Advance Auto Parts has announced its financial results for the third quarter ended Oct. 8, 2016. Third quarter GAAP earnings per diluted share (diluted EPS) were $1.53. Third quarter adjusted earnings per diluted share (adjusted EPS) were $1.73, which excludes 8 cents of amortization of acquired intangible assets and integration and restructuring costs of 12 cents primarily associated with the acquisition of General Parts International Inc.
The adjusted SG&A, adjusted operating income and adjusted EPS for the 12 weeks ended Oct. 8, 2016 and Oct. 10, 2015, respectively, have been reported on an adjusted basis to exclude General Parts integration, store consolidation costs and support center restructuring costs of $14.4 million and $28.6 million, respectively, and General Parts amortization of acquired intangible assets of $9.4 million and $9.7 million, respectively.
“Our third quarter results reflect progress in driving our top line as the initiatives and investments we are making to stabilize and improve our sales performance began to take hold. While we delivered sequential improvement, our results are not where we want them to be and we remain relentlessly focused on taking the actions necessary to improve our execution and generate positive comparable sales performance,” said Tom Greco, president and CEO.
Greco continued, “As we execute against our strategy to deliver more consistent, improved performance over the long term, we have sharpened our attention on sales execution, consistent availability and delivering on the needs of our customer with every interaction. We are confident this is the right path forward.”
Total sales for the third quarter decreased 2 percent to $2.25 billion, as compared with total sales during the third quarter of fiscal 2015 of $2.30 billion. The sales decline was driven by the comparable store sales decrease of 1 percent, the store closures in 2015 and the effect of CARQUEST store consolidations. The sales decline was partially offset by new store and WORLDPAC branch openings.
The company’s gross profit rate was 43.9 percent of sales during the third quarter as compared to 45 percent during the third quarter last year. The 104 basis-point decrease in gross profit rate was primarily the result of higher supply chain expenses and headwinds associated with reducing inventory levels.
On a GAAP basis, the company’s operating income during the third quarter was $193.8 million, a decrease of 5.7 percent versus the third quarter of fiscal 2015. On a GAAP basis, the operating income rate was 8.6 percent during the third quarter as compared to 9 percent during the third quarter of fiscal 2015. The company’s adjusted operating income was $217.6 million during the third quarter, a decrease of 10.8 percent versus the third quarter of fiscal 2015. As a percentage of sales, adjusted operating income in the third quarter was 9.7 percent versus 10.6 percent during the third quarter of fiscal 2015.
Operating cash flow decreased approximately 21.3 percent to $409.4 million through the third quarter of fiscal 2016 from $520.1 million through the third quarter of fiscal 2015. Free cash flow was $205.2 million through the third quarter of fiscal 2016 compared to $358.9 million through the third quarter of fiscal 2015. Capital expenditures through the third quarter of fiscal 2016 were $204.2 million as compared to $161.2 million through the third quarter of fiscal 2015.
