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 fourth quarter ended
December 31, 2016. Fourth quarter GAAP earnings per diluted
share (Diluted EPS) were $0.84. Fourth quarter Adjusted earnings
per diluted share (Adjusted EPS) were $1.00, which exclude $0.08 of
amortization of acquired intangible assets and integration and
restructuring costs of $0.08 primarily associated with the
acquisition of General Parts International, Inc. (General
Parts).
Fourth Quarter Performance Summary
Twelve Weeks Ended
Fifty-Two Weeks Ended
December 31,2016
January 2,2016
December 31,2016
January 2,2016
Sales (in millions) $ 2,082.9 $ 2,033.5 $ 9,567.7 $
9,737.0
Comp Store Sales % 3.1 % (2.5 %) (1.4 %) 0.0
%
Gross Profit (in millions) $ 907.6 $ 909.2 $
4,255.9 $ 4,422.8
SG&A (in millions) $ 801.4 $
808.5 $ 3,468.3 $ 3,597.0
Adjusted SG&A (in millions)
(1) $ 781.9 $ 751.6 $ 3,354.5 $ 3,427.7
Operating
Income (in millions) $ 106.1 $ 100.7 $ 787.6 $ 825.8
Adjusted Operating Income (in millions) (1) $ 125.6 $ 157.6
$ 901.4 $ 995.1
Diluted EPS $ 0.84 $ 0.74 $ 6.20 $
6.40
Adjusted EPS (1) $ 1.00 $ 1.22 $ 7.15 $ 7.82
Avg Diluted Shares (in thousands) 73,886 73,861 73,856
73,733
(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 December 31, 2016 and
January 2, 2016, respectively, have been reported on an adjusted
basis to exclude General Parts integration, store consolidation
costs and support center restructuring costs of $10.1 million and
$47.2 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 fifty-two weeks ended December 31, 2016 and
January 2, 2016, respectively, have been reported on an adjusted
basis to exclude General Parts integration, store consolidation
costs and support center restructuring costs of $72.8 million and
$127.1 million, respectively, and General Parts amortization of
acquired intangible assets of $40.9 million and $42.3 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.
“We are pleased with the sequential improvement in our sales
performance and positive comparable sales for the quarter. Our top
line progress is a direct reflection of sustained investment in the
customer. Our stronger sales execution and improved availability
enabled us to serve our customers better,” said Tom Greco,
President and Chief Executive Officer.
Greco continued, “Our bottom line in the quarter reflects a
planned inventory reduction along with sustained investments in the
customer to accelerate top line growth. Our first priority is to
deliver an outstanding experience for our customers and deliver
consistent top line performance. We fully expect to balance our top
and bottom line performance over time as we offset investments with
a robust productivity agenda.”
Fourth Quarter and Full Year 2016 Highlights
Total sales for the fourth quarter increased 2.4% to $2.08
billion, as compared with total sales during the fourth quarter of
fiscal 2015 of $2.03 billion. The sales increase was driven by the
comparable store sales growth of 3.1%, inclusive of the positive
impact of the year-over-year comparable benefit from holiday timing
and new store and Worldpac branch openings partially offset by the
store closures and Carquest store consolidations. Total sales for
fiscal 2016 were $9.57 billion compared to fiscal 2015 of $9.74
billion.
The Company's Gross Profit rate was 43.6% of sales during the
fourth quarter as compared to 44.7% during the fourth quarter last
year. The 114 basis-point decrease was primarily driven by
previously capitalized supply chain costs flowing through the
income statement and reducing gross profit as a result of the
planned reduction of inventory levels. The Company's Gross Profit
rate was 44.5% of sales for fiscal 2016 as compared to 45.4% for
fiscal 2015.
On a GAAP basis, the Company's SG&A rate was 38.5% of sales
during the fourth quarter as compared to 39.8% during the same
period last year. The 128 basis-point decrease was primarily due to
lower integration and restructuring related costs during the fourth
quarter compared to last year. Excluding this impact, the Company's
Adjusted SG&A rate was 37.5% of sales during the fourth quarter
as compared to 37.0% during the same period last year. The 58
basis-point increase in Adjusted SG&A was primarily driven by
ongoing customer focused investments. On a GAAP basis, the
Company's SG&A rate was 36.3% of sales for fiscal 2016 as
compared to 36.9% during the same period last year. The Company's
Adjusted SG&A rate was 35.1% of sales during fiscal 2016 as
compared to 35.2% during the same period last year.
