TEXT-S&P rates O'Reilly Automotive proposed notes 'BBB'

Thu Aug 16, 2012 2:45pm BST

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Aug 16 - Standard & Poor's Ratings Services said today that it has assigned
its 'BBB' senior unsecured debt rating to Springfield, Mo.-based automotive
aftermarket retailer O'Reilly Automotive Inc.'s proposed $300 million
senior unsecured notes due 2022. We expect the company to use the net proceeds
from the offering for general corporate purposes, including share repurchases. 

The debt offering is consistent with O'Reilly's plan to reach its 2.00x to 
2.25x target leverage metric over time. The company's internal leverage metric 
is close to Standard & Poor's calculated leverage metric. Pro forma for the 
proposed debt offering, leverage (using Standard & Poor's adjustments) is 
about 1.9x, compared with 1.6x as of the 12 months ended June 30, 2012. On 
Aug. 10, 2012, O'Reilly's Board of Directors increased the aggregative share 
repurchase authorization to $2.5 billion from $2 billion. We estimate pro 
forma for the increase that the company had about $600 million remaining under 
its share repurchase authorization as of Aug. 8, 2012.

O'Reilly's ratings reflect our view that the company's profitability will 
remain satisfactory and credit measures will be solid for the rating category 
despite weakening industry demand. The company has a "satisfactory" business 
risk profile as the third-largest competitor in the generally stable retail 
automotive parts industry and a good operational management team, as the 
company's history of satisfactory growth and profitability demonstrates. Its 
"intermediate" financial risk profile reflects our opinion that credit metrics 
will weaken modestly over time, most likely due to share repurchases or 
acquisition activity. (For the complete corporate credit rating rationale, see 
the summary analysis on O'Reilly, published July 20, 2012, on RatingsDirect.)

RELATED CRITERIA AND RESEARCH
     -- Understanding Standard & Poor's Rating Definitions, June 3, 2009
     -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009
     -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008

RATINGS LIST

O'Reilly Automotive Inc.
 Corporate Credit Rating        BBB/Stable/--

New Rating

O'Reilly Automotive Inc.
 Senior Unsecured
  $300 mil notes due 2022       BBB
FILED UNDER:
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