Advance Auto Parts Reports Q3 2021 Results

Advance Auto Parts Reports Q3 2021 Results

Net sales increased 3.1% to $2.6 billion; Comparable store sales increased by 3.1%.

Advance Auto Parts has announced its financial results for the third quarter ended Oct. 9, 2021.

“In Q3, we delivered another quarter of improved top-line growth and margin expansion and returned significant cash to our shareholders in line with the strategy we outlined in April,” said Tom Greco, president and CEO. “Following several years of investments in both our team as well as our diversified physical and digital asset base, we continue to differentiate Advance in the marketplace. Our team members and independent partners once again adapted to a dynamic landscape and executed our plan with excellence. Third quarter comparable sales grew 3.1% on top of double-digit comparable store sales in the third quarter of 2020. Importantly, we delivered a two-year stack of 13.3% in the quarter directly in line with our Q2 2021 two-year stack comp growth of 13.3%. Our professional business once again led our sales improvement as well as the ongoing recovery in key urban markets where miles driven was most impacted in 2020. In terms of our DIY omnichannel business, we were pleased to end the quarter slightly positive after lapping our toughest quarterly comparison of high double-digit growth from the prior year.

“Several years of focus on our balance sheet resulted in Free cash flow improvement of 19% to $734 million compared with $616.6 million year-to-date in 2020. Free cash flow was up 36% when compared to 2019. As a result, and in line with our commitment of returning excess cash to our shareholders, we returned $291.2 million in Q3 and $952.6 million through the first three quarters of 2021 through a combination of share repurchases and our quarterly cash dividend. We’re encouraged by the positive sales trends during the first four weeks of our fourth quarter with our two-year stack remaining in line with Q3. We look forward to finishing 2021 with momentum and remain confident in our ability to drive total shareholder return in the coming years.”

Third Quarter 2021 Financial Results

Net sales for the third quarter of 2021 were $2.6 billion, a 3.1% increase versus the third quarter of the prior year. Comparable store sales for the third quarter of 2021 increased 3.1%. The increase was led by continued recovery in the company’s professional business.

Adjusted gross profit increased 8.9% to $1.2 billion. Adjusted gross profit margin was 46.2% of Net sales in the third quarter of 2021, a 246-basis point increase from the third quarter of 2020. The company said this was driven by improvements in category management, including strategic pricing, strategic sourcing, and owned brand expansion as well as favorable product mix. These improvements were partially offset by inflationary costs and unfavorable channel mix. The company’s GAAP Gross profit margin increased 72 basis points to 45.1% from 44.4% in the third quarter of 2020.

Adjusted SG&A increased 9.5% to $938.2 million. Adjusted SG&A was 35.8% of Net sales in the third quarter of 2021, which deleveraged 209 basis points compared with the third quarter of 2020. This was primarily driven by inflationary headwinds in store labor as well as higher incentive compensation. The company also incurred start-up costs for new store openings and higher delivery associated with the recovery of the professional business. These costs were partially offset by a year over year decrease in COVID-19 related expenses. The company’s GAAP SG&A was 36.4% of Net sales in the third quarter of 2021 compared with 34.3% in the third quarter of 2020.

The company’s Adjusted operating income was $273.8 million in the third quarter of 2021, an increase of 6.9% versus the third quarter of the prior year. Adjusted operating income margin increased 37 basis points to 10.4% of Net sales for the third quarter compared with the third quarter of the prior year. On a GAAP basis, the company’s Operating income was $229.2 million, or 8.7% of Net sales, compared with 10.1% in the third quarter of 2020.

The company’s effective tax rate in the third quarter of 2021 was 23.7%, compared with 25.3% in the third quarter of 2020. The company’s Adjusted Diluted EPS was $3.21 for the third quarter of 2021, an increase of 21.6% compared with the third quarter of the prior year. On a GAAP basis, the company’s Diluted EPS of $2.68 increased 25.8% compared with the third quarter of 2020.

Year to date Operating cash flow was $924.9 million through the third quarter of 2021 versus $809.2 million in the same period of the prior year, an increase of 14.3%. The increase was primarily driven by an improvement in net sales and higher cash generated from operations, as well as other working capital improvements. Free cash flow through the third quarter of 2021 increased to $734.0 million from $616.6 million in the same period of the prior year.

Updated Full Year 2021 Guidance

“We are pleased with the first three quarters of the year and the continued momentum as we began the fourth quarter,” said Jeff Shepherd, executive vice president and CFO. “As a result, we are increasing our full-year 2021 sales and profit guidance to reflect the positive results year-to-date and our expectations for the balance of the year. This guidance incorporates both continued top-line strength as well as higher than planned inflation headwinds. Additionally, we are reducing our guidance for new store openings and capital expenditures for the year. The construction environment in California remains challenging primarily related to the ongoing pandemic. We remain committed to the successful conversion of our 109 California locations and are confident once completed will be highly accretive to our growth trajectory.”

You May Also Like

GPC Acquires Largest NAPA Independent Store Owner in the US

Genuine Parts Company said the acquisition advances its strategic initiative to own more stores in priority markets.

GPC Acquires Largest NAPA Independent Store Owner in the US

Genuine Parts Company (GPC), global distributor of automotive and industrial replacement parts, announced it acquired Motor Parts & Equipment Corporation (MPEC), effective April 30, 2024, for its U.S. Automotive business.

MPEC, founded in 1938 and based in Rockford, Illinois, is the largest independent owner of NAPA Auto Parts stores in the U.S., operating 181 locations across Illinois, Indiana, Iowa, Michigan, Minnesota and Wisconsin, according to GPC.

HDA’s Colorado Brake & Supply Announces Acquisition

The HDA Truck Pride member has acquired Pueblo Brake & Clutch, Inc.

HDA's Colorado Brake & Supply Announces Acquisition
The Impact of Trade and Tariffs on the Aftermarket

While there are numerous components that make up “landed costs,” duties, taxes and tariffs are a huge factor and can often be a detriment to global trade, says Thomas Cook, managing director at Blue Tiger International.

Fenix Parts Completes Acquisition of Neal Auto Parts

Neal is an automotive recycler servicing the Central Illinois market with a population of approximately 1.3 million people.

Fenix Parts Acquires Green Auto Parts & Recycling

The company also announced Edgar Akopyan will be joining Fenix Parts as the director of business development, Southern California.

Other Posts

Shifting Gears: Lauren Beaulieu’s Rise in the Automotive Aftermarket

Beaulieu recently participated in the Advance/Worldpac STX Supplier Training Expo, where she addressed a topic close to her heart: education in the aftermarket.

WATW Lauren Beaulieu Advance Auto Parts
Valvoline Inc. Reports Q2 Financial Results

Sales from continuing operations of $389 million grew 13%, driven by system-wide same store sales growth of 7.7%, Valvoline said.

Advance Auto Parts, Worldpac Wrap Up STX 2024

Nearly 3,400 registrants attended STX, which was hosted in Nashville, April 24-28, at the Gaylord Opryland Resort & Convention Center.

STX Wrap Up
AAM Reports Q1 2024 Financial Results

Sales in Q1 2024 were $1.61 billion as compared to $1.49 billion in the first quarter of 2023, favorably impacted by volume and mix, AAM said.

AAM Reports Q1 2024 Financial Results