LONDON, UK / ACCESSWIRE / September 6, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Advance Auto Parts, Inc. (NYSE: AAP), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=AAP, following the Company's announcement of its second quarter 2017 financial results on August 15, 2017. The auto parts retailer's operating cash flow increased 28.3% on a y-o-y basis, while it also provided guidance for the fiscal year. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For the twelve weeks ended July 15, 2017, Advance Auto Parts' total sales came in at $2.263 billion, a 0.3% increase compared with sales of $2.256 billion in Q2 2016. The Company's comparable store sales for the reported quarter were flat on a y-o-y basis. Advance Auto Parts' reported numbers met Wall Street's estimates.

Advance Auto Parts' gross profit margin decreased 91 basis points y-o-y to 43.9% for Q2 2017. The decline was attributed to the non-cash accounting impact of the planned inventory reduction as well as the increase in supply chain costs, unfavorable mix, and commodity headwinds. These factors were partially offset by the Company's efforts to drive favorable material cost performance. Advance Auto Parts noted that the non-cash accounting impact of the y-o-y inventory reduction was 26 basis points in the reported quarter. Excluding the non-cash accounting impact of the inventory reduction, the Company's gross profit margin decreased 65 basis points year-over-year.

For Q2 2017, Advance Auto Parts' adjusted selling, general, and administrative expenses (SG&A) was 35.2% of sales, a 123 basis point increase compared to the year ago same period. The increase was primarily driven by investments in customer focused strategies. In addition, higher medical and insurance expenses and support center costs related to increased personnel costs also contributed to the increase. The Company's GAAP SG&A increased 222 basis points versus the prior year.

Advance Auto Parts' adjusted operating income totaled $195.5 million, or operating margin was 8.6%, down 214 basis points versus the prior year, primarily driven by the decline in gross profit and increase in SG&A. Excluding the non-cash impact of the inventory reduction the Company's adjusted operating income would have been $207.3 million, or operating margin of 9.2%, reflecting a decline of 188 basis points on a y-o-y basis.

For Q2 2017, Advance Auto Parts reported net income of $87.05 million, or $1.17 per diluted share, compared to net income of $124.60 million, or $1.68 per share, for Q2 2016. The Company's reported quarter adjusted earnings per diluted share were $1.58, which excluded $0.41 of non-GAAP adjustments. Advance Auto Parts' earnings fell short of analysts' forecasts of $1.65 per share.

Cash Matters

Advance Auto Parts' operating cash flow increased approximately 28.3% to $267.3 million through Q2 2017 from $208.4 million through Q2 2016. The Company's free cash flow was $145.0 million through the reported quarter compared to $70.5 million through the year ago period, primarily driven by inventory reduction efforts.

On August 10, 2017, Advance Auto Parts' Board of Directors declared a regular quarterly cash dividend of $0.06 per share to be paid on October 06, 2017 to stockholders of record as of September 22, 2017.

Annual Outlook

For FY17, Advance Auto Parts is forecasting to open 60 to 65 new stores and expects comparable store sales to decline in the range of 3% to 1%. Advance Auto Parts is estimating capital expenditures of approximately $250 million and free cash flow of minimum $300 million.

Advance Auto Parts is projecting to continue reducing inventory levels to improve cash flow, and therefore will experience the associated non-cash accounting gross margin headwinds. Excluding the non-cash impact of the y-o-y inventory reduction which is estimated to be 75 basis points, the y-o-y reduction on adjusted operating income rate is expected to be 125 basis points to 225 basis points.

Stock Performance

At the close of trading session on Tuesday, September 05, 2017, Advance Auto Parts' stock price slipped 1.36% to end the day at $96.73. A total volume of 1.19 million shares were exchanged during the session. The Company's shares are trading at a PE ratio of 19.32 and have a dividend yield of 0.25%. At Tuesday's closing price, the stock's net capitalization stands at $7.14 billion.

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SOURCE: Pro-Trader Daily