Advance Auto Parts

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Q4'25 comparable sales growth of 1.1%; Positive sales performance in the last eight weeks FY25 adjusted operating margin of 2.5%; Over 200-basis points of year-over-year expansion RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America, that serves both professional installer and do-it-yourself customers, announced its financial results for the fourth quarter and full year ended January 3, 2026. "I am pleased with the progress achieved during 2025 and I want to thank our team members for their hard work,” said Shane O'Kelly, president and chief executive officer. "In 2025, we laid the foundation to build a better future for the Company. Our actions are delivering progress on operational goals and financial commitments to our shareholders. We returned to full year positive comparable sales growth following three years of negative results and expanded adjusted operating income margin by over 200-basis points, which were both in line with our full year 2025 guidance range." "In 2026, we will continue to execute our strategic plan with a focus on the customer and the fundamentals of selling auto parts. This execution is being supported by a solid balance sheet with healthy liquidity to fuel our initiatives. Today, we are announcing 2026 guidance targeting an acceleration in full year comparable sales growth of 1.0% to 2.0% and adjusted operating income margin in the range of 3.8% to 4.5%, which builds on the foundation established thus far." Fourth Quarter 2025 Results(1,2) The Company's results for the fourth quarter ended January 3, 2026 included one additional week (the "additional week") as compared to the fourth quarter of the prior year ended December 28, 2024. Fourth quarter 2025 net sales totaled $2.0 billion, compared with $2.0 billion in the fourth quarter of the prior year. The additional week in fourth quarter 2025 added approximately $132 million to net sales. Fourth quarter 2024 net sales included approximately $74 million related to sales at stores closed in Q1'25 as a result of our optimization program associated with our 2024 Restructuring Plan. Comparable store sales for the fourth quarter 2025 increased 1.1%. The calculation for comparable store sales excludes net sales related to closed stores under the 2024 Restructuring Plan and the additional week. The Company's fourth quarter 2025 gross profit was $0.9 billion, or 44.0% of net sales compared with $0.3 billion, or 17.4% in the fourth quarter of the prior year. Adjusted gross profit was $0.9 billion, or 44.2% of net sales compared with $0.8 billion, or 39.0% in the fourth quarter of the prior year. The increase in gross profit as a percentage of net sales compared to the same period in the prior year was driven by cycling of atypical items related to our 2024 Restructuring Plan, operational savings associated with the footprint optimization activity completed in Q1'25 associated with our 2024 Restructuring Plan and improvements in product margins from strategic sourcing initiatives. The Company's fourth quarter 2025 selling, general and administrative (SG&A) expenses were $0.8 billion, or 41.8% of net sales compared with $1.2 billion, or 58.5% of net sales in the fourth quarter of the prior year. Adjusted SG&A expenses were $0.8 billion, or 40.5% of net sales in the fourth quarter of 2025 compared with $0.9 billion, or 43.9% of net sales in the prior year quarter. The reduction in SG&A expenses as a percentage of net sales compared to the same period in the prior year was driven by cycling of atypical items related to our 2024 Restructuring Plan, and the operation of fewer stores compared to last year. The Company's fourth quarter 2025 operating income was $44 million, or 2.2% of net sales, compared with operating loss of $820 million, or (41.1)% of net sales in the fourth quarter of the prior year. Adjusted fourth quarter 2025 operating income was $73 million or 3.7% of net sales, compared with a loss of $99 million or (5.0)% of net sales in the prior year quarter. The additional week in fourth quarter 2025 added approximately $9 million to adjusted operating income. The Company's diluted earnings per share was $0.49, compared with a loss of $(10.16) in the fourth quarter of 2024. The Company's adjusted diluted earnings per share was $0.86 compared with a loss $(1.18) in the fourth quarter of 2024. The additional week in fourth quarter 2025 added approximately $0.08 to adjusted diluted earnings per share. Full Year 2025 Results(1,2) The Company's results for the full year ended January 3, 2026 included one additional week (the "additional week") as compared to the fiscal year ended December 28, 2024. Full year 2025, net sales totaled $8.6 billion, compared with $9.1 billion in full year 2024. Full year 2025 net sales included $51 million related to the store optimization program associated with our 2024 Restructuring