Advance Auto Parts, Inc. : Advance Auto Parts Reports First Quarter Fiscal 2012 Diluted EPS Increase of 32.6% to $1.79
05/17/2012| 08:35am US/Eastern
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Advance Auto Parts, Inc. (NYSE: AAP), a leading retailer of automotive
aftermarket parts, accessories, batteries, and maintenance items, today
announced its financial results for the first fiscal quarter ended
April 21, 2012. First quarter earnings per diluted share (EPS) were
$1.79 which was a 32.6% increase over the first quarter last year.
First Quarter Performance Summary
Sixteen Weeks Ended
April 21,
April 23,
2012
2011
Sales(in millions)
$
1,957.3
$
1,898.1
Comp Store Sales %
2.1
%
1.4
%
Gross Profit %
50.1
%
50.5
%
SG&A %
38.6
%
40.7
%
Operating Income %
11.5
%
9.8
%
Diluted EPS
$
1.79
$
1.35
Avg Diluted Shares(in thousands)
74,223
81,019
"We are pleased with our overall performance during our first quarter
despite a meaningful slowdown in our sales trends in the month of April.
Our commitment to lead in Service, while adapting our costs to the
current business environment allowed us to generate a solid comp store
sales performance and a 21% growth in our operating income," said Darren
R. Jackson, President and Chief Executive Officer. "Our second quarter
sales trends remain challenging despite the positive long-term industry
fundamentals. We remain committed to executing our key priorities while
making adjustments to these short term sales trends."
First Quarter Highlights
Total sales for the first quarter increased 3.1% to $2.0 billion,
compared with total sales of $1.9 billion during the first quarter of
fiscal 2011. The sales increase reflected a comparable store sales gain
of 2.1% compared to a 1.4% comparable store sales gain during the first
quarter of fiscal 2011 and the net addition of 82 new stores during the
past 12 months. The Company's gross profit rate was 50.1% of sales
during the first quarter as compared to 50.5% during the first quarter
last year. The 38 basis-point decrease in gross profit rate was
primarily due to a slower pace of inventory growth which drove higher
supply chain costs, partially offset by improvements in supply chain
labor and transportation costs. The Company's SG&A rate was 38.6% of
sales during the first quarter as compared to 40.7% during the same
period last year. The 205 basis point decrease was primarily due to
actions the Company took last year to increase the productivity of the
Company's store labor, a planned shift in expenses from the first
quarter to the second quarter and continued actions to reduce overall
administrative support costs.
The Company's operating income during the first quarter of $224.6
million increased 20.7% versus the first quarter of fiscal 2011. On a
rate basis, operating income was 11.5% of total sales as compared to
9.8% during the first quarter of fiscal 2011.
Operating cash flow for the quarter decreased 13.6% to $235.4 million
from $272.5 million in the first quarter of 2011. Free cash flow for the
quarter was $153.1 million versus $152.9 million during the first
quarter of fiscal 2011. Capital expenditures were $82.5 million for the
quarter as compared to $88.9 million during the first quarter of 2011.
"We are pleased with our business performance that drove improvement in
our operating income rate which was 11.5% in our first quarter," said
Mike Norona, Executive Vice President and Chief Financial Officer. "Due
to our slow start to the second quarter we anticipate our business
results will be constrained during our second quarter. As a result, we
now anticipate our annual comp store sales will be in the low single
digits for 2012 and are maintaining our previously communicated 2012 EPS
outlook of $5.55 to $5.75 per share."
Comparable Key Financial Metrics and Statistics (1)
Sixteen Weeks Ended
Fifty-Two Weeks Ended
April 21,
April 23,
2012
2011
FY 2011
FY 2010
Sales Growth %
3.1
%
3.7
%
4.1
%
9.5
%
Sales per Store (2)
$
1,711
$
1,697
$
1,708
$
1,697
Operating Income per Store (3)
$
193
$
167
$
184
$
168
Return on Invested Capital (4)
20.3
%
18.0
%
19.5
%
17.5
%
Gross Margin Return on Inventory (5)
6.8
5.5
6.6
5.1
Total Store Square Footage, end of period
26,843
26,211
26,663
25,950
Total Team Members, end of period
54,038
52,546
52,002
51,017
(1)
In thousands except for gross margin return on inventory and total
Team Members. The financial metrics presented are calculated on an
annual basis and accordingly reflect the last four quarters
completed, except for Sales Growth % and where noted.
(2)
Sales per store is calculated as net sales divided by an average of
beginning and ending store count.
(3)
Operating income per store is calculated as operating income divided
by an average of beginning and ending store count.
(4)
Return on invested capital (ROIC) is calculated in detail in the
supplemental financial schedules.
(5)
Gross margin return on inventory is calculated as gross profit
divided by an average of beginning and ending inventory, net of
accounts payable and financed vendor accounts payable.
Store Information
During the first quarter, the Company opened 25 stores, including three
Autopart International stores, and closed five Autopart International
stores. As of April 21, 2012, the Company's total store count was 3,682
including 200 Autopart International stores.
