O’Reilly Automotive sells replacement vehicle parts, tools, and maintenance supplies to repair shops and people who fix their own vehicles. Repair-shop growth strengthened third-quarter sales, and operating cash covered capital spending over the first nine months of 2026. But first-nine-month share repurchases of $3.47 billion were almost twice the $1.74 billion left after capital spending, and borrowing filled most of that gap. The business is expanding from a profitable base, while management’s choice to accelerate buybacks is increasing its financing needs.
Analysis period: quarter and nine months ended September 30, 2026. Research cutoff: November 7, 2026, New York date; the latest company filing verified is dated November 6.
Source: O’Reilly’s third-quarter 2026 Form 10-Q, consolidated cash-flow statement, p. 5, and management discussion, pp. 18–21. Cash remaining after capital spending is calculated below.
1. Repair shops provide most of the sales increase
Sales to professional customers generated about 71% of O’Reilly’s third-quarter revenue increase. Repair shops bought more often, and the average purchase was larger. People repairing their own cars also spent more per purchase, but their transaction count fell. More professional transactions supported growth; do-it-yourself growth depended on larger purchases despite fewer transactions.
| Consolidated sales, US$ millions | Third quarter 2025 | Third quarter 2026 | Change |
|---|---|---|---|
| Professional service providers | 2,307.8 | 2,600.8 | 12.7% |
| Do-it-yourself customers | 2,304.8 | 2,448.4 | 6.2% |
| Other sales and sales adjustments | 93.1 | 72.1 | −22.6% |
| Total | 4,705.7 | 5,121.3 | 8.8% |
Source: 2026 Form 10-Q, Note 11, p. 12, and “Sales,” p. 18. Growth rates and contribution are calculated from unrounded amounts. Customer categories are revenue disclosures, not separately reported profit segments.
The same pattern extends beyond one quarter. In the first nine months, professional sales rose 13.2%, compared with 5.9% for do-it-yourself sales. Professionals accounted for 50.8% of third-quarter consolidated revenue, up from 49.0% a year earlier. O’Reilly therefore increasingly depends on serving repair businesses well, even though both customer groups remain substantial.
Existing U.S. stores also improved. Comparable-store sales—sales at eligible stores open at least a year—rose 7.2% in the third quarter, following 5.6% in 2025 and 1.5% in 2024. New stores outside that comparison added $94 million to third-quarter sales growth. Management identifies higher prices for the same products and the greater cost of complex replacement parts as reasons for larger purchases. The filing does not give enough detail to divide the sales increase precisely between prices, product mix, and units sold.
Sources: 2026 Form 10-Q, Note 11 and “Sales,” p. 18; October 23, 2024 company results, “Comparable Store Sales Results.” The comparable-store measure includes eligible U.S. online orders and excludes specified other sales; it is narrower than consolidated revenue.
An aging vehicle fleet supports the repair market, while growth in driving remains modest. S&P Global Mobility measured average U.S. light-vehicle age at 12.8 years in 2025, versus 12.6 years in 2024. Older vehicles need maintenance over longer lives. Yet better-made components can last longer between repairs, which O’Reilly says pressures transaction counts. Federal Highway Administration data also show only 0.5% growth in miles driven through August 2026. These facts support a continuing need for parts, while leaving pricing, service, and winning customers central to O’Reilly’s growth.
Sources: S&P Global Mobility, May 21, 2025, vehicle-age findings; S&P Global Mobility, May 22, 2024; FHWA, August 2026 Traffic Volume Trends, preliminary cumulative travel estimate compiled with data available October 2; 2026 Form 10-Q, pp. 17–18.
Competition is investing in the same opportunity. AutoZone reported 8.6% growth in domestic commercial sales for its 16-week quarter ended August 29, 2026, and opened 16 U.S. Mega Hub stores during that period to improve parts availability and delivery. Its period and customer mix differ from O’Reilly’s, so this is not a direct market-share calculation. It shows that faster service to repair shops is a contested source of growth. O’Reilly must keep improving availability and delivery to preserve its progress.
Source: AutoZone’s September 22, 2026 results, management commentary and “Domestic Commercial” operating statistics.