Plan, compared with approximately $74 million in full year 2024. The additional week added approximately $132 million to net sales in full year 2025. Comparable store sales for full year 2025 increased 0.8%. The calculation for comparable store sales excludes net sales related to the store optimization program and the additional week. The Company's full year 2025 gross profit was $3.7 billion, or 43.4% of net sales compared with $3.4 billion or 37.5% of net sales in the prior year. Adjusted full year 2025 gross profit was $3.8 billion or 43.9% of net sales, compared with $3.8 billion or 42.2% of net sales in the prior year. The Company's full year 2025 SG&A was $3.8 billion, or 43.9% of net sales, compared with $4.1 billion, or 45.3% of net sales in the prior year. Adjusted full year 2025 SG&A was $3.6 billion, or 41.4% of net sales, compared with $3.8 billion, or 41.8% of net sales, in the prior year. The Company's full year 2025 operating loss was $43 million, or (0.5)% of net sales, compared with a loss of $713 million or (7.8)% of net sales in the prior year. Adjusted full year 2025 operating income was $216 million or 2.5% of net sales, compared with adjusted operating income of $35 million or 0.4% of net sales in the prior year. The store optimization program associated with our 2024 Restructuring Plan negatively impacted full year 2025 adjusted operating income by approximately $37 million. The additional week in full year 2025 added approximately $9 million to adjusted operating income. The Company's full year 2025 diluted earnings per share was $1.13, compared with a loss of $(9.80) in the prior year. Adjusted full year 2025 diluted earnings per share was $2.26, compared with a loss of $(0.29) in the prior year. The additional week in full year 2025 added approximately $0.08 to adjusted diluted earnings per share. Net cash used in operating activities was $46 million for the full year 2025 versus $141 million provided by operating activities for the prior year. Free cash flow for the full year 2025 was an outflow of $298 million, compared with an outflow of $40 million in the prior year. Free cash flow through the fourth quarter of 2025 includes approximately $140 million of cash charges related to restructuring and other related expenses. ____________________ (1) All comparisons are based on continuing operations for the same time period in the prior year. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Closed stores are not included in the comparable store sales calculation. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). (2) Comparative financial information related to results from continuing operations has been recast to reflect the presentation of our former Worldpac, Inc. business (“Worldpac”) as discontinued operations. Refer to the Company’s Annual Report on Form 10-K for 2024, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025 Capital Allocation On February 10, 2026, the Company declared a regular cash dividend of $0.25 per share to be paid on April 24, 2026 to all common stockholders of record as of April 10, 2026. Full Year 2026 Guidance(1) As of February 13, 2026 ($ in millions, except per share data) Low High Net sales $8,485 $8,575 Comparable store sales (52 weeks)(2) 1.00% 2.00% Adjusted operating income margin 3.80% 4.50% Adjusted diluted EPS(3) $2.40 $3.10 Capital expenditures Approx. $300 Free cash flow Approx. $100 Store growth Store Openings 40 - 45 Market hub openings 10 - 15 (1) Adjusted operating income margin, Adjusted diluted EPS and Free cash flow are non-GAAP measures. For a better understanding of the Company's non-GAAP adjustments, refer to the reconciliation of non-GAAP financial measures in the accompanying financial tables. The Company is not able to provide a reconciliation of these forward-looking non-GAAP measures presented herein because it is unable to predict with reasonable accuracy the value of certain adjustments and as a result, the comparable GAAP measures are unavailable without unreasonable efforts. (2) Comparable store sales for fiscal 2026 is calculated based on an adjusted fiscal 2025 baseline to account for the 53rd week. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). (3) Includes pre-tax interest expense of approximately $210 million and pre-tax interest income of approximately $80 million. Investor Conference Call The Company will detail its results for the fourth quarter and full year 2025 via a webcast scheduled to begin at 8 a.m. Eastern Time on Friday, February 13, 2026. The webcast will be accessible via the Investor Relations page of the Company's website (ir.AdvanceAutoParts.com). To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the Company suggests registering a minimum 10 minutes before the start of the call. A replay of the conference call will be available on the Company's Investor Relations website for one year. About Advance Auto