The O'Reilly Slipstream

Springfield-based O’Reilly Automotive Inc. (Nasdaq: ORLY) has grown exponentially in recent years, and no doubt help from its hometown friends have been part of the story.

The publicly traded auto parts retailer, which saw its stock value climb by 40 percent in 2013, has jumped to NASCAR from the Busch League in recent years, and plenty of local supporting team members are happy to be pulled along in the slipstream.

Springfield-based Cardinal Roofing Inc. President Ed Phillips worked 10 years for roofing manufacturer Duro-Last Roofing Inc. – a system Phillips said the retailer prefers – before he started his own company that installs the system for commercial clients. His familiarity with Duro-Last helped Cardinal secure space on the O’Reilly Automotive Rolodex about eight years ago.

“It is hard to travel with crews and be mobile, but we kind of designed our company that way,” Phillips said. “That really saved our company during the recession, because we were able to send our guys out. (O’Reilly) was expanding, and we ran with them.”

Economic aerodynamics
Phillips said Cardinal Roofing has installed or worked on hundreds of roofs for O’Reilly in six states. The steady work during the economic downturn sustained his company as 2008–11 revenues hovered between roughly $3 million and $3.5 million. Since then, the 40-employee Cardinal Roofing has nearly doubled revenue to about $6 million last year.

“They’ve just needed people who could solve their problems. That’s where we’ve really won their trust,” Phillips said.  

Today, servicing O’Reilly roofs within a roughly 200-mile radius of Springfield accounts for about $1.2 million a year, or 20 percent, of Cardinal Roofing’s annual revenue.

Buddy Webb, founder of Springfield-based architecture firm Buddy Webb & Co., has been working for O’Reilly, in one form or another, since 1998, when he joined O’Reilly as a corporate architect.

“I worked in the real estate department for not quite three years. That was my initial contact with O’Reilly,” said Webb, who started his company in 1996 with a focus on residential design. “After that time, we pursued the commercial side of our firm, and from there, we’ve just continued that relationship.”

When he left O’Reilly in 2001, he had a ready-made entry into commercial architecture.

In all, Webb has designed some 1,100 stores for the retailer, as well as several distribution centers and its 115,000-square-foot Springfield headquarters.

“It has definitely been an integral part of our growth. We are an eight-man firm now and have recently relocated,” Webb said of the former MD Publications building it bought and began moving into last fall at 3057 E. Cairo St.

O’Reilly President and CEO Greg Henslee said firms the company works with regularly today – firms that have, to some degree, grown alongside the retailer in recent years – include Esterly Schneider & Associates Inc., Anderson Engineering Inc., Malone Finkle Eckhardt & Collins Inc. and Evans & Green LLP. The Springfield offices of Little Rock, Ark.-based Windstream Communications (Nasdaq: WIN) and Kansas City-based Husch Blackwell LLP also are getting in on the action.

“There are several companies that we work with, and have for years, here in Springfield. The ones we work with the most now typically help us with new stores,” Henslee said.

O’Reilly’s roots in Springfield date back to 1957, when father-and-son founders Charles F. O’Reilly and C.H. O’Reilly carved out $700,000 in revenue the first full year in business. By 2001, the company hit $1 billion in revenue, and this month, O’Reilly reported $6.65 billion in revenue, up 8 percent compared to 2012. Wall Street responded days after its 2013 earnings report by sending the stock to a record $150 per share on Feb. 11.

Henslee said the 2008 acquisition of Arizona-based CSK Auto, which added 1,350 stores to the company’s roster, gave O’Reilly a national footprint.

“It allowed us to leverage our advertising spend on a national basis as opposed to buying radio and other media advertising in local markets,” Henslee said. “It allowed us to go to our suppliers and talk about being able to market their products across the United States instead of just being a regional company. That, coupled with the increased volume that we are doing, allowed us to make better deals on products often manufactured in other countries helping us increase our gross margin significantly.”

The company’s 2013 gross margin was 50.7 percent, while it hovered around 44 percent before acquiring CSK.

Investors have responded. Five years ago this month, O’Reilly stock was less than $30 per share.

Hometown values
With nearly 4,200 locations at the end of 2013, Henslee said the company plans to add another 200 stores this year. He said its hometown values wouldn’t be left behind.

“Most of us who manage the company today are from the area. The O’Reilly family, of course, started the business here and continue to reside in Springfield, so we are very happy being a Missouri-based company,” Henslee said. “I think the shareholders we talk to with some of the large mutual funds, and other institutional investors, like that we are a company with Midwest values.”

Webb declined to disclose the financial impact O’Reilly has had on his firm, but he said the connection to O’Reilly has led to many other deals.

“The relationship we have developed with O’Reilly has allowed us to develop other relationships nationally,” Webb said, pointing to Chattanooga, Tenn.-based Hutton Co., which has developed several O’Reilly locations and is known for its strip centers.

Today, Webb’s firm is licensed to conduct business in 42 states, and more than 80 percent of its business comes from outside the Springfield area.  

Cardinal Roofing’s Phillips said his service-focused approach with O’Reilly also has worked with national brands Braum’s and Darden Restaurants Inc. Those firms are his top three revenue-producing clients.   

“When they call, we try to always be ready,” Phillips said.[[In-content Ad]]