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 fourth quarter and fiscal year
ended December 29, 2012. Fourth quarter earnings per diluted share (EPS)
were $0.88 which was a 2.2% decrease versus the fourth quarter last
year. For fiscal 2012, EPS was $5.22 which was an increase of 2.2% over
the same period last year.
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Fourth Quarter Performance Summary
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Twelve Weeks Ended
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Fifty-Two Weeks Ended
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December 29,
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December 31,
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December 29,
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December 31,
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2012
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2011
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2012
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2011
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Sales (in millions)
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$
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1,329.2
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$
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1,327.6
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$
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6,205.0
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$
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6,170.5
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Comp Store Sales %
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(1.9
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%)
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2.9
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%
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(0.8
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%)
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2.2
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%
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Gross Profit %
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49.9
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%
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49.0
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%
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49.9
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%
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49.7
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%
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SG&A %
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41.4
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%
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40.6
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%
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39.3
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%
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39.0
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%
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Operating Income %
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8.5
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%
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8.4
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%
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10.6
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%
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10.8
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%
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Diluted EPS
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$
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0.88
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$
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0.90
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$
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5.22
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$
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5.11
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Avg Diluted Shares (in thousands)
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74,002
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73,807
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74,062
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77,071
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“We are pleased that our fourth quarter profitability results exceeded
our expectations. Our comparable sales trends continued to improve
sequentially, after adjusting for the holiday shift in our fourth
quarter, as well as our operating profits,” said Darren R. Jackson,
President and Chief Executive Officer. “Overall fiscal 2012 was a
challenging environment, which is reflected in our results. Yet we
achieved many key milestones that position us for a strong future. Those
achievements include the launch of our in-house commercial credit
program, the opening of our new distribution center in Remington,
Indiana, improvements in our commercial customer satisfaction, the
market entry into the boroughs of New York and the acquisition of BWP
which closed after our fiscal year ended. These milestones are
significant steps which will allow us to more effectively compete in the
larger and faster growing Commercial market.”
Fourth Quarter and Fiscal 2012 Highlights
Total sales for the fourth quarter increased 0.1% to $1.33 billion, as
compared with total sales during the fourth quarter of fiscal 2011. The
sales increase reflected a comparable store sales decrease of 1.9%
versus a comparable store sales increase of 2.9% during the fourth
quarter of fiscal 2011, partially offset by the net addition of 132 new
stores over the past 12 months. For fiscal 2012, total sales increased
0.6% to $6.21 billion, compared with total sales of $6.17 billion during
fiscal 2011.
The Company's gross profit rate was 49.9% of sales during the fourth
quarter as compared to 49.0% during the fourth quarter last year. The 87
basis-point increase in gross profit rate was primarily due to
improvements in shrink and supply chain efficiencies. The supply chain
efficiencies, which were driven by an increase in the volume of
inventory handled during the quarter, more than offset the increase in
supply chain costs associated with the opening of the Company's new
distribution center and increased new store openings. For fiscal 2012,
the Company's gross profit rate was 49.9%, compared with 49.7% in fiscal
2011.
The Company's SG&A rate was 41.4% of sales during the fourth quarter as
compared to 40.6% during the same period last year. The 79 basis-point
increase was primarily due to expense deleverage as a result of the
Company's 1.9% comp store sales decline, increased new store openings
and costs associated with the Company's acquisition related activities
during the quarter, partially offset by lower incentive compensation.
For fiscal 2012, the Company's SG&A rate was 39.3% versus 39.0% during
fiscal 2011.
The Company's operating income during the fourth quarter of $113.2
million increased 1.1% versus the fourth quarter of fiscal 2011. On a
rate basis, operating income was 8.5% of total sales as compared to 8.4%
during the fourth quarter of fiscal 2011. For fiscal 2012, the Company's
operating income rate was 10.6% versus 10.8% during fiscal 2011.