Parts Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers. As of January 3, 2026, Advance operated 4,305 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 809 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services, and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com. Forward-Looking Statements Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, future business and financial performance, revenue, earnings, cash flow, liquidity, restructuring and asset optimization plans, financial objectives, including with respect to the Company's reorganized debt capital structure, operational plans and objectives, capital expenditures, organizational changes, cost reductions, expectations for macroeconomic conditions, marketing strategies, inflation, impairments, consumer behavior and preferences, labor costs and availability, supply chain and merchandising strategies and effects, technology investments, effective tax rates, regulatory changes and impacts, anticipated impacts of tariffs and other trade barriers, compliance with debt covenants, statements about the status of, and capacity and utilization under, the Company’s supply chain financing arrangements and statements about the Company’s future credit ratings and outlook as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, risks relating to incurrence of indebtedness and increased leverage, risks relating to the Company's credit ratings or perceived creditworthiness, deterioration of general macroeconomic conditions, geopolitical factors, including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain, implementation and operation of information and technology systems, and challenges with transforming and growing its business. Please refer to “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (in millions), (unaudited)(1) Assets January 3, 2026 December 28, 2024 Current assets: Cash and cash equivalents $ 3,123 $ 1,869 Receivables, net 380 544 Inventories, net 3,646 3,612 Other current assets 141 118 Total current assets 7,290 6,143 Property and equipment, net 1,269 1,334 Operating lease right-of-use assets 2,157 2,243 Goodwill 600 598 Other intangible assets, net 400 406 Other assets 110 74 Total assets $ 11,826 $ 10,798 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,977 $ 3,408 Accrued expenses 756 784 Other current liabilities 443 473 Total current liabilities 4,176 4,665 Long-term debt 3,412 1,789 Operating lease liabilities 1,812 1,897 Deferred income taxes 142 193 Other long-term liabilities 86 84 Total liabilities 9,628 8,628 Total stockholders' equity 2,198 2,170 Total liabilities and stockholders' equity $ 11,826 $ 10,798 (1) This condensed consolidated balance sheet has been prepared on a basis consistent with the Company's previously prepared balance sheets filed with the Securities and Exchange Commission ("SEC"), but does not include the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”). Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (in millions, except per share data), (unaudited)(1) Thirteen Weeks Ended Twelve Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended January 3, 2026 December 28, 2024 January 3, 2026 December 28, 2024 Net sales $ 1,973 $ 1,996 $ 8,601 $ 9,094 Cost of sales 1,104 1,649 4,868 5,685 Gross profit 869 347 3,733 3,409 Selling, general and administrative expenses, exclusive of restructuring expenses 802 879 3,572 3,813 Restructuring and related expenses 23 288 204 309 Selling, general and administrative expenses 825 1,167 3,776 4,122 Operating income (loss) 44 (820 ) (43 ) (713 ) Other, net: - - Interest expense (53 ) (19 ) (139 ) (81 ) Other income, net 30 14 91 26 Total other, net (23 ) (5 ) (48 ) (55 ) Income (loss) before income tax expense 21 (825 ) (91 ) (768 ) Income tax benefit (9 ) (215 ) (159 ) (181 ) Net income (loss) from continuing operations 30 (610 ) 68 (587 ) Net (loss) income from discontinued operations (24 ) 195 (24 ) 251 Net income (loss) $ 6 $ (415 ) $ 44 (336 ) Basic earnings (loss) per common share from continuing operations $ 0.50 $ (10.20 ) $ 1.13 $ (9.84 ) Basic (loss) earnings per common share from discontinued operations (0.40 ) 3.26 (0.40 ) 4.21 Basic earnings (loss) per common share 0.10 $ (6.94 ) 0.73 $ (5.63 ) Basic weighted-average common shares outstanding 60.0 59.7 59.9 59.6 Diluted earnings (loss) per common share from continuing operations $ 0.49 $ (10.16 ) $ 1.13 $ (9.80 ) Diluted (loss) earnings per common share from discontinued operations (0.39 ) 3.24 (0.40 ) 4.19 Diluted earnings (loss) per common share $ 0.10 $ (6.92 ) $ 0.73 $ (5.61 ) Diluted weighted-average common shares outstanding 60.8 60.0 60.6 59.9 (1) These condensed consolidated statements of operations have been prepared on a basis consistent with the Company's previously prepared statements of operations filed with the SEC, but do not include the footnotes required by GAAP. Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions), (unaudited)(1) Fifty-Three Weeks Ended Fifty-Two Weeks Ended January 3, 2026 December 28, 2024 Cash flows from operating activities: Net income (loss) $ 44 $ (336 ) Net (loss) income from discontinued operations (24 ) 251 Net income (loss) from continuing operations 68 (587 ) Adjustments to reconcile net income from continuing operations to net cash (used in) provided by operating activities: Depreciation and amortization 272 292 Share-based compensation 36 42 Loss on sale and impairment of long-lived assets 25 158 Credit loss expense, net 62 56 Provision for deferred income taxes (43 ) (203 ) Other, net 16 4 Net change in: Receivables, net 138 7 Inventories, net (21 ) 270 Operating lease right of use assets 67 73 Other assets (22 ) 74 Accounts payable (469 ) (110 ) Accrued expenses (60 ) 127 Operating lease liabilities (114 ) (60 ) Other liabilities (1 ) (2 ) Net cash (used in) provided by operating activities of continuing operations (46 ) 141 Net cash used in operating activities of discontinued operations - (56 ) Net cash (used in) provided by operating activities (46 ) 85 Cash flows from investing activities: Purchases of property and equipment (252 ) (181 ) Proceeds from sales of property and equipment 21 14 Other, net (8 ) - Net cash used in investing activities of continuing operations (239 ) (167 ) Net cash provided by investing activities of discontinued operations - 1,522 Net cash (used in) provided by investing activities (239 ) 1,355 Cash flows from financing activities: Proceeds from issuance of long-term debt 1,950 - Repayment of long-term debt (300 ) - Debt issuance costs (47 ) - Dividends paid (60 ) (60 ) Other, net (5 ) (15 ) Net cash provided by (used in) financing activities 1,538 (75 ) Effect of exchange rate changes on cash 1 1 Net increase in cash and cash equivalents 1,254 1,366 Cash and cash equivalents, beginning of period 1,869 503 Cash and cash equivalents, end of period $ 3,123 $ 1,869 Supplemental cash flow information: Interest paid $ 76 $ 76 Non-cash transactions of continuing operations: Accrued purchases of property and equipment $ 14 $ 15 Transfers of property and equipment from assets related to discontinued operations to continuing operations - 7 Accrued dividends 16 16 (1) This condensed consolidated statement of cash flows has been prepared on a basis consistent with the Company's previously prepared statements of operations filed with the SEC, but does not include the footnotes required by GAAP. Reconciliation of Non-GAAP Financial Measures The Company uses certain non-GAAP financial measures described below to supplement the Company's unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company's core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by our management to evaluate our business and financial performance. The Company believes that these measures provide investors increased comparability of our core financial performance over multiple periods with other companies in our industry. The Company's Non-GAAP financial measures reflect results from continuing operations, including Adjusted Net (loss) Income, Adjusted Diluted (loss) Earnings Per Share (“Adjusted Diluted EPS”), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Selling, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating (loss) Income, Adjusted Operating (loss) Income Margin, Free Cash Flow and Adjusted Net Debt to Adjusted EBITDAR ("Net Leverage Ratio"), and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows. The Company has presented these non-GAAP financial measures as the Company believes that the presentation of the financial results that exclude (1) transformation expenses under the Company’s turnaround plans, inclusive of the Worldpac divestiture (2) other significant expenses and (3) nonrecurring tax expense are useful and indicative of the Company's base operations because the expenses vary from period to period in terms of size, nature and significance. The income tax impact of these non-GAAP adjustments is adjusted for using the estimated tax rate in effect for the respective non-GAAP adjustments. These measures assist in comparing the Company’s current operating results with past periods and with the operational performance of other companies in the industry. The disclosure of these measures allows investors to evaluate the Company’s performance using the same measures management uses in developing internal budgets and forecasts and in evaluating management’s compensation. Included below is a description of the expenses the Company has determined are not normal, recurring cash operating expenses necessary to operate the Company’s business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures. Transformation Expenses Expenses incurred in connection with the Company's turnaround plan and specific transformative activities related to asset optimization that the Company does not view to be normal cash operating expenses. These expenses primarily