to as “commercial sales,” are recorded upon same-day delivery of the merchandise to the customer, generally at the customer’s place of business. Other sales and sales adjustments primarily includes sales to Team Members, wholesale sales to other retailers (“jobber sales”), equipment sales, discounts, rebates, deferred revenue adjustments relating to the Company’s retail loyalty program, and adjustments to estimated sales returns allowances. Sales to Team Members are recorded when the Team Member takes possession of the merchandise. Jobber sales are recorded upon shipment of the merchandise from a regional distribution center with same-day delivery to the jobber customer’s location. The Company maintains a retail loyalty program named O’Reilly O’Rewards, which represents a performance obligation. The Company records a deferred revenue liability, based on a breakage adjusted, estimated redemption rate, and a corresponding reduction in revenue in periods when loyalty points are earned by members. The Company recognizes revenue and a corresponding reduction to the deferred revenue liability in periods when loyalty program issued coupons are redeemed by members, generally within a period of three months from issuance, or when unredeemed points expire, generally within 12 months after the date they were earned, which satisfies the Company’s performance obligation. See Note 12 for further information concerning the Company’s revenue. Cost of goods sold and selling, general and administrative expenses: Below follows the primary costs classified in each major expense category. Cost of goods sold, including warehouse and distribution expenses: ● Total cost of merchandise sold, including freight expenses associated with acquiring merchandise and with moving merchandise inventories from the Company’s distribution centers to the stores and defective merchandise and warranty costs. ● Supplier allowances and incentives, including allowances that are not reimbursements for specific, incremental, and identifiable costs and cash discounts on payments to suppliers. ● Costs associated with the Company’s supply chain, including payroll and benefit costs, warehouse occupancy costs, transportation costs, depreciation, and inventory shrinkage. Selling general and administrative expenses: ● Payroll benefit costs for store and corporate Team Members; ● Occupancy costs of store and corporate facilities; ● All expenses associated with Hub stores; ● Depreciation and amortization related to store and corporate assets; ● Vehicle expenses for store and Hub delivery services; ● Self-insurance costs; ● Closed store expenses; and ● Other administrative costs, including accounting, legal, and other professional services; bad debt, banking, and credit card fees; supplies; travel; and advertising costs. Advertising expenses: Advertising expense consists primarily of expenses related to the Company’s integrated marketing program, which includes radio, in-store, digital, and social media promotions, as well as sports and event sponsorships and direct mail and newspaper promotional distribution. The Company expenses advertising costs as incurred. The Company also participates in cooperative advertising arrangements with certain of its suppliers. Advertising expense, net of cooperative advertising allowances from suppliers that were incremental to the advertising program, specific to the product or event and identifiable for accounting purposes, were $85.7 million, $81.5 million and $72.5 million for the year ended December 31, 2023, 2022, and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. Share-based compensation and benefit plans: The Company sponsors share-based compensation plans and benefit plans. The Company recognizes compensation expense over the requisite service period for its share-based plans based on the fair value of the awards on the date of the grant, award, or issuance and accounts for forfeitures as they occur. Share-based plans include 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. See Note 13 for further information concerning the Company’s share-based compensation and benefit plans. Pre-opening expenses: Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income as incurred. Costs associated with the opening of new distribution centers, which consist primarily of payroll and occupancy costs, are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income as incurred. Interest expense: The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on its long-term borrowings. Total interest costs capitalized for the year ended December 31, 2023, 2022, and 2021, were $7.2 million, $5.5 million and $7.0 million, respectively. In conjunction with the issuance or amendment of long-term debt instruments, the Company incurs various costs, including debt registration fees, accounting and legal fees, and underwriter and book runner fees. Debt issuance costs related to the Company’s long-term unsecured senior notes are recorded as a reduction of the principal amount of the corresponding unsecured senior notes. Debt issuance costs related to the Company’s unsecured revolving credit facility are recorded as an asset. These debt issuance costs have been deferred and are being amortized over the term of the corresponding debt instrument, and the amortization expense is included in “Interest expense” on the accompanying Consolidated Statements of Income. Deferred debt issuance costs totaled $25.5 million and $24.7 million net of accumulated amortization, as of December 31, 2023 and 2022, respectively, of which $1.9 million and $2.6 million were included in “Other assets, net” as of December 31, 2023 and 2022, respectively, with the remainder included in “Long-term debt” on the accompanying Consolidated Balance Sheets. The Company issued its long-term unsecured senior notes and commercial paper program at a discount. The original issuance discounts on the senior notes are recorded as a reduction of the principal amount of the corresponding senior notes and are accreted over the term of the applicable senior note, and the original issuance discounts on the commercial paper program are recorded as a reduction of the face amount of the borrowings, with the accretion expenses included in “Interest expense” on the accompanying Consolidated Statements of Income. Original issuance discounts, net of accretion, totaled $7.1 million and $6.3 million as of December 31, 2023 and 2022, respectively. See Note 8 for further information concerning debt issuance costs and original issuance discounts associated with the Company’s issuances of long-term debt instruments. Income taxes: The Company accounts for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the U.S. GAAP basis and tax basis of assets and liabilities using enacted tax rules and rates currently scheduled to be in effect for the year in which the differences are expected to reverse. Tax carry forwards are also recognized in deferred tax assets and liabilities under this method. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date. The Company would record a valuation allowance against deferred tax assets to the extent it is more likely than not the amount will not be realized, based upon evidence available at the time of the determination and any change in the valuation allowance is recorded in the period of a change in such determination. The Company did not establish a valuation allowance for deferred tax assets as of December 31, 2023 and 2022, as it was considered more likely than not that deferred tax assets were realizable through a combination of future taxable income, the realization of deferred tax liabilities and tax planning strategies. The Company regularly reviews its potential tax liabilities for tax years subject to audit. The amount of such liabilities is based on various factors, such as differing interpretations of tax regulations by the responsible tax authority, experience with previous tax audits, and applicable tax law rulings. In management’s opinion, adequate provisions for income taxes have been made for all years presented. The estimates of the Company’s potential tax liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company’s various tax positions and actual results could differ from estimates. See Note 16 for further information concerning the Company’s income taxes. Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the fiscal period. Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the common stock equivalents associated with the potential impact of dilutive stock options. Certain common stock equivalents that could potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been antidilutive. Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds the market price of the common shares. See Note 17 for further information concerning the Company’s common stock equivalents. New 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”). 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 amendment 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 adopted this guidance, using the retrospective adoption method, beginning with its first quarter ending March 31, 2023, with the exception, as stated in the guidance, of the rollforward information, which will be adopted prospectively, disclosure for which will be effective with the Company’s fiscal year beginning after December 15, 2023. The application of this new guidance did not have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance requires disclosure only. See Note 7 for further information concerning the Company's supplier finance programs. In November of 2023, FASB issued Accounting Standard Update ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 improves the disclosures about a public entity’s reportable segments. Under ASU 2023-07, a public entity would be required to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 in interim periods, any additional measures of a segment’s profit or loss used by the CODM to allocate resources, and the title and position of the CODM. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 allows for early adoption and requires retrospective adoption. The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2024. 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 only. In December of 2023, FASB issued Ac |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Fair value measurements | NOTE 2 – FAIR VALUE MEASUREMENTS 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 12 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 Consolidated Balance Sheets as of December 31, 2023 and 2022. The Company recorded an increase in fair value related to its marketable securities in the amount of $8.4 million and a decrease in fair value to its related to its marketable securities in the amount of $8.3 million for the year ended December 31, 2023 and 2022, respectively, which were included in “Other income (expense)” on the accompanying 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 December 31, 2023 and 2022 (in thousands): December 31, 2023 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 59,508 $ — $ — $ 59,508 December 31, 2022 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 49,371 $ — $ — $ 49,371 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 December 31, 2023 and 2022, the Company did not have any material 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, unsecured revolving credit facility borrowings, and commercial paper program borrowings are included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach. The fair values as of December 31, 2023 and 2022, were determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands): December 31, 2023 December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 4,820,543 $ 4,687,065 $ 4,371,653 $ 4,119,777 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 carrying amount of the Company’s commercial paper program approximates fair value (Level 2), as borrowings under the program bear interest at market rates prevailing at the time of issuance. See Note 8 for further information concerning the Company’s senior notes, unsecured revolving credit facility, and commercial paper program. The accompanying 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 | 12 Months Ended |
Dec. 31, 2023 | |
Allowance for Doubtful Accounts | |
Allowance for doubtful accounts | NOTE 3 – ALLOWANCE FOR DOUBTFUL ACCOUNTS The following table identifies the changes in the Company’s allowance for doubtful accounts included in “Accounts receivable” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022 (in thousands): 2023 2022 Allowance for doubtful accounts, balance at January 1 $ 14,695 $ 11,870 Reserve accruals 7,261 6,718 Uncollectable accounts written-off (6,226) (3,928) Foreign currency translation 104 35 Allowance for doubtful accounts, balance at December 31 $ 15,834 $ 14,695 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property and equipment | NOTE 4 – PROPERTY AND EQUIPMENT The following table identifies the types and balances of property and equipment included in “Property and equipment, at cost” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022, and includes the estimated useful lives for its types of property and equipment (in thousands, except original useful lives): Original Useful Lives December 31, 2023 December 31, 2022 Land $ 989,575 $ 931,993 Buildings and building improvements 15 – 39 years 3,121,562 2,896,071 Leasehold improvements 3 – 25 years 1,113,374 951,652 Furniture, fixtures and equipment 3 – 20 years 2,029,668 1,847,248 Vehicles 5 – 10 years 709,220 571,328 Construction in progress 348,968 239,773 Total property and equipment 8,312,367 7,438,065 Less: accumulated depreciation and amortization 3,275,387 3,014,024 Net property and equipment $ 5,036,980 $ 4,424,041 The Company recorded depreciation and amortization expense related to property and equipment in the amounts of $404.9 million, $343.6 million and $320.4 million for the year ended December 31, 2023, 2022, and 2021, respectively, which were included in “Selling, general and administrative expenses” and “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income. The Company recorded charges of $2.2 million related to property and equipment for the year ended December 31, 2023, primarily due to the write-down of equipment that exceeded market value and certain hardware and software projects that were disposed or were no longer expected to provide a long-term benefit, $7.6 million related to property and equipment for the year ended December 31, 2022, primarily due to the write-down on surplus land and buildings that exceeded market value and certain hardware and software projects that were disposed or were no longer expected to provide a long-term benefit, and $12.6 million related to property and equipment for the year ended December 31, 2021, primarily due to certain hardware and software projects that were disposed or were no longer expected to provide a long-term benefit, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Leases | NOTE 5 – LEASES Operating lease commitments: The following table summarizes Total lease cost for the years ended December 31, 2023, 2022, and 2021, which was primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income (in thousands): For the Year Ended December 31, 2023 2022 2021 Operating lease cost $ 398,537 $ 367,724 $ 351,296 Short-term operating lease cost 9,508 11,314 7,694 Variable operating lease cost 99,911 93,940 89,065 Sublease income (4,805) (5,220) (4,571) Total lease cost $ 503,151 $ 467,758 $ 443,484 The following table summarizes other lease related information for the years ended December 31, 2023 and 2022 (in thousands): For the Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 390,907 $ 366,866 Right-of-use assets obtained in exchange for new operating lease liabilities 387,810 416,615 The following table identifies the future minimum lease payments under all of the Company’s operating leases for each of the next five years, and in the aggregate thereafter, and reconciles to the present value of the “Operating lease liabilities, less current portion” included in the accompanying Consolidated Balance Sheet as of December 31, 2023 (in thousands): December 31, 2023 Related Parties Non-Related Parties Total 2024 $ 4,730 $ 385,437 $ 390,167 2025 3,875 365,942 369,817 2026 3,260 330,350 333,610 2027 2,283 282,689 284,972 2028 2,046 230,380 232,426 Thereafter 47 1,115,755 1,115,802 Total operating lease payments 16,241 2,710,553 2,726,794 Less: present value discount 8,940 446,974 455,914 Total operating lease liabilities 7,301 2,263,579 2,270,880 Less: current portion of operating lease liabilities 4,730 384,806 389,536 Operating lease liabilities, less current portion $ 2,571 $ 1,878,773 $ 1,881,344 See Note 15 for further information concerning the Company’s related party operating leases. The future minimum lease payments under the Company’s operating leases, in the table above, do not include potential amounts for percentage rent and other variable operating lease related costs and have not been reduced by expected future minimum sublease income under non-cancelable subleases, which was approximately $9.6 million as of December 31, 2023. The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases was 9.4 years and 4.3%, respectively, as of December 31, 2023. The present value discount component of the future minimum lease payments under the Company’s operating leases, in the table above, was primarily calculated using the Company’s incremental borrowing rate based on information available at the lease commencement or modification date. Inputs for the calculation of the Company’s incremental borrowing rate include valuations and yields of U.S. domestic investment grade corporate bonds and the applicable credit spread over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification. When the implicit rate of a lease is available, the implicit rate is used in the calculation and not the Company’s incremental borrowing rate. |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangibles | |
Goodwill and other intangibles | NOTE 6 – GOODWILL AND OTHER INTANGIBLES Goodwill: Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. Goodwill is not amortizable for financial statement purposes. The Company did not record any goodwill impairment during the years ended December 31, 2023, 2022, or 2021. The following table identifies the changes in goodwill and certain acquisition intangibles, which were included in “Goodwill” on the accompanying Consolidated Balance Sheets for the years ended December 31, 2023 and 2022 (in thousands): 2023 2022 Goodwill, balance at January 1, $ 884,445 $ 879,340 Change in goodwill related to small acquisitions 1,989 1,452 Foreign currency translation 11,262 3,653 Goodwill, balance at December 31, $ 897,696 $ 884,445 Intangibles other than goodwill: The following table identifies the components of the Company’s intangible assets, inclusive of foreign currency translation adjustments, which were included in “Other assets, net” on the accompanying Consolidated Balance Sheets for the years ended December 31, 2023 and 2022 (in thousands): December 31, 2023 December 31, 2022 Cost of Accumulated Net Cost of Accumulated Net Intangibles Amortization Intangibles Intangibles Amortization Intangibles Finite-lived intangible assets: Trade names (1) $ 9,797 $ (8,273) $ 1,524 $ 8,532 $ (5,532) $ 3,000 Non-compete agreements (2) 2,240 (1,419) 821 7,010 (5,965) 1,045 Other intangible assets (3) 10,027 (4,095) 5,932 12,446 (6,406) 6,040 Total finite-lived intangible assets 22,064 (13,787) 8,277 27,988 (17,903) 10,085 Indefinite-lived intangible assets: Trade names 41,493 — 41,493 36,134 — 36,134 Total intangible assets $ 63,557 $ (13,787) $ 49,770 $ 64,122 $ (17,903) $ 46,219 (1) Weighted-average remaining useful life of approximately 3.9 years as of December 31, 2023. (2) Weighted-average remaining useful life of approximately 4.0 years as of December 31, 2023. (3) Includes internally-developed software and customer relationships and has an estimated weighted-average remaining useful life of approximately 5.9 years as of December 31, 2023. During the years ended December 31, 2023 and 2022, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amount of less than $0.1 million for each year. Other than the non-compete agreement assets, the Company did not record additional finite-lived or indefinite-lived intangible assets during the years ended December 31, 2023 and 2022. For the year ended December 31, 2023, 2022, and 2021, the Company recorded aggregate amortization expense related to its intangible assets in the amounts of $3.0 million, $4.8 million and $4.9 million, respectively. Indefinite-lived intangible assets, such as trade names, are reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist. The Company did not record any indefinite-lived intangible asset impairment during the years ended December 31, 2023, 2022, or 2021. The following table identifies the estimated amortization expense of the Company’s intangibles for each of the next five years, and the aggregate thereafter, and reconciles to net, finite-lived intangible assets included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2023 (in thousands): December 31, 2023 Amortization Expense 2024 $ 1,620 2025 1,613 2026 1,588 2027 1,448 2028 1,088 Thereafter 920 Total net, finite-lived intangible assets $ 8,277 |
SUPPLIER FINANCE PROGRAMS
SUPPLIER FINANCE PROGRAMS | 12 Months Ended |
Dec. 31, 2023 | |
Supplier Finance Programs | |
Supplier Finance Programs | NOTE 7 – SUPPLIER FINANCE PROGRAMS The Company has established and maintains supplier finance programs with certain third-party financial institutions, which allow participating merchandise suppliers to voluntarily elect to assign the Company’s payment obligations due to these merchandise suppliers to one of the designated third-party institutions. Under these supplier finance programs, the Company has agreed to pay the third-party financial institutions the stated amount of confirmed merchandise supplier invoices on the original maturity dates of the invoices, which are generally for a term of one year. The Company does not have any assets pledged as security or other forms of guarantees for the committed payment to the third-party institutions. As of December 31, 2023, and 2022, the Company had obligations outstanding under these programs for invoices that were confirmed as valid to the third-party financial institutions in the amounts of $4.4 billion and $4.2 billion, respectively, which were included as a component of “Accounts payable” on the accompanying Consolidated Balance Sheets. |
FINANCING
FINANCING | 12 Months Ended |
Dec. 31, 2023 | |
Financing | |
Financing | NOTE 8 – FINANCING The following table identifies the amounts included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Commercial paper program, weighted-average variable interest rate of 5.640% 750,900 — 3.850% Senior Notes due 2023, effective interest rate of 3.851% — 300,000 3.550% Senior Notes due 2026, effective interest rate of 3.570% 500,000 500,000 5.750% Senior Notes due 2026, effective interest rate of 5.767% 750,000 — 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% 850,000 850,000 Total principal amount of debt 5,600,900 4,400,000 Less: Unamortized discount and debt issuance costs 30,775 28,347 Total long-term debt $ 5,570,125 $ 4,371,653 The following table identifies the principal maturity payments of the Company’s financing facilities for each of the next five years, and in the aggregate thereafter, as of December 31, 2023 (in thousands): December 31, 2023 Scheduled Maturities 2024 $ 750,900 2025 — 2026 1,250,000 2027 750,000 2028 500,000 Thereafter 2,350,000 Total principal amount of debt $ 5,600,900 Unsecured revolving credit facility: The Company is party to a credit agreement dated June 15, 2021, as amended as of March 6, 2023 (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. On March 6, 2023, the Company entered into the First Amendment (the “Amendment”) to the credit agreement to convert the LIBOR based pricing to Secured Overnight Financing Rate (“SOFR”) based pricing. The Amendment replaces an Adjusted LIBO Rate with an Adjusted Term SOFR Rate, comprised of the Term SOFR Rate plus 0.100%. The Amendment made no other material changes to the terms of the credit agreement. As of December 31, 2023 and 2022, 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 $5.4 million and $5.1 million, respectively, reducing the aggregate availability under the Credit Agreement by those amounts. Substantially all of the outstanding letters of credit have a one-year term from the date of issuance. As of December 31, 2023 and 2022, 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 Term SOFR Rate (both as defined in the Credit Agreement) plus an applicable margin, which will vary from 0.000% to 0.250% in the case of loans bearing interest at the Alternate Base Rate and 0.680% to 1.250% in the case of loans bearing interest at the Adjusted Term SOFR Rate, in each case based upon the better of the ratings assigned to our debt by Moody’s Investor Service, Inc. and Standard & Poor’s Rating Services, subject to limited exceptions. 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, varying from 0.070% to 0.250% per annum. 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 December 31, 2023, based upon the Company’s current credit ratings, its margin for Alternate Base Rate loans was 0.000%, its margin for Term Benchmark 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, and 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 December 31, 2023, 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 December 31, 2023 and 2022, the Company had other outstanding letters of credit, primarily to support obligations under workers’ compensation, general liability, and other insurance policies, in the amount of $106.8 million and $96.6 million, respectively. 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. Commercial paper program: On August 9, 2023, the Company established a commercial paper program (the “Program”) pursuant to which it may issue short-term, unsecured commercial paper notes (the “Notes”) under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended. Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the Program at any time not to exceed $1.8 billion. The Notes will have maturities of up to 397 days from the date of issue. The Notes rank at least pari passu with all of the Company’s other unsecured and unsubordinated indebtedness. The Company plans to use its Revolving Credit Facility as a liquidity backstop for the repayment of Notes outstanding under the Program. The Notes issued under the Program were included in “Long-term debt” on the accompanying Consolidated Balance Sheet as of December 31, 2023, as the Company has the ability and intent to refinance these Notes on a long-term basis. Senior notes: On June 15, 2023, the Company’s $300 million aggregate principal amount of unsecured 3.850% Senior Notes due 2023 matured, and the Company repaid these notes using borrowings under its Revolving Credit Facility. On November 20, 2023, the Company issued $750 million aggregate principal amount of unsecured 5.750% Senior Notes due 2026 (“5.750% Senior Notes due 2026”) at a price to the public of 99.954% of their face value with U.S. Bank Trust Company, National Association (“U.S. Bank”) as trustee. Interest on the 5.750% Senior Notes due 2026 is payable on May 20 and November 20 of each year, beginning on May 20, 2024, and is computed on the basis of a 360-day year. As of December 31, 2023, the Company has issued and outstanding a cumulative $4.9 billion aggregate principal amount of unsecured senior notes, which are due between 2026 and 2032, with UMB Bank, N.A. and U.S. Bank Trust Company as trustees. Interest on the senior notes, ranging from 1.750% to 5.750%, 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 December 31, 2023. |
WARRANTIES
WARRANTIES | 12 Months Ended |
Dec. 31, 2023 | |
Warranties | |
Warranties | NOTE 9 – WARRANTIES The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. The following table identifies the changes in the Company’s aggregate product warranty liabilities for the years ended December 31, 2023 and 2022 (in thousands): 2023 2022 Warranty liabilities, balance at January 1, $ 98,564 $ 77,199 Warranty claims (180,971) (152,777) Warranty accruals 200,228 174,118 Foreign currency translation 74 24 Warranty liabilities, balance at December 31, $ 117,895 $ 98,564 |
SHARE REPURCHASE PROGRAM
SHARE REPURCHASE PROGRAM | 12 Months Ended |
Dec. 31, 2023 | |
Share Repurchase Program | |
Share repurchase program | NOTE 10 – 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 15, 2022, May 23, 2023, and November 16, 2023, the Company’s Board of Directors approved a resolution to increase the authorization amount under the share repurchase program by an additional $1.5 billion, $2.0 billion, and $2.0 billion, respectively, resulting in a cumulative authorization amount of $25.8 billion. The additional authorizations are effective for three years, beginning on its 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 years ended December 31, 2023 and 2022 (in thousands, except per share data): For the Year Ended December 31, 2023 2022 Shares repurchased 3,568 4,961 Average price per share $ 883.13 $ 661.66 Total investment $ 3,151,120 $ 3,282,215 As of December 31, 2023, the Company had $2.6 billion remaining under its share repurchase program. Excise tax on shares repurchased, assessed at one percent of the fair market value of net shares repurchased, was $28.8 million for the year ended December 31, 2023. Subsequent to the end of the year and through February 28, 2024, the Company repurchased an additional 0.2 million shares of its common stock under its share repurchase program, at an average price of $1,001.04, for a total investment of $184.4 million. The Company has repurchased a total of 94.3 million shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through February 28, 2024, at an average price of $247.83, for a total aggregate investment of $23.4 billion. As of February 28, 2024, we had approximately $2.4 billion remaining under our share repurchase program. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Accumulated Other Comprehensive Income (Loss) | NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) includes adjustments for foreign currency translations. The table below summarizes activity for changes in accumulated other comprehensive loss included in “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022 (in thousands): Foreign Total Accumulated Other Currency (1) Comprehensive Income (Loss) Accumulated other comprehensive loss, balance at December 31, 2021 $ (6,799) $ (6,799) Change in accumulated other comprehensive income 9,795 9,795 Accumulated other comprehensive income, balance at December 31, 2022 $ 2,996 $ 2,996 Change in accumulated other comprehensive income 36,392 36,392 Accumulated other comprehensive income, balance at December 31, 2023 $ 39,388 $ 39,388 (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 | 12 Months Ended |
Dec. 31, 2023 | |
Revenue | |
Revenue | NOTE 12 – REVENUE The table below identifies the Company’s revenues disaggregated by major customer type for the years ended December 31, 2023, 2022, and 2021 (in thousands): For the Year Ended December 31, 2023 2022 2021 Sales to do-it-yourself customers $ 8,248,213 $ 7,903,359 $ 7,643,832 Sales to professional service provider customers 7,245,747 6,170,239 5,368,657 Other sales and sales adjustments 318,290 336,262 315,074 Total sales $ 15,812,250 $ 14,409,860 $ 13,327,563 As of December 31, 2023 and 2022, the Company had recorded a deferred revenue liability of $5.1 million and $5.0 million, respectively, related to its loyalty program, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets. During the year ended December 31, 2023, 2022, and 2021, the Company recognized $13.9 million, $12.2 million and $13.6 million, respectively, of revenue related to its loyalty program, which were included in “Sales” on the accompanying Consolidated Statements of Income. See Note 9 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 | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Compensation and Benefit Plans | |
