Advance Auto Parts Reports Second Quarter 2024 Results
“Our team delivered positive comparable sales growth while navigating a challenging demand environment during the second quarter. I would like to thank the team for their hard work and dedication to serving our customers,” said Shane O’Kelly, president and chief executive officer. “We continue to make progress on our decisive actions with an increased focus on the Advance blended box. This morning, we announced the sale of
Second Quarter 2024 Results (1,2)
Second quarter 2024 net sales totaled
The company's gross profit decreased 2.3% to
SG&A expenses were
The company's operating income was
The company's effective tax rate was 27.5%, compared with 26.4% in the second quarter of 2023. The company's diluted EPS was
Net cash provided by operating activities was
Capital Allocation
On
_______________________________
(1) All comparisons are based on the same time period in the prior year. The company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned |
(2) As reported in the company’s fourth quarter and full year 2023 earnings release, the company corrected non-material errors in certain previously reported financials. All comparisons are based on the corrected historical results as presented in the company’s prior earnings release dated |
Full Year 2024 Guidance
|
|
As of |
||||||
($ in millions, except per share data) |
|
Low |
|
High |
||||
Net sales |
|
$ |
11,150 |
|
|
$ |
11,250 |
|
Comparable store sales (1) |
|
|
(1.0 |
)% |
|
|
0.0 |
% |
Operating income margin |
|
|
2.1 |
% |
|
|
2.5 |
% |
Diluted EPS |
|
$ |
2.00 |
|
|
$ |
2.50 |
|
Capital expenditures |
|
$ |
200 |
|
|
$ |
250 |
|
Free cash flow (2) |
|
Minimum |
(1) |
The company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned |
(2) |
Free cash flow is a non-GAAP measure. For a better understanding of the company's non-GAAP adjustments, refer to the reconciliation of non-GAAP financial measures in the accompanying financial tables. |
Investor Conference Call
The company will detail its results for the second quarter ended
To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the company suggests registering a day in advance or at minimum 10 minutes before the start of the call. A replay of the conference call will be available on the company's Investor Relations website for one year.
About
Forward-Looking Statements
Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the company’s strategic initiatives, operational plans and objectives, statements about the sale of the company’s
|
|||||
Condensed Consolidated Balance Sheets |
|||||
(In thousands) |
|||||
|
|||||
|
|
|
|
||
|
(Unaudited) |
|
(Audited) |
||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
479,418 |
|
$ |
503,471 |
Receivables, net |
|
847,609 |
|
|
800,141 |
Inventories, net |
|
4,903,490 |
|
|
4,857,702 |
Other current assets |
|
229,623 |
|
|
215,707 |
Total current assets |
|
6,460,140 |
|
|
6,377,021 |
Property and equipment, net |
|
1,579,886 |
|
|
1,648,546 |
Operating lease right-of-use assets |
|
2,596,201 |
|
|
2,578,776 |
|
|
990,266 |
|
|
991,743 |
Other intangible assets, net |
|
577,275 |
|
|
593,341 |
Other assets |
|
86,038 |
|
|
86,899 |
Total assets |
$ |
12,289,806 |
|
$ |
12,276,326 |
Liabilities and Stockholders' Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable |
$ |
4,048,321 |
|
$ |
4,177,974 |
Accrued expenses |
|
694,970 |
|
|
671,237 |
Other current liabilities |
|
513,483 |
|
|
458,194 |
Total current liabilities |
|
5,256,774 |
|
|
5,307,405 |
Long-term debt |
|
1,787,867 |
|
|
1,786,361 |
Noncurrent operating lease liabilities |
|
2,177,074 |
|
|
2,215,766 |
Deferred income taxes |
|
375,658 |
|
|
362,542 |