include: Restructuring and other related expenses: Expenses relating to strategic initiatives, including severance expense, retention bonuses offered to store-level employees to help facilitate the closing of stores, incremental reserves related to the collectibility of receivables resulting from contract terminations with certain independents associated with the 2024 Restructuring Plan and third-party professionals assisting in the development and execution of the strategic initiatives. Inventory write-down: Expenses relating to the incremental write-down of inventory to net realizable value due to liquidation sales and streamlining inventory assortment due to store and distribution center closures associated with the 2024 Restructuring Plan. Impairment and write-down of long-lived assets: Expenses relating to the impairment of operating lease right-of-use ("ROU") assets and property and equipment, incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, ROU asset amortization after store closure, and incremental lease abandonment expenses as a result of accelerating ROU asset amortization for leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations, in connection with the 2024 Restructuring Plan and Other Restructuring Plan. Distribution network optimization: Expenses primarily relating to the conversion of the stores and distribution centers to market hubs, including, realized losses on liquidated inventory, temporary labor, nonrecurring professional service fees and team member severance. Other Expenses Expenses incurred by the Company that are not viewed as normal cash operating expenses and vary from period to period in terms of size, nature, and significance. These expenses primarily include: Other professional service fees: Expenses relating to nonrecurring services rendered by third-party vendors engaged to perform a strategic business review, including the Company’s transformation initiatives. Worldpac post transaction-related expenses: Expenses primarily relating to non-recurring separation activities provided by third-party professionals subsequent to the sale of Worldpac. Executive turnover: Expenses associated with executive level reorganization, including expenses for executive severance, the hiring search for leadership positions and certain compensation benefits. Material weakness remediation: Incremental expenses associated with the remediation of the Company’s previously-disclosed material weaknesses in internal control over financial reporting. Cybersecurity incident: Expenses related to the response and remediation of a cybersecurity incident. Other: Includes a non-cash charge related to expected future credit losses on vendor receivables due from a vendor that filed voluntary petitions for Chapter 11 bankruptcy protection. Other tax adjustments: Certain tax items that are unrelated to the fiscal year in which they are recorded are excluded in order to provide a clearer understanding of the Company’s ongoing Non-GAAP tax rate and after-tax earnings. Reconciliation of Diluted Earnings (loss) Per Share (GAAP) and Adjusted Diluted Earnings (loss) Per Share (Non-GAAP): Thirteen Weeks Ended Twelve Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended Classification January 3, 2026 December 28, 2024 January 3, 2026 December 28, 2024 Net income (loss) from continuing operations (GAAP) $ 30 $ (610 ) $ 68 $ (587 ) Cost of sales adjustments: Transformation expenses: Inventory write-down Restructuring - 431 - 431 Distribution network optimization Restructuring 4 - 12 - Expected future credit loss related to other receivables(1) Non-restructuring - - 28 - Selling, general and administrative adjustments: Transformation expenses: Restructuring and other related expenses(2) Restructuring 10 61 88 61 Impairment and write-down of long-lived assets (3) Restructuring 6 204 83 204 Distribution network optimization Restructuring 5 6 20 20 Other expenses: Other professional service fees Non-restructuring(6) 2 10 14 15 Worldpac post transaction-related expenses Restructuring 1 7 8 7 Executive turnover Restructuring 1 - 5 2 Material weakness remediation Non-restructuring - 2 1 5 Cybersecurity incident Non-restructuring - - - 3 Other income adjustments: TSA services - (2 ) (9 ) (3 ) Loss on extinguishment of debt - - 9 - Provision for income taxes on adjustments(4) (7 ) (180 ) (64 ) (185 ) Other tax (benefit) expense adjustments(5) - - (126 ) 10 Adjusted net income (loss) (Non-GAAP) $ 52 $ (71 ) $ 137 $ (17 ) Diluted earnings (loss) per share from continuing operations (GAAP) $ 0.49 $ (10.16 ) $ 1.13 $ (9.80 ) Adjustments, net of tax 0.37 8.98 1.13 9.51 Adjusted diluted earnings (loss) per share (Non-GAAP) $ 0.86 $ (1.18 ) $ 2.26 $ (0.29 ) (1) Reflects a charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025. (2) Restructuring and other related expenses for the thirteen weeks ended January 3, 2026 includes $1 million of nonrecurring services