Advance Auto Parts, Inc. AAP delivered adjusted earnings of 72 cents per share in first-quarter 2023, down 68.1% from the year-ago quarter's figure. The reported figure fell short of the Zacks Consensus Estimate of $2.60 per share. Advance Auto generated net revenues of $3,417.6 million lagged the Zacks Consensus Estimate of $3,427 million, but increased 1.3% year over year.
Comparable store sales dropped 0.4%. Operating income plunged 55.7% year over year to $90 million. SG&A expenses totaled $1,380 million for first-quarter 2023, up 5.9% year over year.
Advance Auto Parts, Inc. Price, Consensus and EPS Surprise
Advance Auto Parts, Inc. price-consensus-eps-surprise-chart | Advance Auto Parts, Inc. Quote
Financial Position
Advance Auto had cash and cash equivalents of $226.4 million as of Apr 22, 2023, compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,784.6 million as of Apr 22, 2023, up from $1,188.3 million on Dec 31, 2023. Year to date, net cash used by operating activities and FCF totaled $378.9 million and $468.9 million, respectively.
Dividend & Share Repurchase
AAP’s board slashed the cash dividend to 25 cents per share, which would be paid out on Jul 28, 2023, to all common shareholders of record as of Jul 14, 2023.
During the quarter under discussion, AAP repurchased around $12.6 million worth of shares.
Store Update
As of Apr 22, 2023, AAP operated 5,096 stores and 318 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,315 independently owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean islands.
Revised Guidance 2023
Advance Auto estimates 2023 net sales in the band of $11.2-$11.3 billion, down from the previous range of $11.4-$11.6 billion. Comparable store sales are now expected between 1% and 0%, down from the prior range of 1-3%. Adjusted operating income margin is envisioned in the range of 5-5.3%, down from previous guidance of 7.8-8.2%.
Advance Auto expects 2023 capex in the range of $250-$300 million, down from $300-$350 million. The company projects FCF in the band of $200-$300 million, down from the prior guidance of a minimum of $400 million. Diluted EPS is forecast between $6-$6.50 per share, down from the prior estimate of $10.2-$11.2 per share. It aims to open 40 to 60 new stores this year, which is lower than its prior estimate of 60-80 stores.
Zacks Rank & Key Picks
AAP currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Ford Motor F, General Motors GM and Wabash National WNC, all sporting a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ford is one of the leading automakers in the world. The Zacks Consensus Estimate for F’s 2023 sales suggests year-over-year growth of 7.6%.
General Motors is one of the world’s largest automakers. The Zacks Consensus Estimate for GM’s 2023 sales indicates year-over-year growth of 4.5%.
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings indicates year-over-year growth of 12% and 90.7%, respectively.
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