O'Reilly Automotive Q2 Earnings Call Highlights

Key Points

• O’Reilly reported strong second-quarter results, with comparable-store sales up 6% and diluted EPS up 10% year over year. Professional sales led growth with roughly 10% comparable gains, while DIY sales rose at a low-single-digit rate.
• The company raised its full-year comparable-sales outlook to 4%–6% and EPS guidance to $3.20–$3.30, while forecasting 2026 revenue of $18.9 billion–$19.2 billion. Gross-margin and operating-margin guidance were maintained.
• O’Reilly remains focused on organic expansion, targeting 225–235 new stores in 2026 and $1.3 billion–$1.4 billion in capital spending. It repurchased $1.5 billion of stock in the quarter and said it does not expect to pursue a large transformative acquisition.

O'Reilly Automotive NASDAQ: ORLY reported a stronger-than-expected second quarter, with comparable store sales rising 6% and diluted earnings per share increasing 10% from the prior-year period, as growth in its professional business remained particularly robust.

Chief Executive Officer Brad Beckham said comparable-store sales rose 7% during the first six months of 2026, helping drive total sales growth of more than 9%. The company raised its full-year comparable-sales outlook to a range of 4% to 6%, from a prior range of 3% to 5%, while maintaining its expectations for growth in the second half of the year.

Professional Sales Lead Comparable Growth

O'Reilly said its professional business generated comparable sales growth of about 10% in the second quarter, marking its fourth consecutive quarter of double-digit comparable growth. Professional ticket counts increased in the mid-single digits, while growth was also supported by higher average ticket values.

The do-it-yourself business posted low-single-digit comparable-sales growth. Higher average ticket values, largely driven by same-SKU inflation, were the primary contributor, while transaction counts declined by a low-single-digit percentage. Beckham said hot weather-related product categories faced pressure late in the quarter because typical early-summer demand did not materialize as strongly as expected.

“Despite this pressure, we believe we're outperforming the market and gaining DIY share,” Beckham said, adding that the company saw a strong pickup in sales as hotter weather arrived in July.

Same-SKU inflation totaled 5.5% for the consolidated business during the quarter. For the second half, O'Reilly expects that benefit to moderate to a range of 1% to 2% as the company laps tariff-driven price increases implemented in 2025.

Management said it remains cautious about the potential effects of fuel prices, crude oil costs and broader economic pressures on consumers. Still, Beckham said customers have remained resilient and continue to prioritize maintaining and repairing their vehicles.

Updated Outlook and Margin Expectations

O'Reilly increased its full-year diluted earnings-per-share guidance to a range of $3.20 to $3.30, citing first-half sales and operating performance as well as the impact of share repurchases completed through the earnings release date. The company now expects 2026 revenue of $18.9 billion to $19.2 billion.

President Brent Kirby said second-quarter gross margin was 51.4%, unchanged from the year-earlier quarter and in line with management's expectations. The company benefited from acquisition cost reductions and improved distribution-cost leverage on higher sales volumes, though those gains were offset by product-mix effects and the faster growth of professional sales.

O'Reilly maintained its full-year gross-margin guidance of 51.5% to 52%. At the midpoint, that would represent 16 basis points of expansion compared with 2025. Year-to-date gross margin was 51.5%, up 11 basis points from the prior year.

Second-quarter selling, general and administrative expense per store increased 4.8%, reflecting spending to support higher sales volumes and modest pressure from higher fuel prices. O'Reilly narrowed its full-year SG&A-per-store growth guidance to 3.5% to 4%, while reiterating an operating-profit-margin outlook of 19.3% to 19.8%.

For the first half, operating margin expanded 21 basis points and operating profit dollars increased 10%, Kirby said.

Store Growth, Capital Spending and Buybacks

O'Reilly opened 110 net new stores in the first half across 31 U.S. states, Puerto Rico, Mexico and Canada. The company remains on track to open 225 to 235 net new stores in 2026. It ended the quarter with 6,695 stores across North America and more than 95,000 team members.

Capital expenditures totaled $552 million in the first six months, and the company continues to forecast full-year capital spending of $1.3 billion to $1.4 billion. Investments are targeted toward new stores, distribution capabilities, store refreshes, technology and inventory availability.

Inventory per store ended the second quarter at $892,000, up 7% year over year. The company continues to target inventory-per-store growth of 5% by the end of 2026.

Chief Financial Officer Jeremy Fletcher said first-half free cash flow rose to $1.5 billion from $904 million a year earlier, driven primarily by operating-income growth and the timing of renewable-energy-credit payments. Full-year free-cash-flow guidance remained $1.8 billion to $2.1 billion.

The company repurchased 17 million shares during the second quarter at an average price of $90.40, spending $1.5 billion. Through the earnings release date, 2026 repurchases totaled 34 million shares for $3.1 billion. O'Reilly ended the quarter with adjusted debt to EBITDAR of 2.17 times and said it intends to prudently move toward its 2.5-times leverage target.

Management Reaffirms Organic Growth Focus

Addressing speculation about a possible acquisition involving a competitor, Beckham reiterated that O'Reilly does not comment on rumors. He said the company expects future acquisition opportunities that meet its criteria to be mainly smaller tuck-in deals and expansion-market transactions, rather than a large transformative acquisition.

“We have no expectation or intention of executing a large transformative acquisition in the foreseeable future,” Beckham said during prepared remarks.

Management emphasized its focus on organic growth, customer service, store expansion and inventory investments, arguing that the company still has a relatively small share of a fragmented auto-parts market. O'Reilly plans to host an Analyst Day at its Atlanta distribution center on Sept. 17.

About O'Reilly Automotive (NASDAQ:ORLY)

O'Reilly Automotive, Inc is a leading retailer and distributor in the automotive aftermarket, supplying parts, tools, supplies and accessories for both professional service providers and do‑it‑yourself (DIY) customers. The company's product assortment covers replacement parts, maintenance items, performance parts, collision components and shop equipment, complemented by diagnostic tools, batteries, chemicals and consumables. O'Reilly serves customers through company-operated retail stores, commercial sales programs for repair shops and maintenance fleets, and digital channels that support parts lookup, ordering and fulfillment.

The company operates a broad supply chain that includes regional distribution centers to support rapid replenishment of store inventory and commercial deliveries.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.