Advance Auto Parts(US:AAP)2025-10-30 10:31Financial Performance - Third quarter 2025 net sales totaled $2.0 billion, a decrease from $2.1 billion in the same quarter of the prior year, with comparable store sales increasing by 3.0%[4] - Gross profit for the third quarter 2025 was $0.9 billion, representing 43.3% of net sales, an increase from 42.3% in the prior year, driven by cost savings from footprint optimization and strategic sourcing initiatives[5] - Selling, general and administrative (SG&A) expenses were $0.9 billion, or 42.2% of net sales, slightly down from 42.3% in the prior year, with adjusted SG&A expenses at $0.8 billion, or 40.4% of net sales[6] - Operating income for the third quarter 2025 was $22 million, or 1.1% of net sales, compared to break-even operating income in the same quarter of the prior year, with adjusted operating income at $90 million, or 4.4% of net sales[7] - The diluted earnings per share for the quarter was $(0.02), an improvement from $(0.42) in the third quarter of 2024, while adjusted diluted earnings per share was $0.92 compared to $(0.05) in the prior year[12] - Free cash flow through the third quarter of 2025 was an outflow of $277 million, compared to an outflow of $49 million in the same period of the prior year, including approximately $130 million in cash charges related to restructuring[13] - Net sales for the twelve weeks ended October 4, 2025, were $2,036 million, a decrease of 5.2% compared to $2,148 million for the same period in 2024[25] - Gross profit for the forty weeks ended October 4, 2025, was $2,864 million, down 6.4% from $3,061 million in 2024[25] - Operating loss for the twelve weeks ended October 4, 2025, was $22 million, compared to an operating income of $0 million in the same period of 2024[25] - Net income from continuing operations for the forty weeks ended October 4, 2025, was $38 million, an increase from $23 million in 2024[27] - The company reported a net cash used in operating activities of continuing operations of $118 million for the forty weeks ended October 4, 2025[27] - The company’s basic earnings per share from continuing operations was $(0.02) for the twelve weeks ended October 4, 2025, compared to $(0.42) in the same period of 2024[25] - For the twelve weeks ended October 4, 2025, the company reported a net loss from continuing operations of $1 million, compared to a loss of $25 million for the same period in 2024[34] - Adjusted net income for the twelve weeks ended October 4, 2025, was $56 million, a significant improvement from a loss of $3 million in the same period last year[34] - The company's gross profit for the twelve weeks ended October 4, 2025, was $913 million, with an adjusted gross profit margin of 44.8%, compared to 42.3% in the same period of 2024[40] - Selling, general and administrative (SG&A) expenses for the twelve weeks ended October 4, 2025, were $823 million, resulting in an adjusted SG&A margin of 40.4%[41] - The company experienced a free cash flow of $(277) million for the forty weeks ended October 4, 2025, which includes approximately $130 million of cash charges related to restructuring[43] Liquidity and Debt - The company ended the quarter with over $3 billion in cash on the balance sheet, indicating a strong liquidity position[9] - Cash and cash equivalents at the end of the period were $3,174 million, significantly up from $491 million at the end of the previous year[28] - The company raised $1,950 million through the issuance of long-term debt during the forty weeks ended October 4, 2025[27] - Total debt as of October 4, 2025, was $3.411 billion, with an adjusted net debt of $2.489 billion[44] - The adjusted net debt to adjusted EBITDAR ratio was 2.6, indicating the company's leverage position[44] Future Outlook and Strategy - The company has updated its full year 2025 guidance, projecting net sales from continuing operations between $8,550 million and $8,600 million, with comparable store sales growth expected between 0.7% and 1.3%[16] - The company plans to open 30 new stores and 14 new market hubs in the upcoming period, maintaining its growth strategy[16] - The company declared a regular cash dividend of $0.25 per share, to be paid on January 23, 2026, to stockholders of record as of January 9, 2026[14] - The company incurred $33 million in restructuring and related expenses during the twelve weeks ended October 4, 2025[25] - The company recorded $37 million in gross profit adjustments for the forty weeks ended October 4, 2025, reflecting ongoing transformation efforts[42] - The company anticipates continued restructuring and transformation expenses, which are expected to impact future financial performance[46] - The company emphasizes the use of non-GAAP financial measures to provide insight into its core operating performance and future prospects[29] Store Operations - During the forty weeks ended October 4, 2025, the company opened 26 new stores while closing 517, resulting in a total of 4,297 stores[45]