2. Profit grew, but tariff refunds explain the quarterly margin improvement
Without the disclosed tariff refund, third-quarter operating profit still grew, while its share of sales was nearly unchanged. Reported results show a stronger improvement because $39 million of refunds increased gross profit and therefore operating profit. Gross profit is what remains after merchandise and warehouse/distribution costs; operating profit also deducts store and corporate operating expenses.
| Consolidated reported results; US$ millions except margins and EPS | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Revenue | 4,705.7 | 5,121.3 | 13,367.7 | 14,573.8 |
| Operating profit | 976.1 | 1,098.3 | 2,632.0 | 2,925.6 |
| Operating margin | 20.74% | 21.45% | 19.69% | 20.07% |
| Net profit | 725.9 | 785.6 | 1,933.0 | 2,104.9 |
| Diluted earnings per share, US$ | 0.85 | 0.97 | 2.25 | 2.54 |
Source: 2026 Form 10-Q, consolidated income statements, p. 2. Margins are calculated before rounding; earnings per share are reported amounts.
Higher sales helped spread distribution and store operating costs across more revenue. Management also reports better purchase costs in selected product categories. Against those benefits, professional customers accounted for more sales and carry a lower gross margin than do-it-yourself customers. Lower-margin petroleum-based products also took a larger share of sales. Those offsets explain why strong revenue growth did not produce much improvement in the operating margin after removing the refund.
| Operating-profit comparison, US$ millions except margins | Third quarter 2025 | Third quarter 2026 | First nine months 2025 | First nine months 2026 |
|---|---|---|---|---|
| Reported operating profit | 976.067 | 1,098.291 | 2,632.003 | 2,925.645 |
| Remove disclosed 2026 tariff refund | 0.000 | −39.000 | 0.000 | −39.000 |
| Operating profit after this single adjustment | 976.067 | 1,059.291 | 2,632.003 | 2,886.645 |
| Margin after this single adjustment | 20.74% | 20.68% | 19.69% | 19.81% |
Calculation notes: This is a calculated, non-GAAP comparison of profit before interest and tax, not a company-defined adjusted earnings measure. The full $39 million disclosed benefit is removed once from each applicable 2026 period; the quarterly and cumulative amounts must not be added. The comparison makes no other adjustments and does not estimate an after-tax refund benefit.
Source: 2026 Form 10-Q, “Gross Profit,” “Selling, General and Administrative Expenses,” and “Operating Income,” p. 18.
After that adjustment, operating profit increased 8.5% in the quarter and 9.7% over nine months. The business therefore produced more profit from greater sales, with a modest cumulative margin improvement. Labor and other costs still required spending: third-quarter employee compensation within selling and administrative expenses rose to $996.0 million from $918.7 million. Management attributes higher total expenses to staffing and operating a larger business, along with cost inflation; casualty-insurance costs also weighed on the nine-month comparison.
The gain reaching net profit was smaller. Quarterly interest expense rose to $81.9 million from $59.6 million because average borrowings increased. The effective tax rate rose to 23.1% from 21.4%, principally because tax benefits from employee share compensation were smaller. Consequently, third-quarter operating profit grew 12.5%, but net profit grew 8.2%. More borrowing is already taking part of the operating improvement.
Source: 2026 Form 10-Q, Note 2, p. 6; income statement, p. 2; and management discussion, pp. 18–19.
3. Cash generation improved, helped by when tax-related payments fell due
Operating cash comfortably funded capital spending, but part of its improvement reflects payment timing. O’Reilly generated $2.60 billion of operating cash in the first nine months, up 22.1%. This exceeded the 8.9% increase in net profit. The difference is explained by expenses that did not require current cash payments and changes in when customers, suppliers, and tax-related obligations were paid.
| First-nine-month cash reconciliation, US$ millions | 2025 | 2026 |
|---|---|---|
| Net profit | 1,932.976 | 2,104.866 |
| Add expenses and other adjustments without matching current operating cash payments | 407.943 | 478.046 |
| Net cash effect of changes in operating assets and liabilities | −212.418 | 15.243 |
| Operating cash flow | 2,128.501 | 2,598.155 |
| Capital spending, shown as a positive use of cash | 899.783 | 860.273 |
| Operating cash remaining after capital spending | 1,228.718 | 1,737.882 |
Source: 2026 Form 10-Q, cash-flow statement, p. 5. The two grouped reconciliation rows are calculations; their components appear in the end notes. Capital spending means cash purchases of property and equipment, without deducting proceeds from asset sales.
