This summary is based on the first quarter fiscal 2008 earnings call conducted by Advance Auto Parts, Inc. (AAP: chart) on May 16, 2008.

Management:

Vice President Finance and Investor Relations: Judd Nystrom
President, Chief Executive Officer: Darren Jackson
Executive Vice President Development Officer DIY: Elwyn Murray
Executive Vice President Customer Development Officer Commercial: Jim Wade
Executive Vice President, Chief Financial Officer: Mike Norona
Executive Vice President Supply Chain and Information Technology: Kevin Freeland

Key Investors Issues

- EPS were 86 cents per share compared to 71 cents per share last year.
- Net income was $82.1 million compared to $76.1 million for the corresponding quarter in 2007.
- Revenue rose 4% to $1.53 billion, from $1.47 billion in the year-ago period.

First Quarter Highlights

Total revenue increased 4% to $1.53 billion compared with revenue of $1.47 billion in the first quarter last year.

- This revenue increase reflected the net addition of 141 new stores in the past 12 months and a comparable store sales increase of 0.6% on top of a 0.7% increase last year.
- The comparable store sales were comprised of a 10.6% increase in commercial sales, including Auto Part International, offset by a 3% decrease in DIY sales. This compares to a 4.2% increase in commercial and a 0.5% decrease in DIY in the first quarter last year. Commercial sales including Auto Part International represented 29% of total sales compared to 26% last year.
- Total commercial sales including Auto Part International were $438.7 million, a 14.4% increase over last year. Consistent with the prior year, 82% of Advance stores had commercial programs.

Gross profit rate was 48.7% as compared to 48.3% last year which reflects a 39 basis point improvement.

- The 39 basis point improvement was driven by lower supply chain and logistics costs combined with more effective pricing.
- SG&A expenses were 39.3% of sales compared to 39.1% last year. This increase of 11 basis points was driven by deleverage due to modest comparable store sales and increased incentive compensation. These increases were almost entirely offset by cost reduction initiatives that were initiated during the second half of fiscal 2007.

- Interest expense net of interest income was $12.3 million compared to $10.9 million last year.
- Current borrowing cost is approximately 5%.
- Earnings per share increased 21% to 86 cents as compared to 71 cents per share for the first quarter last year. This 21% EPS increase was primarily driven by a 7% increase in operating income and approximately 13 million shares repurchased over the past year. This is the first quarter in which quarterly EPS has increased over 20% in over two years.

The company repurchased approximately 4.6 million shares at an average price of $34.04 for a total expenditure of $155 million.

- In comparison, the company repurchased 8.3 million shares and 3.7 million shares in fiscal 2007 and fiscal 2006 respectively.
- The Board authorized a $250 million share repurchase program. This new authorization replaces the company’s $500 million share repurchase program authorized in August 2007 which has $105 million remaining. The company plans to buy back shares on an opportunistic basis.

Inventory increased 4% which matched sales increase of 4%.

- The increase in inventory was driven by parts availability initiative which was somewhat offset by focused plan to improve inventory productivity.
- Inventory per store was flat as compared to prior year. The company has been funding the majority of parts availability initiative through some inventory reduction initiatives.
- Accounts payable to inventory ratio was 58.6% compared to 57% last year.

- Capital expenditures were $58.9 million. This compares to $75.9 million last year or a reduction of $17 million driven by a decrease in store development as well as timing associated with the construction of a new distribution center.
- Overall free cash flow increased to $150.5 million, an increase of $45.4 million compared to last year’s first quarter which was higher than expected.

Sales results came in on plan and bottom line results exceeded plan.

- This was primarily driven by the growth in commercial business, improvements in gross margin, better SG&A leverage versus last year and share buybacks.
- Results were primarily driven by actions initiated last year and fulfilled this year.

The company sees the DIY industry growing at approximately 1% per year.

- New store growth is exceeding industry growth, leading to negative comparable store sales among major competitors.
- Customer traffic has shown single digit declines over the last several years and while partially offset by increasing sales per transaction has resulted in negative comparable store sales trends.