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

Item  7A. Quantitative and Qualitative Disclosures about Market Risk
​
Interest Rate Risk:
We are subject to interest rate risk to the extent we borrow against our unsecured revolving credit facility (the “Revolving Credit Facility”) with variable interest rates based on either an Alternative Base Rate or Adjusted Term SOFR Rate, as defined in the credit agreement governing the Revolving Credit Facility.  As of December 31, 2025, we had no outstanding borrowings under our Revolving Credit Facility.
​
We are subject to interest rate risk to the extent we issue short-term, unsecured commercial paper notes under our commercial paper program (the “Program”) with variable interest rates.  As of December 31, 2025, we had outstanding borrowings under the Program in the amount of $690.0 million, at the weighted-average variable interest rate of 3.979%.  At this borrowing level, a 10% increase in interest rates would have had an unfavorable annual impact on our pre-tax earnings and cash flows in the amount of $2.8 million.
​
We had outstanding fixed rate debt of $5.4 billion as of December 31, 2025 and 2024.  The fair value of our fixed rate debt was estimated at $5.3 billion and $5.2 billion as of December 31, 2025 and 2024, respectively, which was determined by reference to quoted market prices.
​
Cash Equivalents Risk:
We invest certain of our excess cash balances in short-term, highly-liquid instruments with maturities of 90 days or less.  We do not expect any material losses from our invested cash balances and we believe that our interest rate exposure is minimal.  As of December 31, 2025, our cash and cash equivalents totaled $193.8 million.
​
Foreign Currency Risk:
Foreign currency exposures arising from transactions include firm commitments and anticipated transactions denominated in a currency other than our entities’ functional currencies.  To minimize our risk, we generally enter into transactions denominated in the respective functional currencies. Our foreign currency exposure arises from Mexican peso-denominated and Canadian dollar-denominated revenues and profits and their translation into U.S. dollars.
​
We view our investments in Mexican subsidiaries as long-term.  The net asset exposure in the Mexican subsidiaries translated into U.S. dollars using the year-end exchange rates was $507.8 million at December 31, 2025.  The year ended December 31, 2025, exchange rates of the Mexican peso, relative to the U.S. dollar, strengthened by approximately 15.7% from December 31, 2024.  The potential loss in value of our net assets in the Mexican subsidiaries resulting from a 10% change in quoted foreign currency exchange rates at December 31, 2025, would be approximately $46.2 million.  Any changes in our net assets in the Mexican subsidiaries relating to foreign currency exchange rates would be reflected in the financial statement through the foreign currency translation component of accumulated other comprehensive income, unless the Mexican subsidiaries are sold or otherwise disposed.  A 10% change in average exchange rates would not have had a material impact on our results of operations.  
​
We view our investments in Canadian subsidiaries as long-term.  The net asset exposure in the Canadian subsidiaries translated into U.S. dollars using the period-end exchange rates was $177.7 million, at December 31, 2025.  The year ended December 31, 2025, exchange rates of the Canadian dollar, relative to the U.S. dollar, strengthened by approximately 4.8% from December 31, 2024.  The potential loss in value of our net assets in the Canadian subsidiaries resulting from a 10% change in quoted foreign currency exchange rates at December 31, 2025, would be approximately $16.2 million.  Any changes in our net assets in the Canadian subsidiaries relating to foreign currency exchange rates would be reflected in the financial statement through the foreign currency translation component of accumulated other comprehensive income, unless the Canadian subsidiaries are sold or otherwise disposed.  A 10% change in average exchange rates would not have had a material impact on our results of operations.  
​
​

39

​

Item  8. Financial Statements and Supplementary Data
​
Index
​
​

​

​
Page

Management’s Report on Internal Control over Financial Reporting
41

Report of Independent Registered Public Accounting Firm : Internal Control over Financial Reporting (PCAOB ID: 42)
42

Report of Independent Registered Public Accounting Firm : Financial Statements (PCAOB ID: 42 )
43

Consolidated Balance Sheets
45

Consolidated Statements of Income
46

Consolidated Statements of Comprehensive Income
47

Consolidated Statements of Shareholders’ Equity
48

Consolidated Statements of Cash Flows
49

Notes to Consolidated Financial Statements
50

​
​
​

40

​

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
​
The management of O’Reilly Automotive, Inc. and Subsidiaries (the “Company”), under the supervision and with the participation of the Company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13(a)-15(f) or 15(d)-15(f) under the Securities Exchange Act of 1934, as amended.  The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
​
Internal control over financial reporting includes all policies and procedures that:

● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
​
Management recognizes that all internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Also, projections of any evaluation of effectiveness to future periods are subject to risk.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
​
Under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control - Integrated Framework (2013 framework).  Based on this assessment, management believes that as of December 31, 2025, the Company’s internal control over financial reporting is effective based on those criteria.
​
Ernst & Young LLP, Independent Registered Public Accounting Firm, has audited the Company’s consolidated financial statements and has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, as stated in their report, which is included herein.
​
​

​

​

​

​

/s/
Brad Beckham
​
/s/
Jeremy A. Fletcher

Brad Beckham
​
Jeremy A. Fletcher

Chief Executive Officer
​
Executive Vice President and

February 27, 2026
​
Chief Financial Officer

​
​
February 27, 2026

​
​
​
​
​

41

​

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
​
To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc.
​
Opinion on Internal Control Over Financial Reporting
​
We have audited O’Reilly Automotive, Inc. and Subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).  In our opinion, O’Reilly Automotive, Inc. and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
​
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and our report dated February 27, 2026 expressed an unqualified opinion thereon.
​
Basis for Opinion
​
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.  Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.  We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
​
We conducted our audit in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
​
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.
​
Definition and Limitations of Internal Control Over Financial Reporting
​
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
​
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
​
/s/ Ernst & Young LLP
​
Kansas City, Missouri
February 27, 2026

42

​

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
​
To the Shareholders and the Board of Directors of O’Reilly Automotive, Inc.
​
Opinion on the Financial Statements
​
We have audited the accompanying consolidated balance sheets of O’Reilly Automotive, Inc. and Subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).  In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
​
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27, 2026 expressed an unqualified opinion thereon.
​
Basis for Opinion
​
These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on the Company’s financial statements based on our audits.  We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
​
We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.  Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.  Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.  We believe that our audits provide a reasonable basis for our opinion.
​
Critical Audit Matter
​
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:  (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.  The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.  
​
​

​

​
​
Valuation of Self-insurance Reserves

Description of the Matter
​
At December 31, 2025, the Company’s self-insurance reserve estimate was $443 million.  As discussed in Note 1 of the consolidated financial statements, the Company retains a significant portion of the risks associated with workers’ compensation, property, and vehicle claims.  The Company’s self-insurance reserves are estimated based upon historical claim experience, expected claim development and trend lines.
​
Auditing management’s self-insurance reserves was complex and judgmental and required us to use our actuarial specialists for certain reserves due to the estimation required in determining the ultimate claim value.  The estimate is sensitive to assumptions such as claim severity and duration, projected inflation, claim development patterns and exposure forecasts.
​
​

How We Addressed the Matter in Our Audit
​
We obtained an understanding, evaluated the design of controls over the Company’s self-insurance estimation process and tested the operating effectiveness of those controls including management’s controls over reviewing the appropriateness of assumptions and the completeness and accuracy of the data underlying the reserves.
​

43

​

To evaluate the Company’s determination of the estimated self-insurance reserves, we performed audit procedures that included, among others, involving a specialist to assist in the development of an independent actuarial estimate for certain of the reserve balances based upon current industry and economic trends, comparing selected assumptions and the estimate determined by management to our independent estimates which were developed with the assistance of our specialists, testing the underlying data used by management in the development of the reserves and testing the mathematical accuracy of the calculations.

​
​
/s/ Ernst & Young LLP
​
We have served as the Company’s auditor since 1992.
Kansas City, Missouri
February 27, 2026
​
​

44

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
​
​

​

​

​

​

​

​

​
​
December 31, 

​
​
2025
​
2024

Assets
 
​
  ​
 
​
  ​

Current assets:
 
​
  ​
 
​
  ​

Cash and cash equivalents
​
$
193,793
​
$
130,245

Accounts receivable, less allowance for doubtful accounts $ 25,851 in 2025 and $ 22,545 in 2024
​
 
389,793
​
 
356,839

Amounts receivable from suppliers
​
 
159,900
​
 
139,091

Inventory
​
 
5,731,385
​
 
5,095,804

Other current assets
​
 
269,406
​
 
117,916

Total current assets
​
 
6,744,277
​
 
5,839,895

​
​
​
​
​
​
​

Property and equipment, at cost
​
 
10,222,249
​
 
9,192,254

Less: accumulated depreciation and amortization
​
 
3,964,824
​
 
3,587,098

Net property and equipment
​
 
6,257,425
​
 
5,605,156

​
​
​
​
​
​
​

Operating lease, right-of-use assets
​
​
2,391,150
​
​
2,324,638

Goodwill
​
 
948,208
​
 
930,161

Other assets, net
​
 
197,193
​
 
193,891

Total assets
​
$
16,538,253
​
$
14,893,741

​
​
​
​
​
​
​

Liabilities and shareholders’ deficit
​
 
  ​
​
 
  ​

Current liabilities:
​
 
  ​
​
 
  ​

Accounts payable
​
$
7,103,684
​
$
6,524,811

Self-insurance reserves
​
 
297,304
​
 
149,387

Accrued payroll
​
 
119,603
​
 
107,495

Accrued benefits and withholdings
​
 
240,072
​
 
199,593

Income taxes payable
​
 
13,957
​
 
6,274

Current portion of operating lease liabilities
​
​
439,907
​
​
419,213

Other current liabilities
​
 
561,294
​
 
876,732

Total current liabilities
​
 
8,775,821
​
 
8,283,505

​
​
​
​
​
​
​

Long-term debt
​
 
6,016,904
​
 
5,520,932

Operating lease liabilities, less current portion
​
​
2,034,688
​
​
1,980,705

Deferred income taxes
​
 
211,210
​
 
247,599

Other liabilities
​
 
262,982
​
 
231,961

​
​
​
​
​
​
​

Shareholders’ equity (deficit):
​
 
  ​
​
 
  ​

Preferred stock, $ 0.01 par value:
​
 
​
​
​
​

Authorized shares – 5,000,000
​
​
​
​
​
​

Issued and outstanding shares – none
​
​
—
​
 
—

Common stock, $ 0.01 par value:
​
 
​
​
​
​

Authorized shares – 1,250,000,000
​
​
​
​
​
​

Issued and outstanding shares –
​
​
​
​
​
​

841,909,238 as of December 31, 2025, and
​
​
​
​
​
​

862,232,760 as of December 31, 2024
​
​
8,419
​
 
8,622

Additional paid-in capital
​
 
1,530,292
​
 
1,454,518

Retained deficit
​
 
( 2,328,817 )
​
 
( 2,791,288 )

Accumulated other comprehensive income (loss)
​
​
26,754
​
​
( 42,813 )

Total shareholders’ deficit
​
 
( 763,352 )
​
 
( 1,370,961 )

​
​
​
​
​
​
​

Total liabilities and shareholders’ deficit
​
$
16,538,253
​
$
14,893,741

​
See accompanying Notes to consolidated financial statements.
​

45

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Sales
​
$
17,781,992
​
$
16,708,479
​
$
15,812,250

Cost of goods sold, including warehouse and distribution expenses
​
 
8,607,851
​
 
8,153,990
​
 
7,707,447

Gross profit
​
 
9,174,141
​
 
8,554,489
​
 
8,104,803

​
​
​
​
​
​
​
​
​
​

Selling, general and administrative expenses
​
 
5,713,529
​
 
5,303,332
​
 
4,918,427

Operating income
​
 
3,460,612
​
 
3,251,157
​
 
3,186,376

​
​
​
​
​
​
​
​
​
​

Other income (expense):
​
 
  ​
​
 
  ​
​
 
  ​

Interest expense
​
 
( 235,064 )
​
 
( 222,548 )
​
 
( 201,668 )

Interest income
​
 
7,323
​
 
7,295
​
 
4,900

Other, net
​
 
7,300
​
 
9,160
​
 
15,142

Total other expense
​
 
( 220,441 )
​
 
( 206,093 )
​
 
( 181,626 )

​
​
​
​
​
​
​
​
​
​

Income before income taxes
​
 
3,240,171
​
 
3,045,064
​
 
3,004,750

Provision for income taxes
​
 
701,962
​
 
658,384
​
 
658,169

Net income
​
$
2,538,209
​
$
2,386,680
​
$
2,346,581

​
​
​
​
​
​
​
​
​
​

Earnings per share-basic:
​
 
  ​
​
 
  ​
​
 
  ​

Earnings per share
​
$
2.98
​
$
2.73
​
$
2.59

Weighted-average common shares outstanding – basic
​
 
851,472
​
 
875,082
​
 
907,131

​
​
​
​
​
​
​
​
​
​

Earnings per share-assuming dilution:
​
 
  ​
​
 
  ​
​
 
  ​

Earnings per share
​
$
2.97
​
$
2.71
​
$
2.56

Weighted-average common shares outstanding – assuming dilution
​
 
855,919
​
 
880,572
​
 
914,976

​
See accompanying Notes to consolidated financial statements.
​
​

46

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Net income
​
$
2,538,209
​
$
2,386,680
​
$
2,346,581

Other comprehensive income (loss):
​
​
​
​
​
​
​
​
​

Foreign currency translation adjustments
​
 
69,567
​
 
( 82,201 )
​
 
36,392

Total other comprehensive income (loss)
​
​
69,567
​
​
( 82,201 )
​
​
36,392

​
​
​
​
​
​
​
​
​
​

Comprehensive income
​
$
2,607,776
​
$
2,304,479
​
$
2,382,973

​
See accompanying Notes to consolidated financial statements.
​
​

47

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands)
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
 
​
​
​
​
 
​
 
​
​
Accumulated
 
​
​

​
​
​
​
​
​
​
Additional
​
​
​
Other
​
​
​

​
​
Common Stock
​
Paid-In
​
Retained
​
Comprehensive
​
​
​

​
  ​ ​ ​
Shares
  ​ ​ ​
Par Value
  ​ ​ ​
Capital
  ​ ​ ​
Deficit
​
Income (Loss)
  ​ ​ ​
Total

Balance at December 31, 2022
 
935,298
​
$
9,353
​
$
1,302,759
​
$
( 2,375,860 )
​
$
2,996
​
$
( 1,060,752 )

Net income
 
—
​
 
—
​
 
—
​
 
2,346,581
​
 
—
​
 
2,346,581

Other comprehensive income
​
—
​
​
—
​
​
—
​
​
—
​
​
36,392
​
​
36,392

Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes
 
420
​
 
5
​
 
21,686
​
 
—
​
 
—
​
 
21,691

Net issuance of common stock upon exercise of stock options
 
3,896
​
 
39
​
​
71,114
​
 
—
​
 
—
​
 
71,153

Share based compensation
 
—
​
 
—
​
 
25,642
​
 
—
​
 
—
​
 
25,642

Share repurchases, including fees
 
( 53,522 )
​
 
( 536 )
​
 
( 77,196 )
​
 
( 3,073,423 )
​
 
—
​
 
( 3,151,155 )

