Advance Auto Parts Reports Fourth Quarter and Full Year 2023 Results
- Net sales for Q4 2023 decreased by 0.4% compared to the prior year, totaling $2.5 billion.
- Full year 2023 net sales increased by 1.2% to $11.3 billion.
- Gross profit decreased by 11.9% in Q4 2023, amounting to $950.8 million.
- Operating loss for Q4 2023 was $48.6 million, a significant decline from the prior year.
- Diluted loss per share for Q4 2023 was $0.59, compared to diluted earnings per share of $1.39 in the prior year.
- The company's full year 2023 diluted earnings per share were $0.50, down from $7.65 in the prior year.
- Free cash flow for 2023 was $43.7 million, a decrease from $312.5 million in the prior year.
- The company identified issues with previously reported financials and expects to file its Form 10-K after an extension period.
- A regular cash dividend of $0.25 per share was declared to be paid on April 26, 2024.
- The company entered into an amendment to its revolving credit facility to accommodate specific write-downs of inventory and vendor receivables.
- Full year 2024 guidance includes net sales of $11.3-$11.4 billion, operating income margin of 3.2-3.5%, and diluted EPS of $3.75-$4.25.
- The company will host a webcast to discuss its Q4 and full year 2023 results on February 28, 2024.
- Gross profit and operating income saw significant declines in Q4 2023.
- Diluted earnings per share for both Q4 2023 and full year 2023 were notably lower than the prior year.
- Free cash flow for 2023 decreased substantially compared to the previous year.
- The company identified issues with previously reported financials, indicating potential accounting challenges.
- The company's full year 2023 results were well below expectations, highlighting operational challenges.
- The company's effective tax rate for 2023 was 6.6%, a significant decrease from the prior year.
The financial results of Advance Auto Parts, Inc. demonstrate a contraction in net sales and a significant decline in gross profit margins, which is indicative of operational challenges. The decrease in net sales by 0.4% in Q4 and the 1.2% increase for the full year, while marginal, reflect a stagnating revenue trajectory. More concerning is the gross profit margin compression, from 43.6% to 38.6% in Q4 and the overall decrease in operating income from 6.0% to 1.0% of net sales. These figures suggest escalating costs and inventory management issues that have not been offset by pricing strategies.
The announced cost reduction initiatives, including the $150 million in SG&A savings and the additional $50 million in indirect spend reductions, are critical moves to improve profitability. However, the effectiveness of these measures will need to be closely monitored. The strategic review of the business, including potential sales of Worldpac and the Canadian business, indicates a shift in the company's portfolio which could alter the investment thesis for stakeholders.
Furthermore, the identification of issues with previously reported financials and the subsequent amendment to the revolving credit facility to accommodate specific write-downs may raise concerns about financial governance. Investors and analysts should scrutinize the forthcoming 10-K filing for a clearer understanding of the company's financial health and the adequacy of internal controls.
Advance Auto Parts, Inc.'s performance must be contextualized within the broader automotive aftermarket industry. The sector is influenced by factors such as vehicle age, miles driven and the economic climate, which affect demand for maintenance and repair parts. The company's decline in comparable store sales suggests a possible loss of market share or a decrease in market demand. It's important to assess whether this is a result of competitive pressures, shifts in consumer behavior, or broader market trends.
Consolidation of the supply chain and the focus on operational efficiencies are strategic moves that could enhance the company's competitive position in the long run. However, the short-term impact of these changes, including potential disruption and implementation costs, must be considered. The company's guidance for 2024 indicates cautious optimism with a low to moderate increase in net sales and operating margin improvement. This projection will need to be revisited in light of the company's ability to execute on its cost reduction and operational improvement plans.
