Advance Auto Parts Q2 Results Beat View, Again Lifts 2014 Earnings Outlook

(RTTNews) - Auto parts retailer Advance Auto Parts, Inc. (AAP) on Thursday reported a 19 percent increase in profit for the second quarter from last year, reflecting strong revenue and comparable store sales growth.

Both revenue and comparable cash earnings per share for the quarter beat analysts' estimates. Looking ahead, the company once again raised its comparable cash earnings per share outlook for fiscal 2014. Shares of the company are gaining almost 5 percent in pre-market trades.

The Roanoke, Virginia-based company's net income for the second quarter was $139.49 million or $1.89 per share, up from $116.87 million or $1.59 per share in the previous-year quarter.

Excluding items, comparable cash earnings for the quarter were $2.08 per share, compared to $1.60 per share in the year-ago period. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $2.01 per share for the quarter. Analysts' estimates typically exclude special items.

Comparable results for the quarter exclude $0.08 per share of amortization of acquired intangible assets, integration costs of $0.08 per share associated with the acquisition of General Parts International, Inc. and $0.02 per share of integration costs associated with the integration of B.W.P. Distributors, Inc.

Net sales for the quarter grew 52 percent to $2.35 billion from $1.55 billion in the same quarter last year. Analysts had a consensus revenue estimate of $2.32 billion for the quarter.

The company attributed the increase in sales to acquisition of General Parts, strong execution delivering comparable same store sales increase of 2.6 percent, and the addition of new stores over the past 12 months.

Comparable store sales for the quarter were 2.6 percent, compared to negative 0.3 percent in the year-ago period.

However, gross profit margin contracted 510 basis points from last year to 45.2 percent, primarily due to the higher mix of commercial sales which has a lower gross margin rate resulting from the acquisition of General Parts, partially offset by synergy savings in the quarter.

As at the end of the second quarter, Advance Auto Parts operated 5,289 company-operated stores and 106 Worldpac branches, and served about 1,400 independently-owned Carquest stores.

For fiscal 2014, Advance Auto Parts raised its forecast for comparable cash earnings to a range of $7.50 to $7.60 per share from the prior range of $7.30 to $7.50 per share. Street expects the company to report earnings of $7.58 per share for the year.

On August 13, the company's board declared a regular quarterly cash dividend of $0.06 per share, to be paid on October 3 to stockholders of record as of September 19.

AAP closed Wednesday's trading at $122.93. In Thursday's pre-market trades,the stock is up $6.05 or 4.92 percent to $128.98.