Advance Auto Parts has announced its financial results for the first quarter ended April 20, 2019.
Net sales for the first quarter of 2019 were $3 billion, a 2.7% increase versus the first quarter of the prior year. Comparable store sales for the first quarter of 2019 increased 2.7%.
Adjusted gross profit margin was 44.6% of net sales in the first quarter of 2019, a 37 basis point increase from the first quarter of 2018. Advance says the increase was primarily driven by favorable product margin and improved inventory management, partially offset by supply chain headwinds due to planned wage investments. The company’s GAAP Gross profit margin decreased to 44.2% from 44.3% in the first quarter of the prior year.
The company’s Adjusted operating income was $243.6 million in the first quarter of 2019, an increase of 8.7% versus the first quarter of the prior year. Adjusted operating income margin improved to 8.3% of net sales for the first quarter, an increase of 46 basis points compared to the first quarter of the prior year. On a GAAP basis, the company’s operating income was $207.9 million, 7% of net sales, an increase of 15 basis points from the first quarter of 2018.
“We delivered our fourth consecutive quarter of increased top line sales and gross profit expansion,” said Tom Greco, president and CEO. “Our free cash flow improved by nearly 20% as a result of our continued disciplined approach to cash management. The early progress against our strategic transformation agenda is becoming more evident throughout our culture and in our improving results. We saw positive improvement in our comp sales performance while we continue to drive margin expansion. Despite inflationary headwinds, our team’s diligent efforts on operational improvement to reduce costs is evident in our first quarter SG&A results where we continued to leverage store labor in the quarter and further reduce insurance and claims expense through improved safety initiatives. I am confident our more than 70,000 Team Members will enable continued success for AAP throughout 2019 and beyond through their focus and commitment to our Mission, Passion for Customers…Passion for Yes!”
The company’s effective tax rate in the first quarter of 2019 was 25.3%, compared to 24.5% in the first quarter of the prior year. The company’s Adjusted Diluted EPS was $2.46 for the first quarter of 2019, an increase of 17.1% compared to the first quarter of the prior year. On a GAAP basis, the company’s Diluted EPS increased 7.6% to $1.98.
Capital Allocation
On Aug. 8, the company’s board of directors authorized a $600 million share repurchase program. Under this program, the company repurchased 0.8 million shares of its common stock for $127.2 million during the first quarter. At the end of the first quarter of 2019, the company had $200 million remaining under the share repurchase program.
On May 14, the company’s board of directors declared a regular quarterly cash dividend of 6 cents per share to be paid on July 5, 2019, to all common shareholders of record as of June 21, 2019.
On Feb. 28, the company redeemed all of the $300 million aggregate principal amount of its outstanding 2020 senior unsecured notes. The company incurred charges relating to a make-whole provision and debt issuance costs of $10.1 million and $0.7 million resulting from the early redemption of the 2020 senior unsecured notes.
