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Advance Auto Parts reports third quarter 2014 earnings

Tuesday, November 11, 2014 - 09:00
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Advance Auto Parts announced its financial results for the third quarter ended October 4, 2014. Third quarter comparable cash earnings per diluted share (Comparable Cash EPS) were $1.89, an increase of 27.7% versus the third quarter last year.

These third quarter comparable results exclude $0.08 of amortization of acquired intangible assets, integration costs of $0.14 associated with the acquisition of General Parts International, Inc. (General Parts) and $0.01 of integration costs associated with the integration of B.W.P. Distributors, Inc. (BWP).

"We are pleased with our third quarter performance led by our strong commercial business and contributions from our team members in delivering Comparable Cash EPS growth of approximately 28% and an increase in comparable store sales of 1.5% in the quarter," said Darren R. Jackson, Chief Executive Officer. "Heading into the fourth quarter, our base business continues to be on-track against our full-year expectations and we continue to progress as expected against our integration objectives."

Third quarter 2014 highlights

Total sales for the third quarter increased 50.6% to $2.29 billion, as compared with total sales during the third quarter of fiscal 2013 of $1.52 billion. The sales increase was driven by the acquisition of General Parts, a comparable store sales increase of 1.5% and the addition of new stores over the past 12 months. Year-to-date, total sales increased 49.6% to $7.61 billion, compared with total sales of $5.09 billion over the same period last year.

The Company's gross profit rate was 45.2% of sales during the third quarter as compared to 50.2% during the third quarter last year. The 501 basis-point decrease in gross profit rate was primarily due to the higher mix of commercial sales which has a lower gross margin rate resulting from the acquisition of General Parts partially offset by acquisition synergy savings in the quarter. Year-to-date, the Company's gross profit rate was 45.4%, a 480 basis- point decrease over the same period last year.

The Company's Comparable SG&A rate was 34.8% of sales during the third quarter as compared to 38.5% during the same period last year. The 367 basis-point decrease was the result of the acquired General Parts business having lower SG&A costs. On a GAAP basis, the Company's SG&A rate was 36.0% of sales during the third quarter as compared to 39.0% during the same period last year. Year-to-date, the Company's Comparable SG&A rate was 35.0% versus 38.8% during the same period last year. Year-to-date, the Company's GAAP SG&A rate was 36.1% versus 39.0% during the same period last year.

The Company's Comparable Operating Income was $236.8 million during the third quarter, an increase of 33.3% versus the third quarter of fiscal 2013. As a percentage of sales, Comparable Operating Income in the third quarter was 10.3% compared to 11.7% during the third quarter of fiscal 2013. On a GAAP basis, the Company's operating income during the third quarter of $209.2 million increased 22.5% versus the third quarter of fiscal 2013. On a GAAP basis, the Operating Income rate was 9.1% during the third quarter as compared to 11.2% during the third quarter of fiscal 2013. Year-to-date, the Company's Comparable Operating Income rate was 10.3% versus 11.4% during the same period last year. Year-to-date, the Company's GAAP Operating Income rate was 9.3% versus 11.2% during the same period last year.

Operating cash flow increased approximately 35.6% to $540.3 million from $398.5 million through the third quarter of fiscal 2013. Free cash flow increased 51.0% to $378.8 million from $250.8 million through the third quarter of fiscal 2013. Capital expenditures through the third quarter were $161.5 million as compared to $147.7 million through the third quarter of fiscal 2013.

“We are pleased with our overall financial performance in the third quarter delivering positive comparable store sales performance, strong growth in free cash flow and 33.3% growth in Comparable Operating Income dollars,” 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 continue to remain on pace to deliver against our full-year guidance for Comparable Cash EPS in the range of $7.50 - $7.60 including achievement of our full-year synergy targets."

As of October 4, 2014, the Company operated 5,305 company-operated stores and 109 Worldpac branches, and served approximately 1,350 independently owned Carquest stores.

On October 30, 2014, the Company's Board of Directors declared a regular quarterly cash dividend of $0.06 per share to be paid on January 9, 2015 to stockholders of record as of December 26, 2014.


 

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