Advance Auto Parts, Inc. (NYSE:AAP), the largest automotive
aftermarket parts provider in North America, serving both
professional installer and do-it-yourself customers, today
announced its financial results for the fourth quarter ended
January 3, 2015. Fourth quarter comparable cash earnings per
diluted share (Comparable Cash EPS) were $1.37, an increase of 46%
versus the fourth quarter last year. These fourth quarter
comparable results exclude $0.08 of amortization of acquired
intangible assets, integration costs of $0.30 associated with the
acquisition of General Parts International, Inc. (General Parts),
$0.01 of integration costs associated with the integration of
B.W.P. Distributors, Inc. (BWP) and $0.17 from an additional week
of business (53rd week). Full year Comparable Cash EPS of $7.59
increased 33.9% from Fiscal 2013 and exclude $0.36 of amortization
of acquired intangible assets, integration costs of $0.61
associated with the acquisition of General Parts, $0.08 of
integration costs associated with the integration of BWP and $0.17
from the 53rd week.
Comparable Fourth Quarter Performance Summary
(1,2) Twelve Weeks Ended
Fifty-Two Weeks Ended
January 3, 2015
December 28, 2013
January 3, 2015
December 28, 2013
Comparable Sales (in millions) $ 2,086.8 $ 1,408.8 $
9,693.5 $ 6,493.8
Comp Store Sales % 1.1 % 0.1 % 2.0
% (1.5 %)
Comparable Gross Profit (in millions) $
936.2 $ 701.8 $ 4,385.8 $ 3,252.1
Comparable SG&A
(in millions) $ 764.5 $ 587.9 $ 3,430.3 $ 2,558.8
Comparable Operating Income (in millions) $ 171.7 $ 113.8 $
955.6 $ 693.3
Comparable Cash EPS $ 1.37 $ 0.94 $
7.59 $ 5.67
Avg Diluted Shares (in thousands) 73,494
73,248 73,414 73,414 (1)
Fiscal 2014 includes certain
non-comparable expenses and an additional week of business (53rd
week). Comparable Sales and Comparable Gross Profit for the twelve
and fifty-two weeks ended January 3, 2015 have been reported on a
comparable basis to exclude the impact of the 53rd week. The
Comparable SG&A, Comparable Operating Income and Comparable
Cash EPS for the twelve and fifty-two weeks ended January 3, 2015
have been reported on a comparable basis to exclude BWP integration
costs of $0.8 million and $9.0 million, respectively, General Parts
integration costs of $36.0 million and $73.2 million, respectively,
General Parts amortization of acquired intangible assets of $9.9
million and $42.7 million, respectively, and the impact of the 53rd
week. The Comparable SG&A, Comparable Operating Income and
Comparable Cash EPS for the twelve and fifty-two weeks ended
December 28, 2013 have been reported on a comparable basis to
exclude transaction expenses related to our General Parts
acquisition of $21.9 million and $27.0 million, respectively, and
BWP integration costs of $3.1 million and $8.0 million,
respectively. Included in the transaction costs in each period
presented is $2.0 million that is classified as interest expense.
For a better understanding of the Company's comparable results,
refer to the presentation of the respective financial measures on a
GAAP basis and reconciliation of the financial results reported on
a comparable basis to the GAAP basis in the accompanying financial
tables in this press release.
(2)
Consistent with its comparable store sales
policy, the Company did not include the sales from General Parts in
its comparable store sales results in 2014.
“I would like to thank all our Team Members for their hard work
during the fourth quarter and the 2014 fiscal year,” said Darren R.
Jackson, Chief Executive Officer. “Our organizational focus
delivered on our base business outcomes with record operating
profits and full year Comparable Cash EPS of $7.59 while
successfully achieving the first full year of integration
deliverables. We look forward to 2015 with optimism as we continue
the integration of General Parts and build on our performance from
2014.”
Fourth Quarter 2014 Highlights
On a comparable basis, total sales for the fourth quarter
increased 48.1% to $2.09 billion, as compared with total sales
during the fourth quarter of fiscal 2013 of $1.41 billion. The
sales increase was driven by the acquisition of General Parts, a
comparable store sales increase of 1.1% and the addition of new
stores over the past 12 months. On a GAAP basis, total sales for
the fourth quarter increased 58.8% to $2.24 billion, as compared
with total sales during the fourth quarter of fiscal 2013 of $1.41
billion. On a comparable basis, total sales increased 49.3% to
$9.69 billion for fiscal 2014, compared with total sales of $6.49
billion over the same period last year. On a GAAP basis, total
sales increased 51.6% to $9.84 billion for fiscal 2014, compared
with total sales of $6.49 billion over the same period last
year.