The filing of a Form 12b-25 with the Securities and Exchange Commission is a procedural matter indicating a delay in the submission of the company's Form 10-K. While not uncommon, such delays can be a red flag for underlying issues, especially in the context of identified financial reporting errors. The amendment to the revolving credit facility, which enables addbacks for specific inventory and vendor receivables write-downs, suggests that there may be material impacts on the company's financial statements that require careful legal review.
Stakeholders should be aware that these financial governance issues could potentially lead to increased regulatory scrutiny and the need for enhanced compliance measures. It is essential for the company to maintain transparency with its investors and regulatory bodies to restore confidence in its financial reporting.
“As we closed out 2023, we continued to act with a sense of urgency to stabilize the business and position the company to return to profitable growth,” said Shane O'Kelly, president and chief executive officer. “Our full year results are well below our expectations, and we are focused on instilling greater discipline and accountability both in the fundamental business and in how the organization executes across the board. In addition to the operational improvements we are implementing, we are strengthening internal controls and enhancing the quality of our accounting information to help better inform how we drive the business forward.
“We continue to advance our ongoing operational and strategic review of the business, including the separate sales processes for Worldpac and our Canadian business. We have streamlined and reorganized the company’s leadership structure and have made several important new hires, including the appointments of Ryan Grimsland as Chief Financial Officer and Elizabeth Dreyer as Chief Accounting Officer. Building on the
Fourth Quarter and Full Year 2023 Results (1)
Fourth quarter 2023 Net sales totaled
The company's Gross profit decreased
The company's SG&A was
The company's fourth quarter Operating loss was
The company's effective tax rate in the fourth quarter of 2023 was
Net cash provided by operating activities was
During management’s review, the company identified issues with certain previously reported financials. All comparisons are based on the corrected historical results as depicted in the financial tables herein, which include the correction of non-material errors in previously reported results.
The company filed a Form 12b-25 with the Securities and Exchange Commission and disclosed that it expects to file its Form 10-K prior to the expiration of the extension period.
(1) All comparisons are based on the same time period in the prior year. Comparable store sales include locations open for 13 complete accounting periods and excludes sales to independently owned Carquest locations.
Capital Allocation
On February 13, 2024, the company declared a regular cash dividend of
Subsequent Events
On February 26, 2024, the company entered into an amendment to its revolving credit facility to enable certain addbacks to financial covenants for specific write-downs of inventory and vendor receivables. As of December 30, 2023, considering the amendment, the company was in compliance with the credit facility’s financial covenants.
Full Year 2024 Guidance (1)
"In 2024, we are refining our operational improvement plans and building on the decisive actions we have taken to turn around the company’s performance. We are committed to improving overall productivity and taking a disciplined approach to reducing expenses, which will support our focus on investing in our team members. Our 2024 full year guidance is reflective of the steps we must take to reset the business and solidify our foundation for the long term," said Ryan Grimsland, executive vice president and chief financial officer.
|
|
2024 |
||||||
($ in millions, except per share data) |
|
Low |
|
High |
||||
Net sales |
|
$ |
11,300 |
|
|
$ |
11,400 |
|
Comparable store sales (2) |
|
|
0.0 |
% |
|
|
1.0 |
% |
Operating income margin |
|
|
3.2 |
% |
|
|
3.5 |
% |
Diluted EPS |
|
$ |
3.75 |
|
|
$ |
4.25 |
|
Capital expenditures |
|
$ |
200 |
|
|
$ |
250 |
|
Free cash flow (3) |
|
Minimum |
||||||
(1) |
The company is providing guidance as of February 28, 2024, which does not reflect any potential future acquisitions, dispositions or share repurchases. |
(2) |
Comparable store sales include locations open for 13 complete accounting periods and excludes sales to independently owned Carquest locations. |
(3) |
Free cash flow is a non-GAAP measure. For a better understanding of the company's adjusted results, refer to the reconciliation of non-GAAP adjustment in the accompanying financial tables included herein. |
Investor Conference Call
The company will detail its results for the fourth quarter and full year 2023 via a webcast scheduled to begin at 8 a.m. Eastern Time on Wednesday, February 28, 2024. The webcast will be accessible via the Investor Relations page of the company's website (ir.AdvanceAutoParts.com).
