Back to top

Image: Bigstock

Advance Auto Parts (AAP) Beats on Q2 Earnings, Revises '21 View

Read MoreHide Full Article

Advance Auto Parts, Inc. (AAP - Free Report) reported adjusted earnings of $3.4 per share for second-quarter 2021 (ended Jul 17, 2021), jumping 15.3% from the prior-year figure. The reported figure also beat Zacks Consensus Estimate of $2.95 on higher-than-expected comps growth. For the second quarter, comparable store sales witnessed 5.8% growth as against the consensus mark of a fall of 1.1%.

Advance Auto Parts generated net revenues of $2,649.4 million, marginally topping the Zacks Consensus Estimate of $2,614 million. Moreover, the revenue figure increased 5.9% from the year-ago reported figure.

Adjusted operating income went up 7% year over year to $302 million. Adjusted selling, general and administrative expenses totaled $926.4 million compared with the $817.7 million witnessed in the year-ago period.

Advance Auto Parts, Inc. Price, Consensus and EPS Surprise

Advance Auto Parts, Inc. Price, Consensus and EPS Surprise

Advance Auto Parts, Inc. price-consensus-eps-surprise-chart | Advance Auto Parts, Inc. Quote

Financial Position

Advance Auto Parts — which shares space with O’Reilly Automotive (ORLY - Free Report) , AutoZone (AZO - Free Report) and CarMax (KMX - Free Report) — had cash and cash equivalents of $809.3 million as of Jul 17, 2021 compared with $834.9 million as of Jan 2, 2021. Total long-term debt was $1,033.7 million as of Jul 17, 2021, slightly up from the $1,033 million as of Jan 2, 2021.

For the reported quarter, operating cash flow was $446.3 million compared with the year-ago quarter’s of $437.3 million. Free cash flow (FCF) for the second quarter came in at $387.6 million compared with the year-ago quarter’s FCF of $380.2 million.

Dividend & Share Repurchase

On Aug 10, Advance Auto Parts’ board approved a cash dividend of $1 per share. The dividend would be payable on Oct 1 to all common shareholders of record as of Sep 17, 2021. It also approved an additional buyback program of $1 billion. During the quarter, the company repurchased around 2 million shares for $393 million at an average price of $197.52 per share.

Advance Auto Parts returned a record $457.9 million to shareholders through buybacks and dividend during the reported quarter. At the end of second-quarter 2021, the company had $868.8 million remaining under the share-repurchase program.

Store Update

As of Jul 17, it operated 4,748 stores and 215 Worldpac branches in the United States, Canada, Puerto Rico and U.S. Virgin Islands. It also serves 1,306 independently-owned Carquest-branded stores across these locations, in addition to Mexico, the Bahamas, Grand Cayman, Turks and Caicos, and British Virgin Islands.

Guidance for 2021

Advance Auto Parts has updated the full-year 2021 view. It now projects full-year net sales of $10.6-$10.8 billion, up from the previous forecast of $10.4-$10.6 billion. Comparable store sales growth and adjusted operating income margin are now envisioned in the band of 6-8% and 9.2-9.4%, respectively, higher from the previous outlook of 4-6% and 9-9.2%, respectively.

The Zacks Rank #3 (Hold) company expects FCF of minimum $700 million, up from the previous forecast of minimum $575 million. However, it intends to open 80-120 stores this year, lower than the previous projection 100-150 stores. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.