The Company's Comparable Gross Profit rate was 44.9% of sales
during the fourth quarter as compared to 49.8% during the fourth
quarter last year. The 495 basis-point decrease in gross profit
rate was primarily due to the higher mix of commercial sales which
has a lower gross margin rate resulting from the acquisition of
General Parts partially offset by acquisition synergy savings in
the quarter. On a GAAP basis, the Company's gross profit rate was
44.9% of sales during the fourth quarter as compared to 49.8%
during the fourth quarter last year. For fiscal 2014, the Company's
comparable gross profit rate was 45.2%, a 484 basis-point decrease
over the same period last year. On a GAAP basis, the Company's
comparable gross profit rate was 45.2% for fiscal 2014, a 484
basis-point decrease over the same period last year.
The Company's Comparable SG&A rate was 36.6% of sales during
the fourth quarter as compared to 41.7% during the same period last
year. The 510 basis-point decrease was primarily the result of the
acquired General Parts business having lower SG&A costs
combined with lower incentive compensation expenses. On a GAAP
basis, the Company's SG&A rate was 38.3% of sales during the
fourth quarter as compared to 43.4% during the same period last
year. For fiscal 2014, the Company's Comparable SG&A rate was
35.4% versus 39.4% during fiscal 2013. For fiscal 2014, the
Company's GAAP SG&A rate was 36.6% versus 39.9% during fiscal
2013.
The Company's Comparable Operating Income was $171.7 million
during the fourth quarter, an increase of 50.8% versus the fourth
quarter of fiscal 2013. As a percentage of sales, Comparable
Operating Income in the fourth quarter was 8.2% compared to 8.1%
during the fourth quarter of fiscal 2013. On a GAAP basis, the
Company's operating income during the fourth quarter of $146.1
million increased 60.8% versus the fourth quarter of fiscal 2013.
On a GAAP basis, the Operating Income rate was 6.5% during the
fourth quarter as compared to 6.4% during the fourth quarter of
fiscal 2013. For fiscal 2014, the Company's Comparable Operating
Income rate was 9.9% versus 10.7% during fiscal 2013. For fiscal
2014, the Company's GAAP Operating Income rate was 8.7% versus
10.2% during fiscal 2013.
Operating cash flow increased approximately 30.0% to $709.0
million in fiscal 2014 from $545.3 million in fiscal 2013. Free
cash flow increased to $480.5 million in fiscal 2014 from $349.5
million in fiscal 2013. Capital expenditures in fiscal 2014 were
$228.4 million as compared to $195.8 million for fiscal 2013.
“In our first year as a combined company, we are pleased with
our overall performance delivering positive comparable store sales,
strong growth in free cash flow and approximately 38% growth in
Comparable Operating Income dollars in fiscal 2014,” said Mike
Norona, Executive Vice President and Chief Financial Officer. “The
strength of our commercial business combined with achievement of
our targeted synergies and continued disciplined focus on expense
management throughout the year allowed us to increase our fiscal
2014 comparable earnings per share 33.9% over last year.”
Store Information
As of January 3, 2015, the Company operated 5,261 stores
and 111 Worldpac branches and served approximately 1,325
independently-owned Carquest stores. The below table summarizes the
changes in the number of the company-operated stores and branches
during the fifty-three weeks ended January 3, 2015.
AAP AI
BWP CARQUEST WORLDPAC
Total December 28, 2013 3,741
217 91 — — 4,049 New 126 5 — 12
8 151 Closed (6 ) (1 ) — (12 ) — (19 ) Acquired — — — 1,233 103
1,336 Consolidated (2 ) (11 ) (34 ) (98 ) — (145 ) Converted 29
— (19 ) (10 ) — —
January 3,
2015 3,888 210 38
1,125 111 5,372
2015 Annual Financial Outlook Key Assumptions
Fiscal 2015 financial outlook and certain key assumptions
provided below are on a 52-week basis versus 53 weeks in fiscal
2014.
