Advance Auto Parts Running on Empty: Fool by Numbers

On Feb. 15, Advance Auto Parts (NYSE: AAP  ) released earnings for the fourth quarter ended Dec. 30.

• Revenue increased by 5.4% to $1.02 billion with a 1.6% increase in comparable-store sales.
• The bottom line dropped 10.2% to $35.4 million. Management attributed the decline to soft sales, which limited its ability to leverage expenses.
• During Q4, the company opened 53 new stores, remodeled 12, and relocated 16 stores. Given the weak sales, management will reassess how to allocate capital by opening, remodeling, and relocating fewer stores in hopes of improving selling, general, and administrative expenses and return on capital.
• Advance Auto Parts is a three-star stock in Motley Fool CAPS, our interactive stock database.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2006	Q4 2005	Change
Sales	$1,016.2	$963.7	5.4%
Net Profit	$35.4	$39.4	(10.2%)
EPS	$0.33	$0.36	(8.3%)
Diluted Shares	106.2	109.8	(3.2%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q4 2006	Q4 2005	Change*
Gross Margin	47.1%	46.7%	0.4
Operating Margin	6.3%	7.3%	(1.0)
Net Margin	3.5%	4.1%	(0.6)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q4 2006	Q4 2005	Change
Cash + ST Invest.	$11.1	$40.8	(72.7%)
Accounts Rec.	$97.0	$94.7	2.5%
Inventory	$1,463.3	$1,367.1	7.0%

Liabilities	Q4 2006	Q4 2005	Change
Accounts Payable*	$779.1	$748.6	4.1%
Long-Term Debt	$477.2	$406.0	17.5%

*Includes financed vendor accounts payable.

Learn the ways of the balance sheet.

Cash Flow Highlights

	FY 2006	FY 2005	Change
Cash From Ops.	$333.6	$321.6	3.7%
Capital Expenditures	$258.6	$216.2	19.6%
Free Cash Flow	$75.0	$105.4	(28.8%)

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Related companies:

• O'Reilly Automotive (Nasdaq: ORLY  )
• AutoZone (NYSE: AZO  )
• CSK Auto (NYSE: CAO  )
• Pep Boys (NYSE: PBY  )

Related Foolishness:

• Advance Auto Parts Driven by Economic Necessity
• Advance Auto Parts Standing Still
• Dueling Fools: AutoZone

AutoZone is a Motley Fool Inside Value recommendation. For more companies at great prices, try a free 30-day trial.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.