To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the company suggests registering a minimum 10 minutes before the start of the call. A replay of the conference call will be available on the company's Investor Relations website for one year.
About Advance Auto Parts
Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers. As of December 30, 2023, Advance operated 4,786 stores and 321 Worldpac branches primarily within
Forward-Looking Statements
Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our strategic initiatives, operational plans and objectives, our ability to complete the potential divestiture of Worldpac and the company’s
Advance Auto Parts, Inc. and Subsidiaries |
||||||
Condensed Consolidated Balance Sheets |
||||||
(in thousands) |
||||||
(unaudited) |
||||||
|
|
|
|
|
||
|
|
December 30,
|
|
December 31,
|
||
Assets |
|
|
||||
Current assets: |
|
|
|
|
||
Cash and cash equivalents |
|
$ |
503,471 |
|
$ |
270,805 |
Receivables, net |
|
|
800,141 |
|
|
684,048 |
Inventories |
|
|
4,857,702 |
|
|
4,896,269 |
Other current assets |
|
|
215,707 |
|
|
163,695 |
Total current assets |
|
|
6,377,021 |
|
|
6,014,817 |
Property and equipment, net |
|
|
1,648,546 |
|
|
1,690,139 |
Operating lease right-of-use assets |
|
|
2,578,776 |
|
|
2,607,690 |
Goodwill |
|
|
991,743 |
|
|
990,471 |
Other intangible assets, net |
|
|
593,341 |
|
|
620,901 |
Other assets |
|
|
86,899 |
|
|
62,429 |
Total assets |
|
$ |
12,276,326 |
|
$ |
11,986,447 |
Liabilities and Stockholders' Equity |
|
|
|
|
||
Current liabilities: |
|
|
|
|
||
Accounts payable |
|
$ |
4,177,974 |
|
$ |
4,178,907 |
Accrued expenses |
|
|
671,237 |
|
|
629,464 |
Current portion of long-term debt |
|
|
— |
|
|
185,000 |
Other current liabilities |
|
|
458,194 |
|
|
427,480 |
Total current liabilities |
|
|
5,307,405 |
|
|
5,420,851 |
Long-term debt |
|
|
1,786,361 |
|
|
1,188,283 |
Non-current operating lease liabilities |
|
|
2,215,766 |
|
|
2,278,318 |
Deferred income taxes |
|
|
362,542 |
|
|
410,749 |
Other long-term liabilities |
|
|
84,524 |
|
|
89,054 |
Total stockholders' equity |
|
|
2,519,728 |
|
|
2,599,192 |
Total liabilities and stockholders’ equity |
|
$ |
12,276,326 |
|
$ |
11,986,447 |
(1) |
This preliminary condensed consolidated balance sheet has been prepared on a basis consistent with the company's previously prepared balance sheets filed with the Securities and Exchange Commission ("SEC"), but does not include the footnotes required by accounting principles generally accepted in |
(2) |
The fifty-two weeks ended December 31, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results. |
Advance Auto Parts, Inc. and Subsidiaries |
||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||
(in thousands, except per share data) |
||||||||||||||||
(unaudited) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
|
Twelve Weeks Ended |
|
Twelve Weeks Ended |
|
Fifty-Two Weeks Ended |
|
Fifty-Two Weeks Ended |
||||||||
|
|
December 30,
|
|
December 31,
|
|
December 30,
|
|
December 31,
