Advance Auto Parts 2013 Annual Report Download - page 36

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23
Fiscal 2013 Highlights
A high-level summary of our financial results and other highlights from our Fiscal 2013 include:
Financial
• Total sales during Fiscal 2013 increased 4.7% to $6,493.8 million as compared to Fiscal 2012, primarily driven by the
addition of the 124 acquired BWP stores and 151 other net new stores partially offset by a 1.5% decrease in
comparable store sales.
• Our operating income for Fiscal 2013 was $660.3 million, an increase of $3.0 million from the comparable period in
Fiscal 2012. As a percentage of total sales, operating income was 10.2%, a decrease of 42 basis points, due to higher
SG&A partially offset by a higher gross profit rate. Included in the higher SG&A was $25.0 million of expenses
associated with our acquisition of GPI on January 2, 2014 and $8.0 million of expenses associated with our integration
of BWP.
• Our inventory balance as of December 28, 2013 increased $247.9 million, or 10.7%, over the prior year driven
primarily by our new store growth, acquisition of BWP and support of inventory availability initiatives.
• We generated operating cash flow of $545.3 million during Fiscal 2013, a decrease of 20.4% compared to Fiscal 2012,
primarily due to an increase in inventory, net of accounts payable.
Other
• On December 31, 2012, we completed the acquisition of BWP, a leading Commercial provider in the Northeast.
• In December 2013, we issued $450 million of principal amount of 4.50% senior unsecured notes, due in 2023, and
entered into a new credit agreement, in anticipation of our acquisition of GPI.
Subsequent to Fiscal 2013, we completed the acquisition of GPI, a leading privately-held distributor and supplier of
original equipment and aftermarket automotive replacement products for commercial markets operating under the Carquest and
Worldpac brands.
Refer to the “Results of Operations” and “Liquidity” sections for further details of our income statement and cash flow
results, respectively.
Business Update
Our two key strategies are Superior Availability and Service Leadership. Superior Availability is aimed at product
availability and maximizing the speed, reliability and efficiency of our supply chain. Service Leadership leverages our product
availability in addition to more consistent execution of customer-facing initiatives to strengthen our integrated operating
approach of serving our DIY and Commercial customers in our stores and on-line. Through these two key strategies, we believe
we can continue to build on the initiatives discussed below and produce favorable financial results over the long term. Sales to
Commercial customers remain the biggest opportunity for us to increase our overall market share in the automotive aftermarket
industry. Our Commercial sales, as a percentage of total sales, increased to 40.4% in Fiscal 2013 compared to 38.1% in Fiscal
2012. This increase has been more pronounced in Fiscal 2013 due to the contribution of the acquired BWP stores which are
more weighted in Commercial sales than our Advance stores.
Our strategic priorities include:
• Growing our Commercial business through improved delivery speed and reliability, increased customer retention,
increased volume with national and regional accounts, and the integrations of BWP and GPI, respectively;
• Improving localized parts availability through the continued increase in the number of our larger HUB stores,
strengthened focus on in-store availability and leveraging the advancement of our supply chain infrastructure
beginning with our new Remington distribution center;
• Accelerating our new store growth rate; and
• Continuing our focus on store execution through more effective scheduling, increased productivity and simplification,
improved product on-hand accuracy, expanded sales training and continued measurement of customer engagement.
Acquisitions
On December 31, 2012, we acquired B.W.P. Distributors, Inc., a privately-held company that supplied, marketed and
distributed automotive aftermarket parts and products principally to Commercial customers. Prior to the acquisition, BWP