On a GAAP basis, the Company's Operating Income during the
fourth quarter was $106.1 million, an increase of 5.4% versus the
fourth quarter of fiscal 2015. On a GAAP basis, the Operating
Income rate was 5.1% during the fourth quarter as compared to 5.0%
during the fourth quarter of fiscal 2015. The Company's Adjusted
Operating Income was $125.6 million during the fourth quarter, a
decrease of 20.3% versus the fourth quarter of fiscal 2015. As a
percentage of sales, Adjusted Operating Income in the fourth
quarter was 6.0% versus 7.7% during the fourth quarter of fiscal
2015. For fiscal 2016, the Company's GAAP Operating Income rate was
8.2% versus 8.5% during fiscal 2015. For fiscal 2016, the Company's
Adjusted Operating Income was 9.4% versus 10.2% during fiscal
2015.
Operating cash flow decreased approximately 27.4% to $500.9
million in fiscal 2016 from $689.6 million in fiscal 2015. Free
cash flow was $241.3 million in fiscal 2016 compared to $454.9
million in fiscal 2015. Capital expenditures in fiscal 2016 were
$259.6 million as compared to $234.7 million in fiscal 2015.
Store Information
As of December 31, 2016, the Company operated 5,062 stores
and 127 Worldpac branches and served approximately 1,250
independently owned Carquest stores.
2017 Full Year Assumptions
New Stores
75 to 85 new stores including Worldpac branches Comparable
Store Sales (1)
0% to 2% Adjusted Operating Income Rate (2)
15 to 35 basis points
improvement Income Tax Rate (3)
37.5% to 38.0% Integration Expenses (2)
Approximately $30
million to $35 million Capital Expenditures
Approximately $250 million Free
Cash Flow
Minimum $400 million Diluted Share Count
Approximately 74 million shares
1.
Comparable store sales estimate excludes sales to independently
owned Carquest locations and includes the impact of Carquest store
consolidations. 2. Adjusted Operating Income excludes
non-operational expenses related to the integration of General
Parts ("Integration Expenses") and the recurring non-cash
amortization of General Parts' intangible assets. Adjusted
Operating Income is a non-GAAP measure. Management believes
Adjusted Operating Income is an important measure in assessing the
overall performance of the business and utilizes this metric in its
ongoing reporting. On that basis, Management believes it is useful
to provide Adjusted Operating Income to investors and prospective
investors to evaluate Advance’s operating performance across
periods adjusting for these items. Adjusted Operating Income might
not be calculated in the same manner as, and thus might not be
comparable to, similarly titled measures reported by other
companies. Adjusted Operating Income should not be used by
investors or third parties as the sole basis for formulating
investment decisions, as it excludes a number of important cash and
non-cash recurring items. Please refer to a more detailed
explanation of the Company's use of non-GAAP financial measures in
the accompanying financial tables where the Company provides a
reconciliation of its 2016 and 2015 financial results reported on a
GAAP basis to the adjusted basis. Because of the forward-looking
nature of the 2017 non-GAAP financial measures, specific
quantifications of the amounts that would be required to reconcile
these non-GAAP financial measures to their most directly comparable
GAAP financial measures are not available at this time. 3.
Income tax rate estimate does not factor in any impact from the
adoption of Accounting Standards Update (ASU) 2016-09 related to
changes in the presentation of excess tax benefits (deficits) from
share-based payment awards. The Company will adopt the provisions,
as specified by the ASU, effective fiscal 2017.
Dividend
On February 15, 2017, the Company's Board of Directors
declared a regular quarterly cash dividend of $0.06 per share to be
paid on April 7, 2017 to stockholders of record as of
March 24, 2017.
Investor Conference Call
The Company will host a conference call on Tuesday, February 21,
2017, at 8:00 a.m. Eastern time to discuss its quarterly results.
To listen to the live call, log on to the Company's website,
www.advanceautoparts.com, or dial (866) 908-1AAP. The call will be
archived on the Company's website until February 22, 2018.
About Advance Auto Parts
Advance Auto Parts, Inc. is a leading automotive aftermarket
parts provider that serves both professional installer and
do-it-yourself customers. As of December 31, 2016, Advance
operated 5,062 stores and 127 Worldpac branches and employed 74,000
Team Members in the United States, Canada, Puerto Rico and the U.S.
