Advance Auto Parts Inc. (NYSE:AAP) Q2 2019 Earnings Conference Call - Final Transcript

Aug 13, 2019 • 08:00 am ET


Advance Auto Parts Inc. (NYSE:AAP) Q2 2019 Earnings Conference Call - Final Transcript


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Welcome to Advance Auto Parts Second Quarter 2019 Conference Call. Before we begin, Elisabeth Eisleben, Vice President, Investor Relations will make a brief statement concerning forward-looking statements that will be discussed on this call.

Elisabeth Eisleben

Good morning and thank you for joining us to discuss our second quarter 2019 results. I'm joined by Tom Greco, our President and Chief Executive Officer; and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will turn our attention to answering your questions.

Before we begin, please be advised that our comments today may include forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Our actual results may differ materially from those projected in such statements due to a number of risks and uncertainties which are described in the Risk Factors sections in the company's filings with the Securities and Exchange Commission. We maintain no duty to update forward-looking statements made.

Additionally, our comments today include certain non-GAAP financial measures. We believe providing these measures helps investors gain a more complete understanding of our results and is consistent with how management views our financial results. Please refer to our quarterly press release and accompanying financial statements issued today for additional details regarding the forward-looking statements and reconciliations of these non-GAAP financial measures to the most comparable GAAP measures referenced in today's call. The content of this call will be governed by the information contained in our earnings release and related financial statements.

Now, let me turn the call over to Tom Greco.

Tom Greco

Thanks, Elizabeth. Good morning, everyone, and thank you for joining us today as we review our second quarter 2019. Before we begin, I'd like to thank our more than 70,000 team members and our network of Carquest Independence for their continued commitment towards our long-term goals.

In the second quarter, net sales increased to $2.3 billion and comparable store sales were flat. Our adjusted operating income margin of 8.4% decreased 40 basis points compared to the prior year quarter. And our adjusted diluted earnings per share increased 1.5% to $2. Through the first half of 2019 our net sales increased 1.6% with comparable store sales up 1.5%. Year-to-date, our adjusted operating income margin of 8.3% increased 7 basis points and our adjusted diluted EPS was $4.46, an increase of 9.6%.

While our Q2 results were below our expectations, we remain confident in our ability to capitalize on the significant opportunity ahead. We are relentlessly focused on the disciplined execution of our long-term strategic plan to enable sales growth, margin expansion and meaningful cash flow improvement.

As you saw on our press release, we updated our full year guidance ranges, slightly narrowing our sales and adjusted OI margin ranges, while increasing our free cash flow expectations for the year. Jeff will provide further details of our financial results momentarily. However, I want to spend some time reviewing our performance both in Q2 and year-to-date.

As we said in the past, the spring selling season straddles