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
|
$ |
2,464,869 |
|
|
$ |
2,473,745 |
|
|
$ |
11,287,607 |
|
|
$ |
11,154,722 |
|
Cost of sales |
|
|
1,514,028 |
|
|
|
1,394,853 |
|
|
|
6,764,105 |
|
|
|
6,222,487 |
|
Gross profit |
|
|
950,841 |
|
|
|
1,078,892 |
|
|
|
4,523,502 |
|
|
|
4,932,235 |
|
Selling, general and administrative expenses |
|
|
999,407 |
|
|
|
959,583 |
|
|
|
4,409,125 |
|
|
|
4,261,982 |
|
Operating (loss) income |
|
|
(48,566 |
) |
|
|
119,309 |
|
|
|
114,377 |
|
|
|
670,253 |
|
Other, net: |
|
|
|
|
|
|
|
|
||||||||
Interest expense |
|
|
(18,062 |
) |
|
|
(15,946 |
) |
|
|
(88,055 |
) |
|
|
(51,060 |
) |
Loss on early redemptions of senior unsecured notes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7,408 |
) |
Other income (expense), net |
|
|
5,731 |
|
|
|
(2,141 |
) |
|
|
5,525 |
|
|
|
(7,423 |
) |
Total other, net |
|
|
(12,331 |
) |
|
|
(18,087 |
) |
|
|
(82,530 |
) |
|
|
(65,891 |
) |
(Loss) Income before provision for income taxes |
|
|
(60,897 |
) |
|
|
101,222 |
|
|
|
31,847 |
|
|
|
604,362 |
|
Provision for income taxes |
|
|
(25,770 |
) |
|
|
18,318 |
|
|
|
2,112 |
|
|
|
139,960 |
|
Net (loss) income |
|
$ |
(35,127 |
) |
|
$ |
82,904 |
|
|
$ |
29,735 |
|
|
$ |
464,402 |
|
|
|
|
|
|
|
|
|
|
||||||||
Basic (loss) earnings per common share |
|
$ |
(0.59 |
) |
|
$ |
1.40 |
|
|
$ |
0.50 |
|
|
$ |
7.70 |
|
Weighted average common shares outstanding |
|
|
59,504 |
|
|
|
59,333 |
|
|
|
59,432 |
|
|
|
60,351 |
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted (loss) earnings per common share |
|
$ |
(0.59 |
) |
|
$ |
1.39 |
|
|
$ |
0.50 |
|
|
$ |
7.65 |
|
Weighted average common shares outstanding |
|
|
59,675 |
|
|
|
59,623 |
|
|
|
59,608 |
|
|
|
60,717 |
|
(1) |
These preliminary condensed consolidated statements of operations have been prepared on a basis consistent with the company's previously prepared statements of operations filed with the SEC, but do not include the footnotes required by GAAP. |
(2) |
The twelve weeks ended December 31, 2022 and fifty-two weeks ended December 31, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results. |
Advance Auto Parts, Inc. and Subsidiaries |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(in thousands) |
||||||||
(unaudited) |
||||||||
|
|
Fifty-Two Weeks Ended |
||||||
|
|
December 30,
|
|
December 31,
|
||||
|
|
|
|
|
||||
Cash flows from operating activities: |
|
|
|
|
||||
Net income |
|
$ |
29,735 |
|
|
$ |
464,402 |
|
Depreciation and amortization |
|
|
306,454 |
|
|
|
283,800 |
|
Share-based compensation |
|
|
45,647 |
|
|
|
50,978 |
|
Loss on early redemption of senior unsecured notes |
|
|
— |
|
|
|
7,408 |
|
Provision for deferred income taxes |
|
|
(47,782 |
) |
|
|
16,528 |
|
Other, net |
|
|
2,813 |
|
|
|
6,168 |
|
Net change in: |
|
|
|
|
||||
Receivables, net |
|
|
(114,665 |
) |
|
|
67,147 |
|
Inventories |
|
|
44,821 |
|
|
|
(229,643 |
) |
Accounts payable |
|
|
(4,645 |
) |
|
|
227,774 |
|
Accrued expenses |
|
|
115,673 |
|
|
|
(167,723 |
) |
Other assets and liabilities, net |
|
|