Share Repurchase Authorization
On May 14, 2012, the Company's Board of Directors authorized a $500
million share repurchase program. This new authorization replaces the
Company's $300 million share repurchase program authorized in August
2011, which had $200 million remaining.
Dividend
On May 14, 2012, the Company's Board of Directors declared a regular
quarterly cash dividend of $0.06 per share to be paid on July 6, 2012 to
stockholders of record as of June 22, 2012.
Annual Stockholders' Meeting Announcements
The Company held its annual meeting of stockholders on May 15, 2012.
During the meeting, the following individuals were elected to serve on
the Company's Board of Directors for the next year: John F. Bergstrom,
John C. Brouillard, Fiona P. Dias, Frances X. Frei, Darren R. Jackson,
William S. Oglesby, J. Paul Raines, Gilbert T. Ray, Carlos A. Saladrigas
and Jimmie L. Wade.
The Company's stockholders voted to approve the compensation of the
Company's named executive officers, reapproved the performance
objectives contained in the company's 2007 Executive Initiative Plan,
reapproved the performance objectives contained in the company's 2004
Long-Term Incentive Plan and approved the amended and restated 2002
Employee Stock purchase plan. The stockholders ratified the appointment
by the Company's Audit Committee of Deloitte & Touche LLP as its
independent registered public accounting firm for 2012. A majority of
stockholders also voted in favor of an advisory stockholder proposal on
stockholder voting requirements.
Investor Conference Call
The Company will host a conference call on Thursday, May 17, 2012 at
10:00 a.m. Eastern Daylight Time to discuss its quarterly results. To
listen to the live call, please log on to the Company's website, www.AdvanceAutoParts.com,
or dial (866) 908-1AAP. The call will be archived on the Company's
website until May 17, 2013.
About Advance Auto Parts
Headquartered in Roanoke, Va., Advance Auto Parts, Inc., a leading
automotive aftermarket retailer of parts, accessories, batteries, and
maintenance items in the United States, serves both the do-it-yourself
and professional installer markets. As of April 21, 2012, the Company
operated 3,682 stores in 39 states, Puerto Rico, and the Virgin Islands.
Additional information about the Company, employment opportunities,
customer services, and online shopping for parts, accessories and other
offerings can be found on the Company's website at www.AdvanceAutoParts.com.
Certain statements contained in this release are forward-looking
statements, as that statement is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements address future
events or developments, and typically use words such as believe,
anticipate, expect, intend, plan, forecast, outlook or estimate. These
statements discuss, among other things, expected growth and future
performance, including store growth, capital expenditures, comparable
store sales, SG&A, operating income, gross profit rate, free cash flow,
profitability and earnings per diluted share for fiscal year 2011. These
forward-looking statements are subject to risks, uncertainties and
assumptions including, but not limited to, competitive pressures, demand
for the Company's products, the market for auto parts, the economy in
general, inflation, consumer debt levels, the weather, business
interruptions, information technology security, availability of suitable
real estate, dependence on foreign suppliers and other factors disclosed
in the Company's 10-K for the fiscal year ended December 31, 2011 on
file with the Securities and Exchange Commission. Actual results may
differ materially from anticipated results described in these
forward-looking statements. The Company intends these forward-looking
statements to speak only as of the time of this news release and does
not undertake to update or revise them as more information becomes
available.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
April 21,
December 31,
April 23,
2012
2011
2011
Assets
Current assets:
Cash and cash equivalents
$
364,084
$
57,901
$
53,667
Receivables, net
146,228
140,007
115,424
Inventories, net
2,106,944
2,043,158
2,118,119
Other current assets
52,578
52,754
48,278
Total current assets
2,669,834
2,293,820
2,335,488
Property and equipment, net
1,233,689
1,223,099
1,151,926
Assets held for sale
788
615
707
Goodwill
76,389
76,389
34,387
Intangible assets, net
30,288
31,380
25,062
Other assets, net
34,124
30,451
25,813
$
4,045,112
$
3,655,754
$
3,573,383
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt
$
807
$
848
$
923
Accounts payable
1,737,339
1,653,183
1,574,347
Accrued expenses
376,807
385,746
386,552
Other current liabilities
133,761
148,098
114,508
Total current liabilities
2,248,714
2,187,875
2,076,330
Long-term debt
599,841
415,136
430,832
Other long-term liabilities
217,908
204,829
182,337
Total stockholders' equity
978,649
847,914
883,884
$
4,045,112
$
3,655,754
$
3,573,383
NOTE: These preliminary condensed consolidated balance sheets
have been prepared on a basis consistent with our previously
prepared balance sheets filed with the Securities and Exchange
Commission for our prior quarter and annual report, but do not
include the footnotes required by generally accepted accounting
principles, or GAAP, for complete financial statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
Sixteen Week Periods Ended
April 21, 2012 and April 23, 2011
(in thousands, except per share data)
(unaudited)
April 21,
April 23,
2012
2011
Net sales
$
1,957,292
$
1,898,063
Cost of sales, including purchasing and warehousing costs
976,619
939,862
Gross profit
980,673
958,201
Selling, general and administrative expenses
756,109
772,224
Operating income
224,564
185,977
Other, net:
Interest expense
(9,854
)
(9,719
)
Other income, net
502
55
Total other, net
(9,352
)
(9,664
)
Income before provision for income taxes
215,212
176,313
Provision for income taxes
81,706
66,730
Net income
$
133,506
$
109,583
Basic earnings per share (a)
$
1.83
$
1.37
Diluted earnings per share (a)
$
1.79
$
1.35
Average common shares outstanding (a)
72,888
79,468
Average common shares outstanding - assuming dilution (a)
74,223
81,019
(a)
Average common shares outstanding is calculated based on the
weighted average number of shares outstanding during the quarter.
At April 21, 2012 and April 23, 2011, we had 73,443 and 77,855
shares outstanding, respectively.
NOTE: These preliminary condensed consolidated statements of
operations have been prepared on a basis consistent with our
previously prepared statements of operations filed with the
Securities and Exchange Commission for our prior quarter and annual
report, but do not include the footnotes required by GAAP for
complete financial statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
Sixteen Week Periods Ended
April 21, 2012 and April 23, 2011
(in thousands)
(unaudited)
April 21,
April 23,
2012
2011
Cash flows from operating activities:
Net income
$
133,506
$
109,583
Depreciation and amortization
55,799
52,539
Share-based compensation
5,590
5,960
Provision for deferred income taxes
294
14,109
Excess tax benefit from share-based compensation
(17,386
)
(2,692
)
Other non-cash adjustments to net income
863
1,526
(Increase) decrease in:
Receivables, net
(6,221
)
8,821
Inventories, net
(63,786
)
(254,249
)
Other assets
95
28,228
Increase in:
Accounts payable
84,156
282,234
Accrued expenses
35,946
20,941
Other liabilities
6,561
5,450
Net cash provided by operating activities
235,417
272,450
Cash flows from investing activities:
Purchases of property and equipment
(82,463
)
(88,883
)
Proceeds from sales of property and equipment
188
1,021
Net cash used in investing activities
(82,275
)
(87,862
)
Cash flows from financing activities:
Decrease in bank overdrafts
(16,147
)
(4,471
)
Decrease in financed vendor accounts payable
-
(31,648
)
Net (payments) borrowings on credit facilities
(115,000
)
130,200
Issuance of senior unsecured notes
299,904
-
Payment of debt related costs
(2,648
)
-
Dividends paid
(8,784
)
(9,701
)
Proceeds from the issuance of common stock, primarily exercise of
stock options
4,545
5,097
Tax withholdings related to the exercise of stock appreciation
rights
(20,768
)
(1,612
)
Excess tax benefit from share-based compensation
17,386
2,692
Repurchase of common stock
(5,174
)
(280,389
)
Other
(273
)
(298
)
Net cash provided by (used in) financing activities
153,041
(190,130
)
Net increase (decrease) in cash and cash equivalents
306,183
(5,542
)
Cash and cash equivalents, beginning of period
57,901
59,209
Cash and cash equivalents, end of period
$
364,084
$
53,667
NOTE: These preliminary condensed consolidated statements of cash
flows have been prepared on a consistent basis with previously
prepared statements of cash flows filed with the Securities and
Exchange Commission for our prior quarter and annual report, but do
not include the footnotes required by GAAP for complete financial
statements.
Advance Auto Parts, Inc. and Subsidiaries
Supplemental Financial Schedules
Sixteen Week Periods Ended
April 21, 2012 and April 23, 2011
(in thousands)
(unaudited)
Reconciliation of Free Cash Flow:
April 21,
April 23,
2012
2011
Cash flows from operating activities
$
235,417
$
272,450
Cash flows used in investing activities
(82,275
)
(87,862
)
153,142
184,588
Decrease in financed vendor accounts payable
-
(31,648
)
Free cash flow
$
153,142
$
152,940
Note: Management uses free cash flow as a measure of our
liquidity and believes it is a useful indicator to stockholders of
our ability to implement our growth strategies and service our debt.
Free cash flow is a non-GAAP measure and should be considered in
addition to, but not as a substitute for, information contained in
our condensed consolidated statement of cash flows.
Detail of Return on Invested Capital
(ROIC) Calculation:
Capitalized lease obligation is estimated as annualized rent
expense for the applicable period times six years.
Note: Management uses ROIC to evaluate return on investments to
the business and believes it is a useful indicator to stockholders
given the future investments the Company plans to make in areas
including information technology, supply chain and stores. ROIC is
a non-GAAP measure and should be considered in addition to, but
not as a substitute for, information contained in our condensed
consolidated financial statements. Management believes our
comparable results of operations are a useful indicator to
stockholders for consistency purposes.
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