Virgin Islands. The company also serves approximately 1,250
independently owned Carquest branded stores across these locations
in addition to Mexico and the Bahamas, Turks and Caicos, British
Virgin Islands and Pacific Islands. 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 2017 financial performance
including adjusted operating income; 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
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, AAP’s ability to implement its
business and growth strategy; 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 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)
December 31,2016
January 2,2016
Assets
Current assets: Cash and cash equivalents $ 135,178 $
90,782 Receivables, net 641,252 597,788 Inventories, net 4,325,868
4,174,768 Other current assets 70,466 77,408 Total
current assets 5,172,764 4,940,746
Property and
equipment, net 1,446,340 1,434,577
Goodwill 990,877
989,484
Intangible assets, net 640,903 687,125
Other
assets, net 64,149 75,769 $ 8,315,033 $ 8,127,701
Liabilities and
Stockholders' Equity
Current liabilities: Current portion of long-term
debt $ 306 $ 598 Accounts payable 3,086,177 3,203,922 Accrued
expenses 554,397 553,163 Other current liabilities 35,166
39,794 Total current liabilities 3,676,046 3,797,477
Long-term debt 1,042,949 1,206,297
Deferred income
taxes 454,282 433,925
Other long-term liabilities
225,564 229,354
Total stockholders' equity 2,916,192
2,460,648 $ 8,315,033 $ 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 Fifty-Two Week Periods Ended December 31, 2016 and
January 2, 2016 (in thousands, except per share data)
(unaudited)
Q4 2016 Q4 2015 YTD 2016 YTD 2015
Net sales $ 2,082,891 $ 2,033,545 $ 9,567,679 $ 9,737,018
Cost of sales 1,175,327 1,124,373
5,311,764 5,314,246 Gross profit
907,564 909,172 4,255,915 4,422,772 Selling, general and
administrative expenses 801,417 808,494
3,468,317 3,596,992 Operating income
106,147 100,678 787,598
825,780 Other, net: Interest expense (13,365 )
(13,809 ) (59,910 ) (65,408 ) Other (expense) income, net
4,129 (3,044 ) 11,147 (7,484 )
Total other, net (9,236 ) (16,853 ) (48,763 )
(72,892 ) Income before provision for income taxes 96,911
83,825 738,835 752,888 Provision for income taxes 34,546
29,006 279,213 279,490
Net income $ 62,365 $ 54,819 $ 459,622
$ 473,398 Basic earnings per common share (a) $ 0.84
$ 0.75 $ 6.22 $ 6.45 Diluted earnings per common share (a) $ 0.84 $
0.74 $ 6.20 $ 6.40 Average common shares outstanding (a)
73,685 73,263 73,562 73,190 Average diluted common shares
outstanding (a) 73,886 73,861 73,856 73,733
(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 December 31, 2016 and January 2, 2016, we had 73,749
and 73,314 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 December 31, 2016 and January 2, 2016
(in thousands) (unaudited)
December 31,2016
January 2,2016
Cash flows from operating activities: Net income $
459,622 $ 473,398 Depreciation and amortization 258,387 269,476
Share-based compensation 20,452 36,929 Provision (benefit) for
deferred income taxes 20,213 (9,219 ) Excess tax benefit from
share-based compensation (22,429 ) (13,002 ) Other non-cash
adjustments to net income 3,960 15,542 (Increase) decrease in:
Receivables, net (41,642 ) (21,476 ) Inventories, net (144,603 )
(244,096 ) Other assets 14,421 7,423 (Decrease) increase in:
Accounts payable (119,325 ) 119,164 Accrued expenses 49,341 35,103
Other liabilities 2,477 20,400 Net cash
provided by operating activities 500,874 689,642
Cash
flows from investing activities: Purchases of property and
equipment (259,559 ) (234,747 ) Business acquisitions, net of cash
acquired (4,697 ) (18,889 ) Proceeds from sales of property and
equipment 2,212 270 Net cash used in
investing activities (262,044 ) (253,366 )
Cash flows
from financing activities: Decrease in bank overdrafts (5,573 )
(2,922 ) Net payments on credit facilities (160,000 ) (423,400 )
Dividends paid (17,738 ) (17,649 ) Proceeds from the issuance of
common stock, primarily for employee stock purchase plan 4,532
5,174 Tax withholdings related to the exercise of stock
appreciation rights (19,558 ) (13,112 ) Excess tax benefit from
share-based compensation 22,429 13,002 Repurchase of common stock
(18,393 ) (6,665 ) Other (390 ) (380 ) Net cash used
in financing activities (194,691 ) (445,952 )
Effect of exchange rate changes on cash 257
(4,213 )