New Stores 100 to 120 new stores
including Worldpac Comparable Store Sales(1)
Low Single Digits Comparable Cash EPS((2))
• including net synergies of $45 - $55
million related to the acquisition of GPI(3)
• excluding the amortization of intangible
assets associated with the acquisition of GPI
• excluding one-time expenses to achieve
synergies related to the acquisition of GPI
$8.35 - $8.55 Income tax rate(4)
37.5% to 38.0% One-time Expenses to Achieve Synergies(5)
Approximately $75 - $85 million Capital
Expenditures(6) $325 to $340 million Free Cash
Flow Minimum $475 million Diluted Share Count
Approximately 73.5 million shares (1)
Advance calculates comparable store sales
based on the change in store sales starting once a store has been
open for 13 complete accounting periods (approximately one year)
and by including e-commerce sales. We include sales from relocated
stores in comparable store sales from the original date of opening.
Acquired stores are included in our comparable store sales once the
stores have completed 13 complete accounting periods after the
acquisition date (approximately one year). Accordingly, the
previously acquired GPI stores and branches will be included in
2015 comparable store sales beginning with our second fiscal period
of 2015. Sales to independently-owned CarQuest locations will not
be included in comparable store sales. The 2015 comparable store
sales estimates include the impact of store consolidations.
(2)
Comparable Cash EPS is defined as Cash EPS
in addition to the exclusion of other non-comparable items,
including one-time expenses to achieve synergies related to the GPI
acquisition and integration costs associated with the integration
of BWP. Cash EPS is EPS excluding the amortization of GPI's
intangible assets. Both Comparable Cash EPS and Cash EPS are
non-GAAP measures. Because of the forward-looking nature of these
non-GAAP financial measures, specific quantifications of the
amounts that would be required to reconcile these non-GAAP
financial measures to their most directly comparable GAAP financial
measures are not available at this time. Management believes
Comparable Cash EPS is an important measure in assessing the
overall performance of the business and utilizes this metric in its
ongoing reporting. On that basis, Management believes it is useful
to provide Comparable Cash EPS to investors and prospective
investors. Comparable Cash EPS and Cash EPS might not be calculated
in the same manner as, and thus might not be comparable to,
similarly titled measures reported by other companies.
(3)
Total net run rate cost synergies related
to the acquisition of GPI are estimated to be $160 million by
approximately the end of the third year following the close of the
acquisition. These net synergies will be driven primarily through
the areas of procurement as well as corporate, store and supply
chain efficiencies.
(4)
The estimated tax rate for fiscal 2015 is
higher than fiscal 2014 due to specific favorable items in 2014
that we do not expect to reoccur in 2015.
(5)
Total one-time expenses to achieve
synergies related to the acquisition of GPI are estimated to be
approximately $190 million over a five year period following the
close of the acquisition with the majority of the costs being
incurred within the first three years.
(6)
The capital expenditures estimate includes
integration capital for 2015.
“Our 2015 annual comparable cash EPS outlook will be in the
range of $8.35 to $8.55," said Mike Norona, Executive Vice
President and Chief Financial Officer. “We will continue to
build on our 2014 progress and leverage the size and scale of our
company as we focus on continued sales growth, serving our
customers and improving our operating profit in 2015.”
Dividend
On February 11, 2015, the Company's Board of Directors
declared a regular quarterly cash dividend of $0.06 per share to be
paid on April 3, 2015 to stockholders of record as of
March 20, 2015.
Investor Conference Call
The Company will host a conference call on Thursday, February
12, 2015, at 10:30 a.m. Eastern Time to discuss its quarterly
results. To listen to the live call, please log on to the Company's
website, www.AdvanceAutoParts.com, or dial (866) 908-1AAP. The call
will be archived on the Company's website until February 12,
2016.
About Advance Auto Parts
Headquartered in Roanoke, Va., Advance Auto Parts, Inc., the
largest automotive aftermarket parts provider in North America,
serves both the professional installer and do-it-yourself
customers. As of January 3, 2015 Advance operated 5,261 stores
and 111 Worldpac branches and served approximately 1,325
independently-owned Carquest branded stores in the United States,
Puerto Rico, the U.S. Virgin Islands and Canada. Advance employs
approximately 73,000 Team Members. Additional information about the
Company, employment opportunities, customer services, and on-line
shopping for parts, accessories and other offerings can be found on
the Company's website at www.AdvanceAutoParts.com.