Operating cash flow decreased 17.3% to $685.3 million from $828.8
million through the fourth quarter of fiscal 2011. Free cash flow was
$412.3 million versus $507.2 million through the fourth quarter of
fiscal 2011. Capital expenditures were $271.2 million as compared to
$268.1 million through the fourth quarter of fiscal 2011.
“2012 was a challenging year for our company primarily driven by the
ongoing softness in our colder weather markets and decreased consumer
demand for auto parts. While we are disappointed we did not achieve our
growth and profitability expectations for the year, we are encouraged by
our improved sales performance trends versus the market,” said Mike
Norona, Executive Vice President and Chief Financial Officer. “Our
decision to maintain our investment profile through the course of the
year is driven by our confidence in the long-term industry fundamentals
and provides us with a strong foundation to build upon as we head into
fiscal 2013.”
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Comparable Key Financial Metrics and Statistics (1) |
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Twelve Weeks Ended
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Fifty-Two Weeks Ended
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December 29,
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December 31,
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2012
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2011
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FY 2012
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FY 2011
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FY 2010
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Sales Growth %
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0.1
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%
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4.5
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%
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0.6
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%
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4.1
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%
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9.5
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%
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Sales per Store (2) |
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$
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1,664
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$
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1,708
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$
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1,664
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$
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1,708
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$
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1,697
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Operating Income per Store (3) |
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$
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176
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$
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184
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$
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176
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$
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184
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$
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168
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Return on Invested Capital (4) |
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19.4
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%
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19.5
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%
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19.4
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%
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19.5
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%
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17.5
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%
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Gross Margin Return on Inventory (5) |
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9.3
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6.6
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9.3
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6.6
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5.1
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Total Store Square Footage, end of period
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27,806
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26,663
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27,806
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26,663
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25,950
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Total Team Members, end of period
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53,473
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52,002
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53,473
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52,002
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51,017
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(1)
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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.
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(2)
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Sales per store is calculated as net sales divided by an average of
beginning and ending store count.
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(3)
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Operating income per store is calculated as operating income divided
by an average of beginning and ending store count.
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(4)
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Return on invested capital (ROIC) is calculated in detail in the
supplemental financial schedules.
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(5)
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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.
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Store Information
During the fourth quarter, the Company added 67 stores, including eight
Autopart International stores. For fiscal 2012, the Company added 137
stores, including 21 Autopart International stores. As of December 29,
2012, the Company's total store count was 3,794 including 218 Autopart
International stores. For the year, the Company closed five stores.
2013 Annual Financial Outlook
The Company has provided the following annual financial outlook and
certain key assumptions for fiscal 2013.
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Fiscal 2013 Annual Financial Outlook and Key Assumptions
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New Stores
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170 - 190 (155 - 165 Advance Auto Parts stores, 10 - 15 Autopart
International stores); excludes 124 BWP stores acquired on December
31, 2012
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Comparable Store Sales
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Low-single digits
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Operating EPS
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$5.45 - $5.60; excludes BWP integration costs
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Reported EPS
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$5.30 - $5.45; includes BWP integration costs of $0.15 - $0.20
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Capital Expenditures
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$275 million - $300 million
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Diluted Share Count
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Approximately 74 million shares
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In fiscal 2013, the Company anticipates a low-single digit increase in
comparable store sales driven by continued strong Commercial sales
growth. The Company expects a modest increase in gross profit rate. The
Company expects its rate of growth in SG&A dollars per store to increase
three to five percent.
As a result of the acquisition of BWP Distributors, Inc. (BWP), the
Company estimates that BWP will add roughly $170 million to $180 million
of revenue in fiscal 2013. The Company anticipates BWP will generate
positive operating income when excluding the impact of one-time
integration costs. Additionally, the Company anticipates free cash flow
will be a minimum of $375 million, excluding the net acquisition price
of BWP, which was approximately one times the anticipated additional
revenue from BWP in fiscal 2013.