More cash remained tied up in unpaid customer accounts: $82.9 million, compared with $66.9 million a year earlier. Building inventory used $437.6 million, while growth in unpaid supplier bills supplied $409.6 million. Together, those two inventory-related movements used $27.9 million; a year earlier they supplied $46.2 million. Supplier credit therefore remained important, but this particular cash contribution weakened.
The largest favorable timing change was in the cash-flow statement’s remaining operating assets and liabilities: these supplied $129.2 million in 2026, versus using $189.9 million in 2025. Management identifies the timing of payments for purchased federal renewable-energy tax credits, alongside higher operating income, as the main reasons operating cash increased. These credits let O’Reilly offset tax obligations; paying the seller and receiving the tax benefit need not happen in the same reporting period.
Cash income-tax payments, which include purchases of these credits, fell to $618.5 million from $876.5 million even though the income-tax expense in reported profit rose. That supports the payment-timing explanation. It does not establish that the entire $319.0 million swing in the broad “other” operating line came from tax credits, nor that the lower cash payments will repeat. The earlier annual report similarly attributed weaker 2025 operating cash to the timing of these payments.
Sources: 2026 Form 10-Q, cash-flow statement, p. 5, and “Operating Activities,” p. 20; 2025 Form 10-K, “Operating Activities” and Note 17, “Income Taxes,” pp. 69–71.
The $1.74 billion left after capital spending shows that O’Reilly could fund its physical investment from current operations. Its own free-cash-flow measure was slightly lower, at $1.73 billion, because it also removes excess tax benefits from share compensation and adds a return of a tax-credit investment. Both measures leave substantially less cash than the amount spent repurchasing shares.
Source: 2026 Form 10-Q, non-GAAP free-cash-flow reconciliation, p. 21. The exact company calculation is reproduced in the end notes.
4. A wider parts network relies on supplier credit
O’Reilly’s expansion depends on having parts nearby and enough time to pay for them. A repair shop can complete a job sooner when the needed part is available quickly. O’Reilly’s stated strategy combines knowledgeable employees with distribution centers and larger hub stores that make same-day or overnight replenishment possible. Its 2025 annual report described 32 distribution centers and 399 hubs, with more than 95% of stores receiving multiple same-day deliveries and weekend deliveries of hard-to-find parts.
Source: 2025 Form 10-K, Item 1, “Business,” distribution discussion. These are the annual report’s network figures, not an updated September 2026 count.
By September 30, 2026, the company operated 6,758 stores, including 6,595 in the United States and Puerto Rico, 134 in Mexico, and 29 in Canada. It added 173 net stores in the first nine months, versus 160 a year earlier. Management says capital spending supports existing stores, new openings, distribution infrastructure, and information systems. Management attributes the lower year-to-date spending to project timing.
| Selected consolidated balances, US$ millions | December 31, 2025 | September 30, 2026 |
|---|---|---|
| Cash and cash equivalents | 193.8 | 194.4 |
| Customer and other accounts receivable, net | 389.8 | 462.1 |
| Amounts receivable from suppliers | 159.9 | 200.9 |
| Inventory | 5,731.4 | 6,165.1 |
| Property and equipment after depreciation | 6,257.4 | 6,731.6 |
| Recorded right to use leased property and equipment | 2,391.2 | 2,493.5 |
| Goodwill from acquisitions | 948.2 | 952.9 |
| Accounts payable | 7,103.7 | 7,507.5 |
| Total assets | 16,538.3 | 17,601.9 |
Source: 2026 Form 10-Q, balance sheets, p. 1, and management discussion, pp. 16, 18–20.
Inventory and property/equipment account for most of the $1.06 billion increase in assets. More inventory supports a wider product offering, but its dollar increase cannot be read as a count of extra parts: purchase prices and inventory accounting also affect the balance. O’Reilly uses last-in, first-out accounting, which assigns more recent inventory costs to sales. The filing does not divide the inventory increase between units, prices, and new locations.
Receivables also grew. O’Reilly offers short-term credit to qualifying professional customers, so some sales generate cash after the parts are delivered. Supplier receivables are different: they include rebates, allowances, and merchandise returns owed by vendors. Goodwill increased only $4.7 million, and other noncurrent assets changed little; acquired intangible assets were not the principal source of the asset expansion.
