What changed in O’Reilly Automotive's 10-K — 2024 vs 2025
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Paragraph-level year-over-year comparison of O’Reilly Automotive's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.
+244 added−247 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)
Top changes in O’Reilly Automotive's 2025 10-K
244 paragraphs added · 247 removed · 229 edited across 3 sections
- Item 7. Management's Discussion & Analysis+201 / −204 · 188 edited
- Item 1A. Risk Factors+39 / −40 · 38 edited
- Item 5. Market for Registrant's Common Equity+4 / −3 · 3 edited
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
38 edited+1 added−2 removed84 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
38 edited+1 added−2 removed84 unchanged
2024 filing
2025 filing
Biggest changeFor a list of our principal competitors, see the “Competition” section of Item 1 of this annual report on Form 10-K. We are sensitive to regional economic and weather conditions that could impact our costs and sales. Our business is sensitive to national and regional economic and weather conditions and natural disasters.
Biggest changeFor a list of our principal competitors, see the “Competition” section of Item 1 of this annual report on Form 10-K. Our business is sensitive to global, national, and regional economic and weather conditions and natural disasters that could impact our costs and sales.
Examples of such risks include the following: 22 ● We may not be able to continue to identify suitable acquisition targets or to acquire additional companies at favorable prices or on other favorable terms. ● Our management’s attention may be distracted. ● We may fail to retain key personnel from acquired businesses. ● We may assume unanticipated legal liabilities and other problems. ● We may not be able to successfully integrate the operations (accounting and billing functions, for example) of businesses we acquire to realize economic, operational, and other benefits. We may fail, or be unable, to discover liabilities of businesses that we acquire for which we or the subsequent owner or operator may be liable. Litigation, governmental proceedings, environmental, employment, and tax legislation and regulations may affect our business, financial condition, results of operations, and cash flows.
Examples of such risks include the following: ● We may not be able to continue to identify suitable acquisition targets or to acquire additional companies at favorable prices or on other favorable terms. ● Our management’s attention may be distracted. ● We may fail to retain key personnel from acquired businesses. ● We may assume unanticipated legal liabilities and other problems. ● We may not be able to successfully integrate the operations (accounting and billing functions, for example) of businesses we acquire to realize economic, operational, and other benefits. We may fail, or be unable, to discover liabilities of businesses that we acquire for which we or the subsequent owner or operator may be liable. Litigation, governmental proceedings, environmental, employment, and tax legislation and regulations may affect our business, financial condition, results of operations, and cash flows.
The Audit Committee receives on a quarterly basis, or as needed, comprehensive updates from management on cybersecurity risks, including risk assessments, cybersecurity maturity assessments, progress of risk reduction initiatives, enhancements 24 to cybersecurity programs and initiatives, business continuity planning, PCI compliance, any relevant internal or industry cybersecurity incidents, and compliance with regulatory requirements and industry standards, as applicable. Management’s Role A cross-functional Compliance Committee comprised of O’Reilly executive and senior leadership, including our Chief Information Officer (“CIO”), has responsibility for assessing and managing material cybersecurity risks and oversees our enterprise security, privacy, and risk priorities, including ensuring alignment on security decisions across the Company.
The Audit Committee receives on a quarterly basis, or as needed, comprehensive updates from management on cybersecurity risks, including risk assessments, cybersecurity maturity assessments, progress of risk reduction initiatives, enhancements to cybersecurity programs and initiatives, business continuity planning, PCI compliance, any relevant internal or industry cybersecurity incidents, and compliance with regulatory requirements and industry standards, as applicable. Management’s Role A cross-functional Compliance Committee comprised of O’Reilly executive and senior leadership, including our Chief Information Officer (“CIO”), has responsibility for assessing and managing material cybersecurity risks and oversees our enterprise security, privacy, and risk priorities, including ensuring alignment on security decisions across the Company.
These efforts can result in significant potential risks, 21 including failure of the systems to operate as designed, potential loss or corruption of data, incurring more costs than expected, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. A breach of customer, supplier, Team Member, or Company information could damage our reputation or result in substantial additional costs or litigation.
These efforts can result in significant potential risks, including failure of the systems to operate as designed, potential loss or corruption of data, incurring more costs than expected, or implementation delays or errors, and may result in operational challenges, security control failures, reputational harm, and increased costs, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. A breach of customer, supplier, Team Member, or Company information could damage our reputation or result in substantial additional costs or litigation.
Our systems, and the third-party systems with which we interact, are subject to damage, failure, or interruption due to various reasons, including, but not limited to, power or other critical infrastructure outages; facility damage; physical theft; telecommunications failures; malware; security incidents; cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks, and ransomware; natural disasters and catastrophic events; inadequate or ineffective redundancy measures; and design or usage errors by Team Members, contractors, or third-party service providers.
Our systems, and the third-party systems with which we interact, are subject to damage, failure, or interruption due to various reasons, including, but not limited to, power or other critical infrastructure outages; facility damage; physical theft; telecommunications failures; malware; security incidents; cyber-attacks, including the use of malicious codes, worms, phishing, spyware, denial of service attacks, and ransomware; natural disasters and catastrophic events; inadequate or ineffective redundancy measures; and misconduct or design or usage errors by Team Members, contractors, or third-party service providers.
Adverse changes in these factors could lead to a decreased level of demand for our products, which could negatively impact our business, results of operations, financial condition, and cash flows. In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings, bankruptcies, liquidations, and other unfavorable events for our customers, suppliers, logistics, and other service providers and financial institutions that are counterparties to our credit facilities.
Adverse changes in these factors could lead to a decreased level of demand for our products, which could negatively impact our business, results of operations, financial condition, and cash flows. 18 In addition, economic conditions, including decreased access to credit, may result in financial difficulties leading to restructurings, bankruptcies, liquidations, and other unfavorable events for our customers, suppliers, logistics, and other service providers and financial institutions that are counterparties to our credit facilities.
However, while we have devoted financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations, and we intend to continue to make investments to maintain the security of our data and cybersecurity infrastructure, we cannot provide absolute assurance that any potential future cybersecurity threats or incidents will not materially affect us or our business strategies, results of operations, financial condition, or cash flows.
However, while we have devoted financial and personnel resources to implement and maintain security measures to meet regulatory requirements and customer expectations, and we intend to continue to 23 make investments to maintain the security of our data and cybersecurity infrastructure, we cannot provide absolute assurance that any potential future cybersecurity threats or incidents will not materially affect us or our business strategies, results of operations, financial condition, or cash flows.
For further discussion on cybersecurity related risks, see the “Risk Factors” section of Item 1A of this annual report on Form 10-K. 23 RISK MANAGEMENT AND STRATEGY We execute a holistic approach to our standards, policies, practices, and processes for identifying, assessing, managing, mitigating, and responding to material risks from cybersecurity threats, all of which are integrated into our overall risk management program.
For further discussion on cybersecurity related risks, see the “Risk Factors” section of Item 1A of this annual report on Form 10-K. RISK MANAGEMENT AND STRATEGY We execute a holistic approach to our standards, policies, practices, and processes for identifying, assessing, managing, mitigating, and responding to material risks from cybersecurity threats, all of which are integrated into our overall risk management program.
The economic health of our customers is affected by many factors, including, among others, general business conditions, interest rates, inflation, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, fuel prices, unemployment levels, a prolonged public health crisis or pandemic, and other matters that influence consumer confidence and spending.
The economic health of our customers is affected by many factors, including, among others, general business conditions, interest rates, inflation, tariffs, consumer debt levels, the availability of consumer credit, currency exchange rates, taxation, fuel prices, unemployment levels, a prolonged public health crisis or pandemic, and other matters that influence consumer confidence and spending.