Excise tax on share repurchases
​
—
​
​
—
​
​
—
​
​
( 28,830 )
​
​
—
​
​
( 28,830 )

Balance at December 31, 2023
 
886,092
​
$
8,861
​
$
1,344,005
​
$
( 3,131,532 )
​
$
39,388
​
$
( 1,739,278 )

Net income
 
—
​
 
—
​
 
—
​
 
2,386,680
​
 
—
​
 
2,386,680

Other comprehensive loss
​
—
​
​
—
​
​
—
​
​
—
​
​
( 82,201 )
​
​
( 82,201 )

Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes
 
381
​
 
3
​
 
23,741
​
 
—
​
 
—
​
 
23,744

Net issuance of common stock upon exercise of stock options
 
4,803
​
 
48
​
 
106,622
​
 
—
​
 
—
​
 
106,670

Share based compensation
 
—
​
 
—
​
 
26,964
​
 
—
​
 
—
​
 
26,964

Share repurchases, including fees
 
( 29,043 )
​
 
( 290 )
​
 
( 46,814 )
​
 
( 2,029,425 )
​
 
—
​
 
( 2,076,529 )

Excise tax on share repurchases
​
—
​
​
—
​
​
—
​
​
( 17,011 )
​
​
—
​
​
( 17,011 )

Balance at December 31, 2024
 
862,233
​
$
8,622
​
$
1,454,518
​
$
( 2,791,288 )
​
$
( 42,813 )
​
$
( 1,370,961 )

Net income
 
—
​
 
—
​
 
—
​
 
2,538,209
​
 
—
​
 
2,538,209

Other comprehensive income
​
—
​
​
—
​
​
—
​
​
—
​
​
69,567
​
​
69,567

Issuance of common stock under employee benefit plans, net of forfeitures and shares withheld to cover taxes
 
353
​
 
4
​
 
28,559
​
 
—
​
 
—
​
 
28,563

Net issuance of common stock upon exercise of stock options
 
2,051
​
 
21
​
 
53,869
​
 
—
​
 
—
​
 
53,890

Share based compensation
 
—
​
 
—
​
 
33,062
​
 
—
​
 
—
​
 
33,062

Share repurchases, including fees
 
( 22,728 )
​
 
( 228 )
​
 
( 39,716 )
​
 
( 2,057,018 )
​
 
—
​
 
( 2,096,962 )

Excise tax on share repurchases
​
—
​
​
—
​
​
—
​
​
( 18,720 )
​
​
—
​
​
( 18,720 )

Balance at December 31, 2025
 
841,909
​
$
8,419
​
$
1,530,292
​
$
( 2,328,817 )
​
$
26,754
​
$
( 763,352 )

​
See accompanying Notes to consolidated financial statements.
​
​

48

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Operating activities:
 
​
  ​
 
​
  ​
 
​
  ​

Net income
​
$
2,538,209
​
$
2,386,680
​
$
2,346,581

Adjustments to reconcile net income to net cash provided by operating activities:
​
 
​
​
 
  ​
​
 
  ​

Depreciation and amortization of property, equipment and intangibles
​
 
511,230
​
 
461,892
​
 
409,061

Amortization of debt discount and issuance costs
​
 
7,379
​
 
6,613
​
 
4,954

Deferred income taxes
​
 
( 37,544 )
​
 
( 50,238 )
​
 
48,232

Share-based compensation programs
​
 
35,115
​
 
28,931
​
 
27,511

Other
​
 
11,069
​
 
6,360
​
 
2,116

Changes in operating assets and liabilities:
​
 
​
​
 
​
​
 
​

Accounts receivable
​
 
( 35,505 )
​
 
30,495
​
 
( 35,539 )

Inventory
​
 
( 604,537 )
​
 
( 403,886 )
​
 
( 288,323 )

Accounts payable
​
 
576,413
​
 
421,364
​
 
207,061

Income taxes payable
​
 
4,537
​
 
( 8,690 )
​
 
33,889

Accrued payroll
​
 
12,072
​
 
( 30,810 )
​
 
11,234

Accrued benefits and withholdings
​
 
35,561
​
 
71,128
​
 
( 12,763 )

Other
​
 
( 292,006 )
​
 
129,737
​
 
280,070

Net cash provided by operating activities
​
 
2,761,993
​
 
3,049,576
​
 
3,034,084

​
​
​
​
​
​
​
​
​
​

Investing activities:
​
 
  ​
​
 
  ​
​
 
  ​

Purchases of property and equipment
​
 
( 1,168,815 )
​
 
( 1,023,387 )
​
 
( 1,006,264 )

Proceeds from sale of property and equipment
​
 
30,845
​
 
16,350
​
 
17,689

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

Other, including acquisitions, net of cash acquired
​
 
( 14,386 )
​
 
( 161,258 )
​
 
( 3,211 )

Net cash used in investing activities
​
 
( 1,152,356 )
​
 
( 1,166,805 )
​
 
( 995,936 )

​
​
​
​
​
​
​
​
​
​

Financing activities:
​
 
  ​
​
 
  ​
​
 
  ​

Proceeds from borrowings on revolving credit facility
​
 
—
​
 
30,000
​
 
3,227,000

Payments on revolving credit facility
​
 
—
​
 
( 30,000 )
​
 
( 3,227,000 )

Net proceeds (payments) of commercial paper
​
​
488,786
​
​
( 547,604 )
​
​
746,789

Proceeds from the issuance of long-term debt
​
 
—
​
 
498,910
​
 
749,655

Principal payments on long-term debt
​
​
—
​
​
—
​
​
( 300,000 )

Payment of debt issuance costs
​
 
( 3,997 )
​
 
( 4,076 )
​
 
( 4,989 )

Payment of excise tax on share repurchases
​
​
( 17,012 )
​
​
( 28,830 )
​
​
—

Repurchases of common stock
​
 
( 2,096,962 )
​
 
( 2,076,529 )
​
 
( 3,151,155 )

Net proceeds from issuance of common stock
​
 
80,823
​
 
128,981
​
 
91,316

Other
​
 
( 433 )
​
 
( 569 )
​
 
( 354 )

Net cash used in 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

Cash and cash equivalents at beginning of the period
​
 
130,245
​
 
279,132
​
 
108,583

Cash and cash equivalents at end of the period
​
$
193,793
​
$
130,245
​
$
279,132

​
​
​
​
​
​
​
​
​
​

Supplemental disclosures of cash flow information:
​
 
  ​
​
 
  ​
​
 
  ​

Income taxes paid
​
$
1,067,524
​
$
640,426
​
$
315,060

Interest paid, net of capitalized interest
​
 
226,752
​
 
209,094
​
 
189,611

​
See accompanying Notes to consolidated financial statements.
​
​
​

49

​

O’REILLY AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2025
​
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
​
Nature of Business:
O’Reilly Automotive, Inc. and Subsidiaries, collectively, “O’Reilly” or the “Company,” is a specialty retailer and supplier of automotive aftermarket parts.  The Company’s stores carry an extensive product line, including new and remanufactured automotive hard parts, maintenance items, and various automotive accessories.  As of December 31, 2025, the Company owned and operated 6,585 stores in 48 U.S. states, Puerto Rico, Mexico, and Canada, servicing both do-it-yourself (“DIY”) and professional service provider customers.  The Company’s robust distribution system provides stores with same-day or overnight access to an extensive inventory of hard-to-find items not typically stocked in the stores of other auto parts retailers.  
​
In May 2025, the number of shares of the Company’s authorized common stock was increased to 1.25 billion shares in order to implement a 15 -for-1 forward stock split of its common stock, which was completed on June 10, 2025.  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.  Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from “Additional paid-in capital” to “Common stock.”
​
Segment Reporting:
The Company conducts its operations in the U.S., Canada, and Mexico in a similar nature and, because of this, collectively represents its single operating segment, referred to as its automotive aftermarket parts segment.  Product sales of automotive aftermarket parts are the only material source of revenue for the Company.  The products sold by the Company, across all geographic areas, have similar economic characteristics, are sourced from the Company’s suppliers in a similar manner, and are available for sale to all of the Company’s customers through the Company’s stores.  All of the Company’s stores have similar characteristics, including the nature of the products and services, the type and class of customers, and the methods used to distribute products and provide service to its customers.  The loss of any single customer would not have a material adverse effect on the Company.  The chief operating decision maker regularly reviews consolidated financial information, supplemented with other specific information when needed, to make decisions about the resources to be allocated and to assess performance.  Due to these reasons, the Company has one operating segment, referred to as its automotive aftermarket parts segment.  
​
The Company’s chief operating decision maker is its Chief Executive Officer.  The Company evaluates its reportable segment primarily on the basis of sales and segment profit, which is net income.  Net income is utilized by the chief operating decision maker to evaluate budget to actual results, as well as trends over time, to allocate resources, and evaluate performance.  See Note 2 for further information concerning the Company’s segment reporting.
​
Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All inter-company balances and transactions have been eliminated in consolidation.
​
Use of Estimates:
The preparation of the consolidated financial statements, in conformity with United States (“U.S.”) generally accepted accounting principles (“GAAP”), requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.  Actual results could materially differ from those estimates.
​
Cash Equivalents:
Cash equivalents include investments with maturities of 90 days or less on the date of purchase.  
​
Foreign Currency:
The Company accounts for its Mexican operations using the local market currency, the Mexican peso, and converts its financial statements compiled for these operations from the Mexican peso to U.S. dollars.  The Company accounts for its Canadian operations using the local market currency, the Canadian dollar, and converts its financial statements compiled for these operations from the Canadian dollar to U.S. dollars.  The cumulative gain or loss on currency translation is included as a component of “Accumulated other

50

​

comprehensive income (loss)” on the accompanying Consolidated Balance Sheets.  See Note 12 for further information concerning the Company’s accumulated other comprehensive income (loss).  
​
Accounts Receivable:
The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments.  The Company considers the following factors when determining if collection is reasonably assured:  customer creditworthiness, past transaction history with the customer, current expectations of future economic and industry trends, changes in customer payment terms, and management’s expectations.  Allowances for doubtful accounts are determined based on historical experience and an evaluation of the current composition of accounts receivable.
​
The Company grants credit to certain professional service provider and jobber customers who meet the Company’s pre-established credit requirements.  Concentrations of credit risk with respect to these receivables are limited because the Company’s customer base consists of a large number of relatively small customers, spreading the credit risk across a broad base regarded as a single class of financing receivable by the Company.  The Company also controls this credit risk through credit approvals, credit limits and accounts receivable, and credit monitoring procedures.  Generally, the Company does not require security when credit is granted to customers.  Credit is granted to customers on a short-term basis, consisting primarily of daily, weekly, or monthly accounts.  Credit losses are provided for in the Company’s consolidated financial statements and have consistently been within management’s expectations.
​
Amounts due to the Company from its Team Members are included in “Accounts receivable” on the accompanying Consolidated Balance Sheets.  These amounts consist primarily of purchases of merchandise on Team Member accounts.  Accounts receivable due from Team Members was approximately $ 0.7 million and $ 0.8 million as of December 31, 2025 and 2024, respectively.
​
Amounts Receivable from Suppliers:
The Company receives concessions from its suppliers through a variety of programs and arrangements, including allowances for new stores and warranties, volume purchase rebates, and co-operative advertising.  Co-operative advertising allowances that are incremental to the Company’s advertising program, specific to a product or event and identifiable for accounting purposes are reported as a reduction of advertising expense in the period in which the advertising occurred.  All other supplier concessions are recognized as a reduction to the cost of sales.  Amounts receivable from suppliers also include amounts due to the Company for changeover merchandise and product returns.  The Company regularly reviews supplier receivables for collectability and assesses the need for a reserve for uncollectable amounts based on an evaluation of the Company’s suppliers’ financial positions and corresponding abilities to meet financial obligations.  Management does not believe there is a reasonable likelihood that the Company will be unable to collect the aggregate amounts receivable from suppliers, and the Company did no t record a reserve for uncollectable amounts from suppliers in the consolidated financial statements as of December 31, 2025 or 2024.
​
Inventory:
Inventory, which consists of automotive hard parts, maintenance items, accessories, and tools, is stated at the lower of cost or market.  Inventory also includes capitalized costs related to procurement, warehousing, and distribution centers (“DCs”).  Cost has been determined using the last-in, first-out (“LIFO”) method, which more accurately matches costs with related revenues.  The replacement cost of inventory was $ 6.25 billion and $ 5.32 billion as of December 31, 2025 and 2024, respectively.  
​
Fair Value of Financial Instruments:
The Company uses the fair value hierarchy, which prioritizes the inputs used to measure the fair value of certain of its financial instruments.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).  The Company uses the income and market approaches to determine the fair value of its assets and liabilities.  The three levels of the fair value hierarchy are set forth below:

● Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
● Level 2 – Inputs other than quoted prices in active markets included within Level 1 that are observable for the asset or liability, either directly or indirectly.
● Level 3 – Unobservable inputs for the asset or liability.
​
See Note 3 for further information concerning the Company’s financial and non-financial assets and liabilities measured at fair value on a recurring and non-recurring basis.
​

51

​

Property and Equipment:
Property and equipment are carried at cost.  Depreciation is calculated using the straight-line method, generally over the estimated useful lives of the assets.  Leasehold improvements are amortized over the lesser of the lease term or the estimated economic life of the assets.  The lease term includes renewal options determined by management at lease inception, for which failure to execute renewal options would result in a substantial economic penalty to the Company.  Maintenance and repairs are charged to expense as incurred.  Upon retirement or sale, the cost and accumulated depreciation are eliminated and the gain or loss, if any, is recognized in the Company’s Consolidated Statements of Income.  The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable.  See Note 5 for further information concerning the Company’s property and equipment.
​
Goodwill and Other Intangibles:
The accompanying Consolidated Balance Sheets at December 31, 2025 and 2024, include goodwill and other intangible assets recorded as the result of acquisitions.  The Company operates a single reporting unit and evaluates goodwill and indefinite-lived intangibles for impairment annually during the fourth quarter, or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values.  The goodwill impairment test includes an optional qualitative assessment.  The Company’s qualitative assessment found no evidence to suggest it is more likely than not that its fair value is less than its carrying amount, including goodwill, as of December 31, 2025 and 2024.  As such, no goodwill impairment adjustment was required as of December 31, 2025 and 2024.  Finite-lived intangibles are carried at amortized cost and amortization is calculated using the straight-line method, generally over the estimated useful lives of the intangibles.  See Note 7 for further information concerning the Company’s goodwill and other intangibles.
​
Leases:
The Company leases certain office space, retail stores, distribution centers, and equipment under long-term, non-cancelable operating leases.  The Company does not separate non-lease components from lease components for any current lease contracts.  Leases generally include renewal options and some include options to purchase, provisions for percentage rent based on sales, and/or incremental step increase provisions.  The exercise of renewal options is typically at the Company’s sole discretion and all operating lease expense is recognized on a straight-line basis over the lease term.  The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.  The Company rents or subleases certain surplus real estate to third parties.  Right-of-use assets and corresponding operating lease liabilities are recognized for all leases with an initial term greater than 12 months.  See Note 6 for further information concerning the Company’s operating leases.
​
Impairment of Long-Lived Assets:
The Company reviews its long-lived assets, including its right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.  When such an event occurs, the Company compares the sum of the undiscounted expected future cash flows of the asset (asset group) with the carrying amounts of the asset.  If the undiscounted expected future cash flows are less than the carrying value of the assets, the Company measures the amount of impairment loss as the amount by which the carrying amount of the assets exceeds the fair value of the assets.  The Company has not historically recorded any material impairment charges to its long-lived assets.  See Note 5 for further information concerning the Company’s impairment of long-lived assets activities.
​
Valuation of Investments:
The Company has an unsecured obligation to pay, in the future, the value of deferred compensation and a Company match relating to employee participation in the Company’s nonqualified deferred compensation plan (the “Deferred Compensation Plan”).  The future obligation is adjusted to reflect the performance, whether positive or negative, of selected investment measurement options, chosen by each participant.  The Company invests in various marketable securities with the intention of selling these securities to fulfill its future obligations under the Deferred Compensation Plan.  The investments in this plan were stated at fair value based on quoted market prices, were accounted for as trading securities, and were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  See Note 3 for further information concerning the fair value measurements of the Company’s marketable securities.  See Note 14 for further information concerning the Company’s benefit plans.
​
Variable Interest Entities:
The Company invested in certain tax credit funds that promote renewable energy.  These investments generated a return primarily through the realization of federal tax credits and other tax benefits.  The Company accounts for the tax attributes of its renewable energy investments using the deferral method.  Under this method, realized investment tax credits and other tax benefits are recognized as a reduction of the renewable energy investments.
​