(91,987 |
) |
|
|
9,732 |
|
Net cash provided by operating activities |
|
|
286,064 |
|
|
|
736,571 |
|
Cash flows from investing activities: |
|
|
|
|
||||
Purchases of property and equipment |
|
|
(242,411 |
) |
|
|
(424,061 |
) |
Purchase of intangible asset |
|
|
— |
|
|
|
(1,900 |
) |
Proceeds from sales of property and equipment |
|
|
6,922 |
|
|
|
1,513 |
|
Net cash used in investing activities |
|
|
(235,489 |
) |
|
|
(424,448 |
) |
Cash flows from financing activities: |
|
|
|
|
||||
Payments on senior unsecured notes |
|
|
— |
|
|
|
(201,081 |
) |
Borrowings under credit facilities |
|
|
4,805,000 |
|
|
|
2,035,000 |
|
Payments on credit facilities |
|
|
(4,990,000 |
) |
|
|
(1,850,000 |
) |
Proceeds from issuance of senior unsecured notes, net |
|
|
599,571 |
|
|
|
348,618 |
|
Dividends paid |
|
|
(209,293 |
) |
|
|
(336,230 |
) |
Repurchases of common stock |
|
|
(14,518 |
) |
|
|
(618,480 |
) |
Other, net |
|
|
(182 |
) |
|
|
1,469 |
|
Net cash provided by (used in) financing activities |
|
|
190,578 |
|
|
|
(620,704 |
) |
Effect of exchange rate changes on cash |
|
|
(8,487 |
) |
|
|
(8,664 |
) |
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
|
232,666 |
|
|
|
(317,245 |
) |
Cash and cash equivalents, beginning of period |
|
|
270,805 |
|
|
|
588,050 |
|
Cash and cash equivalents, end of period |
|
$ |
503,471 |
|
|
$ |
270,805 |
|
(1) |
This preliminary condensed consolidated statement of cash flows has been prepared on a basis consistent with the company's previously prepared statements of operations filed with the SEC, but does not include the footnotes required by GAAP. |
(2) |
The fifty-two weeks ended December 31, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of the non-material errors the company discovered in previously reported results. |
Restatement of Previously Issued Financial Statements
In connection with the preparation of the financial statements for the fourth quarter of 2023, the company identified additional errors primarily impacting cost of sales and selling, general and administrative costs. The company evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period. A summary of the corrections to the impacted financial statement line items in our Consolidated Balance Sheet as of December 31, 2022 and our Consolidated Statements of Operations for the and Consolidated Statement of Cash Flows for the year ended December 31, 2022 included in our previously filed Annual Report on Form 10-K and our Consolidated Statements of Operations for the twelve weeks ended December 31, 2022 included in our previously filed Form 8-K and earnings release are presented below:
Condensed Consolidated Balance Sheet |
|||||||||||
December 31, 2022 |
|||||||||||
|
As Previously Reported |
|
Adjustments |
|
As Corrected |
||||||
Assets |
|
|
|
|
|
||||||
Cash and cash equivalents |
$ |
269,282 |
|
|
$ |
1,523 |
|
|
$ |
270,805 |
|
Receivables, net |
|
698,613 |
|
|
|
(14,565 |
) |
|
|
684,048 |
|
Inventories, net |
|
4,915,262 |
|
|
|
(18,993 |
) |
|
|
4,896,269 |