Forward Looking Statements
Certain statements contained in this release are forward-looking
statements, as that term is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements address
future events or developments, and typically use words such as
believe, anticipate, expect, intend, plan, forecast, outlook or
estimate. These forward looking statements include, but are not
limited to, guidance for 2015 financial performance, statements
regarding the benefits and other effects of the acquisition of
General Parts; the combined company’s plans, objectives and
expectations; expected growth and future performance of AAP,
including store growth, capital expenditures, comparable store
sales, gross profit rate, SG&A, operating income, free cash
flow, income tax rate, integration costs for BWP and General Parts,
synergies, expenses to achieve synergies, comparable cash earnings
per diluted share for fiscal year 2015 and other statements that
are not historical facts. These forward-looking statements are
subject to significant risks, uncertainties and assumptions, and
actual future events or results may differ materially from such
forward-looking statements. Such differences may result from, among
other things, the risk that the benefits of the General Parts
acquisition, including synergies, may not be fully realized or may
take longer to realize than expected; the possibility that the
General Parts acquisition may not advance AAP’s business strategy;
the risk that AAP may experience difficulty integrating General
Part’s employees, business systems and technology; the potential
diversion of AAP’s management’s attention from AAP’s other
businesses resulting from the General Parts acquisition; the impact
of the General Parts acquisition on third-party relationships,
including customers, wholesalers, independently owned and jobber
stores and suppliers; changes in regulatory, social and political
conditions, as well as general economic conditions; competitive
pressures; demand for AAP’s and General Part’s products; the market
for auto parts; the economy in general; inflation; consumer debt
levels; the weather; business interruptions; information technology
security; availability of suitable real estate; dependence on
foreign suppliers; and other factors disclosed in AAP’s 10-K for
the fiscal year ended December 28, 2013 and other filings made by
AAP with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking
statements. AAP intends these forward-looking statements to speak
only as of the time of this communication and does not undertake to
update or revise them as more information becomes available.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (in thousands)
(unaudited)
January 3, 2015
December 28, 2013
Assets
Current assets: Cash and cash equivalents $ 104,671 $
1,112,471 Receivables, net 579,825 277,595 Inventories, net
3,936,955 2,556,557 Other current assets 119,589 42,761 Total
current assets 4,741,040 3,989,384
Property and
equipment, net 1,432,030 1,283,970
Assets held for sale
615 2,064
Goodwill 995,426 199,835
Intangible assets,
net 748,125 49,872
Other assets, net 45,122 39,649 $
7,962,358 $ 5,564,774
Liabilities and
Stockholders' Equity
Current liabilities: Current portion of long-term
debt $ 582 $ 916 Accounts payable 3,095,365 2,180,614 Accrued
expenses 520,673 428,625 Other current liabilities 126,446 154,630
Total current liabilities 3,743,066 2,764,785
Long-term
debt 1,636,311 1,052,668
Other long-term liabilities
580,069 231,116
Total stockholders' equity 2,002,912
1,516,205 $ 7,962,358 $ 5,564,774
NOTE: These preliminary condensed consolidated balance sheets
have been prepared on a basis consistent with our previously
prepared balance sheets filed with the Securities and Exchange
Commission for our prior quarter and annual report, but do not
include the footnotes required by generally accepted accounting
principles, or GAAP, for complete financial statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Fiscal
Fourth Quarters Ended January 3, 2015 and December 28,
2013 (in thousands, except per share data) (unaudited)
Q4
2014 Q4 2013 Comparable Adjustments (a)
As Reported 53rd Week
IntegrationCosts
Comparable As Reported
ComparableAdjustments(a)
Comparable (13 weeks) (12 weeks) (12 weeks) (12 weeks) Net
sales $ 2,237,209 $ (150,386 ) $ — $ 2,086,823 $ 1,408,813 $ — $
1,408,813 Cost of sales 1,233,268 (82,606 ) —
1,150,662 707,036 — 707,036 Gross
profit 1,003,941 (67,780 ) — 936,161 701,777 — 701,777 Selling,