If similar litigation were initiated against us, it could result in substantial costs and a diversion of our management’s attention and resources, which could have an adverse effect on our business. 20 RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING Our debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
If similar litigation were initiated against us, it could result in substantial costs and a diversion of our management’s attention and resources, which could have an adverse effect on our business. RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING Our debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
Such a disruption of these systems, 19 and the response to remedy, could result in a negative impact on our business operations and increased costs, which could have an adverse effect on our results of operations, financial condition, and cash flows. Failure to protect our brand and reputation could have a material adverse effect on our brand name, business, results of operations, financial condition, and cash flows.
Such a disruption of these systems, and the response to remedy, could result in a negative impact on our business operations and increased costs, which could have an adverse effect on our results of operations, financial condition, and cash flows. Failure to protect our brand and reputation could have a material adverse effect on our brand name, business, results of operations, financial condition, and cash flows.
We cannot be certain that we will be able to continue to attract and retain qualified personnel, which could cause us to be less efficient, in particular in a significant inflationary wage pressured environment, and, as a result, may adversely impact our sales and profitability.
We cannot be certain that we will be able to continue to attract and retain qualified personnel, which could cause us to be 22 less efficient, in particular in a significant inflationary wage pressured environment, and, as a result, may adversely impact our sales and profitability.
Downturns in the stock market may cause the price of our common stock to decline. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such companies.
Downturns in the stock market may cause the price of our common stock 20 to decline. In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been initiated against such companies.
Our business continuity and disaster recovery plans are updated regularly and tested each year or as needed. GOVERNANCE Board Oversight Our Board, in coordination with the Audit Committee, oversees our management of cybersecurity risk.
Our business continuity and disaster recovery plans are updated regularly and tested each year or as needed. 24 GOVERNANCE Board Oversight Our Board, in coordination with the Audit Committee, oversees our management of cybersecurity risk.
A compromise of our security measures or those of a third-party we entrust could result in information related to our customers, suppliers, Team Members, or the Company being obtained or misused by unauthorized persons; damage to our reputation; adverse operational effects or interruptions; costs to the Company to address the breach, which could require extensive time and financial resources to resolve; or claims, litigation, or possible regulatory action against us, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. In addition, the regulatory environment related to information security and data collection, processing, use, and privacy is complex and constantly evolving.
A compromise of our security measures or those of a third-party we entrust could result in information related to our customers, suppliers, Team Members, or the Company being obtained or misused by unauthorized persons; damage to our reputation; adverse operational effects or interruptions; costs to the Company to address the breach, which could require extensive time and financial resources to resolve; or claims, litigation, or possible regulatory action against us, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. In addition, the regulatory environment related to information security and data collection, retention, processing, use, notification, consent, and privacy is complex and constantly evolving.
Our ability to accomplish our growth objectives is dependent, in part, on matters beyond our control, such as weather conditions, zoning, and other issues related to new store site development, the availability of qualified management personnel, and general business and economic conditions. We cannot be sure that our growth plans for 2025 and beyond will be achieved.
Our ability to accomplish our growth objectives is dependent, in part, on matters beyond our control, such as weather conditions, zoning, and other issues related to new store site development, the availability of qualified management personnel, and general business and economic conditions. We cannot be sure that our growth plans for 2026 and beyond will be achieved.
In addition, our stores and DCs located in coastal regions may be subject to increased unrecoverable losses resulting from regional weather conditions and our results of operations, financial condition, and cash flows could be adversely affected. A change in the relationship with any of our key suppliers, the limited supply or unavailability of key products, supply chain disruptions, or changes in trade policies could affect our financial health.
In addition, our stores and DCs, particularly those located in coastal regions, may be subject to increased unrecoverable losses resulting from regional weather conditions or disasters and our results of operations, financial condition, and cash flows could be adversely affected. A change in the relationship with any of our key suppliers, the limited supply or unavailability of key products, supply chain disruptions, or changes in trade policies could affect our financial health.
Business interruptions, including from a prolonged public health crisis or pandemic, weather-related events, terrorist activities, war, political or civil unrest, or other disasters, or the threat of them, may result in a disruption of operations or the closure of one or more of our DCs or other facilities, or may adversely affect our ability to deliver inventory to our stores on a nightly basis.
Business interruptions, including from a prolonged public health crisis or pandemic, weather-related events, terrorist activities, war, political or civil unrest, disruption of critical infrastructure systems, or other disasters, or the threat of them, may result in a disruption of operations or the closure of one or more of our DCs or other facilities, or may adversely affect our ability to deliver inventory to our stores on a nightly basis.
The effects of complying with stricter and more complex data collection, processing, use, and privacy and information security laws, regulations, and standards can be far-reaching and may increase our responsibility and liability, which may increase our costs by needing to invest significant, additional time and resources and make changes to our existing practice and processes.
The effects of complying with stricter and more complex data collection, retention, processing, use, notification, consent, and privacy and information security laws, regulations, and standards can be far-reaching and may increase our responsibility and liability, which may increase our costs by needing to invest significant, additional time and resources and make changes to our existing practice and processes.
We have entered into separate master lease agreements with each of the affiliated entities for the occupancy of the stores covered thereby. Such master lease agreements with two of the five affiliated entities have been modified to extend the term of the lease agreement for specific stores.
We have entered into separate master lease agreements with each of the affiliated entities for the occupancy of the stores covered thereby. Such master lease agreements with two of the four affiliated entities have been modified to extend the term of the lease agreement for specific stores.
If third parties, on whom we rely for merchandise, are unable to overcome difficulties resulting from the deterioration in economic conditions, the cause of which could include a prolonged public health crisis or pandemic, and provide us with the merchandise 18 we need, or if counterparties to our credit facilities do not perform their obligations, our business, results of operations, financial condition, and cash flows could be adversely affected. The automotive aftermarket business is highly competitive, and we may have to risk our capital to remain competitive, all of which could adversely impact our business, results of operations, financial condition, and cash flows.
If third parties, on whom we rely for merchandise, are unable to overcome difficulties resulting from the deterioration in economic conditions, the cause of which could include, among others, geopolitical uncertainty or a prolonged public health crisis or pandemic, and provide us with the merchandise we need, or if counterparties to our credit facilities do not perform their obligations, our business, results of operations, financial condition, and cash flows could be adversely affected. The automotive aftermarket business is highly competitive, and we may have to risk our capital to remain competitive, all of which could adversely impact our business, results of operations, financial condition, and cash flows.
A material incident could significantly disrupt our operations and business processes; result in the impairment or loss of critical data; be costly and resource-intensive to remedy; and/or harm our reputation and relationship with customers, Team Members, suppliers, and other stakeholders, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. In addition, our information technology systems, infrastructure, and personnel require substantial investments, such as replacing systems, maintaining or enhancing systems, or designing or acquiring new systems.
A material incident could significantly disrupt our operations and business processes; result in the impairment or loss of critical data; be costly and resource- 21 intensive to remedy; and/or harm our reputation and relationship with customers, Team Members, suppliers, and other stakeholders, all of which could have a material adverse impact on our results of operations, financial condition, and cash flows. In addition, our information technology systems, infrastructure, and personnel require substantial investments, such as replacing systems, maintaining or enhancing systems, or designing or acquiring new systems or functionality, including artificial intelligence.
Our CIO has served in various roles in information technology for more than 30 years, including serving as a chief information officer for a technology company, and has a degree in information management systems.
Our CIO has served in various roles in information technology for more than 35 years, including serving as a chief information officer for a technology company, and has a degree in information management systems.
Failure to comply with data collection, processing, use, and privacy and information security laws, regulations, and standards by us or our third-party service providers or suppliers could subject us to fines, sanctions, governmental investigations, lawsuits, or reputational damage, which could have a material adverse impact on our results of operations, financial condition, and cash flows. GENERAL RISKS We cannot assure future growth will be achieved.
Failure to comply with data collection, retention, processing, use, notification, consent, and privacy and information security laws, regulations, and standards by us or our third-party service providers or suppliers could subject us to fines, sanctions, lawsuits, regulatory enforcement actions, governmental investigations, or reputational damage, which could have a material adverse impact on our results of operations, financial condition, and cash flows. GENERAL RISKS We cannot assure future growth will be achieved.
