Advance Auto Parts (AAP) posted a profit of $1.19 per share in the first quarter of 2010, ended April 24, 2010, compared with $1.02 (excluding the charge related to store divestitures) in the year-ago quarter.
With this, the automotive retailer outdid the Zacks Consensus Estimate of $1.00 per share. The improvement in profit was attributable to the company’s aggressive store expansion, which enabled better availability of parts to its customers.
Sales in the quarter escalated 8.7% to $1.83 billion, driven by a net addition of 57 stores during the past 12 months. Sales per store improved to $1,619 from $1,556 a year ago. Comparable store sales gained 7.7%, compared with 8.2% in the first quarter of 2009.
Gross profit was 49.8% of sales compared with 48.8% last year. This translated into an improvement of 93 basis points, caused by continued investments in pricing capabilities, parts availability and an increase in direct sourcing.
Operating income rose 15.6% to $182.2 million or 10% of total sales, versus $157.6 million or 9.4% of total sales in the year-ago period. Excluding the impact of store divestitures, the operating income increased 25 basis points.
During the first quarter, Advance Auto Parts opened 43 stores, including 11 Autopart International stores, and closed one store. As of April 24, 2010, the company’s total store count was 3,462, including 167 Autopart International stores.
Advance Auto Parts repurchased 6.91 million shares during the first quarter at an aggregate cost of $287.7 million, reflecting an average price of $41.62 per share. At the end of the quarter, the company had $212.3 million remaining under the $500 million share repurchase authorization approved by the Board of Directors in February 2010.
Financial Position
Advance Auto Parts had cash and cash equivalents of $133.3 million as of April 24, 2010. This was a significant improvement from $50.9 million as of April 25, 2009. Long-term debt amounted to $279 million as of that date. The long-term debt-to-capitalization ratio stood at 20%.
Operating cash flow in the quarter increased to $338 million from $293 million a year ago, primarily attributable to higher income. Free cash flow for the quarter grew 30.5% to $262.9 million. Capital expenditures rose slightly to $60.7 million from $50.2 million a year ago.
Advance Auto Parts anticipates earnings in the range of $3.20 to $3.40 per share, excluding the impact of share repurchases as well as the recent notes offering.
The favorable impact of share repurchases, partially offset by the recent notes offering, expects to add a net incremental benefit of 14 cents to the full year EPS, of which the company has already realized 4 cents during the first quarter.
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