The Road-Map For Advance Auto Parts

(RTTNews) - Driven by the acquisition of General Parts, the company delivered good growth in the fourth quarter and solid double-digit growth with its national accounts for the full year. The company believes that its focus on sales growth, service excellence and profit growth underpin its path to being the best.

The Stock In Focus...

Advance Auto Parts Inc. (AAP) is a specialty retailer of automotive aftermarket parts, accessories, batteries and maintenance items primarily operating within the United States. Its stores carry an extensive product line for cars, vans, sport utility vehicles and light trucks.

The company serves both "do-it-yourself," or DIY, and "do-it-for-me," or Commercial, customers. Its Commercial customers consist primarily of delivery customers for whom it deliver product from its store locations to Commercial customers' places of business, including independent garages, service stations and auto dealers.

January 2, 2014, Advance Auto Parts completed the acquisition of General Parts International Inc. The transaction helped boost the company's geographic presence in North America, with a balanced platform for growth between Do-It-yourself and Commercial. The deal also expanded Advance's product and category offerings in both core and new product lines.

Store Economics

As of January 3, 2015, the company operated 5,261 stores and 111 Worldpac branches and served about 1,325 independently-owned Carquest branded stores in the United States, Puerto Rico, the U.S. Virgin Islands and Canada.

During the latest fourth quarter, the company opened 48 new Advance, Autopart International and CARQUEST stores and closed 5 stores, including planned consolidations of 87 CARQUEST and B.W.P. stores, bringing the total company-operated store count to 5,261. It also added 2 WORLDPAC branches in the quarter, bringing its total branch count to 111.

Latest Q4 Performance

The company's fourth-quarter net income was $84.43 million or $1.15 per share compared to $49.27 million or $0.67 per share in the prior year period.

Comparable cash earnings per share was $1.37, for the quarter, an increase of 46% versus $0.94 per share earned last year.

These fourth quarter comparable results exclude $0.08 of amortization of acquired intangible assets, integration costs of $0.30 associated with the acquisition of General Parts International Inc., $0.01 of integration costs associated with the integration of B.W.P. Distributors Inc. and $0.17 from an additional week of business (53rd week).

On average, 20 analysts polled by Thomson Reuters expected the company to report profit per share of $1.48 for the quarter. Analysts' estimates typically exclude special items.

On a GAAP basis, total sales increased 58.8% to $2.24 billion from $1.41 billion last year.

On a comparable basis, total sales for the fourth quarter increased 48.1% to $2.09 billion from $1.41 billion, prior year, driven by the acquisition of General Parts, a comparable store sales increase of 1.1% and the addition of new stores over the past 12 months. Analysts expected revenue of $2.29 billion for the quarter.

Commercial business continues to be its growth engine, which again generated solid growth in the fourth quarter, helping it deliver its fifth consecutive quarter of positive comps.

The company's Board has declared a regular quarterly cash dividend of $0.06 per share to be paid on April 3, 2015 to stockholders of record as of March 20, 2015.

Darren Jackson, Chief Executive Officer. "Our organizational focus delivered on our base business outcomes with record operating profits and full year Comparable Cash EPS of $7.59 while successfully achieving the first full year of integration deliverables. We look forward to 2015 with optimism as we continue the integration of General Parts and build on our performance from 2014."

FY15 Outlook

The company projects fiscal 2015 cash earnings to range between $8.35 and $8.55 per share, with comparable store sales in low single digits.

Advance Auto Parts also expects to open 100 to 120 new stores including Worldpac. The company will also continue the work of consolidating, converting and relocating CARQUEST locations throughout 2015.

Mike Norona, Executive Vice President and Chief Financial Officer, said, "We will continue to build on our 2014 progress and leverage the size and scale of our company as we focus on continued sales growth, serving our customers and improving our operating profit in 2015."

Future In Focus

The company remains relentlessly focused at the highest level on the same two objectives as 2014: methodically improving the base business while delivering the next phase of the integration.

From a base business perspective, the macro environment should position the industry favorably in 2015, the company said. The combination of steadily improving job market, along with lower gasoline prices, should help provide a positive impact over the course of the year. Meanwhile, the Affordable Care Act could continue to challenge some of its customers in the year ahead. Industry fundamentals continue to be strong, with miles driven showing steady improvement and should increase spending in select discretionary maintenance categories over time.

The company's own corporate office consolidations, coupled with its recently completed sales and operations integration work, will likely create some strain in the system as the teams adjust and reestablish to consistent rhythms in running their businesses.

Looking at its business specifically, the company said it will continue to focus on the structural program improvements to further accelerate sales in its commercial business in 2015.

Summary

The company stated that the year 2014 confirmed the growth and value creation potential of the Advanced Auto Parts and General Parts acquisition. The cultural consistency, coupled with the complementary talent and capabilities, provides the most diversified growth platform in the aftermarket industry.

Also the company believes that the integrated Advance Auto Parts will once again be positioned as the largest commercial, online, import and integrated aftermarket supplier, with extraordinary organic growth potential as it look to the future.