10-K – 2026-02-27 – orly-20251231x10k.htm

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O Reilly Automotive Inc_December 31, 2025
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM  10-K

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☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2025
OR
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☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                        

O’REILLY AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)

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Missouri
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000-21318
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27-4358837

(State or other jurisdiction
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Commission file
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(I.R.S. Employer

of incorporation or organization)
​
number
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Identification No.)

233 South Patterson Avenue
Springfield , Missouri 65802
(Address of principal executive offices, Zip code)
( 417 ) 862-6708
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class
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Trading Symbol(s)
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Name of Each Exchange on which Registered

Common Stock
$0.01 par value
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ORLY
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The Nasdaq Stock Market LLC

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(Nasdaq Global Select Market)

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    ☒   No   ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes   ☐    No    ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes    ☒   No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes    ☒   No   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer    ☒
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Accelerated filer   ☐

Non-accelerated filer   ☐
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Smaller reporting company   ☐

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Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

​

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.    ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).    ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ☐   No   ☒
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At June 30, 2025, the aggregate market value of the voting stock held by non-affiliates of the Company was $ 63,300,585,790 based on the last price of the common stock reported by The Nasdaq Global Select Market.
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At February 23, 2026, an aggregate of 838,487,034 shares of common stock of the registrant were outstanding.
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DOCUMENTS INCORPORATED BY REFERENCE
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Portions of the definitive proxy statement for the 2026 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after December 31, 2025, are incorporated by reference into Part III.
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O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2025
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TABLE OF CONTENTS
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Page

PART I
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Item 1.
Business
5

Item 1A.
Risk Factors
18

Item 1B.
Unresolved Staff Comments
23

Item 1C.
Cyb ersecurity
23

Item 2.
Properties
25

Item 3.
Legal Proceedings
26

Item 4.
Mine Safety Disclosures
26

PART II
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Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
27

Item 6.
[Reserved]
28

Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
29

Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
39

Item 8.
Financial Statements and Supplementary Data
40

Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
73

Item 9A.
Controls and Procedures
73

Item 9B.
Other Information
74

Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
74

PART III
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Item 10.
Directors, Executive Officers, and Corporate Governance
75

Item 11.
Executive Compensation
75

Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
76

Item 13.
Certain Relationships and Related Transactions, and Director Independence
76

Item 14.
Principal Accountant Fees and Services
76

PART IV
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Item 15.
Exhibits and Financial Statement Schedules
77

Item 16 .
Form 10-K Summary
81

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3

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Forward-Looking Statements
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We claim the protection of the safe-harbor for forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  You can identify these statements by forward-looking words such as “estimate,” “may,” “could,” “will,” “believe,” “expect,” “would,” “consider,” “should,” “anticipate,” “project,” “plan,” “intend,” or similar words.  In addition, statements contained within this annual report that are not historical facts are forward-looking statements, such as statements discussing, among other things, expected growth, store development, integration and expansion strategy, business strategies, future revenues, and future performance.  These forward-looking statements are based on estimates, projections, beliefs, and assumptions and are not guarantees of future events and results.  Such statements are subject to risks, uncertainties, and assumptions, including, but not limited to, the economy in general; inflation; consumer debt levels; product demand; a public health crisis; the market for auto parts; competition; weather; trade disputes and changes in trade policies, including the imposition of new or increased tariffs; availability of key products and supply chain disruptions; business interruptions, including terrorist activities, war and the threat of war; failure to protect our brand and reputation; challenges in international markets; volatility of the market price of our common stock; our increased debt levels; credit ratings on public debt; damage, failure, or interruption of information technology systems, including information security and cyber-attacks; historical growth rate sustainability; our ability to hire and retain qualified employees; risks associated with the performance of acquired businesses; and governmental regulations.  Actual results may materially differ from anticipated results described or implied in these forward-looking statements.  Please refer to the “Risk Factors” section in this annual report on Form 10-K for the year ended December 31, 2025, and subsequent Securities and Exchange Commission filings, for additional factors that could materially affect our financial performance.  Forward-looking statements speak only as of the date they were made, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.
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4

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PART I
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Item  1. Business
​
GENERAL INFORMATION
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Unless otherwise indicated, “we,” “us,” “our,” and similar terms, as well as references to the “Company,” refer to O’Reilly Automotive, Inc. and its Subsidiaries.  O’Reilly is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment, and accessories across North America, selling our products to both do-it-yourself (“DIY”) and professional service provider customers, our “dual market strategy.”  The business was founded in 1957 by Charles F. O’Reilly and his son, Charles H. “Chub’’ O’Reilly, Sr., and initially operated from a single store in Springfield, Missouri.  Our common stock has traded on The Nasdaq Global Select Market under the symbol “ORLY” since April 22, 1993.
​
On June 10, 2025, the Company completed a 15-for-1 forward stock split of our common stock.  All 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.  All shares of common stock retained a par value of $0.01 per share.  
​
At December 31, 2025, we operated 6,447 stores in 48 states in the United States (“U.S.”) and Puerto Rico, 112 stores in Mexico, and 26 stores in Canada.  Our stores carry an extensive product line, including:

● New and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting, oil, and wiper blades.
● Accessories, such as floor mats, seat covers, and truck accessories.
​
Our stores offer many enhanced services and programs to our customers, such as:

● Battery diagnostic testing.
● Battery, wiper, and bulb replacement.
● Check engine light code extraction through our trusted VeriScan technology, which provides diagnostic information with possible repair fixes.
● Referrals to trusted local repair shops.
● Custom hydraulic hoses.
● Drum and rotor resurfacing.
● Electrical and module testing.
● Loaner tool program.
● Professional paint shop mixing and related materials.
● Used oil, oil filter, and battery recycling.
​
See the “Risk Factors” section of this annual report on Form 10-K for a description of certain risks relevant to our business.  These risk factors include, among others, risks related to deteriorating economic conditions; competition in the automotive aftermarket business; our sensitivity to regional economic and weather conditions; our relationships with key suppliers and availability of key products; business interruptions; failure to protect our brand and reputation; risks associated with international operations; unanticipated fluctuations in our quarterly results; the volatility of the market price of our common stock; our increased debt levels; a downgrade in our credit ratings; information and systems security, damage, and failure; failure to achieve our growth objectives; our dependence upon key personnel; our acquisition success; and litigation, environmental legislation, and other regulations.
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OUR BUSINESS
​
Our goal is to continue to achieve growth in sales and profitability by capitalizing on our competitive advantages and executing our growth strategies.  We remain confident in our ability to continue to gain market share in our existing markets and grow our business in new markets by focusing on our dual market strategy and the core O’Reilly values, including hard work, superior customer service, and expense control.  Our mission is to be the dominant auto parts provider in all the markets we serve by providing a higher level of customer service and a better value position than our competitors to both DIY and professional service provider customers.
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Competitive Advantages
​
We believe our effective dual market strategy, superior customer service, technically proficient store personnel, strategic distribution network, and experienced management Team make up our key competitive advantages, which cannot be easily duplicated.
​
Proven Ability to Execute Our Dual Market Strategy:
For more than 45 years, we have established a track record of effectively serving, at a high level, both DIY and professional service provider customers.  We believe our proven ability to effectively execute a dual market strategy is a unique competitive advantage.  The execution of this strategy enables us to better compete by targeting a larger base of automotive aftermarket parts consumers, capitalizing on our existing store and distribution infrastructure, operating profitably in both large markets and less densely populated geographic areas that typically attract fewer national chain competitors, and enhancing service levels offered to DIY customers through the offering of a broad inventory and the extensive product knowledge required by professional service provider customers.
​
In 2025, we derived approximately 50% of our sales from our DIY customers and approximately 50% of our sales from our professional service provider customers.  Historically, we have increased our sales to professional service provider customers at a faster pace than the increase in our sales to DIY customers due to the more fragmented nature of the professional service provider business, which offers a greater opportunity for consolidation.  We believe we will continue to have a competitive advantage on the professional service provider portion of our business, due to our systems, knowledge, industry-leading parts availability, and experience serving the professional service provider side of the automotive aftermarket, augmented by our approximately 825 full-time sales staff dedicated solely to calling upon and servicing the professional service provider customer.  We will also continue to expand and enhance the level of offerings focused on growing our DIY business and will continue to execute our proven dual market strategy in both existing and new markets.
​
Superior Customer Service:
We seek to provide our customers with an efficient and pleasant in-store experience by maintaining attractive stores in convenient locations with a wide selection of automotive products.  We believe the satisfaction of DIY and professional service provider customers is substantially dependent upon our ability to provide, in a timely fashion, the correct automotive products needed to complete their repairs.  Accordingly, each O’Reilly store carries, or has same or next day availability to, a broad selection of automotive products designed to cover a wide range of vehicle applications.  We continuously refine the inventory levels and assortments carried in each of our stores and within our network, based in large part on the sales movement tracked by our inventory control system, market vehicle registration data, failure rates, and management’s assessment of the changes and trends in the marketplace.  We have no material backorders for the products we sell.
​
We seek to attract new DIY and professional service provider customers and retain existing customers by offering superior customer service, the key elements of which are identified below:

● Superior in-store service through highly-motivated, technically-proficient store personnel (“Professional Parts People”).
● An extensive selection and superior availability of products.
● Many enhanced service programs, including battery and electrical testing, battery, wiper and bulb replacement, and check engine light code extractions with diagnostic information.
● Attractive stores in convenient locations.
● Competitive pricing, supported by a good, better, best product assortment designed to meet all of our customers’ quality and value preferences.
● A robust point-of-sale system integrated with our proprietary electronic catalog, which contains a wide variety of product images, schematics and technical specifications, and equips our Team Members with highly effective tools to source products in our extensive supply network.
● Online ordering for our professional customers through our proprietary professional customer platforms, www.OReillyPro.com and our O’Reilly Pro mobile application, with local delivery available.
● Online ordering, featuring “chat with a parts professional,” parts look up assistance for our DIY customers through our retail platform, www.OReillyAuto.com , with convenient store locations for pick-up-in-store orders or home delivery.
​
Technically Proficient Professional Parts People:
Our highly-motivated, technically-proficient Professional Parts People provide us with a significant competitive advantage, particularly over less specialized retail operators.  We require our Professional Parts People to undergo extensive and ongoing training and to be knowledgeable, particularly with respect to hard part repairs, in order to better serve the technically-oriented professional service

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provider customers with whom they interact on a daily basis.  Such technical proficiency also enhances the customer service we provide to our DIY customers who value the expert assistance provided by our Professional Parts People.  See our “Team Members and Human Capital Management” disclosure of the “Business” section of this annual report on Form 10-K for more information about our technically proficient professional parts people.
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Strategic Regional Tiered Distribution Network:
We believe our commitment to a robust, regional, tiered distribution network provides superior replenishment and access to hard-to-find parts and enables us to optimize product availability and inventory levels throughout our store network.  Our strategic, regional, tiered distribution network includes distribution centers (“DCs”) and Hub stores.  Our inventory management and distribution systems electronically link each of our stores to one or more DCs, which provides for efficient inventory control and management.  We currently operate 32 DCs, which typically provides our stores with same-day or overnight access to over 156,000 stock keeping units (“SKUs”), many of which are hard-to-find items not typically stocked by other auto parts retailers.  To augment our robust distribution network, we operate a total of 399 Hub stores that also provide delivery service and same-day access to stores within the surrounding areas to an average of 63,000 SKUs, with Hubs in select markets carrying further enhanced inventory levels up to approximately 115,000 SKUs.  More than 95% of our stores receive multiple same-day deliveries and deliveries on weekends of hard to find parts from our DCs and Hub stores.  We believe this timely access to a broad range of products is a key competitive advantage in satisfying customer demand and generating repeat business.
​
Experienced Management Team:
Our Company philosophy is to “promote from within,” and the vast majority of our senior managers, district managers, and store managers have been promoted from within the Company.  We augment this “promote from within” philosophy by pursuing strategic hires with a strong emphasis on automotive aftermarket experience, technical proficiency, or subject matter expertise.  We have a strong management Team that has demonstrated the consistent ability to successfully execute our business plan and growth strategy by generating 33 consecutive years of record revenues and earnings and positive comparable store sales results since becoming a public company in April of 1993.  See our “Team Members and Human Capital Management” disclosure in the “Business” section of this annual report on Form 10-K for more information about our experienced management Team.
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Growth Strategy
​
Aggressively Open New Stores:
We intend to continue to consolidate the fragmented automotive aftermarket.  During 2025, we opened 207 net, new stores.  In 2026, we plan to open 225 to 235 net, new stores, which will increase our penetration in existing markets and allow for expansion into new, contiguous markets.  The sites for these new stores have been identified, and to date, we have not experienced significant difficulties in locating suitable sites for construction of new stores or identifying suitable acquisition targets for conversion to O’Reilly stores.  We typically open new stores by:

(i) Constructing a new facility or renovating an existing facility on property we purchase or lease and stocking the new store with fixtures and inventory;
(ii) Acquiring an independently owned auto parts store (“jobber store”), typically by the purchase of substantially all of the inventory and other assets (other than realty) of such store; or
(iii) Purchasing multi-store chains.
​
New store sites are strategically located in clusters within geographic areas that complement our distribution network in order to achieve economies of scale in management, advertising, and distribution.  Other key factors we consider in the site selection process include population density and growth patterns, demographic lifestyle segmentation, age and per capita income, vehicle traffic counts, vehicles in operation, number and type of existing automotive repair facilities, and competing auto parts stores within a predetermined radius.
​
We target both small and large markets for expansion of our store network.  While we have, and continue to face, aggressive competition in the more densely populated markets, we believe we have competed effectively, and are well positioned to continue to compete effectively, in such markets in order to achieve our goal of continued profitable sales growth within these markets.  We also believe that with our dual market strategy, we are better able to operate stores in less densely populated areas, which would not otherwise support a national chain store selling primarily to the retail automotive aftermarket.  Therefore, we continue to pursue opening new stores in less densely populated market areas as part of our growth strategy.
​
Grow Sales in Existing Stores:
Profitable comparable store sales growth is also an important part of our growth strategy.  To achieve improved sales and profitability at existing O’Reilly stores, we continually strive to improve the service provided to our customers.  We believe that while competitive

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pricing is an essential component of successful growth in the automotive aftermarket business, it is customer satisfaction, whether of the DIY consumer or professional service provider, resulting from superior customer service, that generates sustainable increased sales and profitability.
​
Selectively Pursue Strategic Acquisitions:
The automotive aftermarket industry is still highly fragmented, and we believe the ability of national auto parts chains, like O’Reilly, to operate more efficiently and effectively than smaller independent operators will result in continued industry consolidation.  Our intention is to continue to selectively pursue strategic acquisitions that will strengthen our position as a leading automotive aftermarket parts supplier in existing markets and provide a springboard for expansion into new domestic and international markets.
​
Continually Enhance Store Design and Location:
Our current prototype store design features optimized square footage, high ceilings, convenient interior store layouts, in-store signage, multilingual signage, bright lighting, convenient ingress and egress, ample parking, and dedicated counters to serve professional service provider customers, each designed to increase sales and operating efficiencies to enhance overall customer service.  We continually update the location and condition of our store network through systematic renovation and relocation of our existing stores to enhance store performance.  During 2025, we relocated 35 stores and performed minor to major updates or renovations to approximately 700 additional stores.  We believe that our ability to consistently achieve growth in comparable store sales is due in part to our commitment to maintaining an attractive store network, which is strategically located to best attract and serve our customers.  
​
Omnichannel Growth Strategy:
Our Omnichannel growth strategies reflect the continued evolution of customer preferences in researching and completing purchases.  More than ever before, our customers’ purchase decisions are informed by a range of interactions, whether in-person, over the phone, or through a variety of digital channels, as they seek to find the professional parts knowledge and product availability they need to meet their automotive repair and maintenance needs.  Our Omnichannel growth strategies are focused on offering our customers an enhanced and seamless research and buying experience through any of these channels.  We have long been known for excellent customer service and continue to grow the functionality and user-friendliness of our digital platforms, including www.OReillyAuto.com,  www.OReillyPro.com, and our O’Reilly Pro mobile application, to enhance our customers’ shopping experience.  Many of our customers interact over multiple channels to research and complete a purchase, and the functionality and features of our digital properties complement the outstanding customer service provided in our brick and mortar locations.
​
Team Members and Human Capital Management
​
Our tradition for 69 years has been to treat all of our Team Members with honesty and respect and to commit significant resources to instill in them our “Live Green” culture, which emphasizes the importance of each Team Member’s contribution to the success of O’Reilly.  This focus on professionalism and respect has created an industry-leading Team, and we consider our relations with our Team Members to be excellent.  
​
We are committed to providing a work environment where Team Members feel highly valued and are productive in their jobs by maintaining an environment where every voice is valued.  We believe this, along with a healthy work/life balance, increases Team Member engagement.  Our ongoing emphasis on engagement and respect, including our policies, recruitment and selection procedures, onboarding processes, and training efforts, positively builds upon our successful “promote from within” philosophy and growth strategies.  
​
Talent Acquisition, Retention, and Training:
Our Company knows the value of a tenured Team, which is why our philosophy is to “promote from within” first.  As management opportunities arise, we look first within the Company and promote those who have performed well, have the right expertise, and have shown leadership potential before looking outside the Company; however, we augment this philosophy by pursuing strategic hires with a strong emphasis on automotive aftermarket experience, customer service excellence, subject matter expertise, and strong culture fit.  This comprehensive approach increases Team Member commitment and has resulted in a very experienced leadership Team.  As of December 31, 2025, our strong management Team was comprised of 264 senior managers who average 20 years of service, 377 corporate managers who average 13 years of service, and 649 district managers who average 14 years of service.
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Each of our stores is staffed with a store manager and one or more assistant managers, in addition to parts specialists, retail and/or installer service specialists, and other positions required to meet the specific needs of each store.  Each of our 649 district managers has general supervisory responsibility for an average of 10 stores, which provides our stores with strong operational support.
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We offer a variety of specific training programs that address a broad spectrum of topics from store and distribution center operations to customer service.  We believe our highly trained Team of Professional Parts People is essential in providing superior customer service to both DIY and professional service provider customers.  A significant portion of our business is from professional service provider customers; therefore, our Professional Parts People are required to be highly technically proficient in automotive products.  In addition, we have found that the typical DIY customer often seeks assistance from Professional Parts People, particularly when purchasing hard parts.  The ability of our Professional Parts People to provide such assistance to the DIY customer creates a favorable impression and is a significant factor in generating repeat DIY business.
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We screen prospective store Team Members to identify highly motivated individuals who either have experience with automotive parts and repairs or automotive aptitude.  New store Team Members go through a comprehensive orientation focused on the culture of our Company, as well as the requirements for their specific position.  Additionally, during their first year of employment, our parts specialists go through extensive automotive systems and product knowledge training to ensure they are able to provide high levels of service to our customers.  Once all of the required training has been satisfied, our parts specialists become eligible to take the O’Reilly Certified Parts Professional test.  Passing the O’Reilly test helps prepare them to become certified by the National Institute for Automotive Service Excellence (“ASE”).
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All of our stores have the ability to support and supply professional service provider customers.  For this reason, select Team Members in each store complete extensive sales call training with a regional field sales manager.  These Team Members then spend at least one day per week calling on existing and potential professional service provider customers.  Each Team Member engaged in such sales activities participates in quarterly advanced training programs for sales and business development.
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Additionally, we have extensive processes in place to specifically identify emerging talent and conduct formalized training focused on leadership development.  Store and district managers complete a comprehensive training program to ensure each has a thorough understanding of customer service, leadership, inventory management, and store profitability, as well as all other sales and operational aspects of our business model.  Store and district managers are also required to complete a structured training program that is specific to their position, including attending a week-long manager development program at the corporate headquarters in Springfield, Missouri.  Store and district managers also receive continuous training through online training programs, field workshops, regional meetings, and our annual leadership conference.
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Engagement and Belonging:
At O’Reilly, we are committed to fostering a culture of engagement and belonging where every individual’s voice is heard, valued, and respected.  We believe in celebrating and embracing the unique perspectives, experiences, and talents that each person brings.  We are dedicated to creating an environment that is free from discrimination, harassment, and bias, and where everyone has equal opportunities to thrive and succeed.  We are committed to recruiting and building strong teams through our robust processes for talent acquisition, ongoing leadership development, and active identification of emerging talent.  We have worked to expand opportunities for all of our Team Members through programs designed to prepare them to take on more responsibilities at every level of the organization.  We firmly believe that promoting from within is a differentiator in leveraging Team Member experience and maximizing engagement across the entire Company.  In order to ensure our engagement efforts are successful, we survey our Team Members, provide enhanced, collaborative learning through training and resources, and build network groups, action plans, and programs aimed at improving our work environments for our Team Members and customers.
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Compensation, Benefits, and Recognition:
Our compensation philosophy has always been to incentivize Team Members to “run it like you own it,” and we continually evaluate and benchmark our comprehensive compensation programs to ensure they remain competitive, providing an important tool to attract and retain the best and most qualified Team Members in every market.  We provide financial incentives to all store Team Members through various incentive compensation programs.  Store team members have the opportunity to earn incentive pay that increases their base hourly wage consistent with their individual performance or the performance of their store.  Store managers, district managers, region directors, and division vice presidents have the ability to earn additional compensation above their salary or base hourly wage based upon the performance of their stores.  In addition, beginning with the district manager level, we augment our competitive programs with share-based compensation.  We believe our incentive compensation programs significantly increase the motivation and overall performance of our Team Members.
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Just as pay, benefits, and growth opportunities are critically important to our Team Members’ success, we believe it is equally important to recognize Team Members for a job well done.  We regularly present many awards that range from recognizing individual service longevity to performance, allowing peer-to-peer recognition, or management nomination of an individual’s excellent performance.  
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Team Composition:
We recognize that each and every one of our Team Members plays a critical role in our ability to provide outstanding customer service and achieve consistent, successful performance.  As of January 31, 2026, we employed 92,923 Team Members (78,258 full-time Team Members and 14,665 part-time Team Members), of whom 76,467 were employed at our stores, 11,649 were employed at our DCs, and 4,807 were employed at our corporate and regional offices.  Ours is an increasingly technical business creating the need for knowledgeable Professional Parts People, and our ongoing focus on developing a technically proficient Team has resulted in the growth of the mix of our full-time work force, increasing from 65% at January 31, 2020, to 84% at January 31, 2026.  While full-time Professional Parts People play a vital role in our ongoing success, the flexibility of incorporating part-time employment into our work force is also an important component of providing excellent customer service.  Many of our part-time Team Members choose to work at O’Reilly while attending school, or during other transitional periods in their lives, or simply because of their passion for cars and knowledge of auto parts.  Part-time Team Members have the opportunity to become career Professional Parts People because of our “promote from within” philosophy, and many of our leaders today began their careers as part-time Team Members in our stores or distribution centers.  
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A union represents approximately 464 Team Members in 49 stores in the Greater Bay Area in California and has for many years.  There are approximately 28 Team Members that drive over-the-road trucks in one of our domestic DCs that are also represented by a labor union.  Additionally, two unions represent approximately 862 Team Members in Mexico and two unions represent approximately 128 Team Members in Canada.  We consider our current relationship with these unions and union Team Members to be excellent.  With the exception of the previously described Team Members, our Team Members are not represented by labor unions.  
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Additional information about our Team Member population and human capital management practices can be found in our most recent Impact Report, which is available on our website at www.OReillyAuto.com.  The information available on our website, including our Impact Report, is not, and will not be deemed to be, a part of this annual report on Form 10-K for the year ended December 31, 2025, or incorporated by reference into any of our other filings with the Securities and Exchange Commission.
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Store Network
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New Store Site Selection:
In selecting sites for new stores, we seek to strategically locate store sites in clusters within geographic areas in order to achieve economies of scale in management, advertising, and distribution.  Other key factors we consider in the site selection process are:

● Population density.
● Demographics, including age, life style, and per capita income.
● Market economic strength, retail draw, and growth patterns.
● Number, age, and percent of makes and models of registered vehicles.
● The number, type, and sales potential of existing automotive repair facilities.
● The number of auto parts stores and other competitors within a predetermined radius.
● Physical location, traffic count, size, economics, and presentation of the site.
● Financial review of adjacent existing locations.
● The type and size of store that should be developed.
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When entering new, more densely populated markets, we may, when appropriate, seek to initially open several stores within a short span of time in order to maximize the effect of initial promotional programs and achieve economies of scale.  After opening this initial cluster of new stores, we begin penetrating the less densely populated surrounding areas.  As these store clusters mature, we evaluate the need to open additional locations in the more densely populated markets where we believe opportunities exist to expand our market share or to improve the level of service provided in high volume areas.  This strategy enables us to achieve additional distribution and advertising efficiencies in each market.
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Store Locations and Size:
As a result of our dual market strategy, we are able to profitably operate in both large, densely populated markets and small, less densely populated areas that would not otherwise support a national chain selling primarily to the retail automotive aftermarket.  Our domestic stores, on average, carry approximately 24,000 SKUs and average approximately 8,000 total square feet in size.  At December 31, 2025, we had a total of approximately 52 million square feet in our 6,447 domestic stores.  Our stores are served primarily by the nearest DC, which, on average, carry over 156,000 SKUs, but also have same-day access to the broad selection of inventory available at one of our

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399 Hub stores that average 18,300 square feet in size and carry an average of 63,000 SKUs, with Hubs in select markets carrying further enhanced inventory levels up to approximately 115,000 SKUs.
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We believe that our stores are “destination stores” generating their own traffic rather than relying on traffic created by the presence of other stores in the immediate vicinity.  Consequently, most of our stores are freestanding buildings or prominent end caps situated on or near major traffic thoroughfares and offer ample parking, easy customer access, and are generally located in close proximity to our professional service provider customers.
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The following table sets forth the geographic distribution and opening and acquisition activity of our stores as of December 31, 2025 and 2024:
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December 31, 2024
​
2025 Net, New Stores
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December 31, 2025

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​
​
  ​ ​ ​
  ​ ​ ​
​
​
  ​ ​ ​
% of Total
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​
  ​ ​ ​
  ​ ​ ​
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Cumulative

​
​
Store
​
% of Total
​
Store
​
Store
​
Store
​
% of Total
​
% of Total

Location
​
Count
​
Store Count
​
Growth
​
Growth
​
Count
​
Store Count
​
Store Count