general and administrative expenses 857,864 (46,720 )
(46,655 ) 764,489 610,933 (23,002 ) 587,931
Operating income 146,077 (21,060 ) 46,655 171,672
90,844 23,002 113,846 Other, net:
Interest expense (17,002 ) 1,291 — (15,711 ) (9,986 ) 1,987 (7,999
) Other income, net 1,883 (212 ) — 1,671 1,009
— 1,009 Total other, net (15,119 ) 1,079
— (14,040 ) (8,977 ) 1,987 (6,990 ) Income
before provision for income taxes 130,958 (19,981 ) 46,655 157,632
81,867 24,989 106,856 Provision for income taxes 46,524
(7,610 ) 17,729 56,643 32,600 5,509
38,109 Net income $ 84,434 $ (12,371 ) $ 28,926
$ 100,989 $ 49,267 $ 19,480 $ 68,747
Basic earnings per share (b) $ 1.15 $ (0.17 ) $ 0.39
$ 1.37 $ 0.68 $ 0.27 $ 0.94 Diluted earnings per share (b) $ 1.15 $
(0.17 ) $ 0.39 $ 1.37 $ 0.67 $ 0.27 $ 0.94 Average common
shares outstanding (b) 72,997 72,997 72,997 72,997 72,761 72,761
72,761 Average diluted common shares outstanding (b) 73,494 73,494
73,494 73,494 73,248 73,248 73,248
(a)
The comparable adjustments to Q4 2014
include adjustments to remove the impact of the 53rd week of
operations and adjustments to Selling, general and administrative
expenses for BWP integration costs of $0.8 million, General Parts
integration costs of $36.0 million and General Parts amortization
of $9.9 million related to the acquired intangible assets. The
comparable adjustments for Q4 2013 includes transaction expenses
related to our General Parts acquisition of $21.9 million, of which
$2.0 million was interest related, and BWP integration costs of
$3.1 million.
(b)
Average common shares outstanding is
calculated based on the weighted average number of shares
outstanding during the quarter. At January 3, 2015 and December 28,
2013, we had 73,074 and 72,840 shares outstanding,
respectively.
NOTE: These preliminary condensed consolidated statements of
operations have been prepared on a basis consistent with our
previously prepared statements of operations filed with the
Securities and Exchange Commission for our prior quarter and annual
report, with the exception of the footnotes required by GAAP for
complete financial statements and inclusion of certain non-GAAP
adjustments and measures as described in footnote (a) above.
Management believes the reporting of comparable results is
important in assessing the overall performance of the business and
is therefore useful for investors and prospective investors.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations Fiscal
Years Ended January 3, 2015 and December 28, 2013 (in
thousands, except per share data) (unaudited)
2014 2013
Comparable Adjustments (a) As Reported 53rd
Week
IntegrationCosts
Comparable As Reported
ComparableAdjustments
Comparable (53 weeks) (52 weeks) (52 weeks) (52 weeks) Net
sales $ 9,843,861 $ (150,386 ) $ — $ 9,693,475 $ 6,493,814 $ — $
6,493,814 Cost of sales 5,390,248 (82,606 ) —
5,307,642 3,241,668 — 3,241,668 Gross
profit 4,453,613 (67,780 ) — 4,385,833 3,252,146 — 3,252,146
Selling, general and administrative expenses 3,601,903
(46,720 ) (124,930 ) 3,430,253 2,591,828 (32,987 )
2,558,841 Operating income 851,710 (21,060 ) 124,930
955,580 660,318 32,987 693,305
Other, net: Interest expense (73,408 ) 1,291 — (72,117 ) (36,618 )
1,987 (34,631 ) Other income, net 3,092 (212 ) —
2,880 2,698 — 2,698 Total other, net
(70,316 ) 1,079 — (69,237 ) (33,920 ) 1,987
(31,933 ) Income before provision for income taxes 781,394 (19,981
) 124,930 886,343 626,398 34,974 661,372 Provision for income taxes
287,569 (7,610 ) 47,473 327,432 234,640
9,268 243,908 Net income $ 493,825 $ (12,371 )
$ 77,457 $ 558,911 $ 391,758 $ 25,706 $
417,464 Basic earnings per share (b) $ 6.75 $ (0.17 )
$ 1.06 $ 7.64 $ 5.36 $ 0.35 $ 5.71 Diluted earnings per share (b) $
6.71 $ (0.17 ) $ 1.05 $ 7.59 $ 5.32 $ 0.35 $ 5.67 Average
common shares outstanding (b) 72,932 72,932 72,932 72,932 72,930
72,930 72,930 Average diluted common shares outstanding (b) 73,414
73,414 73,414 73,414 73,414 73,414 73,414
(a)
The comparable adjustments to 2014 include
adjustments to remove the impact of the 53rd week of operations and
adjustments to Selling, general and administrative expenses for BWP
integration costs of $9.0 million, General Parts integration costs
of $73.2 million and General Parts amortization of $42.7 million
related to the acquired intangible assets. The comparable
adjustments for 2013 includes transaction expenses related to our
General Parts acquisition of $27.0 million, of which $2.0 million
was interest related, and BWP integration costs of $8.0
million.