Share-based compensation and benefit plans | NOTE 13 – 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. The table below identifies the shares that have been authorized for issuance and the shares available for future issuance under the Company plans, as of December 31, 2023 (in thousands): December 31, 2023 Total Shares Authorized for Shares Available for Future Plans Issuance under the Plans Issuance under the Plans Incentive Plans 35,650 5,492 Employee Stock Purchase Plan 4,250 412 Profit Sharing and Savings Plan 4,200 349 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 year ended December 31, 2023: Average Aggregate Shares Weighted- Average Remaining Intrinsic Value (in thousands) Exercise Price Contractual Terms (in thousands) Outstanding at December 31, 2022 1,069 $ 356.76 Granted 94 861.57 Exercised (260) 273.94 Forfeited or expired (19) 652.81 Outstanding at December 31, 2023 884 $ 428.50 5.3 Years $ 461,145 Vested or expected to vest at December 31, 2023 853 $ 414.37 5.2 Years $ 456,945 Exercisable at December 31, 2023 627 $ 330.25 4.2 Years $ 388,517 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 years ended December 31, 2023, 2022, and 2021: December 31, 2023 2022 2021 Risk free interest rate 3.96 % 2.09 % 0.82 % Expected life 6.3 Years 6.3 Years 5.9 Years Expected volatility 29.0 % 28.9 % 30.0 % Expected dividend yield — % — % — % The following table summarizes activity related to stock options awarded by the Company for the years ended December 31, 2023, 2022, and 2021: For the Year Ended December 31, 2023 2022 2021 Compensation expense for stock options awarded (in thousands) $ 22,090 $ 21,412 $ 20,035 Income tax benefit from compensation expense related to stock options (in thousands) 5,477 5,332 4,989 Total intrinsic value of stock options exercised (in thousands) 170,521 123,911 163,722 Cash received from exercise of stock options (in thousands) 71,153 60,976 67,761 Weighted-average grant-date fair value of options awarded $ 323.16 $ 221.19 $ 146.57 Weighted-average remaining contractual life of exercisable options (in years) 5.3 4.5 4.7 At December 31, 2023, the remaining unrecognized compensation expense related to unvested stock option awards was $39.4 million, and the weighted-average period of time, over which this cost will be recognized, is 2.7 years. Restricted stock: The Company’s incentive plans provide for the awarding of shares of restricted stock to certain key employees or the non-employee directors of the Company that vest after one-year or evenly over a three-year period and are held in escrow until such vesting has occurred. Generally, unvested shares are forfeited when an employee or a director ceases employment or service on the Company’s Board of Directors, for reasons other than death or retirement. The fair value of shares awarded under these plans is based on the closing market price of the Company’s common stock on the date of award, and compensation expense is recorded over the vesting period or minimum required service period. The table below identifies restricted stock activity under these plans during the year ended December 31, 2023 (in thousands, except per share data): Weighted-Average Grant-Date Shares Fair Value Non-vested at December 31, 2022 4 $ 572.54 Granted during the period 2 888.60 Vested during the period (1) (3) 571.45 Forfeited during the period — — Non-vested at December 31, 2023 3 $ 772.45 (1) Includes less than one thousand shares withheld to cover employees’ taxes upon vesting. The following table summarizes activity related to restricted stock awarded by the Company for the years ended December 31, 2023, 2022, and 2021 (in thousands, except per share data): For the Year Ended December 31, 2023 2022 2021 Compensation expense for restricted shares awarded $ 1,869 $ 1,808 $ 1,602 Income tax benefit from compensation expense related to restricted shares $ 463 $ 450 $ 399 Total fair value of restricted shares at vest date $ 2,693 $ 2,595 $ 2,815 Shares awarded under the plans 2 3 3 Weighted-average grant-date fair value of shares awarded under the plans $ 888.60 $ 645.31 $ 509.24 At December 31, 2023, the remaining unrecognized compensation expense related to unvested restricted share awards was $0.5 million, and the weighted-average period of time, over which this cost will be recognized, is 0.3 years . Employee stock purchase plan: 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. Employees may authorize the Company to withhold up to 5% of their annual salary to participate in the plan. 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 grant-date fair value and the employee purchase price for the shares sold to employees. The table below summarizes activity related to the Company’s ESPP for the years ended December 31, 2023, 2022, and 2021 (in thousands, except per share data): For the Year Ended December 31, 2023 2022 2021 Compensation expense for shares issued under the ESPP $ 3,552 $ 3,238 $ 3,019 Income tax benefit from compensation expense related to shares issued under the ESPP $ 881 $ 806 $ 752 Shares issued under the ESPP 26 31 36 Weighted-average price of shares issued under the ESPP $ 766.11 $ 592.22 $ 473.22 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. 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. The Company may also make additional discretionary profit sharing contributions to the 401(k) 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 years ended December 31, 2023, 2022, or 2021. The Company expensed matching contributions under the 401(k) Plan in the amounts of $48.6 million, $36.7 million and $32.5 million for the year ended December 31, 2023, 2022, and 2021, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying 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 Company may make discretionary contributions to the Deferred Compensation Plan on an annual basis as determined by the Board of Directors. 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, if applicable, adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. See Note 2 for further information concerning the Company’s marketable securities held to fulfill our future unsecured obligations under this plan. The liability for compensation deferred under the Deferred Compensation Plan was $59.5 million and $49.4 million as of December 31, 2023 and 2022, respectively, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets. The Company did not make discretionary contributions to the Deferred Compensation Plan during the years ended December 31, 2023 or 2022. The Company expensed matching contributions under the Deferred Compensation Plan in the amount of less than $0.1 million, $0.2 million, and $0.2 million for the for the year ended December 31, 2023, 2022, and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying 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. There were 13,079 and 13,159 stock appreciation rights outstanding as of December 31, 2023 and 2022, respectively. During the year ended December 31, 2023, there were 1,714 stock appreciation rights granted, 1,187 stock appreciation rights exercised, and 607 stock appreciation rights forfeited. The liability for compensation to be paid for redeemed stock appreciation rights was $4.5 million and $2.9 million as of December 31, 2023 and 2022, respectively, which were included in “Other liabilities” on the Consolidated Balance Sheets. The Company recorded compensation expense for stock appreciation rights in the amounts of $1.1 million, $1.7 million and $1.0 million for the year ended December 31, 2023, 2022, and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. |
COMMITMENTS
COMMITMENTS | 12 Months Ended |
Dec. 31, 2023 | |
Commitments | |
Commitments | NOTE 14 – COMMITMENTS Construction commitments: As of December 31, 2023, the Company had purchase obligations for construction contract commitments in the amount of $170.9 million. Letters of credit commitments: As of December 31, 2023, the Company had outstanding letters of credit, primarily to satisfy workers’ compensation, general liability, and other insurance policies, in the amount of $112.2 million. See Note 8 for further information concerning the Company’s letters of credit commitments. Debt financing commitments: Each series of senior notes is redeemable in whole, at any time, or in part, from time to time, at the Company’s option upon not less than 30 nor more than 60 days notice at a redemption price, plus any accrued and unpaid interest to, but not including, the redemption date, equal to the greater of (i) 100% of the principal amount thereof or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis at the applicable Treasury Yield plus basis points identified in the indenture governing such series of senior notes; provided, that on or after the date that is three months prior to the maturity date of the series of senior notes, such series of senior notes is redeemable at a redemption price equal to par plus accrued and unpaid interest to, but not including, the redemption date. In addition, if at any time the Company undergoes a Change of Control Triggering Event, as defined in the indenture governing such series of senior notes, the holders may require the Company to repurchase all or a portion of their senior notes at a price equal to 101% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any, but not including the repurchase date. See Note 8 for further information concerning the Company’s debt financing commitments. Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability, and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure to this obligation. See Note 1 for further information concerning the Company’s self-insurance reserves. |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Dec. 31, 2023 | |
Related Parties | |
Related parties | NOTE 15 – RELATED PARTIES The Company leases certain land and buildings related to 70 of its O’Reilly Auto Parts stores under fifteen |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Income taxes | NOTE 16 – INCOME TAXES The following table identifies components of income from continuing operations before income taxes included in “Income before income taxes” on the accompanying Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021 (in thousands): For the Year Ended December 31, 2023 2022 2021 Domestic $ 2,994,856 $ 2,786,866 $ 2,770,485 International 9,894 11,789 11,429 Income before income taxes $ 3,004,750 $ 2,798,655 $ 2,781,914 Provision for income taxes: The following tables reconcile the amounts included in “Provision for income taxes” on the accompanying Consolidated Statements of Income for the years ended December 31, 2023, 2022, and 2021 (in thousands): For the Year Ended December 31, 2023 2022 2021 Current: Federal income tax expense $ 497,492 $ 455,779 $ 485,988 State income tax expense 109,924 95,388 104,837 International income tax expense 2,521 5,263 6,021 Total current 609,937 556,430 596,846 Deferred: Federal income tax expense 41,782 62,719 20,543 State income tax expense 6,003 8,583 2,432 International income tax expense (benefit) 447 (1,727) (2,592) Total deferred 48,232 69,575 20,383 Net income tax expense $ 658,169 $ 626,005 $ 617,229 The following table outlines the reconciliation of the “Provision for income taxes” amounts included on the accompanying Consolidated Statements of Income to the amounts computed at the federal statutory rate for the years ended December 31, 2023, 2022, and 2021 (in thousands): For the Year Ended December 31, 2023 2022 2021 Federal income taxes at statutory rate $ 630,998 $ 587,716 $ 584,202 State income taxes, net of federal tax benefit 98,254 87,352 90,360 Excess tax benefit from share-based compensation (35,950) (25,503) (35,202) Benefit from renewable energy tax credits (19,627) (17,593) (18,592) Other items, net (15,506) (5,967) (3,539) Total provision for income taxes $ 658,169 $ 626,005 $ 617,229 The Company has invested in tax credit equity investments for the purposes of receiving renewable energy tax credits and purchased transferrable federal renewable energy tax credits. During the year ended December 31, 2023, 2022, and 2021, the Company recognized investment tax credits in the amount of $336.5 million, $167.6 million and $177.1 million, respectively, 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 Consolidated Statements of Cash Flows for the respective years. As of December 31, 2023, the Company had recorded a liability for the purchase of transferrable federal renewable energy tax credits of $266.0 million, which was included in “Other current liabilities” on the accompanying Consolidated Balance Sheets. See Note 1 for further information concerning the Company’s investment in tax credit funds. Income taxes have not been accrued by the Company for the unremitted earnings of its foreign subsidiaries because such earnings are intended to be reinvested in the subsidiaries indefinitely. Deferred income tax assets and liabilities: Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and also include the tax effect of carryforwards. The following table identifies significant components of the Company’s net deferred tax liabilities included in “Deferred income taxes” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Deferred tax assets: Allowance for doubtful accounts $ 2,430 $ 2,196 Other accruals 150,483 137,474 Operating lease liability 559,830 538,890 Other 18,102 17,115 Total deferred tax assets 730,845 695,675 Deferred tax liabilities: Inventories 142,578 104,572 Property and equipment 280,791 233,288 Operating lease asset 540,359 521,541 Other 62,588 81,621 Total deferred tax liabilities 1,026,316 941,022 Net deferred tax liabilities $ (295,471) $ (245,347) Unrecognized tax benefits: The following table summarizes the changes in the gross amount of unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2023, 2022, and 2021 (in thousands): 2023 2022 2021 Unrealized tax benefit, balance at January 1, $ 24,798 $ 26,847 $ 30,967 Additions based on tax positions related to the current year 3,932 4,146 5,446 Payments related to items settled with taxing authorities — (1,000) (2,570) Reductions due to the lapse of statute of limitations and settlements (4,787) (5,195) (6,996) Unrealized tax benefit, balance at December 31, $ 23,943 $ 24,798 $ 26,847 For the year ended December 31, 2023, 2022, and 2021, the Company recorded a reserve in the amount of $21.9 million, $22.4 million and $24.2 million, respectively, for unrecognized tax benefits, including interest and penalties, net of federal benefits, which if recognized would affect the Company’s effective tax rate. The timing related to the ultimate resolution or settlement of these uncertain tax positions cannot be determined. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2023, 2022, and 2021, the Company had accrued approximately $3.9 million, $3.5 million and $3.8 million, respectively, of interest and penalties related to uncertain tax positions before the benefit of the deduction for interest on state and federal returns. During the year ended December 31, 2023, 2022, and 2021, the Company recorded tax expense related to an increase in its liability for interest and penalties in the amounts of $2.1 million, $1.5 million and $1.6 million, respectively. Although unrecognized tax benefits for individual tax positions may increase or decrease during 2024, the Company expects a reduction of $7.3 million of unrecognized tax benefits during the one-year period subsequent to December 31, 2023, resulting from settlement or expiration of the statute of limitations. The Company’s United States federal income tax returns for tax years 2020 and beyond remain subject to examination by the Internal Revenue Service. The Company’s state income tax returns remain subject to examination by various state authorities for tax years ranging from 2012 through 2022. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share | |
Earnings per share | NOTE 17 – EARNINGS PER SHARE The following table illustrates the computation of basic and diluted earnings per share for the years ended December 31, 2023, 2022, and 2021 (in thousands, except per share data): For the Year Ended December 31, 2023 2022 2021 Numerator (basic and diluted): Net income $ 2,346,581 $ 2,172,650 $ 2,164,685 Denominator: Weighted-average common shares outstanding – basic 60,475 64,372 68,967 Effect of stock options (1) 523 590 644 Weighted-average common shares outstanding – assuming dilution 60,998 64,962 69,611 Earnings per share: Earnings per share-basic $ 38.80 $ 33.75 $ 31.39 Earnings per share-assuming dilution $ 38.47 $ 33.44 $ 31.10 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 95 144 111 Weighted-average exercise price per share of antidilutive stock options (1) $ 836.12 $ 663.36 $ 479.90 (1) See Note 13 for further information concerning the terms of the Company’s share-based compensation plans. See Note 10 for information concerning the Company’s subsequent share repurchases. |
