Core Insights - Advance Auto Parts plans to close 523 corporate stores, exit 204 independently owned locations, and close four distribution centers in the U.S. by mid-2025 to enhance operational productivity [1] - The company reported a decline in net sales from $2.2 billion to $2.1 billion, with comparable sales decreasing by 2.3%, while gross profit increased by 11% [3] Strategic Actions - The company has completed the sale of its wholesale operation, Worldpac, which will help simplify its business model and focus on core retail improvements [2][6] - A new three-year financial plan has been introduced, aiming to improve adjusted operating income margin by over 500 basis points by optimizing store operations, merchandising, and supply chain [4] Operational Improvements - Plans include standardizing the store operating model, improving labor productivity, and accelerating new store openings [4] - In merchandising, the company aims to enhance first costs, speed up market entry for parts, improve availability, and manage pricing and promotions to boost gross margin [5] Supply Chain Optimization - The company intends to consolidate distribution centers, open more market hub locations, and optimize transportation routes and freight [5] - The strategic plan focuses on strengthening the blended-box business to elevate core operations and achieve consistent profitable results [7]

Financial Data and Key Metrics Changes - Net sales from continuing operations were $2.1 billion, a 3% decrease compared to Q3 last year, with comparable store sales declining 2.3% due to consumer spending softness and external events [12][9] - Gross profit from continuing operations was $908 million, representing 42.3% of net sales, an improvement of approximately 540 basis points year-over-year, primarily due to stabilization of product costs [14] - Adjusted operating income from continuing operations was $16.7 million, or 0.8% of net sales, compared to negative 3.3% last year, with adjusted diluted loss per share from continuing operations at $0.04 compared to a loss of $1.19 in the prior year [15] Business Line Data and Key Metrics Changes - Both pro and DIY channels experienced low single-digit declines, with pro performing relatively better; average ticket growth was positive in both channels [13] - Strength was noted in categories such as batteries, filters, and engine management, while discretionary categories saw weaker sales [13] Market Data and Key Metrics Changes - The U.S. vehicle market continues to grow, with over 280 million cars on the road, and nearly 85% of those vehicles are at least four years old, indicating a strong demand for auto parts and maintenance [24] - Economic uncertainty is impacting consumer sentiment, which the company is planning for in its business strategy [24] Company Strategy and Development Direction - The company aims to achieve an adjusted operating margin of approximately 7% by the end of fiscal 2027, driven by improvements in merchandising, supply chain transformation, and store efficiency [6][23] - A thorough assessment of operational productivity has identified opportunities to improve profitability, including store footprint optimization and a focus on core retail fundamentals [22][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that Q3 results were below expectations due to macro headwinds and specific events like hurricanes and system outages, but expressed confidence in the strategic actions being taken [9][16] - The leadership team emphasized the importance of returning to customer-first principles and embedding industry-best practices to drive performance [25][20] Other Important Information - The successful completion of the Worldpac sale added $1.5 billion of liquidity to the balance sheet, providing a strong cash position exceeding total debt [31][71] - The company plans to close over 500 non-performing stores and exit relationships with more than 200 independent locations to optimize its asset base for long-term growth [38][41] Q&A Session Summary Question: Long-term outlook on reinvestment and vendor financing - The company confirmed it is maintaining a target of $2.8 billion in vendor financing capacity and plans to reinvest approximately $300 million annually in capital expenditures, factoring in inflation and cost savings [83][84]

The action in Advance Auto Parts, Inc. AAP has some investors and traders confused. The company released its earnings report Thursday and it was well short of estimates.But the shares are trading higher. This is why it is our Stock of the Day.The company reported a loss of four cents per share. This was well below the Street's estimates of a profit of 49 cents. The revenue was also well short of estimates. It came in at $2.15 billion. Analysts were looking for $2.65 billion.But sometimes the headlines don't ...

Advance Auto Parts said Thursday it will close about 500 stores by mid-2025 and cut some jobs under a restructuring effort, as demand for vehicle parts takes a hit from fewer consumers opting to repair their cars.Shares of the auto parts retailer were up about 2% despite also reporting a surprise third-quarter adjusted loss of 4 cents per share.Analysts on average were expecting a profit of 49 cents, according to data compiled by LSEG.Advance Auto Parts said demand for vehicle parts takes a hit from fewer c ...

Advance Auto Parts, Inc. (AAP) reported an adjusted loss of 4 cents per share for the third quarter of 2024 as against the Zacks Consensus Estimate of earnings of 52 cents. The company had incurred an adjusted loss of 82 cents in the year-ago quarter.Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.Advance Auto generated net revenues of $2.1 billion, which missed the Zacks Consensus Estimate of $2.67 billion. Comparable store sales decreased 2.3% year over year. We projected a ...

F/ADVANCE AUTO PARTS Q3 2024 RESULTS & THREE YEAR FINANCIAL PLAN NOVEMBER 14 | 2024 Forward Looking Statements and Non-GAAP 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," ...