52

​

The Company has determined its investment in these tax credit funds were investments in variable interest entities (“VIEs”).  The Company analyzes any investments in VIEs at inception and again if certain triggering events are identified to determine if it is the primary beneficiary.  The Company considers a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIEs’ economic performance including, but not limited to, the ability to direct financing, leasing, construction, and other operating decisions and activities.  As of December 31, 2025, the Company had invested in five unconsolidated tax credit fund entities that were considered to be VIEs and concluded it was not the primary beneficiary of any of the entities, as it did not have the power to control the activities that most significantly impact the entities, and has therefore accounted for these investments using the equity method.  During the year ended December 31, 2024, the Company exited one unconsolidated tax credit fund entity, considered a VIE, and received a return of investment payment in the amount of $ 1.5 million, which was included in “Return of (investment in) tax credit equity investments” on the accompanying Consolidated Statements of Cash Flows.  
​
The Company’s maximum exposure to losses associated with these VIEs is generally limited to its net investment, which was $ 12.8 million as of December 31, 2025, and was included in “Other assets, net” on the accompanying Consolidated Balance Sheets.  The Company did not recognize investment tax credits from association with these VIEs during the years ended December 31, 2025 and 2024.  During the year ended December 31, 2023, the Company recognized investment tax credits from association with these VIEs in the amounts of $ 0.5 million, all of which were realized through reductions in cash income taxes paid and were reflected as a component of the change in “Income taxes payable” on the accompanying Consolidated Statements of Cash Flows for the respective years.
​
Self-Insurance Reserves:
The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability, and property loss.  With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation, and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure.  The Company estimates its self-insurance liabilities by considering a number of factors, including historical claims experience and trend-lines, projected cost inflation, growth patterns, and exposure forecasts.  Certain of these liabilities were recorded at an estimate of their net present value.
​
The following table identifies the components of the Company’s self-insurance reserves as of December 31, 2025 and 2024 (in thousands):
​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

Self-insurance reserves (undiscounted)
​
$
462,777
​
$
286,566

Self-insurance reserves (discounted)
​
 
443,027
​
 
268,308

​
The current portion of the Company’s discounted self-insurance reserves totaled $ 297.3 million and $ 149.4 million as of December 31, 2025 and 2024, respectively, which was included in “Self-insurance reserves” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  The remainder was included in “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.
​
Warranties:
The Company provides warranties on certain merchandise it sells with warranty periods ranging from 30 days to limited lifetime warranties.  The risk of loss arising from warranty claims is typically the obligation of the Company’s suppliers.  Certain suppliers provide upfront allowances to the Company in lieu of accepting the obligation for warranty claims.  For this merchandise, when sold, the Company bears the risk of loss associated with the cost of warranty claims.  Differences between supplier allowances received by the Company, in lieu of warranty obligations and estimated warranty expense, are recorded as an adjustment to cost of sales.  Estimated warranty costs, which are recorded as obligations at the time of sale, are based on the historical failure rate of each individual product line.  The Company’s historical experience has been that failure rates are relatively consistent over time and that the ultimate cost of warranty claims to the Company has been driven by volume of units sold as opposed to fluctuations in failure rates or the variation of the cost of individual claims.  See Note 10 for further information concerning the Company’s aggregate product warranty liabilities.
​
Litigation Accruals:
The Company is currently involved in litigation incidental to the ordinary conduct of the Company’s business.  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.

53

​

​
Share Repurchases:
In January of 2011, the Company’s Board of Directors approved a share repurchase program.  Under the program, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements, and overall market conditions.  All shares repurchased under the share repurchase program are retired and recorded under the par value method on the accompanying Consolidated Balance Sheets.  See Note 11 for further information concerning the Company’s share repurchase program.
​
Revenue Recognition:
The Company’s primary source of revenue is derived from the sale of automotive aftermarket parts and merchandise to its customers.  Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, in an amount representing the consideration the Company expects to receive in exchange for transferring goods to the customer.  Generally, the Company’s performance obligations are satisfied when the customer takes possession of the merchandise, which normally occurs immediately at the point of sale or through same day delivery of the merchandise.  All sales are recorded net of estimated returns allowances, discounts, and taxes.  The Company does not recognize revenue related to product warranties, as these are considered assurance warranty obligations.  
​
Over-the-counter retail sales to DIY customers are recorded when the customer takes possession of the merchandise.  Internet retail sales, included in sales to DIY customers, are recorded when the merchandise is shipped or when the customer picks up the merchandise at a store.  Sales to professional service provider customers, also referred to as “commercial sales,” are recorded upon same-day delivery of the merchandise to the customer, generally at the customer’s place of business.  Other sales and sales adjustments primarily includes sales to Team Members, wholesale sales to other retailers (“jobber sales”), equipment sales, discounts, rebates, deferred revenue adjustments relating to the Company’s retail loyalty program, and adjustments to estimated sales returns allowances.  Sales to Team Members are recorded when the Team Member takes possession of the merchandise.  Jobber sales are recorded upon shipment of the merchandise from a regional distribution center with same-day delivery to the jobber customer’s location.
​
The Company maintains a retail loyalty program named O’Reilly O’Rewards, which represents a performance obligation.  The Company records a deferred revenue liability, based on a breakage adjusted, estimated redemption rate, and a corresponding reduction in revenue in periods when loyalty points are earned by members.  The Company recognizes revenue and a corresponding reduction to the deferred revenue liability in periods when loyalty program issued coupons are redeemed by members, generally within a period of three months from issuance, or when unredeemed points expire, generally within 12 months after the date they were earned, which satisfies the Company’s performance obligation.  See Note 13 for further information concerning the Company’s revenue.
​
Cost of Goods Sold and Selling, General and Administrative Expenses:
Below follows the primary costs classified in each major expense category.
​
Cost of goods sold, including warehouse and distribution expenses:

● Total cost of merchandise sold, including freight expenses associated with acquiring merchandise and with moving merchandise inventories from the Company’s distribution centers to the stores and defective merchandise and warranty costs.
● Supplier allowances and incentives, including allowances that are not reimbursements for specific, incremental, and identifiable costs and cash discounts on payments to suppliers.
● Costs associated with the Company’s supply chain, including payroll and benefit costs, warehouse occupancy costs, transportation costs, depreciation, and inventory shrinkage.
​
Selling general and administrative expenses:

● Payroll benefit costs for store and corporate Team Members.
● Occupancy costs of store and corporate facilities.
● All expenses associated with Hub stores.
● Depreciation and amortization related to store and corporate assets.
● Vehicle expenses for store and Hub delivery services.
● Self-insurance costs.
● Closed store expenses.
● Other administrative costs, including accounting, legal, and other professional services; bad debt, banking, and credit card fees; supplies; travel; and advertising costs.

54

​

​
Advertising Expenses:
Advertising expense consists primarily of expenses related to the Company’s integrated marketing program, which includes radio, in-store, digital, and social media promotions, as well as sports and event sponsorships and direct mail and newspaper promotional distribution.  The Company expenses advertising costs as incurred.  The Company also participates in cooperative advertising arrangements with certain of its suppliers.  Advertising expense, net of cooperative advertising allowances from suppliers that were incremental to the advertising program, specific to the product or event and identifiable for accounting purposes, were $ 91.1 million, $ 90.7 million and $ 85.7 million for the year ended December 31, 2025, 2024, and 2023, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income.
​
Share-Based Compensation and Benefit Plans:
The Company sponsors share-based compensation plans and benefit plans.  The Company recognizes compensation expense over the requisite service period for its share-based plans based on the fair value of the awards on the date of the grant, award, or issuance and accounts for forfeitures as they occur.  Share-based plans include stock option awards, restricted stock awards, and stock appreciation rights issued under the Company’s incentive plans and stock issued through the Company’s employee stock purchase plan.  See Note 14 for further information concerning the Company’s share-based compensation and benefit plans.
​
Pre-Opening Expenses:
Costs associated with the opening of new stores, which consist primarily of payroll and occupancy costs, are charged to “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income as incurred.  Costs associated with the opening of new distribution centers, which consist primarily of payroll and occupancy costs, are included in “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income as incurred.
​
Interest Expense:
The Company capitalizes interest costs as a component of construction in progress, based on the weighted-average interest rates incurred on its long-term borrowings.  Total interest costs capitalized for the year ended December 31, 2025, 2024, and 2023, were $ 17.1 million, $ 14.1 million and $ 7.2 million, respectively.
​
In conjunction with the issuance or amendment of long-term debt instruments, the Company incurs various costs, including debt registration fees, accounting and legal fees, and underwriter and book runner fees.  Debt issuance costs related to the Company’s long-term unsecured senior notes are recorded as a reduction of the principal amount of the corresponding unsecured senior notes.  Debt issuance costs related to the Company’s unsecured revolving credit facility are recorded as an asset.  These debt issuance costs have been deferred and are being amortized over the term of the corresponding debt instrument, and the amortization expense is included in “Interest expense” on the accompanying Consolidated Statements of Income.  Deferred debt issuance costs totaled $ 21.6 million and $ 24.0 million net of accumulated amortization, as of December 31, 2025 and 2024, respectively, of which $ 4.1 million and $ 1.1 million were included in “Other assets, net” as of December 31, 2025 and 2024, respectively, with the remainder included in “Long-term debt” on the accompanying Consolidated Balance Sheets.
​
The Company issued its long-term unsecured senior notes and commercial paper program at a discount.  The original issuance discounts on the senior notes are recorded as a reduction of the principal amount of the corresponding senior notes and are accreted over the term of the applicable senior note, and the original issuance discounts on the commercial paper program are recorded as a reduction of the face amount of the borrowings, with the accretion expenses included in “Interest expense” on the accompanying Consolidated Statements of Income.  Original issuance discounts, net of accretion, totaled $ 5.6 million and $ 6.2 million as of December 31, 2025 and 2024, respectively.
​
See Note 9 for further information concerning debt issuance costs and original issuance discounts associated with the Company’s issuances of long-term debt instruments.
​
Income Taxes:
The Company accounts for income taxes using the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.  Under this method, deferred tax assets and liabilities are determined based on differences between the U.S. GAAP basis and tax basis of assets and liabilities using enacted tax rules and rates currently scheduled to be in effect for the year in which the differences are expected to reverse.  Tax carry forwards are also recognized in deferred tax assets and liabilities under this method.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period of the enactment date.  The Company would record a valuation allowance against deferred tax assets to the extent it is more likely than not the amount will not be realized, based upon evidence available at the time of the determination and any change in the valuation allowance is recorded in the period of a change in such determination.  The

55

​

Company did no t establish a valuation allowance for deferred tax assets as of December 31, 2025 and 2024, as it was considered more likely than not that deferred tax assets were realizable through a combination of future taxable income, the realization of deferred tax liabilities and tax planning strategies.
​
The Company regularly reviews its potential tax liabilities for tax years subject to audit.  The amount of such liabilities is based on various factors, such as differing interpretations of tax regulations by the responsible tax authority, experience with previous tax audits, and applicable tax law rulings.  In management’s opinion, adequate provisions for income taxes have been made for all years presented.  The estimates of the Company’s potential tax liabilities contain uncertainties because management must use judgment to estimate the exposures associated with the Company’s various tax positions and actual results could differ from estimates.  
​
In July 2025, H.R. 1 was signed into law in the U.S., which contained a broad range of tax reform provisions affecting businesses.  The effects of the legislation, which were immaterial, are reflected in the accompanying consolidated financial statements for the period ended December 31, 2025.
​
See Note 17 for further information concerning the Company’s income taxes.
​
Earnings Per Share:
Basic earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding during the fiscal period.  Diluted earnings per share is calculated by dividing the weighted-average number of common shares outstanding plus the common stock equivalents associated with the potential impact of dilutive stock options.  Certain common stock equivalents that could potentially dilute basic earnings per share in the future were not included in the fully diluted computation because they would have been antidilutive.  Generally, stock options are antidilutive and excluded from the earnings per share calculation when the exercise price exceeds the market price of the common shares.  See Note 18 for further information concerning the Company’s common stock equivalents.
​
New Accounting Pronouncements:
In December of 2023, FASB issued Accounting Standard Update ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”).  ASU 2023-09 enhances the transparency and decision usefulness of income tax disclosures.  Under ASU 2023-09, a public entity would be required to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, such as if the effect of the reconciling items is equal to or greater than five percent of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate.  Entities would also have to disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid, along with income/loss from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign.  ASU 2023-09 is effective for annual reporting periods beginning after December 15, 2024.  ASU 2023-09 allows for early adoption for annual financial statements that have not yet been issued and allows retrospective and prospective adoption.  The Company adopted this guidance beginning with its fourth quarter ending December 31, 2025.  The application of this new guidance did not have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only.  See Note 17 for further information concerning the Company’s income taxes.
​
In November of 2024, FASB issued Accounting Standard Update ASU No. 2024-03, “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”).  Under ASU 2024-03, a public entity would be required to disclose information about purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses.  Entities would also have to disclose other specific expenses, gains, or losses that are already required to be disclosed under GAAP in this same disclosure, a qualitative description of the amounts remaining that are not separately disaggregated quantitatively, and the total amount of selling expenses, as well as an entity’s definition of selling expenses.  ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.  ASU 2024-03 allows for early adoption and requires either prospective adoption to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements.  The Company will adopt this guidance beginning with its fourth quarter ending December 31, 2027.  The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows, as the guidance pertains to disclosure only.
​
In September of 2025, the FASB issued ASU No. 2025-06, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 35040): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”).  ASU 2025-06 modernizes the accounting for software costs related to internal-use software.  Under ASU 2025-06, public entities would be required to start capitalizing software costs when two thresholds are met: management has authorized and committed to funding the software project and it is probable