QUARTERLY RESULTS (Unaudited)
QUARTERLY RESULTS (Unaudited) | 12 Months Ended |
Dec. 31, 2023 | |
Quarterly Results (Unaudited) | |
Quarterly results (unaudited) | NOTE 18 – QUARTERLY RESULTS (Unaudited) The following tables set forth certain quarterly unaudited operating data for the fiscal years ended December 31, 2023 and 2022. The unaudited quarterly information includes all adjustments, which the Company considers necessary for a fair presentation of the information shown (in thousands, except per share data): Fiscal 2023 First Second Third Fourth Quarter Quarter Quarter Quarter Sales $ 3,707,864 $ 4,068,991 $ 4,203,380 $ 3,832,015 Gross profit 1,890,329 2,086,582 2,160,463 1,967,429 Operating income 716,645 853,773 897,222 718,736 Net income 516,885 627,365 649,827 552,504 Earnings per share – basic (1) $ 8.36 $ 10.32 $ 10.82 $ 9.33 Earnings per share – assuming dilution (1) $ 8.28 $ 10.22 $ 10.72 $ 9.26 Fiscal 2022 First Second Third Fourth Quarter Quarter Quarter Quarter Sales $ 3,296,011 $ 3,670,737 $ 3,798,619 $ 3,644,493 Gross profit 1,708,072 1,884,718 1,934,962 1,853,954 Operating income 669,530 798,550 804,194 682,217 Net income 481,880 576,760 585,438 528,572 Earnings per share – basic (1) $ 7.24 $ 8.86 $ 9.25 $ 8.45 Earnings per share – assuming dilution (1) $ 7.17 $ 8.78 $ 9.17 $ 8.37 (1) Earnings per share amounts are computed independently for each quarter and annual period. The quarterly earnings per share amounts may not sum to equal the full-year earnings per share amount. The unaudited operating data presented above should be read in conjunction with the Company’s consolidated financial statements and related notes and the other financial information included therein. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Event | |
Subsequent Event | NOTE 19 – SUBSEQUENT EVENT On December 18, 2023, the Company announced that it had entered into a definitive stock purchase agreement with the shareholders of Groupe Del Vasto, an auto parts supplier headquartered in Montreal, Quebec, Canada, under which O’Reilly would acquire all of the outstanding thousands |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Nature of business | Nature of business: O’Reilly Automotive, Inc. and Subsidiaries, collectively, “O’Reilly” or the “Company,” is a specialty retailer and supplier of automotive aftermarket parts. The Company’s stores carry an extensive product line, including new and remanufactured automotive hard parts, maintenance items, and various automotive accessories. As of December 31, 2023, the Company owned and operated 6,095 stores in 48 U.S. states and Puerto Rico and 62 stores in Mexico, servicing both do-it-yourself (“DIY”) and the professional service provider customers. The Company’s robust distribution system provides stores with same-day or overnight access to an extensive inventory of hard-to-find items not typically stocked in the stores of other auto parts retailers. |
Segment reporting | Segment reporting: The Company is managed and operated by a single single |
Principles of consolidation | Principles of consolidation: The 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. |
Use of estimates | Use of estimates: The preparation of the consolidated financial statements, in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could materially differ from those estimates. |
Cash equivalents | Cash equivalents: Cash equivalents include investments with maturities of 90 days or less on the date of purchase. |
Foreign Currency | Foreign Currency: The Company accounts for its Mexican operations using the local market currency, the Mexican peso, and converts its financial statements compiled for these operations from the Mexican peso to U.S. dollars. The cumulative gain or loss on currency translation is included as a component of “Accumulated other comprehensive income” on the accompanying Consolidated Balance Sheets. See Note 11 for further information concerning the Company’s accumulated other comprehensive income. |
Accounts receivable | Accounts receivable: 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 relatively 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 consolidated financial statements and have consistently been within management’s expectations. Amounts due to the Company from its Team Members are included in “Accounts receivable” on the accompanying Consolidated Balance Sheets. These amounts consist primarily of purchases of merchandise on Team Member accounts. Accounts receivable due from Team Members was approximately $0.9 million and $0.8 million as of December 31, 2023 and 2022, respectively. |
Amounts receivable from suppliers | Amounts receivable from suppliers: 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 consolidated financial statements as of December 31, 2023 or 2022. |
Inventory | Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories, and tools, is stated at the lower of cost or market. Inventory also includes capitalized costs related to procurement, warehousing, and distribution centers (“DCs”). Cost has been determined using the last-in, first-out (“LIFO”) method, which more accurately matches costs with related revenues. The replacement cost of inventory was $4.94 billion and $4.70 billion as of December 31, 2023 and 2022, respectively. |
Fair value of financial instruments | 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. See Note 2 for further information concerning the Company’s financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis. |
Property and equipment | Property and equipment: Property and equipment are carried at cost. Depreciation is calculated using the straight-line method, generally over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the estimated economic life of the assets. The lease term includes renewal options determined by management at lease inception, for which failure to execute renewal options would result in a substantial economic penalty to the Company. Maintenance and repairs are charged to expense as incurred. Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is recognized in the Company’s Consolidated Statements of Income. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. See Note 4 for further information concerning the Company’s property and equipment. |
Goodwill and other intangibles | Goodwill and other intangibles: The accompanying Consolidated Balance Sheets at December 31, 2023 and 2022, include goodwill and other intangible assets recorded as the result of acquisitions. The Company operates a single reporting unit and evaluates goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter, or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. The goodwill impairment test includes an optional qualitative assessment. The Company’s qualitative assessment found no evidence to suggest it is more likely than not that its fair value is less than its carrying amount, including goodwill, as of December 31, 2023 and 2022. As such, no goodwill impairment adjustment was required as of December 31, 2023 and 2022. Finite-lived intangibles are carried at amortized cost and amortization is calculated using the straight-line method, generally over the estimated useful lives of the intangibles. See Note 6 for further information concerning the Company’s goodwill and other intangibles. |
Leases | Leases: The Company leases certain office space, retail stores, distribution centers, and equipment under long-term, non-cancelable operating leases. The Company does not separate non-lease components from lease components for any current lease contracts. Leases generally include renewal options and some include options to purchase, provisions for percentage rent based on sales, and/or incremental step increase provisions. The exercise of renewal options is typically at the Company’s sole discretion and all operating lease expense is recognized on a straight-line basis over the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company rents or subleases certain surplus real estate to third parties. Right-of-use assets and corresponding operating lease liabilities are recognized for all leases with an initial term greater than 12 months. See Note 5 for further information concerning the Company’s operating leases. |
Impairment of long-lived assets | Impairment of long-lived assets: The Company reviews its long-lived assets, including its right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When such an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset (asset group) with the carrying amounts of the asset. If the undiscounted expected future cash flows are less than the carrying value of the assets, the Company measures the amount of impairment loss as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not historically recorded any material impairment charges to its long-lived assets. See Note 4 for further information concerning the Company’s impairment of long-lived assets activities. |
Valuation of investments | Valuation of investments: The Company has an unsecured obligation to pay, in the future, the value of deferred compensation and a Company match relating to employee participation in the Company’s nonqualified deferred compensation plan (the “Deferred Compensation Plan”). The future obligation is adjusted to reflect the performance, whether positive or negative, of selected investment measurement options, chosen by each participant. The Company invests in various marketable securities with the intention of selling these securities to fulfill its future obligations under the Deferred Compensation Plan. The investments in this plan were stated at fair value based on quoted market prices, were accounted for as trading securities, and were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. See Note 2 for further information concerning the fair value measurements of the Company’s marketable securities. See Note 13 for further information concerning the Company’s benefit plans. |
Variable Interest Entities | 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 December 31, 2023, the Company had invested in six 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 $34.7 million as of December 31, 2023, and was included in “Other assets, net” on the accompanying Consolidated Balance Sheets. During the year ended December 31, 2023, 2022, and 2021, the Company recognized investment tax credits from association with these VIEs in the amounts of $0.5 million, $167.6 million and $177.1 million, respectively, 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 Consolidated Statements of Cash Flows for the respective years. |
Self-insurance reserves | Self-insurance reserves: The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability, and property loss. With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation, and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure. The Company estimates its self-insurance liabilities by considering a number of factors, including historical claims experience and trend-lines, projected cost inflation, growth patterns, and exposure forecasts. Certain of these liabilities were recorded at an estimate of their net present value. The following table identifies the components of the Company’s self-insurance reserves as of December 31, 2023 and 2022 (in thousands): December 31, 2023 2022 Self-insurance reserves (undiscounted) $ 225,740 $ 245,562 Self-insurance reserves (discounted) 214,116 233,017 The current portion of the Company’s discounted self-insurance reserves totaled $128.5 million and $138.9 million as of December 31, 2023 and 2022, respectively, which was included in “Self-insurance reserves” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2023 and 2022. |
Warranties | 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. See Note 9 for further information concerning the Company’s aggregate product warranty liabilities. |
Litigation accruals | Litigation accruals: 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. |
Share repurchases | Share repurchases: 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. All shares repurchased under the share repurchase program are retired and recorded under the par value method on the accompanying Consolidated Balance Sheets. See Note 10 for further information concerning the Company’s share repurchase program. |
Revenue recognition | Revenue recognition: The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for transferring goods to the customer. Generally, the Company’s performance obligations are satisfied when the customer takes possession of the merchandise, which normally occurs immediately at the point of sale or through same day delivery of the merchandise. All sales are recorded net of estimated returns allowances, discounts, and taxes. The Company does not recognize revenue related to product warranties, as these are considered assurance warranty obligations. Over-the-counter retail sales to DIY customers are recorded when the customer takes possession of the merchandise. Internet retail sales, included in sales to DIY customers, are recorded when the merchandise is shipped or when the customer picks up the merchandise at a store. Sales to professional service provider customers, also referred to as “commercial sales,” are recorded upon same-day delivery of the merchandise to the customer, generally at the customer’s place of business. Other sales and sales adjustments primarily includes sales to Team Members, wholesale sales to other retailers (“jobber sales”), equipment sales, discounts, rebates, deferred revenue adjustments relating to the Company’s retail loyalty program, and adjustments to estimated sales returns allowances. Sales to Team Members are recorded when the Team Member takes possession of the merchandise. Jobber sales are recorded upon shipment of the merchandise from a regional distribution center with same-day delivery to the jobber customer’s location. The Company maintains a retail loyalty program named O’Reilly O’Rewards, which represents a performance obligation. The Company records a deferred revenue liability, based on a breakage adjusted, estimated redemption rate, and a corresponding reduction in revenue in periods when loyalty points are earned by members. The Company recognizes revenue and a corresponding reduction to the deferred revenue liability in periods when loyalty program issued coupons are redeemed by members, generally within a period of three months from issuance, or when unredeemed points expire, generally within 12 months after the date they were earned, which satisfies the Company’s performance obligation. See Note 12 for further information concerning the Company’s revenue. |
Cost of goods sold and selling, general and administrative expenses | Cost of goods sold and selling, general and administrative expenses: Below follows the primary costs classified in each major expense category. Cost of goods sold, including warehouse and distribution expenses: ● Total cost of merchandise sold, including freight expenses associated with acquiring merchandise and with moving merchandise inventories from the Company’s distribution centers to the stores and defective merchandise and warranty costs. ● Supplier allowances and incentives, including allowances that are not reimbursements for specific, incremental, and identifiable costs and cash discounts on payments to suppliers. ● Costs associated with the Company’s supply chain, including payroll and benefit costs, warehouse occupancy costs, transportation costs, depreciation, and inventory shrinkage. Selling general and administrative expenses: ● Payroll benefit costs for store and corporate Team Members; ● Occupancy costs of store and corporate facilities; ● All expenses associated with Hub stores; ● Depreciation and amortization related to store and corporate assets; ● Vehicle expenses for store and Hub delivery services; ● Self-insurance costs; ● Closed store expenses; and ● Other administrative costs, including accounting, legal, and other professional services; bad debt, banking, and credit card fees; supplies; travel; and advertising costs. |
