Advance Auto Parts has announced its financial results for the third quarter ended Oct. 3, 2020.
“Never has it been more important for us to put the health and safety of our customers and team members first as COVID-19 continues to impact our communities and ongoing operations. As a result, we continue to adapt and take the steps necessary to prioritize the well-being of our customers and team members” said Tom Greco, president and CEO. “Our third quarter comparable sales growth of 10.2% is the strongest in 15 years, and was led by our DIY Omnichannel performance. Double-digit comp sales combined with disciplined cost control resulted in 183 basis points of adjusted operating income margin expansion and a 95% increase in quarterly free cash flow. Industry demand remained strong in the quarter, however our performance is also a testament to the resilience of our team members and independent partners during the COVID-19 pandemic.
“While we cannot predict the direction of the pandemic from here, we remain laser focused on the execution of our long-term plans,” Greco added. “This includes the introduction of our #DieHardisBack marketing campaign on October 18. The energy and excitement surrounding this integrated campaign has driven widespread coverage and recognition not only for DieHard, but for the Advance and Carquest brands. Including DieHard, we’re building an increasingly differentiated assortment to complement our strong digital presence and a comprehensive suite of fulfillment options including over 6000 conveniently located stores and Advance Same Day delivery. We believe that these capabilities, combined with a strong balance sheet and talented team, position us well to continue to drive growth and margin expansion in the years ahead.”
Q3 2020 Highlights
- Net sales increased 9.9% to $2.5 billion; Comparable store sales(b) increased 10.2%
- Operating income increased 49.0% to $256.8 million; Operating income margin expanded 265 basis points to 10.1%
- Adjusted operating income(b) increased 32.6% to $271.9 million; Adjusted operating income margin(b) expanded 183 basis points to 10.7%
- Diluted EPS increased 21.7% to $2.13; Adjusted Diluted EPS(b) increased 33.8% to $2.81
- Declared $0.25 quarterly cash dividend
- Used proceeds from 7-year 1.75% senior notes offering to partially repurchase existing 4.50% senior notes due 2023
- All comparisons are based on the same time period prior year.
Third Quarter 2020 Financial Results
Net sales for the third quarter of 2020 were $2.5 billion, a 9.9% increase versus the third quarter of the prior year. Comparable store sales for the third quarter of 2020 increased 10.2%. The increase in net sales was led by the company’s DIY Omnichannel business.
Adjusted gross profit increased 11.2% to $1.1 billion. Adjusted gross profit margin was 44.4% of Net sales in the third quarter of 2020, a 50 basis point increase from the third quarter of 2019, driven by improvements in pricing actions and supply chain efficiencies as well as favorable channel mix. These improvements were slightly offset by unfavorable product mix and headwinds associated with shrink and defectives. The Company’s GAAP Gross profit margin increased to 44.4% from 43.8% in the third quarter of 2019.
2020 Full Year Guidance
The company withdrew guidance on April 9, 2020, given uncertainties related to the full impact of the COVID-19 pandemic. Due to continued volatility, the company is not providing guidance at this time.
