Advance Auto Parts, Inc. (AAP) has reported a 5.50 percent fall in profit for the quarter ended Oct. 08, 2016. The company has earned $113.84 million, or $1.53 a share in the quarter, compared with $120.47 million, or $1.63 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $128.61 million, or $1.73 a share compared with $144.20 million or $1.95 a share, a year ago. Revenue during the quarter went down marginally by 2.02 percent to $2,248.86 million from $2,295.20 million in the previous year period. Gross margin for the quarter contracted 104 basis points over the previous year period to 43.94 percent. Total expenses were 91.38 percent of quarterly revenues, up from 91.05 percent for the same period last year. That has resulted in a contraction of 34 basis points in operating margin to 8.62 percent.
Operating income for the quarter was $193.77 million, compared with $205.52 million in the previous year period.
However, the adjusted operating income for the quarter stood at $217.58 million compared to $243.81 million in the prior year period. At the same time, adjusted operating margin contracted 95 basis points in the quarter to 9.68 percent from 10.62 percent in the last year period.
"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.
Operating cash flow declines
Advance Auto Parts, Inc. has generated cash of $409.42 million from operating activities during the nine month period, down 21.28 percent or $110.67 million, when compared with the last year period. The company has spent $205.40 million cash to meet investing activities during the nine month period as against cash outgo of $179.95 million in the last year period. It has incurred net capital expenditure of $202.73 million on net basis during the nine month period, up 25.88 percent or $41.68 million from year ago period.
The company has spent $176.30 million cash to carry out financing activities during the nine month period as against cash outgo of $337.25 million in the last year period.
Cash and cash equivalents stood at $119.49 million as on Oct. 08, 2016, up 13.43 percent or $14.15 million from $105.35 million on Oct. 10, 2015.
Working capital increases sharply
Advance Auto Parts, Inc. has recorded an increase in the working capital over the last year. It stood at $1,424.78 million as at Oct. 08, 2016, up 34.73 percent or $367.30 million from $1,057.47 million on Oct. 10, 2015. Current ratio was at 1.37 as on Oct. 08, 2016, up from 1.27 on Oct. 10, 2015.
Cash conversion cycle (CCC) has decreased to 42 days for the quarter from 88 days for the last year period. Days sales outstanding were almost stable at 25 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 145 days for the quarter compared with 275 days for the previous year period. At the same time, days payable outstanding was almost stable at 212 days for the quarter, when compared with the previous year period.
Debt comes down
Advance Auto Parts has recorded a decline in total debt over the last one year. It stood at $1,043 million as on Oct. 08, 2016, down 19.38 percent or $250.69 million from $1,293.70 million on Oct. 10, 2015. Total debt was 12.40 percent of total assets as on Oct. 08, 2016, compared with 15.81 percent on Oct. 10, 2015. Debt to equity ratio was at 0.37 as on Oct. 08, 2016, down from 0.54 as on Oct. 10, 2015. Interest coverage ratio deteriorated to 14.27 for the quarter from 14.29 for the same period last year.
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