Advertising expenses | Advertising expenses: Advertising expense consists primarily of expenses related to the Company’s integrated marketing program, which includes radio, in-store, digital, and social media promotions, as well as sports and event sponsorships and direct mail and newspaper promotional distribution. The Company expenses advertising costs as incurred. The Company also participates in cooperative advertising arrangements with certain of its suppliers. Advertising expense, net of cooperative advertising allowances from suppliers that were incremental to the advertising program, specific to the product or event and identifiable for accounting purposes, were $85.7 million, $81.5 million and $72.5 million for the year ended December 31, 2023, 2022, and 2021, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income. |
Share-based compensation and benefit plans | Share-based compensation and benefit plans: The Company sponsors share-based compensation plans and benefit plans. The Company recognizes compensation expense over the requisite service period for its share-based plans based on the fair value of the awards on the date of the grant, award, or issuance and accounts for forfeitures as they occur. Share-based plans include 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. See Note 13 for further information concerning the Company’s share-based compensation and benefit plans. |
Pre-opening expenses | Pre-opening expenses: Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income as incurred. Costs associated with the opening of new distribution centers, which consist primarily of payroll and occupancy costs, are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income as incurred. |
Interest expense | Interest expense: The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on its long-term borrowings. Total interest costs capitalized for the year ended December 31, 2023, 2022, and 2021, were $7.2 million, $5.5 million and $7.0 million, respectively. In conjunction with the issuance or amendment of long-term debt instruments, the Company incurs various costs, including debt registration fees, accounting and legal fees, and underwriter and book runner fees. Debt issuance costs related to the Company’s long-term unsecured senior notes are recorded as a reduction of the principal amount of the corresponding unsecured senior notes. Debt issuance costs related to the Company’s unsecured revolving credit facility are recorded as an asset. These debt issuance costs have been deferred and are being amortized over the term of the corresponding debt instrument, and the amortization expense is included in “Interest expense” on the accompanying Consolidated Statements of Income. Deferred debt issuance costs totaled $25.5 million and $24.7 million net of accumulated amortization, as of December 31, 2023 and 2022, respectively, of which $1.9 million and $2.6 million were included in “Other assets, net” as of December 31, 2023 and 2022, respectively, with the remainder included in “Long-term debt” on the accompanying Consolidated Balance Sheets. The Company issued its long-term unsecured senior notes and commercial paper program at a discount. The original issuance discounts on the senior notes are recorded as a reduction of the principal amount of the corresponding senior notes and are accreted over the term of the applicable senior note, and the original issuance discounts on the commercial paper program are recorded as a reduction of the face amount of the borrowings, with the accretion expenses included in “Interest expense” on the accompanying Consolidated Statements of Income. Original issuance discounts, net of accretion, totaled $7.1 million and $6.3 million as of December 31, 2023 and 2022, respectively. See Note 8 for further information concerning debt issuance costs and original issuance discounts associated with the Company’s issuances of long-term debt instruments. |
Income taxes | Income taxes: The Company accounts for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between the U.S. GAAP basis and tax basis of assets and liabilities using enacted tax rules and rates currently scheduled to be in effect for the year in which the differences are expected to reverse. Tax carry forwards are also recognized in deferred tax assets and liabilities under this method. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date. The Company would record a valuation allowance against deferred tax assets to the extent it is more likely than not the amount will not be realized, based upon evidence available at the time of the determination and any change in the valuation allowance is recorded in the period of a change in such determination. The Company did not establish a valuation allowance for deferred tax assets as of December 31, 2023 and 2022, as it was considered more likely than not that deferred tax assets were realizable through a combination of future taxable income, the realization of deferred tax liabilities and tax planning strategies. The Company regularly reviews its potential tax liabilities for tax years subject to audit. The amount of such liabilities is based on various factors, such as differing interpretations of tax regulations by the responsible tax authority, experience with previous tax audits, and applicable tax law rulings. In management’s opinion, adequate provisions for income taxes have been made for all years presented. The estimates of the Company’s potential tax liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company’s various tax positions and actual results could differ from estimates. See Note 16 for further information concerning the Company’s income taxes. |
Earnings per share | Earnings per share: Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the fiscal period. Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the common stock equivalents associated with the potential impact of dilutive stock options. Certain common stock equivalents that could potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been antidilutive. Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds the market price of the common shares. See Note 17 for further information concerning the Company’s common stock equivalents. |
New accounting pronouncements | New 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”). 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 amendment 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 adopted this guidance, using the retrospective adoption method, beginning with its first quarter ending March 31, 2023, with the exception, as stated in the guidance, of the rollforward information, which will be adopted prospectively, disclosure for which will be effective with the Company’s fiscal year beginning after December 15, 2023. The application of this new guidance did not have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance requires disclosure only. See Note 7 for further information concerning the Company's supplier finance programs. In November of 2023, FASB issued Accounting Standard Update ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 improves the disclosures about a public entity’s reportable segments. Under ASU 2023-07, a public entity would be required to disclose significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), a description of other segment items by reportable segment, annual disclosures about a reportable segment’s profit or loss and assets required by Topic 280 in interim periods, any additional measures of a segment’s profit or loss used by the CODM to allocate resources, and the title and position of the CODM. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. ASU 2023-07 allows for early adoption and requires retrospective adoption. The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2024. 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 only. In December of 2023, FASB issued Accounting Standard Update ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures. Under ASU 2023-09, a public entity would be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, such as if the effect of the reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate. Entities would also have to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, along with income/loss from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024. ASU 2023-09 allows for early adoption for annual financial statements that have not yet been issued and allows retrospective and prospective adoption. The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2025. 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 only. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Summary of Significant Accounting Policies | |
Components of self-insurance reserves | December 31, 2023 2022 Self-insurance reserves (undiscounted) $ 225,740 $ 245,562 Self-insurance reserves (discounted) 214,116 233,017 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Fair Value Measurements | |
Valuation of marketable securities | December 31, 2023 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 59,508 $ — $ — $ 59,508 December 31, 2022 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 49,371 $ — $ — $ 49,371 |
Valuation of senior notes | December 31, 2023 December 31, 2022 Carrying Amount Estimated Fair Value Carrying Amount Estimated Fair Value Senior Notes $ 4,820,543 $ 4,687,065 $ 4,371,653 $ 4,119,777 |
ALLOWANCE FOR DOUBTFUL ACCOUN_2
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Allowance for Doubtful Accounts | |
Changes in allowance for doubtful accounts | 2023 2022 Allowance for doubtful accounts, balance at January 1 $ 14,695 $ 11,870 Reserve accruals 7,261 6,718 Uncollectable accounts written-off (6,226) (3,928) Foreign currency translation 104 35 Allowance for doubtful accounts, balance at December 31 $ 15,834 $ 14,695 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Property and Equipment | |
Property and equipment, including original useful lives | Original Useful Lives December 31, 2023 December 31, 2022 Land $ 989,575 $ 931,993 Buildings and building improvements 15 – 39 years 3,121,562 2,896,071 Leasehold improvements 3 – 25 years 1,113,374 951,652 Furniture, fixtures and equipment 3 – 20 years 2,029,668 1,847,248 Vehicles 5 – 10 years 709,220 571,328 Construction in progress 348,968 239,773 Total property and equipment 8,312,367 7,438,065 Less: accumulated depreciation and amortization 3,275,387 3,014,024 Net property and equipment $ 5,036,980 $ 4,424,041 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Leases | |
Summary of total lease cost | For the Year Ended December 31, 2023 2022 2021 Operating lease cost $ 398,537 $ 367,724 $ 351,296 Short-term operating lease cost 9,508 11,314 7,694 Variable operating lease cost 99,911 93,940 89,065 Sublease income (4,805) (5,220) (4,571) Total lease cost $ 503,151 $ 467,758 $ 443,484 |
Other lease related information | For the Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities: Operating cash flows from operating leases $ 390,907 $ 366,866 Right-of-use assets obtained in exchange for new operating lease liabilities 387,810 416,615 |
Schedule of future minimum lease payments | December 31, 2023 Related Parties Non-Related Parties Total 2024 $ 4,730 $ 385,437 $ 390,167 2025 3,875 365,942 369,817 2026 3,260 330,350 333,610 2027 2,283 282,689 284,972 2028 2,046 230,380 232,426 Thereafter 47 1,115,755 1,115,802 Total operating lease payments 16,241 2,710,553 2,726,794 Less: present value discount 8,940 446,974 455,914 Total operating lease liabilities 7,301 2,263,579 2,270,880 Less: current portion of operating lease liabilities 4,730 384,806 389,536 Operating lease liabilities, less current portion $ 2,571 $ 1,878,773 $ 1,881,344 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Goodwill and Other Intangibles | |
Change in goodwill | 2023 2022 Goodwill, balance at January 1, $ 884,445 $ 879,340 Change in goodwill related to small acquisitions 1,989 1,452 Foreign currency translation 11,262 3,653 Goodwill, balance at December 31, $ 897,696 $ 884,445 |
Schedule of components of intangible assets other than goodwill | December 31, 2023 December 31, 2022 Cost of Accumulated Net Cost of Accumulated Net Intangibles Amortization Intangibles Intangibles Amortization Intangibles Finite-lived intangible assets: Trade names (1) $ 9,797 $ (8,273) $ 1,524 $ 8,532 $ (5,532) $ 3,000 Non-compete agreements (2) 2,240 (1,419) 821 7,010 (5,965) 1,045 Other intangible assets (3) 10,027 (4,095) 5,932 12,446 (6,406) 6,040 Total finite-lived intangible assets 22,064 (13,787) 8,277 27,988 (17,903) 10,085 Indefinite-lived intangible assets: Trade names 41,493 — 41,493 36,134 — 36,134 Total intangible assets $ 63,557 $ (13,787) $ 49,770 $ 64,122 $ (17,903) $ 46,219 (1) Weighted-average remaining useful life of approximately 3.9 years as of December 31, 2023. (2) Weighted-average remaining useful life of approximately 4.0 years as of December 31, 2023. (3) Includes internally-developed software and customer relationships and has an estimated weighted-average remaining useful life of approximately 5.9 years as of December 31, 2023. |
Estimated net amortization of intangibles | December 31, 2023 Amortization Expense 2024 $ 1,620 2025 1,613 2026 1,588 2027 1,448 2028 1,088 Thereafter 920 Total net, finite-lived intangible assets $ 8,277 |
FINANCING (Tables)
FINANCING (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Financing | |
Outstanding financing facilities | December 31, 2023 2022 Commercial paper program, weighted-average variable interest rate of 5.640% 750,900 — 3.850% Senior Notes due 2023, effective interest rate of 3.851% — 300,000 3.550% Senior Notes due 2026, effective interest rate of 3.570% 500,000 500,000 5.750% Senior Notes due 2026, effective interest rate of 5.767% 750,000 — 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% 850,000 850,000 Total principal amount of debt 5,600,900 4,400,000 Less: Unamortized discount and debt issuance costs 30,775 28,347 Total long-term debt $ 5,570,125 $ 4,371,653 |
Principle maturities of financing facilities | December 31, 2023 Scheduled Maturities 2024 $ 750,900 2025 — 2026 1,250,000 2027 750,000 2028 500,000 Thereafter 2,350,000 Total principal amount of debt $ 5,600,900 |
WARRANTIES (Tables)
WARRANTIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Warranties | |
Changes in product warranty liabilities | 2023 2022 Warranty liabilities, balance at January 1, $ 98,564 $ 77,199 Warranty claims (180,971) (152,777) Warranty accruals 200,228 174,118 Foreign currency translation 74 24 Warranty liabilities, balance at December 31, $ 117,895 $ 98,564 |
SHARE REPURCHASE PROGRAM (Table
SHARE REPURCHASE PROGRAM (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share Repurchase Program | |
Schedule of shares repurchased | For the Year Ended December 31, 2023 2022 Shares repurchased 3,568 4,961 Average price per share $ 883.13 $ 661.66 Total investment $ 3,151,120 $ 3,282,215 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Accumulated Other Comprehensive Income (Loss) | |
Summary of activity for changes in accumulated other comprehensive income (loss) | Foreign Total Accumulated Other Currency (1) Comprehensive Income (Loss) Accumulated other comprehensive loss, balance at December 31, 2021 $ (6,799) $ (6,799) Change in accumulated other comprehensive income 9,795 9,795 Accumulated other comprehensive income, balance at December 31, 2022 $ 2,996 $ 2,996 Change in accumulated other comprehensive income 36,392 36,392 Accumulated other comprehensive income, balance at December 31, 2023 $ 39,388 $ 39,388 (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) | 12 Months Ended |
Dec. 31, 2023 | |
Revenue | |
Disaggregation of revenue | For the Year Ended December 31, 2023 2022 2021 Sales to do-it-yourself customers $ 8,248,213 $ 7,903,359 $ 7,643,832 Sales to professional service provider customers 7,245,747 6,170,239 5,368,657 Other sales and sales adjustments 318,290 336,262 315,074 Total sales $ 15,812,250 $ 14,409,860 $ 13,327,563 |
SHARE-BASED COMPENSATION AND _2
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Compensation and Benefit Plans | |
Summary of shares authorized and available for future issuance under compensation and benefit plans | December 31, 2023 Total Shares Authorized for Shares Available for Future Plans Issuance under the Plans Issuance under the Plans Incentive Plans 35,650 5,492 Employee Stock Purchase Plan 4,250 412 Profit Sharing and Savings Plan 4,200 349 |
