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** |

Advance Auto Parts, Inc. AAP will release earnings results for its third quarter, before the opening bell on Thursday, Nov. 14.Analysts expect the Raleigh, North Carolina-based company to report quarterly earnings at 54 cents per share, versus a year-ago loss of 82 cents per share. Advance Auto Parts projects to report revenue of $2.67 billion for the quarter, compared to $2.72 billion a year earlier, according to data from Benzinga Pro.On Nov. 4, Advance Auto Parts announced the close of the sale of Worldp ...

Analysts on Wall Street project that Advance Auto Parts (AAP) will announce quarterly earnings of $0.52 per share in its forthcoming report, representing an increase of 163.4% year over year. Revenues are projected to reach $2.67 billion, declining 2% from the same quarter last year.The consensus EPS estimate for the quarter has undergone an upward revision of 28.8% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial est ...

Advance Auto Parts (AAP) is expected to deliver a year-over-year increase in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on No ...

Core Viewpoint - Advance Auto Parts is undergoing a significant turnaround plan, bolstered by a $1.2 billion cash influx from the sale of its Worldpac business, which is expected to enhance its financial flexibility and operational efficiency [1][2][4]. Group 1: Company Overview - Advance Auto Parts has a market capitalization of $2.4 billion, significantly smaller than competitors Autozone and O'Reilly, which have market caps of $53 billion and $71 billion respectively [1]. - Advance operates nearly 4,800 locations, while Autozone and O'Reilly have approximately 7,400 and 6,200 locations respectively, indicating that the size disparity does not fully justify the market valuation differences [1]. Group 2: Financial Transactions - Advance sold its Worldpac business for $1.5 billion, netting approximately $1.2 billion after transaction expenses, which is about half of its current market cap [2]. - Worldpac generated $2.1 billion in trailing-12-month revenue and $100 million in EBITDA, leading to a sales price of 0.7 times its sales and 15 times its EBITDA [2]. Group 3: Performance Metrics - Advance's stock trades at 0.2 times sales and about 7 times EBITDA, indicating that the sale of Worldpac was at a premium compared to its current stock valuation [3]. - Over the past decade, Advance has averaged an operating margin of about 6%, significantly lower than Autozone and O'Reilly, which have maintained margins between 18% and 20% [4]. Group 4: Strategic Changes - The new CEO, Shane O'Kelly, is focusing on restructuring the supply chain to address profitability issues, which is seen as crucial for improving returns for shareholders [5][6]. - If Advance can achieve a 10% operating margin, it could generate close to $1 billion in annual profits, with potential for the stock to quadruple in value if valued at 10 times its operating profit [5]. Group 5: Financial Position - Advance has approximately $1.8 billion in long-term debt and less than $500 million in cash and equivalents, indicating a challenging net-debt position [6]. - The sale of Worldpac is expected to improve Advance's balance sheet and provide management with the necessary flexibility to make strategic decisions for long-term success [6].

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Core Viewpoint - Advance Auto Parts is facing significant challenges, including an 83% decline in stock price since early 2022, but potential opportunities may arise if the company successfully implements its restructuring efforts [1][2]. Group 1: Financial Performance - The company reported a full-year EPS of $0.50 for 2023, a substantial drop from $7.65 in 2022, indicating severe profit margin contraction [2]. - In Q2 2024, EPS was $0.75, which fell short of consensus estimates, with net sales growth remaining flat year over year and comparable store sales increasing by only 0.4% [2]. - For 2024, Advance Auto Parts anticipates comparable sales to range between -1% and 0%, with an EPS target of $2.00-$2.50 and a minimum of $100 million in free cash flow [2]. Group 2: Restructuring Efforts - The company is undergoing a major restructuring, including corporate layoffs, aimed at improving its cost structure and returning to profitable growth [2]. - The sale of its WorldPac automotive parts wholesale distribution business for $1.5 billion is expected to close by the end of the year, providing a significant cash infusion to strengthen the balance sheet [5]. Group 3: Market Position and Valuation - Advance Auto Parts operates a network of 4,776 stores, benefiting from a loyal customer base despite current challenges [4]. - The stock is trading at a forward P/E ratio of 18 for 2024, which narrows to 13 for 2025, indicating a potential valuation discount compared to competitors like AutoZone and O'Reilly Automotive [5].

Changes in the company's managerial structure raised concerns in the market.A pair of executive resignations led to a mild sell-off in Advance Auto Parts (AAP -0.51%) shares on Friday. The company's stock closed the day 0.5% lower on the news, on investor concern that the company's managerial structure might not be entirely stable. By comparison, the benchmark S&P 500 index landed in positive territory by rising 0.9%.Double resignationBefore market open that day, Advance revealed in a regulatory filing that ...