Advance Auto Parts, Inc. Reports Third Quarter 2024 Financial Results
Advance Auto Parts, Inc. (NYSE:AAP), a leading automotive aftermarket parts provider in North America, announced its financial results for the third quarter ended October 5, 2024.
Key Financial Metrics
| Financial Metric | Q3 2024 | Q3 2023 | YoY Change |
|---|---|---|---|
| Total Revenue | $2.1B | $2.2B | -4.5% |
| Gross Profit | $907.9M | - | +11.0% |
| Gross Margin | 42.3% | 36.9% | +5.4 pp |
| SG&A Expenses | $907.5M | - | - |
| Operating Income | $0.4M | - | -63.6% |
| Diluted Loss per Share (GAAP) | -$0.42 | -$1.19 | - |
| Adjusted Diluted Loss per Share | -$0.04 | - | - |
Advance Auto Parts reported a decline in total revenue for the quarter, attributed to a 2.3% decrease in comparable store sales. Despite this, the company achieved significant gross margin improvement from 36.9% to 42.3%, driven by strategic pricing investments and cost stabilization.
Key Developments and Operational Highlights
- Announces Asset Optimization Program targeting a reduction of 500 corporate stores, 200 independently owned locations, and four distribution centers by mid-2025.
- Completion of the sale of Worldpac for approximately $1.5 billion in cash, adjusted for working capital and other items.
- Identifies over 500-basis points of operating margin expansion opportunity through fiscal 2027.
Comments from Company Officers
Shane O'Kelly, President and CEO, stated, 'We are pleased to have made progress on our strategic actions, including the completion of the sale of Worldpac and a comprehensive operational productivity review of our business. We are charting a clear path forward and introducing a new three-year financial plan, focusing on executing core retail fundamentals to improve asset productivity and create shareholder value.'
Dividends or Share Repurchase Program
The company declared a regular cash dividend of $0.25 per share, payable on January 24, 2025, to shareholders of record as of January 10, 2025.
Forward Guidance
Advance Auto Parts provided preliminary fiscal 2025 guidance and introduced new fiscal 2027 financial objectives, aiming for a 7% adjusted operating income margin and approximately a 2.5x debt leverage ratio.
Stock Price Movement
Following the earnings release, the company's stock price experienced a 2.58% increase.
In summary, while Advance Auto Parts reported a decline in revenue for the quarter, its strategic initiatives and operational improvements led to a notable increase in gross margins and adjusted earnings. The company's forward-looking plans and cost optimization efforts are aimed at enhancing long-term profitability and shareholder value.
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