Other long-term liabilities |
|
85,681 |
|
|
84,524 |
Total stockholders' equity |
|
2,606,752 |
|
|
2,519,728 |
Total liabilities and stockholders’ equity |
$ |
12,289,806 |
|
$ |
12,276,326 |
|
|||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||
(In thousands, except per share data) (unaudited) |
|||||||||||||||
|
|
|
|
|
|||||||||||
|
Twelve Weeks Ended |
|
Twenty-Eight Weeks Ended |
||||||||||||
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
2,683,053 |
|
|
$ |
2,686,066 |
|
|
$ |
6,089,307 |
|
|
$ |
6,103,659 |
|
Cost of sales, including purchasing and warehousing costs |
|
1,568,745 |
|
|
|
1,545,611 |
|
|
|
3,545,924 |
|
|
|
3,501,277 |
|
Gross profit |
|
1,114,308 |
|
|
|
1,140,455 |
|
|
|
2,543,383 |
|
|
|
2,602,382 |
|
Selling, general and administrative expenses |
|
1,042,557 |
|
|
|
1,014,495 |
|
|
|
2,385,610 |
|
|
|
2,378,484 |
|
Operating income |
|
71,751 |
|
|
|
125,960 |
|
|
|
157,773 |
|
|
|
223,898 |
|
Other, net: |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
(18,668 |
) |
|
|
(20,869 |
) |
|
|
(43,543 |
) |
|
|
(50,587 |
) |
Other income, net |
|
9,011 |
|
|
|
1,684 |
|
|
|
7,720 |
|
|
|
1,009 |
|
Total other, net |
|
(9,657 |
) |
|
|
(19,185 |
) |
|
|
(35,823 |
) |
|
|
(49,578 |
) |
Income before provision for income taxes |
|
62,094 |
|
|
|
106,775 |
|
|
|
121,950 |
|
|
|
174,320 |
|
Provision for income taxes |
|
17,103 |
|
|
|
28,198 |
|
|
|
36,947 |
|
|
|
47,420 |
|
Net income |
$ |
44,991 |
|
|
$ |
78,577 |
|
|
$ |
85,003 |
|
|
$ |
126,900 |
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share |
$ |
0.75 |
|
|
$ |
1.32 |
|
|
$ |
1.43 |
|
|
$ |
2.14 |
|
Weighted-average common shares outstanding |
|
59,633 |
|
|
|
59,451 |
|
|
|
59,590 |
|
|
|
59,384 |
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per common share |
$ |
0.75 |
|
|
$ |
1.32 |
|
|
$ |
1.42 |
|
|
$ |
2.13 |
|
Weighted-average common shares outstanding |
|
59,905 |
|
|
|
59,604 |
|
|
|
59,868 |
|
|
|
59,570 |
|
(1) |
The condensed consolidated statement of operations for the twelve and twenty-eight weeks ended |
|
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(In thousands) (unaudited) |
|||||||
|
|
|
|
||||
|
Twenty-Eight Weeks Ended |
||||||
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
85,003 |
|
|
$ |
126,900 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
167,443 |
|
|
|
162,974 |
|
Share-based compensation |
|
27,653 |
|
|
|
26,791 |
|
(Gain) Loss and impairment of long-lived assets |
|
(15,645 |
) |
|
|
859 |
|
Provision for deferred income taxes |
|
13,634 |
|
|
|
21,497 |
|
Other, net |
|
2,076 |
|
|
|
1,628 |
|
Net change in: |
|
|
|
||||
Receivables, net |
|
(49,546 |
) |
|
|
(97,022 |
) |
Inventories, net |
|
(53,472 |
) |
|
|
(148,918 |
) |
Accounts payable |
|
(125,351 |
) |
|
|
(319,785 |
) |
Accrued expenses |
|
33,166 |
|
|
|
118,781 |
|
Other assets and liabilities, net |
|
2,853 |
|
|
|
(60,836 |
) |
Net cash provided by (used in) operating activities |
|
87,814 |
|
|
|
(167,131 |
) |
Cash flows from investing activities: |
|
|
|
||||
Purchases of property and equipment |
|
(92,445 |
) |
|
|
(144,874 |
) |
Proceeds from sales of property and equipment |
|
12,820 |
|
|
|
1,532 |
|
Net cash used in investing activities |
|
(79,625 |
) |
|
|
(143,342 |
) |
Cash flows from financing activities: |
|
|
|
||||
Borrowings under credit facilities |
|
— |
|
|
|
4,327,000 |
|
Payments on credit facilities |
|
— |
|
|
|
(4,417,000 |
) |
Borrowings on senior unsecured notes |
|
— |
|
|
|
599,571 |
|
Dividends paid |
|
(29,920 |
) |
|
|
(179,347 |
) |
Purchases of noncontrolling interests |
|
(9,101 |
) |
|
|
— |
|
Proceeds from the issuance of common stock |
|
1,788 |
|
|
|
2,060 |
|
