ROANOKE, Va. — Advance Auto Parts has announced its financial results for the fourth quarter and fiscal year ended Jan. 2.

Fourth quarter and fiscal 2009 results include the impact of 45 store closures related to the previously announced store divestiture plan. Additionally, fourth quarter and fiscal 2008 results included an additional fiscal week of business (53rd week) as well as a non-cash inventory adjustment resulting from a change in inventory management approach for slow-moving inventory. As a result, the company’s fiscal 2009 and fiscal 2008 financial results are not comparable with prior periods.

Fourth quarter earnings per diluted share (EPS) were 36 cents, which included a 3 cent charge related to store divestitures. On a comparable basis, EPS decreased 5 percent to 39 cents. For fiscal 2009, on a comparable basis, EPS increased 14 percent to $3 on top of a 16 percent increase in EPS last year.
 
The financial results have been reported on a comparable basis to exclude store divestiture expenses in fiscal 2009 and the 53rd week results and non-cash inventory adjustment in fiscal 2008.

The company has retrospectively applied a change in accounting principle made in the first quarter for costs included in inventory to all prior periods presented herein related to cost of sales and selling, general and administrative expenses (SG&A). Refer to the accompanying financial statements included in this press release for further explanation.

The company’s adoption of the two-class method of calculating earnings per share during the first quarter 2009 decreased the company’s diluted EPS for fiscal 2008 by 1 cent. The adoption did not significantly impact the company’s fourth quarter fiscal 2008 EPS.
 
“While our fourth quarter financial performance did not meet our expectations, we believe it is a short-term setback versus a long-term trend,” said Darren Jackson, chief executive officer. “Our fiscal 2009 results exceeded our expectations strategically and financially. Overall, our performance, as measured through our customers, Team Members, growth and returns, has reached all-time highs and I am confident we are moving in the right direction.”

On a comparable basis, total sales for the fourth quarter increased 3.6 percent to $1.14 billion, compared with total sales of $1.10 billion in the fourth quarter of fiscal year 2008. The sales increase reflected the net addition of 52 new stores during the past 12 months and a comparable store sales gain of 2.4 percent compared to a 3.0 percent gain during the fourth quarter of fiscal 2008. The 2.4 percent comparable store sales gain was comprised of a 9.5 percent increase in Commercial sales, partially offset by a 0.8 percent decrease in do-it-yourself (DIY) sales. This compares to a 13.7 percent increase in Commercial and a 1.1 percent decrease in DIY during the fourth quarter last year. After adjusting for the calendar shift due to the 53rd week in fiscal 2008, fourth quarter comparable store sales increased approximately 3.1 percent . For fiscal 2009, the company’s comparable store sales increased 5.3 percent versus a 1.5 percent increase during fiscal 2008. Comparable store sales increased 1.7 percent for DIY and 13.7 percent for Commercial versus a 2.3 percent decrease and a 12.1 percent increase in DIY and commercial last year, respectively.

Operating cash flow for fiscal 2009 increased $221 million to $699.7 million from $478.7 million in fiscal 2008. Free cash flow for fiscal 2009 was a record $410 million, which represents a 46 percent increase from fiscal 2008. This increase was primarily driven by improved working capital, increased deferred taxes and an increase in net income. The increase in free cash flow enabled the company to decrease its total outstanding bank debt by $252.0 million over the past year. Capital expenditures were $192.9 million for fiscal 2009. This compares to capital expenditures of $185.0 million in 2008, an increase of $7.9 million.

“Overall our 2009 financial performance reflected improved top line growth, record cash flow and increased return on invested capital despite our soft fourth quarter performance,” said Mike Norona, executive vice president and chief financial officer. “Looking ahead, our 2010 outlook reflects continued confidence in our ability to grow both our top and bottom line while improving productivity and returns.”
 
During the fourth quarter, the company repurchased approximately 1.2 million shares of its common stock at an aggregate cost of $50.0 million, or an average price of $40.24 per share. The company repurchased approximately 2.5 million shares of its common stock during fiscal 2009 at an aggregate cost of $99.6 million, at an average price of $40.36 per share. The company has repurchased 4 million shares at an average price of $39.77 per share under the $250 million share repurchase program authorization.

The company’s board of directors has authorized a $500 million share repurchase program. This new authorization replaces the company’s $250 million share repurchase program authorized in May 2008, which had $89.3 million remaining.

In fiscal 2010, the company anticipates a low to approaching mid single-digit increase in comparable store sales primarily driven by continued strong commercial sales growth. The company assumes a more modest increase in gross profit rate primarily due to the investments made over the past two years.

While the company plans to continue investing in key areas such as commercial, e-commerce and global sourcing, total SG&A dollar growth is expected to decelerate due to a lower growth in its fixed cost structure. The company estimates an EPS range of approximately $3.20 to $3.40 for fiscal 2010.

“The annual financial outlook for fiscal 2010 reflects continued focus on top line growth with a more balanced cost structure that will better position the company to leverage SG&A at lower comp sales levels in 2010,” said Norona. “The single-digit comp store sales increase, combined with the third consecutive year of gross profit rate improvement should position us to achieve our third consecutive year of double-digit EPS growth.”
Dividend

During the fourth quarter, the company opened 14 stores, including five Autopart International stores, and the company also closed 12 stores. For the year, the company opened 107 new stores, including 32 Autopart International stores, and closed 55 stores. The stores closures are inclusive of the divested stores discussed above. As of January 2, 2010, the company’s total store count was 3,420, including 156 Autopart International stores.