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TheStreet Open House

Advance Auto Parts Reports Second Quarter Fiscal 2012 Results

Dividend

On August 7, 2012, the Company's Board of Directors declared a regular quarterly cash dividend of $0.06 per share to be paid on October 5, 2012 to stockholders of record as of September 21, 2012.

Investor Conference Call

The Company will host a conference call on Thursday, August 9, 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 August 9, 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 July 14, 2012, the Company operated 3,692 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 2012. 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)
 
 
   

July 14,

2012

   

December 31,

2011

   

July 16,

2011

 

Assets

 
Current assets:
Cash and cash equivalents $ 448,594 $ 57,901 $ 68,820
Receivables, net 159,349 140,007 122,188
Inventories, net 2,096,341 2,043,158 2,091,913
Other current assets   60,883   52,754   59,245
Total current assets 2,765,167 2,293,820 2,342,166
 
Property and equipment, net 1,263,680 1,223,099 1,172,132
Assets held for sale 788 615 707
Goodwill 76,389 76,389 34,387
Intangible assets, net 29,468 31,380 24,839
Other assets, net   33,654   30,451   29,237
$ 4,169,146 $ 3,655,754 $ 3,603,468
 

Liabilities and Stockholders' Equity

 
Current liabilities:
Current portion of long-term debt $ 760 $ 848 $ 991
Accounts payable 1,738,101 1,653,183 1,570,320
Accrued expenses 417,663 385,746 396,187
Other current liabilities   135,517   148,098   118,537
Total current liabilities 2,292,041 2,187,875 2,086,035
 
Long-term debt 599,696 415,136 565,420
Other long-term liabilities 218,308 204,829 187,735
Total stockholders' equity   1,059,101   847,914   764,278
$ 4,169,146 $ 3,655,754 $ 3,603,468
 

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
Twelve Week Periods Ended
July 14, 2012 and July 16, 2011
(in thousands, except per share data)
(unaudited)
 
 
   

July 14,

2012

   

July 16,

2011

 
Net sales $ 1,460,983 $ 1,479,839
Cost of sales, including purchasing and warehousing costs   732,125     743,991  
Gross profit 728,858 735,848
Selling, general and administrative expenses   559,663     546,921  
Operating income   169,195     188,927  
Other, net:
Interest expense (7,947 ) (8,007 )
Other expense, net   (55 )   (212 )
Total other, net   (8,002 )   (8,219 )
Income before provision for income taxes 161,193 180,708
Provision for income taxes   61,587     67,601  
Net income $ 99,606   $ 113,107  
 
Basic earnings per share (a) $ 1.36 $ 1.48
Diluted earnings per share (a) $ 1.34 $ 1.46
 
Average common shares outstanding (a) 73,150 75,979
Average common shares outstanding - assuming dilution (a) 74,084 77,426
 
 

(a)

Average common shares outstanding is calculated based on the weighted average number of shares outstanding during the quarter. At July 14, 2012 and July 16, 2011, we had 73,325 and 74,072 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 Operations
Twenty-Eight Week Periods Ended
July 14, 2012 and July 16, 2011
(in thousands, except per share data)
(unaudited)
 
 
   

July 14,

2012

   

July 16,

2011

 
Net sales $ 3,418,275 $ 3,377,902
Cost of sales, including purchasing and warehousing costs   1,708,744     1,683,853  
Gross profit 1,709,531 1,694,049
Selling, general and administrative expenses   1,315,772     1,319,145  
Operating income   393,759     374,904  
Other, net:
Interest expense (17,801 ) (17,726 )
Other income (expense), net   447     (157 )
Total other, net   (17,354 )   (17,883 )
Income before provision for income taxes 376,405 357,021
Provision for income taxes   143,293     134,331  
Net income $ 233,112   $ 222,690  
 
Basic earnings per share (a) $ 3.19 $ 2.85
Diluted earnings per share (a) $ 3.14 $ 2.79
 
Average common shares outstanding (a) 73,003 77,973
Average common shares outstanding - assuming dilution (a) 74,157 79,484
 
 

(a)

Average common shares outstanding is calculated based on the weighted average number of shares outstanding during the year-to-date period. At July 14, 2012 and July 16, 2011, we had 73,325 and 74,072 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
Twenty-Eight Week Periods Ended
July 14, 2012 and July 16, 2011
(in thousands)
(unaudited)
 
 
   

July 14,

2012

   

July 16,

2011

 
Cash flows from operating activities:
Net income $ 233,112 $ 222,690
Depreciation and amortization 98,527 92,973
Share-based compensation 9,280 9,992
Provision for deferred income taxes 1,526 25,962
Excess tax benefit from share-based compensation (20,685 ) (4,780 )
Other non-cash adjustments to net income 2,232 2,674
(Increase) decrease in:
Receivables, net (19,342 ) 2,057
Inventories, net (53,183 ) (228,043 )
Other assets (7,483 ) 17,162
Increase in:
Accounts payable 84,918 278,207
Accrued expenses 75,037 41,922
Other liabilities   7,444     8,734  

Net cash provided by operating activities

411,383 469,550
 
Cash flows from investing activities:
Purchases of property and equipment (146,281 ) (151,595 )
Proceeds from sales of property and equipment   268     1,028  
Net cash used in investing activities (146,013 ) (150,567 )
 
Cash flows from financing activities:
Decrease in bank overdrafts (16,181 ) (7,820 )
Decrease in financed vendor accounts payable (31,648 )
Net (payments) borrowings on credit facilities (115,000 ) 265,000
Issuance of senior unsecured notes 299,904
Payment of debt related costs (2,648 ) (3,561 )
Dividends paid (13,196 ) (14,155 )
Proceeds from the issuance of common stock, primarily exercise of stock options 6,260 10,514
Tax withholdings related to the exercise of stock appreciation rights (24,214 ) (2,841 )
Excess tax benefit from share-based compensation 20,685 4,780
Repurchase of common stock (25,042 ) (529,176 )
Contingent consideration related to previous business acquisition (4,755 )
Other   (490 )   (465 )
Net cash provided by (used in) financing activities   125,323     (309,372 )
 
Net increase in cash and cash equivalents 390,693 9,611
Cash and cash equivalents, beginning of period   57,901     59,209  
Cash and cash equivalents, end of period $ 448,594   $ 68,820  
 

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
Twenty-Eight Week Periods Ended
July 14, 2012 and July 16, 2011
(in thousands)
(unaudited)
 
 

Reconciliation of Free Cash Flow:

 

July 14,

2012

July 16,

2011

 
Cash flows from operating activities $ 411,383 $ 469,550
Cash flows used in investing activities   (146,013 )   (150,567 )
265,370 318,983
 
Decrease in financed vendor accounts payable       (31,648 )
 
Free cash flow $ 265,370   $ 287,335  
 

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

July 14,

2012

July 16,

2011

 
Net income $ 405,103 $ 358,401
Add:
After-tax interest expense and other, net 19,168 19,619
After-tax rent expense   193,850     190,984  
After-Tax Operating Earnings 618,121 569,004
 
Average assets (less cash) 3,627,600 3,351,278
Less: Average liabilities (excluding total debt) (2,391,184 ) (2,116,364 )
Add: Capitalized lease obligation (rent expense * 6) (a)   1,873,212     1,837,002  
Total Invested Capital 3,109,628 3,071,916
 
ROIC 19.9 % 18.5 %
 
Rent expense $ 312,202 $ 306,167
Interest expense and other, net $ 30,877 $ 31,451
 
 

(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.

Copyright Business Wire 2010
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