rendered by third party vendors assisting with the 2024 Restructuring Plan, $2 million of severance and other related costs and $7 million of other-related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the fifty-three weeks ended January 3, 2026 includes $38 million of nonrecurring services rendered by third party vendors assisting with the 2024 Restructuring Plan, $18 million of severance and other related costs, $7 million for reserves on independent loans and $25 million of other related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the fifty-two weeks ended December 28, 2024 includes $25 million of incremental receivable reserves resulting from contract terminations with certain independents as part of the 2024 Restructuring Plan, $15 million of severance and other labor related costs as part of the 2024 Restructuring Plan, and $21 million of nonrecurring services rendered by third party vendors assisting with the 2024 Restructuring Plan. (3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $4 million and impairment charges for ROU assets and property and equipment of $2 million, net of gains on sale, for the thirteen weeks ended January 3, 2026. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $60 million and impairment charges for ROU assets and property and equipment of $23 million, net of gains on sale, for the fifty-three weeks ended January 3, 2026. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $171 million and impairment charges for ROU assets and property and equipment of $33 million, net of gains on sale, for the fifty-two weeks ended December 28, 2024 (4) The income tax impact of Non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective Non-GAAP adjustments. (5) Income tax (benefit) expenses included a discrete non-recurring tax benefit associated with capital loss deductions effectuated in the first quarter of fiscal 2025. The benefit has been excluded from Non-GAAP results in order to provide a clearer understanding of ongoing Non-GAAP tax rate and after-tax earnings. (6) Other professional service fees in fiscal 2024 were classified as restructuring and related expenses based on the underlying activity to which they are related. Reconciliation of Adjusted Gross Profit Thirteen Weeks Ended Twelve Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended (in millions) January 3, 2026 December 28, 2024 January 3, 2026 December 28, 2024 Gross Profit (GAAP) $ 869 $ 347 $ 3,733 $ 3,409 Gross Profit adjustments 4 431 40 431 Adjusted Gross Profit (Non-GAAP) $ 873 $ 778 $ 3,773 $ 3,840 Gross Profit Margin (GAAP)(1) 44.0 % 17.4 % 43.4 % 37.5 % Adjusted Gross Profit Margin (Non-GAAP)(1) 44.2 % 39.0 % 43.9 % 42.2 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Adjusted Selling, General and Administrative Expenses Thirteen Weeks Ended Twelve Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended (in millions) January 3, 2026 December 28, 2024 January 3, 2026 December 28, 2024 SG&A expenses (GAAP) $ 825 $ 1,167 $ 3,776 $ 4,122 SG&A adjustments (25 ) (290 ) (219 ) (317 ) Adjusted SG&A (Non-GAAP) $ 800 $ 877 $ 3,557 $ 3,805 SG&A Margin (GAAP)(1) 41.8 % 58.5 % 43.9 % 45.3 % Adjusted SG&A Margin (Non-GAAP)(1) 40.5 % 43.9 % 41.4 % 41.8 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Adjusted Operating Income: Thirteen Weeks Ended Twelve Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended (in millions) January 3, 2026 December 28, 2024 January 3, 2026 December 28, 2024 Operating Income (Loss) (GAAP) $ 44 $ (820 ) $ (43 ) $ (713 ) Gross Profit adjustments 4 431 40 431 SG&A adjustments 25 290 219 317 Adjusted Operating Income (Loss) (Non-GAAP) $ 73 $ (99 ) $ 216 $ 35 Operating Income (Loss) Margin (GAAP)(1) 2.2 % (41.1 )% (0.5 )% (7.8 )% Adjusted Operating Income (Loss) Margin (Non-GAAP)(1) 3.7 % (5.0 )% 2.5 % 0.4 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Free Cash Flow: Fifty-Three Weeks Ended Fifty-Two Weeks Ended (in millions) January 3, 2026 December 28, 2024 Cash flows from continuing operations $ (46 ) $ 141 Purchases of property and equipment (252 ) (181 ) Free cash flow $ (298 ) $ (40 ) (1) Includes approximately $140 million of cash charges related to restructuring and other related expenses. Reconciliation of Adjusted Net Debt to Adjusted EBITDAR(1) Four Quarters Ended (in millions, except adjusted debt to EBITDAR ratio) January 3, 2026 Total Debt (GAAP) $ 3,412 Add: Operating lease liabilities 2,247 Less: Cash & cash equivalents (3,123 ) Adjusted Net Debt (Non-GAAP) $ 2,536 Net income from continuing operations (GAAP) $ 68 Depreciation and amortization 272 Interest expense 139 Other income, net (91 ) Income tax benefit (159 ) Rent expense 557 Share-based compensation 36 Transformation and other charges(2) 227 Adjusted EBITDAR (Non-GAAP) $ 1,049 Debt to Net income from continuing operations (GAAP) 50.2 Adjusted Net Debt to Adjusted EBITDAR (Non-GAAP) 2.4 (1) Management believes its Adjusted Net Debt