(b)
Average common shares outstanding is
calculated based on the weighted average number of shares
outstanding during the year-to-date period. At January 3, 2015 and
December 28, 2013, we had 73,074 and 72,840 shares outstanding,
respectively.
NOTE: These preliminary condensed consolidated statements of
operations have been prepared on a basis consistent with our
previously prepared statements of operations filed with the
Securities and Exchange Commission for our prior quarter and annual
report, with the exception of the footnotes required by GAAP for
complete financial statements and inclusion of certain non-GAAP
adjustments and measures as described in footnote (a) above.
Management believes the reporting of comparable results is
important in assessing the overall performance of the business and
is therefore useful for investors and prospective investors.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows Fiscal
Years Ended January 3, 2015 and December 28, 2013 (in
thousands) (unaudited)
January 3, 2015
December 28, 2013
Cash flows from operating activities: (53 weeks) (52
weeks) Net income $ 493,825 $ 391,758 Depreciation and amortization
284,693 207,795 Share-based compensation 21,705 13,191 Provision
(benefit) for deferred income taxes 48,468 (2,237 ) Excess tax
benefit from share-based compensation (10,487 ) (16,320 ) Other
non-cash adjustments to net income 15,912 3,278 (Increase) decrease
in: Receivables, net (48,209 ) (32,428 ) Inventories, net (227,657
) (203,513 ) Other assets (63,482 ) 11,011 Increase (decrease) in:
Accounts payable 216,412 113,497 Accrued expenses (28,862 ) 63,346
Other liabilities 6,673 (4,128 ) Net cash provided by
operating activities 708,991 545,250
Cash flows from
investing activities: Purchases of property and equipment
(228,446 ) (195,757 ) Business acquisitions, net of cash acquired
(2,060,783 ) (186,137 ) Sale of certain assets of acquired business
— 19,042 Proceeds from sales of property and equipment 992
745 Net cash used in investing activities (2,288,237 )
(362,107 )
Cash flows from financing activities: Increase
(decrease) in bank overdrafts 16,219 (2,926 ) Issuance of senior
unsecured notes — 448,605 Payment of debt related costs — (8,815 )
Net borrowings on credit facilities 583,400 — Dividends paid
(17,580 ) (17,574 ) Proceeds from the issuance of common stock,
primarily exercise of stock options 6,578 3,611 Tax withholdings
related to the exercise of stock appreciation rights (7,102 )
(21,856 ) Excess tax benefit from share-based compensation 10,487
16,320 Repurchase of common stock (5,154 ) (80,795 ) Contingent
consideration related to previous business acquisitions (10,047 )
(4,726 ) Other (890 ) (627 ) Net cash provided by financing
activities 575,911 331,217 Effect of exchange
rate changes on cash (4,465 ) —
Net (decrease)
increase in cash and cash equivalents (1,007,800 ) 514,360
Cash and cash equivalents, beginning of period 1,112,471
598,111
Cash and cash equivalents, end of
period $ 104,671 $ 1,112,471
NOTE: These preliminary condensed consolidated statements of
cash flows have been prepared on a consistent basis with previously
prepared statements of cash flows filed with the Securities and
Exchange Commission for our prior quarter and annual report, but do
not include the footnotes required by GAAP for complete financial
statements.
