Advance Auto Parts Inc.’s stock jumped 7.5% early Wednesday, after the car parts maker’s upbeat profit guidance weighed against a quarterly loss as it continues to overhaul its business and rein in costs.
Raleigh, N.C.-based Advance Auto
AAP,
had a net loss of $35.1 million, or 59 cents a share, for the quarter, after income of $82.9 million, or $1.39 a share, in the year-earlier period. Sales fell to $2.465 billion from $2.474 billion a year ago.
The FactSet consensus was for EPS of 21 cents and sales of $2.464 billion.
“As we closed out 2023, we continued to act with a sense of urgency to stabilize the business and position the company to return to profitable growth,” CEO Shane O’Kelly said in a statement. “Our full year results are well below our expectations, and we are focused on instilling greater discipline and accountability both in the fundamental business and in how the organization executes across the board.”
The company is still moving ahead with a strategic review of the business, which includes plans to sell its Worldpac and Canadian businesses, he said. Worldpac makes catalytic converters, engine cooling and other products.
The company has made new hires, including Ryan Grimsland as CFO and Elizabeth Dreyer as chief accounting officer. It has added $50 million in reductions to its sales, general and administrative costs on top of an initial $150 million on an annualized basis. And it’s moving to consolidate its supply chain to a single, unified network.
On Feb. 26, the company entered an amendment to its revolving credit facility to enable certain add-backs to financial covenants for write-downs of inventory and vendor receivables. As of Dec. 30, it was in compliance with its covenants.
“In 2024, we are refining our operational improvement plans and building on the decisive actions we have taken to turn around the company’s performance,” said Grimsland. “We are committed to improving overall productivity and taking a disciplined approach to reducing expenses, which will support our focus on investing in our team members.”
The company is now expecting full-year sales to range from $11.3 billion to $11.4 billion, and for EPS to range from $3.75 to $4.25. The FactSet consensus is for 2024 EPS of $3.65 and sales of $11.5 billion.
The stock has fallen 55% in the last 12 months, while the S&P 500
SPX,
has gained 28%.