to Adjusted EBITDAR ratio (“net leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The Company’s goal is to re-establish an investment grade rating. The Company's credit rating could impact the Company's ability to obtain additional funding. A negative change in the Company's investment rating, could negatively impact future performance and limit growth opportunities. The net leverage ratio calculated by the Company is a Non-GAAP measure and should not be considered a substitute for debt to net income, as determined in accordance with GAAP. The Company adjusts the calculation to remove rent expense, transformational and other non-cash charges, deduct available cash & cash equivalents and to add back the Company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the Company’s peers and to account for differences in debt structures and leasing arrangements. The Company’s calculation of its net leverage ratio may not be calculated in the same manner as other companies, and thus may not be comparable to similarly titled measures used by other companies. (2) The adjustments to the four quarters ended January 3, 2026 include expenses associated with our transformation and restructuring and related activities, in addition to other items, including a charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025, the Company's material weakness remediation efforts, professional fees and executive turnover. Store Information: During the fifty-three weeks ended January 3, 2026, 39 stores were opened and 522 were closed, resulting in a total of 4,305 stores as of January 3, 2026, compared with a total of 4,788 stores as of December 28, 2024. The below table summarizes the changes in the number of company-operated stores during the thirteen and fifty-three weeks ended January 3, 2026: Thirteen Weeks Ended AAP CARQUEST Total October 4, 2025 4,061 236 4,297 New 9 4 13 Closed (4 ) (1 ) (5 ) Relocation — — — Converted — — — January 3, 2026 4,066 239 4,305 Fifty-Three Weeks Ended AAP CARQUEST Total December 28, 2024 4,507 281 4,788 New 31 8 39 Closed (474 ) (48 ) (522 ) Relocation 1 (1 ) — Converted 1 (1 ) — January 3, 2026 4,066 239 4,305 Investor Relations Contact: Lavesh Hemnani T: (919) 227-5466 E: [email protected] Media Contact: Nicole Ducouer T: (984) 389-7207 E: [email protected] Source: Advance Auto Parts, Inc. View the full article

Enhanced rewards tiers modernize program and make it easier for millions of DIY loyalty members to earn and redeem rewards. RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts (NYSE: AAP), a leading automotive aftermarket parts provider in North America that serves both professional installers and do-it-yourself customers, today launched Advance Rewards – a new, modernized loyalty program designed to deliver greater value and features that matter to its heavy and light DIY customers. The new program replaces the former Speed Perks program and rolls out today at all Advance locations and online. Advance Rewards maintains a familiar, tiered structure while introducing meaningful improvements and value that make it easier to earn and redeem rewards and provide customers with more ways to save. The loyalty program’s revised three-tier system – 1st Gear, 2nd Gear, and Top Gear – rewards more frequent shoppers with higher rewards rates and provides greater coupon flexibility, including the ability to combine coupons for up to $100 in savings. Advance Rewards maintains a familiar, tiered structure while introducing meaningful improvements and value that make it easier to earn and redeem rewards and provide customers with more ways to save. The loyalty program’s revised three-tier system – 1st Gear, 2nd Gear, and Top Gear – rewards more frequent shoppers with higher rewards rates and provides greater coupon flexibility, including the ability to combine coupons for up to $100 in savings. "Advance Rewards delivers the value that our customers are asking for in a loyalty program,” said Bruce Starnes, executive vice president, chief merchant at Advance Auto Parts. "At the same time, it gives us more tools to engage with them, in part through personalized experiences. We put the customer first in everything we do at Advance, which is why we've added exciting new features that recognize customer engagement while maintaining familiarity embedded in the core structure of the program.” New Advance Rewards features also include exclusive vendor partnerships that offer members-only deals, bonus points promotions on popular products and sweepstakes opportunities. Members can gain visibility into their rewards and can combine coupons directly in the Advance mobile app and through POS integration in Advance stores. Reward tiers include: 1 st Gear – free to join, earn 5 points per dollar spent, stack up to $100 in coupons 2 nd Gear – spend $500 in a calendar year, earn 8 points per dollar spent, stack up to $100 in coupons Top Gear – spend $1,000 in a