56

​

that the project will be completed and the software will be used to perform the function intended.  ASU 2025-06 will also require entities to follow different disclosure requirements for capitalized internal-use software costs.  ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods.  Early adoption is permitted and allows for prospective, modified, or retrospective transition approach.  The Company will adopt this guidance beginning with its first quarter ending March 31, 2028.  The application of this new guidance is not expected to have a material impact on the Company’s consolidated financial condition, results of operations, or cash flows.  
  ​
NOTE 2 – SEGMENT REPORTING
​
The Company conducts its operations in the U.S., Canada, and Mexico, and collectively this represents its single operating segment, referred to as its automotive aftermarket parts segment, which is its only reportable segment .  There have been no changes in the determination of segmentation or the measurements used to determine reported segment net income during the year ended December 31, 2025.  The measure of segment assets is reported as “Total assets” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  At December 31, 2025 and 2024, the Company’s consolidated long-lived assets were located primarily in the United States and consolidated revenue was primarily generated within the United States for the years ending December 31, 2025, 2024 and 2023, with immaterial assets and revenues associated with international operations.  
​
The table below identifies the Company’s significant segment expenses regularly provided to the chief operating decision maker that are included in reported segment profit or loss, which is consolidated net income, for the years ended December 31, 2025, 2024 and 2023 (in thousands):
​

​

​

​

​

​

​

​

​

​

​

​
​
​
For the Year Ended

​
​
​
December 31, 

​
​
​
2025
​
2024
​
2023

Automotive aftermarket parts segment:
​
​
​
​
​
​
​
​
​

Sales
​
$
17,781,992
​
$
16,708,479
​
$
15,812,250

Cost of goods sold, including warehouse and distribution expenses
​
​
8,607,851
​
​
8,153,990
​
​
7,707,447

Gross profit
​
​
9,174,141
​
​
8,554,489
​
​
8,104,803

Less:
Team Member compensation expense (1)
​
​
3,587,196
​
​
3,334,574
​
​
3,139,448

​
Rent expense (2)
​
​
461,744
​
​
429,686
​
​
402,572

​
Depreciation and amortization expense
​
​
415,209
​
​
372,878
​
​
333,678

​
Advertising expense
​
​
91,061
​
​
90,744
​
​
85,706

​
Other segment items (3)
​
​
1,143,696
​
​
1,058,995
​
​
936,981

​
Interest expense
​
​
235,064
​
​
222,548
​
​
201,668

​
Provision for income taxes
​
​
701,962
​
​
658,384
​
​
658,169

Consolidated net income
​
$
2,538,209
​
$
2,386,680
​
$
2,346,581

(1)
Team Member compensation expense derived from selling, general and administrative expenses included in Segment net income includes payroll expense, benefits and withholdings expense, share-based compensation expense, and nonqualified deferred compensation expense.

(2)
Rent expense derived from selling, general and administrative expenses included in Segment net income includes rent and common area maintenance expense.

(3)
Other segment items included in Segment net income includes vehicle expenses, utilities expense, real estate taxes and insurance expense, bad debt and banking fees expense, interest income, and other operating expenses.    

​
NOTE 3 – FAIR VALUE MEASUREMENTS
​
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis:
The Company invests in various marketable securities with the intention of selling these securities to fulfill its future unsecured obligations under the Company’s nonqualified deferred compensation plan.  See Note 14 for further information concerning the Company’s benefit plans.
​
The Company’s marketable securities were accounted for as trading securities and the carrying amount of its marketable securities were included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  The Company recorded an increase in fair value related to its marketable securities in the amount of $ 8.0 million and $ 7.1 million for the year ended December 31, 2025 and 2024, respectively, which were included in “Other income (expense)” on the accompanying Consolidated Statements of Income.
​

57

​

The tables below identify the estimated fair value of the Company’s marketable securities, determined by reference to quoted market prices (Level 1), as of December 31, 2025 and 2024 (in thousands):
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025

​
​
Quoted Priced in Active Markets
​
Significant Other
​
Significant
​
​
​

​
​
for Identical Instruments
​
Observable Inputs
​
Unobservable Inputs
​
​
​

​
  ​ ​ ​
(Level 1)
  ​ ​ ​
(Level 2)
  ​ ​ ​
(Level 3)
  ​ ​ ​
Total

Marketable securities
​
$
67,840
​
$
—
​
$
—
​
$
67,840

​
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2024

​
​
Quoted Prices in Active Markets
​
Significant Other
​
Significant
​
​

​
​
for Identical Instruments
​
Observable Inputs
​
Unobservable Inputs
​
​

​
  ​ ​ ​
(Level 1)
  ​ ​ ​
(Level 2)
  ​ ​ ​
(Level 3)
  ​ ​ ​
Total

Marketable securities
​
$
65,156
​
$
—
​
$
—
​
$
65,156

​
Non-financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis:
Certain long-lived non-financial assets and liabilities may be required to be measured at fair value on a nonrecurring basis in certain circumstances, including when there is evidence of impairment.  These non-financial assets and liabilities may include assets acquired in a business combination or property and equipment that are determined to be impaired.  As of December 31, 2025 and 2024, the Company did no t have any material non-financial assets or liabilities that had been measured at fair value subsequent to initial recognition.
​
Fair Value of Financial Instruments:
The carrying amounts of the Company’s senior notes, unsecured revolving credit facility borrowings, and commercial paper program borrowings are included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  
​
The table below identifies the estimated fair value of the Company’s senior notes, using the market approach.  The fair values as of December 31, 2025 and 2024, were determined by reference to quoted market prices of the same or similar instruments (Level 2) (in thousands):
​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025
​
December 31, 2024

​
​
Carrying Amount
​
Estimated Fair Value
​
Carrying Amount
​
Estimated Fair Value

Senior Notes
​
$
5,327,587
​
$
5,308,675
​
$
5,321,219
​
$
5,151,768

​
The carrying amount of the Company’s unsecured revolving credit facility approximates fair value (Level 2), as borrowings under the facility bear variable interest at current market rates.  The carrying amount of the Company’s commercial paper program approximates fair value (Level 2), as borrowings under the program bear interest at market rates prevailing at the time of issuance.  See Note 9 for further information concerning the Company’s senior notes, unsecured revolving credit facility, and commercial paper program.  
​
The accompanying Consolidated Balance Sheets include other financial instruments, including cash and cash equivalents, accounts receivable, amounts receivable from suppliers, and accounts payable.  Due to the short-term nature of these financial instruments, the Company believes that the carrying values of these instruments approximate their fair values.
​
NOTE 4 – ALLOWANCE FOR DOUBTFUL ACCOUNTS
​
The following table identifies the changes in the Company’s allowance for doubtful accounts included in “Accounts receivable” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024 (in thousands):
​

​

​

​

​

​

​

​
​
2025
​
2024

Allowance for doubtful accounts, balance at January 1
​
$
22,545
​
$
15,834

Reserve accruals
​
 
13,109
​
 
14,837

Uncollectable accounts written-off
​
​
( 10,134 )
​
​
( 7,973 )

Foreign currency translation
​
 
331
​
 
( 153 )

Allowance for doubtful accounts, balance at December 31
​
$
25,851
​
$
22,545

​
​
​

58

​

NOTE 5 – PROPERTY AND EQUIPMENT
​
The following table identifies the types and balances of property and equipment included in “Property and equipment, at cost” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024, and includes the estimated useful lives for its types of property and equipment (in thousands, except original useful lives):
​
​

​

​

​

​

​

​

​

​

​
  ​ ​ ​
Original Useful
  ​ ​ ​
December 31,

​
​
Lives
​
2025
​
2024

Land
​
​
​
$
1,228,262
 
$
1,070,098

Buildings and building improvements
​
15 – 39 years
​
 
3,830,809
 
​
3,407,685

Leasehold improvements
​
3 – 25 years
​
 
1,438,562
 
​
1,277,447

Furniture, fixtures and equipment
​
3 – 20 years
​
 
2,461,876
 
​
2,250,540

Vehicles
​
5 – 10 years
​
 
790,700
 
​
748,315

Construction in progress
​
​
​
 
472,040
 
​
438,169

Total property and equipment
​
​
​
 
10,222,249
 
​
9,192,254

Less: accumulated depreciation and amortization
​
​
​
 
3,964,824
 
​
3,587,098

Net property and equipment
​
​
​
$
6,257,425
​
$
5,605,156

​
The Company recorded depreciation and amortization expense related to property and equipment in the amounts of $ 504.9 million, $ 457.0 million, and $ 404.9 million for the year ended December 31, 2025, 2024, and 2023, respectively, which were included in “Selling, general and administrative expenses” and “Cost of goods sold, including warehouse and distribution expenses” on the accompanying Consolidated Statements of Income.
​
The Company recorded charges of $ 2.5 million related to property and equipment for the year ended December 31, 2025, primarily due to certain hardware and software projects that were disposed or were no longer expected to provide a long-term benefit; $ 0.5 million related to property and equipment for the year ended December 31, 2024, primarily due to the write-down of equipment that exceeded market value; and $ 2.2 million related to property and equipment for the year ended December 31, 2023, primarily due to the write-down of equipment that exceeded market value and certain hardware and software projects that were disposed or were no longer expected to provide a long-term benefit, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income.  
​
NOTE 6 – LEASES
​
Operating Lease Commitments:
The following table summarizes Total lease cost for the years ended December 31, 2025, 2024, and 2023, which was primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income (in thousands):
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

​
  ​ ​ ​
2025
​
2024
​
2023

Operating lease cost
​
$
457,952
​
$
425,481
​
$
398,537

Short-term operating lease cost
​
 
8,187
​
 
8,206
​
 
9,508

Variable operating lease cost
​
 
130,778
​
 
114,634
​
 
99,911

Sublease income
​
 
( 4,796 )
​
 
( 4,826 )
​
 
( 4,805 )

Total lease cost
​
$
592,121
​
$
543,495
​
$
503,151

​
The following table summarizes other lease related information for the years ended December 31, 2025 and 2024 (in thousands):
​

​

​

​

​

​

​

​

​
  ​ ​ ​
For the Year Ended

​
​
December 31, 

​
​
2025
​
2024

Cash paid for amounts included in the measurement of operating lease liabilities:
 
​
  ​
​
​
​

​
Operating cash flows from operating leases
​
$
453,544
​
$
416,714

Right-of-use assets obtained in exchange for new operating lease liabilities
​
​
375,163
​
​
423,196

​

59

​

The following table identifies the future minimum lease payments under all of the Company’s operating leases for each of the next five years, and in the aggregate thereafter, and reconciles to the present value of the “Operating lease liabilities, less current portion” included in the accompanying Consolidated Balance Sheet as of December 31, 2025 (in thousands):
​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025

​
  ​ ​ ​
Related Parties
  ​ ​ ​
Non-Related Parties
  ​ ​ ​
Total

2026
​
$
4,188
​
$
442,624
​
$
446,812

2027
​
​
3,370
​
​
410,365
​
​
413,735

2028
​
 
3,182
​
 
360,190
​
 
363,372

2029
​
 
1,119
​
 
312,368
​
 
313,487

2030
​
 
336
​
 
268,913
​
 
269,249

Thereafter
​
 
25
​
 
1,213,576
​
 
1,213,601

Total operating lease payments
​
 
12,220
​
 
3,008,036
​
 
3,020,256

Less: present value discount
​
 
897
​
 
544,764
​
 
545,661

Total operating lease liabilities
​
 
11,323
​
 
2,463,272
​
 
2,474,595

Less: current portion of operating lease liabilities
​
 
4,188
​
 
435,719
​
 
439,907

Operating lease liabilities, less current portion
​
$
7,135
​
$
2,027,553
​
$
2,034,688

​
See Note 16 for further information concerning the Company’s related party operating leases.
​
The future minimum lease payments under the Company’s operating leases, in the table above, do not include potential amounts for percentage rent and other variable operating lease related costs and have not been reduced by expected future minimum sublease income under non-cancelable subleases, which was approximately $ 8.8 million as of December 31, 2025.  The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases was 8.9 years and 4.6 %, respectively, as of December 31, 2025.  
​
The present value discount component of the future minimum lease payments under the Company’s operating leases, in the table above, was primarily calculated using the Company’s incremental borrowing rate based on information available at the lease commencement or modification date.  Inputs for the calculation of the Company’s incremental borrowing rate include valuations and yields of U.S. domestic investment grade corporate bonds and the applicable credit spread over comparable U.S. Treasury rates, adjusted to a collateralized basis by estimating the credit spread improvement that would result from an upgrade of one ratings classification.  When the implicit rate of a lease is available, the implicit rate is used in the calculation and not the Company’s incremental borrowing rate.
​
​
NOTE 7 – GOODWILL AND OTHER INTANGIBLES
​
Goodwill:
Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist.  Goodwill is not amortizable for financial statement purposes.  The Company did no t record any goodwill impairment during the years ended December 31, 2025, 2024, or 2023.
​
The following table identifies the changes in goodwill, which were included in “Goodwill” on the accompanying Consolidated Balance Sheets for the years ended December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​
  ​ ​ ​
2025
  ​ ​ ​
2024

Goodwill, balance at January 1,
​
$
930,161
​
$
897,696

Change in goodwill related to acquisitions
​
 
4,657
​
 
52,105

Foreign currency translation
​
​
13,390
​
​
( 19,640 )

Goodwill, balance at December 31, 
​
$
948,208
​
$
930,161

​

60

​

Intangibles Other than Goodwill:
The following table identifies the components of the Company’s intangible assets, inclusive of foreign currency translation adjustments, which were included in “Other assets, net” on the accompanying Consolidated Balance Sheets for the years ended December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
December 31, 2025
​
December 31, 2024

​
  ​ ​ ​
Cost of
  ​ ​ ​
Accumulated
​
Net
​
Cost of
  ​ ​ ​
Accumulated
  ​ ​ ​
Net

​
​
Intangibles
​
Amortization
​
Intangibles
​
Intangibles
​
Amortization
​
Intangibles

Finite-lived intangible assets:
 
​
  ​
 
​
  ​
​
​
  ​
​
​
  ​
 
​
  ​
 
​
  ​

Trade names (1)
​
$
2,933
​
$
( 2,230 )
​
$
703
​
$
2,536
​
$
( 1,612 )
​
$
924

Non-compete agreements (2)
​
​
2,141
​
​
( 1,736 )
​
​
405
​
​
2,161
​
​
( 1,548 )
​
​
613

Customer relationships (3)
​
​
41,506
​
​
( 10,023 )
​
​
31,483
​
​
38,758
​
​
( 6,193 )
​
​
32,565

Total finite-lived intangible assets
​
​
46,580
​
​
( 13,989 )
​
​
32,591
​
​
43,455
​
​
( 9,353 )
​
​
34,102

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Indefinite-lived intangible assets:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Trade names
​
​
39,103
​
​
—
​
​
39,103
​
​
33,810
​
​
—
​
​
33,810

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Total intangible assets
​
$
85,683
​
$
( 13,989 )
​
$
71,694
​
$
77,265
​
$
( 9,353 )
​
$
67,912

(1)
Weighted-average remaining useful life of approximately 1.9 years as of December 31, 2025.