KEY TAKEAWAYSAdvance Auto Parts shares surged after the auto retailer announced plans Thursday to close hundreds of stores as it posted a surprise quarterly loss. As part of a new three-year turnaround plan, the company intends to reduce its US footprint by shuttering 523 Advance corporate stores, exiting 204 independent locations, and closing four distribution centers.The retailer reported a surprise third-quarter loss of 10 cents per share, versus expectations by analysts polled by Visible Alpha of 52 cen ...

Advance Auto Parts (AAP) reported $2.15 billion in revenue for the quarter ended September 2024, representing a year-over-year decline of 21%. EPS of -$0.04 for the same period compares to -$0.82 a year ago.The reported revenue represents a surprise of -19.40% over the Zacks Consensus Estimate of $2.67 billion. With the consensus EPS estimate being $0.52, the EPS surprise was -107.69%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to ...

Advance Auto Parts (AAP) came out with a quarterly loss of $0.04 per share versus the Zacks Consensus Estimate of $0.52. This compares to loss of $0.82 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -107.69%. A quarter ago, it was expected that this auto parts retailer would post earnings of $0.97 per share when it actually produced earnings of $0.75, delivering a surprise of -22.68%.Over the last four quarters, the company h ...

[Executive Summary and Strategic Overview](index=1&type=section&id=Advance%20Auto%20Parts%20Reports%20Third%20Quarter%202024%20Results%20and%20Completes%20Comprehensive%20Review%20of%20Operational%20Productivity) [Q3 2024 Performance Summary](index=1&type=section&id=Third%20Quarter%202024%20Results) Q3 2024 saw net sales of $2.1B and a 2.3% comparable store sales decline, offset by improved gross profit margin to 42.3% and adjusted operating income to $16.7M Q3 2024 Financial Highlights (Continuing Operations) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2.1B | $2.2B | (4.5%) | | Comparable Store Sales | -2.3% | N/A | N/A | | Gross Profit Margin | 42.3% | 36.9% | +5.4 p.p. | | Adjusted Operating Income | $16.7M | ($74.3M) | Improvement | | Adjusted Operating Income Margin | 0.8% | (3.3%) | +4.1 p.p. | | Diluted Loss Per Share | ($0.42) | ($1.24) | Improvement | | Adjusted Diluted Loss Per Share | ($0.04) | ($1.19) | Improvement | - The significant improvement in gross profit margin was primarily due to lapping a one-time change in inventory reserves from the prior year and stabilizing product costs, which was partially offset by strategic pricing investments[4](index=4&type=chunk) - Adjusted SG&A expenses as a percentage of net sales increased to **41.5%** from **40.2%** in Q3 2023, driven by lower sales and wage investments in frontline team members[5](index=5&type=chunk) - Operating income margin was negatively impacted by approximately **125 basis points** due to atypical items like Hurricane Helene and the CrowdStrike outage, which are not included in non-GAAP adjustments[6](index=6&type=chunk) [Cash Flow and Capital Allocation](index=2&type=section&id=Cash%20Flow%20and%20Capital%20Allocation) The company generated **$81.0M** in net cash from operating activities year-to-date Q3 2024, a significant improvement, with free cash flow at an outflow of **$48.7M** Cash Flow Summary (Year-to-Date) | Metric | YTD Q3 2024 | YTD Q3 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $81.0M | ($28.3M) | | Free Cash Flow | ($48.7M) | ($202.5M) | - A regular cash dividend of **$0.25 per share** was declared on October 29, 2024, payable on January 24, 2025[9](index=9&type=chunk) [Strategic Plan and Financial Outlook](index=4&type=section&id=Strategic%20Priorities%20and%20Financial%20Objectives) [Strategic Priorities and Asset Optimization](index=4&type=section&id=Strategic%20Priorities) The company launched a new strategic plan targeting over **500 basis points** of adjusted operating income margin expansion by FY2027, including significant asset optimization - Completed the sale of its Worldpac business for approximately **$1.5 billion** in cash, marking a significant strategic shift[2](index=2&type=chunk) - Announced a significant asset optimization program targeting the reduction of **500 corporate stores**, **200 independently owned locations**, and **four distribution centers** by mid-2025[1](index=1&type=chunk)[14](index=14&type=chunk) - The strategic plan is anchored on three pillars: - **Store operations:** Reducing asset footprint, standardizing operating models, and accelerating new store openings - **Merchandising excellence:** Improving sourcing, assortment management, and pricing - **Supply chain:** Consolidating distribution centers, opening market hubs, and optimizing transportation[14](index=14&type=chunk) [Full Year 2024 Guidance](index=3&type=section&id=Full%20Year%202024%20Guidance) For FY2024, the company projects net sales of approximately **$9.0B**, comparable store sales around **-1.0%**, and adjusted operating income margin between **0.25%** and **0.75%** Full Year 2024 Guidance (Continuing Operations) | Metric | Guidance Range | | :--- | :--- | | Net Sales | Approx. $9,000M | | Comparable Store Sales | Approx. (1.0%) | | Adjusted Operating Income Margin | 0.25% - 0.75% | | Adjusted Diluted EPS | ($0.60) - $0.00 | | Capital Expenditures | $175M - $225M | | Free Cash Flow | Approx. flat | [Preliminary FY 2025 Guidance and FY 2027 Objectives](index=5&type=section&id=Financial%20Objectives) The company set FY2027 objectives including **$9.0B** net sales and **7.0%** adjusted operating income margin, with preliminary FY2025 guidance of **$8.4B-$8.6B** net sales Financial Objectives and Preliminary 2025 Guidance | Metric | Preliminary FY 2025 Guidance | FY 2027 Objectives | | :--- | :--- | :--- | | Net Sales | $8,400M - $8,600M | Approx. $9,000M | | Comparable Sales Growth | 0.50% - 1.50% | Positive low-single-digit % | | New Store Growth | 30 new stores | 50 to 70 new stores | | Adjusted Operating Income Margin | 2.00% - 3.00% | Approx. 7.00% | | Leverage Ratio (Adj. debt/Adj. EBITDAR) | 3.0x – 4.0x | Approx. 2.5x | - The company has identified opportunities to improve adjusted operating income margin by more than **500 basis points** through fiscal 2027[13](index=13&type=chunk) [Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of October 5, 2024, total assets were **$12.47B**, with a significant increase in current assets held for sale to **$2.14B**, and total stockholders' equity at **$2.60B** Balance Sheet Summary (in thousands) | Account | Oct 5, 2024 | Dec 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $7,493,767 | $6,377,021 | | Total Assets | $12,468,184 | $12,276,326 | | Total Current Liabilities | $5,593,541 | $5,307,405 | | Long-Term Debt | $1,788,513 | $1,786,361 | | Total Stockholders' Equity | $2,597,680 | $2,519,728 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2024, the company reported a net loss from continuing operations of **$25.4M** on net sales of **$2.15B**, an improvement from the prior year's **$74.2M** loss Statement of Operations Summary - Q3 (in thousands) | Account | Twelve Weeks Ended Oct 5, 2024 | Twelve Weeks Ended Oct 7, 2023 | | :--- | :--- | :--- | | Net Sales | $2,147,991 | $2,218,205 | | Gross Profit | $907,898 | $817,567 | | Operating Income (Loss) | $403 | ($78,578) | | Net (Loss) Income from Continuing Operations | ($25,363) | ($74,186) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the forty weeks ended October 5, 2024, net cash from operating activities was **$81.0M**, a significant improvement from the **$28.3M** used in the prior year Cash Flow Summary - YTD (in thousands) | Account | Forty Weeks Ended Oct 5, 2024 | Forty Weeks Ended Oct 7, 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities (Continuing) | $81,019 | ($28,314) | | Net Cash used in Investing Activities (Continuing) | ($116,482) | ($172,185) | | Net Cash (used in) provided by Financing Activities | ($57,732) | $204,047 | [Reconciliation of Non-GAAP Financial Measures](index=13&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) [Reconciliation of Adjusted Net Income and EPS](index=13&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income%20and%20Adjusted%20EPS) The company adjusts GAAP net income and EPS to exclude non-recurring items, resulting in a Q3 2024 adjusted net loss of **$3.2M** and adjusted diluted loss per share of **$0.04** - Non-GAAP measures exclude transformation expenses (e.g., distribution network optimization), executive turnover costs, and non-recurring tax expenses to better reflect base operations[31](index=31&type=chunk) Q3 2024 GAAP to Non-GAAP Reconciliation (in thousands) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Net Loss from Continuing Operations | ($25,363) | $22,199 | ($3,164) | | Diluted Loss Per Share | ($0.42) | $0.38 | ($0.04) | [Reconciliation of Adjusted SG&A and Adjusted Operating Income](index=14&type=section&id=Reconciliation%20of%20Adjusted%20SG%26A%20and%20Adjusted%20Operating%20Income) Q3 2024 GAAP operating income of **$0.4M** was adjusted by **$16.3M** in SG&A costs, resulting in a non-GAAP adjusted operating income of **$16.7M** Q3 2024 Operating Income Reconciliation (in thousands) | Metric | GAAP | SG&A Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Operating Income | $403 | $16,265 | $16,668 | [Reconciliation of Free Cash Flow](index=14&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) Free cash flow, a non-GAAP measure, was an outflow of **$48.7M** for the forty weeks ended October 5, 2024, derived from **$81.0M** operating cash flow YTD 2024 Free Cash Flow Reconciliation (in thousands) | Metric | Amount | | :--- | :--- | | Cash flows from operating activities (continuing) | $81,019 | | Purchases of property and equipment | ($129,714) | | **Free cash flow** | **($48,695)** | [Store Information](index=16&type=section&id=Store%20Information) [Store Count Activity](index=16&type=section&id=Store%20Count%20Activity) During the forty weeks ended October 5, 2024, Advance Auto Parts experienced a net decrease of **6 stores**, resulting in an ending count of **4,781** locations Store Count Change (Forty Weeks Ended Oct 5, 2024) | Activity | Count | | :--- | :--- | | Beginning Store Count (Dec 30, 2023) | 4,786 | | New Stores Opened | 23 | | Stores Closed | (29) | | **Ending Store Count (Oct 5, 2024)** | **4,781** |