ROANOKE, Va. — Advance Auto Parts announced its financial results for the second quarter ended July 17, 2010.
Second quarter earnings per diluted share (EPS) were $1.16 which was a 40 percent increase over the second quarter last year. Excluding the $0.06 charge related to store divestitures recorded during the second quarter of fiscal 2009, EPS increased 30 percent.
"I would like to thank our 51,000 Team Members for delivering a record performance in our second quarter of 2010. The team continues to position us for another great year through their focus on execution and an unwavering commitment to serving our customers," said CEO Darren R. Jackson. "We remain confident in our Team Members and strategies as they fueled our 6.9 percent increase in year-to-date comp stores sales and continue to drive the resurgence of our DIY business while extending our string of double-digit comparable store sales gains in our commercial business. We are encouraged by our good start to the third quarter and are upbeat as we look to the second half of 2010."
Second Quarter and Year-to-Date Highlights
Total sales for the second quarter increased 7.2 percent to $1.42 billion, compared with total sales of $1.32 billion during the second quarter of fiscal 2009. The sales increase reflected the net addition of 90 new stores during the past 12 months and a comparable store sales gain of 5.8 percent compared to a 4.8 percent comparable store sales gain during the second quarter of fiscal 2009. Year-to-date comparable store sales increased 6.9 percent which was on top of a 6.7 percent increase over the same period in fiscal 2009.
The company’s gross profit rate was 50.4 percent of sales during the second quarter as compared to 49.3 percent during the second quarter last year. The 111 basis-point improvement in the gross profit rate was driven by improved merchandising and pricing capabilities, increased inventory levels and resulting supply chain efficiencies and improved parts availability. Year-to-date, the company’s gross profit rate was 50.1 percent, or 101 basis points favorable to the same period in fiscal 2009.
The company’s SG&A rate was 38.3 percent of sales during the second quarter as compared to 39.1 percent during the same period last year, an 81 basis-point decrease. Excluding the impact of store divestitures last year, the SG&A rate decreased 10 basis points, primarily due to strong comparable store sales, which drove leverage in occupancy costs, and an expected decelerated pace of incremental spending on the company’s strategic capabilities. Year-to-date, the company’s SG&A rate was 39.2 percent versus 39.3 percent during the same period last year, or 38.8 percent when excluding the impact of store divestitures in fiscal 2009.
The company’s operating income during the second quarter of $171.6 million increased 27.3 percent, or 191 basis points, to 12.1 percent of total sales as compared to the second quarter of fiscal 2009. Excluding the impact of store divestitures, the company’s operating income increased 19.1 percent, and its operating income rate increased 121 basis points.
Operating cash flow through the second quarter increased 14.2 percent to $495.5 million from $433.8 million last year. Free cash flow through the second quarter increased 41.8 percent to $407.6 million from $287.4 million last year. Capital expenditures were $99.3 million through the second quarter as compared to $90.8 million through the second quarter of fiscal 2009.
"We are pleased with our strong second quarter financial performance that was driven by our previous strategic investments, fantastic team member execution and positive industry dynamics. These factors contributed to us delivering strong top line and bottom line growth, along with record free cash flow and returns as measured by return on invested capital," said Mike Norona, executive vice president and chief financial officer. "As a result of our first half performance which exceeded our internal expectations, combined with our significant share repurchase activity which was not included in our original annual EPS outlook, we believe it is prudent to reflect these material changes and update our previously communicated annual EPS outlook. We now estimate our fiscal 2010 annual EPS outlook to be in the range of $3.70 – $3.80 per share."
