Advance Auto Parts, Inc. (NYSE:AAP), a leading automotive
aftermarket parts provider in North America, serving both
professional installer and do-it-yourself customers, today
announced its financial results for the third quarter ended
October 8, 2016. Third quarter GAAP earnings per diluted share
(Diluted EPS) were $1.53. Third quarter Adjusted earnings per
diluted share (Adjusted EPS) were $1.73, which exclude $0.08 of
amortization of acquired intangible assets and integration and
restructuring costs of $0.12 primarily associated with the
acquisition of General Parts International, Inc. (General
Parts).
Third Quarter Performance Summary
Twelve Weeks Ended Forty Weeks
Ended October 8, 2016 October 10,
2015 October 8, 2016 October 10,
2015 Sales (in millions) $ 2,248.9 $ 2,295.2 $
7,484.8 $ 7,703.5
Comp Store Sales % (1.0 %) 0.5 %
(2.4 %) 0.7 %
Gross Profit (in millions) $ 988.2 $
1,032.4 $ 3,348.4 $ 3,513.6
SG&A (in millions) $
794.4 $ 826.9 $ 2,666.9 $ 2,788.5
Adjusted SG&A (in
millions) (1) $ 770.6 $ 788.6 $ 2,572.6 $ 2,676.0
Operating Income (in millions) $ 193.8 $ 205.5 $ 681.5 $
725.1
Adjusted Operating Income (in millions) (1) $ 217.6 $
243.8 $ 775.7 $ 837.6
Diluted EPS $ 1.53 $ 1.63 $
5.36 $ 5.66
Adjusted EPS (1) $ 1.73 $ 1.95 $ 6.14 $ 6.60
Avg Diluted Shares (in thousands) 73,860 73,763
73,847 73,695
(1) Fiscal 2016 and 2015 include certain non-operational
expenses. The Adjusted SG&A, Adjusted Operating Income and
Adjusted EPS for the twelve weeks ended October 8, 2016 and
October 10, 2015, respectively, have been reported on an
adjusted basis to exclude General Parts integration, store
consolidation costs and support center restructuring costs of $14.4
million and $28.6 million, respectively, and General Parts
amortization of acquired intangible assets of $9.4 million and $9.7
million, respectively. The Adjusted SG&A, Adjusted Operating
Income and Adjusted EPS for the forty weeks ended October 8,
2016 and October 10, 2015, respectively, have been reported on
an adjusted basis to exclude General Parts integration, store
consolidation costs and support center restructuring costs of $62.7
million and $79.8 million, respectively, and General Parts
amortization of acquired intangible assets of $31.5 million and
$32.6 million, respectively. For a better understanding of the
Company's adjusted results, refer to the reconciliation of the
financial results reported on a GAAP basis to the adjusted basis in
the accompanying financial tables in this press release.
“Our third quarter results reflect progress in driving our top
line as the initiatives and investments we are making to stabilize
and improve our sales performance began to take hold. While we
delivered sequential improvement, our results are not where we want
them to be and we remain relentlessly focused on taking the actions
necessary to improve our execution and generate positive comparable
sales performance,” said Tom Greco, President and Chief Executive
Officer.
Greco continued, “As we execute against our strategy to deliver
more consistent, improved performance over the long term, we have
sharpened our attention on sales execution, consistent availability
and delivering on the needs of our customer with every interaction.
We are confident this is the right path forward."
Third Quarter 2016 Highlights
Total sales for the third quarter decreased 2.0% to $2.25
billion, as compared with total sales during the third quarter of
fiscal 2015 of $2.30 billion. The sales decline was driven by the
comparable store sales decrease of 1.0%, the store closures in 2015
and the effect of Carquest store consolidations. The sales decline
was partially offset by new store and Worldpac branch openings.
The Company's Gross Profit rate was 43.9% of sales during the
third quarter as compared to 45.0% during the third quarter last
year. The 104 basis-point decrease in gross profit rate was
primarily the result of higher supply chain expenses and headwinds
associated with reducing inventory levels.
On a GAAP basis, the Company's SG&A rate was 35.3% of sales
during the third quarter as compared to 36.0% during the same
period last year. The 70 basis-point decrease was primarily due to
lower integration and restructuring related costs during the third
quarter compared to last year. Excluding this impact, the Company's
Adjusted SG&A rate was essentially flat year-over-year
reflecting the Company's continued cost reduction initiatives
partially offset by investments in customer service initiatives.
The Company's Adjusted SG&A rate was 34.3% of sales during the
third quarter as compared to 34.4% during the same period last
year.