(2)
Weighted-average remaining useful life of approximately 2.5 years as of December 31, 2025.

(3)
Weighted-average remaining useful life of approximately 11.9 years as of December 31, 2025.

​
During the years ended December 31, 2025 and 2024, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amount of less than $ 0.1 million for each year.  Other than the non-compete agreement assets, the Company did not record additional finite-lived assets during the year ended December 31, 2025, or indefinite-lived intangible assets during the years ended December 31, 2025 and 2024.  During the year ended December 31, 2024, the Company recorded a finite-lived asset, related to customer relationships from the Vast Auto acquisition, in the amount of $ 32.8 million.  For the year ended December 31, 2025, 2024, and 2023, the Company recorded aggregate amortization expense related to its intangible assets in the amounts of $ 3.6 million, $ 3.6 million and $ 3.0 million, respectively.
​
Indefinite-lived intangible assets, such as trade names, are reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in circumstances indicate that impairment may exist.  The Company did no t record any indefinite-lived intangible asset impairment during the years ended December 31, 2025, 2024, or 2023.
​
The following table identifies the estimated amortization expense of the Company’s intangibles for each of the next five years, and the aggregate thereafter, and reconciles to net, finite-lived intangible assets included in “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2025 (in thousands):
​
​

​

​

​

​
​
December 31, 2025

​
  ​ ​ ​
Amortization Expense

2026
​
$
3,654

2027
​
 
3,516

2028
​
 
3,176

2029
​
 
3,009

2030
​
 
2,140

Thereafter
​
​
17,096

Total net, finite-lived intangible assets
​
$
32,591

​
  ​
​

61

​

NOTE 8 – SUPPLIER FINANCE PROGRAMS
​
The Company has established and maintains supplier finance programs with certain third-party financial institutions, which allow participating merchandise suppliers to voluntarily elect to assign the Company’s payment obligations due to these merchandise suppliers to one of the designated third-party institutions.  Under these supplier finance programs, the Company has agreed to pay the third-party financial institutions the stated amount of confirmed merchandise supplier invoices on the original maturity dates of the invoices, which are generally for a term of one year .  The Company does no t have any assets pledged as security or other forms of guarantees for the committed payment to the third-party institutions.  As of December 31, 2025, and 2024, the Company had obligations outstanding under these programs for invoices that were confirmed as valid to the third-party financial institutions in the amounts of $ 5.1 billion and $ 4.8 billion, respectively, which were included as a component of “Accounts payable” on the accompanying Consolidated Balance Sheets.
​
The following table identifies the changes in the outstanding obligations of the Company’s supplier finance programs for the year ended December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​
​
2025
​
2024

Obligations outstanding, balance at January 1,
​
$
4,807,430
​
$
4,423,008

Invoices added
​
 
5,582,708
​
​
5,338,154

Invoices paid
​
 
( 5,244,760 )
​
​
( 4,953,732 )

Obligations outstanding, balance at December 31,
​
$
5,145,378
​
$
4,807,430

​
​
NOTE 9 – FINANCING
​
The following table identifies the amounts included in “Long-term debt” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​
​
December 31, 

​
​
​
2025
​
​
2024

Commercial paper program, weighted-average variable interest rate of 3.979 % as of December 31, 2025 and 4.750 % as of December 31, 2024
​
​
690,000
​
​
200,000

3.550 % Senior Notes due 2026, effective interest rate of 3.570 %
​
 
500,000
​
 
500,000

5.750 % Senior Notes due 2026, effective interest rate of 5.767 %
​
​
750,000
​
​
750,000

3.600 % Senior Notes due 2027, effective interest rate of 3.619 %
​
 
750,000
​
 
750,000

4.350 % Senior Notes due 2028, effective interest rate of 4.383 %
​
 
500,000
​
 
500,000

3.900 % Senior Notes due 2029, effective interest rate of 3.901 %
​
​
500,000
​
​
500,000

4.200 % Senior Notes due 2030, effective interest rate of 4.205 %
​
​
500,000
​
​
500,000

1.750 % Senior Notes due 2031, effective interest rate of 1.798 %
​
​
500,000
​
​
500,000

4.700 % Senior Notes due 2032, effective interest rate of 4.740 %
​
​
850,000
​
​
850,000

5.000 % Senior Notes due 2034, effective interest rate of 5.028 %
​
​
500,000
​
​
500,000

Total principal amount of debt
​
​
6,040,000
​
​
5,550,000

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

Total long-term debt
​
$
6,016,904
​
$
5,520,932

​
The following table identifies the principal maturity payments of the Company’s financing facilities for each of the next five years, and in the aggregate thereafter, as of December 31, 2025 (in thousands):
​
​

​

​

​

​
  ​ ​ ​
December 31, 2025

​
​
Scheduled Maturities

2026
​
$
1,940,000

2027
​
 
750,000

2028
​
 
500,000

2029
​
 
500,000

2030
​
 
500,000

Thereafter
​
 
1,850,000

Total principal amount of debt
​
$
6,040,000

​
Unsecured Revolving Credit Facility:
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 provides for a five-year $ 2.25 billion unsecured

62

​

revolving credit facility (the “Revolving Credit Facility”) arranged by JPMorgan Chase Bank, N.A., which is scheduled to mature in March of 2030.  The Credit Agreement includes a $ 200 million sub-limit for the issuance of letters of credit and a $ 75 million sub-limit for swing line borrowings under the Revolving Credit Facility.  As described in the Credit Agreement governing the Revolving Credit Facility, the Company may, from time to time, subject to certain conditions, increase the aggregate commitments under the Revolving Credit Facility by up to $ 900 million, provided that the aggregate amount of the commitments does not exceed $ 3.15 billion at any time.
​
As of December 31, 2025 and 2024, the Company had outstanding letters of credit, primarily to support obligations related to workers’ compensation, general liability and other insurance policies, under the Credit Agreement each in the amount of $ 5.3 million and $ 5.4 million, respectively, reducing the aggregate availability under the Credit Agreement by those amounts.  Substantially all of the outstanding letters of credit have a one-year term from the date of issuance.  As of December 31, 2025 and 2024, the Company had no outstanding borrowings under its Revolving Credit Facility.
​
Borrowings under the Revolving Credit Facility (other than swing line loans) bear interest, at the Company’s option, at either an Alternate Base Rate or an Adjusted Term SOFR Rate (both as defined in the Credit Agreement) plus an applicable margin, which will vary from 0.000 % to 0.050 % in the case of loans bearing interest at the Alternate Base Rate and 0.680 % to 1.075 % in the case of loans bearing interest at the Adjusted Term SOFR Rate, in each case based upon the better of the ratings assigned to our debt by Moody’s Investor Service, Inc. and Standard & Poor’s Rating Services, subject to limited exceptions.  Swing line loans made under the Revolving Credit Facility bear interest at an Alternate Base Rate plus the applicable margin for Alternate Base Rate loans.  In addition, the Company pays a facility fee on the aggregate amount of the commitments under the Credit Agreement in an amount equal to a percentage of such commitments, varying from 0.070 % to 0.175 % per annum.  The interest rate margins and facility fee are based upon the better of the ratings assigned to the Company’s debt by Moody’s Investor Service, Inc. and Standard & Poor’s Ratings Services, subject to limited exceptions.  As of December 31, 2025, based upon the Company’s current credit ratings, its margin for Alternate Base Rate loans was 0.000 %, its margin for Term Benchmark Revolving Loans was 0.900 %, and its facility fee was 0.100 %.
​
The Credit Agreement contains certain covenants, including limitations on subsidiary indebtedness, a minimum consolidated fixed charge coverage ratio of 2.50 :1.00 and a maximum consolidated leverage ratio of 3.50 :1.00.  The consolidated fixed charge coverage ratio includes a calculation of earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense to fixed charges.  Fixed charges include interest expense, capitalized interest, and rent expense.  The consolidated leverage ratio includes a calculation of adjusted debt to earnings before interest, taxes, depreciation, amortization, rent, and non-cash share-based compensation expense.  Adjusted debt includes outstanding debt, outstanding stand-by letters of credit, and similar instruments, and five-times rent expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt.  In the event that the Company should default on any covenant (subject to customary grace periods, cure rights, and materiality thresholds) contained in the Credit Agreement, certain actions may be taken, including, but not limited to, possible termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under the Credit Agreement, and litigation from lenders.   As of December 31, 2025, the Company remained in compliance with all covenants under the Credit Agreement.
​
In addition to the letters of credit issued under the Credit Agreement described above, as of December 31, 2025 and 2024, the Company had other outstanding letters of credit, primarily to support obligations under workers’ compensation, general liability, and other insurance policies, in the amount of $ 150.4 million and $ 121.9 million, respectively.  Substantially all of these letters of credit have a one-year term from the date of issuance and were not issued under the Company’s Credit Agreement or another committed facility.
​
Commercial Paper Program:
On August 9, 2023, the Company established a commercial paper program (the “Program”) pursuant to which it may issue short-term, unsecured commercial paper notes (the “Notes”) under the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.  Amounts available under the Program may be borrowed, repaid, and re-borrowed from time to time, with the aggregate face or principal amount of the Notes outstanding under the Program at any time not to exceed $ 2.25 billion.  The Notes will have maturities of up to 397 days from the date of issue.  The Notes rank at least pari passu with all of the Company’s other unsecured and unsubordinated indebtedness.  The Company plans to use its Revolving Credit Facility as a liquidity backstop for the repayment of Notes outstanding under the Program.  The Notes issued under the Program were included in “Long-term debt” on the accompanying Consolidated Balance Sheet as of December 31, 2025 and 2024, as the Company has the ability and intent to refinance these Notes on a long-term basis.
​
Senior Notes:
As of December 31, 2025, the Company has issued and outstanding a cumulative $ 5.4 billion aggregate principal amount of unsecured senior notes, which are due between 2026 and 2034, with UMB Bank, N.A. and U.S. Bank Trust Company, National Association as trustees.  Interest on the senior notes, ranging from 1.750 % to 5.750 %, is payable semi-annually and is computed on the basis of a 360 -day year.  The $ 500 million aggregate principal amount of unsecured 3.550 % Senior Notes due 2026 and $ 750 million aggregate principal amount of unsecured 5.750 % Senior Notes due 2026 were included in “Long-term debt” on the accompanying Consolidated

63

​

Balance Sheet as of December 31, 2025, as the Company has the ability and intent to refinance these notes on a long-term basis.   None of the Company’s subsidiaries is a guarantor under the senior notes.   Each of the senior notes is subject to certain customary covenants, with which the Company complied as of December 31, 2025.    
  ​
NOTE 10 – WARRANTIES
​
The Company’s product warranty liabilities are included in “Other current liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024.  The following table identifies the changes in the Company’s aggregate product warranty liabilities for the years ended December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​
  ​ ​ ​
2025
  ​ ​ ​
2024

Warranty liabilities, balance at January 1,
​
$
133,251
​
$
117,895

Warranty claims
​
 
( 250,072 )
​
 
( 203,645 )

Warranty accruals
​
 
263,021
​
 
219,121

Foreign currency translation
​
​
79
​
​
( 120 )

Warranty liabilities, balance at December 31,
​
$
146,279
​
$
133,251

​
​
​
​
NOTE 11 – SHARE REPURCHASE PROGRAM
​
In January of 2011, the Company’s Board of Directors approved a share repurchase program.  Under the program, the Company may, from time to time, repurchase shares of its common stock, solely through open market purchases effected through a broker dealer at prevailing market prices, based on a variety of factors such as price, corporate trading policy requirements, and overall market conditions.  The Company’s Board of Directors may increase or otherwise modify, renew, suspend, or terminate the share repurchase program at any time, without prior notice.  As announced on November 22, 2024, and November 18, 2025, the Company’s Board of Directors each time approved a resolution to increase the authorization amount under the share repurchase program by an additional $ 2.0 billion, resulting in a cumulative authorization amount of $ 29.8 billion.  The additional authorizations are effective for three years , beginning on its respective announcement date.  
​
The following table identifies shares of the Company’s common stock that have been repurchased as part of the Company’s publicly announced share repurchase program for the years ended December 31, 2025 and 2024 (in thousands, except per share data):
​
​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

Shares repurchased
 
​
22,728
​
​
29,043

Average price per share
​
$
92.26
​
$
71.50

Total investment
​
$
2,096,840
​
$
2,076,510

​
As of December 31, 2025, the Company had $ 2.4 billion remaining under its share repurchase program.  Excise tax on shares repurchased, assessed at one percent of the fair market value of net shares repurchased, was $ 21.0 million for the year ended December 31, 2025.
​
Subsequent to the end of the year and through February 27, 2026, the Company repurchased an additional 4.7 million shares of its common stock under its share repurchase program, at an average price of $ 93.61 , for a total investment of $ 436.3 million.  The Company has repurchased a total of 1.5 billion shares of its common stock under its share repurchase program since the inception of the program in January of 2011 and through February 27, 2026, at an average price of $ 18.93 , for a total aggregate investment of $ 27.8 billion.  As of February 27, 2026, we had approximately $ 2.0 billion remaining under our share repurchase program.    
​

64

​

NOTE 12 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
​
Accumulated other comprehensive income (loss) includes adjustments for foreign currency translations.  The table below summarizes activity for changes in accumulated other comprehensive loss included in “Accumulated other comprehensive income (loss)” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024 (in thousands):
​

​

​

​

​

​

​

​
​
Foreign
​
Total Accumulated Other

​
​
Currency (1)
​
Comprehensive Income (Loss)

Accumulated other comprehensive income, balance at December 31, 2023
​
$
39,388
​
$
39,388

Change in accumulated other comprehensive loss
​
​
( 82,201 )
​
​
( 82,201 )

Accumulated other comprehensive loss, balance at December 31, 2024
​
$
( 42,813 )
​
$
( 42,813 )

Change in accumulated other comprehensive income
​
​
69,567
​
​
69,567

Accumulated other comprehensive income, balance at December 31, 2025
​
$
26,754
​
$
26,754

(1) Foreign currency translation is not shown net of additional U.S. tax, as other basis differences of non-U.S. subsidiaries are intended to be permanently reinvested .  
​
NOTE 13 – REVENUE
​
The table below identifies the Company’s revenues disaggregated by major customer type for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Sales to do-it-yourself customers
​
$
8,765,647
​
$
8,473,041
​
$
8,248,213

Sales to professional service provider customers
 
​
8,651,746
 
​
7,836,283
 
​
7,245,747

Other sales and sales adjustments
 
​
364,599
 
​
399,155
 
​
318,290

Total sales
​
$
17,781,992
​
$
16,708,479
​
$
15,812,250

​
As of December 31, 2025 and 2024, the Company had recorded a deferred revenue liability of $ 7.8 million and $ 6.8 million, respectively, related to its loyalty program, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets.  During the year ended December 31, 2025, 2024, and 2023, the Company recognized $ 19.8 million, $ 17.3 million and $ 13.9 million, respectively, of revenue related to its loyalty program, which were included in “Sales” on the accompanying Consolidated Statements of Income.
​
See Note 10 for information concerning the expected costs associated with the Company’s assurance warranty obligations.
​
NOTE 14 – SHARE-BASED COMPENSATION AND BENEFIT PLANS
​
The Company recognizes share-based compensation expense based on the fair value of the grants, awards, or shares at the time of the grant, award, or issuance.  Share-based compensation includes stock option awards, restricted stock awards, and stock appreciation rights issued under the Company’s incentive plans and stock issued through the Company’s employee stock purchase plan.
​
The table below identifies the shares that have been authorized for issuance and the shares available for future issuance under the Company plans, as of December 31, 2025 (in thousands):
​
​