Texas
​
850
​
13.3
%  
​
28
 
13.5
%  
​
878
​
13.3
%  
​
13.3
%

California
​
604
​
9.5
%  
​
10
 
4.8
%  
​
614
​
9.2
%  
​
22.5
%

Florida
​
300
​
4.7
%  
​
18
 
8.7
%  
​
318
​
4.8
%  
​
27.3
%

Georgia
​
247
​
3.9
%  
​
6
 
3.0
%  
​
253
​
3.8
%  
​
31.1
%

Illinois
​
233
​
3.7
%  
​
5
 
2.4
%  
​
238
​
3.6
%  
​
34.7
%

North Carolina
​
228
​
3.6
%  
​
7
 
3.4
%  
​
235
​
3.6
%  
​
38.3
%

Ohio
​
227
​
3.6
%  
​
4
 
1.9
%  
​
231
​
3.5
%  
​
41.8
%

Missouri
​
215
​
3.4
%  
​
2
 
1.0
%  
​
217
​
3.3
%  
​
45.1
%

Tennessee
​
207
​
3.2
%  
​
4
 
1.9
%  
​
211
​
3.2
%  
​
48.3
%

Michigan
​
189
​
3.0
%  
​
3
 
1.4
%  
​
192
​
2.9
%  
​
51.2
%

Indiana
​
174
​
2.7
%  
​
1
 
0.5
%  
​
175
​
2.7
%  
​
53.9
%

Alabama
​
168
​
2.6
%  
​
6
 
3.0
%  
​
174
​
2.6
%  
​
56.5
%

Washington
​
169
​
2.6
%  
​
3
 
1.4
%  
​
172
​
2.6
%  
​
59.1
%

Arizona
​
154
​
2.4
%  
​
9
 
4.3
%  
​
163
​
2.5
%  
​
61.6
%

Louisiana
​
152
​
2.4
%  
​
3
 
1.4
%  
​
155
​
2.4
%  
​
64.0
%

Wisconsin
​
144
​
2.3
%  
​
2
 
1.0
%  
​
146
​
2.2
%  
​
66.2
%

Minnesota
​
138
​
2.2
%  
​
2
 
1.0
%  
​
140
​
2.1
%  
​
68.3
%

Oklahoma
​
136
​
2.1
%  
​
4
 
1.9
%  
​
140
​
2.1
%  
​
70.4
%

South Carolina
​
131
​
2.1
%  
​
4
 
1.9
%  
​
135
​
2.1
%  
​
72.5
%

Arkansas
​
129
​
2.0
%  
​
3
 
1.4
%  
​
132
​
2.0
%  
​
74.5
%

Colorado
​
127
​
2.0
%  
​
5
 
2.4
%  
​
132
​
2.0
%  
​
76.5
%

Kentucky
​
111
​
1.7
%  
​
—
 
—
%  
​
111
​
1.7
%  
​
78.2
%

Virginia
​
103
​
1.6
%  
​
4
 
1.9
%  
​
107
​
1.6
%  
​
79.8
%

Kansas
​
89
​
1.4
%  
​
1
 
0.5
%  
​
90
​
1.4
%  
​
81.2
%

Mississippi
​
87
​
1.4
%  
​
3
 
1.4
%  
​
90
​
1.4
%  
​
82.6
%

Iowa
​
83
​
1.3
%  
​
—
 
—
%  
​
83
​
1.3
%  
​
83.9
%

Utah
​
78
​
1.2
%  
​
3
 
1.4
%  
​
81
​
1.2
%  
​
85.1
%

Oregon
​
79
​
1.2
%  
​
—
 
—
%  
​
79
​
1.2
%  
​
86.3
%

New Mexico
​
66
​
1.0
%  
​
2
 
1.0
%  
​
68
​
1.0
%  
​
87.3
%

Massachusetts
​
62
​
1.0
%  
​
1
 
0.5
%  
​
63
​
1.0
%  
​
88.3
%

Nevada
​
61
​
1.0
%  
​
2
 
1.0
%  
​
63
​
1.0
%  
​
89.3
%

Idaho
​
58
​
0.9
%  
​
4
 
1.9
%  
​
62
​
0.9
%  
​
90.2
%

New York
​
47
​
0.7
%  
​
11
 
5.3
%  
​
58
​
0.9
%  
​
91.1
%

Nebraska
​
54
​
0.8
%  
​
1
 
0.5
%  
​
55
​
0.8
%  
​
91.9
%

Pennsylvania
​
48
​
0.8
%  
​
1
 
0.5
%  
​
49
​
0.7
%  
​
92.6
%

Connecticut
​
38
​
0.6
%  
​
2
 
1.0
%  
​
40
​
0.6
%  
​
93.2
%

Maine
​
37
​
0.6
%  
​
—
 
—
%  
​
37
​
0.6
%  
​
93.8
%

New Hampshire
​
37
​
0.6
%  
​
—
 
—
%  
​
37
​
0.6
%  
​
94.4
%

Montana
​
31
​
0.5
%  
​
—
 
—
%  
​
31
​
0.5
%  
​
94.9
%

West Virginia
​
25
​
0.4
%  
​
—
 
—
%  
​
25
​
0.4
%  
​
95.3
%

Vermont
​
24
​
0.4
%  
​
—
 
—
%  
​
24
​
0.4
%  
​
95.7
%

South Dakota
​
22
​
0.3
%  
​
2
 
1.0
%  
​
24
​
0.4
%  
​
96.1
%

Wyoming
​
23
​
0.4
%  
​
—
 
—
%  
​
23
​
0.3
%  
​
96.4
%

Hawaii
​
21
​
0.3
%  
​
—
 
—
%  
​
21
​
0.3
%  
​
96.7
%

Alaska
​
17
​
0.2
%  
​
2
 
1.0
%  
​
19
​
0.3
%  
​
97.0
%

North Dakota
​
18
​
0.3
%  
​
—
 
—
%  
​
18
​
0.3
%  
​
97.3
%

Rhode Island
​
17
​
0.2
%  
​
1
 
0.5
%  
​
18
​
0.3
%  
​
97.6
%

Maryland
​
3
​
—
%
​
8
​
3.9
%  
​
11
​
0.2
%
​
97.8
%

Total stores by state
​
6,261
​
98.1
%  
​
177
​
85.5
%  
​
6,438
​
97.8
%  
​
​
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Puerto Rico
​
4
​
0.1
%
​
5
​
2.4
%
​
9
​
0.1
%
​
97.9
%

Mexico
​
87
​
1.4
%
​
25
​
12.1
%
​
112
​
1.7
%
​
99.6
%

Canada
​
26
​
0.4
%
​
—
​
—
%
​
26
​
0.4
%
​
100.0
%

Total stores
 
6,378
 
100.0
%
​
207
 
100.0
%
​
6,585
 
100.0
%
​
  ​
​

​

12

​

Distribution Systems
​
We believe that our tiered distribution model provides industry-leading parts availability and store in-stock positions, while optimizing our inventory investment by controlling the depth of our store stocked inventory.  Our distribution expansion strategy, supported by our ongoing, significant capital investments, complements our new store opening strategy by supporting newly established clusters of stores, and additional penetration into existing markets, in the regions surrounding each DC.  
​
Distribution Centers:
As of December 31, 2025, we operated 32 DCs comprised of approximately 14.0 million operating square feet (see the “Properties” table in Item 2 of this annual report on Form 10-K for more information about DC operating square footage).  Our DCs stock, on average, over 156,000 SKUs and most DCs are linked to and have access to multiple other DCs’ inventory.  Our DCs provide five-night-a-week delivery, primarily via a Company-owned fleet, to substantially all of our stores.  In addition, stores within an individual DC’s metropolitan area receive multiple daily deliveries from the DC’s “city counter,” many of which receive this service seven days per week.  Our DCs provide service to not only the stores they service via their city counters but also to strategic Hub locations, which redistribute products to surrounding stores.  Our national Hub store network provides additional service throughout the week, and on weekends, to surrounding stores.
​
As part of our continuing efforts to enhance our distribution network in 2026, we plan to:

● Continue to enhance our distribution network through the engineering, design, expansion, or relocation of new or current DCs.
● Continue to utilize routing software to enhance logistics efficiencies.
● Continue to enhance labor management software to improve DC productivity and overall operating efficiency.
● Continue to refine best practices in all DCs and standardize across the network.
● Make proven, return-on-investment based capital enhancements to material handling equipment in DCs, including conveyor systems, picking modules, lift equipment, and computer hardware.
● Continue to augment our robust distribution network, when and where appropriate, through the use of strategically located Hubs.
● Invest in our people to continue providing a safe working environment and anchor in our people first and always model.  
​
Hub Stores:
We currently operate a total of 399 strategically located Hub stores.  In addition to serving DIY and professional service provider customers in their markets, Hub stores also provide delivery service to our other stores within the surrounding area and access to an expanded selection of SKUs on a same-day basis.  Our Hub stores average approximately 18,300 square feet and carry an average of 63,000 SKUs, with Hubs in select markets carrying further enhanced inventory levels up to approximately 115,000 SKUs.
​
Products and Purchasing
​
Our stores offer DIY and professional service provider customers a wide selection of products for domestic and imported automobiles, vans, and trucks.  Our merchandise generally consists of nationally recognized, well-advertised, premium name brand products, such as AC Delco, Armor All, Bosch, Castrol, Denso, Dorman, Fel-Pro, Gates Rubber, Lucas Oil, Mobil1, Monroe, NGK, Pennzoil, Prestone, Standard, STP, Turtle Wax, Valvoline, and Wix, and a wide selection of quality proprietary private label products, which span the entire good, better, and best value spectrum, under our BesTest®, BrakeBest®, Cartek®, Import Direct®, MasterPro®, MicroGard®, Murray®, Omnispark®, O’Reilly Auto Parts®, Precision®, Power-Torque®, Super-Start®, Syntec®, and Ultima® brands.  Our proprietary private label products are produced by respected automotive manufacturers, meet or exceed original equipment manufacturer specifications, which we have acquired or developed over time.  Our “good” proprietary brands provide a great combination of quality and value, a characteristic important to our DIY customers, while our “better” and “best” proprietary brands offer options for our more heavy-duty DIY customers, as well as our professional service provider customers, who often prefer higher quality products that can be relied upon to support and grow their businesses.
​
We have no long-term contracts with material purchase commitments with any of our suppliers, nor have we experienced difficulty in obtaining satisfactory alternative supply sources for automotive parts.  We believe that alternative supply sources exist at competitive costs for substantially all of the automotive products that we sell.  It is our policy to take advantage of payment and seasonal purchasing discounts offered by our suppliers and to utilize extended dating terms available from suppliers.  We have entered into various programs and arrangements with certain suppliers that provided for extended dating and payment terms for inventory purchases.  As a whole, we consider our relationships with our suppliers to be very good.
​

13

​

We purchase automotive products in substantial quantities from over 655 suppliers, the five largest of which accounted for approximately 23% of our total purchases in 2025.  Our largest supplier in 2025 accounted for approximately 8% of our total purchases and the next four largest suppliers each accounted for approximately 3% to 5% of our total purchases.
​
Marketing
​
Retail and Online Marketing:
Our integrated marketing strategy and Omnichannel efforts include national media channels, in-store, digital, and social media activation, as well as personalized experiences through e-mail and text messaging and marketing the O’Reilly brand through automotive event sponsorships and on-site appearances throughout the country.  Our O’Rewards loyalty program encourages repeat customers, as they accumulate points from their O’Reilly purchases that are redeemable for rewards at various purchase levels.  Our marketing efforts also target the Spanish-speaking market through broadcast media, print, and sports marketing, as well as sponsorships of local and regional events.
​
Professional Marketing:
To develop our continued relationships with professional service providers and installers, we employ Territory Sales Managers in all major markets to ensure complete sales territory coverage and personalized service for professional customers.  Flyers, quick reference guides, and catalogs are distributed on a regular basis to all professional service providers, including paint and body shops and fleet maintenance customers to encourage brand and program awareness.  In addition, our professional customer program also offers a proprietary ordering mobile application, business ecommerce platform called www.OReillyPro.com, dedicated Professional Service Specialists in stores, multiple daily deliveries, and access to training opportunities, shop management, maintenance supplies, and the Certified Auto Repair program, which offers professional service providers with the business tools they need to profitably grow and market their business.
​
INDUSTRY ENVIRONMENT
​
For each of the countries in which we operate, the automotive aftermarket industry includes all products and services purchased for light and heavy-duty vehicles after the original sale and is made up of four segments: labor share of professional service provider sales, auto parts share of professional service provider sales, DIY sales, and tire sales.  We predominantly operate in the U.S., which supports an automotive aftermarket industry with a total size estimated to be approximately $435 billion, according to the Auto Care Association.  We estimate that O’Reilly’s U.S. addressable market within this industry is approximately $165 billion to $175 billion, which includes the auto parts share of professional service provider sales at wholesale and DIY sales at retail.  We do not sell tires or perform for-fee automotive repairs or installations.  
​
Competition
​
The sale of automotive aftermarket items is highly competitive in many areas, including customer service, product availability, store location, brand recognition, and price.  We compete in both the DIY and professional service provider portions of the automotive aftermarket and are one of the largest specialty retailers within that market.  We compete primarily with:

● National retail and wholesale automotive parts chains (such as AutoZone, Inc., Advance Auto Parts, CARQUEST, and NAPA).
● Regional retail and wholesale automotive parts chains.
● Wholesalers or jobber stores (some of which are associated with national automotive parts distributors or associations such as NAPA, CARQUEST, Bumper to Bumper, and Auto Value).
● Automobile dealers.
● Mass merchandisers and online retailers that carry automotive replacement parts, maintenance items, and accessories (such as Wal-Mart Stores, Inc. and Amazon.com, Inc.).
​
We compete on the basis of customer service, which includes merchandise selection and availability, technical proficiency, helpfulness of store personnel, price, store layout, the Omnichannel experience, and convenient and accessible store locations.  Our dual market strategy requires significant capital, including the capital expenditures required for our distribution and store networks and working capital needed to maintain inventory levels necessary for providing products to both the DIY and professional service provider portions of the automotive aftermarket.
​

14

​

Inflation and Seasonality
​
We have generally been successful in reducing the effects of merchandise cost increases principally by taking advantage of supplier incentive programs, economies of scale resulting from increased volume of purchases, and selective forward buying.  To the extent our acquisition costs increased due to price increases industry wide, we have typically been able to pass along these increased costs through higher retail prices for the affected products.  As a result, we do not believe inflation has had a material adverse effect on our operations.
​
To some extent our business is seasonal, primarily as a result of the impact of weather conditions on customer buying patterns.  While we have historically realized operating profits in each quarter of the year, our store sales, profits, and inventory levels have historically been higher in the second and third quarters (April through September) than in the first and fourth quarters (October through March) of the year.
​
Regulations
​
Our operations are subject to extensive federal, state, and local laws regarding business conduct and the health and safety of our Team Members and customers.  Key areas of compliance include:

● Hazardous Materials – Protocols for the handling, storage, and disposal of regulated substances.
● Recycling Mandates – Specific requirements for automotive battery reclamation and the management of used lubricants.
● Property Management – Regulations governing the environmental impact of owning and operating real property.
​
We manage hazardous materials as a routine part of our business.  Through our customer-facing recycling programs (used oil, oil filters, and batteries), we facilitate the intake of regulated waste at designated store locations.