If any of these events occur, or if unfavorable economic conditions challenge the consumer environment, our business, results of operations, financial condition, and cash flows could be adversely affected. Overall demand for products sold in the automotive aftermarket is dependent upon many factors, including the total number of vehicle miles driven in the U.S., the total number of registered vehicles in the U.S., the age and quality of these registered vehicles, and the level of unemployment in the U.S.
If any of these events occur, or if unfavorable economic conditions challenge the consumer environment, our business, results of operations, financial condition, and cash flows could be adversely affected. Overall demand for products sold in the automotive aftermarket is dependent upon many factors in the countries in which we operate, including the total number of vehicle miles driven, the total number of registered vehicles, the age and quality of these registered vehicles, and the level of unemployment.
We could also be negatively impacted when our suppliers or our supply chain experiences work stoppages; labor strikes; a prolonged public health crisis or pandemic; shipping and transportation disruptions or increased costs; currency fluctuations or inflation; or other interruptions to, or difficulties in, the manufacture or supply of the products we purchase.
We could also be negatively impacted when our suppliers or our supply chain experiences work stoppages and labor strikes; a prolonged public health crisis or pandemic; import, shipping, and transportation disruptions or increased costs, such as from inflation, tariffs, or currency fluctuations; or other interruptions to, or difficulties in, the manufacture or supply of the products we purchase.
In addition, changes in U.S. trade policies, sanctions, practices, tariffs or taxes, import limitations, and other factors relating to foreign trade and port agreements could affect our ability to source products and our suppliers’ ability to source materials or provide products at current volumes and/or prices.
In addition, changes in country specific trade policies, sanctions, practices, tariffs or taxes, import limitations, and other factors relating to foreign trade and port agreements could affect our ability to source products and our suppliers’ ability to source materials or provide products at current volumes and/or prices.
Some of our merchandise is imported from other countries and these goods could become difficult or impossible to bring into the United States, and we may not be able to obtain such merchandise from other sources at similar prices.
Some of our merchandise is imported from other countries and these goods could become difficult or impossible to bring into the countries in which we operate, and we may not be able to obtain such merchandise from other 19 sources at similar prices.
(2) Terms expiring on dates ranging from December 31, 2027, to August 31, 2042. In addition, we operate 11 satellite warehouses in Mexico and Canada; these facilities do not provide regular stock order replenishment to stores and are immaterial in the aggregate.
(2) Terms expiring on dates ranging from December 31, 2027, to August 31, 2042. In addition, we operate 11 satellite warehouses in Mexico and Canada; these facilities do not provide regular stock order replenishment to stores and are immaterial in the aggregate. During 2025, we opened a new DC in Stafford, Virginia.
See Note 17 “Related Parties” to the Consolidated Financial Statements for further information on master lease agreements. The following table provides information regarding our DCs in operation as of December 31, 2024: Operating Square Footage (1) Principal Use Nature of Occupancy Number of Locations (in thousands) Distribution center Owned 23 10,129 Distribution center Leased (2) 8 3,155 Total 31 13,284 (1) DC operating square footage includes floor and mezzanine operating square footage and excludes subleased square footage.
See Note 16 “Related Parties” to the Consolidated Financial Statements for further information on master lease agreements. 25 The following table provides information regarding our DCs in operation as of December 31, 2025: Operating Square Footage (1) Principal Use Nature of Occupancy Number of Locations (in thousands) Distribution center Owned 24 10,858 Distribution center Leased (2) 8 3,155 Total 32 14,013 (1) DC operating square footage includes floor and mezzanine operating square footage and excludes subleased square footage.
Properties Stores, Distribution Centers, and Other Properties: Of the 6,378 stores we operated at December 31, 2024, 2,658 stores were owned, 3,650 stores were leased from unaffiliated parties, and 70 stores were leased from entities that include one or more of our affiliated directors or members of their immediate family.
Properties Stores, Distribution Centers, and Other Properties: Of the 6,585 stores we operated at December 31, 2025, 2,791 stores were owned, 3,728 stores were leased from unaffiliated parties, and 66 stores were leased from entities that include one or more of our affiliated directors or members of their immediate family.
The damages sought against us in some of these litigation proceedings may be material and may adversely affect our business, results of operations, financial condition, and cash flows. Environmental legislation and regulations, like the initiatives to limit greenhouse gas emissions and bills related to climate change, could adversely impact all industries.
The damages sought against us in some of these litigation proceedings may be material and may adversely affect our business, results of operations, financial condition, and cash flows. Environmental legislation and regulations, such as the initiatives related to limiting greenhouse gas emissions and climate change as well as extended producer responsibility and the associated costs, could adversely impact all industries.
Further enhancing our distribution capabilities, we plan to open a new DC in Stafford, Virginia in 2025, adding additional store servicing capabilities to our distribution network. We believe that our present facilities are in good condition, are sufficiently insured, and are adequate for the conduct of our current operations.
Further enhancing our distribution capabilities, we plan to expand our Lakeland, Florida, DC in 2026 and open a new DC in the Fort Worth, Texas area, in 2028, adding additional store servicing capabilities to our distribution network. We believe that our present facilities are in good condition, are sufficiently insured, and are adequate for the conduct of our current operations.
However, as we expand our geographic footprint, we will continue to evaluate our existing distribution system infrastructure and will adjust our distribution system capacity as needed to support our future growth. Our corporate office operations occur primarily in Springfield, Missouri, and as of December 31, 2024, the total square footage for our corporate office operations was 0.6 million square feet, substantially all of which was owned.
We believe the growth capacity in our DCs will provide us with the DC infrastructure needed for near-term expansion, and we will continue to evaluate our existing distribution system infrastructure and will adjust our distribution system capacity as needed to support our future growth. Our corporate office operations occur primarily in Springfield, Missouri, and as of December 31, 2025, the total square footage for our corporate office operations was 0.6 million square feet, substantially all of which was owned.
The master lease agreements or modifications thereto expire on dates ranging from February 28, 2025, to December 31, 2029. We believe that the lease agreements with the affiliated entities are on terms comparable to those of third parties.
The master lease agreements or modifications thereto expire on dates ranging from June 30, 2026, to March 31, 2031. We believe that the lease agreements with the affiliated entities are on terms comparable to those of third parties.
We rely on all third-party business partners to maintain appropriate security programs; however, we cannot ensure in all circumstances that their efforts will be successful. We assess third-party cybersecurity controls through a detailed cybersecurity assessment and review and include security and privacy addendums to our contracts, where applicable.
We rely on all third-party business partners to maintain appropriate security programs; however, we cannot ensure in all circumstances that their efforts will be successful. We assess and monitor third-party posture through a detailed third-party risk management program. Contracts are updated to address risk and include privacy addendums, where applicable.
Unusually inclement weather, such as significant rain, snow, sleet, freezing rain, flooding, seismic activity, and hurricanes, has historically discouraged our customers from visiting our stores during the affected period and reduced our sales, particularly to DIY customers.
Our business is sensitive to impacts from global, national, and regional economic and weather conditions and natural disasters. Unusually inclement weather and natural disasters, such as significant rain, snow, sleet, freezing rain, flooding, wildfire, seismic activity, and hurricanes, have historically discouraged our customers from visiting our stores during the affected period and reduced our sales, particularly to DIY customers.
Although we seek to effectively maintain and safeguard our systems, and we seek to ensure our third-party service providers effectively maintain and safeguard their systems, such measures are not guaranteed to be successful.
In addition, the increased adoption of artificial intelligence could heighten certain of these risks. Although we seek to effectively maintain and safeguard our systems, and we seek to ensure our third-party service providers effectively maintain and safeguard their systems, such measures are not guaranteed to be successful.
Removed
During 2024, we relocated our Springfield DC and Atlanta DC to larger more efficient facilities, which increased store servicing capabilities, and we completed the conversion of our North Little Rock DC facility into a large Hub.