Sources: 2026 Form 10-Q, balance sheets and Note 4; 2025 Form 10-K, Note 1, “Accounts Receivable,” “Amounts Receivable from Suppliers,” and “Inventory,” and Note 7, “Goodwill and Other Intangibles.”
Supplier payment terms are especially important. Accounts payable exceeded inventory by $1.34 billion at September 30. Within those payables, $5.1 billion consisted of confirmed invoices under supplier-finance programs, approximately the same amount as at year-end. Suppliers can sell those invoices to participating financial institutions and receive payment sooner; O’Reilly still pays the original invoice amount on its original due date, generally about a year later.
These are merchandise obligations, separate from the bonds and commercial paper used for financing. Even so, they are a major source of funding for the business. If vendors required quicker payment, O’Reilly would need more cash to support the same stock of parts. The balance sheet’s $2.12 billion excess of current liabilities over current assets makes continued collections, supplier terms, and access to borrowing more meaningful liquidity tests than the cash balance alone.
Source: 2026 Form 10-Q, balance sheets, p. 1, and Note 6, pp. 8–9. The invoice amount is included in accounts payable and must not be added to it again.
5. Larger buybacks reduced the share count and increased borrowing needs
The larger buyback program explains the main cash gap. Repurchases return cash to selling shareholders and reduce the number of shares dividing future earnings. O’Reilly treats them as an optional part of its capital allocation: its board can change, suspend, or terminate the program. The scale chosen in 2026 had a clear financing consequence.
| First-nine-month cash allocation, US$ millions | 2025 | 2026 |
|---|---|---|
| Operating cash after capital spending | 1,228.718 | 1,737.882 |
| Cash paid for share repurchases, including fees | 1,596.650 | 3,467.904 |
| Repurchases exceeding that cash remainder | 367.932 | 1,730.022 |
| Net cash from debt issuance and repayments, after issuance costs | 385.967 | 1,690.019 |
Source: 2026 Form 10-Q, cash-flow statement, p. 5, Note 9, and “Liquidity and Capital Resources,” pp. 19–21. This table compares major uses and funding sources; the complete cash reconciliation, including other flows, is in the end notes.
O’Reilly repurchased and retired 38.531 million shares in the first nine months, while employee plans and option exercises issued approximately 1.230 million shares. Actual shares outstanding fell from 841.909 million at year-end to 804.608 million at September 30. Retirement means the repurchased shares are removed, rather than held in a separate treasury-share balance.
The lower count helped quarterly diluted earnings per share rise 14.1%, compared with net-profit growth of 8.2%. Average diluted shares fell 4.7% to 812.201 million. Employee equity awards still have a cost—the cash-flow statement adds back $26.3 million of share-based compensation—and options added 3.350 million shares to the quarter’s diluted denominator. Buybacks more than offset these sources of dilution, at a much larger cash cost than the compensation expense.
Sources: 2026 Form 10-Q, equity statement, p. 4, cash-flow statement, p. 5, and Notes 9, 12–13; 2025 Form 10-K, Note 1, “Share Repurchases,” for retirement policy. EPS growth uses reported rounded EPS.
Repurchases also explain why accounting equity became more negative despite substantial profit. The shareholders’ deficit widened from $763.4 million to $2.09 billion. The company earned $2.10 billion, but repurchases and the related excise-tax charge removed more equity than earnings added. This is an accumulated capital-distribution result, not evidence that the company lost money during the period. Its practical significance is that a larger share of the assets is supported by creditors and operating liabilities.
The program continued after September: through November 6, O’Reilly repurchased another 3.0 million shares for $262.8 million. Those amounts belong to the fourth quarter and are excluded from the nine-month cash table. Management retains the ability to change the pace if expansion or refinancing needs require more cash.
Source: 2026 Form 10-Q, equity statement, p. 4, and Note 9, p. 11. The detailed equity reconciliation is in the end notes.