On a GAAP basis, the Company's operating income during the third
quarter was $193.8 million, a decrease of 5.7% versus the third
quarter of fiscal 2015. On a GAAP basis, the Operating Income rate
was 8.6% during the third quarter as compared to 9.0% during the
third quarter of fiscal 2015. The Company's Adjusted Operating
Income was $217.6 million during the third quarter, a decrease of
10.8% versus the third quarter of fiscal 2015. As a percentage of
sales, Adjusted Operating Income in the third quarter was 9.7%
versus 10.6% during the third quarter of fiscal 2015.
Operating cash flow decreased approximately 21.3% to $409.4
million through the third quarter of fiscal 2016 from $520.1
million through the third quarter of fiscal 2015. Free cash flow
was $205.2 million through the third quarter of fiscal 2016
compared to $358.9 million through the third quarter of fiscal
2015. Capital expenditures through the third quarter of fiscal 2016
were $204.2 million as compared to $161.2 million through the third
quarter of fiscal 2015.
Store Information
As of October 8, 2016, the Company operated 5,058 stores
and 127 Worldpac branches and served approximately 1,250
independently owned Carquest stores. The below table summarizes the
changes in the number of the company-operated stores and branches
during the forty weeks ended October 8, 2016.
AAP AI
CARQUEST (a) WORLDPAC
Total January
2, 2016 4,102 184 885 122
5,293 New 42 — 6 5 53 Closed (11 ) (3 ) (5 ) — (19 )
Consolidated (3 ) — (139 ) — (142 ) Converted 107 —
(107 ) — —
October 8, 2016 4,237
181 640 127 5,185
(a) Includes activity for stores acquired with B.W.P.
Distributors, Inc. that operate under the Carquest trade name.
Dividend
On November 8, 2016, the Company's Board of Directors
declared a regular quarterly cash dividend of $0.06 per share to be
paid on January 6, 2017 to stockholders of record as of
December 23, 2016.
Advance hosts meet and greet with management
The Company will host a Meet and Greet with management today in
New York, NY from 5:00 p.m. to 7:00 p.m. Eastern time with
presentations given by Tom Greco, President and Chief Executive
Officer; Tom Okray, Executive Vice President, Chief Financial
Officer; and Bob Cushing, Executive Vice President, Professional.
The meeting will include a review of the Company’s 2016 third
quarter results and elements of its strategic business plan
followed by a question and answer session.
In-person attendance to the event will be by invitation only. A
live audio webcast of the event including presentation slides will
commence at approximately 5:00 p.m. Eastern time using the
following link http://edge.media-server.com/m/p/jhnkpfih.
Presentation slides included in the webcast will also be available
on the day of the event, at approximately 4:55 p.m. Eastern time,
at www.advanceautoparts.com under the Investor Relations section.
The event will also be available via telephone by dialing: (866)
908-1AAP in the U.S. and Canada; (773) 799-3753 for international
participants.
An audio replay of the event will be made available
approximately 24 hours after the event concludes at
www.advanceautoparts.com under the Investor Relations section.
About Advance Auto Parts
Advance Auto Parts, Inc., a leading automotive aftermarket parts
provider in North America, serves both professional installer and
do-it-yourself customers. As of October 8, 2016, Advance
operated 5,058 stores and 127 Worldpac branches and served
approximately 1,250 independently owned Carquest branded stores in
the United States, Puerto Rico, the U.S. Virgin Islands and
Canada. Advance employs approximately 74,000 Team Members.
Additional information about the Company, employment opportunities,
customer services, and on-line shopping for parts, accessories and
other offerings can be found on the Company's website at
www.AdvanceAutoParts.com.
Forward Looking Statements
Certain statements contained in this release are forward-looking
statements, as that term is used in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements address
future events or developments, and typically use words such as
believe, anticipate, expect, intend, plan, forecast, outlook or
estimate. These forward looking statements include, but are not
limited to, key assumptions for 2016 financial performance
including adjusted operating income; statements regarding the
benefits and other effects of the acquisition of General Parts and
the combined company’s plans, objectives and expectations;
statements regarding expected growth and future performance of
Advance Auto Parts, Inc. (AAP), including store growth, capital
expenditures, comparable store sales, gross profit rate, SG&A,
adjusted operating income, free cash flow, income tax rate, General
Parts integration costs and store consolidation costs, synergies,
expenses to achieve synergies and adjusted operating income rate
targets; expectations regarding leadership changes and their impact
on the company’s strategies, opportunities and results; statements
regarding enhancements to shareholder value; statements regarding
strategic plans or initiatives, growth or profitability; and all
other statements that are not statements of historical facts. These
forward-looking statements are subject to significant risks,
uncertainties and assumptions, and actual future events or results
may differ materially from such forward-looking statements. Such
differences may result from, among other things, the risk that the
benefits of the General Parts acquisition, including synergies, may
not be fully realized or may take longer to realize than expected;
the possibility that the General Parts acquisition may not advance
AAP’s business strategy; the risk that AAP may experience
difficulty integrating General Parts’ employees, business systems
and technology; the potential diversion of AAP’s management’s
attention from AAP’s other businesses resulting from the General
Parts acquisition; the impact of the General Parts acquisition on
third-party relationships, including customers, wholesalers,
independently owned and jobber stores and suppliers; AAP’s ability
to attract, develop and retain executives and other employees;
changes in regulatory, social and political conditions, as well as
general economic conditions; competitive pressures; demand for
AAP’s and General Parts' products; the market for auto parts; the
economy in general; inflation; consumer debt levels; the weather;
business interruptions; information technology security;
availability of suitable real estate; dependence on foreign
suppliers; and other factors disclosed in AAP’s 10-K for the fiscal
year ended January 2, 2016 and other filings made by AAP with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements. AAP
intends these forward-looking statements to speak only as of the
time of this communication and does not undertake to update or
revise them as more information becomes available.
Advance Auto Parts, Inc. and Subsidiaries Condensed
Consolidated Balance Sheets (in thousands) (unaudited)
October 8, 2016 January
2, 2016 Assets
Current assets: Cash and cash equivalents $ 119,494 $ 90,782
Receivables, net 686,947 597,788 Inventories, net 4,357,013
4,174,768 Other current assets 98,672 77,408 Total current
assets 5,262,126 4,940,746
Property and equipment,
net 1,442,173 1,434,577
Goodwill 991,392 989,484
Intangible assets, net 652,361 687,125
Other assets,
net 66,593 75,769 $ 8,414,645 $ 8,127,701
Liabilities and Stockholders' Equity
Current liabilities: Current portion of long-term debt $ 372
$ 598 Accounts payable 3,197,075 3,203,922 Accrued expenses 590,325
553,163 Other current liabilities 49,579 39,794 Total
current liabilities 3,837,351 3,797,477
Long-term
debt 1,042,633 1,206,297
Deferred income taxes 455,348
433,925
Other long-term liabilities 223,592 229,354
Total
stockholders' equity 2,855,721 2,460,648 $ 8,414,645
$ 8,127,701
NOTE: These preliminary condensed consolidated balance sheets
have been prepared on a basis consistent with our previously
prepared balance sheets filed with the Securities and Exchange
Commission for our prior quarter and annual report, but do not
include the footnotes required by generally accepted accounting
principles, or GAAP, for complete financial statements. The Company
retrospectively adopted ASU 2015-03 in the first quarter of 2016,
which resulted in a reclassification of debt issuance costs from
Other assets, net to Long-term debt.
Advance Auto Parts, Inc. and Subsidiaries Condensed
Consolidated Statements of Operations Twelve and Forty Week
Periods Ended October 8, 2016 and October 10, 2015 (in
thousands, except per share data) (unaudited)
Q3 2016 Q3 2015 YTD 2016
YTD 2015 Net sales $ 2,248,855 $ 2,295,203 $
7,484,788 $ 7,703,473 Cost of sales 1,260,650 1,262,816
4,136,437 4,189,873 Gross profit 988,205
1,032,387 3,348,351 3,513,600 Selling, general and administrative
expenses 794,437 826,862 2,666,900 2,788,498
Operating income 193,768 205,525 681,451
725,102 Other, net: Interest expense (13,581 )
(14,384 ) (46,545 ) (51,599 ) Other (expense) income, net (2,349 )
1,276 7,018 (4,440 ) Total other, net (15,930 )
(13,108 ) (39,527 ) (56,039 ) Income before provision for income
taxes 177,838 192,417 641,924 669,063 Provision for income taxes
63,994 71,948 244,667 250,484 Net
income $ 113,844 $ 120,469 $ 397,257 $ 418,579
Basic earnings per common share (a) $ 1.54 $ 1.64 $
5.38 $ 5.70 Diluted earnings per common share (a) $ 1.53 $ 1.63 $
5.36 $ 5.66 Average common shares outstanding (a) 73,638
73,215 73,524 73,168 Average diluted common shares outstanding (a)
73,860 73,763 73,847 73,695
(a) Average common shares outstanding is calculated based on the
weighted average number of shares outstanding during the quarter or
year-to-date period, as applicable. At October 8, 2016 and
October 10, 2015, we had 73,653 and 73,234 shares outstanding,
respectively.
NOTE: These preliminary condensed consolidated statements of
operations have been prepared on a basis consistent with our
previously prepared statements of operations filed with the
Securities and Exchange Commission for our prior quarter and annual
report, with the exception of the footnotes required by GAAP for
complete financial statements.
Advance Auto Parts, Inc. and Subsidiaries Condensed
Consolidated Statements of Cash Flows Forty Week Periods
Ended October 8, 2016 and October 10, 2015 (in
thousands) (unaudited)
October
8, 2016 October 10, 2015 Cash
flows from operating activities: Net income $ 397,257 $ 418,579
Depreciation and amortization 199,262 207,496 Share-based
compensation 11,664 25,941 Provision (benefit) for deferred income
taxes 21,130 (13,486 ) Excess tax benefit from share-based
compensation (17,615 ) (10,291 ) Other non-cash adjustments to net
income 1,945 11,782 Increase in: Receivables, net (87,488 ) (86,610
) Inventories, net (175,678 ) (202,901 ) Other assets (15,804 )
(16,522 ) (Decrease) increase in: Accounts payable (9,222 ) 91,590
Accrued expenses 84,897 93,101 Other liabilities (931 ) 1,409
Net cash provided by operating activities 409,417 520,088
Cash flows from investing activities: Purchases of
property and equipment (204,213 ) (161,232 ) Business acquisitions,
net of cash acquired (2,672 ) (18,893 ) Proceeds from sales of
property and equipment 1,483 178 Net cash used in
investing activities (205,402 ) (179,947 )
Cash flows
from financing activities: Increase in bank overdrafts 8,765
23,455 Net payments on credit facilities (160,000 ) (343,400 )
Dividends paid (17,734 ) (17,642 ) Proceeds from the issuance of
common stock, primarily for employee stock purchase plan 3,438
3,870 Tax withholdings related to the exercise of stock
appreciation rights (15,764 ) (11,713 ) Excess tax benefit from
share-based compensation 17,615 10,291 Repurchase of common stock
(12,300 ) (1,820 ) Other (323 ) (294 ) Net cash used in financing
activities (176,303 ) (337,253 ) Effect of exchange rate
changes on cash 1,000 (2,213 )
Net increase in
cash and cash equivalents 28,712 675
Cash and cash
equivalents, beginning of period 90,782 104,671
Cash and cash equivalents, end of period $ 119,494 $
105,346
NOTE: These preliminary condensed consolidated statements of
cash flows have been prepared on a consistent basis with previously
prepared statements of cash flows filed with the Securities and
Exchange Commission for our prior quarter and annual report, but do
not include the footnotes required by GAAP for complete financial
statements.
Reconciliation of Non-GAAP Financial
Measures
The Company's financial results include certain financial
measures not derived in accordance with generally accepted
accounting principles (“GAAP”). Non-GAAP financial measures
should not be used as a substitute for GAAP financial measures, or
considered in isolation, for the purpose of analyzing our operating
performance, financial position or cash flows. However, the Company
has presented these non-GAAP financial measures as management
believes that the presentation of its financial results that
exclude non-cash charges related to the acquired General Parts
intangibles and non-operational expenses associated with i) the
integration of General Parts, ii) store consolidation costs and
iii) support center restructuring costs is useful and indicative of
its base operations because the expenses vary from period to period
in terms of size, nature and significance and relate to the
integration of General Parts and store closure activity in excess
of historical levels. These measures assist in comparing the
Company's current operating results with past periods and with the
operational performance of other companies in the industry. The
disclosure of these measures allow investors to evaluate the
Company’s performance using the same measures management uses in
developing internal budgets and forecasts and in evaluating
management’s compensation. Included below is a description of the
expenses the Company has determined are not normal, recurring cash
operating expenses necessary to operate the Company’s business and
the rationale for why providing these measures are useful to
investors as a supplement to the GAAP measures.
General Parts Integration Expenses
- As disclosed in the Company’s filings with the Securities and
Exchange Commission, the Company acquired General Parts
International, Inc. (“General Parts”) for $2.08 billion on January
2, 2014 and is in the midst of a multi-year integration plan to
integrate the operations of General Parts with Advance Auto Parts.
This includes the integration of product brands and assortments,
supply chain and information technology. The integration is being
completed in phases and the nature and timing of expenses will vary
from quarter to quarter over several years. The integration of
product brands and assortments was primarily completed in 2015 and
the focus has shifted to integrating the supply chain and
information technology systems beginning in 2016. Due to the size
of the acquisition, the Company considers these expenses to be
outside of its base business. Therefore, the Company believes
providing additional information in the form of non-GAAP measures
that exclude these costs is beneficial to the users of its
financial statements in evaluating the operating performance of the
base business and its sustainability once the integration is
completed.
Store Closure and Consolidation
Expenses - Store consolidation expenses consist of expenses
associated with the Company’s announced plans to (i) convert or
consolidate the Carquest stores acquired from General Parts, (ii)
close its Autopart International stores in Florida and (iii) close
approximately 80 underperforming Advance Auto Parts stores in the
fourth quarter of fiscal 2015. The conversion and consolidation of
the Carquest stores is a multi-year process that began in 2014. As
of October 8, 2016, 316 Carquest stores acquired from General Parts
had been consolidated into existing Advance Auto Parts stores and
266 stores had been converted to the Advance Auto Parts format. As
of October 8, 2016, the Company operated 640 stores under the
Carquest name. The closure of the 40 Autopart International stores
in Florida, primarily in the first quarter of 2015, and closure of
80 underperforming Advance Auto Parts stores in the fourth quarter
of 2015 significantly exceed the Company’s average store closure
activity. While periodic store closures are common, these closures
represent major programs outside of the Company’s typical market
evaluation process. The Company also continues to have store
closures that occur as part of its normal market evaluation process
and has not excluded the expenses associated with these store
closures in computing the Company’s non-GAAP measures. The Company
believes it is useful to provide additional non-GAAP measures that
exclude these costs to provide investors greater comparability of
our base business and core operating performance.
Support Center Restructuring
Expenses - The costs excluded for support center
restructuring activities include costs associated with (i) closing
the Company’s Minnesota office and relocating functions to existing
offices, (ii) relocating functions within the Company’s Roanoke, VA
office and Raleigh, NC office (formerly the headquarters for
General Parts) and (iii) eliminating duplicative functions between
these two offices. These actions are a direct consequence of the
acquisition and integration of General Parts and therefore the
Company does not consider these expenses to be normal, recurring,
cash operating expenses necessary to operate its business. These
actions were substantially completed as of the end of fiscal 2015
and the Company has had no material support center restructuring
expenses following the end of fiscal 2015.
The Company has included a reconciliation of this information to
the most comparable GAAP measures in the following tables.
Reconciliation of
Adjusted Net Income and Adjusted EPS:
Twelve Week Periods Ended
(in thousands, except per share data)
Forty Week Periods Ended
(in thousands, except per share data)
October 8, 2016 October 10, 2015 October 8,
2016 October 10, 2015 Net income (GAAP) $ 113,844
$ 120,469 $ 397,257 $ 418,579 SG&A adjustments (a) 23,816
38,283 94,292 112,459 Provision for income taxes on adjustments (b)
(9,050 ) (14,548 ) (35,831 ) (42,734 ) Adjusted net income $
128,610 $ 144,204 $ 455,718 $ 488,304
Diluted earnings per common share (GAAP) $ 1.53 $ 1.63 $
5.36 $ 5.66 SG&A adjustments, net of tax 0.20 0.32
0.78 0.94 Adjusted EPS $ 1.73 $ 1.95
$ 6.14 $ 6.60
Reconciliation of
Adjusted Selling, General and Administrative
Expenses:
Twelve Week Periods Ended
(in thousands)
Forty Week Periods Ended
(in thousands)
October 8, 2016 October 10, 2015 October 8,
2016 October 10, 2015 SG&A (GAAP) $ 794,437 $
826,862 $ 2,666,900 $ 2,788,498 SG&A adjustments (a) (23,816 )
(38,283 ) (94,292 ) (112,459 ) Adjusted SG&A $ 770,621 $
788,579 $ 2,572,608 $ 2,676,039
Reconciliation of
Adjusted Operating Income:
Twelve Week Periods Ended
(in thousands)
Forty Week Periods Ended
(in thousands)
October 8, 2016 October 10, 2015 October 8,
2016 October 10, 2015 Operating income (GAAP) $ 193,768
$ 205,525 $ 681,451 $ 725,102 SG&A adjustments (a) 23,816
38,283 94,292 112,459 Adjusted
operating income $ 217,584 $ 243,808 $ 775,743
$ 837,561
(a) The adjustments to SG&A expenses for the twelve and
forty weeks ended October 8, 2016 include General Parts
integration, store consolidation costs and support center
restructuring costs of $14,389 and $62,745 and General Parts
amortization of acquired intangible assets of $9,426 and $31,547,
respectively. The adjustments to SG&A expenses for the twelve
and forty weeks ended October 10, 2015 include General Parts
integration, store consolidation costs and support center
restructuring costs of $28,555 and $79,846 and General Parts
amortization of acquired intangible assets of $9,728 and $32,614,
respectively.
(b) The income tax impact of non-GAAP adjustments is calculated
using the estimated tax rate in effect for the respective non-GAAP
adjustments.
Reconciliation of Free Cash Flow:
Forty Week Periods Ended October 8,
2016 October 10, 2015 Cash flows from
operating activities $ 409,417 $ 520,088 Purchases of property and
equipment (204,213 ) (161,232 ) Free cash flow $ 205,204 $
358,856
NOTE: Management uses free cash flow as a measure of our
liquidity and believes it is a useful indicator to stockholders of
our ability to implement our growth strategies and service our
debt. Free cash flow is a non-GAAP measure and should be considered
in addition to, but not as a substitute for, information contained
in our condensed consolidated statement of cash flows.
Adjusted Debt to Adjusted EBITDAR:
(In thousands, except adjusted debt to
adjusted EBITDAR ratio)
Four Quarters Ended October
8, 2016 January 2, 2016 Total debt (a) $
1,043,005 $ 1,206,895 Add: Capitalized lease obligation (rent
expense * 6) 3,211,344 3,190,728 Adjusted debt 4,254,349
4,397,623 Operating income 782,129 825,780 Add: Adjustments
(b) 109,959 127,059 Depreciation and amortization 261,242
269,476 Adjusted EBITDA 1,153,330 1,222,315 Rent expense (less
favorable lease amortization of $4,051 and $4,786, respectively)
535,224 531,788 Adjusted EBITDAR $ 1,688,554 $ 1,754,103
Adjusted Debt to Adjusted EBITDAR 2.5
2.5
(a) The Company retrospectively adopted ASU 2015-03 in the first
quarter of 2016, which resulted in a reclassification of debt
issuance costs from Other assets, net to Long-term debt.
(b) The adjustments to the four quarters ended October 8,
2016 include General Parts integration, store closure and
consolidation costs and support center restructuring costs of
$110.0 million. The adjustments to Fiscal 2015 include General
Parts integration, store closure and store consolidation costs and
support center restructuring costs of $127.1 million.
NOTE: Management believes its Adjusted Debt to Adjusted EBITDAR
ratio (“leverage ratio”) is a key financial metric for debt
securities, as reviewed by rating agencies, and believes its debt
levels are best analyzed using this measure. The Company’s goal is
to maintain a 2.5 times leverage ratio and investment grade rating.
The Company's credit rating directly impacts the interest rates on
borrowings under its existing credit facility and could impact the
Company's ability to obtain additional funding. If the Company was
unable to maintain its investment grade rating this could
negatively impact future performance and limit growth
opportunities. Similar measures are utilized in the calculation of
the financial covenants and ratios contained in the Company's
financing arrangements. The leverage ratio calculated by the
Company is a non-GAAP measure and should not be considered a
substitute for debt to net earnings, net earnings or debt as
determined in accordance with GAAP. The Company adjusts the
calculation to remove rent expense and capitalize the Company’s
existing operating leases to provide a more meaningful comparison
with the Company’s peers and to account for differences in debt
structures and leasing arrangements. The use of a multiple of rent
expense to calculate the adjustment for capitalized operating lease
obligations is a commonly used method of estimating the debt the
Company would record for its leases that are classified as
operating if they had met the criteria for a capital lease or the
Company had purchased the property. The Company’s calculation of
its leverage ratio might not be calculated in the same manner as,
and thus might not be comparable to, similarly titled measures by
other companies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161114005378/en/
Advance Auto PartsMedia: Laurie Stacy,
540-561-8452laurie.stacy@advanceautoparts.comorInvestor: Zaheed
Mawani, 919-573-3848zaheed.mawani@advanceautoparts.com
Advance Auto Parts (NYSE:AAP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Advance Auto Parts (NYSE:AAP)
Historical Stock Chart
From Apr 2023 to Apr 2024