Employee Stock Option [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of stock options | Average Aggregate Shares Weighted- Average Remaining Intrinsic Value (in thousands) Exercise Price Contractual Terms (in thousands) Outstanding at December 31, 2022 1,069 $ 356.76 Granted 94 861.57 Exercised (260) 273.94 Forfeited or expired (19) 652.81 Outstanding at December 31, 2023 884 $ 428.50 5.3 Years $ 461,145 Vested or expected to vest at December 31, 2023 853 $ 414.37 5.2 Years $ 456,945 Exercisable at December 31, 2023 627 $ 330.25 4.2 Years $ 388,517 |
Black-Scholes option pricing model | December 31, 2023 2022 2021 Risk free interest rate 3.96 % 2.09 % 0.82 % Expected life 6.3 Years 6.3 Years 5.9 Years Expected volatility 29.0 % 28.9 % 30.0 % Expected dividend yield — % — % — % |
Summary of activity of share-based compensation and benefit plans | For the Year Ended December 31, 2023 2022 2021 Compensation expense for stock options awarded (in thousands) $ 22,090 $ 21,412 $ 20,035 Income tax benefit from compensation expense related to stock options (in thousands) 5,477 5,332 4,989 Total intrinsic value of stock options exercised (in thousands) 170,521 123,911 163,722 Cash received from exercise of stock options (in thousands) 71,153 60,976 67,761 Weighted-average grant-date fair value of options awarded $ 323.16 $ 221.19 $ 146.57 Weighted-average remaining contractual life of exercisable options (in years) 5.3 4.5 4.7 |
Restricted stock [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of activity of share-based compensation and benefit plans | For the Year Ended December 31, 2023 2022 2021 Compensation expense for restricted shares awarded $ 1,869 $ 1,808 $ 1,602 Income tax benefit from compensation expense related to restricted shares $ 463 $ 450 $ 399 Total fair value of restricted shares at vest date $ 2,693 $ 2,595 $ 2,815 Shares awarded under the plans 2 3 3 Weighted-average grant-date fair value of shares awarded under the plans $ 888.60 $ 645.31 $ 509.24 |
Summary of restricted stock | Weighted-Average Grant-Date Shares Fair Value Non-vested at December 31, 2022 4 $ 572.54 Granted during the period 2 888.60 Vested during the period (1) (3) 571.45 Forfeited during the period — — Non-vested at December 31, 2023 3 $ 772.45 (1) Includes less than one thousand shares withheld to cover employees’ taxes upon vesting. |
Employee stock purchase plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Summary of ESPP plan activity | For the Year Ended December 31, 2023 2022 2021 Compensation expense for shares issued under the ESPP $ 3,552 $ 3,238 $ 3,019 Income tax benefit from compensation expense related to shares issued under the ESPP $ 881 $ 806 $ 752 Shares issued under the ESPP 26 31 36 Weighted-average price of shares issued under the ESPP $ 766.11 $ 592.22 $ 473.22 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Income Taxes | |
Schedule of components of income from continuing operations before income taxes | For the Year Ended December 31, 2023 2022 2021 Domestic $ 2,994,856 $ 2,786,866 $ 2,770,485 International 9,894 11,789 11,429 Income before income taxes $ 3,004,750 $ 2,798,655 $ 2,781,914 |
Schedule of components of the provision for income taxes | For the Year Ended December 31, 2023 2022 2021 Current: Federal income tax expense $ 497,492 $ 455,779 $ 485,988 State income tax expense 109,924 95,388 104,837 International income tax expense 2,521 5,263 6,021 Total current 609,937 556,430 596,846 Deferred: Federal income tax expense 41,782 62,719 20,543 State income tax expense 6,003 8,583 2,432 International income tax expense (benefit) 447 (1,727) (2,592) Total deferred 48,232 69,575 20,383 Net income tax expense $ 658,169 $ 626,005 $ 617,229 |
Reconciliation of the provision for income taxes to the amounts computed at the federal statutory rate | For the Year Ended December 31, 2023 2022 2021 Federal income taxes at statutory rate $ 630,998 $ 587,716 $ 584,202 State income taxes, net of federal tax benefit 98,254 87,352 90,360 Excess tax benefit from share-based compensation (35,950) (25,503) (35,202) Benefit from renewable energy tax credits (19,627) (17,593) (18,592) Other items, net (15,506) (5,967) (3,539) Total provision for income taxes $ 658,169 $ 626,005 $ 617,229 |
Schedule of deferred tax assets and liabilities | December 31, 2023 2022 Deferred tax assets: Allowance for doubtful accounts $ 2,430 $ 2,196 Other accruals 150,483 137,474 Operating lease liability 559,830 538,890 Other 18,102 17,115 Total deferred tax assets 730,845 695,675 Deferred tax liabilities: Inventories 142,578 104,572 Property and equipment 280,791 233,288 Operating lease asset 540,359 521,541 Other 62,588 81,621 Total deferred tax liabilities 1,026,316 941,022 Net deferred tax liabilities $ (295,471) $ (245,347) |
Summary of changes in gross amount of unrecognized tax benefits, excluding interest and penalties | 2023 2022 2021 Unrealized tax benefit, balance at January 1, $ 24,798 $ 26,847 $ 30,967 Additions based on tax positions related to the current year 3,932 4,146 5,446 Payments related to items settled with taxing authorities — (1,000) (2,570) Reductions due to the lapse of statute of limitations and settlements (4,787) (5,195) (6,996) Unrealized tax benefit, balance at December 31, $ 23,943 $ 24,798 $ 26,847 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | For the Year Ended December 31, 2023 2022 2021 Numerator (basic and diluted): Net income $ 2,346,581 $ 2,172,650 $ 2,164,685 Denominator: Weighted-average common shares outstanding – basic 60,475 64,372 68,967 Effect of stock options (1) 523 590 644 Weighted-average common shares outstanding – assuming dilution 60,998 64,962 69,611 Earnings per share: Earnings per share-basic $ 38.80 $ 33.75 $ 31.39 Earnings per share-assuming dilution $ 38.47 $ 33.44 $ 31.10 Antidilutive potential common shares not included in the calculation of diluted earnings per share: Stock options (1) 95 144 111 Weighted-average exercise price per share of antidilutive stock options (1) $ 836.12 $ 663.36 $ 479.90 (1) See Note 13 for further information concerning the terms of the Company’s share-based compensation plans. |
QUARTERLY RESULTS (Unaudited) (
QUARTERLY RESULTS (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Quarterly Results (Unaudited) | |
Quarterly operating data (unaudited) | Fiscal 2023 First Second Third Fourth Quarter Quarter Quarter Quarter Sales $ 3,707,864 $ 4,068,991 $ 4,203,380 $ 3,832,015 Gross profit 1,890,329 2,086,582 2,160,463 1,967,429 Operating income 716,645 853,773 897,222 718,736 Net income 516,885 627,365 649,827 552,504 Earnings per share – basic (1) $ 8.36 $ 10.32 $ 10.82 $ 9.33 Earnings per share – assuming dilution (1) $ 8.28 $ 10.22 $ 10.72 $ 9.26 Fiscal 2022 First Second Third Fourth Quarter Quarter Quarter Quarter Sales $ 3,296,011 $ 3,670,737 $ 3,798,619 $ 3,644,493 Gross profit 1,708,072 1,884,718 1,934,962 1,853,954 Operating income 669,530 798,550 804,194 682,217 Net income 481,880 576,760 585,438 528,572 Earnings per share – basic (1) $ 7.24 $ 8.86 $ 9.25 $ 8.45 Earnings per share – assuming dilution (1) $ 7.17 $ 8.78 $ 9.17 $ 8.37 (1) Earnings per share amounts are computed independently for each quarter and annual period. The quarterly earnings per share amounts may not sum to equal the full-year earnings per share amount. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment store entity state | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | |
Summary of Significant Accounting Policies | |||
Number of reportable segments | segment | 1 | ||
Allowance for doubtful supplier receivables | $ 0 | $ 0 | |
Replacement cost of inventory | $ 4,940,000 | $ 4,700,000 | |
Number of reporting units | segment | 1 | 1 | |
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Self-insurance reserves, current | 128,548 | 138,926 | |
Investment tax credit amount | 336,500 | 167,600 | 177,100 |
Advertising expense, net | 85,700 | 81,500 | 72,500 |
Total interest costs capitalized | 7,200 | 5,500 | 7,000 |
Deferred debt issuance costs, net of amortization | 25,500 | 24,700 | |
Original issuance discounts, net of accretion | 7,100 | 6,300 | |
Valuation allowance for deferred tax assets | $ 0 | 0 | |
Variable Interest Entity, Not Primary Beneficiary [Member] | |||
Summary of Significant Accounting Policies | |||
Number of unconsolidated tax credit fund entities that were considered to be Variable Interest Entities | entity | 6 | ||
Equity method investment in VIEs, net | $ 34,700 | ||
Investment tax credit amount | 500 | 167,600 | $ 177,100 |
Other Assets | |||
Summary of Significant Accounting Policies | |||
Deferred debt issuance costs, net of amortization | 1,900 | 2,600 | |
Related Party [Member] | |||
Summary of Significant Accounting Policies | |||
Accounts receivable due from employees to the Company | $ 900 | $ 800 | |
U.S. | |||
Summary of Significant Accounting Policies | |||
Number of stores | store | 6,095 | ||
Number of states, in which the Company operates | state | 48 | ||
Mexico | |||
Summary of Significant Accounting Policies | |||
Number of stores | store | 62 | ||
Loyalty Program Points [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Summary of Significant Accounting Policies | |||
Deferred revenue, period expect to be recognized within | 12 months | ||
Loyalty Program Coupon [Member] | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | |||
Summary of Significant Accounting Policies | |||
Deferred revenue, period expect to be recognized within | 3 months |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Components of Self-Insurance Reserves) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Summary of Significant Accounting Policies | ||
Self-insurance reserves (undiscounted) | $ 225,740 | $ 245,562 |
Self-insurance reserves (discounted) | $ 214,116 | $ 233,017 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Fair Value Measurements | ||
Increase (decrease) in fair value of marketable securities | $ 8.4 | $ (8.3) |
Non-financial assets and liabilities measured at fair value on a nonrecurring basis | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Fair V
FAIR VALUE MEASUREMENTS (Fair Value of Marketable Securities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 59,508 | $ 49,371 |
Fair value, inputs, Level 1 [Member] | ||
Fair Value Measurements | ||
Estimated fair value of marketable securities | $ 59,508 | $ 49,371 |
FAIR VALUE MEASUREMENTS (Fair_2
FAIR VALUE MEASUREMENTS (Fair Value of Senior Notes) (Details) - Fair value, inputs, Level 2 [Member] - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Fair Value Measurements | ||
Carrying amount of senior notes | $ 4,820,543 | $ 4,371,653 |
Estimated fair value of senior notes | $ 4,687,065 | $ 4,119,777 |
ALLOWANCE FOR DOUBTFUL ACCOUN_3
ALLOWANCE FOR DOUBTFUL ACCOUNTS (Changes in Allowance for Doubtful Accounts) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Allowance for Doubtful Accounts | ||
Allowance for doubtful accounts, beginning balance | $ 14,695 | $ 11,870 |
Reserve accruals | 7,261 | 6,718 |
Uncollectable accounts written-off | (6,226) | (3,928) |
Foreign currency translation | 104 | 35 |
Allowance for doubtful accounts, ending balance | $ 15,834 | $ 14,695 |
PROPERTY AND EQUIPMENT (Narrati
PROPERTY AND EQUIPMENT (Narrative) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Property and Equipment | |||
Depreciation and amortization expense | $ 409,061 | $ 357,933 | $ 328,217 |
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling, General and Administrative Expense | Selling, General and Administrative Expense | Selling, General and Administrative Expense |
Impairment of long-lived assets | $ 2,200 | $ 7,600 | $ 12,600 |
Property and equipment [Member] | |||
Property and Equipment | |||
Depreciation and amortization expense | $ 404,900 | $ 343,600 | $ 320,400 |
PROPERTY AND EQUIPMENT (Propert
PROPERTY AND EQUIPMENT (Property and Equipment, Including Original Useful Lives) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Property and Equipment | ||
Property and equipment | $ 8,312,367 | $ 7,438,065 |
Less: accumulated depreciation and amortization | 3,275,387 | 3,014,024 |
Net property and equipment | 5,036,980 | 4,424,041 |
Land [Member] | ||
Property and Equipment | ||
Property and equipment | 989,575 | 931,993 |
Buildings and building improvements [Member] | ||
Property and Equipment | ||
Property and equipment | $ 3,121,562 | 2,896,071 |
Buildings and building improvements [Member] | Minimum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 15 years | |
Buildings and building improvements [Member] | Maximum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 39 years | |
Leasehold improvements [Member] | ||
Property and Equipment | ||
Property and equipment | $ 1,113,374 | 951,652 |
Leasehold improvements [Member] | Minimum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 3 years | |
Leasehold improvements [Member] | Maximum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 25 years | |
Furniture, fixtures and equipment [Member] | ||
Property and Equipment | ||
Property and equipment | $ 2,029,668 | 1,847,248 |
Furniture, fixtures and equipment [Member] | Minimum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 3 years | |
Furniture, fixtures and equipment [Member] | Maximum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 20 years | |
Vehicles [Member] | ||
Property and Equipment | ||
Property and equipment | $ 709,220 | 571,328 |
Vehicles [Member] | Minimum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 5 years | |
Vehicles [Member] | Maximum [Member] | ||
Property and Equipment | ||
Property and equipment, useful lives | 10 years | |
Construction in Progress [Member] | ||
Property and Equipment | ||
Property and equipment | $ 348,968 | $ 239,773 |
LEASES (Narrative) (Details)
LEASES (Narrative) (Details) $ in Millions | Dec. 31, 2023 USD ($) |
Leases | |
Weighted-average remaining lease term - operating leases | 9 years 4 months 24 days |
Weighted-average discount rate - operating leases | 4.30% |
Minimum [Member] | Sublease | |
Leases | |
Future minimum sublease income under non-cancelable subleases | $ 9.6 |
LEASES (Summary of Total Lease
LEASES (Summary of Total Lease Cost) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Leases | |||
Operating lease cost | $ 398,537 | $ 367,724 | $ 351,296 |
Short-term operating lease cost | 9,508 | 11,314 | 7,694 |
Variable operating lease cost | 99,911 | 93,940 | 89,065 |
Sublease income | (4,805) | (5,220) | (4,571) |
Total lease cost | $ 503,151 | $ 467,758 | $ 443,484 |
LEASES (Supplemental Cash Flow
LEASES (Supplemental Cash Flow Information) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Cash paid for amounts included in the measurement of operating lease liabilities, operating cash flows from operating leases | $ 390,907 | $ 366,866 |
Right-of-use asset obtained in exchange for new operating lease liability | $ 387,810 | $ 416,615 |
LEASES (Future Minimum Lease Pa
LEASES (Future Minimum Lease Payments) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Leases | ||
2024 | $ 390,167 | |
2025 | 369,817 | |
2026 | 333,610 | |
2027 | 284,972 | |
2028 | 232,426 | |
Thereafter | 1,115,802 | |
Total operating lease payments | 2,726,794 | |
Less: present value discount | 455,914 | |
Total operating lease liabilities | 2,270,880 | |
Less: current portion of operating lease liabilities | 389,536 | $ 366,721 |
Operating lease liabilities, less current portion | 1,881,344 | $ 1,806,656 |
Related Parties. | ||
Leases | ||
2024 | 4,730 | |
2025 | 3,875 | |
2026 | 3,260 | |
2027 | 2,283 | |
2028 | 2,046 | |
Thereafter | 47 | |
Total operating lease payments | 16,241 | |
Less: present value discount | 8,940 | |
Total operating lease liabilities | 7,301 | |
Less: current portion of operating lease liabilities | 4,730 | |
Operating lease liabilities, less current portion | 2,571 | |
Non-Related Parties | ||
Leases | ||
2024 | 385,437 | |
2025 | 365,942 | |
2026 | 330,350 | |
2027 | 282,689 | |
2028 | 230,380 | |
Thereafter | 1,115,755 | |
Total operating lease payments | 2,710,553 | |
Less: present value discount | 446,974 | |
Total operating lease liabilities | 2,263,579 | |
Less: current portion of operating lease liabilities | 384,806 | |