“Our 2013 annual operating EPS outlook will be in the range of $5.45 to
$5.60 per share excluding one-time integration costs for BWP of
approximately $0.15 to $.20 per share. On a reported basis, including
the BWP one-time integration costs, our EPS outlook is expected to be
$5.30 to $5.45,” said Mike Norona, Executive Vice President and Chief
Financial Officer. "Consistent with our historical practice, our outlook
does not reflect any anticipated share repurchase activity. However, we
plan to continue our historical practice of opportunistically
repurchasing shares in a disciplined manner, which could positively
impact our 2013 annual EPS outlook."
Share Repurchase Program
As of December 29, 2012, the Company had approximately $492 million
available on the Company's $500 million share repurchase program
authorized by the Company's Board of Directors on May 14, 2012.
Dividend
On February 5, 2013, the Company's Board of Directors declared a regular
quarterly cash dividend of $0.06 per share to be paid on April 5, 2013
to stockholders of record as of March 22, 2013.
Investor Conference Call
The Company will host a conference call on Thursday, February 7, 2013 at
10:00 a.m. Eastern 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 February 7, 2014.
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 December 29, 2012, the Company
operated 3,794 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 2013. 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.
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Advance Auto Parts, Inc. and Subsidiaries
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Condensed Consolidated Balance Sheets
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(in thousands)
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(unaudited)
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December 29,
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December 31,
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2012
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2011
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Assets
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Current assets:
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Cash and cash equivalents
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$
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598,111
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$
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57,901
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Receivables, net
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229,866
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140,007
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Inventories, net
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2,308,609
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2,043,158
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Other current assets
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47,614
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52,754
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Total current assets
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3,184,200
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2,293,820
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Property and equipment, net
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1,291,759
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1,223,099
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Assets held for sale
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788
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615
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Goodwill
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76,389
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76,389
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Intangible assets, net
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28,845
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31,380
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Other assets, net
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31,833
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30,451
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$
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4,613,814
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$
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3,655,754
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Liabilities and Stockholders' Equity
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Current liabilities:
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Current portion of long-term debt
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$
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627
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$
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848
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Accounts payable
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2,029,814
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1,653,183
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Accrued expenses
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379,639
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385,746
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Other current liabilities
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149,558
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148,098
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Total current liabilities
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2,559,638
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2,187,875
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Long-term debt
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604,461
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415,136
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Other long-term liabilities
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239,021
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204,829
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Total stockholders' equity
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1,210,694
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847,914
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$
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4,613,814
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$
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3,655,754
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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.
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Advance Auto Parts, Inc. and Subsidiaries
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Condensed Consolidated Statements of Operations
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Twelve Week Periods Ended
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December 29, 2012 and December 31, 2011
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(in thousands, except per share data)
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(unaudited)
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December 29,
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December 31,
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2012
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2011
|
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|
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Net sales
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$
|
1,329,201
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$
|
1,327,572
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Cost of sales, including purchasing and warehousing costs
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|
|
666,046
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676,834
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Gross profit
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|
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663,155
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|
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650,738
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Selling, general and administrative expenses
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|
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549,959
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|
|
538,820
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|
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Operating income
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|
113,196
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|
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111,918
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Other, net:
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|
|
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|
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Interest expense
|
|
|
(7,992
|
)
|
|
(5,073
|
)
|
|
Other (expense) income, net
|
|
|
(159
|
)
|
|
314
|
|
|
Total other, net
|
|
|
(8,151
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)
|
|
(4,759
|
)
|
|
Income before provision for income taxes
|
|
|
105,045
|
|
|
107,159
|
|
|
Provision for income taxes
|
|
|
39,990
|
|
|
40,720
|
|
|
Net income
|
|
|
$
|
65,055
|
|
|
$
|
66,439
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (a) |
|
|
$
|
0.89
|
|
|
$
|
0.92
|
|
|
Diluted earnings per share (a) |
|
|
$
|
0.88
|
|
|
$
|
0.90
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding (a) |
|
|
73,221
|
|
|
72,394
|
|
|
Average common shares outstanding - assuming dilution (a) |
|
|
74,002
|
|
|
73,807
|
|
|
|
|
|
|
|
|
|
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(a)
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|
Average common shares outstanding is calculated based on the
weighted average number of shares outstanding during the quarter.
