O'Reilly Keeps Buying Back Shares While Borrowing To Pay A $750 Million Bond
Post-quarter repurchases reached $262.8 million through Friday, while the retailer's lender-defined leverage ratio rose.
O'Reilly Automotive, which sells auto parts to car owners and repair shops, borrowed to repay a $750 million bond on October 20 rather than using cash. Its quarterly report filed Friday also puts post-quarter share repurchases at $262.8 million through Friday, extending the tally in its October earnings announcement.
Buybacks keep shrinking the share count
The latest purchases covered 3.0 million shares at an average of $87.89 each. O'Reilly's Wednesday earnings release had put repurchases since quarter-end at $204 million through October 28, covering 2.3 million shares at an average of $87.11.
Those purchases followed $3.47 billion spent on 38.5 million shares during the first nine months of 2026. At September 30, the company still had $931.3 million available under its authorization, before the subsequent purchases. Since the program began in January 2011, spending had reached $31.1 billion through Friday.
The commitment was already substantial before the October refinancing: the second-quarter report recorded another $658.5 million of purchases between June 30 and August 7. The shrinking share base matters for earnings per share: third-quarter diluted earnings rose 14% to $0.97, compared with net-income growth of 8% to $786 million. The diluted share count averaged 812 million, versus 853 million a year earlier.
A bond paid, debt still owed
The October payment replaced bonds carrying a 5.750% coupon with commercial paper—unsecured, short-term borrowing. That settles the bond maturity without extinguishing the underlying borrowing obligation.
O'Reilly plans to back commercial-paper repayment with its $2.25 billion revolving credit line. The line had no borrowings outstanding at September 30, although $5.0 million of letters of credit reduced its availability. Commercial paper outstanding at that date was $450 million; the program permits up to $2.25 billion.
The lender-defined debt-to-earnings ratio stood at 2.16 at September 30, compared with 2.07 at June 30. Both were below the agreement's 3.50 ceiling. This measure counts debt, letters of credit and five times rent expense against earnings before interest, taxes, depreciation, amortization, rent and non-cash stock pay.
Higher borrowing already has a cost. Third-quarter interest expense was $81.850 million, versus $59.566 million a year earlier. The company attributed the rise in total other expense primarily to interest on higher average borrowings.
Repair sales fund expansion and repurchases
O'Reilly serves both do-it-yourself customers and professional repair providers, with each accounting for approximately half of 2025 sales. Its network at September 30 comprised 6,595 stores in the United States and Puerto Rico, 134 in Mexico and 29 in Canada.
Third-quarter revenue reached $5.12 billion, up 9% from a year earlier. Larger purchases by both customer groups and more professional-customer transactions helped sales at established U.S. stores grow 7.2%; do-it-yourself transaction counts declined.
Tariff refunds also contributed $39 million to the quarter. Brad Beckham, O'Reilly's CEO, said in the Wednesday earnings release that guidance updates incorporated "our margin expectations for the fourth quarter." The company expects $1.9 billion to $2.2 billion in full-year free cash flow and $1.3 billion to $1.4 billion in capital spending.
Expansion continues alongside repurchases: O'Reilly anticipates 225 to 235 net new stores in 2026 and 265 to 275 in 2027.
Another $750 million of bonds comes due in 2027. O'Reilly classifies those bonds as long-term debt because it intends, and says it has the ability, to refinance them.
Sources
- 10-Q Filing — O'Reilly Automotive (ORLY) — SEC EDGAR
- 10-Q Filing — O'Reilly Automotive (ORLY), Q2 FY2026 filed 2026-08-07 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, orly-ex99d1.htm) — O'Reilly Automotive, filed 2026-10-28 — SEC EDGAR
- AutoZone Sees Aging Vehicles, Mega Hubs Fueling Commercial Growth — Yahoo Finance