Operating lease liabilities, less current portion | $ 1,878,773 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLES (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill and Other Intangibles | |||
Goodwill impairment | $ 0 | $ 0 | $ 0 |
Amortization expense of amortizable intangible assets | 3 | 4.8 | 4.9 |
Indefinite-lived intangible asset impairment | 0 | 0 | $ 0 |
Non-compete Agreements [Member] | |||
Goodwill and Other Intangibles | |||
Finite-lived intangible assets | $ 0.1 | $ 0.1 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLES (Changes in Net Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Goodwill and Other Intangibles | ||
Goodwill, beginning balance | $ 884,445 | $ 879,340 |
Change in goodwill related to small acquisitions | 1,989 | 1,452 |
Foreign currency translation | 11,262 | 3,653 |
Goodwill, ending balance | $ 897,696 | $ 884,445 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLES (Intangibles Other Than Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Finite-lived intangible assets | ||
Finite-lived intangibles, cost of intangibles | $ 22,064 | $ 27,988 |
Finite-lived intangibles, accumulated amortization | (13,787) | (17,903) |
Finite-lived intangibles, net intangibles | 8,277 | 10,085 |
Indefinite-lived intangible assets | ||
Total intangible assets, excluding goodwill | 63,557 | 64,122 |
Net amortizable intangible assets | 49,770 | 46,219 |
Trade names [Member] | ||
Indefinite-lived intangible assets | ||
Indefinite-lived intangible assets, other than goodwill | 41,493 | 36,134 |
Trade names [Member] | ||
Finite-lived intangible assets | ||
Finite-lived intangibles, cost of intangibles | 9,797 | 8,532 |
Finite-lived intangibles, accumulated amortization | (8,273) | (5,532) |
Finite-lived intangibles, net intangibles | $ 1,524 | 3,000 |
Indefinite-lived intangible assets | ||
Weighted-average remaining useful life of favorable leases | 3 years 10 months 24 days | |
Non-compete Agreements [Member] | ||
Finite-lived intangible assets | ||
Finite-lived intangibles, cost of intangibles | $ 2,240 | 7,010 |
Finite-lived intangibles, accumulated amortization | (1,419) | (5,965) |
Finite-lived intangibles, net intangibles | $ 821 | 1,045 |
Indefinite-lived intangible assets | ||
Weighted-average remaining useful life of favorable leases | 4 years | |
Other intangible assets [Member] | ||
Finite-lived intangible assets | ||
Finite-lived intangibles, cost of intangibles | $ 10,027 | 12,446 |
Finite-lived intangibles, accumulated amortization | (4,095) | (6,406) |
Finite-lived intangibles, net intangibles | $ 5,932 | $ 6,040 |
Indefinite-lived intangible assets | ||
Weighted-average remaining useful life of favorable leases | 5 years 10 months 24 days |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLES (Estimated Amortization of Intangibles) (Details) $ in Thousands | Dec. 31, 2023 USD ($) |
Goodwill and Other Intangibles | |
2024 amortization expense | $ 1,620 |
2025 amortization expense | 1,613 |
2026 amortization expense | 1,588 |
2027 amortization expense | 1,448 |
2028 amortization expense | 1,088 |
Thereafter amortization expense | 920 |
Total net, finite-lived intangible assets | $ 8,277 |
SUPPLIER FINANCE PROGRAMS (Deta
SUPPLIER FINANCE PROGRAMS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Debt Instrument [Line Items] | ||
Accounts payable, trade | $ 4,400,000 | $ 4,200,000 |
Supplier Finance Programs [Member] | ||
Debt Instrument [Line Items] | ||
Debt instrument term | 1 year | |
Assets pledged as security or other forms of guarantees | $ 0 |
FINANCING (Unsecured Revolving
FINANCING (Unsecured Revolving Credit Facility) (Narrative) (Details) - USD ($) $ in Millions | 10 Months Ended | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
Financing | |||
Line of credit facility covenant compliance | As of December 31, 2023, the Company remained in compliance with all covenants under the Credit Agreement. | ||
Minimum [Member] | |||
Financing | |||
Line of credit facility fee percentage | 0.07% | ||
Maximum [Member] | |||
Financing | |||
Line of credit facility fee percentage | 0.25% | ||
Spread over Alternate Base rate [Member] | Minimum [Member] | |||
Financing | |||
Line of credit current interest rate | 0% | ||
Spread over Alternate Base rate [Member] | Maximum [Member] | |||
Financing | |||
Line of credit current interest rate | 0.25% | ||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | |||
Financing | |||
Line of credit current interest rate | 0.10% | ||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Minimum [Member] | |||
Financing | |||
Line of credit current interest rate | 0.68% | ||
Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | Maximum [Member] | |||
Financing | |||
Line of credit current interest rate | 1.25% | ||
Letter of credit [Member] | |||
Financing | |||
Letters of credit | $ 112.2 | $ 112.2 | |
Unsecured debt [Member] | Letter of credit [Member] | |||
Financing | |||
Number of years in credit facility, term | 1 year | 1 year | |
Letters of credit | $ 106.8 | $ 106.8 | $ 96.6 |
Line of credit facility [Member] | Swing line revolver [Member] | |||
Financing | |||
Unsecured revolving credit facility | $ 0 | $ 0 | 0 |
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 | 5 years | |
Current maximum borrowing capacity under credit facility | $ 1,800 | $ 1,800 | |
Maximum aggregate increase to credit facility allowable | 900 | ||
Maximum aggregate capacity of credit facility allowable | $ 2,700 | ||
Line of credit facility fee percentage | 0.10% | ||
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] | Through maturity [Member] | |||
Financing | |||
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] | Letter of credit [Member] | |||
Financing | |||
Number of years in credit facility, term | 1 year | 1 year | |
Line of credit facility sublimit | $ 200 | ||
Letters of credit | $ 5.4 | 5.4 | $ 5.1 |
Line of credit facility [Member] | Unsecured debt [Member] | Swing line revolver [Member] | |||
Financing | |||
Line of credit facility sublimit | $ 75 |
FINANCING (Commercial Paper Pro
FINANCING (Commercial Paper Program) (Narrative) (Details) - Commercial Paper [Member] $ in Billions | Aug. 09, 2023 USD ($) |
Financing | |
Current maximum borrowing capacity under credit facility | $ 1.8 |
Maximum [Member] | |
Financing | |
Number of years in credit facility, term | 397 days |
FINANCING (Senior Notes) (Narra
FINANCING (Senior Notes) (Narrative) (Details) $ in Thousands | 12 Months Ended | ||||
Nov. 20, 2023 USD ($) D | Jun. 15, 2023 USD ($) | Dec. 31, 2023 USD ($) entity D | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Financing | |||||
Repayment of senior notes | $ 300,000 | $ 300,000 | $ 300,000 | ||
Senior notes [Member] | |||||
Financing | |||||
Face amount of senior notes | $ 4,900,000 | ||||
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 December 31, 2023. | ||||
Minimum [Member] | Senior notes [Member] | |||||
Financing | |||||
Interest rate of senior notes | 1.75% | ||||
Maximum [Member] | Senior notes [Member] | |||||
Financing | |||||
Interest rate of senior notes | 5.75% | ||||
3.850% Senior Notes due 2023 [Member] | Senior notes [Member] | |||||
Financing | |||||
Face amount of senior notes | $ 300,000 | ||||
Interest rate of senior notes | 3.85% | 3.85% | |||
Repayment of senior notes | $ 300,000 | ||||
5.750% Senior Notes due 2026 [Member] | Senior notes [Member] | |||||
Financing | |||||
Issuance date of senior notes | Nov. 20, 2023 | ||||
Face amount of senior notes | $ 750,000 | $ 750,000 | |||
Interest rate of senior notes | 5.75% | 5.75% | |||
Percentage of face value of debt instrument | 99.954% | ||||
Number of days in annual interest calculation period | D | 360 |
FINANCING (Outstanding Financin
FINANCING (Outstanding Financing Facilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Nov. 20, 2023 | Jun. 15, 2023 | Dec. 31, 2022 |
Financing | ||||
Total principal amount of debt | $ 5,600,900 | $ 4,400,000 | ||
Less: Unamortized discount and debt issuance costs | 30,775 | 28,347 | ||
Total long-term debt | 5,570,125 | 4,371,653 | ||
Commercial Paper [Member] | ||||
Financing | ||||
Debt instrument, principal amount | $ 750,900 | |||
Commercial paper program, weighted-average variable interest rate | 5.64% | |||
Senior notes [Member] | ||||
Financing | ||||
Debt instrument, principal amount | $ 4,900,000 | |||
Senior notes [Member] | 3.850% Senior Notes due 2023 [Member] | ||||
Financing | ||||
Debt instrument, principal amount | $ 300,000 | |||
Interest rate of senior notes | 3.85% | 3.85% | ||
Senior notes, effective interest rate | 3.851% | |||
Senior notes [Member] | 3.550% Senior Notes due 2026 [Member] | ||||
Financing | ||||
Debt instrument, 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] | 5.750% Senior Notes due 2026 [Member] | ||||
Financing | ||||
Debt instrument, principal amount | $ 750,000 | $ 750,000 | ||
Interest rate of senior notes | 5.75% | 5.75% | ||
Senior notes, effective interest rate | 5.767% | |||
Senior notes [Member] | 3.600% Senior Notes due 2027 [Member] | ||||
Financing | ||||
Debt instrument, 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 | ||||
Debt instrument, 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 | ||||
Debt instrument, 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 | ||||
Debt instrument, 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 | ||||
Debt instrument, 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 | ||||
Debt instrument, principal amount | $ 850,000 | $ 850,000 | ||
Interest rate of senior notes | 4.70% | 4.70% | ||
Senior notes, effective interest rate | 4.74% | 4.74% |
FINANCING (Principal Maturities
FINANCING (Principal Maturities of Financing Facilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Maturities of financing facilities | ||
2024 | $ 750,900 | |
2025 | 0 | |
2026 | 1,250,000 | |
2027 | 750,000 | |
2028 | 500,000 | |
Thereafter | 2,350,000 | |
Total principal amount of debt | $ 5,600,900 | $ 4,400,000 |
WARRANTIES (Product Warranty Li
WARRANTIES (Product Warranty Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Warranties | ||
Warranty liabilities, beginning balance | $ 98,564 | $ 77,199 |
Warranty claims | (180,971) | (152,777) |
Warranty accruals | 200,228 | 174,118 |
Foreign currency translation | 74 | 24 |
Warranty liabilities, ending balance | $ 117,895 | $ 98,564 |
SHARE REPURCHASE PROGRAM (Narra
SHARE REPURCHASE PROGRAM (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 2 Months Ended | 12 Months Ended | 158 Months Ended | ||||
Nov. 16, 2023 | May 23, 2023 | Nov. 15, 2022 | Feb. 28, 2024 | Dec. 31, 2023 | Dec. 31, 2022 | Feb. 28, 2024 | |
Share Repurchase Program | |||||||
Increase in authorized amount | $ 2,000,000 | $ 2,000,000 | $ 1,500,000 | ||||
Cumulative authorized amount | $ 25,800,000 | ||||||
Authorization effective period | 3 years | 3 years | 3 years | ||||
Remaining balance under share repurchase program | $ 2,600,000 | ||||||
Common stock repurchased, shares | 3,568 | 4,961 | |||||
Common stock repurchased, average price per share | $ 883.13 | $ 661.66 | |||||
Common stock repurchased, value | $ 3,151,120 | $ 3,282,215 | |||||
Excise tax on share repurchases | $ 28,830 | ||||||
Subsequent event [Member] | |||||||
Share Repurchase Program | |||||||
Remaining balance under share repurchase program | $ 2,400,000 | $ 2,400,000 | |||||
Common stock repurchased, shares | 200 | 94,300 | |||||
Common stock repurchased, average price per share | $ 1,001.04 | $ 247.83 | |||||
Common stock repurchased, value | $ 184,400 | $ 23,400,000 |
SHARE REPURCHASE PROGRAM (Sched
SHARE REPURCHASE PROGRAM (Schedule of Shares Repurchased) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Share Repurchase Program | ||
Shares repurchased | 3,568 | 4,961 |
Average price per share | $ 883.13 | $ 661.66 |
Total investment | $ 3,151,120 | $ 3,282,215 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Balance at beginning of period | $ (1,060,752) | $ (66,423) | $ 140,258 |
Change in accumulated other comprehensive income (loss) | 36,392 | 9,795 | (4,644) |
Balance at end of period | (1,739,278) | (1,060,752) | (66,423) |
Accumulated other comprehensive income (loss) [Member] | |||
Balance at beginning of period | 2,996 | (6,799) | (2,155) |
Change in accumulated other comprehensive income (loss) | 36,392 | 9,795 | (4,644) |
Balance at end of period | 39,388 | 2,996 | (6,799) |
Foreign currency [Member] | |||
Balance at beginning of period | 2,996 | (6,799) | |
Change in accumulated other comprehensive income (loss) | 36,392 | 9,795 | |
Balance at end of period | $ 39,388 | $ 2,996 | $ (6,799) |
REVENUE (Narrative) (Details)
REVENUE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue | |||||||||||
Revenue recognized | $ 3,832,015 | $ 4,203,380 | $ 4,068,991 | $ 3,707,864 | $ 3,644,493 | $ 3,798,619 | $ 3,670,737 | $ 3,296,011 | $ 15,812,250 | $ 14,409,860 | $ 13,327,563 |
Loyalty Program [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Revenue recognized | 13,900 | 12,200 | $ 13,600 | ||||||||
Deferred revenue liability | $ 5,100 | $ 5,000 | $ 5,100 | $ 5,000 |
REVENUE (Disaggregation of Reve
REVENUE (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation of Revenue | |||||||||||
Sales | $ 3,832,015 | $ 4,203,380 | $ 4,068,991 | $ 3,707,864 | $ 3,644,493 | $ 3,798,619 | $ 3,670,737 | $ 3,296,011 | $ 15,812,250 | $ 14,409,860 | $ 13,327,563 |
DIY customer [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Sales | 8,248,213 | 7,903,359 | 7,643,832 | ||||||||
Professional service provider customer [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Sales | 7,245,747 | 6,170,239 | 5,368,657 | ||||||||
Other customers and sales adjustments [Member] | |||||||||||
Disaggregation of Revenue | |||||||||||
Sales | $ 318,290 | $ 336,262 | $ 315,074 |
SHARE-BASED COMPENSATION AND _3
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Option) (Narrative) (Details) - Employee Stock Option [Member] $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Share-Based Compensation and Benefit Plans | |
Vesting period | 4 years |
Option vesting rate per year | 25% |
Remaining unrecognized compensation expense | $ 39.4 |
Weighted-average period for cost recognition | 2 years 8 months 12 days |
Stock option [Member] | |
Share-Based Compensation and Benefit Plans | |
Options expiration period | 10 years |
SHARE-BASED COMPENSATION AND _4
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Restricted Stock) (Narrative) (Details) - Restricted stock [Member] $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
Share-Based Compensation and Benefit Plans | |
Remaining unrecognized compensation expense | $ 0.5 |
Weighted-average period for cost recognition | 3 months 18 days |
Minimum [Member] | Employee [Member]. | |
Share-Based Compensation and Benefit Plans | |
Vesting period | 1 year |
Maximum [Member] | Employee [Member]. | |
Share-Based Compensation and Benefit Plans | |
Vesting period | 3 years |
SHARE-BASED COMPENSATION AND _5
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Employee Stock Purchase Plan) (Narrative) (Details) - Employee stock purchase plan [Member] | 12 Months Ended |
Dec. 31, 2023 | |
Share-Based Compensation and Benefit Plans | |
Employee stock purchase plan stock purchase percentage | 85% |
Percentage of annual salary to be withhold by company | 5% |
SHARE-BASED COMPENSATION AND _6
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Profit Sharing and Savings Plan) (Narrative) (Detail) - Profit sharing and savings plan [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Profit sharing and savings plan, employer discretionary contribution | $ 0 | $ 0 | $ 0 |
Profit sharing and savings plan, cost recognized | $ 48.6 | $ 36.7 | $ 32.5 |
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 _7
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Nonqualified Deferred Compensation Plan) (Narrative) (Details) - Nonqualified Deferred Compensation Plan [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Deferred compensation plan obligation | $ 59.5 | $ 49.4 | |
Deferred compensation plan, employer discretionary contribution | 0 | 0 | |
Deferred compensation plan cost recognized | $ 0.2 | $ 0.2 | |
Maximum [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Deferred compensation plan cost recognized | $ 0.1 |
SHARE-BASED COMPENSATION AND _8