● Intake Process – Team Members collect and secure these materials in specialized containers or on pallets.
● Third-Party Logistics – Recycling is performed by specialized third-party suppliers with stringent liability coverage.
● Liability Mitigation – Our agreements with these suppliers include specific indemnification provisions. These are designed to limit our liability under environmental regulations for contamination or damage occurring at off-site recycling facilities or on our properties when caused by the supplier.
​
Compliance with environmental and safety laws has not had a material adverse effect on our operations to date.  However, because these regulations are subject to frequent changes, we cannot guarantee that future compliance requirements will not result in significant operational expenses.
​
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
​
Brad Beckham , age 47, Chief Executive Officer, has been an O’Reilly Team Member for 29 years.  Mr. Beckham’s O’Reilly career began as a Parts Specialist and progressed through the roles of Store Manager, District Manager, Regional Manager, Divisional Vice President, Vice President of Eastern Store Operations and Sales, Senior Vice President of Eastern Store Operations and Sales, Senior Vice President of Central Store Operations and Sales, Executive Vice President of Store Operations and Sales, Executive Vice President and Chief Operating Officer, and Co-President.  Mr. Beckham has held the position of Chief Executive Officer since 2024.
​
Brent G. Kirby , age 57, President, has been an O’Reilly Team Member for seven years.  Mr. Kirby’s primary areas of responsibility are Merchandise, Distribution, Logistics, Inventory Management, Pricing, Store Design, Marketing, Advertising/Marketing, Electronic Catalog, Customer Satisfaction, Omnichannel, and Information Technology.  Mr. Kirby began his retail career of over 35 years with Lowe’s Companies, Inc. (“Lowe’s”) as a hardware associate and progressed through various positions at the store, district, and regional levels before being promoted to Senior Vice President of Store Operations and later Chief Omnichannel Officer.  In 2018, Mr. Kirby’s O’Reilly career began as Senior Vice President of Omnichannel and progressed through the roles of Executive Vice President of Supply Chain, Executive Vice President and Chief Supply Chain Officer, and Co-President.  Mr. Kirby has held the position of President since 2024.
​
Jeremy Fletcher , age 48, Executive Vice President and Chief Financial Officer, has been an O’Reilly Team Member for 20 years.  Mr. Fletcher’s primary areas of responsibility are Finance, Accounting, Credit and Collections, Financial Planning, Tax, Treasury, Investor Relations, Legal, Risk Management, and Loss Prevention.  Mr. Fletcher’s O’Reilly career began as the Financial Reporting and Budgeting Manager and progressed through the roles of Director of Finance, Vice President of Finance and Controller, and Senior Vice President of Finance and Controller.  Prior to joining O’Reilly, Mr. Fletcher worked as a Certified Public Accountant in public practice and in a financial reporting and planning role for a Fortune 1000 corporation.  Mr. Fletcher has held the position of Executive Vice President and Chief Financial Officer since 2022.

15

​

​
Scott R. Ross , age 60, Executive Vice President and Chief Information Officer, has been an O’Reilly Team Member since 2023.  Mr. Ross’s primary area of responsibility is Information Technology.  Mr. Ross has more than 30 years of information technology experience.  Mr. Ross’s career includes information technology positions with Mobil Oil and L.L. Bean, Inc.  Mr. Ross held positions of Vice President of Enterprise Architecture and Vice President of International and Business Development before being promoted to Senior Vice President of IT Omnichannel Technology at Lowe’s Companies, Inc.  Prior to joining O’Reilly, Mr. Ross held the title of President of Saks Cloud Services at Hudson’s Bay Company and subsidiaries.  In 2023, Mr. Ross joined O’Reilly as Executive Vice President and Chief Information Officer and has held this position since that time.
​
Jason Tarrant , age 45, Executive Vice President of Store Operations and Sales, has been an O’Reilly Team Member for 24 years, which includes continuous years of service with a company acquired by O’Reilly.  Mr. Tarrant’s primary areas of responsibility are Store Operations and Sales for O’Reilly’s U.S. store operations.  Mr. Tarrant’s O’Reilly career began as a Parts Specialist and progressed through the roles of Assistant Store Manager, Store Manager, District Manager, Regional Field Sales Manager, Regional Manager, Divisional Vice President, and Senior Vice President of Western Store Operations and Sales.  Mr. Tarrant has held the position of Executive Vice President of Store Operations and Sales since 2024.
​
Tamara F. Conn , age 55, Senior Vice President of Legal and General Counsel, has been an O’Reilly Team Member for 17 years.  Ms. Conn’s primary areas of responsibility are Legal, Risk Management, ESG, and Internal Audit.  Ms. Conn’s O’Reilly career began as Legal Counsel and progressed through the roles of Associate General Counsel, Director of Legal Services and Associate General Counsel, and Deputy General Counsel and Vice President of Legal Services.  Prior to joining O’Reilly, Ms. Conn worked in a private civil defense trial practice.  Ms. Conn has held the position of Senior Vice President of Legal and General Counsel since 2023.
​
Robert Dumas , age 52, Senior Vice President of Southeast Store Operations and Sales, has been an O’Reilly Team Member for 34 years, which includes continuous years of service with a company acquired by O’Reilly.  Mr. Dumas’s primary areas of responsibility are Store Operations and Sales for O’Reilly’s southeast U.S. store operations.  Mr. Dumas’s O’Reilly career began as a Parts Specialist and progressed through the roles of Installer Service Specialist, Night Manager, Associate Manager, Store Manager, District Manager, Regional Manager, and Divisional Vice President.  Mr. Dumas has held the position of Senior Vice President of Eastern Store Operations and Sales since 2016.
​
Larry Gray , age 54, Senior Vice President of Inventory Management, has been an O’Reilly Team Member for 34 years.  Mr. Gray’s primary areas of responsibility are Inventory Control, Purchasing, and Store Design.  Mr. Gray’s O’Reilly career began as a Distribution Center Team Member and progressed through the roles of Distribution Center Supervisor, Operations Manager, Distribution Center Manager, Director of Distribution Center Operations Support, Regional Distribution Center Director, Vice President of Eastern Distribution Operations, Senior Director of Inventory Management, and Vice President of Inventory Management.  Mr. Gray has held the position of Senior Vice President of Inventory Management since 2023.  
​
Philip M. Hopper , age 44, Senior Vice President of Real Estate and Expansion, has been an O’Reilly Team Member for 14 years.  Mr. Hopper’s primary areas of responsibility are Real Estate, Expansions, Acquisitions, and Property Management.  Mr. Hopper’s O’Reilly career began as Real Estate Counsel and progressed through the roles of Director of Property Management, Vice President of Real Estate Expansion and Property Management, and Vice President of Real Estate Development.  Mr. Hopper has held the position of Senior Vice President of Real Estate and Expansion since 2022.
​
Justin Kale , age 50, Senior Vice President of Central Operations and Sales, has been an O’Reilly Team Member for 30 years.  Mr. Kale’s primary areas of responsibility are Store Operations and Sales for O’Reilly’s central U.S. store operations.  Mr. Kale’s O’Reilly career began as a Delivery Driver and progressed through the roles of Parts Specialist, Assistant Store Manager, Store Manager, District Manager, Regional Director, and Central Division Vice President.  Mr. Kale has held the position of Senior Vice President of Central Operations and Sales since 2024.
​
Jeffery T. Loafman , age 56, Senior Vice President of Distribution Operations, has been an O’Reilly Team Member since 2023.  Mr. Loafman’s primary areas of responsibility are Distribution Operations and Logistics.  Mr. Loafman began his career of over 20 years with Walmart, Inc. (“Walmart”) working in distribution and held various positions including Operations Manager, Distribution Center General Manager, Senior Director of Distribution, and Vice President of International Distribution Operations.  Prior to joining O’Reilly, Mr. Loafman served as Divisional Vice President for the U.S. Supply Chain for Walmart.  In 2023, Mr. Loafman joined O’Reilly as Senior Vice President of Distribution Operations and has held this position since that time.
​
Chris Mancini , age 48, Senior Vice President of Store Operations, has been an O’Reilly Team Member for 22 years.  Mr. Mancini’s primary areas of responsibility are Store Operations and Retail Systems, Professional Sales, and Jobber Sales.  Mr. Mancini’s O’Reilly career began as an Installer Service Specialist and progressed through the roles of Store Manager, District Manager, Regional Director,

16

​

Mid-Atlantic Division Vice President, Western Division Vice President, and Senior Vice President of Central Store Operations and Sales.  Mr. Mancini has held the position of Senior Vice President of Store Operations and Sales since 2022.
​
Mark J. Merz , age 54, Senior Vice President of International, has been an O’Reilly Team Member for 18 years.  Mr. Merz’s primary area of responsibility is International Development.  Mr. Merz’s O’Reilly career began as a Senior Accountant and progressed through the roles of External Reporting and Investor Relations Manager, Director of External Reporting and Investor Relations, Vice President of Investor Relations, Financial Reporting, and Planning, and Senior Vice President of Finance.  Prior to joining O’Reilly, Mr. Merz worked for nine years as a Controller for a privately held company.  Mr. Merz has held the position of Senior Vice President of International since 2024.
​
Jose Montellano , age 43, Senior Vice President of Western Operations and Sales, has been an O’Reilly Team Member for 18 years.  Mr. Montellano’s primary areas of responsibility are Store Operations and Sales for O’Reilly’s western U.S. store operations.  Mr. Montellano’s O’Reilly career began as a Store Manager and progressed through the roles of District Manager, Regional Director, and Southern California Division Vice President.  Mr. Montellano has held the position of Senior Vice President of Western Operations and Sales since 2024.
​
Ramon Odems , age 49, Senior Vice President of Northeast Operations and Sales, has been an O’Reilly Team Member for 32 years.  Mr. Odems’s primary areas of responsibility are Store Operations and Sales for O’Reilly’s northeast U.S. store operations.  Mr. Odems’s O’Reilly career began as a Stocker and progressed through the roles of Parts Specialist, Assistant Store Manager, Store Manager, District Manager, Regional Director, and Great Lakes Division Vice President.  Mr. Odems has held the position of Senior Vice President of Northeast Operations and Sales since 2024.
​
Shari Reaves, age 55, Senior Vice President of Human Resources and Training, has been an O’Reilly Team Member for 32 years.  Ms. Reaves’s primary areas of responsibility are Human Resources and Training.  Ms. Reaves’s O’Reilly career began as an Employment Coordinator and progressed through the roles of Benefits Coordinator, Benefits Supervisor, Benefits Manager, Director of Benefits, Senior Director of Benefits and Payroll, and Vice President of Human Resources.  Ms. Reaves has held the position of Senior Vice President of Human Resources and Training since 2024.
​
David Wilbanks , age 54, Senior Vice President of Merchandise, has been an O’Reilly Team Member for 13 years.  Mr. Wilbanks’s primary areas of responsibility are Merchandise and Pricing.  Mr. Wilbanks has over 35 years of experience in the automotive aftermarket industry.  Mr. Wilbanks’s career began as a counter technician for an independent jobber and progressed to becoming an ASE Certified Master Technician for an automotive dealership, before accepting a position with AutoZone, Inc. (“AutoZone”).  Mr. Wilbanks served AutoZone for twelve years as a financial analyst, Category Manager, and Director of Merchandise.  In 2012, Mr. Wilbanks joined O’Reilly as Vice President of Merchandise and has held the position of Senior Vice President of Merchandise since 2016.
​
SERVICE MARKS AND TRADEMARKS
  ​
We have registered, acquired, and/or been assigned the following service marks and trademarks in the United States:  BENNETT AUTO SUPPLY®; BESTEST®; BETTER PARTS. BETTER PRICES.®; BETTER PARTS, BETTER PRICES....EVERYDAY!®; BETTER PARTS. BETTER PRICES. BETTER SERVICE.®; BOND AUTO PARTS®; BRAKEBEST®; BRAKEBEST HD®; BRAKEBEST SELECT®; BRAKEBEST SELECT PRO®; CARTEK®; CARTEK PRO®; CERTIFIED AUTO REPAIR®; CHECKER AUTO PARTS®; CUSTOMIZE YOUR RIDE®; DEPENDABILITY YOU CAN COUNT ON®; DO IT RIGHT DEALS®; EARN POINTS EVERY WAY YOU SHOP®; FIRST CALL®; FLEET & HEAVY DUTY PROFESSIONAL PARTS PEOPLE®; FORMULATED FOR TODAY’S ENGINES®; FRIENDLIEST PARTS STORE IN TOWN®; FROM OUR STORE TO YOUR DOOR®; IMPORT DIRECT®; IMPORT DIRECT OE REPLACEMENT PARTS®; KRAGEN AUTO PARTS®; MASTER PRO®; MASTER PRO REFINISHING®; MASTERPRO SELECT®; MASTERPRO UNDERCAR®; MICROGARD®; MICROGARD HEPA®; MICROGARD SELECT®; MORE PARTS. YOUR WAY.®; MURRAY®; MURRAY CLIMATE CONTROL®; MURRAY TEMPERATURE CONTROL®; MURRAY’S MASCOT® (Design only); MURRAY PLUS®; MURRAY ULTRA®; MURRAY’S AUTO PARTS®; O LOW PRICE GUARANTEE! ®;  O® (Shamrock inside of “O”); OMNISPARK®; O’REILLY®; O’REILLY AUTO COLOR PROFESSIONAL PAINT PEOPLE®; O’REILLY AUTO COLOR PROFESSIONAL PAINT PEOPLE® (Mascot design); O’REILLY AUTO PARTS®; O’REILLY AUTO PARTS PROFESSIONAL PARTS PEOPLE®; O’REILLY AUTOMOTIVE®; O’REILLY O’REWARDS®; O’REILLY PARTS PAYOFF® (design only); O’REILLY SELECT®; O’REILLY VERISCAN®; O’REWARDS®; ORIGINAL BRAND PROXONE EST. 2007®; PARTS CITY®; PARTS CITY AUTO COLOR PROFESSIONAL PAINT PEOPLE®; PARTS CITY AUTO PARTS®; PARTS FOR YOUR CAR WHEREVER YOU ARE®; PARTS PAYOFF®; POWER PERFORMANCE RELIABILITY®; POWER TORQUE®; PRECISION®; PRECISION HUB ASSEMBLIES®; PRO X ONE®; PROFESSIONAL PARTS PEOPLE®; PROFESIONALES EN AUTOPARTES®; PROTECTION YOU CAN TRUST®; QUIETECH®; REAL WORLD TRAINING®; ¡SIGUE ADELANTE CON O’REILLY!®; SCHUCK’S AUTO SUPPLY®;

