Advance Auto Parts (AAP) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $2.7 billion, flat year-over-year, with comparable store sales up 0.4%, led by the pro business while DIY sales remained pressured but improved sequentially.

• Gross profit margin declined to 41.5% from 42.5% last year, impacted by pricing investments and higher product costs.

• Diluted EPS was $0.75, down from $1.32 in Q2 2023.

• Announced sale agreement for Worldpac for $1.5 billion, with net proceeds of $1.2 billion expected to strengthen the balance sheet and invest in core operations.

• Retained Canadian operations after a strategic review, citing strong performance and alignment with U.S. business.

Financial highlights

• Q2 net sales were $2.7 billion, flat year-over-year; Q2 net income was $45.0 million, down from $78.6 million.

• Gross profit for Q2 2024 was $1.1 billion (41.5% of sales), down from $1.14 billion (42.5%).

• SG&A expenses increased to $1 billion (38.9% of sales), up from 37.8% last year, mainly due to higher labor and professional fees.

• Operating income was $71.8 million (2.7% of sales), down from $125.9 million (4.7%) in Q2 2023.

• Year-to-date free cash flow outflow was $4.6 million, improved from $312 million outflow last year.

Outlook and guidance

• Full-year 2024 sales expected at $11.15–$11.25 billion, with comparable store sales between -1% and flat.

• Operating income margin forecasted at 2.1%–2.5% for the year.

• Diluted EPS guidance is $2–$2.50; minimum $100 million free cash flow expected.

• Capital expenditures to remain at $200–$250 million for IT, store, and supply chain projects.

• Guidance includes Worldpac until transaction closes; RemainCo guidance to be provided after Q3.