6. Borrowing capacity is available, but October’s refinancing increased reliance on short-term debt
O’Reilly met its lending requirements, while the next funding decisions carry a larger interest bill. Debt recorded on the balance sheet rose from $6.02 billion to $7.71 billion. Its face amount was $7.75 billion before deducting unamortized discounts and issuance costs. During the first nine months, O’Reilly issued $2.45 billion of bonds, repaid a $500 million maturity, and reduced commercial paper principal by $240 million.
| Debt principal outstanding at September 30, 2026, US$ millions | Principal |
|---|---|
| Bonds due in 2026 | 750 |
| Bonds due in 2027 | 750 |
| Bonds due in 2028 | 500 |
| Bonds due in 2029 | 1,200 |
| Bonds due in 2030 | 500 |
| Bonds due in 2031 | 1,000 |
| Bonds due in 2032–2037 | 2,600 |
| Commercial paper | 450 |
| Total | 7,750 |
Source: 2026 Form 10-Q, Note 7, pp. 9–10. Commercial paper consists of short-term notes with permitted maturities up to 397 days. This is a September 30 schedule, before the October refinancing.
On October 20, the company repaid the $750 million of 5.75% bonds using commercial paper borrowings. The maturity was met, but the principal was replaced with another borrowing. The filing classifies commercial paper and the 2026 and 2027 bonds as long-term debt because O’Reilly has the ability and intent to refinance them over a longer period. Readers still need the actual maturity schedule to understand when refinancing occurs.
O’Reilly had no direct borrowings under its $2.25 billion revolving bank facility at September 30. About $5 million of facility letters of credit reduced availability, and the facility also backs the commercial paper program. Reserving capacity for the $450 million of then-outstanding commercial paper leaves approximately $1.795 billion of backup capacity, before cash on hand. That capacity must also support upcoming bond maturities. October’s refinancing illustrates this use; the filing does not provide a complete updated commercial-paper balance at November 6.
Source: 2026 Form 10-Q, Note 7. The revolving facility matures in March 2030; backup capacity is calculated for September 30 only.
The lending tests show meaningful room. The agreement’s measure of earnings covering interest and rent was 6.06 times, above the required minimum of 2.50. Its adjusted-debt-to-earnings measure was 2.16 times, below the permitted maximum of 3.50, but up from 1.93 a year earlier. These measures include specified rent adjustments; they are not ordinary debt-to-net-profit ratios. Management reported compliance with both the credit agreement and bond covenants.
Interest costs will reflect the larger debt base. The new 2026 bonds alone require $124.4 million of interest each full year at their stated rates, before allowing for interest saved on repaid debt. September’s outstanding bonds carried fixed rates ranging from 1.75% to 5.75%; commercial paper carried a 4.170% weighted-average rate that can change when it is refinanced. The timing and type of borrowing therefore matter alongside the total amount.
Leases are another continuing cash claim. Recorded operating-lease obligations totaled $2.585 billion, including $458.0 million due within a year. Nine-month cash payments against those obligations were $335.4 million, while total lease expense, including variable and short-term costs and less sublease income, was $464.3 million. These payments are already part of operating cash flow. Expansion must support both new investment and the continuing cost of occupied locations.
Source: 2026 Form 10-Q, Notes 5 and 7, balance sheets, and covenant calculations, pp. 20–21. The new bonds’ interest calculation and the earlier lease-payment schedule appear in the end notes.
7. Faster store expansion raises the need for sales and cost control
Management plans faster store expansion, with a substantial investment step still scheduled for late 2026. The company’s October 28 outlook called for $1.3–$1.4 billion of full-year capital spending. After $860.3 million spent through September, that implies about $440–$540 million during the fourth quarter. Management attributes the spending pattern to the timing of store and distribution projects. The purpose is to improve reach and availability, while supporting existing operations.
The company expects 225–235 net new stores in 2026, leaving 52–62 openings after the first nine months. The 10-Q also gives a 2027 target of 265–275 net openings. A larger network can serve more customers, but payroll, occupancy, and opening costs arrive before every location reaches mature sales. Whether new stores and better parts access bring enough additional business is therefore more useful than simply counting openings.
Sources: October 28, 2026 company results, “Updated Full-Year 2026 Guidance”; 2026 Form 10-Q, “Sales” and liquidity discussion, pp. 18–20; 2025 Form 10-K, Note 1, pre-opening expense policy. Remaining spending and openings are calculations from management’s targets, not commitments already completed.
