Advance Auto Parts today announced its financial results for the second quarter ended July 18, 2015.
Second quarter comparable cash earnings per diluted share (Comparable Cash EPS) were $2.27, which included a $0.03 unfavorable impact from foreign currency and was an increase of 9.1% versus the second quarter last year. These second quarter comparable results exclude $0.08 of amortization of acquired intangible assets and integration costs of $0.16 primarily associated with the acquisition of General Parts International, Inc. (General Parts).
“I would like to thank all our Team Members for their hard work during the second quarter of 2015,” said Darren R. Jackson, Chief Executive Officer. “Our second quarter comparable store sales increased 1.0% and Comparable Cash EPS grew 9.1% to $2.27. These results were in-line with our expectations given the continuing demands of the General Parts integration. Our integration continues to be on-track overall along with our sales and profitability.”
Second quarter 2015 highlights
Total sales for the second quarter increased 1.0% to $2.37 billion, as compared with total sales during the second quarter of fiscal 2014 of $2.35 billion. The sales increase was driven by the addition of new stores over the past 12 months and a comparable store sales increase of 1.0% partially offset by changes in independent store count. Comparable store sales were negatively impacted by 34 basis points due to foreign currency fluctuations from our Canadian operations.
The Company's Gross Profit rate was 45.9% of sales during the second quarter as compared to 45.2% during the second quarter last year. The 64 basis-point increase in gross profit rate was primarily the result of lower product acquisition costs, inclusive of the Company's ongoing merchandise cost synergy savings.
The Company's Comparable SG&A rate was 33.8% of sales during the second quarter as compared to 34.0% during the same period last year. The 22 basis-point decrease was primarily the result of lower insurance costs and overall lower administrative costs driven by synergy savings partially offset by expense de-leverage as a result of our low comparable store sales growth. On a GAAP basis, the Company's SG&A rate was 35.0% of sales during the second quarter as compared to 35.0% during the same period last year.
The Company's Comparable Operating Income was $285.5 million during the second quarter, an increase of 8.7% versus the second quarter of fiscal 2014. As a percentage of sales, Comparable Operating Income in the second quarter was 12.0% compared to 11.2% during the second quarter of fiscal 2014. On a GAAP basis, the Company's operating income during the second quarter of $257.0 million increased 6.8% versus the second quarter of fiscal 2014. On a GAAP basis, the Operating Income rate was 10.8% during the second quarter as compared to 10.3% during the second quarter of fiscal 2014.
Operating cash flow increased approximately 3.2% to $330.8 million through the second quarter of fiscal 2015 from $320.6 million through the second quarter of fiscal 2014. Free cash flow increased to $216.3 million through the second quarter of fiscal 2015 from $214.3 million through the second quarter of fiscal 2014. Capital expenditures through the second quarter of fiscal 2015 were $114.5 million as compared to $106.3 million through the second quarter of fiscal 2014.
“Our teams once again delivered on our synergy expectations, expanded our core gross margins and demonstrated expense discipline to grow our Comparable Operating Income 8.7% in the quarter,” said Mike Norona, Executive Vice President and Chief Financial Officer. “We continue to stay focused on our base business while meeting our integration milestones and remain on pace to deliver against our full-year guidance for Comparable Cash EPS in the range of $8.10 to $8.30 including achievement of our full-year synergy targets.”
2015 full-year outlook
The Company is maintaining its full-year guidance for Comparable Cash EPS of $8.10 to $8.30. As part of its on-going process of store evaluations, the Company has identified, and is subsequently planning to close 50 stores in the latter part of 2015 in line with the Company's accelerated efforts to achieve its 12% comparable operating profit target in 2016. The one-time expense impact of these closures is expected to be between $16 and $20 million in 2015. This effectively increases the 2015 full-year estimates for one-time expenses from the original outlook of $75 to $85 million disclosed in the Company's fourth quarter 2014 earnings release to now be between $91 to $105 million.
As of July 18, 2015, the Company operated 5,252 stores and 117 Worldpac branches and served approximately 1,300 independently-owned Carquest stores.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.