Added
Our DC network provides a growth capacity of approximately 400 to 550 domestic stores.
Removed
Including our planned DC expansion project discussed above, our total DC network provides a growth capacity of 25 approximately 500 to 650 domestic stores. We believe the growth capacity in our DCs will provide us with the DC infrastructure needed for near-term expansion.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+1 added−0 removed0 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
3 edited+1 added−0 removed0 unchanged
2024 filing
2025 filing
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock: Shares of the Company’s common stock are traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “ORLY.” The Company’s common stock began trading on April 22, 1993; no cash dividends have been declared since that time, and the Company does not anticipate paying any cash dividends in the foreseeable future. As of February 13, 2025, the Company had approximately 1,107,000 shareholders of common stock based on the number of holders of record and an estimate of individual participants represented by security position listings. Sales of Unregistered Securities: There were no sales of unregistered securities during the year ended December 31, 2024. Issuer Purchases of Equity Securities: The following table identifies all repurchases during the fourth quarter ended December 31, 2024, of any of the Company’s securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, by or on behalf of the Company or any affiliated purchaser (in thousands, except per share price data): Total Number of Maximum Dollar Value Total Average Shares Purchased as of Shares that May Yet Number of Price Paid Part of Publicly Be Purchased Under the Period Shares Purchased per Share Announced Programs Programs (1) October 1, 2024, to October 31, 2024 100 $ 1,177.24 100 $ 850,341 November 1, 2024, to November 30, 2024 156 1,201.48 156 2,663,071 December 1, 2024, to December 31, 2024 135 1,236.50 135 $ 2,495,691 Total as of December 31, 2024 391 $ 1,207.43 391 (1) The authorizations under the share repurchase program that currently have capacity are scheduled to expire on November 16, 2026, and November 22, 2027.
Biggest changeAll share and per share information, including share-based compensation, in the current and comparable periods throughout this annual report on Form 10-K, has been retrospectively adjusted to reflect the stock split. As of February 12, 2026, the Company had approximately 1,514,000 shareholders of common stock based on the number of holders of record and an estimate of individual participants represented by security position listings. Sales of Unregistered Securities: There were no sales of unregistered securities during the year ended December 31, 2025. Issuer Purchases of Equity Securities: The following table identifies all repurchases during the fourth quarter ended December 31, 2025, of any of the Company’s securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, by or on behalf of the Company or any affiliated purchaser (in thousands, except per share price data): Total Number of Maximum Dollar Value Total Average Shares Purchased as of Shares that May Yet Number of Price Paid Part of Publicly Be Purchased Under the Period Shares Purchased per Share Announced Programs Programs (1) October 1, 2025, to October 31, 2025 2,374 $ 98.68 2,374 $ 664,846 November 1, 2025, to November 30, 2025 1,288 96.21 1,288 2,540,848 December 1, 2025, to December 31, 2025 1,511 93.99 1,511 $ 2,398,851 Total as of December 31, 2025 5,173 $ 96.69 5,173 (1) The authorizations under the share repurchase program that currently have capacity are scheduled to expire on November 22, 2027, and November 18, 2028.
No other share repurchase programs existed during the twelve months ended December 31, 2024.
No other share repurchase programs existed during the twelve months ended December 31, 2025.
See Note 12 “Share Repurchase Program” to the Consolidated Financial Statements for further information on our share repurchases. 27 Stock Performance Graph: The graph below shows the cumulative total shareholder return assuming the investment of $100, on December 31, 2019, and the reinvestment of dividends thereafter, if any, in the Company’s common stock versus the Standard and Poor’s S&P 500 Retail Index (“S&P 500 Retail Index”) and the Standard and Poor’s S&P 500 Index (“S&P 500”). December 31, Company/Index 2019 2020 2021 2022 2023 2024 O’Reilly Automotive, Inc. $ 100 $ 103 $ 161 $ 193 $ 217 $ 271 S&P 500 Retail Index 100 145 173 112 159 210 S&P 500 $ 100 $ 116 $ 148 $ 119 $ 148 $ 182
See Note 11 “Share Repurchase Program” to the Consolidated Financial Statements for further information on our share repurchases. 27 Stock Performance Graph: The graph below shows the cumulative total shareholder return assuming the investment of $100, on December 31, 2020, and the reinvestment of dividends thereafter, if any, in the Company’s common stock versus the Standard and Poor’s S&P 500 Retail Index (“S&P 500 Retail Index”) and the Standard and Poor’s S&P 500 Index (“S&P 500”). December 31, Company/Index 2020 2021 2022 2023 2024 2025 O’Reilly Automotive, Inc. $ 100 $ 156 $ 187 $ 210 $ 262 $ 302 S&P 500 Retail Index 100 119 77 109 144 150 S&P 500 $ 100 $ 127 $ 102 $ 127 $ 157 $ 182
Added
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common Stock: Shares of the Company’s common stock are traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbol “ORLY.” The Company’s common stock began trading on April 22, 1993; no cash dividends have been declared since that time, and the Company does not anticipate paying any cash dividends in the foreseeable future. On June 10, 2025, the Company completed a 15-for-1 forward stock split of our common stock.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
188 edited+13 added−16 removed133 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
188 edited+13 added−16 removed133 unchanged
2024 filing
2025 filing
Biggest changeSee Note 7 for further information concerning the Company’s operating leases. NOTE 18 – 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, 2024, 2023, and 2022 (in thousands): For the Year Ended December 31, 2024 2023 2022 Domestic $ 3,053,501 $ 2,994,856 $ 2,786,866 International (8,437) 9,894 11,789 Income before income taxes $ 3,045,064 $ 3,004,750 $ 2,798,655 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, 2024, 2023, and 2022 (in thousands): For the Year Ended December 31, 2024 2023 2022 Current: Federal income tax expense $ 587,496 $ 497,492 $ 455,779 State income tax expense 120,209 109,924 95,388 International income tax expense 446 2,521 5,263 Total current 708,151 609,937 556,430 Deferred: Federal income tax (benefit) expense (43,222) 41,782 62,719 State income tax (benefit) expense (3,229) 6,003 8,583 International income tax (benefit) expense (3,316) 447 (1,727) Total deferred (49,767) 48,232 69,575 Net income tax expense $ 658,384 $ 658,169 $ 626,005 70 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, 2024, 2023, and 2022 (in thousands): For the Year Ended December 31, 2024 2023 2022 Federal income taxes at statutory rate $ 639,534 $ 630,998 $ 587,716 State income taxes, net of federal tax benefit 97,459 98,254 87,352 Excess tax benefit from share-based compensation (39,871) (35,950) (25,503) Benefit from renewable energy tax credits (28,345) (19,627) (17,593) Other items, net (10,393) (15,506) (5,967) Total provision for income taxes $ 658,384 $ 658,169 $ 626,005 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.