At December 29, 2012 and December 31, 2011, we had 73,383 and
72,799 shares outstanding, respectively.
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|
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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.
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|
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|
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Advance Auto Parts, Inc. and Subsidiaries
|
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Condensed Consolidated Statements of Operations
|
|
Fifty-Two Week Periods Ended
|
|
December 29, 2012 and December 31, 2011
|
|
(in thousands, except per share data)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
December 31,
|
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
6,205,003
|
|
|
$
|
6,170,462
|
|
|
Cost of sales, including purchasing and warehousing costs
|
|
|
3,106,967
|
|
|
3,101,172
|
|
|
Gross profit
|
|
|
3,098,036
|
|
|
3,069,290
|
|
|
Selling, general and administrative expenses
|
|
|
2,440,721
|
|
|
2,404,648
|
|
|
Operating income
|
|
|
657,315
|
|
|
664,642
|
|
|
Other, net:
|
|
|
|
|
|
|
Interest expense
|
|
|
(33,841
|
)
|
|
(30,949
|
)
|
|
Other income (expense), net
|
|
|
600
|
|
|
(457
|
)
|
|
Total other, net
|
|
|
(33,241
|
)
|
|
(31,406
|
)
|
|
Income before provision for income taxes
|
|
|
624,074
|
|
|
633,236
|
|
|
Provision for income taxes
|
|
|
236,404
|
|
|
238,554
|
|
|
Net income
|
|
|
$
|
387,670
|
|
|
$
|
394,682
|
|
|
|
|
|
|
|
|
|
Basic earnings per share (a) |
|
|
$
|
5.29
|
|
|
$
|
5.21
|
|
|
Diluted earnings per share (a) |
|
|
$
|
5.22
|
|
|
$
|
5.11
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding (a) |
|
|
73,091
|
|
|
75,620
|
|
|
Average common shares outstanding - assuming dilution (a) |
|
|
74,062
|
|
|
77,071
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Average common shares outstanding is calculated based on the
weighted average number of shares outstanding during the year. At
December 29, 2012 and December 31, 2011, we had 73,383 and 72,799
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
|
|
Fifty-Two Week Periods Ended
|
|
December 29, 2012 and December 31, 2011
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income
|
|
$
|
387,670
|
|
|
$
|
394,682
|
|
|
Depreciation and amortization
|
|
189,544
|
|
|
175,949
|
|
|
Share-based compensation
|
|
15,236
|
|
|
19,553
|
|
|
Provision for deferred income taxes
|
|
26,893
|
|
|
53,037
|
|
|
Excess tax benefit from share-based compensation
|
|
(23,099
|
)
|
|
(9,663
|
)
|
|
Other non-cash adjustments to net income
|
|
4,281
|
|
|
6,326
|
|
|
(Increase) decrease in:
|
|
|
|
|
|
Receivables, net
|
|
(89,482
|
)
|
|
(15,372
|
)
|
|
Inventories, net
|
|
(260,298
|
)
|
|
(179,288
|
)
|
|
Other assets
|
|
8,213
|
|
|
23,073
|
|
|
Increase (decrease) in:
|
|
|
|
|
|
Accounts payable
|
|
376,631
|
|
|
360,678
|
|
|
Accrued expenses
|
|
40,936
|
|
|
(15,901
|
)
|
|
Other liabilities
|
|
8,756
|
|
|
15,775
|
|
|
Net cash provided by operating activities
|
|
685,281
|
|
|
828,849
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Purchases of property and equipment