|
Total current assets |
|
6,046,852 |
|
|
|
(32,035 |
) |
|
|
6,014,817 |
|
Total assets |
$ |
12,018,482 |
|
|
$ |
(32,035 |
) |
|
$ |
11,986,447 |
|
|
|
|
|
|
|
||||||
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||||||
Accounts payable |
$ |
4,123,462 |
|
|
$ |
55,445 |
|
|
$ |
4,178,907 |
|
Accrued expenses |
|
634,447 |
|
|
|
(4,983 |
) |
|
|
629,464 |
|
Total current liabilities |
|
5,370,389 |
|
|
|
50,462 |
|
|
|
5,420,851 |
|
Deferred income taxes |
|
415,997 |
|
|
|
(5,248 |
) |
|
|
410,749 |
|
Other long-term liabilities |
|
87,214 |
|
|
|
1,840 |
|
|
|
89,054 |
|
Total liabilities |
|
9,340,201 |
|
|
|
47,054 |
|
|
|
9,387,255 |
|
Accumulated other comprehensive loss |
|
(45,143 |
) |
|
|
448 |
|
|
|
(44,695 |
) |
Retained earnings |
|
4,744,624 |
|
|
|
(79,537 |
) |
|
|
4,665,087 |
|
Total stockholders’ equity |
|
2,678,281 |
|
|
|
(79,089 |
) |
|
|
2,599,192 |
|
Total liabilities and stockholders’ equity |
$ |
12,018,482 |
|
|
$ |
(32,035 |
) |
|
$ |
11,986,447 |
|
Condensed Consolidated Statement of Operations |
|||||||||||||||||||||||
December 31, 2022 |
|||||||||||||||||||||||
|
Twelve Weeks Ended |
|
Fifty-Two Weeks Ended |
||||||||||||||||||||
|
As Previously Reported |
|
Adjustments |
|
As Corrected |
|
As Previously Reported |
|
Adjustments |
|
As Corrected |
||||||||||||
Cost of sales |
$ |
1,383,734 |
|
|
$ |
11,119 |
|
|
$ |
1,394,853 |
|
|
$ |
6,192,622 |
|
|
$ |
29,865 |
|
|
$ |
6,222,487 |
|
Gross profit |
|
1,090,011 |
|
|
|
(11,119 |
) |
|
|
1,078,892 |
|
|
|
4,962,100 |
|
|
|
(29,865 |
) |
|
|
4,932,235 |
|
Selling, general and administrative expenses |
|
958,009 |
|
|
|
1,574 |
|
|
|
959,583 |
|
|
|
4,247,949 |
|
|
|
14,033 |
|
|
|
4,261,982 |
|
Operating income |
|
132,002 |
|
|
|
(12,693 |
) |
|
|
119,309 |
|
|
|
714,151 |
|
|
|
(43,898 |
) |
|
|
670,253 |
|
Other (expense) income, net |
|
11,320 |
|
|
|
(13,461 |
) |
|
|
(2,141 |
) |
|
|
(6,996 |
) |
|
|
(427 |
) |
|
|
(7,423 |
) |
Total other, net |
|
(4,626 |
) |
|
|
(13,461 |
) |
|
|
(18,087 |
) |
|
|
(65,464 |
) |
|
|
(427 |
) |
|
|
(65,891 |
) |
Income before provision for income taxes |
|
127,376 |
|
|
|
(26,154 |
) |
|
|
101,222 |
|
|
|
648,687 |
|
|
|
(44,325 |
) |
|
|
604,362 |
|
Provision for income taxes |
|
20,679 |
|
|
|
(2,361 |
) |
|
|
18,318 |
|
|
|
(146,815 |
) |
|
|
6,855 |
|
|
|
(139,960 |
) |
Net income |
$ |
106,697 |
|
|
$ |
(23,793 |
) |
|
$ |
82,904 |
|
|
$ |
501,872 |
|
|
$ |
(37,470 |
) |
|
$ |
464,402 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic earnings per share |
$ |
1.80 |
|
|
$ |
(0.40 |
) |
|
$ |
1.40 |
|
|
$ |
8.32 |
|
|
$ |
(0.62 |
) |
|
$ |
7.70 |
|
Diluted earnings per common share |
$ |
1.79 |
|
|
$ |
(0.40 |
) |
|
$ |
1.39 |
|
|
$ |
8.27 |
|
|
$ |
(0.62 |
) |
|
$ |
7.65 |
|
Condensed Consolidated Statement of Cash Flows |
|||||||||||
Fifty-Two Weeks Ended December 31, 2022 |
|||||||||||
|
As Previously Reported |
|
Adjustments |
|
As Corrected |
||||||
Net income |
$ |
501,872 |
|
|
$ |
(37,470 |
) |
|
$ |
464,402 |
|
Provision for deferred income taxes |