Net increase (decrease) in cash and cash
equivalents 44,396 (13,889 )
Cash and cash equivalents,
beginning of period 90,782 104,671
Cash and cash equivalents, end of period $ 135,178 $
90,782
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 December 31, 2016, 615 Carquest stores acquired from General
Parts had been consolidated or converted into existing Advance Auto
Parts stores format. As of December 31, 2016, the Company operated
608 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)
Fifty-Two Week Periods Ended(in
thousands, except per share data)
December 31,2016
January 2,2016
December 31,2016
January 2,2016
Net income (GAAP) $ 62,365 $ 54,819 $ 459,622 $ 473,398 SG&A
adjustments (a) 19,477 56,881 113,768 169,340 Provision for income
taxes on adjustments (b) (7,401 ) (21,615 )
(43,232 ) (64,349 ) Adjusted net income $ 74,441 $
90,085 $ 530,158 $ 578,389 Diluted
earnings per common share (GAAP) $ 0.84 $ 0.74 $ 6.20 $ 6.40
SG&A adjustments, net of tax 0.16 0.48
0.95 1.42 Adjusted EPS $ 1.00
$ 1.22 $ 7.15 $ 7.82
Reconciliation of
Adjusted Selling, General and Administrative
Expenses:
Twelve Week Periods Ended(in
thousands)
Fifty-Two Week Periods Ended(in
thousands)
December 31,2016
January 2,2016
December 31,2016
January 2,2016
SG&A (GAAP) $ 801,417 $ 808,494 $ 3,468,317 $ 3,596,992
SG&A adjustments (a) (19,477 ) (56,881 )
(113,768 ) (169,340 ) Adjusted SG&A $ 781,940 $
751,613 $ 3,354,549 $ 3,427,652
Reconciliation of
Adjusted Operating Income:
Twelve Week Periods Ended(in
thousands)
Fifty-Two Week Periods Ended(in
thousands)
December 31,2016
January 2,2016
December 31,2016
January 2,2016
Operating income (GAAP) $ 106,147 $ 100,678 $ 787,598 $ 825,780
SG&A adjustments (a) 19,477 56,881
113,768 169,340 Adjusted operating
income $ 125,624 $ 157,559 $ 901,366 $ 995,120
(a)
The adjustments to SG&A expenses for
the twelve and fifty-two weeks ended December 31, 2016 include
General Parts integration, store consolidation costs and support
center restructuring costs of $10,084 and $72,828 and General Parts
amortization of acquired intangible assets of $9,393 and $40,940,
respectively. The adjustments to SG&A expenses for the twelve
and fifty-two weeks ended January 2, 2016 include General Parts
integration, store consolidation costs and support center
restructuring costs of $47,213 and $127,059 and General Parts
amortization of acquired intangible assets of $9,668 and $42,281,
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:
Fifty-Two Week Periods Ended
December 31,2016
January 2,2016
Cash flows from operating activities $ 500,874 $ 689,642 Purchases
of property and equipment (259,559 ) (234,747 ) Free
cash flow $ 241,315 $ 454,895
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
December 31,2016
January 2,2016
Total debt (a) $ 1,043,255 $ 1,206,895 Add: Capitalized lease
obligation (rent expense * 6) 3,221,202 3,190,728
Adjusted debt 4,264,457 4,397,623 Operating income 787,598
825,780 Add: Adjustments (b) 72,828 127,059 Depreciation and
amortization 258,387 269,476 Adjusted EBITDA
1,118,813 1,222,315 Rent expense (less favorable lease amortization
of $3,498 and $4,786, respectively) 536,867 531,788
Adjusted EBITDAR $ 1,655,680 $ 1,754,103
Adjusted Debt to
Adjusted EBITDAR 2.6 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
December 31, 2016 include General Parts integration, store closure
and consolidation costs and support center restructuring costs of
$72.8 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.
Store Information:
As of December 31, 2016, the Company operated 5,062 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 twelve and fifty-two weeks ended December 31,
2016.
AAP
AI CARQUEST WORLDPAC
Total October 8, 2016 4,237
181 640 127 5,185 New 22 — 3 — 25
Closed (2 ) — (2 ) — (4 ) Consolidated — — (17 ) — (17 ) Converted
16 — (16 ) — —
December 31,
2016 4,273 181
608 127 5,189 January
2, 2016 4,102 184 885 122
5,293 New 64 — 9 5 78 Closed (13 ) (3 ) (7 ) — (23 )
Consolidated (3 ) — (156 ) — (159 ) Converted 123 —
(123 ) — —
December 31, 2016
4,273 181 608
127 5,189
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version on businesswire.com: http://www.businesswire.com/news/home/20170221005623/en/
Advance Auto Parts, Inc.Media ContactLaurie Stacy,
540-561-1206laurie.stacy@advanceautoparts.comorInvestor
ContactZaheed 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