|
|
(271,182
|
)
|
|
(268,129
|
)
|
|
Business acquisitions, net of cash acquired
|
|
(8,369
|
)
|
|
(23,133
|
)
|
|
Proceeds from sales of property and equipment
|
|
6,573
|
|
|
1,288
|
|
|
Net cash used in investing activities
|
|
(272,978
|
)
|
|
(289,974
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
(Decrease) increase in bank overdrafts
|
|
(7,459
|
)
|
|
6,625
|
|
|
Decrease in financed vendor accounts payable
|
|
—
|
|
|
(31,648
|
)
|
|
Net (payments) borrowings on credit facilities
|
|
(115,000
|
)
|
|
115,000
|
|
|
Issuance of senior unsecured notes
|
|
299,904
|
|
|
—
|
|
|
Payment of debt related costs
|
|
(2,942
|
)
|
|
(3,656
|
)
|
|
Dividends paid
|
|
(17,596
|
)
|
|
(18,554
|
)
|
|
Proceeds from the issuance of common stock, primarily exercise of
stock options
|
|
8,495
|
|
|
21,056
|
|
|
Tax withholdings related to the exercise of stock appreciation rights
|
|
(26,677
|
)
|
|
(6,582
|
)
|
|
Excess tax benefit from share-based compensation
|
|
23,099
|
|
|
9,663
|
|
|
Repurchase of common stock
|
|
(27,095
|
)
|
|
(631,149
|
)
|
|
Contingent consideration related to previous business acquisitions
|
|
(10,911
|
)
|
|
—
|
|
|
Other
|
|
4,089
|
|
|
(938
|
)
|
|
Net cash provided by (used in) financing activities
|
|
127,907
|
|
|
(540,183
|
)
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
540,210
|
|
|
(1,308
|
)
|
|
Cash and cash equivalents, beginning of period
|
|
57,901
|
|
|
59,209
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
598,111
|
|
|
$
|
57,901
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Fifty-Two Week Periods Ended
|
|
December 29, 2012 and December 31, 2011
|
|
(in thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Reconciliation of Free Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 29,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
$
|
685,281
|
|
|
$
|
828,849
|
|
|
Cash flows used in investing activities
|
|
(272,978
|
)
|
|
(289,974
|
)
|
|
|
|
412,303
|
|
|
538,875
|
|
|
|
|
|
|
|
|
Decrease in financed vendor accounts payable
|
|
—
|
|
|
(31,648
|
)
|
|
|
|
|
|
|
|
Free cash flow
|
|
$
|
412,303
|
|
|
$
|
507,227
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
Last Four Quarters Ended
|
|
|
|
December 29, 2012
|
|
December 31, 2011
|
|
|
|
|
|
|
|
Net income
|
|
$
|
387,671
|
|
|
$
|
394,682
|
|
|
Add:
|
|
|
|
|
|
After-tax interest expense and other, net
|
|
20,649
|
|
|
19,575
|
|
|
After-tax rent expense
|
|
198,960
|
|
|
194,755
|
|
|
After-Tax Operating Earnings
|
|
607,280
|
|
|
609,012
|
|
|
|
|
|
|
|
|
Average assets (less cash)
|
|
3,806,779
|
|
|
3,446,432
|
|
|
Less: Average liabilities (excluding total debt)
|
|
(2,594,945
|
)
|
|
(2,202,439
|
)
|
|
Add: Capitalized lease obligation (rent expense * 6) (a) |
|
1,921,722
|
|
|
1,874,814
|
|
|
Total Invested Capital
|
|
3,133,556
|
|
|
3,118,807
|
|
|
|
|
|
|
|
|
ROIC
|
|
19.4
|
%
|
|
19.5
|
%
|
|
|
|
|
|
|
|
Rent expense
|
|
$
|
320,287
|
|
|
$
|
312,469
|
|
|
Interest expense and other, net
|
|
$
|
33,241
|
|
|
$
|
31,406
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) 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.
|
|
|