Management raised its 2026 comparable-store-sales outlook to 5.5%–6.5% and operating-margin outlook to 19.5%–20.0%, including the tariff-refund benefit. Its full-year free-cash-flow forecast was $1.9–$2.2 billion. Even the top of that cash range is below the repurchases already made through September. Continued large buybacks would therefore require additional funding or cash from sources beyond that forecast measure. A slower buyback pace is a direct way to preserve money for expansion and refinancing.
Source: October 28, 2026 company results, management commentary and full-year guidance. Guidance is management’s forecast as of that date, not a subsequent result.
Operating risks also deserve attention. Nine-month warranty provisions were $238.7 million, versus $212.8 million of claims, lifting the warranty obligation to $172.1 million. For products where suppliers give O’Reilly an allowance instead of accepting future claims, O’Reilly bears the claim cost. More covered sales create more potential claims, so errors in estimating repair or replacement costs would affect profit.
Insurance is a separate pressure. Current self-insurance reserves fell to $198.8 million from $297.3 million at year-end, but the quarterly filing does not reconcile the full reserve or identify a corresponding profit benefit. Management instead reports higher casualty-insurance costs in the nine-month expense comparison. The lower current balance should not be treated as evidence that insurance costs improved.
The company also reports ordinary-course litigation without a quantified range of possible additional losses. Management believes these matters, after insurance and accruals, will not have a material adverse effect, while acknowledging that the eventual liability cannot be determined. Claims costs and legal outcomes could therefore consume cash beyond the amounts currently estimated.
Sources: 2026 Form 10-Q, balance sheets, Note 8, Note 14, and nine-month expense discussion; 2025 Form 10-K, Note 1, self-insurance policy. The annual report shows that some self-insurance obligations are classified outside current liabilities.
8. Conclusion: expansion is funded, while buybacks add financing pressure
O’Reilly’s operating expansion is supported by profit and cash generation; its faster buybacks are increasing the demands on financing. Repair-shop growth, more sales from existing stores, and a service network designed for quick parts access provide a credible operating base. The counterweight is that do-it-yourself transactions declined, professional sales carry lower gross margins, and the tariff refund explains the quarterly margin improvement.
The business assessment depends on whether professional transaction growth and new-store sales continue to cover the cost of a larger network. Cash available for other uses also depends on supplier terms and the timing of tax-related payments. If management keeps repurchases near the recent pace while accelerating expansion, borrowing and interest will remain important constraints. Adjusting repurchases would give the company more room to fund those business priorities without requiring a comparable improvement in demand.
Sources: 2026 Form 10-Q, customer sales, margin discussion, cash-flow statement, financing, and repurchase disclosures; October 28 outlook. The business implications are interpretations of the evidence discussed above.
Reporting basis and calculation notes
Reporting basis: O’Reilly Automotive, Inc., ticker ORLY, CIK 0000898173; Form 10-Q, accession 0000898173-26-000053, filed November 6, 2026, for September 30, 2026. The quarter covers July 1–September 30; the cumulative period covers January 1–September 30. Comparisons use the same 2025 periods, while balance-sheet changes use December 31, 2025. The unaudited U.S. GAAP accounts consolidate O’Reilly and its wholly owned subsidiaries and eliminate transactions between them. The company reports one automotive-aftermarket segment; foreign operations are immaterial to consolidated revenue and long-lived assets.
Sources: SEC issuer filing history; 2026 Form 10-Q, cover and Notes 1–2; SEC company facts. Revenue, operating profit, net profit, cash, inventory, debt, assets, equity, cash flows, repurchases, and diluted EPS were cross-checked against facts for this accession, using the actual start/end dates and USD or USD-per-share units. The fiscal-quarter label alone was not used to distinguish quarterly from cumulative facts.
Reporting basis: The research cutoff is November 7, 2026, New York date. Company evidence includes the November 6 filing and its subsequent-event disclosures through that date, plus the October 28 outlook. Industry evidence has the separate dates stated beside it. This does not assert that every development through November 7 was independently verified.
Calculation notes: Unless a table states otherwise, dollar values below are US$ millions. Growth equals the current amount divided by the comparable prior amount, minus one. A margin is profit divided by revenue. A percentage-point change subtracts one margin from another. Calculations use original amounts before display rounding.
