O'Reilly Auto Parts 2010 Annual Report Download - page 6

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improved operating performance of the
chain, we are poised to generate significant
positive cash flow in 2011 and beyond.
We believe that the best use of this cash
is to invest in new store growth and to
continue to consolidate the industry.
However, our growth will continue to be
rational, and we will only open stores we
believe will achieve our required return
rates and we will continue to be opportu-
nistic in our acquisitions. To the extent we
generate free cash flow in the coming
years, we will return excess cash to our
shareholders by repurchasing shares in
accordance with our Board-approved
$500 million stock repurchase program.
We are very grateful for your
continued support and are excited about
the opportunities ahead as we remain
focused on making O’Reilly Auto Parts
the dominant supplier of auto parts in all
of our markets.
In addition to providing great service to
our retail customers, store managers are
responsible for building and maintaining
strong relationships with commercial
customers. We will continue to focus
on improving our most important assets,
our Team Members, through ongoing
training and mentoring.
Improving the Technical Skills of Store
Team Members. We are focused on
selling hard parts, which we believe is a
very sustainable business. This focus
requires store teams that have a very
strong technical knowledge of automo-
tive repair and can provide superior
service to both our Commercial and DIY
customers. We will continue to focus on
improving our store teams’ technical
skills through training and the addition
of strategic hires.
Developing Relationships with
Commercial Shops. With our DC
network now in place, the store POS
systems converted and with our store
teams improving daily, we are now in
position to aggressively grow the
commercial business in the acquired
markets. This will be a multiyear process
as we prove to the Commercial customer
base that we have excellent parts
availability, technical proficiency,
specialized commercial programs,
competitive prices and long-term
commitment to the success of their
business to be their First Call supplier.
We are confident in our ability to execute
our commercial strategy and have seen
GREG HENSLEE
Chief Executive Officer
and Co-President
THOMAS MCFALL
Chief Financial Officer
and Executive Vice President of Finance
TED WISE
Chief Operating Officer
and Co-President
good results since the acquisition;
however, building these relationships
and improving the performance to match
our expectations will take time.
Increase Share of DIY Hard Parts Market.
Prior to our acquisition, CSK had shifted
away from focusing on selling hard parts.
We believe hard parts are a sustainable,
profitable business, and we focus on
these categories. We have added
substantial hard parts inventories to the
acquired stores, and we have adjusted
prices to be competitive. We have a
substantial opportunity to regain the DIY
hard parts business CSK had lost over
the years. Our retail advertising will focus
on hard parts availability at competitive
prices as we work hard to regain share in
the DIY market on the West Coast.
LOOKING FORWARD TO 2011
We remain confident in our ability to
successfully execute our Dual Market
Strategy in all of our markets. We are
pleased with the progress we have made
on the CSK integration to date, and we are
excited about the prospects for significant
market share gains in the Western U.S. in
the next several years. With the system
conversions complete, we are able to
refocus significant resources from
conversions to enhancing our industry-
leading systems and programs.
We expect to make approximately
$50 million of remaining capital invest-
ments in the acquired CSK stores. As we
complete these investments, and with the
EXPERIENCED MANAGEMENT TEAM
Strong and experienced leadership is one of
O’Reilly’s greatest strengths. Our current executive
management team brings more than 220 years of
combined automotive aftermarket industry experience
to our company.
Seated: Tom McFall, Ted Wise
Greg Henslee, David O’Reilly
Standing: Randy Johnson, Mike Swearengin,
Greg Johnson, Jeff Shaw
O’REILLY AUTO M OTIVE 2010 AN NUAL REPORT PAGE 4