ROANOKE, Va. – Advance Auto Parts has announced its financial results for the second quarter ended July 13, 2013. Second quarter earnings per diluted share (EPS) were $1.59, an 18.7 percent increase versus the second quarter last year and includes a 1 cent impact resulting from the integration expenses for B.W.P. Distributors, Inc. (BWP).
“Our sales grew 6.1 percent and operating income increased 15.1 percent in the second quarter. We are pleased with our profit improvement despite our comparable store sales being essentially flat,” said Darren Jackson, CEO. “The positive comparable sales growth at the start of the quarter was offset by weaker demand in the balance of the quarter including sales shortfalls in key seasonal categories. While the macroeconomic environment continued to impact our customers, we continue to be encouraged by the strong long-term fundamentals of our industry and remain focused on improving our sales performance as we continue to improve our profitability.”
Total sales for the second quarter increased 6.1 percent to $1.55 billion, as compared with total sales during the second quarter of fiscal 2012 of $1.46 billion. The sales increase was driven by the acquisition of BWP and the net addition of 175 new stores over the past 12 months, partially offset by a comparable store sales decrease of 0.3 percent versus a comparable store sales decrease of 2.7 percent during the second quarter of fiscal 2012. Year-to-date, total sales increased 4.3 percent to $3.56 billion, compared with total sales of $3.42 billion over the same period last year.
The company’s gross profit rate was 50.3 percent of sales during the second quarter as compared to 49.9 percent during the second quarter last year. Year-to-date, the company’s gross profit rate was 50.1 percent, a 13 basis-point increase over the same period in fiscal 2012.
The company’s operating income during the second quarter of $194.7 million increased 15.1 percent versus the second quarter of fiscal 2012. On a rate basis, operating income was 12.6 percent of total sales as compared to 11.6 percent during the second quarter of fiscal 2012. Year-to-date, the company’s operating income rate was 11.2 percent versus 11.5 percent during the same period last year.
Operating cash flow decreased 24.6 percent to $310.1 million from $411.4 million through the second quarter of fiscal 2012. Free cash flow was $27.9 million versus $265.4 million through the second quarter of fiscal 2012. This decrease in free cash flow was primarily due to the company’s acquisition of BWP, which occurred at the beginning of the fiscal year. Capital expenditures were $111.9 million as compared to $146.3 million through the second quarter of fiscal 2012.
“We are pleased that we were able to exceed our profit expectations for the quarter,” said Mike Norona, executive vice president and CFO. “Despite softer sales than we expected in the back half of the quarter, our gross profit improvements and disciplined focus on expense management allowed us to increase our earnings per share 18.7 percent and our operating margins by 98 bps during the quarter. Our long-term operating income rate goal is to achieve 12 percent, and our progress in the quarter is a solid step in the right direction.”
During the second quarter, the company opened 26 stores, including five Autopart International stores, and closed five stores. As of July 13, 2013, the company’s total store count was 3,990, including 227 Autopart International stores.
Share Repurchase Program
Year-to-date, the company repurchased approximately 1 million shares of its common stock at an aggregate cost of $74.5 million, or an average price of $77.38 per share. As of July 13, 2013, the company had approximately $418 million available on the company’s $500 million share repurchase program authorized by the company’s board of directors on May 14, 2012.