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SUPER START®; SYNTEC®; TOOLBOX®; ULTIMA®; ULTIMA SELECT®; ULTIMA SELECT MOTOR PRODUCTS®; VERISCAN®; WORK AT THE O®; and X® (design mark associated with PRECISION).  Some of the service marks and trademarks listed above may also have a design associated therewith.  Each of the service marks and trademarks are in duration for as long as we continue to use and seek renewal of such marks.  The above list includes only the trademarks and service marks that are currently and validly registered with the United States Patent and Trademark Office.  It does not include trademarks or service marks which may also be in use, but are not yet registered or trademarks or service marks used and/or registered in other countries.  Except for the trademarks and service marks listed or referred to in this Item 1, we believe that our business is not dependent upon any patent, trademark, service mark, or copyright.
​
Solely for convenience, our service marks and trademarks may appear in this report without the ® or ™ symbol, which is not intended to indicate that we will not assert, to the fullest extent under applicable law, our rights or the right to these service marks and trademarks.
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AVAILABLE INFORMATION
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Our Internet address is www.OReillyAuto.com.  Interested readers can access, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, through the Securities and Exchange Commission website at www.sec.gov and searching with our ticker symbol “ORLY.”  Such reports are generally available the day they are filed.  Upon request, we will furnish interested readers a paper copy of such reports free of charge by contacting our Investor Relations team, at 233 South Patterson Avenue, Springfield, Missouri, 65802.
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Investors and others should note that we use our website to communicate with our investors and the public about the Company, its products, and other matters, and from time to time we may announce material information through our website.  Therefore, we encourage investors, the media, and others interested in the Company to monitor and review the information we make available on our website.  
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Item 1A.  Risk Factors
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Our future performance is subject to a variety of risks and uncertainties.  Although the risks described below are the risks that we believe are material, there may also be risks of which we are currently unaware, or that we currently regard as immaterial based upon the information available to us that later may prove to be material.  Interested parties should be aware that the occurrence of the events described in these risk factors, elsewhere in this Form 10-K, and in our other filings with the Securities and Exchange Commission could have a material adverse effect on our business, operating results, and financial condition.  Actual results, therefore, may materially differ from anticipated results described in our forward-looking statements.
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RISKS SPECIFIC TO OUR BUSINESS AND INDUSTRY
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Deteriorating economic conditions may adversely impact demand for our products, reduce access to credit, and cause our customers and others, with which we do business, to suffer financial hardship, all of which could adversely impact our business, results of operations, financial condition, and cash flows.
Although demand for many of our products is primarily non-discretionary in nature and tend to be purchased by consumers out of necessity, our sales are impacted by constraints on the economic health of our customers.  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.  Many of these factors are outside of our control.  Our customers’ purchases, including purchases of our products, could decline during periods when income is lower, when prices increase in response to rising costs, or in periods of actual or perceived unfavorable economic conditions or political uncertainty.  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.
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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.  Changes in vehicle technology used by the original equipment manufacturers (“OEM”) on future vehicles, including but not limited to electric, hybrid, and internal combustion engines, may result in less frequent repairs, parts lasting longer, or elimination of certain repairs.  In addition, restrictions on access to telematics, diagnostic tools, and repair information imposed by the OEMs or by governmental regulations may force vehicle owners to rely on dealers to perform maintenance and repairs.  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.
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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.  Furthermore, the ability of these third parties to overcome these difficulties may worsen.  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.
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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.
Both the DIY and professional service provider portions of our business are highly competitive, particularly in the more densely populated areas that we serve.  Some of our competitors are larger than we are and have greater financial resources.  In addition, some of our competitors are smaller than we are, but have a greater presence than we do in a particular market.  Online and mobile platforms may allow customers to quickly compare prices and product assortment and availability between us and a range of competitors, which could result in pricing pressure.  Some online competitors may have a lower cost structure than we do, as a result of our strategy of providing an exceptional in-store experience and superior parts availability supported by our extensive store network and robust, regional distribution footprint, which could also create pricing pressure.  We may have to expend more resources and risk additional capital to remain competitive and our results of operations, financial condition, and cash flows could be adversely affected.  For a list of our principal competitors, see the “Competition” section of Item 1 of this annual report on Form 10-K.
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Our business is sensitive to global, national, and regional economic and weather conditions and natural disasters that could impact our costs and sales.
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.  Extreme weather conditions, such as extreme heat and extreme cold temperatures, may enhance demand for our products due to increased failure rates of our customers’ automotive parts, while temperate weather conditions may have a lesser impact on failure rates of automotive parts.  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.
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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.
Our business depends on developing and maintaining close relationships with our suppliers and on our suppliers’ ability or willingness to sell quality products to us at favorable prices and terms.  Many factors outside of our control may harm these relationships and the ability or willingness of these suppliers to sell us products on favorable terms.  For example, financial or operational difficulties that our suppliers may face could increase the cost of the products we purchase from them or our ability to source products from them.  In addition, the trend toward consolidation among automotive parts suppliers, as well as the off-shoring of manufacturing capacity to foreign countries, may disrupt or end our relationship with some suppliers and could lead to less competition and result in higher prices.  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.  If we are unable to effectively respond to such disruptions to our supply chain, or manage them more effectively than our competitors, our business and competitive position may be negatively impacted.  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.  These and other factors affecting our suppliers and our access to products could adversely affect our results of operations, financial condition, and cash flows.
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Business interruptions in our distribution centers or other facilities may affect our store hours, stability of systems we rely on, and/or availability and distribution of merchandise, which may affect our business.
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.  This may affect our ability to timely provide products to our customers, resulting in lost sales or a potential loss of customer loyalty, among other things.  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

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sources at similar prices.  Such a disruption in revenue could potentially have a negative impact on our results of operations, financial condition, and cash flows.
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In addition, we rely extensively on various systems, some of which are provided by third-party service providers, to manage inventory, process transactions, and timely provide products to our stores and customers.  These systems are subject to failure, damage, or interruption, including power outages, telecommunications failures, computer viruses, cyber-attacks, security breaches, or other catastrophic events.  If these systems are damaged or fail to function properly, we may experience loss of critical data and interruptions or delays in our ability to manage inventories, deliver product, or process customer transactions.  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.
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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 believe our Company has built an excellent reputation as a leading retailer in the automotive aftermarket industry.  We believe our continued success depends, in part, on our ability to preserve, grow, and leverage the value of our brand.  Our reputation is based, in part, on perceptions of subjective qualities; negative publicity involving the Company, our merchandise or our industry in general that erode customer trust or confidence could adversely affect our reputation and business.  Failure to comply with ethical, social, product, labor, health and safety, accounting or environmental standards, or existing or future laws or regulations, as well as failure or perceived failure to achieve or make progress with environmental, social, and governance goals, could also jeopardize our reputation and potentially lead to various adverse actions from consumer or environmental groups, employees, or regulatory bodies, which could require us to incur substantial legal fees and costs.  In addition, negative claims or publicity, including the availability of information and opinions on social media, as its impact is immediate, could adversely affect our reputation.  The opportunity for the rapid dissemination of information, including inaccurate and inflammatory information and opinions, is virtually limitless and easily accessible.  Damage to our reputation or loss of consumer confidence for any of these or other reasons could have an adverse effect on our business, results of operations, financial condition, or cash flows, as well as require additional resources to rebuild our reputation.
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Risks associated with international operations could result in additional costs and inefficiencies.
In addition to many of the risks we face in our U.S. operations, international operations present a unique set of risks and challenges, including local laws and customs, various and potentially complex international tax regulations and compliance requirements, U.S. laws applicable to foreign operations, and political and socio-economic conditions.  Our ability to operate effectively and grow in international markets could be impacted by these risks resulting in legal liabilities, additional costs, and the distraction of management’s attention.  Compliance with the Foreign Corrupt Practices Act and protection of intellectual property rights surrounding items such as tradenames and trademarks in foreign jurisdictions can pose significant challenges.
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In addition, our operations in international markets are conducted primarily in the local currency of those countries.  Given that our Consolidated Financial Statements are denominated in U.S. dollars, amounts of assets, liabilities, net sales, and other revenues and expenses denominated in local currencies must be translated into U.S. dollars using exchange rates for the current period.  As a result, foreign currency exchange rates and fluctuations in those rates may adversely impact our financial performance.
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RISKS RELATED TO OUR COMMON STOCK
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Risks related to us and unanticipated fluctuations in our quarterly operating results could affect our stock price.
We believe that quarter-to-quarter comparisons of our financial results are not necessarily meaningful indicators of our future operating results and should not be relied on as an indication of future performance.  If our quarterly operating results fail to meet the expectations of analysts, the trading price of our common stock could be negatively affected.  We cannot be certain that our growth plans and business strategies will be successful or that they will successfully meet the expectations of these analysts.  If we fail to adequately address any of these risks or difficulties, our stock price would likely suffer.
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The market price of our common stock may be volatile and could expose us to securities class action litigation.
The stock market and the price of our common stock may be subject to wide fluctuations based upon general economic and market conditions and potentially being targeted through the selling and buying of our common stock by a group of individuals, whose interests and reasoning behind such actions may not align with an average market participant.  The market price of our common stock may also be affected by our ability to meet analysts’ expectations and failure to meet such expectations, even slightly, could have an adverse effect on the market price of our common stock.
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In addition, stock market volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to the operating performance of these companies.  Downturns in the stock market may cause the price of our common stock

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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.  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.
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RISKS RELATED TO OUR INDEBTEDNESS AND FINANCING
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Our debt levels could adversely affect our cash flow and prevent us from fulfilling our obligations.
We have an unsecured revolving credit facility, unsecured commercial paper program, and unsecured senior notes, which could have important consequences for our financial health.  For example, our level of indebtedness could, among other things,