Repurchases of common stock |
|
(4,617 |
) |
|
|
(13,808 |
) |
Other, net |
|
(1,143 |
) |
|
|
(4,531 |
) |
Net cash (used in) provided by financing activities |
|
(42,993 |
) |
|
|
313,945 |
|
Effect of exchange rate changes on cash |
|
10,751 |
|
|
|
949 |
|
Net (decrease) increase in cash and cash equivalents |
|
(24,053 |
) |
|
|
4,421 |
|
Cash and cash equivalents, beginning of period |
|
503,471 |
|
|
|
270,805 |
|
Cash and cash equivalents, end of period |
$ |
479,418 |
|
|
$ |
275,226 |
|
(1) |
The condensed consolidated statement of cash flows for the twenty-eight weeks ended |
Restatement of Previously Issued Financial Statements
During the fiscal year ended
Condensed Consolidated Statement of Operations |
|||||||||||||||||||
|
|
||||||||||||||||||
|
Twelve Weeks Ended |
|
Twenty-Eight Weeks Ended |
||||||||||||||||
(in thousands) |
As Previously
|
|
Adjustments |
|
As Corrected |
|
As Previously
|
|
Adjustments |
|
As Corrected |
||||||||
Cost of sales |
$ |
1,537,997 |
|
$ |
7,614 |
|
|
$ |
1,545,611 |
|
$ |
3,484,927 |
|
$ |
16,350 |
|
|
$ |
3,501,277 |
Gross profit |
|
1,148,069 |
|
|
(7,614 |
) |
|
|
1,140,455 |
|
|
2,618,732 |
|
|
(16,350 |
) |
|
|
2,602,382 |
Selling, general and administrative expenses |
|
1,013,701 |
|
|
794 |
|
|
|
1,014,495 |
|
|
2,394,365 |
|
|
(15,881 |
) |
|
|
2,378,484 |
Operating income |
|
134,368 |
|
|
(8,408 |
) |
|
|
125,960 |
|
|
224,367 |
|
|
(469 |
) |
|
|
223,898 |
Income before provision for income taxes |
|
115,183 |
|
|
(8,408 |
) |
|
|
106,775 |
|
|
174,789 |
|
|
(469 |
) |
|
|
174,320 |
Provision for income taxes |
|
29,821 |
|
|
(1,623 |
) |
|
|
28,198 |
|
|
46,776 |
|
|
644 |
|
|
|
47,420 |
Net income |
$ |
85,362 |
|
$ |
(6,785 |
) |
|
$ |
78,577 |
|
$ |
128,013 |
|
$ |
(1,113 |
) |
|
$ |
126,900 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share |
$ |
1.44 |
|
$ |
(0.12 |
) |
|
$ |
1.32 |
|
$ |
2.16 |
|
$ |
(0.02 |
) |
|
$ |
2.14 |
Diluted earnings per common share |
$ |
1.43 |
|
$ |
(0.11 |
) |
|
$ |
1.32 |
|
$ |
2.15 |
|
$ |
(0.02 |
) |
|
$ |
2.13 |
Condensed Consolidated Statement of Cash Flows |
|||||||||||
Twenty-Eight Weeks Ended |
|||||||||||
(in thousands) |
As Previously
|
|
Adjustments |
|
As Corrected |
||||||
Net income |
$ |
128,013 |
|
|
$ |
(1,113 |
) |
|
$ |
126,900 |
|
Provision for deferred income taxes |
|
16,249 |
|
|
|
5,248 |
|
|
|
21,497 |
|
Other, net |
|
1,170 |
|
|
|
458 |
|
|
|
1,628 |
|
Net change in: |
|
|
|
|
|
||||||
Receivables, net |
|
(93,539 |
) |
|
|
(3,483 |
) |
|
|
(97,022 |
) |
Inventories, net |
|
(145,148 |
) |
|
|
(3,770 |
) |
|
|
(148,918 |
) |
Accounts payable |
|
(346,808 |
) |
|
|
27,023 |
|
|
|
(319,785 |
) |
Accrued expenses |
|
120,888 |
|
|
|
(2,107 |
) |
|
|
118,781 |
|
Other assets and liabilities, net |
|
(36,008 |
) |
|
|
(24,828 |
) |
|
|
(60,836 |
) |
Net cash used in operating activities |
|
(164,559 |
) |
|
|
(2,572 |
) |
|
|
(167,131 |
) |
Other, net (1) |
|
(4,073 |
) |
|
|
(458 |
) |
|
|
(4,531 |
) |
Net cash provided by financing activities |
|
314,403 |
|
|
|
(458 |
) |
|
|
313,945 |
|
Effect of exchange rate changes on cash |
|
1,280 |
|
|
|
(331 |
) |
|
|
949 |
|
Net increase in cash and cash equivalents |
|
7,782 |
|
|
|
(3,361 |
) |
|
|
4,421 |
|
Cash and cash equivalents, beginning of period |
|
269,282 |
|
|
|
1,523 |
|
|
|
270,805 |
|
Cash and cash equivalents, end of period |
$ |
277,064 |
|
|
$ |
(1,838 |
) |
|
$ |
275,226 |
|
(1) |
The summary of corrections table above inadvertently omitted disclosure for proceeds from the issuance of common stock as follows: |
Reconciliation of Non-GAAP Financial Measures
The company's financial results include certain financial measures not derived in accordance with accounting principles generally accepted in