​

​

​

​

​
​
December 31, 2025

​
  ​ ​ ​
Total Shares Authorized for
  ​ ​ ​
Shares Available for Future

Plans
​
Issuance under the Plans
​
Issuance under the Plans

Incentive Plans
 
175,650
 
55,937

Employee Stock Purchase Plan
 
25,250
 
5,206

Profit Sharing and Savings Plan
 
63,000
 
—

​
Stock Options:
The Company’s incentive plans provide for the granting of stock options for the purchase of common stock of the Company to certain key employees of the Company.  Employee stock options are granted at an exercise price that is equal to the closing market price of the Company’s common stock on the date of the grant.  Employee stock options granted under the plans expire after 10 years and typically

65

​

vest 25 % per year, over four years .  The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period or minimum required service period.
​
The table below identifies stock option activity under these plans during the year ended December 31, 2025:
​
​

​

​

​

​

​

​

​

​

​

​

​

​
  ​ ​ ​
​
  ​ ​ ​
​
  ​ ​ ​
Average
  ​ ​ ​
Aggregate

​
​
Shares
​
Weighted- Average
​
Remaining
​
Intrinsic Value

​
​
(in thousands)
​
Exercise Price
​
Contractual Terms
​
(in thousands)

Outstanding at December 31, 2024
 
9,422
​
$
36.59
 
  ​
​
 
​
  ​

Granted
 
891
​
 
89.82
 
  ​
​
 
​
  ​

Exercised
 
( 2,051 )
​
 
26.28
 
  ​
​
 
​
  ​

Forfeited or expired
 
( 78 )
​
 
66.05
 
  ​
​
 
​
  ​

Outstanding at December 31, 2025
 
8,184
​
$
44.70
 
5.5
Years
​
$
382,128

Vested or expected to vest at December 31, 2025
 
8,049
​
$
44.26
 
5.5
Years
​
$
377,929

Exercisable at December 31, 2025
 
5,592
​
$
32.59
 
4.3
Years
​
$
327,772

​
The fair value of each stock option award is estimated on the date of the grant using the Black-Scholes option pricing model.  The Black-Scholes model requires the use of assumptions, including the risk-free rate, expected life, expected volatility, and expected dividend yield.

● Risk-Free Interest Rate   – The United States Treasury rates in effect at the time the options are granted for the options’ expected life.
● Expected Life – Represents the period of time that options granted are expected to be outstanding.  The Company uses historical experience to estimate the expected life of options granted.
● Expected Volatility – Measure of the amount, by which the Company’s stock price is expected to fluctuate, based on a historical trend.
● Expected Dividend Yield   – The Company has not paid, nor does it have plans in the foreseeable future to pay, any dividends.
​
The table below identifies the weighted-average assumptions used for grants awarded during the years ended December 31, 2025, 2024, and 2023:
​
​

​

​

​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
​
2024
​
2023

Risk free interest rate
 
4.18
%  
​
4.16
%  
​
3.96
%

Expected life
 
6.6
Years
​
6.4
Years
​
6.3
Years

Expected volatility
 
26.7
%  
​
28.2
%  
​
29.0
%

Expected dividend yield
 
—
%  
​
—
%  
​
—
%

​
The following table summarizes activity related to stock options awarded by the Company for the years ended December 31, 2025, 2024, and 2023:
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

​
  ​ ​ ​
2025
​
2024
​
2023

Compensation expense for stock options awarded (in thousands)
​
$
28,309
​
$
23,024
​
$
22,090

Income tax benefit from compensation expense related to stock options (in thousands)
​
 
6,997
​
 
5,769
​
 
5,477

Total intrinsic value of stock options exercised (in thousands)
​
 
136,307
​
 
239,563
​
 
170,521

Cash received from exercise of stock options (in thousands)
​
 
53,890
​
 
106,670
​
 
71,153

Weighted-average grant-date fair value of options awarded
​
$
33.43
​
$
26.94
​
$
21.54

Weighted-average remaining contractual life of exercisable options (in years)
​
 
5.5
​
 
5.6
​
 
5.3

​
At December 31, 2025, the remaining unrecognized compensation expense related to unvested stock option awards was $ 44.2 million, and the weighted-average period of time, over which this cost will be recognized, is 2.6 years.
​
Restricted Stock:
The Company’s incentive plans provide for the awarding of shares of restricted stock to certain key employees or the non-employee directors of the Company that vest after one-year or evenly over a three-year period and are held in escrow until such vesting has occurred.  Generally, unvested shares are forfeited when an employee or a director ceases employment or service on the Company’s

66

​

Board of Directors, for reasons other than death or retirement.  The fair value of shares awarded under these plans is based on the closing market price of the Company’s common stock on the date of award, and compensation expense is recorded over the vesting period or minimum required service period.
​
The table below identifies restricted stock activity under these plans during the year ended December 31, 2025 (in thousands, except per share data):
​
​

​

​

​

​

​

​
​
​
​
Weighted-Average Grant-Date

​
  ​ ​ ​
Shares
  ​ ​ ​
Fair Value

Non-vested at December 31, 2024
 
35
​
$
64.38

Granted during the period
 
23
​
 
90.21

Vested during the period (1)
 
( 35 )
​
 
64.38

Forfeited during the period
 
—
​
 
—

Non-vested at December 31, 2025
 
23
​
$
90.21

(1) Includes less than five thousand shares withheld to cover employees’ taxes upon vesting.
​
The following table summarizes activity related to restricted stock awarded by the Company for the years ended December 31, 2025, 2024, and 2023 (in thousands, except per share data):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Compensation expense for restricted shares awarded
​
$
2,053
​
$
1,967
​
$
1,869

Income tax benefit from compensation expense related to restricted shares
​
$
507
​
$
493
​
$
463

Total fair value of restricted shares at vest date
​
$
3,109
​
$
3,093
​
$
2,693

Shares awarded under the plans
​
 
23
​
 
29
​
 
32

Weighted-average grant-date fair value of shares awarded under the plans
​
$
90.21
​
$
68.22
​
$
59.24

​
At December 31, 2025, the remaining unrecognized compensation expense related to unvested restricted share awards was $ 0.5 million, and the weighted-average period of time, over which this cost will be recognized, is 0.3  years .
​
Employee Stock Purchase Plan:
The Company’s employee stock purchase plan (the “ESPP”) permits eligible employees to purchase shares of the Company’s common stock at 85 % of the fair market value.  Employees may authorize the Company to withhold up to 5 % of their annual salary to participate in the plan.  The fair value of shares issued under the ESPP is based on the average of the high and low market prices of the Company’s common stock during the offering periods, and compensation expense is recognized based on the discount between the grant-date fair value and the employee purchase price for the shares sold to employees.
​
The table below summarizes activity related to the Company’s ESPP for the years ended December 31, 2025, 2024, and 2023 (in thousands, except per share data):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Compensation expense for shares issued under the ESPP
​
$
4,753
​
$
3,940
​
$
3,552

Income tax benefit from compensation expense related to shares issued under the ESPP
​
$
1,175
​
$
987
​
$
881

Shares issued under the ESPP
​
 
336
​
 
360
​
 
394

Weighted-average price of shares issued under the ESPP
​
$
80.05
​
$
61.99
​
$
51.07

​
Stock Appreciation Rights:
The Company’s incentive plans provide for the granting of stock appreciation rights, which expire after 10 years and vest 25 % per year, over four years , and are settled in cash.  There were 176,535 and 204,765 stock appreciation rights outstanding as of December 31, 2025 and 2024, respectively.  During the year ended December 31, 2025, there were 21,270 stock appreciation rights granted, 43,665 stock appreciation rights exercised, and 5,835 stock appreciation rights forfeited.  The liability for compensation to be paid for redeemed stock appreciation rights was $ 7.3 million and $ 6.4 million as of December 31, 2025 and 2024, respectively, which were included in “Other liabilities” on the Consolidated Balance Sheets.  The Company recorded compensation expense for stock appreciation rights in the amounts of $ 2.4 million, $ 4.3 million and $ 1.1 million for the year ended December 31, 2025, 2024, and 2023, respectively, which were included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income.

67

​

​
Benefit Plans:
The Company sponsors a contributory profit sharing and savings plan (the “401(k) Plan”) that covers substantially all employees who are at least 21 years of age.  The Company makes matching contributions equal to 100 % of the first 2% of each employee’s wages that are contributed and 25 % of the next 4% of each employee’s wages that are contributed.  The Company also sponsors a nonqualified deferred compensation plan (the “Deferred Compensation Plan”) for highly compensated employees whose contributions to the 401(k) Plan are limited due to the application of the annual limitation under the Internal Revenue Code.  In the event of bankruptcy, the assets of the Deferred Compensation Plan are available to satisfy the claims of general creditors.  The Company has an unsecured obligation to pay, in the future, the value of the deferred compensation and Company match, if applicable, adjusted to reflect the performance, whether positive or negative, of selected investment measurement options chosen by each participant during the deferral period. The Company may make discretionary contributions to the 401(k) Plan or the Deferred Compensation Plan on an annual basis as determined by the Board of Directors.  
​
The Company did no t make any discretionary contributions to the 401(k) Plan or the Deferred Compensation Plan during the years ended December 31, 2025, 2024, or 2023.  The Company expensed matching contributions under the plans in the amount of $ 58.9 million, $ 52.7 million and $ 48.6 million for the year ended December 31, 2025, 2024, and 2023, respectively, which were primarily included in “Selling, general and administrative expenses” on the accompanying Consolidated Statements of Income.  The liability for compensation deferred under the Deferred Compensation Plan was $ 67.8 million and $ 65.2 million as of December 31, 2025 and 2024, respectively, which were included in “Other liabilities” on the accompanying Consolidated Balance Sheets.  See Note 3 for further information concerning the Company’s marketable securities held to fulfill our future unsecured obligations under this plan.
  ​
NOTE 15 – COMMITMENTS
​
Construction Commitments:
As of December 31, 2025, the Company had purchase obligations for construction contract commitments in the amount of $ 275.9 million.
​
Letters of Credit Commitments:
As of December 31, 2025, the Company had outstanding letters of credit, primarily to satisfy workers’ compensation, general liability, and other insurance policies, in the amount of $ 155.6 million.  See Note 9 for further information concerning the Company’s letters of credit commitments.
​
Debt Financing Commitments:
Each series of senior notes is redeemable in whole, at any time, or in part, from time to time, at the Company’s option upon not less than 30 nor more than 60  days notice at a redemption price, plus any accrued and unpaid interest to, but not including, the redemption date, equal to the greater of (i)  100 % of the principal amount thereof or (ii) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis at the applicable Treasury Yield plus basis points identified in the indenture governing such series of senior notes; provided, that on or after the date that is three months prior to the maturity date of the series of senior notes, such series of senior notes is redeemable at a redemption price equal to par plus accrued and unpaid interest to, but not including, the redemption date.  In addition, if at any time the Company undergoes a Change of Control Triggering Event, as defined in the indenture governing such series of senior notes, the holders may require the Company to repurchase all or a portion of their senior notes at a price equal to 101 % of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any, but not including the repurchase date.  See Note 9 for further information concerning the Company’s debt financing commitments.
​
Self-Insurance Reserves:
The Company uses a combination of insurance and self-insurance mechanisms to provide for potential liabilities for Team Member health care benefits, workers’ compensation, vehicle liability, general liability, and property loss.  With the exception of certain Team Member health care benefit liabilities, employment related claims and litigation, certain commercial litigation and certain regulatory matters, the Company obtains third-party insurance coverage to limit its exposure to this obligation.  See Note 1 for further information concerning the Company’s self-insurance reserves.
​
Federal Renewable Energy Tax Credits:
Subsequent to the end of the year, the Company entered into a conditional agreement to purchase transferrable federal renewable energy tax credits (“RETC”).  As of February 27, 2026, the Company had a total commitment of approximately $ 450 million to purchase RETCs, with the final closing payment anticipated to occur by August of 2026.  

68

​

​
NOTE 16 – RELATED PARTIES
​
The Company leases certain land and buildings related to 66 of its O’Reilly Auto Parts stores and one surplus property under fifteen - or twenty-year operating lease agreements with entities that include one or more of the Company’s affiliated directors or members of an affiliated director’s immediate family.  Generally, these lease agreements provide for renewal options for an additional five years at the option of the Company and the lease agreements are periodically modified to further extend the lease term for specific stores under the agreements.  Lease payments under these operating leases totaled $ 4.6 million, $ 4.8 million, and $ 4.7 million for the year ended December 31, 2025, 2024, and 2023, respectively.  The Company believes that the lease agreements with the affiliated entities are on terms comparable to those obtainable from third parties.  See Note 6 for further information concerning the Company’s operating leases.
​
NOTE 17 – INCOME TAXES
​
The following table identifies components of income from continuing operations before income taxes included in “Income before income taxes” on the accompanying Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

​
​
2025
​
2024
​
2023

Domestic
​
$
3,259,128
​
$
3,053,501
​
$
2,994,856

Foreign
​
​
( 18,957 )
​
​
( 8,437 )
​
​
9,894

Income before income taxes
​
$
3,240,171
​
$
3,045,064
​
$
3,004,750

​
Provision for Income Taxes:
The following tables reconcile the amounts included in “Provision for income taxes” on the accompanying Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Current:
​
​
​
​
​
​
​
​
​

Federal income tax expense
​
$
584,569
​
$
587,496
​
$
497,492

State income tax expense
​
 
153,026
​
 
120,209
​
 
109,924

Foreign income tax expense
​
​
1,911
​
​
446
​
​
2,521

Total current
​
​
739,506
​
​
708,151
​
​
609,937

​
​
​
​
​
​
​
​
​
​

Deferred:
​
​
​
​
​
​
​
​
​

Federal income tax (benefit) expense
​
​
( 20,482 )
​
​
( 43,222 )
​
​
41,782

State income tax (benefit) expense
​
​
( 8,986 )
​
​
( 3,229 )
​
​
6,003

Foreign income tax (benefit) expense
​
​
( 8,076 )
​
​
( 3,316 )
​
​
447

Total deferred
​
​
( 37,544 )
​
​
( 49,767 )
​
​
48,232

​
​
​
​
​
​
​
​
​
​

Net income tax expense
​
$
701,962
​
$
658,384
​
$
658,169

​

69

​

The following table outlines the reconciliation of the “Provision for income taxes” amounts included on the accompanying Consolidated Statements of Income to the amounts computed at the federal statutory rate for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

​
​
Amount
​
Percent
​
Amount
​
Percent
​
Amount
​
Percent

U.S. federal statutory tax rate
​
$
680,418
​
21.0
%
​
$
639,534
​
21.0
%
​
$
630,998
​
21.0
%

State and local income taxes, net of federal income tax effect (1)
​
​
104,123
​
3.2
​
​
​
95,928
​
3.2
​
​
​
96,814
​
3.2
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Nontaxable or nondeductible items:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Excess tax benefit from share-based compensation
​
​
( 29,928 )
​
( 0.9 )
​
​
​
( 39,871 )
​
( 1.3 )
​
​
​
( 35,950 )
​
( 1.2 )
​

Other
​
​
4,640
​
0.1
​
​
​
3,575
​
0.1
​
​
​
5,247
​
0.2
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Tax credits:
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Federal renewable energy tax credit
​
​
( 49,519 )
​
( 1.5 )
​
​
​
( 28,345 )
​
( 0.9 )
​
​
​
( 19,627 )
​
( 0.6 )
​

Other
​
​
( 9,979 )
​
( 0.3 )
​
​
​
( 11,541 )
​
( 0.4 )
​
​
​
( 14,115 )
​
( 0.5 )
​

​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​
​

Effect of cross-border tax laws
​
​
—
​
—
​
​
​
—
​
—
​
​
​
—
​
—
​

Effect of changes in tax laws or rates enacted in the current period
​
​
—
​
—
​
​
​
—
​
—
​
​
​
—
​
—
​

Change in unrecognized tax benefits
​
​
11,696
​
0.4
​
​
​
( 817 )
​
—
​
​
​
( 502 )
​
—
​

Changes in valuation allowances
​
​
—
​
—
​
​
​
—
​
—
​
​
​
—
​
—
​

Other adjustments
​
​
( 7,720 )
​
( 0.2 )
​
​
​
1,495
​
—
​
​
​
( 4,905 )
​
( 0.2 )
​

Foreign tax effects
​
​
( 1,769 )
​
( 0.1 )
​
​
​
( 1,574 )
​
( 0.1 )
​
​
​
209
​
—
​

Total
​
$
701,962
​
21.7
%
​
$
658,384
​
21.6
%
​
$
658,169
​
21.9
%

(1)
State taxes in California, Illinois, Minnesota, Tennessee, and Texas for the years ended December 31, 2025, 2024, and 2023, made up the majority (greater than 50%) of the tax effect in this category.

​
The Company has purchased transferrable federal renewable energy tax credits, and during the year ended December 31, 2025, 2024, and 2023, the Company recognized federal renewable energy tax credits in the amount $ 453.1 million, $ 376.4 million, and $ 336.5 million, respectively.  As of December 31, 2025 and 2024, the Company had recorded a liability for the purchase of transferrable federal renewable energy tax credits in the amount of $ 17.6 million and $ 346.6 million, respectively, which were included in “Other current liabilities” on the accompanying Consolidated Balance Sheets.  Payments for the purchases of transferrable federal renewable energy tax credits are included in income taxes paid.
​
Income taxes have not been accrued by the Company for the unremitted earnings of its foreign subsidiaries because such earnings are intended to be reinvested in the subsidiaries indefinitely.
​
Income Taxes Paid:
The following table outlines the components of income taxes paid (net of refunds received) for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​

​

​

​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
​
2024
  ​ ​ ​
2023

Federal
​
$
921,798
​
$
508,917
​
$
208,310

State
​
​
140,673
​
​
126,802
​
​
100,085

Foreign
​
​
5,053
​
​
4,707
​
​
6,665

Total income taxes paid
​
$
1,067,524
​
$
640,426
​
$
315,060

​
Deferred Income Tax Assets and Liabilities:
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and also include the tax effect of carryforwards.
​

70

​

The following table identifies significant components of the Company’s net deferred tax liabilities included in “Deferred income taxes” on the accompanying Consolidated Balance Sheets as of December 31, 2025 and 2024 (in thousands):
​
​

​

​

​

​

​

​

​
​
December 31, 

​
  ​ ​ ​
2025
  ​ ​ ​
2024

Deferred tax assets:
 
​
  ​
 
​
  ​

Allowance for doubtful accounts
​
$
4,488
​
$
4,161

Other accruals
​
 
195,819
​
 
174,307

Operating lease liability
​
​
604,407
​
​
589,140

Net operating loss
​
​
14,172
​
​
5,831

Other
​
 
19,700
​
 
17,726

Total deferred tax assets
​
 
838,586
​
 
791,165

​
​
​
​
​
​
​

Deferred tax liabilities:
​
 
  ​
​
 
  ​

Inventories
​
 
59,192
​
 
118,712

Property and equipment
​
 
341,413
​
 
298,804

Operating lease asset
​
​
582,567
​
​
568,577

Other
​
 
66,624
​
 
52,671

Total deferred tax liabilities
​
 
1,049,796
​
 
1,038,764

​
​
​
​
​
​
​

Net deferred tax liabilities
​
$
( 211,210 )
​
$
( 247,599 )

​
As of December 31, 2025 and 2024, the Company had foreign net operating loss (“NOL”) carryforwards totaling approximately $ 45.7 million ($ 14.2 million tax effected) and $ 17.9 million ($ 5.8 million tax effected), respectively.  These NOLs will expire, if not utilized, in various years ranging from 2033 to 2035.
​
Unrecognized Tax Benefits:
The following table summarizes the changes in the gross amount of unrecognized tax benefits, excluding interest and penalties, for the years ended December 31, 2025, 2024, and 2023 (in thousands):
​
​

​

​

​

​

​

​

​

​

​

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

Unrealized tax benefit, balance at January 1,
​
$
22,524
​
$
23,943
​
$
24,798

Additions based on tax positions related to the current year
​
 
3,493
​
 
3,907
​
 
3,932

Additions based on tax positions related to the prior years
​
​
8,401
​
​
—
​
​
—

Payments related to items settled with taxing authorities
​
 
( 10,683 )
​
 
( 420 )
​
 
—

Reductions due to the lapse of statute of limitations and settlements
​
 
( 3,133 )
​
 
( 4,906 )
​
 
( 4,787 )

Unrealized tax benefit, balance at December 31, 
​
$
20,602
​
$
22,524
​
$
23,943

​
For the year ended December 31, 2025, 2024, and 2023, the Company recorded a reserve in the amount of $ 19.3 million, $ 21.0 million and $ 21.9 million, respectively, for unrecognized tax benefits, including interest and penalties, net of federal benefits, which if recognized would affect the Company’s effective tax rate.  The timing related to the ultimate resolution or settlement of these uncertain tax positions cannot be determined.  The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  As of December 31, 2025, 2024, and 2023, the Company had accrued approximately $ 3.9 million, $ 4.0 million and $ 3.9 million, respectively, of interest and penalties related to uncertain tax positions before the benefit of the deduction for interest on state and federal returns.  During the year ended December 31, 2025, 2024, and 2023, the Company recorded tax expense related to an increase in its liability for interest and penalties in the amounts of $ 1.8 million, $ 2.4 million and $ 2.1 million, respectively.  
​
The Company’s United States federal income tax returns for tax years 2022 and beyond remain subject to examination by the Internal Revenue Service.  The IRS is currently conducting an examination of the Company’s consolidated returns for the tax year 2023 .  The Company’s state income tax returns remain subject to examination by various state authorities for tax years ranging from 2014 through 2024.  
​

71

​

NOTE 18 – EARNINGS PER SHARE
​
The following table illustrates the computation of basic and diluted earnings per share for the years ended December 31, 2025, 2024, and 2023 (in thousands, except per share data):
​
​

​

​

​

​

​

​

​

​

​

​
​
For the Year Ended

​
​
December 31, 

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

Numerator (basic and diluted):
 
​
  ​
 
​
  ​
 
​
  ​

Net income
​
$
2,538,209
​
$
2,386,680
​
$
2,346,581

​
​
​
​
​
​
​
​
​
​

Denominator:
​
 
  ​
​
 
  ​
​
 
  ​

Weighted-average common shares outstanding – basic
​
 
851,472
​
 
875,082
​
 
907,131

Effect of stock options (1)
​
 
4,447
​
 
5,490
​
 
7,845

Weighted-average common shares outstanding – assuming dilution
​
 
855,919
​
 
880,572
​
 
914,976

​
​
​
​
​
​
​
​
​
​

Earnings per share:
​
 
  ​
​
 
  ​
​
 
  ​

Earnings per share-basic
​
$
2.98
​
$
2.73
​
$
2.59

Earnings per share-assuming dilution
​
$
2.97
​
$
2.71
​
$
2.56

​
​
​
​
​
​
​
​
​
​

Antidilutive potential common shares not included in the calculation of diluted earnings per share:
​
 
  ​
​
 
  ​
​
 
  ​

Stock options (1)
​
 
1,142
​
 
1,490
​
 
1,421

Weighted-average exercise price per share of antidilutive stock options (1)
​
$
84.51
​
$
67.79
​
$
55.74

(1) See Note 14 for further information concerning the terms of the Company’s share-based compensation plans.
​
See Note 11 for information concerning the Company’s subsequent share repurchases.
  ​
​
​

72

​

​
Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
​
None.
​
Item 9A.  Controls and Procedures
​
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
​
As of the end of the period covered by this report, the Company’s management, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b) and as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of the end of the period covered by this report are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company, including its consolidated subsidiaries, in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
​
CHANGES IN INTERNAL CONTROLS
​
There were no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
​
INTERNAL CONTROL OVER FINANCIAL REPORTING
​
The management of the Company, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer and effected by the Company’s Board of Directors, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13(a)-15(f) or 15(d)-15(f) under the Exchange Act.  The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.
​
Internal control over financial reporting includes all policies and procedures that:

● Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
● Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
● Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
​
Management recognizes that all internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Also, projections of any evaluation of effectiveness to future periods are subject to risk.  Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
​
Under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.  In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013 framework).  Based on this assessment, management believes that as of December 31, 2025, the Company’s internal control over financial reporting was effective based on those criteria.
​
Ernst & Young LLP, Independent Registered Public Accounting Firm, has audited the Company’s consolidated financial statements and has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting, which is included in Item 8 of this annual report on Form 10-K.
​

73

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Item 9B.  Other Information
​
(c) Rule 10b5-1 Trading Plan Elections:
​
On November 24, 2025 , Greg Henslee , Executive Chairman of the Board of Directors of O’Reilly Automotive, Inc. (the “Company”), established a plan in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, for the trading of the Company’s common stock.  The plan provides for the sale of up to 138,705 shares at specific market prices, subject to specified limitations over a period beginning around March 5, 2026 and ending on April 27, 2026.  The plan was established for the purposes of facilitating the potential exercise of vested stock options that are due to expire in February 2027 , and the associated sale of shares.  The plan was established during the Company’s unrestricted trading window and in accordance with the Company’s policies regarding transactions in Company securities.
​
None of the Company’s other Directors or Officers adopted, modified, or terminated a Rule 10b5-1 trading agreement or a non-Rule 10b5-1 trading agreement, as defined in Item 408(c) of Regulation S-K, during the Company’s fiscal quarter ended December 31, 2025.  
​
Item 9 C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
​
Not Applicable.
​
​

74

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PART III
​
Item 10.  Directors, Executive Officers and Corporate Governance
​
Certain information required by Part III is incorporated by reference from the Company’s Proxy Statement on Schedule 14A for the 2026 Annual Meeting of Shareholders (“Proxy Statement”), which will be filed with the Securities and Exchange Commission (the “SEC”) within 120 days of the end of the Company’s most recent fiscal year.  Except for those portions specifically incorporated in this annual report on Form 10-K by reference to the Company’s Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this annual report on Form 10-K.
​
Directors and Officers:
The information regarding the directors of the Company will be included in the Company’s Proxy Statement under the caption “Proposal 1 - Election of Directors” and “Information Concerning the Board of Directors” and is incorporated herein by reference.  The Proxy Statement will be filed with the SEC within 120 days of the end of the Company’s most recent fiscal year.  The information regarding executive officers called for by Item 401 of Regulation S-K is included in Part I, in accordance with General Instruction G(3) to Form 10-K, for the Company’s executive officers who are not also directors.
​
Section 16(a) of the Securities Exchange Act of 1934, as amended:
The information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), required by Item 405 of Regulation S-K, will be included in the Company’s Proxy Statement under the caption “Delinquent Section 16(a) Reports,” if applicable, and is incorporated herein by reference.
​
Code of Ethics:
The Company’s Board of Directors has adopted a code of ethics that applies to all of its directors, officers (including its chief executive officer, chief operating officer, chief financial officer, chief accounting officer, controller, and any person performing similar functions), and Team Members.  The Company’s Code of Business Conduct and Ethics is available on its website at www.OReillyAuto.com, under “Investor Relations” and then “Governance” captions.  The Company intends to disclose any amendments or waivers of its Code of Ethics pertaining to a director or executive officer on the Company’s website at the above-referenced address.  The information on the Company’s website is not a part of this annual report on Form 10-K and is not incorporated by reference in this report or any of the Company’s other filings with the SEC.
​
Insider Trading Policy :
The Company maintains an Insider Trading Policy that applies to all of its directors, officers, and Team Members, which we believe is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations and listing standards.  As noted in the Insider Trading Policy, it is the also the Company’s policy to comply with applicable securities laws concerning trading in Company securities on the Company’s behalf.  The Insider Trading Policy is filed as Exhibit 19.1 to this annual report on Form 10-K.
​
Corporate Governance:
The Corporate Governance/Nominating Committee of the Board of Directors does not have a written policy on the consideration of Director candidates recommended by shareholders.  It is the view of the Board of Directors that all candidates, whether recommended by a shareholder or the Corporate Governance/Nominating Committee, shall be evaluated based on the same established criteria for persons to be nominated for election to the Board of Directors and its committees.
​
The Board of Directors has established an Audit Committee pursuant to Section 3(a)(58)(A) of the Exchange Act.  The Audit Committee currently consists of Thomas T. Hendrickson, John R. Murphy, Dana M. Perlman, and Maria A. Sastre, each an independent director in accordance with The Nasdaq Stock Market Marketplace Rule 5605(a)(2), the standards of Rule 10A-3 of the Exchange Act, and the requirements of The Nasdaq Stock Market Marketplace Rule 5605(c)(2).  In addition, our Board of Directors has determined that Mr. Hendrickson, Chairperson of the Audit Committee, qualifies as an audit committee financial expert under Item 407(d)(5) of Regulation S-K.
​
Item 11.  Executive Compensation
​
Director and Officer Compensation:
The information required by Item 402 of Regulation S-K will be included in the Company’s Proxy Statement under the captions “Compensation of Executive Officers” and “Compensation of Directors” and is incorporated herein by reference.
​

75

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Human Capital and Compensation Committee:
The information required by Item 407(e)(4) and (e)(5) of Regulation S-K will be included in the Company’s Proxy Statement under the captions “Human Capital and Compensation Committee Interlocks and Insider Participation” and “Human Capital and Compensation Committee Report” and is incorporated herein by reference.
​
Item  12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
​
The information required by Item 201(d) of Regulation S-K will be included in the Company’s Proxy Statement under the caption “Equity Compensation Plans” and is incorporated herein by reference.
​
The information required by Item 403 of Regulation S-K will be included in the Company’s Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners” and “Security Ownership of Directors and Management” and is incorporated herein by reference.
​
Item 13.  Certain Relationships and Related Transactions, and Director Independence
​
The information required by Item 404 of Regulation S-K will be included in the Company’s Proxy Statement under the caption “Certain Relationships and Related Transactions” and is incorporated herein by reference.
​
The information required by Item 407(a) of Regulation S-K will be included in the Company’s Proxy Statement under the caption “Director Independence” and is incorporated herein by reference.
​
Item 14.  Principal Accountant Fees and Services
​
The information required by Item 9(e) of Schedule 14A will be included in the Company’s Proxy Statement under the caption “Fees Paid to Independent Registered Public Accounting Firm” and is incorporated herein by reference.
​
​

76

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PART IV
​
Item  15. Exhibits and Financial Statement Schedules
​
(a) The following documents are filed as part of this annual report on Form 10-K:  
​
1. Financial Statements – O’Reilly Automotive, Inc. and Subsidiaries

The following consolidated financial statements of O’Reilly Automotive, Inc. and Subsidiaries included in the Annual Report of the registrant for the year ended December 31, 2025, are filed with this annual report in Part II, Item 8:

● Management’s Report on Internal Control over Financial Reporting.
● Report of Independent Registered Public Accounting Firm – Internal Control over Financial Reporting.
● Report of Independent Registered Public Accounting Firm – Financial Statements.
● Consolidated Balance Sheets as of December 31, 2025 and 2024.
● Consolidated Statements of Income for the years ended December 31, 2025, 2024, and 2023.
● Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024, and 2023.
● Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2025, 2024, and 2023.
● Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024, and 2023.
● Notes to Consolidated Financial Statements for the years ended December 31, 2025, 2024, and 2023.
​
2. Financial Statement Schedules – O’Reilly Automotive, Inc. and Subsidiaries

Any schedules, for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission, are not required under the related instructions or are inapplicable, and therefore have been omitted.
​
​

77

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3. Exhibits

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​

​

Exhibit No .
  ​ ​ ​
Description

​
​
​

3.1
​
Third Amended and Restated Articles of Incorporation of the Registrant, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K dated May 15, 2025, is incorporated herein by this reference.