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Appreciation Rights) (Narrative) (Details) - Stock Appreciation Rights (SARs) [Member] - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | 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 | 13,079 | 13,159 | |
Stock appreciation rights granted during the period, units | 1,714 | ||
Stock appreciation rights exercised during the period, units | 1,187 | ||
Stock appreciation rights forfeited during the period, units | 607 | ||
Liability for compensation to be paid for redeemed stock appreciation rights | $ 4.5 | $ 2.9 | |
Compensation expense (benefit) for share-based compensation | $ 1.1 | $ 1.7 | $ 1 |
SHARE-BASED COMPENSATION AND _9
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Summary of Shares Authorized and Available for Future Issuance Under Benefit and Compensation Plans) (Details) shares in Thousands | Dec. 31, 2023 shares |
Profit sharing and savings plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 4,200 |
Shares available for future issuance under compensation and benefit plans | 349 |
Employee stock purchase plan [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 4,250 |
Shares available for future issuance under compensation and benefit plans | 412 |
Stock option [Member] | Restricted stock [Member] | |
Share-Based Compensation and Benefit Plans | |
Shares authorized for issuance under compensation and benefit plans | 35,650 |
Shares available for future issuance under compensation and benefit plans | 5,492 |
SHARE-BASED COMPENSATION AND_10
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Summary of Stock Options) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Outstanding at the end of the year, average remaining contractual term | 5 years 3 months 18 days | ||
Outstanding at the end of the year, aggregate intrinsic value | $ 461,145 | ||
Vested or expected to vest at the end of the year, average remaining contractual term | 5 years 2 months 12 days | ||
Vested or expected to vest at the end of the year, aggregate intrinsic value | $ 456,945 | ||
Exercisable at the end of the year, average remaining contractual term | 4 years 2 months 12 days | ||
Exercisable at the end of the year, aggregate intrinsic value | $ 388,517 | ||
Employee Stock Option [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Outstanding shares, beginning balance | 1,069 | ||
Outstanding weighted-average exercise price, beginning balance | $ 356.76 | ||
Granted, shares | 94 | ||
Granted, weighted-average exercise price | $ 861.57 | ||
Exercised, shares | (260) | ||
Exercised, weighted-average exercise price | $ 273.94 | ||
Forfeited or expired, shares | (19) | ||
Forfeited or expired, weighted-average exercise price | $ 652.81 | ||
Outstanding shares, ending balance | 884 | 1,069 | |
Outstanding weighted-average exercise price, ending balance | $ 428.50 | $ 356.76 | |
Vested or expected to vest at the end of the year, shares | 853 | ||
Vested or expected to vest at the end of the year, weighted-average exercise price | $ 414.37 | ||
Exercisable shares, ending balance | 627 | ||
Exercisable weighted-average exercise price, ending balance | $ 330.25 | ||
Exercisable at the end of the year, average remaining contractual term | 5 years 3 months 18 days | 4 years 6 months | 4 years 8 months 12 days |
SHARE-BASED COMPENSATION AND_11
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Black-Scholes Option Pricing Model) (Details) - Employee Stock Option | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Risk-free interest rate | 3.96% | 2.09% | 0.82% |
Expected life | 6 years 3 months 18 days | 6 years 3 months 18 days | 5 years 10 months 24 days |
Expected volatility | 29% | 28.90% | 30% |
Expected dividend yield | 0% | 0% | 0% |
SHARE-BASED COMPENSATION AND_12
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Weighted-average remaining contractual life of options currently exercisable | 4 years 2 months 12 days | ||
Employee Stock Option [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Compensation expense (benefit) for share-based compensation | $ 22,090 | $ 21,412 | $ 20,035 |
Income tax benefit from compensation expense for share-based compensation | 5,477 | 5,332 | 4,989 |
Total intrinsic value of options exercised | 170,521 | 123,911 | 163,722 |
Cash received from the exercise of stock options | $ 71,153 | $ 60,976 | $ 67,761 |
Weighted-average grant-date fair value of options awarded | $ 323.16 | $ 221.19 | $ 146.57 |
Weighted-average remaining contractual life of options currently exercisable | 5 years 3 months 18 days | 4 years 6 months | 4 years 8 months 12 days |
SHARE-BASED COMPENSATION AND_13
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Summary of Restricted Stock) (Details) - Restricted stock [Member] - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Non-vested restricted stock at beginning of the year, weighted-average grant date fair value | $ 572.54 | ||
Restricted stock granted during period, weighted-average grant date fair value | 888.60 | $ 645.31 | $ 509.24 |
Restricted stock vested during the period, weighted-average grant date fair value | 571.45 | ||
Restricted stock forfeited during the period, weighted-average grant date fair value | 0 | ||
Non-vested restricted stock at the end of the year, weighted-average grant date fair value | $ 772.45 | $ 572.54 | |
Performance shares [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Non-vested restricted stock beginning balance, shares | 4 | ||
Restricted stock granted during the period, shares | 2 | ||
Restricted stock vested during the period, shares | (3) | ||
Restricted stock forfeited during the period, shares | 0 | ||
Non-vested restricted stock ending balance, shares | 3 | 4 | |
Shares withheld to cover employees' taxes upon vesting | 1 |
SHARE-BASED COMPENSATION AND_14
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Restricted Stock Activity) (Details) - Restricted stock [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Compensation expense (benefit) for share-based compensation | $ 1,869 | $ 1,808 | $ 1,602 |
Income tax benefit from compensation expense for share-based compensation | 463 | 450 | 399 |
Total fair value of shares vested, at vest date | $ 2,693 | $ 2,595 | $ 2,815 |
Weighted-average grant-date fair value of shares issued during the period in compensation and benefit plans other than stock options | $ 888.60 | $ 645.31 | $ 509.24 |
Performance shares [Member] | |||
Share-Based Compensation and Benefit Plans | |||
Shares awarded or issued under employee benefit plans, shares | 2 | 3 | 3 |
SHARE-BASED COMPENSATION AND_15
SHARE-BASED COMPENSATION AND BENEFIT PLANS (Employee Stock Purchase Plan Activity) (Details) - Employee stock purchase plan [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation and Benefit Plans | |||
Compensation expense for shares issued under the ESPP | $ 3,552 | $ 3,238 | $ 3,019 |
Income tax benefit from compensation expense for shares issued under the ESPP | $ 881 | $ 806 | $ 752 |
Shares awarded or issued under employee benefit plans, shares | 26 | 31 | 36 |
Weighted-average grant-date fair value of shares issued during the period in compensation and benefit plans other than stock options | $ 766.11 | $ 592.22 | $ 473.22 |
COMMITMENTS (Commitments) (Narr
COMMITMENTS (Commitments) (Narrative) (Details) $ in Millions | Dec. 31, 2023 USD ($) D |
Senior notes [Member] | |
Commitments | |
Debt instrument minimum number of days callable | 30 |
Debt instrument maximum number of days callable | 60 |
Percentage principal amount of debt that can be redeemed by the Company | 100% |
Percentage principal amount of debt redeemable upon change in control | 101% |
Construction [Member] | |
Commitments | |
Construction commitments | $ | $ 170.9 |
RELATED PARTIES (Narrative) (De
RELATED PARTIES (Narrative) (Details) - Related parties [Member] $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 USD ($) store | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Related Parties | |||
Number of stores | store | 70 | ||
Operating lease agreement, renewal term | 5 years | ||
Lease payments under related party operating leases | $ | $ 4.7 | $ 4.7 | $ 4.7 |
Minimum [Member] | |||
Related Parties | |||
Operating lease agreement, term | 15 years | ||
Maximum [Member] | |||
Related Parties | |||
Operating lease agreement, term | 20 years |
INCOME TAXES (Provision for Inc
INCOME TAXES (Provision for Income Taxes) (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | |||
Investment tax credit amount | $ 336.5 | $ 167.6 | $ 177.1 |
Liability for the purchase of transferrable federal renewable energy tax credits | $ 266 |
INCOME TAXES (Unrecognized Tax
INCOME TAXES (Unrecognized Tax Benefits) (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Unrecognized tax benefits | |||
Reserve for unrecognized tax benefits, including interest and penalties, net of federal benefits, that would impact the effective tax rate | $ 21.9 | $ 22.4 | $ 24.2 |
Accrual of interest and penalties related to uncertain tax positions | 3.9 | 3.5 | 3.8 |
Tax expense related to an increase in liabilities for interest and penalties | 2.1 | $ 1.5 | $ 1.6 |
Reduction of unrecognized tax benefits due to lapse of statute of limitations and settlements over the next twelve months | $ 7.3 | ||
Open tax year | 2020 |
INCOME TAXES (Components of Inc
INCOME TAXES (Components of Income from Continuing Operations) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | |||
Domestic | $ 2,994,856 | $ 2,786,866 | $ 2,770,485 |
International | 9,894 | 11,789 | 11,429 |
Income before income taxes | $ 3,004,750 | $ 2,798,655 | $ 2,781,914 |
INCOME TAXES (Schedule of Compo
INCOME TAXES (Schedule of Components of the Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Provision for income taxes | |||
Federal income tax expense, current | $ 497,492 | $ 455,779 | $ 485,988 |
State income tax expense, current | 109,924 | 95,388 | 104,837 |
International income tax expense, current | 2,521 | 5,263 | 6,021 |
Current income tax expense | 609,937 | 556,430 | 596,846 |
Federal income tax expense, deferred | 41,782 | 62,719 | 20,543 |
State income tax (benefit) expense, deferred | 6,003 | 8,583 | 2,432 |
International income tax benefit. deferred | 447 | (1,727) | (2,592) |
Total deferred | 48,232 | 69,575 | 20,383 |
Provision for income taxes | $ 658,169 | $ 626,005 | $ 617,229 |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of the Provision for Income Taxes to the Amounts Computed at the Federal Statutory Rate) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of provision for income taxes | |||
Federal income taxes at statutory rate | $ 630,998 | $ 587,716 | $ 584,202 |
State income taxes, net of federal tax benefit | 98,254 | 87,352 | 90,360 |
Excess tax benefit from share-based compensation | (35,950) | (25,503) | (35,202) |
Benefit from investment in renewable energy tax credits | (19,627) | (17,593) | (18,592) |
Other items, net | (15,506) | (5,967) | (3,539) |
Provision for income taxes | $ 658,169 | $ 626,005 | $ 617,229 |
INCOME TAXES (Schedule of Com_2
INCOME TAXES (Schedule of Components of Deferred Tax Assets and Liabilities) (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Deferred tax assets: | ||
Allowance for doubtful accounts | $ 2,430 | $ 2,196 |
Other accruals | 150,483 | 137,474 |
Operating lease liability | 559,830 | 538,890 |
Other | 18,102 | 17,115 |
Total deferred tax assets | 730,845 | 695,675 |
Deferred tax liabilities: | ||
Inventories | 142,578 | 104,572 |
Property and equipment | 280,791 | 233,288 |
Operating lease asset | 540,359 | 521,541 |
Other | 62,588 | 81,621 |
Total deferred tax liabilities | 1,026,316 | 941,022 |
Net deferred tax liabilities | $ (295,471) | $ (245,347) |
INCOME TAXES (Summary of Change
INCOME TAXES (Summary of Changes in Gross Amount of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Unrecognized tax benefits | |||
Unrealized tax benefit, beginning balance | $ 24,798 | $ 26,847 | $ 30,967 |
Additions based on tax positions related to the current year | 3,932 | 4,146 | 5,446 |
Payments related to items settled with taxing authorities | 0 | (1,000) | (2,570) |
Reduction due to lapse of statute of limitations and settlements | (4,787) | (5,195) | (6,996) |
Unrealized tax benefit, ending balance | $ 23,943 | $ 24,798 | $ 26,847 |
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 | 12 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator (basic and diluted): | |||||||||||
Net Income (Loss) | $ 552,504 | $ 649,827 | $ 627,365 | $ 516,885 | $ 528,572 | $ 585,438 | $ 576,760 | $ 481,880 | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Denominator: | |||||||||||
Denominator for basic earnings per share - weighted-average shares | 60,475 | 64,372 | 68,967 | ||||||||
Effect of stock options | 523 | 590 | 644 | ||||||||
Denominator for diluted earnings per share - weighted-average shares and assumed conversion | 60,998 | 64,962 | 69,611 | ||||||||
Earnings per share - basic | $ 9.33 | $ 10.82 | $ 10.32 | $ 8.36 | $ 8.45 | $ 9.25 | $ 8.86 | $ 7.24 | $ 38.80 | $ 33.75 | $ 31.39 |
Earnings per share - assuming dilution | $ 9.26 | $ 10.72 | $ 10.22 | $ 8.28 | $ 8.37 | $ 9.17 | $ 8.78 | $ 7.17 | $ 38.47 | $ 33.44 | $ 31.10 |
Antidilutive stock options | 95 | 144 | 111 | ||||||||
Weighted-average exercise price per share of antidilutive stock options | $ 836.12 | $ 663.36 | $ 479.90 |
QUARTERLY RESULTS (Unaudited)_2
QUARTERLY RESULTS (Unaudited) (Unaudited Operating Data) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Quarterly Results (Unaudited) | |||||||||||
Sales | $ 3,832,015 | $ 4,203,380 | $ 4,068,991 | $ 3,707,864 | $ 3,644,493 | $ 3,798,619 | $ 3,670,737 | $ 3,296,011 | $ 15,812,250 | $ 14,409,860 | $ 13,327,563 |
Gross profit | 1,967,429 | 2,160,463 | 2,086,582 | 1,890,329 | 1,853,954 | 1,934,962 | 1,884,718 | 1,708,072 | 8,104,803 | 7,381,706 | 7,019,949 |
Operating income | 718,736 | 897,222 | 853,773 | 716,645 | 682,217 | 804,194 | 798,550 | 669,530 | 3,186,376 | 2,954,491 | 2,917,168 |
Net Income (Loss) | $ 552,504 | $ 649,827 | $ 627,365 | $ 516,885 | $ 528,572 | $ 585,438 | $ 576,760 | $ 481,880 | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Earnings per share - basic | $ 9.33 | $ 10.82 | $ 10.32 | $ 8.36 | $ 8.45 | $ 9.25 | $ 8.86 | $ 7.24 | $ 38.80 | $ 33.75 | $ 31.39 |
Earnings per share - assuming dilution | $ 9.26 | $ 10.72 | $ 10.22 | $ 8.28 | $ 8.37 | $ 9.17 | $ 8.78 | $ 7.17 | $ 38.47 | $ 33.44 | $ 31.10 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent event [Member] - Groupe Del Vasto [Member] entity in Thousands | 1 Months Ended |
Jan. 31, 2024 entity store property warehouse | |
Subsequent Event [Line Items] | |
Business acquisition, name of acquired entity | Groupe Del Vasto |
Business acquisition, percentage acquired | 100% |
Number of distribution centers | property | 2 |
Number of satellite warehouses | warehouse | 6 |
Number of stores | store | 23 |
Number Of Independent Jobber Locations | entity | 2 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||||||||||
Net Income (Loss) | $ 552,504 | $ 649,827 | $ 627,365 | $ 516,885 | $ 528,572 | $ 585,438 | $ 576,760 | $ 481,880 | $ 2,346,581 | $ 2,172,650 | $ 2,164,685 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 shares | |
Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Greg Johnson [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On December 1, 2023, Greg Johnson, the then Chief Executive Officer of the Company, established a plan intended to satisfy the affirmative defense of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended, for the trading of the Company’s common stock. The plan provides for the sale of up to 32,291 shares at specific market prices, subject to specified limitations over a period beginning on March 4, 2024 and ending on December 31, 2024. The plan was established for the purposes of facilitating the exercise and subsequent sale of stock options with a ten-year contractual life that are due to expire February of 2028. The plan was established during the Company’s unrestricted trading window and at a time when Mr. Johnson was not in possession of material, non-public information about the Company. Mr. Johnson has informed the Company that he will publicly disclose, as required by federal securities laws, any option exercises and stock sales made under this plan. |
Name | Greg Johnson |
Title | the then Chief Executive Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | Dec. 01, 2023 |
Aggregate Available | 32,291 |