Company: ORLY
Filing Date: 2025-11-07
Form Type: 10-Q
Source: 0000898173-25-000057
Chunk: 11

Company: O REILLY AUTOMOTIVE INC
Filing Date: 2025-11-07
Form: 10-Q
Item: Part I, Item 3Q
Chunk 11
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Item 3.  Quantitative and Qualitative Disclosures about Market Risk

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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 September 30, 2025, we had no outstanding borrowings under our Revolving Credit Facility.  

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We are also 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 September 30, 2025, we had outstanding borrowings under the Program in the amount of $590.0 million, at the weighted-average variable interest rate of 4.309%.  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 $2.6 million.

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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 September 30, 2025, our cash and cash equivalents totaled $204.5 million.

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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 respective translations into U.S. dollars.

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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 period-end exchange rates was $479.3 million at September 30, 2025.  The period-end exchange rate of the Mexican peso, relative to the U.S. dollar, strengthened by approximately 13.7% 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 September 30, 2025