3.2
​
Fourth Amended and Restated Bylaws of the Registrant, filed as Exhibit 3.3 to the Registrant’s Current Report on Form 8-K dated May 19, 2020, is incorporated herein by this reference.

4.1
​
Form of Stock Certificate for Common Stock, filed as Exhibit 4.1 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference.

4.2
​
Indenture, dated as of March 8, 2016, by and among O’Reilly Automotive, Inc., the subsidiaries party thereto as guarantors, and UMB Bank, N.A., as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated March 8, 2016, is incorporated herein by this reference.

4.3
​
Supplemental Indenture, dated as of March 8, 2016, by and among O’Reilly Automotive, Inc., the subsidiaries party thereto as guarantors, and UMB Bank, N.A., as Trustee, filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated March 8, 2016, is incorporated herein by this reference.

4.4
​
Form of 3.550% Note due 2026, included in Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated March 8, 2016, is incorporated herein by this reference.

4.5
​
Second Supplemental Indenture, dated as of August 17, 2017, by and between O’Reilly Automotive, Inc. and UMB Bank N.A., as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated August 17, 2017, is incorporated herein by this reference.

4.6
​
Form of Note for 3.600% Senior Notes due 2027, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated August 17, 2017, is incorporated herein by this reference.

4.7
​
Third Supplemental Indenture, dated as of May 17, 2018, by and between O’Reilly Automotive, Inc. and UMB Bank N.A., as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated May 17, 2018, is incorporated herein by this reference.

4.8
​
Form of Note for 4.350% Senior Notes due 2028, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated May 17, 2018, is incorporated herein by this reference.

4.9
​
Indenture, dated as of May 20, 2019, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company National Association (formerly known as U.S. Bank National Association), as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated May 20, 2019, is incorporated herein by this reference.

4.10
​
First Supplemental Indenture, dated as of May 20, 2019, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company National Association (formerly known as U.S. Bank National Association), as Trustee, filed as Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated May 20, 2019, is incorporated herein by this reference.

4.11
​
Form of Note for 3.900% Senior Notes due 2029, included in Exhibit 4.2 to the Registrant’s Current Report on Form 8-K dated May 20, 2019, is incorporated herein by this reference.

4.12
​
Description of Capital Stock Exchange Act Section 12 Registered Securities of O’Reilly Automotive, Inc., filed as Exhibit 4.20 to the Registrant’s Annual Report on Form 10-K dated February 28, 2020, is incorporated herein by this reference.

4.13
​
Second Supplemental Indenture, dated as of March 27, 2020, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company National Association (formerly known as U.S. Bank National Association), as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated March 27, 2020, is incorporated herein by this reference.

4.14
​
Form of Note for 4.200% Senior Notes due 2030, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated March 27, 2020, is incorporated herein by this reference.

4.15
​
Third Supplemental Indenture, dated as of September 23, 2020, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company National Association (formerly known as U.S. Bank National Association), as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated September 23, 2020, is incorporated herein by this reference.

4.16
​
Form of Note for 1.750% Senior Notes due 2031, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated September 23, 2020, is incorporated herein by this reference.

78

​

​

​

​

Exhibit No .
  ​ ​ ​
Description

​
​
​

4.17
​
Fourth Supplemental Indenture, dated as of June 15, 2022, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company, National Association, as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated June 15, 2022, is incorporated herein by this reference.

4.18
​
Form of Note for 4.700% Senior Notes due 2032, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated June 15, 2022, is incorporated herein by this reference.

4.19
​
Fifth Supplemental Indenture, dated November 20, 2023, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company, National Association, as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated November 20, 2023, is incorporated herein by this reference.

4.20
​
Form of Note for 5.750% Senior Notes due 2026, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated November 20, 2023, is incorporated herein by this reference.

4.21
​
Sixth Supplemental Indenture, dated as of August 19, 2024, by and between O’Reilly Automotive, Inc. and U.S. Bank Trust Company, National Association, as Trustee, filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated August 19, 2024, is incorporated herein by this reference.

4.22
​
Form of Note for 5.000% Senior Notes due 2034, included in Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated August 19, 2024, is incorporated herein by this reference.

10.1 (a)
​
Form of Employment Agreement between the Registrant and David E. O’Reilly, filed as Exhibit 10.1 to the Registration Statement of the Registrant on Form S-1, File No. 33-58948, is incorporated herein by this reference.

10.2 (a)
​
O’Reilly Automotive, Inc. Profit Sharing and Savings Plan, filed as Exhibit 4.1 to the Registration Statement of the Registrant on Form S-8, File No. 33-73892, is incorporated herein by this reference.

10.3 (a)
​
O’Reilly Automotive, Inc. Performance Incentive Plan, filed as Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K dated March 31, 1997, is incorporated herein by this reference.

10.4 (a)
​
Form of Retirement Agreement between the Registrant and David E. O’Reilly, filed as Exhibit 10.4 to the Registrant’s Annual Report on Form 10-K dated March 31, 1998, is incorporated herein by this reference.

10.5 (a)
​
O’Reilly Automotive, Inc. Deferred Compensation Plan, filed as Exhibit 10.23 to the Registrant’s Quarterly Report on Form 10-Q dated May 15, 1998, is incorporated herein by this reference.

10.6 (a)
​
First Amendment to Retirement Agreement, dated February 7, 2001, filed as Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K dated March 29, 2002, is incorporated herein by this reference.

10.7 (a)
​
O’Reilly Automotive, Inc. 2009 Stock Purchase Plan, filed as Annex A to the Registrant’s Proxy Statement for 2009 Annual Meeting of Shareholders on Schedule 14A dated March 20, 2009, is incorporated herein by this reference.

10.8 (a)
​
O’Reilly Automotive, Inc. 2009 Incentive Plan, filed as Annex B to the Registrant’s Proxy Statement for 2009 Annual Meeting of Shareholders on Schedule 14A dated March 20, 2009, is incorporated herein by this reference.

10.9 (a)
​
O’Reilly Automotive, Inc. 2009 Incentive Plan, Form of Stock Option Agreement, dated as of December 31, 2009, filed as Exhibit 10.47 to the Registrant’s Annual Report on Form 10-K dated February 26, 2010, is incorporated herein by this reference.

10.10 (a)
​
O’Reilly Automotive, Inc. 2012 Incentive Award Plan, filed as Annex A to the Registrant’s Proxy Statement for 2012 Annual Meeting of Shareholders on Schedule 14A dated March 23, 2012, is incorporated herein by this reference.

10.11 (a)
​
O’Reilly Automotive, Inc. 2012 Incentive Award Plan, Form of Stock Option Grant Notice and Agreement, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q dated August 8, 2012, is incorporated herein by this reference.

10.12 (a)
​
Form of O’Reilly Automotive, Inc. Director Indemnification Agreement, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 19, 2013, is incorporated herein by this reference.

10.13 (a)
​
Second Form of O’Reilly Automotive, Inc. Director Indemnification Agreement, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q dated August 7, 2020, is incorporated herein by this reference.

10.14 (a)
​
Form of O’Reilly Automotive, Inc. Executive Officer Indemnification Agreement, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated August 19, 2013, is incorporated herein by this reference.

79

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Exhibit No .
  ​ ​ ​
Description

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​
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10.15 (a)
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Second Form of O’Reilly Automotive, Inc. Executive Officer Indemnification Agreement, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q dated August 7, 2020, is incorporated herein by this reference.

10.16 (a)
​
Form of Change in Control Severance Agreement between O’Reilly and certain O’Reilly Executive Officers, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated February 4, 2015, is incorporated herein by this reference.

10.17 (a)
​
O’Reilly Automotive, Inc. 2017 Incentive Award Plan, filed as Annex A to the Registrant’s Proxy Statement for 2017 Annual Meeting of Shareholders on Schedule 14A dated March 24, 2017, is incorporated herein by this reference.

10.18 (a)
​
O’Reilly Automotive, Inc. 2017 Incentive Award Plan, Form of Stock Option Grant Notice and Agreement, dated as of July 10, 2017, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q dated August 7, 2017, is incorporated herein by this reference.

10.19 (a)
​
O’Reilly Automotive, Inc. 2017 Incentive Award Plan, Second Form of Stock Option Agreement, dated as of August 6, 2020, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q dated August 7, 2020, is incorporated herein by this reference.

10.20 (a)
​
O’Reilly Automotive, Inc. 2017 Incentive Award Plan, Form of Director Restricted Stock Agreement, filed as Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K dated February 28, 2020, is incorporated herein by this reference.

10.21 (a)
​
O’Reilly Automotive, Inc. Deferred Compensation Plan, as amended and restated effective as of January 1, 2021, filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K dated February 26, 2021, is incorporated herein by this reference.

10.22 (a)
​
O’Reilly Automotive, Inc. 2009 Stock Purchase Plan, as Amended and Restated May 4, 2016, and further Amended and Restated May 18, 2023, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q dated August 8, 2023, is incorporated herein by this reference.

10.23
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Form of Commercial Paper Dealer Agreement between O’Reilly Automotive, Inc., an issuer, and the applicable Dealer party, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated August 9, 2023, is incorporated herein by this reference.

10.24
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Underwriting Agreement, dated as of November 13, 2023, by and among the Company and BofA Securities, Inc., J.P. Morgan Securities LLC and Truist Securities, Inc., as the representatives of the underwriters named on Schedule 1 thereto, filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated November 13, 2023, is incorporated herein by this reference.

10.25
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Underwriting Agreement, dated as of August 12, 2024, by and among the Company and J.P. Morgan Securities LLC, BofA Securities, Inc. and U.S. Bancorp Investments, Inc., as the representatives of the underwriters named on Schedule 1 thereto, filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K dated August 12, 2024, is incorporated herein by this reference.

10.26
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First Amended and Restated Credit Agreement, dated as of March 31, 2025, among O’Reilly Automotive, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, and the lender party thereto, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated April 1, 2025, is incorporated herein by this reference.

19.1
​
Insider trading policy of O’Reilly Automotive, Inc., filed as Exhibit 19.1 to the Registrant’s Annual Report on Form 10-K dated February 28, 2025, is incorporated herein by this reference.

21.1
​
Subsidiaries of the Registrant, filed herewith.

23.1
​
Consent of Ernst & Young LLP, independent registered public accounting firm, filed herewith.

31.1
​
Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

31.2
​
Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

32.1 *
​
Certificate of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

32.2 *
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Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

80

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Exhibit No .
  ​ ​ ​
Description

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97.1
​
O’Reilly Automotive, Inc. 2014 Executive Incentive Compensation Clawback Policy, as Amended and Restated November 10, 2023, filed as Exhibit 97.1 to the Registrant’s Annual Report on Form 10-K dated February 28, 2023, is incorporated herein by this reference.

97.2 (a)
​
Form of O’Reilly Automotive, Inc. Executive Incentive Compensation Clawback Policy Acknowledgement, between O’Reilly Automotive, Inc. and O’Reilly Automotive, Inc. Executive Officers, filed as Exhibit 97.2 to the Registrant’s Annual Report on Form 10-K dated February 28, 2023, is incorporated herein by this reference.

101.INS
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iXBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH
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iXBRL Taxonomy Extension Schema.

101.CAL
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iXBRL Taxonomy Extension Calculation Linkbase.

101.DEF
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iXBRL Taxonomy Extension Definition Linkbase.

101.LAB
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iXBRL Taxonomy Extension Label Linkbase.

101.PRE
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iXBRL Taxonomy Extension Presentation Linkbase.

104
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Cover Page Interactive Data File, formatted as Inline XBRL, contained in Exhibit 101 attachments.

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​

(a)
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Management contract or compensatory plan or arrangement.

*
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Furnished (and not filed) herewith pursuant to Item 601 (b)(32)(ii) of Regulation S-K.  

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Item  16. Form 10-K Summary
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Not applicable.
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SIGNATURES
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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O’REILLY AUTOMOTIVE, INC.
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(Registrant)
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Date:
February 27, 2026
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By:
/s/
Brad Beckham
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Brad Beckham
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Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.
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Date:
February 27, 2026
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/s/
Greg Henslee
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/s/
David O’Reilly

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Greg Henslee
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David O’Reilly

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Director and Executive Chairman of the Board
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Director and Executive Vice Chairman of the Board

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/s/
Thomas T. Hendrickson
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/s/
Kimberly A. deBeers

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Thomas T. Hendrickson
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Kimberly A. deBeers

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Director
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Director

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/s/
Gregory D. Johnson
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/s/
John R. Murphy

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Gregory D. Johnson
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John R. Murphy

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Director
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Director

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/s/
Dana M. Perlman
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/s/
Maria A. Sastre

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Dana M. Perlman
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Maria A. Sastre

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Director
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Director

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/s/
Fred Whitfield
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Fred Whitfield
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Director
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/s/
Brad Beckham
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/s/
Jeremy A. Fletcher

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Brad Beckham
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Jeremy A. Fletcher

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Chief Executive Officer
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Executive Vice President and

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(Principal Executive Officer)
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Chief Financial Officer

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(Principal Financial and Accounting Officer)

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82