● make it more difficult to satisfy our financial obligations, including those relating to the senior unsecured notes, commercial paper program, and our credit facility;
● increase our vulnerability to adverse economic and industry conditions;
● limit our flexibility in planning for, or reacting to, changes and opportunities in our industry, which may place us at a competitive disadvantage;
● require us to dedicate a substantial portion of our cash flows to service the principal and interest on our debt, reducing the funds available for other business purposes, such as working capital, capital expenditures, or other cash requirements;
● limit our ability to incur additional debt with acceptable terms, if at all; and
● expose us to fluctuations in interest rates, including changes that may result from the implementation of new benchmark rates to SOFR.
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In addition, the terms of our financing obligations include restrictions, such as affirmative, negative and financial covenants, conditions on borrowing, and subsidiary guarantees.  A failure to comply with these restrictions could result in a default under our financing obligations or could require us to obtain waivers from our lenders for failure to comply with these restrictions.  The occurrence of a default that remains uncured or the inability to secure a necessary consent or waiver could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
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A downgrade in our credit rating would impact our cost of capital and could impact the market value of our unsecured senior notes, as well as limit our access to attractive supplier financing programs.
Credit ratings are an important component of our cost of capital.  These ratings are based upon, among other factors, our financial strength.  Our current credit ratings provide us with the ability to borrow funds at favorable rates.  A downgrade in our current credit rating from either rating agency could adversely affect our cost of capital by causing us to pay a higher interest rate on borrowed funds under our unsecured revolving credit facility and commercial paper program and a higher facility fee on commitments under our unsecured revolving credit facility and commercial paper program.  A downgrade in our current credit rating could also adversely affect the market price and/or liquidity of our unsecured senior notes, preventing a holder from selling the unsecured senior notes at a favorable price, as well as adversely affect our ability to issue new notes in the future.  In addition, a downgrade in our current credit rating could limit the financial institutions willing to commit funds to the supplier financing programs our suppliers participate in at attractive rates.  Decreased participation in our supplier financing programs would lead to an increase in working capital needed to operate the business, adversely affecting our cash flows.
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RISKS RELATED TO INFORMATION TECHNOLOGY AND DATA PRIVACY
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Damage, failure, or interruptions of information technology systems could adversely affect our business operations and results.
We rely extensively on information technology systems, some of which are managed or provided by third-party service providers, to collect, analyze, process, store, manage, transmit, and protect business operations, processes, transactions, and data.  Delays in the maintenance, updates, upgrading, or patching of these systems, applications, or processes could adversely impact their effectiveness or could expose us to risks.  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.  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.  As a result, we or our service providers could experience one or more errors, interruptions, delays, or cessations of service impacting the integrity or availability of our information technology infrastructure.  A material incident could significantly disrupt our operations and business processes; result in the impairment or loss of critical data; be costly and resource-

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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.
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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.  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.
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A breach of customer, supplier, Team Member, or Company information could damage our reputation or result in substantial additional costs or litigation.
Our business involves the receiving, storage, and transmitting of certain personally identifiable or confidential information about our customers, suppliers, Team Members, and the Company, some of which is entrusted to third-party service providers and suppliers.  We and our third-party service providers and suppliers have taken significant and appropriate steps to protect this information, including maintaining compliance with payment card industry and National Clearing House standards and a security program that includes updating technology and security policies, employee training, and monitoring and routine testing of our systems.  However, these security measures are costly and require constant, ongoing attention and may not prevent a security breach due to cyber-attacks, computer malware viruses, exploitation of hardware or software vulnerabilities, Team Member error, malfeasance, system compromises, fraud, hacking, trickery, or other intentional or unintentional acts, which could result in unauthorized parties gaining access to such information.  The methods used to obtain unauthorized access are constantly evolving and may be difficult to anticipate or detect for long periods of time.  There is no guarantee that the security measures that we and our third-party service providers and suppliers have implemented, or will introduce in the future, to protect against unauthorized access to secured data are adequate to safeguard against all data security breaches, or provide us with sufficient visibility to determine if data security breaches have occurred.  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.  
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In addition, the regulatory environment related to information security and data collection, retention, processing, use, notification, consent, and privacy is complex and constantly evolving.  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.  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.
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GENERAL RISKS
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We cannot assure future growth will be achieved.
We believe that our ability to open additional, profitable stores at a high growth rate will be a significant factor in achieving our growth objectives for the future.  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.  Failure to achieve our growth objectives may negatively impact the trading price of our common stock.  For a discussion of our growth strategies, see the “Growth Strategy” section of Item 1 of this annual report on Form 10-K.
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In order to be successful, we will need to attract, retain, and motivate qualified employees.
Our success has been largely dependent on the efforts of certain key personnel.  In order to be successful, we will need to attract, retain, and motivate executives and other key employees.  Experienced management and technical personnel are in high demand and competition for their talents is intense.  In addition, we compete with other retail businesses to fill many of our hourly positions, which historically have had high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market.  We must also continue to motivate employees and keep them focused on our strategies and goals.  Our business, results of operations, and cash flows could be materially adversely affected by the unexpected loss of the services of one or more of our key employees.  We cannot be certain that we will be able to continue to attract and retain qualified personnel, which could cause us to be

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less efficient, in particular in a significant inflationary wage pressured environment, and, as a result, may adversely impact our sales and profitability.  For a discussion of our management, see the “Business” section of Item 1 of this annual report on Form 10-K.
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Risks associated with future acquisitions may not lead to expected growth and could result in increased costs and inefficiencies.
We expect to continue to make acquisitions as an element of our growth strategy.  Acquisitions involve certain risks that could cause our actual growth and profitability to differ from our expectations.  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.
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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.
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Litigation, governmental proceedings, environmental, employment, and tax legislation and regulations may affect our business, financial condition, results of operations, and cash flows.
We are, and in the future may become, involved in lawsuits, including litigation relating to motor vehicle accidents incurred through the operation of our large vehicle fleet, regulatory inquiries, and governmental and other legal proceedings, arising out of the ordinary course of our business.  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.
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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.  While it is uncertain whether these initiatives will become law, new or more stringent climate change-related mandates, laws, or regulations, or stricter interpretations of existing mandates, laws, or regulations could potentially be forthcoming.  These matters, if enacted, could adversely impact our costs, by, among other things, increasing fuel prices or requiring additional expenditures by us or our suppliers to comply, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
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Our business is subject to employment legislation and regulations, including requirements related to minimum wage.  Our success depends, in part, on our ability to manage operating costs and identify opportunities to reduce costs.  Our ability to meet labor needs, while controlling costs is subject to external factors, such as minimum wage legislation.  A violation of, or change in, employment legislation and/or regulations could hinder our ability to control costs, which could have a material adverse effect on our business, results of operations, financial condition, and cash flows.
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New laws, statutes, rules, regulations, or ordinances, including as a result of executive orders, could harm our business, results of operations, and financial condition.  In addition, existing laws, statutes, rules, regulations, or ordinances, including those related to tax, could be interpreted, changed, modified, or applied adversely to us, which could adversely impact our costs directly or indirectly through our suppliers and have a material adverse effect on our business, results of operations, financial condition, and cash flows.    
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Item  1B. Unresolved Staff Comments
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None.
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It em 1C.   Cybersecurity
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We execute a comprehensive approach to cybersecurity risk management, helping ensure the data customers and other stakeholders entrust to us remains safe and secure.  Our board of directors (the “Board”), Compliance Committee, and Information Security Program leaders are actively involved in the oversight of our cybersecurity risk management program.  As described in more detail below, we have established standards, policies, practices, and processes focused on identifying, assessing, managing, mitigating, and responding to material risks from cybersecurity threats.  To date, the Company is not aware of risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, 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

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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.
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RISK MANAGEMENT AND STRATEGY
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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.  Our cybersecurity program is guided by industry-wide recognized standards, including The National Institute of Standards and Technology (NIST) Cybersecurity Framework.  
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We have implemented best practices and established numerous programs and controls to reduce cybersecurity risk.  Our Information Security Program includes physical, administrative, and technical safeguards.  Some key components of the Information Security Program include:

● Security awareness training for Team Members.
● A dedicated security operations team to monitor, analyze, and respond to security threats.
● Security governance to manage and maintain security processes.
● Intrusion, detection, and prevention systems.
● A vulnerability management program to identify and remediate security liabilities.
● A configuration management program to harden systems based on industry standards.
● Industry-leading email security, endpoint detection, and response platforms.
● Threat intelligence from multiple resources to identify and anticipate emerging threats.
● Network and web application firewalls.
● Identity security to include multi-factor authentication.
● Network segmentation to isolate and safeguard critical systems and sensitive data.
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On an ongoing basis we conduct cybersecurity risk assessments, including compiling, reviewing, and acting on information garnered from internal stakeholders, known security vulnerabilities, and data from external sources.  The results of these assessments are used to drive alignment on, and prioritization of, initiatives to enhance our security controls, make recommendations to improve processes, and inform a broader enterprise-level risk assessment that is presented to our Board, Audit Committee, and members of management.
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We routinely assess our systems and processes for modifications in advance of evolving state privacy regulations and other applicable industry standards and regularly update our privacy and information security policies to remain current with industry-leading practices.  We are continually adapting to the ever-changing cyber risk landscape and have a dedicated team of information security professionals committed to maintaining the highest levels of systems and data security.   The Company conducts and has engaged external information security firms to conduct assessments, including penetration tests, to continually improve security controls and ensure security controls.  We continue to expand and grow our security team and their skillsets and make regular enhancements to our Information Security Program.
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In addition, we engage with our third-party business partners to enforce our internal cybersecurity practices.  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.  We also require that our third parties report material cybersecurity incidents to us, allowing us the ability to assess the impact of any reported incident on our operations.  
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Additionally, we developed a business continuity and disaster recovery program to help minimize the impact from certain types of cybersecurity risks.  The Company’s incident response plans include emergency response, systems recovery, and other plans that would be enacted in the event of certain types of cybersecurity attacks.  Our business continuity and disaster recovery plans are updated regularly and tested each year or as needed.
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GOVERNANCE
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Board Oversight
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Our Board, in coordination with the Audit Committee , oversees our management of cybersecurity risk.  The Board receives regular reports from management about the prevention, detection, assessment, mitigation, and remediation of cybersecurity risks and incidents, including analysis of material security risks or information security vulnerabilities.  Our Audit Committee directly oversees our Information Security Program.  The Audit Committee is composed of Board members with a broad range of expertise, including risk management, technology, and finance experience, which provides them with the necessary qualifications to effectively oversee cybersecurity risks.  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.
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Management’s Role
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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 Compliance Committee meets quarterly, or as needed, to review security performance metrics, identify security risks, assess the status of approved security enhancements, and discuss future changes necessary to execute best practice, among other items.  The Compliance Committee also considers and makes recommendations on security policies and procedures, security service requirements, and risk mitigation strategies to senior management.  We have an established escalation process to help ensure senior management and the Board are timely informed of any potential cybersecurity issues or incidents.  Our comprehensive monitoring, analysis, response, and communication protocols are designed to ensure the highest level of management is informed of cybersecurity risks and that the Board has comprehensive oversight and information necessary to provide guidance on critical cybersecurity issues.
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Our Compliance Committee members have decades of business and leadership experience managing risk, including cybersecurity risks, that collectively enables them to effectively oversee comprehensive cybersecurity risks.   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.  Information Security Program leaders and Team Members who support our Information Security Program have relevant educational and technical certifications, such as Certified Information Security Manager (CISM) and Certified Information Systems Security Professional (CISSP), and applicable industry experience, including cybersecurity threat assessment and detection, mitigation technologies, cybersecurity training, incident response, cyber forensics, insider threats, and regulatory compliance.  For further details about our CIO’s background, see the “Information About Our Executive Officers” section of Item 1 of this annual report on Form 10-K.
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Item  2. 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.  Leases with unaffiliated parties generally provide for payment of a fixed base rent, payment of certain tax, insurance, and maintenance expenses and an original term of, at a minimum, 10 years, subject to one or more renewals at our option.  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.  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.  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.  
(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.  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.  Our DC network provides a growth capacity of approximately 400 to 550 domestic stores.  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.  
​
Item 3.  Legal Proceedings
​
The Company is currently involved in litigation incidental to the ordinary conduct of the Company’s business.  Based on existing facts and historical patterns, the Company accrues for litigation losses in instances where an adverse outcome is probable and the Company is able to reasonably estimate the probable loss in accordance with Accounting Standard Codification 450-20.  The Company also accrues for an estimate of legal costs to be incurred for litigation matters.  Although the Company cannot ascertain the amount of liability that it may incur from legal matters, it does not currently believe that, in the aggregate, these matters, taking into account applicable insurance and accruals, will have a material adverse effect on its consolidated financial position, results of operations, or cash flows in a particular quarter or annual period.
​
Item 4.  Mine Safety Disclosures
​
Not applicable.
  ​

26

​

PART II
​
Item 5.  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.  All 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, 2025.  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

  ​
​
​
Item 6.   [Reserved]
​
Not applicable.  
​
​
​

28

​

Item 7.  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.  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 successful execution of our growth strategy includes aggressively opening new stores, growing sales in existing stores, continually enhancing merchandising and store layouts, and implementing our Omnichannel initiatives.  As of December 31, 2025, we operated 6,447 stores in 48 U.S. states and Puerto Rico, 112 stores in Mexico, and 26 stores in Canada.
​
The extensive product line offered in our stores consists of new and remanufactured automotive hard parts, maintenance items, accessories, a complete line of auto body paint and related materials, automotive tools, and professional service provider service equipment. Our extensive product line includes an assortment of products that are differentiated by quality and price for most of the product lines we offer.  For many of our product offerings, this quality differentiation reflects “good,” “better,” and “best” alternatives.  Our sales and total gross profit dollars are, generally, highest for the “best” quality category of products.  Consumers’ willingness to select products at a higher point on the value spectrum is a driver of enhanced sales and profitability in our industry.  We have ongoing initiatives focused on marketing and training to educate customers on the advantages of ongoing vehicle maintenance, as well as “purchasing up” on the value spectrum.
​
Our stores also offer enhanced services and programs to our customers, including used oil, oil filter, and battery recycling; battery, wiper, and bulb replacement; battery diagnostic testing; electrical and module testing; check engine light code extraction through our trusted VeriScan technology, which provides diagnostic information with possible repair fixes; referrals to trusted local repair shops; loaner tool program; drum and rotor resurfacing; custom hydraulic hoses; professional paint shop mixing and related materials; and machine shops.
​
Our business is influenced by a number of general macroeconomic factors that impact both our industry and consumers, including, but not limited to, inflation, including rising consumer staples; fuel and energy costs; unemployment trends; interest rates; and other economic factors.  Future changes, such as continued broad-based inflation and rapid fuel cost increases that exceed wage growth, may negatively impact our consumers’ level of disposable income, and we cannot predict the degree these changes, or other future changes, may have on our business or industry.
​
While inflationary cost pressures can impact our business, including inflation resulting from changes in tariff rates, historically we have been successful in reducing the effects of merchandise cost increases, principally by taking advantage of supplier incentive programs, economies of scale resulting from increased volume of purchases, and selective forward buying.  To the extent our acquisition costs increase due to base commodity price increases or other input cost increases affecting the entire industry, we have typically been able to pass along these cost increases through higher selling prices for the affected products. As a result, we do not believe inflation has had a material adverse effect on our operating results.
​