Biggest changeSee Note 6 for further information concerning the Company’s operating leases. NOTE 17 – 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, 2025, 2024, and 2023 (in thousands): For the Year Ended December 31, 2025 2024 2023 Domestic $ 3,259,128 $ 3,053,501 $ 2,994,856 Foreign (18,957) (8,437) 9,894 Income before income taxes $ 3,240,171 $ 3,045,064 $ 3,004,750 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, 2025, 2024, and 2023 (in thousands): For the Year Ended December 31, 2025 2024 2023 Current: Federal income tax expense $ 584,569 $ 587,496 $ 497,492 State income tax expense 153,026 120,209 109,924 Foreign income tax expense 1,911 446 2,521 Total current 739,506 708,151 609,937 Deferred: Federal income tax (benefit) expense (20,482) (43,222) 41,782 State income tax (benefit) expense (8,986) (3,229) 6,003 Foreign income tax (benefit) expense (8,076) (3,316) 447 Total deferred (37,544) (49,767) 48,232 Net income tax expense $ 701,962 $ 658,384 $ 658,169 69 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, 2025, 2024, and 2023 (in thousands): For the Year Ended December 31, 2025 2024 2023 Amount Percent Amount Percent Amount Percent U.S. federal statutory tax rate $ 680,418 21.0 % $ 639,534 21.0 % $ 630,998 21.0 % State and local income taxes, net of federal income tax effect (1) 104,123 3.2 95,928 3.2 96,814 3.2 Nontaxable or nondeductible items: Excess tax benefit from share-based compensation (29,928) (0.9) (39,871) (1.3) (35,950) (1.2) Other 4,640 0.1 3,575 0.1 5,247 0.2 Tax credits: Federal renewable energy tax credit (49,519) (1.5) (28,345) (0.9) (19,627) (0.6) Other (9,979) (0.3) (11,541) (0.4) (14,115) (0.5) Effect of cross-border tax laws — — — — — — Effect of changes in tax laws or rates enacted in the current period — — — — — — Change in unrecognized tax benefits 11,696 0.4 (817) — (502) — Changes in valuation allowances — — — — — — Other adjustments (7,720) (0.2) 1,495 — (4,905) (0.2) Foreign tax effects (1,769) (0.1) (1,574) (0.1) 209 — Total $ 701,962 21.7 % $ 658,384 21.6 % $ 658,169 21.9 % (1) State taxes in California, Illinois, Minnesota, Tennessee, and Texas for the years ended December 31, 2025, 2024, and 2023, made up the majority (greater than 50%) of the tax effect in this category. The Company has purchased transferrable federal renewable energy tax credits, and during the year ended December 31, 2025, 2024, and 2023, the Company recognized federal renewable energy tax credits in the amount $453.1 million, $376.4 million, and $336.5 million, respectively.
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.
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.
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.
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.
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.
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. 53 Share Repurchases: In January of 2011, the Company’s Board of Directors approved a share repurchase program.
(h) Free cash flow is calculated as net cash provided by operating activities less capital expenditures, excess tax benefit from share-based compensation payments, and (return of)/investment in tax credit equity investments for the period. (i) In 2016 and 2018, the Company acquired materially all assets of Bond Auto Parts (“Bond”) and Bennett Auto Supply, Inc. (“Bennett”), respectively.
(h) Free cash flow is calculated as net cash provided by operating activities less capital expenditures, excess tax benefit from share-based compensation payments, and (return of)/investment in tax credit equity investments for the period. 31 (i) In 2016 and 2018, the Company acquired materially all assets of Bond Auto Parts (“Bond”) and Bennett Auto Supply, Inc. (“Bennett”), respectively.
Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future. 29 Size and Age of the Vehicle Fleet: The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry.
Total miles driven can be impacted by macroeconomic factors, including rapid increases in fuel cost, but we are unable to predict the degree of impact these factors may have on miles driven in the future. Size and Age of the Vehicle Fleet: The total number of vehicles on the road and the average age of the vehicle population heavily influence the demand for products sold within the automotive aftermarket industry.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the annual report on Form 10-K for the year ended December 31, 2023, filed with 33 the Securities and Exchange Commission (the “SEC”) on February 28, 2024, which is available free of charge on the SEC’s website at www.sec.gov by searching with our ticker symbol “ORLY” or at our internet address, www.OReillyAuto.com, by clicking “Investor Relations” located at the bottom of the page. LIQUIDITY AND CAPITAL RESOURCES Our long-term business strategy requires capital to maintain and enhance our existing stores, invest to open new stores, fund strategic acquisitions, expand distribution infrastructure, develop enhanced information technology systems and tools, and may include the opportunistic repurchase of shares of our common stock through our Board-approved share repurchase program.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the annual report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025, which is available free of charge on the SEC’s website at www.sec.gov by searching with our ticker symbol “ORLY” or at our internet address, www.OReillyAuto.com, by clicking “Investor Relations” located at the bottom of the page. 33 LIQUIDITY AND CAPITAL RESOURCES Our long-term business strategy requires capital to maintain and enhance our existing stores, invest to open new stores, fund strategic acquisitions, expand distribution infrastructure, develop enhanced information technology systems and tools, and may include the opportunistic repurchase of shares of our common stock through our Board-approved share repurchase program.
Additionally, these factors could also impact our ability to meet the debt covenants of our credit agreement and, therefore, negatively impact the funds available under our unsecured revolving credit facility. Our material contractual cash obligations as of December 31, 2024, included commitments for short and long-term debt arrangements and interest payments related to long-term debt, future minimum payments under non-cancelable lease arrangements, self-insurance reserves, projected obligations related to future payments under the Company’s nonqualified deferred compensation plan, purchase obligations for construction contract commitments, uncertain tax positions and associated estimated interest and penalties, payments for certain deferred income taxes, the obligation to purchase renewable energy tax credits, and payments for the purchase of inventory. We expect to fund these various commitments and obligations primarily with operating cash flows expected to be generated in the normal course of business or through borrowings under our unsecured revolving credit facility and commercial paper program.
Additionally, these factors could also impact our ability to meet the debt covenants of our credit agreement and, therefore, negatively impact the funds available under our unsecured revolving credit facility. Our material contractual cash obligations as of December 31, 2025, included commitments for short and long-term debt arrangements and interest payments related to long-term debt, future minimum payments under non-cancelable lease arrangements, self-insurance reserves, projected obligations related to future payments under the Company’s nonqualified deferred compensation plan, purchase obligations for construction contract commitments, uncertain tax positions and associated estimated interest and penalties, payments for certain deferred income taxes, the obligation to purchase renewable energy tax credits, and payments for the purchase of inventory. We expect to fund these various commitments and obligations primarily with operating cash flows expected to be generated in the normal course of business or through borrowings under our unsecured revolving credit facility and commercial paper program.
The Company accounts for its Canadian operations using the local market currency, the Canadian dollar, and converts its financial statements compiled for these operations from the Canadian dollar to U.S. dollars. The cumulative gain or loss on currency translation is included as a component of “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets.
The Company accounts for its Canadian operations using the local market currency, the Canadian dollar, and converts its financial statements compiled for these operations from the Canadian dollar to U.S. dollars. The cumulative gain or loss on currency translation is included as a component of “Accumulated other 50 comprehensive income (loss)” on the accompanying Consolidated Balance Sheets.
See Note 10 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.
See Note 9 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.
See Note 14 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.
See Note 13 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. ● Other administrative costs, including accounting, legal, and other professional services; bad debt, banking, and credit card fees; supplies; travel; and advertising costs. 54 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.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the annual report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024, which is available free of charge on the SEC’s website at www.sec.gov by searching with our ticker symbol “ORLY” or at our internet address, www.OReillyAuto.com, by clicking “Investor Relations” located at the bottom of the page. 35 Debt Instruments: See Note 10 “Financing” to the Consolidated Financial Statements for information concerning the Company’s credit agreement, unsecured revolving credit facility, outstanding letters of credit, commercial paper program, and unsecured senior notes. Debt Covenants: The indentures governing our senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things, create certain liens on assets to secure certain debt and enter into certain sale and leaseback transactions, and limit our ability to merge or consolidate with another company or transfer all or substantially all of our property, in each case as set forth in the indentures.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the annual report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2025, which is available free of charge on the SEC’s website at www.sec.gov by searching with our ticker symbol “ORLY” or at our internet address, www.OReillyAuto.com, by clicking “Investor Relations” located at the bottom of the page. Debt Instruments: See Note 9 “Financing” to the Consolidated Financial Statements for information concerning the Company’s credit agreement, unsecured revolving credit facility, outstanding letters of credit, commercial paper program, and unsecured senior notes. 35 Debt Covenants: The indentures governing our senior notes contain covenants that limit our ability and the ability of certain of our subsidiaries to, among other things, create certain liens on assets to secure certain debt and enter into certain sale and leaseback transactions, and limit our ability to merge or consolidate with another company or transfer all or substantially all of our property, in each case as set forth in the indentures.
Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable. 51 The Company grants credit to certain professional service provider and jobber customers who meet the Company’s pre-established credit requirements.
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.
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”).
