Advance Auto Parts(AAP) - 2023 Q4 - Annual Results

Financial Performance - Fourth quarter 2023 net sales totaled $2.5 billion, a 0.4% decrease compared to the prior year, while full year net sales reached $11.3 billion, a 1.2% increase from 2022[4] - Comparable store sales for the fourth quarter decreased by 1.4%, and for the full year, they decreased by 0.3%[4] - Gross profit for the fourth quarter was $950.8 million, representing 38.6% of net sales, down from 43.6% in the prior year quarter, primarily due to inventory-related items and elevated supply chain costs[4] - Net income for the twelve weeks ended December 30, 2023, was $29.735 million, a significant decrease from $464.402 million in the same period last year[22] - Operating income for the year was reported at $670,253, reflecting a decrease from $714,151 in the previous year[25] - The company reported a gross profit of $4,932,235 for the year, down from $4,962,100 in the previous year[25] - Basic earnings per share decreased to $7.70 from $8.32, representing a decline of 7.5%[25] - Net income for the year ended December 30, 2023, was reported at $464,402, a decrease of 7.4% from the previously reported $501,872[26] Expenses and Losses - The company's SG&A expenses were $999.4 million in the fourth quarter, or 40.6% of net sales, compared to 38.8% in the prior year quarter[5] - The fourth quarter operating loss was $48.6 million, or (2.0)% of net sales, compared to an operating income of $119.3 million, or 4.8% of net sales in the prior year[7] - Diluted loss per share for the fourth quarter was $0.59, compared to diluted earnings per share of $1.39 in the prior year[7] - Free cash flow for the full year 2023 was $43.7 million, down from $312.5 million in the prior year[8] - The company achieved a Free cash flow of $43,653 for the year, down from $312,510 in the previous year[28] Cash Flow and Assets - Operating cash flow for the fifty-two weeks ended December 30, 2023, was $286.064 million, down from $736.571 million in the previous year[22] - Cash and cash equivalents at the end of the period increased to $503.471 million from $270.805 million year-over-year[22] - The net cash provided by operating activities was $736,571, an increase from $722,222 in the previous year[26] - The company reported a net cash increase of $232.666 million for the fifty-two weeks ended December 30, 2023, compared to a decrease of $317.245 million in the prior year[22] Strategic Initiatives - The company plans to implement an additional $50 million in annualized cost reductions related to indirect spending, building on $150 million in SG&A reductions executed in the fourth quarter[3] - The company is undergoing a strategic review, including potential divestitures of Worldpac and its Canadian business, and has made key leadership appointments to strengthen its operational focus[3] Adjustments and Corrections - Total assets as of December 31, 2022, were corrected to $11.986 billion after adjustments[24] - Total liabilities were adjusted to $9.387 billion as of December 31, 2022, reflecting a correction of $47.054 million[24] - The company identified errors impacting cost of sales and administrative costs, which were not material to prior financial statements[23] Debt and Leverage - Total GAAP debt increased to $1,786,361 as of December 30, 2023, compared to $1,373,283 at the end of the previous year[29] - The adjusted debt to adjusted EBITDAR ratio improved to 4.0 from 2.5, indicating a stronger leverage position[28] Store Operations - The company opened 61 new stores and branches while closing 40, resulting in a total of 5,107 stores as of December 30, 2023[30]