Wednesday, automotive aftermarket parts retailer Advance Auto Parts Inc. (AAP) reported a rise in its third quarter profit, helped mainly by a 6.3% growth in revenues primarily due to the addition of 66 new stores during the past 12 months and higher comparable store sales. Adjusted earnings for the quarter came in well above the Street's estimate, while revenues were in line.
The Roanoke, Virginia-based company reported net income for the third quarter of $61.98 million or $0.65 per share, compared to $56.16 million or $0.58 per share in the year-ago quarter.
Net income for the recent quarter included a $0.04 per share charge related to store divestitures. Excluding the impact of the store divestitures, net income increased 19% to $0.69 per share .
On average, twenty analysts polled by Thomson Reuters expected the company to earn $0.66 per share for the quarter. Analysts estimates typically exclude special items.
Sales for the quarter increased 6.3% to $1.26 billion from $1.19 billion in the prior-year quarter, Seventeen analysts had a revenue consensus of $1.26 billion for the third quarter.
Comparable store sales for the quarter grew 4.7% compared to a decrease of 0.1% during the third quarter last year. Adjusting for the calendar shift due to the 53rd week last year, third quarter comparable store sales increased about 5.2%, contributing to the revenue growth.
In the immediately preceding quarter, Advance Auto Parts reported a second quarter that profit rose 7% from last year, helped by a 4.8% same-store sales growth. Net income for the second quarter was $80.3 million or $0.83 per share, compared to $75.4 million or $0.78 per share in the year-ago quarter. Net sales for the second quarter rose 6.5% to $1.32 billion from $1.24 billion in the same quarter last year. For the second quarter, commercial same-store sales rose 14.8%, while do-it-yourself same-store sales grew 0.7%.
Amongst peers, AutoZone Inc. (AZO) reported a 3.1% drop in profit to $$236.13 million or $4.43 per share for the fourth quarter, mainly reflecting higher expenses, while prior-year results benefited from an additional week. Net sales for the quarter increased 1% to $2.23 billion from $2.21 billion in the prior year quarter.
Another player, auto parts retailer O'Reilly Automotive, Inc. (ORLY) reported a third quarter profit that more than doubled to $87.2 million to $0.63 per share from last year, helped by strong same-stores sales growth and improved gross margins. Sales for the third quarter rose 13% to $1.26 billion from $1.11 billion in the same quarter last year. The company's consolidated same-store store sales for the quarter rose 5.3%.
Atlanta, Georgia-based automotive and industrial replacement parts maker Genuine Parts Co. (GPC) reported an 17% decline in third-quarter profit of $107.64 million or $0.67 per share mainly due to lower quarterly sales across all business segments in what is turning out to be a challenging year for the company. Genuine Parts' net sales for the quarter decreased to $2.61 billion from $2.88 billion in the year-earlier quarter.
Advance Auto Parts' gross margin for third quarter was 49.2%, compared to from 47.3% a year ago, an improvement of 190 basis points, primarily due to continued investments in pricing and merchandising capabilities, parts availability, decreased inventory shrink and improved store execution.
Operating income grew to $104.86 million from $95.90 million in the last year quarter.
Selling, general and administrative expenses for the quarter rose to $516.60 million from $466.28 million in the prior year quarter. Selling, general and administrative expenses rate was 40.9% of sales during the third quarter as compared to 39.3% during the third quarter last year. Excluding the impact of store divestitures, the company's SG&A rate increased 110 basis points.
Commenting on the results, Advance Auto Parts' chief executive officer, Darren Jackson said, "I am very proud of our Team Members' ability to drive continuous improvements in customer satisfaction and Team Member engagement. Their ability to revitalize our core values and actions to drive our four strategies resulted in strong top line growth, a 53% increase in free cash flow and a 100 basis-point increase on our return on invested capital."
Advance Auto Parts said it opened 24 stores, including 9 Autopart International stores. The company also closed 13 stores. As of October 10, 2009, the company's total store count was 3,418 including 151 Autopart International stores.
The company also repurchased 879,910 shares of its common stock during the third quarter at an aggregate cost of $35.2 million, or an average price of $40.00 per share, under the company's share repurchase authorization plan. At the end of the third quarter, the company had $139.4 million available from the $250 million share repurchase authorization approved in May 2008.
During the quarter, Advance Auto closed 12 stores and expects to divest a total of 40 to 50 unprofitable stores in 2009 that are delivering unacceptable strategic or financial results.
On November 10, 2009, the company's board declared a regular quarterly cash dividend of $0.06 per share to be paid on January 8, 2010 to stockholders of record as of December 24, 2009.
For the nine-month period, Advance Auto Parts' net income increased to $235.89 million from $213.63 million in the prior-year period. Earnings per share were $2.46, up from $2.23 in the year-ago period. Sales for the period rose to $4.27 billion from $3.95 billion in the year-earlier period.
Advance Auto Parts shares, which have traded in a range of $24.03 to $47.41 over the past year, closed Wednesday's regular trading session at $40.28, up $1.28 or 3.28%. In after hours, the stock is losing $1.29 or 3.20%, trading at $38.99.
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