|
6,338 |
|
|
|
10,190 |
|
|
|
16,528 |
|
Net change in: |
|
|
|
|
|
||||||
Receivables, net |
|
81,254 |
|
|
|
(14,107 |
) |
|
|
67,147 |
|
Inventories, net |
|
(272,253 |
) |
|
|
42,610 |
|
|
|
(229,643 |
) |
Accounts payable |
|
212,568 |
|
|
|
15,206 |
|
|
|
227,774 |
|
Accrued expenses |
|
(165,643 |
) |
|
|
(2,080 |
) |
|
|
(167,723 |
) |
Net cash provided by operating activities |
|
722,222 |
|
|
|
14,349 |
|
|
|
736,571 |
|
Effect of exchange rate changes on cash |
|
(9,216 |
) |
|
|
552 |
|
|
|
(8,664 |
) |
Net (decrease) increase in cash and cash equivalents |
|
(332,146 |
) |
|
|
14,901 |
|
|
|
(317,245 |
) |
Cash and cash equivalents, beginning of period |
|
601,428 |
|
|
|
(13,378 |
) |
|
|
588,050 |
|
Cash and cash equivalents, end of period |
$ |
269,282 |
|
|
$ |
1,523 |
|
|
$ |
270,805 |
|
Reconciliation of Non-GAAP Financial Measures
The company's financial results include certain financial measures not derived in accordance with accounting principles generally accepted in
Reconciliation of Free Cash Flow:(1) |
|
|
|
|
||||
|
|
Fifty-Two Weeks Ended |
||||||
(in thousands) |
|
December 30,
|
|
December 31,
|
||||
Cash flows from operating activities |
|
$ |
286,064 |
|
|
$ |
736,571 |
|
Purchases of property and equipment |
|
|
(242,411 |
) |
|
|
(424,061 |
) |
Free cash flow |
|
$ |
43,653 |
|
|
$ |
312,510 |
|
Adjusted Debt to Adjusted EBITDAR Ratio: (1) |
|
|
|
|
||||
|
|
Four Quarters Ended |
||||||
(in thousands, except adjusted debt to adjusted EBITDAR ratio) |
|
December 30,
|
|
December 31,
|
||||
Total GAAP debt |
|
$ |
1,786,361 |
|
|
$ |
1,373,283 |
|
Add: Operating lease liabilities |
|
|
2,660,827 |
|
|
|
2,692,861 |
|
Adjusted debt |
|
$ |
4,447,188 |
|
|
$ |
4,066,144 |
|
|
|
|
|
|
||||
GAAP Net income |
|
$ |
29,735 |
|
|
$ |
464,402 |
|
Depreciation and amortization |
|
|
306,454 |
|
|
|
283,800 |
|
Interest expense |
|
|
88,055 |
|
|
|
51,060 |
|
Other expense (income), net |
|
|
(5,525 |
) |
|
|
7,423 |
|
Provision for income taxes |
|
|
2,112 |
|
|
|
139,960 |
|
Rent expense |
|
|
613,859 |
|
|
|
594,838 |
|
Share-based compensation |
|
|
45,647 |
|
|
|
50,978 |
|
Other nonrecurring charges(2) |
|
|
12,419 |
|
|
|
7,408 |
|
Transformation related charges |
|
|
29,719 |
|
|
|
37,083 |
|
Adjusted EBITDAR |
|
$ |
1,122,475 |
|
|
$ |
1,636,952 |
|
|
|
|
|
|
||||
Adjusted debt to adjusted EBITDAR ratio |
|
|
4.0 |
|
|
|
2.5 |
|
(1) |
The fifty-two weeks ended December 31, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results. |
(2) |
The adjustments to the four quarters ended December 30, 2023 include expenses associated with our remediation efforts and executive search charges and the adjustments to the four quarters ended December 31, 2022 represent charges incurred resulting from the early redemption of the company's 2023 senior unsecured notes. |