Reconciliation of Free Cash Flow: (1) |
|
|
|
||||
|
Twenty-Eight Weeks Ended |
||||||
(in thousands) |
|
|
|
||||
Cash flows provided by operating activities |
$ |
87,814 |
|
|
$ |
(167,131 |
) |
Purchases of property and equipment |
|
(92,445 |
) |
|
|
(144,874 |
) |
Free cash flow |
$ |
(4,631 |
) |
|
$ |
(312,005 |
) |
Adjusted Debt to Adjusted EBITDAR: (1) |
|
|
|
||||
|
Four Quarters Ended |
||||||
(In thousands, except adjusted debt to adjusted EBITDAR ratio) |
|
|
|
||||
Total GAAP debt |
$ |
1,787,867 |
|
|
$ |
1,786,361 |
|
Add: Operating lease liabilities |
|
2,685,542 |
|
|
|
2,660,827 |
|
Adjusted debt |
$ |
4,473,409 |
|
|
$ |
4,447,188 |
|
|
|
|
|
||||
GAAP Net (loss) income |
$ |
(12,162 |
) |
|
$ |
29,735 |
|
Depreciation and amortization |
|
310,923 |
|
|
|
306,454 |
|
Interest expense |
|
81,012 |
|
|
|
88,055 |
|
Other expense, net |
|
(12,237 |
) |
|
|
(5,525 |
) |
Provision for income taxes |
|
(8,361 |
) |
|
|
2,112 |
|
Rent expense |
|
636,395 |
|
|
|
613,859 |
|
Share-based compensation |
|
46,509 |
|
|
|
45,647 |
|
Other nonrecurring charges (2) |
|
25,757 |
|
|
|
12,419 |
|
Transformation related charges |
|
40,293 |
|
|
|
29,719 |
|
Adjusted EBITDAR |
$ |
1,108,129 |
|
|
$ |
1,122,475 |
|
|
|
|
|
||||
Adjusted Debt to Adjusted EBITDAR |
|
4.0 |
|
|
|
4.0 |
|
(1) |
The four quarters ended |
(2) |
The adjustments to the four quarters ended |
NOTE: Management believes its Adjusted Debt to Adjusted EBITDAR ratio (“leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The company’s goal is to maintain an investment grade rating. The company's credit rating directly impacts the interest rates on borrowings under its existing credit facility and could impact the company's ability to obtain additional funding. If the company was unable to maintain its investment grade rating, this could negatively impact future performance and limit growth opportunities. Similar measures are utilized in the calculation of the financial covenants and ratios contained in the company's financing arrangements. The leverage ratio calculated by the company is a non-GAAP measure and should not be considered a substitute for debt to net earnings, as determined in accordance with GAAP. The company adjusts the calculation to remove rent expense and to add back the company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the company’s peers and to account for differences in debt structures and leasing arrangements. The company’s calculation of its leverage ratio may not be calculated in the same manner as other companies, and thus may not be comparable to similarly titled measures used by other companies.
Store Information
During the twenty-eight weeks ended
The below table summarizes the changes in the number of company-operated store and branch locations during the twelve and twenty-eight weeks ended
|
|
Twelve Weeks Ended |
||||||||||
|
|
AAP |
|
|
|
|
|
Total |
||||
|
|
4,483 |
|
|
294 |
|
|
320 |
|
5,097 |
|
|
New |
|
7 |
|
|
1 |
|
|
1 |
|
9 |
|
|
Closed |
|
(6 |
) |
|
(3 |
) |
|
— |
|
(9 |
) |
|
|
|
4,484 |
|
|
292 |
|
|
321 |
|
5,097 |
|
|
|
Twenty-Eight Weeks Ended |
||||||||||
|
|
AAP |
|
|
|
|
|
Total |
||||
|
|
4,484 |
|
|
302 |
|
|
321 |
|
|
5,107 |
|
New |
|
14 |
|
|
1 |
|
|
1 |
|
|
16 |
|
Closed |
|
(15 |
) |
|
(10 |
) |
|
(1 |
) |
|
(26 |
) |
Converted |
|
1 |
|
|
(1 |
) |
|
— |
|
|
— |
|
|
|
4,484 |
|
|
292 |
|
|
321 |
|
|
5,097 |
|
(1) |
Certain converted |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240821458253/en/
Investor Relations Contact:
T: (919) 227-5466
E: invrelations@advanceautoparts.com
Media Contact:
T: (984) 389-7207
E: AAPCommunications@advance-auto.com
Source: