Advance Auto Parts Earnings Beat Ests - Analyst Blog

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Advance Auto Parts Inc. ( AAP ) saw a 6.8% rise in comparable earnings to 94 cents per share in the fourth quarter of fiscal 2013 from 88 cents in the prior-year quarter. It also exceeded the Zacks Consensus Estimate by 16 cents per share.

Including transaction expenses of 24 cents related to the acquisition of General Parts International and integration expenses of 3 cents for B.W.P. Distributors, earnings per share (on a reported basis) came in at 67 cents compared with 88 cents in the year-ago quarter. Net earnings rose 5.7% to $68.7 million from $65.1 million in the fourth quarter of fiscal 2012.

Revenues went up 6% to $1.41 billion, marginally beating the Zacks Consensus Estimate of $1.38 billion. Sales benefited from the acquisition of BWP Distributors, increase in comparable same store sales and the net addition of 151 new stores in the last 12 months. Comparable store sales increased 0.1% versus a decrease of 1.9% during the fourth quarter of fiscal 2012.

Gross profit increased 5.8% to $701.8 million or 49.8% of sales in the quarter compared with $663.2 million or 49.9% of sales a year ago. The marginal decrease in gross profit margin was due to higher mix of commercial sales (which has a lower gross margin rate), partially offset by increased merchandise margins.

Comparable SG&A expenses were $587.9 million or 41.7% of sales in the quarter, compared with $550 million or 41.4% in the fourth quarter of fiscal 2012. The increase in margin resulted from higher incentive compensation and increased new store openings, which was partially offset by lower administrative and support costs and enhanced labor productivity.

Operating income increased 0.6% to $113.8 million from $113.2 million in the fourth quarter of fiscal 2012. Operating margin was 8.1% versus 8.5% a year ago.

Fiscal 2013 Performance

Advance Auto Parts' comparable earnings increased 8.6% year over year to $5.67 per share for full-year 2013, beating the Zacks Consensus Estimate of $5.44. Revenues for full-year 2013 increased 4.7% to $6.49 billion from $6.21 billion in 2012.

Store Openings

During the quarter, Advance Auto Parts opened 55 stores and closed 24 stores including planned consolidations of 17 BWP stores and 5 Autopart International stores. In 2013, the company opened 172 Advance Auto Part and Autopart International stores in addition to the acquisition of 124 BWP stores. Additionally, the company closed 41 stores including planned consolidations of 20 BWP stores and 13 Autopart International stores during the year. As of Dec 28, 2013, the company's total store count stood at 4,049, including 217 Autopart International stores.

Dividend

The board of directors of Advance Auto Parts declared a regular quarterly dividend of 6 cents per share to be paid on Apr 4, 2014 to stockholders of record as of Mar 21, 2014.

Financial Position

Advance Auto Parts had cash and cash equivalents of $1.1 billion as of Dec 28, 2013, an increase from $598.1 million as of Dec 29, 2012. Long-term debt increased to $1.1 billion as of Dec 28, 2013, from $605.1 million as of Dec 29, 2012. The long-term debt-to-capitalization ratio stood at 41% versus 33.3% as of Dec 29, 2012.

In the 52-week period ended Dec 28, 2013, operating cash flow dipped to $545.3 million from $685.3 million in the year-ago period. Free cash flow in 2013 was $183.1 million versus $412.3 million last year. This decline can be attributed to the acquisition of BWP and increase in inventory, which were partially offset by lower capital expenditures. Capital expenditures in 2013 were $195.8 million as compared with $271.2 million year ago.

Outlook

Advance Auto Parts continues to expect earnings between $7.20 and $7.40 per share for 2014. The company will continue to focus on sales growth and to improve operating profit with the benefits from the General Part acquisition.

Advance Auto Parts, which is a prominent player in the automotive replacement parts and accessories industry along with AutoZone Inc. ( AZO ), O'Reilly Automotive Inc. ( ORLY ) and CarMax Inc. ( KMX ), currently retains a Zacks Rank #3 (Hold).



ADVANCE AUTO PT (AAP): Free Stock Analysis Report

AUTOZONE INC (AZO): Free Stock Analysis Report

CARMAX GP (CC) (KMX): Free Stock Analysis Report

O REILLY AUTO (ORLY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AAP , AZO , KMX , ORLY

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