- Professional sales contribution: the increase was 2,600.841 − 2,307.782 = 293.059. Total sales increased 5,121.290 − 4,705.696 = 415.594. Professional customers therefore supplied 293.059 ÷ 415.594 = 70.52% of the net increase. Other sales and adjustments declined by 21.055, so the two main customer groups’ increases exceed total growth.
- Profit reaching the bottom line: quarterly operating-profit growth of 122.224, less 23.740 of additional net other expense and 38.759 of additional tax expense, equals the 59.725 increase in net profit. The interest increase was 22.284 within that other-expense change.
- Company-defined free cash flow: 2026 operating cash 2,598.155 − property/equipment purchases 860.273 − excess share-compensation tax benefit 11.507 + tax-credit investment return 3.294 = 1,729.669. For 2025, operating cash 2,128.501 − property/equipment purchases 899.783 − excess share-compensation tax benefit 27.714 = 1,201.004. Asset-sale proceeds are not deducted from capital spending in either calculation.
- Cash balance check: opening cash 193.793 + operating inflow 2,598.155 − investing outflow 853.020 − financing outflow 1,744.540 + currency effect 0.057 = closing cash 194.445. Investing comprises capital spending −860.273, property-sale proceeds +6.677, tax-credit investment return +3.294, and other/acquisition cash −2.718. No separate restricted-cash balance is included in the presented cash reconciliation.
- Funding check: 2026 debt proceeds 2,446.149 − bond repayment 500.000 − net commercial-paper payments 238.843 − debt issuance costs 17.287 = net funding of 1,690.019. Add stock-issuance cash 52.333, subtract repurchases 3,467.904, paid excise tax 18.718, and other financing 0.270 to reach net financing outflow of 1,744.540. For 2025, commercial-paper proceeds 389.796 − issuance costs 3.829 = 385.967. No cash dividend was reported.
Calculation notes: The table below supplies the two grouped cash adjustments used in Section 3. Positive amounts add cash relative to reported profit; negative amounts reduce it. Depreciation allocates earlier asset spending across the years of use. Deferred tax reflects a difference between the timing of tax expense and tax payment; it is counted once in this reconciliation.
| First-nine-month profit-to-cash adjustments, US$ millions | 2025 | 2026 |
|---|---|---|
| Depreciation and amortization of operating assets | 375.825 | 413.189 |
| Amortization of debt discounts and issuance costs | 5.502 | 6.086 |
| Deferred income taxes | −7.873 | 33.460 |
| Share-based compensation | 27.108 | 26.289 |
| Other reconciliation adjustments | 7.381 | −0.978 |
| Total noncash and other reconciliation adjustments | 407.943 | 478.046 |
| Change in accounts receivable | −66.898 | −82.911 |
| Change in inventory | −486.368 | −437.579 |
| Change in accounts payable | 532.599 | 409.638 |
| Change in income taxes payable | −1.882 | −3.077 |
| Changes in other operating assets and liabilities | −189.869 | 129.172 |
| Total effect of changes in operating balances | −212.418 | 15.243 |
Calculation notes: These cash-flow movements can differ from simple balance-sheet changes because currency translation and other noncash changes also affect balances.
Source: 2026 Form 10-Q, income and cash-flow statements, Notes 9 and 11, and free-cash-flow reconciliation, p. 21.
Calculation notes: The following table checks how the shareholders’ deficit changed. It is an accounting-equity reconciliation, not a cash-flow statement.
| First nine months of 2026, US$ millions | Effect on equity |
|---|---|
| Opening shareholders’ deficit | −763.352 |
| Net profit | +2,104.866 |
| Employee-plan and option-related share issuance | +54.117 |
| Share compensation recorded in equity | +24.746 |
| Repurchases, including fees | −3,467.904 |
| Repurchase excise tax recorded in equity | −33.539 |
| Foreign-currency translation loss | −11.542 |
| Closing shareholders’ deficit | −2,092.608 |
Calculation notes: Buying back and retiring shares reduces several equity accounts. “Paid-in capital” records share and equity-award amounts beyond the shares’ small legal face value. The “retained deficit” includes the accumulated effect of profit and amounts charged there for repurchases. The table traces those two balances without treating either as a cash balance.
| First-nine-month equity-account movements, US$ millions | Paid-in capital | Retained deficit |
|---|---|---|
| Opening balance | 1,530.292 | −2,328.817 |
| Net profit | 0.000 | 2,104.866 |
| Employee-plan share issuance | 25.394 | 0.000 |
| Option-exercise share issuance | 28.711 | 0.000 |
| Share compensation | 24.746 | 0.000 |
| Repurchase allocation | −71.743 | −3,395.776 |
| Excise-tax charge | 0.000 | −33.539 |
| Closing balance | 1,537.400 | −3,653.266 |
Calculation notes: Common-stock capital fell from 8.419 to 8.046; accumulated currency translation moved from +26.754 to +15.212. Retired shares leave no separate treasury-stock account.
Calculation notes: Note 9 reports repurchase investment of 3,467.519. The cash-flow and equity statements report 3,467.904, a difference of 0.385; the equity row explicitly includes fees. Note 9 separately reports gross excise tax of approximately 34.7; the equity charge is 33.539 and cash paid is 18.718. These are different disclosed measures and are not substituted for one another. Likewise, equity issuance and compensation entries differ from the corresponding cash-flow entries; each reconciliation uses its own statement’s amounts.
Source: 2026 Form 10-Q, equity and cash-flow statements, pp. 4–5, and Note 9. Share and EPS comparisons use the post-split basis; the 2025 Form 10-K, Note 1, records the 15-for-1 split completed June 10, 2025.
Calculation notes: September 30 assets of 17,601.879 equal total liabilities of 19,694.487 plus equity of −2,092.608. December 31 assets of 16,538.253 equal liabilities of 17,301.605 plus equity of −763.352. September liabilities comprise current liabilities 9,343.568, financing debt 7,711.498, noncurrent operating leases 2,126.908, deferred income taxes 244.095, and other noncurrent liabilities 268.418.
Source: 2026 Form 10-Q, balance sheets, p. 1.
Calculation notes: Annual interest on the four 2026 bond issues equals each principal amount multiplied by its fixed annual rate. The total excludes savings on debt repaid, commercial-paper interest, bank fees, and accounting charges for issuing debt.
| New bond issue and maturity; US$ millions | Principal | Annual rate | Annual contractual interest |
|---|---|---|---|
| March issue, due 2036 | 850 | 5.10% | 43.350 |
| August issue, due 2029 | 700 | 4.80% | 33.600 |
| August issue, due 2031 | 500 | 5.05% | 25.250 |
| August issue, due 2037 | 400 | 5.55% | 22.200 |
| Total | 2,450 | — | 124.400 |
Calculation notes: The loan agreement measures earnings before specified costs. For the 12 months ended September 30, 2026, net profit of 2,710.099 plus interest, tax, rent, depreciation/amortization, and noncash share compensation totaling 2,157.859 equals 4,867.958. This lender-defined amount is neither net profit nor spendable cash. Dividing it by interest, interest included in construction costs, and rent totaling 802.721 gives coverage of 6.06 times. Dividing lender-defined debt of 10,512.556 by those earnings gives leverage of 2.16 times. That debt measure includes face-value borrowing, standby letters of credit, and five times specified rent.
Source: 2026 Form 10-Q, Note 7 and covenant reconciliations, pp. 20–21.
Reporting basis: The latest full lease-maturity schedule reviewed is dated December 31, 2025. Its payments are shown below. It is not a September 2026 remaining-payment schedule: the quarterly filing reports 370.083 of new lease rights and obligations during the first nine months.
| Lease payments scheduled at December 31, 2025, US$ millions | Amount |
|---|---|
| 2026 | 446.812 |
| 2027 | 413.735 |
| 2028 | 363.372 |
| 2029 | 313.487 |
| 2030 | 269.249 |
| Later years | 1,213.601 |
| Total future payments | 3,020.256 |
| Reduction for the time until payment | −545.661 |
| Recorded lease obligation | 2,474.595 |
Calculation notes: The recorded obligation is smaller than the sum of future payments because accounting discounts payments that occur further in the future.
Reporting basis: At December 31, 2025, the annual tax footnote reported 20.602 of gross tax benefits not recognized because their acceptance by tax authorities was uncertain. It also disclosed an IRS examination of the 2023 return. The quarterly filing does not update that schedule, so these historical amounts are not presented as September balances.
Sources: 2025 Form 10-K, Notes 6 and 17; 2026 Form 10-Q, Notes 5 and 14.
This report is for general information and business analysis, not investment advice.