29

​

We believe the key drivers of demand over the long-term for the products sold within the automotive aftermarket include the number of miles driven, number of registered vehicles, annual rate of light vehicle sales, and average vehicle age:
​
Number of Miles Driven: 
The number of total miles driven influences the demand for repair and maintenance products sold within the automotive aftermarket.  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. Department of Transportation, the number of total miles driven in the U.S. increased 2.1%, 1.0%, and 0.9% in 2023, 2024, and 2025, 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.
​
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.  As reported by the Auto Care Association, the total number of U.S. registered vehicles increased 13.4% from 2014 to 2024, bringing the number of light vehicles on the road to 286 million by the end of 2024.  For the year ended December 31, 2025, the seasonally adjusted annual rate of light vehicle sales in the U.S. (“SAAR”) was approximately 16.0 million vehicles, contributing to the continued growth in the total number of registered vehicles on the road.  From 2014 to 2024, U.S. vehicle scrappage rates have remained relatively stable, ranging from 4.1% to 5.6% annually.  As a result, over the past decade, the average age of the U.S. vehicle population has increased 10.5%, from 11.4 years in 2014 to 12.6 years in 2024.  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.  As the average age of vehicles on the road increases, a larger percentage of miles are being driven by vehicles that are outside of a manufacturer warranty.  These out-of-warranty, older vehicles generate strong demand for automotive aftermarket products as they go through more routine maintenance cycles, have more frequent mechanical failures, and generally require more maintenance than newer vehicles.  We believe consumers will continue to invest in these reliable, higher-quality, higher-mileage vehicles, and these investments, along with an increasing total light vehicle fleet, will support continued demand for automotive aftermarket products.
​
We remain confident in our ability to gain market share in our existing markets and grow our business in new markets by focusing on our dual market strategy and the core O’Reilly values of hard work and excellent customer service.
​

30

​

RESULTS OF OPERATIONS
​
The table below compares the Company’s selected financial data over a ten-year period:
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Year ended December 31, 
  ​
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016

(In thousands, except per share, Team Members, stores and ratio data)
 
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

SELECT INCOME STATEMENT RELATED DATA:
 
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Percentage increase in comparable store sales (a)(b)
 
4.7
% 
2.9
% 
7.9
% 
6.4
% 
13.3
% 
10.9
% 
4.0
% 
3.8
% 
1.4
% 
4.8
% 

Sales ($)
 
17,781,992
16,708,479
15,812,250
14,409,860
13,327,563
11,604,493
10,149,985
9,536,428
8,977,726
8,593,096

Gross profit
 
9,174,141
8,554,489
8,104,803
7,381,706
7,019,949
6,085,692
5,394,691
5,039,966
4,720,683
4,509,011

Operating income
 
3,460,612
3,251,157
3,186,376
2,954,491
2,917,168
2,419,336
1,920,726
1,815,184
1,725,400
1,699,206

Net income ($) (c)(d)
 
2,538,209
2,386,680
2,346,581
2,172,650
2,164,685
1,752,302
1,391,042
1,324,487
1,133,804
1,037,691

Earnings per share – basic ($)
 
2.98
2.73
2.59
2.25
2.09
1.58
1.20
1.08
0.85
0.72

Earnings per share – assuming dilution ($) (c)(d)
 
2.97
2.71
2.56
2.23
2.07
1.57
1.19
1.07
0.84
0.72

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

SELECT BALANCE SHEET AND CASH FLOW RELATED DATA:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Total assets ($)
 
16,538,253
14,893,741
13,872,995
12,627,979
11,718,707
11,596,642
10,717,160
7,980,789
7,571,885
7,204,189

Total debt ($)
​
6,016,904
5,520,932
5,570,125
4,371,653
3,826,978
4,123,217
3,890,527
3,417,122
2,978,390
1,887,019

Shareholders’ (deficit) equity ($) (c)
 
(763,352)
(1,370,961)
(1,739,278)
(1,060,752)
(66,423)
140,258
397,340
353,667
653,046
1,627,136

Inventory turnover (e)
 
1.6
1.7
1.7
1.7
1.7
1.5
1.4
1.4
1.4
1.5

Accounts payable to inventory (f)
 
123.9
% 
128.0
% 
130.8
% 
134.9
% 
127.4
% 
114.5
% 
104.4
% 
105.7
% 
106.0
% 
105.7
% 

Cash provided by operating activities ($) (g)
 
2,761,993
3,049,576
3,034,084
3,148,250
3,207,310
2,836,603
1,708,479
1,727,555
1,403,687
1,510,713

Capital expenditures ($)
 
1,168,815
1,023,387
1,006,264
563,342
442,853
465,579
628,057
504,268
465,940
476,344

Free cash flow ($) (g)(h)
 
1,563,250
1,987,808
1,987,720
2,371,123
2,548,922
2,189,995
1,020,649
1,188,584
889,059
978,375

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

SELECT OPERATING DATA:
 
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​
  ​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Team Members
 
93,072
93,176
90,189
87,377
82,852
77,654
82,484
78,882
75,552
74,580

Total store count (i)(j)(k)
 
6,585
6,378
6,157
5,971
5,784
5,616
5,460
5,219
5,019
4,829

Domestic store count (i)
​
6,447
6,265
6,095
5,929
5,759
5,594
5,439
5,219
5,019
4,829

Mexico store count (j)
​
112
87
62
42
25
22
21
—
—
—

Canada store count (k)
​
26
26
—
—
—
—
—
—
—
—

Store square footage (a)(l)
​
51,515
48,809
46,681
44,604
43,185
41,668
40,227
38,455
36,685
35,123

Sales per weighted-average store ($) (a)(m)
 
2,728
2,642
2,578
2,415
2,298
2,057
1,881
1,842
1,807
1,826

Sales per weighted-average square foot ($) (a)(l)(n)
 
346
342
340
322
307
277
255
251
248
251

​
(a)
Represents O’Reilly’s U.S. and Puerto Rico operations only.

(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.  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.  In compliance with the standard, the Company did not restate prior period amounts to conform to current period presentation.  The Company recorded a cumulative effect adjustment to opening retained earnings, due to the adoption of the new accounting standard.  See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.

(d)
Following the enactment of the U.S. Tax Cuts and Jobs Act in December of 2017, the Company revalued its deferred income tax liabilities, which resulted in a one-time benefit to the Company’s Consolidated Statement of Income for the years ended December 31, 2018 and 2017.  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.  Average inventory is calculated as the average of inventory for the trailing four quarters used in determining the denominator.

(f)
Accounts payable to inventory is calculated as accounts payable divided by inventory.

(g)
Certain prior period amounts have been reclassified to conform to current period presentation, due to the Company’s adoption of a new accounting standard during the first quarter ended March 31, 2017.  See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements of the annual report on Form 10-K for the year ended December 31, 2017, for more information.

(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.  After the close of business on December 31, 2018, the Company acquired substantially all of the non-real estate assets of Bennett, including 33 stores that were not included in the 2018 store count and were not operated by the Company in 2018, but beginning January 1, 2019, the operations of the acquired Bennett locations were included in the Company’s store count, and during the year ended December 31, 2019, the Company merged 13 of these acquired Bennett stores into existing O’Reilly locations and rebranded the remaining 20 Bennett stores as O’Reilly stores.  Financial results for these acquired companies have been included in the Company’s consolidated financial statements from the dates of the acquisitions forward.

(j)
In 2019, the Company acquired Mayoreo de Autopartes y Aceites, S.A. de C.V.  (“Mayasa”), which added 21 stores to the O’Reilly store count.  Financial results for this acquired company have been included in the Company’s consolidated financial statements beginning from the date of the acquisition.

(k)
In January of 2024, the Company acquired Groupe Del Vasto (“Vast Auto”), which added 23 stores to the O’Reilly store count.  Financial results for this acquired company have been included in the Company’s consolidated financial statements beginning from the date of the acquisition.

(l)
Square footage includes normal selling, office, stockroom, and receiving space.

(m)
Sales per weighted-average store are weighted to consider the approximate dates of store openings, acquisitions, or closures.

(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.  Comparable store sales increased 4.7% and 2.9% for the year ended December 31, 2025 and 2024, respectively.  Comparable store sales are calculated based on changes in sales for U.S. stores open at least one year and exclude sales of specialty machinery, sales to independent parts stores, and sales to Team Members, as well as sales from Leap Day in the year ended December 31, 2024.  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.  Additionally, we began operating 23 stores in Canada from the Groupe Del Vasto (“Vast Auto”) acquisition during the year ended December 31, 2024.  We anticipate new store growth will be 225 to 235 net, new store openings in 2026.
​
The increase in sales for the year ended December 31, 2025, was primarily the result of the 4.7% increase in domestic comparable store sales, a $354 million increase in sales from new stores opened in 2024 and 2025 that are not considered comparable stores, partially offset by the effect of sales from one additional day in the prior year due to Leap Day.  Our comparable store sales increase for the year ended December 31, 2025, was driven by an increase in average ticket value for both professional service provider and DIY customers and an increase in transaction counts for professional service provider customers, partially offset by a decrease in transaction counts for DIY customers.  Average ticket values benefited from increases in average selling prices on a same-SKU basis, as compared to the same period in 2024, driven by increases in acquisition costs of inventory, principally resulting from increased tariffs, which were passed on in selling prices.  Average ticket values also continue to be positively impacted by the increasing complexity and cost of replacement parts necessary to maintain the current population of better-engineered and more technically advanced vehicles.  These better-engineered, more technically advanced vehicles require less frequent repairs, as the component parts are more durable and last for longer periods of time.  The resulting decrease in repair frequency creates pressure on customer transaction counts; however, when repairs are needed, the cost of replacement parts is, on average, greater, which is a benefit to average ticket values.  The decrease in DIY customer transaction counts was driven by pressured consumer spending on discretionary categories and broader industry pressure on certain hard part categories.
​
See Note 13 “Revenue” to the Consolidated Financial Statements for further information concerning the Company’s sales.

32

​

​
Gross Profit:
Gross profit for the year ended December 31, 2025, increased 7% to $9.17 billion (or 51.6% of sales) from $8.55 billion (or 51.2% of sales) for the same period in 2024.  The increase in gross profit dollars for the year ended December 31, 2025, was primarily the result of increase in comparable store sales at existing stores and sales from new stores, partially offset by prior year gross profit dollars generated from one additional day due to Leap Day.  The increase in gross profit as a percentage of sales for the year ended December 31, 2025, was due to improved acquisition costs and distribution operating efficiencies, partially offset by a greater percentage of our total sales mix being generated from professional service provider customers, which carry a lower gross margin percentage than DIY sales.  
​
Selling, General and Administrative Expenses:
Selling, general and administrative expenses (“SG&A”) for the year ended December 31, 2025, increased 8% to $5.71 billion (or 32.1% of sales) from $5.30 billion (or 31.7% of sales) for the same period in 2024.  The increase in total SG&A dollars for the year ended December 31, 2025, was the result of additional Team Members and vehicles to support our increased sales and store count, partially offset by prior year incremental SG&A expenses incurred from one additional day due to Leap Day.  The increase in SG&A as a percentage of sales for the year ended December 31, 2025, was principally due to broad inflationary pressure in costs, primarily relating to medical and casualty insurance programs, and enhancements to store-level compensation and benefits.
​
Operating Income:
As a result of the impacts discussed above, operating income for the year ended December 31, 2025, increased 6% to $3.46 billion (or 19.5% of sales) from $3.25 billion (or 19.5% of sales) for the same period in 2024.
​
Other Income and Expense:
Total other expense for the year ended December 31, 2025, increased 7% to $220 million (or 1.2% of sales), from $206 million (or 1.2% of sales) for the same period in 2024.  The increase in total other expense for the year ended December 31, 2025, was the result of increased interest expense on higher average outstanding borrowings.  See Note 9 “Financing” to the Consolidated Financial Statements for further information concerning the Company’s borrowings.  
​
Income Taxes:
Our provision for income taxes for the year ended December 31, 2025, increased 7% to $702 million (21.7% effective tax rate) from $658 million (21.6% effective tax rate) for the same period in 2024.  The increase in our provision for income taxes for the year ended December 31, 2025, was primarily the result of higher taxable income and lower excess tax benefits from share-based compensation.  The increase in our effective tax rate for the year ended December 31, 2025, was primarily the result of lower excess tax benefits from share-based compensation partially offset by higher transferable federal renewable energy tax credits.  See Note 17 “Income Taxes” to the Consolidated Financial Statements for further information concerning the Company’s income taxes.
​
Net Income:
As a result of the impacts discussed above, net income for the year ended December 31, 2025, increased to $2.54 billion (or 14.3% of sales), from $2.39 billion (or 14.3% of sales) for the same period in 2024.
​
Earnings Per Share:
Our diluted earnings per common share for the year ended December 31, 2025, increased 10% to $2.97 on 856 million shares from $2.71 on 881 million shares for the same period in 2024.  
​
2024 Compared to 2023
​
A discussion of the changes in our results of operations for the year ended December 31, 2024, as compared to the year ended December 31, 2023, has been omitted from this Form 10-K but may be found in Item 7. “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.  Our material cash requirements necessary to maintain the current operations of our long-term business strategy include, but are not limited to, inventory purchases; human capital obligations, including payroll and benefits; contractual obligations, including debt and interest obligations; capital expenditures; payment of income taxes; and other operational priorities.  We expect to fund our short- and long-term cash and capital requirements with our primary sources of liquidity, which include funds generated from the normal course of our business operations, borrowings under our unsecured revolving credit facility and our commercial paper program, and senior note offerings.  However, there can be no assurance that we will continue to generate cash flows or maintain liquidity at or above recent levels, as we are unable to predict decreased demand for our products or changes in customer buying patterns.  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.  See Note 6 “Leases,” Note 14 “Share-Based Compensation and Benefit Plans,” Note 15 “Commitments,” and Note 17 “Income Taxes” to the Consolidated Financial Statements for further information on our leasing arrangements, share-based compensation payments, commitments, and uncertain tax positions, respectively, which are not reflected in the table below.  
​
The following table identifies the estimated payments for each of the next five years, and in the aggregate thereafter, of the Company’s debt instruments and related interest payments and self-insurance reserves as of December 31, 2025 (in thousands):
​