Under this method, realized investment tax credits and other tax benefits are recognized as a reduction of the renewable energy investments. 52 The Company has determined its investment in these tax credit funds were investments in variable interest entities (“VIEs”).
In total, vehicles in the U.S. are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S.
In the U.S., vehicles are driven approximately three trillion miles per year, resulting in ongoing wear and tear and a corresponding continued demand for the repair and maintenance products necessary to keep these vehicles in operation. According to the U.S.
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 4 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.
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 3 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. 51 Property and Equipment: Property and equipment are carried at cost.
As of December 31, 2024 and 2023, 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, 2024 and 2023. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach.
As of December 31, 2025 and 2024, 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, 2025 and 2024. The table below identifies the estimated fair value of the Company’s senior notes, using the market approach.
(3) Other segment items included in Segment net income includes vehicle expenses, utilities expense, real estate taxes and insurance expense, bad debt and banking fees expense, interest income, and other operating expenses. 58 NOTE 4 – 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.
(3) Other segment items included in Segment net income includes vehicle expenses, utilities expense, real estate taxes and insurance expense, bad debt and banking fees expense, interest income, and other operating expenses. NOTE 3 – 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.
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, 2024 or 2023. Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories, and tools, is stated at the lower of cost or market.
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, 2025 or 2024. Inventory: Inventory, which consists of automotive hard parts, maintenance items, accessories, and tools, is stated at the lower of cost or market.
Online sales, resulting from ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. (c) During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement.
Online sales for ship-to-home orders and pick-up-in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. (c) During the year ended December 31, 2017, the Company adopted a new accounting standard that requires excess tax benefits related to share-based compensation payments to be recorded through the income statement.
As of December 31, 2024, 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.
As of December 31, 2025, 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.
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.
Generally, unvested shares are forfeited when an employee or a director ceases employment or service on the Company’s 66 Board of Directors, for reasons other than death or retirement.
The estimate is sensitive to assumptions such as claim severity and duration, projected inflation, claim development patterns and exposure forecasts. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design of controls over the Company’s self-insurance estimation process and tested the operating effectiveness of those controls including management’s controls over reviewing the appropriateness of assumptions and the completeness and accuracy of the data underlying the reserves. 44 To test the Company’s determination of the estimated self-insurance reserves, we performed audit procedures that included, among others, involving a specialist to assist in the development of an independent actuarial estimate for certain of the reserve balances based upon current industry and economic trends, comparing selected assumptions and the estimate determined by management to our independent estimates which were developed with the assistance of our specialists, testing the underlying data used by management in the development of the reserves and testing the mathematical accuracy of the calculations. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1992.
The estimate is sensitive to assumptions such as claim severity and duration, projected inflation, claim development patterns and exposure forecasts. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design of controls over the Company’s self-insurance estimation process and tested the operating effectiveness of those controls including management’s controls over reviewing the appropriateness of assumptions and the completeness and accuracy of the data underlying the reserves. 43 To evaluate the Company’s determination of the estimated self-insurance reserves, we performed audit procedures that included, among others, involving a specialist to assist in the development of an independent actuarial estimate for certain of the reserve balances based upon current industry and economic trends, comparing selected assumptions and the estimate determined by management to our independent estimates which were developed with the assistance of our specialists, testing the underlying data used by management in the development of the reserves and testing the mathematical accuracy of the calculations. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1992.
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 8 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.
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 7 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.
As of December 31, 2024, the Company had invested in five unconsolidated tax credit fund entities that were considered to be VIEs and concluded it was not the primary beneficiary of any of the entities, as it did not have the power to control the activities that most significantly impact the entities, and has therefore accounted for these investments using the equity method.
As of December 31, 2025, the Company had invested in five unconsolidated tax credit fund entities that were considered to be VIEs and concluded it was not the primary beneficiary of any of the entities, as it did not have the power to control the activities that most significantly impact the entities, and has therefore accounted for these investments using the equity method.
We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures. Share Repurchase Program: See Note 12 “Share Repurchase Program” to the Consolidated Financial Statements for information on our share repurchase program. CRITICAL ACCOUNTING ESTIMATES The preparation of our financial statements in accordance with GAAP requires the application of certain estimates and judgments by management.
We compensate for such limitations by presenting, in the tables above, a reconciliation to the most directly comparable GAAP measures. Share Repurchase Program: See Note 11 “Share Repurchase Program” to the Consolidated Financial Statements for information on our share repurchase program. CRITICAL ACCOUNTING ESTIMATES The preparation of our financial statements in accordance with GAAP requires the application of certain estimates and judgments by management.
(2) See Note 16 “Commitments” and Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements for further information on our self-insurance reserves. Due to the absence of scheduled maturities, the nature of the account or the commitment’s cancellation terms, the timing of payments for certain deferred income taxes, uncertain tax positions, and commitments related to future payments under the Company’s nonqualified compensation plan cannot be determined and are therefore excluded from the above table, except for amounts estimated to be payable in 2025, which are included in “Current liabilities” on our Consolidated Balance Sheets. Off-balance sheet arrangements are transactions, agreements, or other contractual arrangements with an unconsolidated entity, for which we have an obligation to the entity that is not recorded in our consolidated financial statements.
(2) See Note 15 “Commitments” and Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements for further information on our self-insurance reserves. Due to the absence of scheduled maturities, the nature of the account or the commitment’s cancellation terms, the timing of payments for certain deferred income taxes, uncertain tax positions, and commitments related to future payments under the Company’s nonqualified compensation plan cannot be determined and are therefore excluded from the above table, except for amounts estimated to be payable in 2026, which are included in “Current liabilities” on our Consolidated Balance Sheets. Off-balance sheet arrangements are transactions, agreements, or other contractual arrangements with an unconsolidated entity, for which we have an obligation to the entity that is not recorded in our consolidated financial statements.
The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2024 and 2023. 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.
The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024. 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.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management.
See Note 15 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.
See Note 14 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.
The Credit Agreement includes a $200 million sub-limit 63 for the issuance of letters of credit and a $75 million sub-limit for swing line borrowings under the Revolving Credit Facility.
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.
While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from the current environment of elevated new and used vehicle prices, as consumers are more willing to continue to invest in their current vehicle. We believe the increase in average vehicle age over the long term can be attributed to better engineered and manufactured vehicles, which can be reliably driven at higher mileages due to better quality power trains, interiors and exteriors, coupled with consumers’ willingness to invest in maintaining these higher-mileage, better built vehicles.
While the annual changes to the vehicle population resulting from new vehicle sales and the fluctuation in vehicle scrappage rates in any given year represent a small percentage of the total light vehicle population and have a muted impact on the total number and average age of vehicles on the road over the short term, we believe our business benefits from rising average new and used vehicle prices, as consumers are generally more willing to continue to invest in their current vehicle. We believe the increase in average vehicle age over the long term can be attributed to better engineered and manufactured vehicles, which can be reliably driven at higher mileages due to better quality power trains, interiors, and exteriors, coupled with consumers’ willingness to invest in maintaining these higher-mileage, better built vehicles.
Financial Statements and Supplementary Data Index Page Management’s Report on Internal Control over Financial Reporting 41 Report of Independent Registered Public Accounting Firm : Internal Control over Financial Reporting (PCAOB ID: 42) 42 Report of Independent Registered Public Accounting Firm : Financial Statements (PCAOB ID: 42) 44 Consolidated Balance Sheets 46 Consolidated Statements of Income 47 Consolidated Statements of Comprehensive Income 48 Consolidated Statements of Shareholders’ Equity 49 Consolidated Statements of Cash Flows 50 Notes to Consolidated Financial Statements 51 40 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of O’Reilly Automotive, Inc. and Subsidiaries (the “Company”), under the supervision and with the participation of the Company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13(a)-15(f) or 15(d)-15(f) under the Securities Exchange Act of 1934, as amended.
