Advance Auto Parts has announced its financial results for the second quarter ended July 16, 2016. Second quarter GAAP earnings per diluted share (Diluted EPS) were $1.68. Second quarter adjusted earnings per diluted share (adjusted EPS) were $1.90, which exclude 8 cents of amortization of acquired intangible assets and integration and restructuring costs of 14 cents, primarily associated with the acquisition of General Parts International Inc.
Fiscal 2016 and 2015 include certain non-operational expenses. The adjusted SG&A, adjusted Operating Income and adjusted EPS for the 12 weeks ended July 16, 2016, and July 18, 2015, respectively, have been reported on an adjusted basis to exclude General Parts integration, store consolidation costs and support center restructuring costs of $17 million and $18.6 million, respectively, and General Parts amortization of acquired intangible assets of $9.5 million and $9.8 million, respectively. The adjusted SG&A, adjusted operating income and adjusted EPS for the twenty-eight weeks ended July 16, 2016 and July 18, 2015, respectively, have been reported on an adjusted basis to exclude General Parts integration, store consolidation costs and support center restructuring costs of $48.4 million and $51.3 million, respectively, and General Parts amortization of acquired intangible assets of $22.1 million and $22.9 million, respectively.
“Our second quarter results were not acceptable and we are moving thoughtfully and swiftly to make the necessary changes across a number of critical areas within the organization to alter the trajectory of the business and improve our operating performance,” said Tom Greco, CEO. “There’s a heightened sense of urgency and accountability throughout the organization and we are taking decisive actions to deliver near-term improvement with a focus on accelerating our commercial growth and improving our execution.”
Greco continued, “I continue to be energized by the immense opportunity for improvement. The actions we need to take are well within our control and we are focused on building the right foundation for the long term. We are hard at work constructing a comprehensive strategic plan, which will help us reliably and consistently deliver industry-leading performance and unparalleled customer service going forward. We remain confident in our business, our people and the opportunity that lies ahead to create long-term value.”
Second Quarter 2016 Highlights
Total sales for the second quarter decreased 4.8 percent to $2.26 billion, as compared with total sales during the second quarter of fiscal 2015 of $2.37 billion. The sales decline was driven by the comparable store sales decrease of 4.1 percent, the store closures in 2015 and the effect of CARQUEST consolidations. The sales decline was partially offset by new store and WORLDPAC branch openings.
On a GAAP basis, the company’s operating income during the second quarter of $216.7 million decreased 15.7 percent versus the second quarter of fiscal 2015. On a GAAP basis, the operating income rate was 9.6 percent during the second quarter as compared to 10.8 percent during the second quarter of fiscal 2015. The company’s adjusted operating income was $243.1 million during the second quarter, a decrease of 14.8 percent versus the second quarter of fiscal 2015. As a percentage of sales, adjusted operating income in the second quarter was 10.8 percent versus 12 percent during the second quarter of fiscal 2015.
Advance Names Robert Cushing to Lead Commercial Business
The company also announced that Robert “Bob” Cushing, who currently serves as president of WORLDPAC, has been promoted to the newly created position of executive vice president, commercial. In this new role, Cushing will report to Greco, and will oversee all of the company’s commercial operations, including Autopart International and continue to lead WORLDPAC.
“The consolidation of all of our commercial operations under one leader will enable us to implement a more holistic commercial strategy and enhance our ability to serve customers,” said Greco. “Bob is uniquely qualified to lead this effort. He has a proven track record of delivering results including establishing WORLDPAC as one of the premier import distributors of original equipment and aftermarket parts to commercial customers. Bob’s customer-focused approach, along with his expertise in developing an integrated e-commerce platform and leveraging technology to more effectively meet customer demands will be critical as we work to deliver improved results. We have valuable and distinctive commercial assets and I am excited that Bob will focus on using those assets to our competitive advantage.”
Cushing joined WORLDPAC via the acquisition of Metrix Parts Warehouse Inc. in 1999 and was named president in January 2008. Prior to serving as president, Cushing served as executive vice president, sales and operations for the U.S. and Canada WORLDPAC operations and its affiliates from 1999 to 2007. Prior to joining WORLDPAC, Cushing held executive-level sales, marketing and operations positions with Metrix, Interco and Robert Bosch Corp.