​

​

​

​

​

​

​
​
December 31, 2025

​
​
Long-Term Debt Principal
​
Self-Insurance

​
  ​ ​ ​
and Interest Payments (1)
  ​ ​ ​
Reserves (2)

2026
​
$
2,157,231
​
$
297,304

2027
​
 
915,231
​
 
68,365

2028
​
 
627,363
​
 
44,655

2029
​
 
606,731
​
 
24,641

2030
​
​
586,481
​
 
12,079

Thereafter
​
​
2,014,863
​
 
15,733

Contractual cash obligations
​
$
6,907,900
​
$
462,777

(1)
See Note 9 “Financing” to the Consolidated Financial Statements for further information on our debt instruments and related interest payments.

(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.  See Note 1 “Summary of Significant Accounting Policies” for more information on our variable interest entities.  We issue stand-by letters of credit, for more information see Note 9 “Financing” to the Consolidated Financial Statements for further information on our stand-by letters of credit.
​
Other than the commitments discussed in Note 15 “Commitments” to the Consolidated Financial Statements, we do not have any off-balance sheet financing that has, or is reasonably likely to have, a material, current, or future effect on our financial condition, cash flows, results of operations, liquidity, capital expenditures, or capital resources.  
​

34

​

The following table identifies cash provided by/(used in) our operating, investing and financing activities for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

Liquidity:
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

Total cash provided by/(used in):
 
​
  ​
 
​
  ​
 
​
  ​

Operating activities
​
$
2,761,993
​
$
3,049,576
​
$
3,034,084

Investing activities
​
 
(1,152,356)
​
 
(1,166,805)
​
 
(995,936)

Financing activities
​
 
(1,548,795)
​
 
(2,029,717)
​
 
(1,868,738)

Effect of exchange rate changes on cash
​
​
2,706
​
​
(1,941)
​
​
1,139

Net increase (decrease) in cash and cash equivalents
​
$
63,548
​
$
(148,887)
​
$
170,549

​
​
​
​
​
​
​
​
​
​

Capital expenditures
​
$
1,168,815
​
$
1,023,387
​
$
1,006,264

Free cash flow (1)
​
$
1,563,250
​
$
1,987,808
​
 
1,987,720

(1) Calculated as net cash provided by operating activities, less capital expenditures, excess tax benefit from share-based compensation payments, and investment in tax credit equity investments for the period.  See page 37 for the reconciliation of the calculation of free cash flow.
​
Cash and cash equivalents balances held outside of the U.S. were $19.1 million and $17.2 million as of December 31, 2025 and 2024, respectively, which was generally utilized to support the liquidity needs of foreign operations in Mexico and Canada.
​
2025 Compared to 2024
​
Operating Activities:
The decrease in net cash provided by operating activities in 2025 compared to 2024 was primarily due to the timing of payment for transferrable federal renewable energy tax credits, partially offset by an increase in operating income.  
​
Investing Activities:
The decrease in net cash used in investing activities in 2025 compared to 2024 was primarily the result of the acquisition of Vast Auto in 2024, partially offset by an increase in capital expenditures.  The increase in capital expenditures was primarily due to distribution enhancement and expansion projects and an increase in investments in new store growth.
​
We opened 207 and 198 net, new stores in 2025 and 2024, respectively.  We plan to open 225 to 235 net, new stores in 2026.  The costs associated with the expected openings of owned store locations in 2026, including the cost of land acquisition, building construction, fixtures, vehicles, net inventory investment, and computer equipment, are estimated to average approximately $3.2 million to $3.5 million per store.  However, such costs may be significantly lower where we lease, rather than purchase, the store site and higher where we build a Hub, as they are larger in size.
​
Financing Activities:
The decrease in net cash used in financing activities in 2025 compared to 2024 was primarily attributable to net borrowings on the Company’s commercial paper program in 2025 versus net paydown on commercial paper in 2024, partially offset by the issuance of senior notes in 2024.
​
2024 Compared to 2023
​
A discussion of the changes in our operating activities, liquidity activities, and financing activities for the year ended December 31, 2024, as compared to the year ended December 31, 2023, has been omitted from this Form 10-K but may be found in Item 7. “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.  These covenants are, however, subject to a number of important limitations and exceptions.  As of December 31, 2025, we were in compliance with the covenants applicable to our senior notes.
​
As discussed in Note 9 “Financing” to the Consolidated Financial Statements, the Company is party to a credit agreement dated June 15, 2021, as amended and restated by the First Amended and Restated Credit Agreement as of March 31, 2025 (the “Credit Agreement”).  The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50:1.00 and a maximum consolidated leverage ratio of 3.50:1.00.  The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense to fixed charges.  Fixed charges include interest expense, capitalized interest, and rent expense.  The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense.  Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, and five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt.  In the event that we should default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement, and litigation from our lenders.
​
We had a consolidated fixed charge coverage ratio of 6.08 times and 6.11 times as of December 31, 2025 and 2024, respectively, and a consolidated leverage ratio of 1.92 times and 1.89 times as of December 31, 2025 and 2024, respectively, remaining in compliance with all covenants related to the borrowing arrangements.
​

36

​

The table below outlines the calculations of the consolidated fixed charge coverage ratio and consolidated leverage ratio covenants, as defined in the Credit Agreement governing our revolving credit facility, for the years ended December 31, 2025 and 2024 (dollars in thousands):
​

​

​

​

​

​

​

​

​
​
​
For the Year Ended

​
​
​
December 31, 

​
​
  ​ ​ ​
2025
  ​ ​ ​
2024

GAAP net income
​
$
2,538,209
​
$
2,386,680

Add:
Interest expense
​
 
235,064
​
 
222,548

​
Rent expense (1)
​
 
490,357
​
 
452,529

​
Provision for income taxes
​
 
701,962
​
 
658,384

​
Depreciation expense
​
 
507,341
​
 
457,047

​
Amortization expense
​
 
3,889
​
 
4,845

​
Non-cash share-based compensation
​
 
35,115
​
 
28,931

Non-GAAP EBITDAR
​
$
4,511,937
​
$
4,210,964

​
​
​
​
​
​
​

​
Interest expense
​
$
235,064
​
$
222,548

​
Capitalized interest
​
 
17,141
​
 
14,141

​
Rent expense (1)
​
 
490,357
​
 
452,529

Total fixed charges
​
$
742,562
​
$
689,218

​
​
​
​
​
​
​
​

Consolidated fixed charge coverage ratio
​
 
6.08
​
 
6.11

​
​
​
​
​
​
​
​

GAAP debt
​
$
6,016,904
​
$
5,520,932

Add:
Stand-by letters of credit
​
 
155,642
​
 
127,310

​
Unamortized discount and debt issuance costs
​
 
23,096
​
 
29,068

​
Five-times rent expense
​
 
2,451,785
​
 
2,262,645

Non-GAAP adjusted debt
​
$
8,647,427
​
$
7,939,955

​
​
​
​
​
​
​
​

Consolidated leverage ratio
​
 
1.92
​
 
1.89

​
(1)
The table below outlines the calculation of Rent expense and reconciles Rent expense to Total lease cost, per Accounting Standard Codification 842 (“ASC 842”), the most directly comparable GAAP financial measure, for the years ended December 31, 2025 and 2024 (in thousands):

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

​
​
2025
​
2024

Total lease cost, per ASC 842
  ​ ​ ​
$
592,121
​
$
543,495

Less:
Variable non-contract operating lease components, related to property taxes and insurance
​
 
101,764
​
 
90,966

Rent expense
​
$
490,357
​
$
452,529

​
The table below outlines the calculation of Free cash flow and reconciles Free cash flow to Net cash provided by operating activities, the most directly comparable GAAP financial measure, for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​

​

​

​

​

​

​

​

​

​

​

​
​
​
For the Year Ended

​
​
​
December 31, 

​
​
  ​ ​ ​
2025
  ​ ​ ​
2024
  ​ ​ ​
2023

Cash provided by operating activities
​
$
2,761,993
​
$
3,049,576
​
$
3,034,084

Less:
Capital expenditures
​
 
1,168,815
​
 
1,023,387
​
 
1,006,264

​
Excess tax benefit from share-based compensation payments
​
 
29,928
​
 
39,871
​
 
35,950

​
(Return of) investment in tax credit equity investments
​
 
—
​
 
(1,490)
​
 
4,150

Free cash flow
​
$
1,563,250
​
$
1,987,808
​
$
1,987,720

​
Free cash flow, the consolidated fixed charge coverage ratio, and the consolidated leverage ratio discussed and presented in the tables above are not derived in accordance with United States generally accepted accounting principles (“GAAP”).  We do not, nor do we suggest investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information.  We believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio, and consolidated leverage ratio provides meaningful supplemental information to both management and investors and reflects the required covenants under the Credit Agreement.  We include these items in judging our performance and believe this non-GAAP information is useful to investors as

37

​

well.  Material limitations of these non-GAAP measures are that such measures do not reflect actual GAAP amounts.  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.  Management bases its assumptions, estimates, and adjustments on historical experience, current trends, and other factors believed to be relevant at the time the consolidated financial statements are prepared.  Management believes that the following policies are critical due to the inherent uncertainty of these matters and the complex and subjective judgments required in establishing these estimates.  Management continues to review these critical accounting estimates and assumptions to ensure that the consolidated financial statements are presented fairly in accordance with GAAP.  However, actual results could differ from our assumptions and estimates and such differences could be material.
​
Self-Insurance Reserves:
We use a combination of insurance and self-insurance mechanisms to provide for potential liabilities from workers’ compensation, general liability, vehicle liability, property loss, and Team Member health care benefits.  With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation, and certain regulatory matters, we obtain third-party insurance coverage to limit our exposure for any individual workers’ compensation, general liability, vehicle liability, or property loss claim.  
​
When estimating our self-insurance liabilities, we consider a number of factors, including historical claims experience and trend-lines, projected medical and legal inflation, growth patterns, and exposure forecasts.  The assumptions made by management as they relate to each of these factors represent our judgment as to the most probable cumulative impact of each factor to our future obligations.  Certain of the self-insurance liabilities are determined at an estimate of their net present value, using the U.S. treasury risk-free rate.  Our calculation of self-insurance liabilities requires management to apply a significant amount of subjective judgment to estimate the ultimate cost to resolve reported claims and claims incurred but not yet reported as of the balance sheet date.  The application of alternative assumptions could result in a different estimate of these liabilities.  Management believes the assumptions developed and used to determine the estimate for our self-insurance reserve are reasonable.  Actual claim activity or development may vary from our assumptions and estimates, which may result in material losses or gains.  
​
As we obtain additional information that affects the assumptions and estimates we used to recognize liabilities for claims incurred in prior accounting periods, we adjust our self-insurance liabilities to reflect the revised estimates based on this additional information.  These liabilities are recorded at our estimate of their net present value.  These liabilities do not have scheduled maturities, but we can estimate the timing of future payments based upon historical patterns.  We could apply alternative assumptions regarding the timing of payments that could result in materially different estimates of the net present value of the liabilities.  
​
Our self-insurance reserve estimate included on our Consolidated Balance Sheets increased $175 million from 2024 to 2025, which is primarily due to general litigation accruals, inflation in claim development costs, our growing operations, increases in healthcare costs, the number of vehicles, and the number of hours worked, partially offset by having resolved and paid out claims throughout 2025.  If the underlying assumptions in management’s estimate changed self-insurance reserves by 10% from our estimated reserves at December 31, 2025, the financial impact would have been approximately $44 million or 1.4% of pretax income for the year ended December 31, 2025.  See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements for further information on our self-insurance reserves.    
​
RECENT ACCOUNTING PRONOUNCEMENTS
​
See Note 1 “Summary of Significant Accounting Policies” to the Consolidated Financial Statements for information about recent accounting pronouncements.
​
​

38

​