NOTE: Management believes its Adjusted Debt to Adjusted EBITDAR ratio (“leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The company’s goal is to maintain an investment grade rating. The company's credit rating directly impacts the interest rates on borrowings under its existing credit facility and could impact the company's ability to obtain additional funding. If the company was unable to maintain its investment grade rating, this could negatively impact future performance and limit growth opportunities. Similar measures are utilized in the calculation of the financial covenants and ratios contained in the company's financing arrangements. The leverage ratio calculated by the company is a non-GAAP measure and should not be considered a substitute for debt to net earnings, net earnings or debt as determined in accordance with GAAP. The company adjusts the calculation to remove rent expense and to add back the company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the company’s peers and to account for differences in debt structures and leasing arrangements. The company’s calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.
Store Information:
During the fifty-two weeks ended December 30, 2023, 61 stores and branches were opened and 40 were closed or consolidated, resulting in a total of 5,107 stores and branches as of December 30, 2023, compared with a total of 5,086 stores and branches as of December 31, 2022.
The below table summarizes the changes in the number of company-operated stores and branches during the twelve and fifty-two weeks ended December 30, 2023:
|
|
Twelve Weeks Ended |
|||||||||
|
|
AAP |
|
CARQUEST |
|
WORLDPAC (1) |
|
Total |
|||
October 7, 2023 |
|
4,477 |
|
|
308 |
|
|
320 |
|
5,105 |
|
New |
|
9 |
|
|
— |
|
|
1 |
|
10 |
|
Closed |
|
(3 |
) |
|
(5 |
) |
|
— |
|
(8 |
) |
Relocated |
|
1 |
|
|
(1 |
) |
|
— |
|
— |
|
December 30, 2023 |
|
4,484 |
|
|
302 |
|
|
321 |
|
5,107 |
|
|
|
Fifty-Two Weeks Ended |
|||||||||
|
|
AAP |
|
CARQUEST |
|
WORLDPAC (1) |
|
Total |
|||
December 31, 2022 |
|
4,440 |
|
|
330 |
|
|
316 |
|
5,086 |
|
New |
|
55 |
|
|
1 |
|
|
5 |
|
61 |
|
Closed |
|
(13 |
) |
|
(27 |
) |
|
— |
|
(40 |
) |
Relocated |
|
2 |
|
|
(2 |
) |
|
— |
|
— |
|
December 30, 2023 |
|
4,484 |
|
|
302 |
|
|
321 |
|
5,107 |
|
(1) |
Certain converted Autopart International (AI) locations will remain branded as AI going forward. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240227515136/en/
Investor Relations Contact:
Elisabeth Eisleben
T: (919) 227-5466
E: invrelations@advanceautoparts.com
Media Contact:
Darryl Carr
T: (984) 389-7207
E: darryl.carr@advance-auto.com
Source: Advance Auto Parts, Inc.
FAQ
What was Advance Auto Parts' net sales for Q4 2023?
How did the company's gross profit perform in Q4 2023?
What was the operating income margin for the full year 2023 according to the PR?
What was the diluted loss per share for Q4 2023?
What was the full year 2023 diluted earnings per share for Advance Auto Parts?
When will the regular cash dividend of $0.25 per share be paid?
What is the range for Advance Auto Parts' diluted EPS in the full year 2024 guidance?
When will the company host a webcast to discuss its Q4 and full year 2023 results?