Financial Statements and Supplementary Data Index Page Management’s Report on Internal Control over Financial Reporting 41 Report of Independent Registered Public Accounting Firm : Internal Control over Financial Reporting (PCAOB ID: 42) 42 Report of Independent Registered Public Accounting Firm : Financial Statements (PCAOB ID: 42) 43 Consolidated Balance Sheets 45 Consolidated Statements of Income 46 Consolidated Statements of Comprehensive Income 47 Consolidated Statements of Shareholders’ Equity 48 Consolidated Statements of Cash Flows 49 Notes to Consolidated Financial Statements 50 40 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management of O’Reilly Automotive, Inc. and Subsidiaries (the “Company”), under the supervision and with the participation of the Company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13(a)-15(f) or 15(d)-15(f) under the Securities Exchange Act of 1934, as amended.
See Note 13 “Income Taxes” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2018, for more information. (e) Inventory turnover is calculated as cost of goods sold for the last 12 months divided by average inventory.
See Note 17 “Income Taxes” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2018, for more information. (e) Inventory turnover is calculated as cost of goods sold for the last 12 months divided by average inventory.
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. NOTE 8 – 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.
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. NOTE 7 – 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.
See Note 6 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”).
See Note 5 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”).
Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.
Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.
See Note 7 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.
See Note 6 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.
There have been no changes in the determination of segmentation or the measurements used to determine reported segment net income during the year ended December 31, 2024. The measure of segment assets is reported as “Total assets” on the accompanying Consolidated Balance Sheets as of December 31, 2024 and 2023.
There have been no changes in the determination of segmentation or the measurements used to determine reported segment net income during the year ended December 31, 2025. The measure of segment assets is reported as “Total assets” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.
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 66 vest 25% per year, over four years.
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 65 vest 25% per year, over four years.
During the year ended December 31, 2023, and 2022, the Company recognized investment tax credits from association with these VIEs in the amounts of $0.5 million and $167.6 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.
During the year ended December 31, 2023, the Company recognized investment tax credits from association with these VIEs in the amounts of $0.5 million, all of which were realized through reductions in cash income taxes paid and were reflected as a component of the change in “Income taxes payable” on the accompanying 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.
We are one of the largest U.S. automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings.
We are one of the largest North American automotive aftermarket specialty retailers, selling our products to both DIY customers and professional service providers – our “dual market strategy.” Our goal is to achieve growth in sales and profitability by capitalizing on our competitive advantages, such as our dual market strategy, superior customer service provided by well-trained and technically proficient Team Members, and strategic distribution and hub store network that provides same day and over-night inventory access for our stores to offer a broad selection of product offerings.
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, 2024 and 2023. As such, no goodwill impairment adjustment was required as of December 31, 2024 and 2023.
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, 2025 and 2024. As such, no goodwill impairment adjustment was required as of December 31, 2025 and 2024.
See Note 10 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.
See Note 9 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.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 42 /s/ Ernst & Young LLP Kansas City, Missouri February 28, 2025 43 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of O’Reilly Automotive, Inc. and Subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Kansas City, Missouri February 27, 2026 42 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of O’Reilly Automotive, Inc. and Subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
As of December 31, 2024, we had no outstanding borrowings under our Revolving Credit Facility. We are subject to interest rate risk to the extent we issue short-term, unsecured commercial paper notes under our commercial paper program (the “Program”) with variable interest rates.
As of December 31, 2025, we had no outstanding borrowings under our Revolving Credit Facility. We are subject to interest rate risk to the extent we issue short-term, unsecured commercial paper notes under our commercial paper program (the “Program”) with variable interest rates.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2024 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.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2025 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations In Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity, and certain other factors that may affect our future results, including ● an overview of the key drivers and other influences on the automotive aftermarket industry; ● our results of operations for the years ended December 31, 2024 and 2023; ● our liquidity and capital resources; ● our critical accounting estimates; and ● recent accounting pronouncements that may affect our Company. The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements, related notes and other financial information, forward-looking statements, and other risk factors included elsewhere in this annual report. OVERVIEW We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada.
Management’s Discussion and Analysis of Financial Condition and Results of Operations In Management’s Discussion and Analysis, we provide a historical and prospective narrative of our general financial condition, results of operations, liquidity, and certain other factors that may affect our future results, including: ● An overview of the key drivers and other influences on the automotive aftermarket industry. ● Our results of operations for the years ended December 31, 2025 and 2024. ● Our liquidity and capital resources. ● Our critical accounting estimates. ● Recent accounting pronouncements that may affect our Company. The review of Management’s Discussion and Analysis should be made in conjunction with our consolidated financial statements, related notes and other financial information, forward-looking statements, and other risk factors included elsewhere in this annual report on Form 10-K. OVERVIEW We are a specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, Mexico, and Canada.
See Note 13 for further information concerning the Company’s accumulated other comprehensive income (loss). 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.
See Note 12 for further information concerning the Company’s accumulated other comprehensive income (loss). 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.
As of December 31, 2024 and 2023, 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.
As of December 31, 2025 and 2024, 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 0.050% in the case of loans bearing interest at the Alternate Base Rate and 0.680% to 1.075% 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.
The Company did not establish a valuation allowance for deferred tax assets as of December 31, 2024 and 2023, 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 55 Company did not establish a valuation allowance for deferred tax assets as of December 31, 2025 and 2024, 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 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.
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.
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 12 for further information concerning the Company’s share repurchase program. 54 Revenue Recognition: The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers.
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 11 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.
Fletcher Chief Executive Officer Executive Vice President and February 28, 2025 Chief Financial Officer February 28, 2025 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc. Opinion on Internal Control Over Financial Reporting We have audited O’Reilly Automotive, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
Fletcher Chief Executive Officer Executive Vice President and February 27, 2026 Chief Financial Officer February 27, 2026 41 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc. Opinion on Internal Control Over Financial Reporting We have audited O’Reilly Automotive, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
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.
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 0.175% per annum.
(b) Comparable store sales are calculated based on the change in sales of U.S. stores open at least one year and excludes sales of specialty machinery, sales to independent parts stores, sales to Team Members, and sales from Leap Day during the years ended December 31, 2024, 2020, and 2016.
(b) Comparable store sales are calculated based on the change in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, sales to Team Members, and sales from Leap Day during the years ended December 31, 2024, 2020, and 2016.
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.
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 adopted this guidance beginning with its fourth quarter ending December 31, 2025.
For the year ended December 31, 2024, 2023, and 2022, the Company recorded aggregate amortization expense related to its intangible assets in the amounts of $3.6 million, $3.0 million and $4.8 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.
For the year ended December 31, 2025, 2024, and 2023, the Company recorded aggregate amortization expense related to its intangible assets in the amounts of $3.6 million, $3.6 million and $3.0 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.
Lease payments under these operating leases totaled $4.8 million, $4.7 million, and $4.7 million for the year ended December 31, 2024, 2023, and 2022, respectively. The Company believes that the lease agreements with the affiliated entities are on terms comparable to those obtainable from third parties.
Lease payments under these operating leases totaled $4.6 million, $4.8 million, and $4.7 million for the year ended December 31, 2025, 2024, and 2023, respectively. The Company believes that the lease agreements with the affiliated entities are on terms comparable to those obtainable from third parties.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Self-insurance Reserves Description of the Matter At December 31, 2024, the Company’s self-insurance reserve estimate was $268 million.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Self-insurance Reserves Description of the Matter At December 31, 2025, the Company’s self-insurance reserve estimate was $443 million.
See Note 11 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.
See Note 10 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.
Other than the non-compete agreement assets, the Company did not record additional finite-lived during the year ended December 31, 2023, or indefinite-lived intangible assets during the years ended December 31, 2024 and 2023.
Other than the non-compete agreement assets, the Company did not record additional finite-lived assets during the year ended December 31, 2025, or indefinite-lived intangible assets during the years ended December 31, 2025 and 2024.
See Note 10 for further information concerning the Company’s debt financing commitments. 69 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.
See Note 9 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.
