Advance Auto Parts increased earnings per diluted share 57.1% to $US0.77 for the second quarter ended July 13, 2002, before integration expenses and the extraordinary item, compared to $0.49 for the same quarter last year. Including integration expenses, earnings per share rose 30.6% to $0.64. After integration expenses and an extraordinary item, earnings per share declined 10.2% to $0.44.
Year-to-date earnings per share before integration expenses and the extraordinary item, climbed 111.1% to $1.33 compared to $0.63 last year. Including integration expense, earnings per share rose 61.9% to $1.02. After integration expenses and the extraordinary item earnings per share rose 25.4% to $0.79.
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During the second quarter, the company incurred pre-tax integration expenses of $7.6 million and $18.2 million year-to-date. These expenses are related to the integration of Discount Auto Parts, which was acquired on November 29, 2001. As previously announced, the company believes that total integration expenses for the year will not exceed $40 million.
During the quarter, Advance Auto Parts recorded an after-tax extraordinary loss of $7.6 million from the extinguishment of debt. These charges resulted from the company negotiating a more favourable $250 million Tranche C loan, pre- paying in full its $305 million Tranche B loan, repurchasing approximately $37 million in face value of bonds and pre-paying $23 million on its Tranche A loan. The extraordinary loss includes un-amortised deferred loan fees and related refinancing fees on the credit facilities; and un-amortised discounts, un-amortised deferred loan fees and premiums paid to repurchase the bonds.
Second quarter sales increased 30.5% to $792.7 million compared with $607.5 million last year. Same store sales for the Advance Auto Parts stores grew 5.0% for the second quarter compared to 6.8% in the comparable period last year. The Discount Auto Parts stores, that are not yet in the reported comparable store base, produced a comparable store sales increase of 3.7% during the second quarter compared to 1.8% last year.
Year-to-date sales rose 34.4% to approximately $1.8 billion from $1.3 billion last year. Same store sales rose 6.5% for the first two quarters compared to 6.2% last year. The majority of same stores sales gains, both in the second quarter and year-to-date, were generated from an increase in customers with the remainder being produced from an increase in transaction size.
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By GlobalData
Operating income, before integration expenses, increased 78.3% to $64.9 million from $36.4 million in the comparable period last year, generating an operating margin increase of 220 basis points to 8.2% from 6.0% last year. Including integration expenses, the company reported a 57.4% increase in operating income to $57.2 million, producing a 120 basis points increase in operating margin to 7.2%. Year-to-date operating income, before integration expenses, rose 98.8% to $123.8 million from $62.3 million last year, generating an operating margin increase of 220 basis points to 6.9% compared to 4.7% last year. Including integration expenses, operating income rose 69.6% to $105.6 million, which produced a 120 basis point increase in operating margin to 5.9%.
Net income, before integration expense and the extraordinary item, rose 99.9% in the second quarter to $28.2 million from $14.1 million in the comparable quarter last year. Including integration expense and the extraordinary item the company reported a 12.9% increase in net income to $15.9 million. Year-to-date net income, before integration expense and the extraordinary item, increased 164.3% to $47.6 million from $18.0 million last year. Including integration expense and the extraordinary item the company reported a 55.8% increase in net income to $28.0 million.
During the seasonally strong second quarter, the company generated $75 million in free cash flow. The company has raised its fiscal year free cash flow guidance to a range of $100 million to $110 million from $90 million to $100 million.
On July 26, 2002, the company closed its acquisition of approximately 55 Trak Auto Parts stores in the northern Virginia, Washington DC and eastern Maryland market. The Company anticipates that it will successfully convert each of the locations to Advance Auto Parts by year-end, including enhanced inventory selection and state-of-the-art store systems.
With respect to the outlook for the remainder of fiscal 2002, the company raised its earnings per diluted share guidance to a range of $2.53 to $2.60 per share before integration expense and the extraordinary item for 2002. For the fiscal year 2003, the company believes it can achieve a 25% increase in earnings per share.