Advance Auto Parts, Inc. and Subsidiaries
Supplemental Financial Schedules Fiscal Years Ended
January 3, 2015 and December 28, 2013 (in thousands)
(unaudited)
Reconciliation of
Free Cash Flow:
January 3, 2015
December 28, 2013
(53 weeks) (52 weeks) Cash flows from operating activities $
708,991 $ 545,250 Purchases of property and equipment (228,446 )
(195,757 ) Free cash flow $ 480,545 $ 349,493
NOTE: Management uses free cash flow as a measure of our
liquidity and believes it is a useful indicator to stockholders of
our ability to implement our growth strategies and service our
debt. Free cash flow is a non-GAAP measure and should be considered
in addition to, but not as a substitute for, information contained
in our condensed consolidated statement of cash flows.
Adjusted Debt to
EBITDAR:
(In thousands, except adjusted debt to EBITDAR
ratio)
January 3, 2015 December
28, 2013 (53 weeks) (52 weeks) Total debt
$
1,636,893
$
1,053,584
Add: Capitalized lease obligation (rent expense * 6)
3,038,904 2,145,654 Adjusted debt 4,675,797 3,199,238
Operating income 851,710 660,318 Add: Comparable adjustments
(a) 82,234 32,987 Depreciation and amortization 284,693
207,795 EBITDA 1,218,637 901,100 Rent expense (less
favorable lease amortization of $4,972) 506,484
357,609 EBITDAR
$
1,725,121
$
$1,258,709
Adjusted Debt to EBITDAR
2.7 2.5
(a)
The comparable adjustments to 2014 include
BWP integration costs of $9.0 million, and General Parts
integration costs of $73.2 million. The comparable adjustments to
2013 include transaction expenses related to our General Parts
acquisition of $25.0 million and BWP integration costs of $8.0
million.
NOTE: Management believes its Adjusted Debt to EBITDAR ratio
(“leverage ratio”) is a key financial metric and believes its debt
levels are best analyzed using this measure. The Company’s goal is
to quickly pay down debt resulting from the GPI acquisition, get
back to a 2.5 times leverage ratio and to maintain an investment
grade rating. 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’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.
Fourth Quarter
Performance Summary on a GAAP
Basis(a):
Quarters Ended
Fiscal Years Ended January 3, 2015
December 28, 2013
January 3, 2015 December 28, 2013 (13
weeks) (12 weeks) (53 weeks) (52 weeks)
Sales (in millions)
$ 2,237.2 $ 1,408.8 $ 9,843.9 $ 6,493.8
Comp Store Sales
% 1.1 % 0.1 % 2.0 % (1.5 %)
Gross Profit (in
millions) $ 1,003.9 $ 701.8 $ 4,453.6 $ 3,252.1
SG&A (in millions) $ 857.9 $ 610.9 $ 3,601.9 $ 2,591.8
Operating Income (in millions) $ 146.1 $ 90.8 $ 851.7
$ 660.3
Diluted EPS $ 1.15 $ 0.67 $ 6.71 $ 5.32
Avg Diluted Shares (in thousands) 73,494 73,248
73,414 73,414
(a)
These financial measures for the thirteen
and fifty-three weeks ended January 3, 2015 have been reported on a
GAAP basis which includes the impact of a 53rd week of operations,
BWP integration costs of $0.8 million and $9.0 million,
respectively, General Parts integration costs of $36.0 million and
$73.2 million, respectively, and General Parts amortization of
acquired intangible assets of $9.9 million and $42.7 million,
respectively. These financial measures for the twelve and fifty-two
weeks ended December 28, 2013 have been reported on a GAAP basis
which includes transaction expenses related to our General Parts
acquisition of $21.9 million and $27.0 million, respectively, and
the impact of BWP integration costs of $3.1 million and $8.0
million, respectively. Included in the transaction costs in each
period presented is $2.0 million that is classified as interest
expense. These financial measures should be read in conjunction
with our financial measures presented on a comparable basis earlier
in this press release. Management believes the reporting of
financial results on a non-GAAP basis to remain comparable is
important in assessing the overall performance of the business and
is therefore useful for investors and prospective investors.
Advance Auto Parts, Inc.Media:Shelly Whitaker, APR,
540-561-8452shelly.whitaker@advanceautoparts.comorInvestors:Zaheed
Mawani, 952-715-5097zaheed.mawani@advanceautoparts.com
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