See Note 3 for further information concerning the Company’s segment reporting. Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
See Note 2 for further information concerning the Company’s segment reporting. Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.
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, 2024, the Company owned and operated 6,378 stores in 48 U.S. states, Puerto Rico, Mexico, and Canada, servicing both do-it-yourself (“DIY”) and the professional service provider customers.
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, 2025, the Company owned and operated 6,585 stores in 48 U.S. states, Puerto Rico, Mexico, and Canada, servicing both do-it-yourself (“DIY”) and professional service provider customers.
As of December 31, 2024, 2023, and 2022, the Company had accrued approximately $4.0 million, $3.9 million and $3.5 million, respectively, of interest and penalties related to uncertain tax positions before the benefit of the deduction for interest on state and federal returns.
As of December 31, 2025, 2024, and 2023, the Company had accrued approximately $3.9 million, $4.0 million and $3.9 million, respectively, of interest and penalties related to uncertain tax positions before the benefit of the deduction for interest on state and federal returns.
Accounts receivable due from Team Members was approximately $0.8 million and $0.9 million as of December 31, 2024 and 2023, 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.
Accounts receivable due from Team Members was approximately $0.7 million and $0.8 million as of December 31, 2025 and 2024, 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.
Total interest costs capitalized for the year ended December 31, 2024, 2023, and 2022, were $14.1 million, $7.2 million and $5.5 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.
Total interest costs capitalized for the year ended December 31, 2025, 2024, and 2023, were $17.1 million, $14.1 million and $7.2 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.
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, 2024 and 2023. See Note 4 for further information concerning the fair value measurements of the Company’s marketable securities.
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, 2025 and 2024. See Note 3 for further information concerning the fair value measurements of the Company’s marketable securities.
During the year ended December 31, 2024, the Company exited one unconsolidated tax credit fund entity, considered a VIE, and received a return of investment payment in the amount of $1.5 million, which was included in “Return of (investment in) tax credit equity investments” on the accompanying Consolidated Statements of Cash Flows. 53 The Company’s maximum exposure to losses associated with these VIEs is generally limited to its net investment, which was $23.9 million as of December 31, 2024, and was included in “Other assets, net” on the accompanying Consolidated Balance Sheets.
During the year ended December 31, 2024, the Company exited one unconsolidated tax credit fund entity, considered a VIE, and received a return of investment payment in the amount of $1.5 million, which was included in “Return of (investment in) tax credit equity investments” on the accompanying Consolidated Statements of Cash Flows. The Company’s maximum exposure to losses associated with these VIEs is generally limited to its net investment, which was $12.8 million as of December 31, 2025, and was included in “Other assets, net” on the accompanying Consolidated Balance Sheets.
The Company recorded an increase in fair value related to its marketable securities in the amount of $7.1 million and $8.4 million for the year ended December 31, 2024 and 2023, 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, 2024 and 2023 (in thousands): December 31, 2024 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 65,156 $ — $ — $ 65,156 December 31, 2023 Quoted Prices 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 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.
The Company recorded an increase in fair value related to its marketable securities in the amount of $8.0 million and $7.1 million for the year ended December 31, 2025 and 2024, respectively, which were included in “Other income (expense)” on the accompanying Consolidated Statements of Income. 57 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, 2025 and 2024 (in thousands): December 31, 2025 Quoted Priced in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 67,840 $ — $ — $ 67,840 December 31, 2024 Quoted Prices in Active Markets Significant Other Significant for Identical Instruments Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total Marketable securities $ 65,156 $ — $ — $ 65,156 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.
The fair value of our fixed rate debt was estimated at $5.2 billion and $4.7 billion as of December 31, 2024 and 2023, respectively, which was determined by reference to quoted market prices. Cash Equivalents Risk: We invest certain of our excess cash balances in short-term, highly-liquid instruments with maturities of 90 days or less.
The fair value of our fixed rate debt was estimated at $5.3 billion and $5.2 billion as of December 31, 2025 and 2024, respectively, which was determined by reference to quoted market prices. Cash Equivalents Risk: We invest certain of our excess cash balances in short-term, highly-liquid instruments with maturities of 90 days or less.
Online sales, resulting from ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 198 and 186 net, new stores during the year ended December 31, 2024 and 2023, respectively.
Online sales, resulting from ship-to-home orders and pickup in-store orders for U.S. stores open at least one year are included in the comparable store sales calculation. We opened 207 and 198 net, new stores during the year ended December 31, 2025 and 2024, respectively.
Each of the senior notes is subject to certain customary covenants, with which the Company complied as of December 31, 2024. NOTE 11 – WARRANTIES The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2024 and 2023.
Each of the senior notes is subject to certain customary covenants, with which the Company complied as of December 31, 2025. NOTE 10 – WARRANTIES The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.
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.
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 $2.25 billion. The Notes will have maturities of up to 397 days from the date of issue.
(n) Sales per weighted-average square foot are weighted to consider the approximate dates of domestic store openings, acquisitions, expansions, or closures. The following table includes income statement data as a percentage of sales, which is each calculated independently and may not compute to presented totals due to rounding differences, for the years ended December 31, 2024 and 2023: For the Year Ended December 31, 2024 2023 Sales 100.0 % 100.0 % Cost of goods sold, including warehouse and distribution expenses 48.8 48.7 Gross profit 51.2 51.3 Selling, general and administrative expenses 31.7 31.1 Operating income 19.5 20.2 Interest expense (1.3) (1.3) Interest income — 0.1 Income before income taxes 18.2 19.0 Provision for income taxes 3.9 4.2 Net income 14.3 % 14.8 % 2024 Compared to 2023 Sales: Sales for the year ended December 31, 2024, increased $896 million, or 6%, to $16.71 billion from $15.81 billion for the same period in 2023.
(n) Sales per weighted-average square foot are weighted to consider the approximate dates of domestic store openings, acquisitions, expansions, or closures. The following table includes income statement data as a percentage of sales, which is each calculated independently and may not compute to presented totals due to rounding differences, for the years ended December 31, 2025 and 2024: For the Year Ended December 31, 2025 2024 Sales 100.0 % 100.0 % Cost of goods sold, including warehouse and distribution expenses 48.4 48.8 Gross profit 51.6 51.2 Selling, general and administrative expenses 32.1 31.7 Operating income 19.5 19.5 Interest expense (1.3) (1.3) Interest income — — Income before income taxes 18.2 18.2 Provision for income taxes 3.9 3.9 Net income 14.3 % 14.3 % 2025 Compared to 2024 Sales: Sales for the year ended December 31, 2025, increased $1.07 billion, or 6%, to $17.78 billion from $16.71 billion for the same period in 2024.
As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $900 million, provided that the aggregate amount of the commitments does not exceed $2.7 billion at any time. As of December 31, 2024 and 2023, 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 each in the amount of $5.4 million, reducing the aggregate availability under the Credit Agreement by those amounts.
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 $3.15 billion at any time. As of December 31, 2025 and 2024, 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 each in the amount of $5.3 million and $5.4 million, respectively, reducing the aggregate availability under the Credit Agreement by those amounts.
See Note 15 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, 2024 and 2023.
See Note 14 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, 2025 and 2024.
Original issuance discounts, net of accretion, totaled $6.2 million and $7.1 million as of December 31, 2024 and 2023, respectively. See Note 10 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.
Original issuance discounts, net of accretion, totaled $5.6 million and $6.2 million as of December 31, 2025 and 2024, respectively. See Note 9 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.
(2) Weighted-average remaining useful life of approximately 3.2 years as of December 31, 2024. (3) Weighted-average remaining useful life of approximately 12.9 years as of December 31, 2024. During the years ended December 31, 2024 and 2023, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amount of less than $0.1 million for each year.
(2) Weighted-average remaining useful life of approximately 2.5 years as of December 31, 2025. (3) Weighted-average remaining useful life of approximately 11.9 years as of December 31, 2025. During the years ended December 31, 2025 and 2024, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amount of less than $0.1 million for each year.
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