calendar year, earn 10 points per dollar spent, stack up to $100 in coupons Loyalty members represent a large portion of Advance Auto Parts' heavy and light DIY business, and by modernizing the program, the company is providing greater value and flexibility to members. Customers can join Advance Rewards for free at all Advance Auto Parts locations and online at AdvanceAutoParts.com. Visit www.AdvanceAutoParts.com/AdvanceRewards for more information. About Advance Auto Parts Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. As of October 4, 2025, Advance operated 4,297 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 814 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com. Investor Relations Contact: Lavesh Hemnani E: [email protected] View the full article

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ARGOS will be available in all Advance and Carquest U.S. locations and online by early 2026 RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America that serves both professional installers and do-it-yourself customers, today announced the launch of ARGOS, its new owned oil and fluids brand designed to meet growing consumer demand for high-quality, affordable auto care products. In developing ARGOS, Advance conducted extensive customer surveys, market analysis and field testing with both do-it-yourself enthusiasts and professional customers. Both groups said that they need a product that is affordable, reliable and strong. Their feedback played a role in shaping the final product lineup, reinforcing Advance’s commitment to listening to its customers. “Affordability, reliability and strength are the three clear priorities we hear from our customers when it comes to quality automotive products,” said Bruce Starnes, executive vice president, chief merchant at Advance Auto Parts. “ARGOS delivers on those qualities. It’s a product line built for today’s drivers, DIYers, and professional technicians. We’re excited to help our customers’ cars last longer, for an affordable price.” The average age of vehicles on U.S. roads has reached an all-time high of just under 13 years, creating increased demand for maintenance and repair products that are both reliable and affordable. ARGOS meets those needs by offering engine protection and performance comparable to national brands, but at a price that provides meaningful savings for both DIYers and professional customers. ARGOS will be available exclusively in all Advance and Carquest locations in the U.S. and online, starting with synthetic blend and full synthetic heavy-duty motor oil in mid-February, followed by passenger car motor oil in a variety of blends in early March. A full portfolio will become available by May, including automatic transmission fluid, bulk fluids, gear oil, small engine oil and performance chemicals. View the full article

RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America that serves both professional installers and do-it-yourself customers, announced today that it has appointed Ronald Gilbert as senior vice president of supply chain, effective December 22, 2025. Mr. Gilbert will report directly to president and chief executive officer, Shane O’Kelly. Mr. Gilbert will be responsible for all aspects of the Company’s supply chain operations and oversee the Company’s ongoing strategic initiatives aimed at enhancing the productivity of its supply chain network. Mr. Gilbert succeeds Stephen Szilagyi, who is retiring but will stay with Advance in an advisory capacity to support the transition. Under Steve’s leadership, the Company has made significant progress on optimizing its supply chain infrastructure, including the consolidation of its distribution footprint, the opening of market hubs, and the re-design of the transportation network. The Company is on track to operate 16 DCs in the United States by the end of 2025, compared to 38 DCs in 2023. The Company also opened its first market hub store and distribution location in 2024 and remains on track to operate 60 market hubs by mid-2027. “I am pleased to welcome Ron to Advance. He is a recognized industry leader with a strong record of delivering operational efficiencies and innovation across complex supply chain systems. Our strategy remains unchanged, and as we embark on the next phase of our supply chain transformation, we are pleased to have him at the helm,” said Shane O’Kelly, president and chief executive officer. “On behalf of Advance, I also want to extend our deepest gratitude to Steve for his leadership and many contributions to better serve our customers. We wish him all the best on his retirement.” Mr. Gilbert brings more than 20 years of experience in supply chain logistics with leadership roles across prominent retailers. Most recently, he served as senior vice president of logistics and supply chain at Saks Global. Prior to that he served as senior vice president of supply chain at Rite Aid Pharmacies. He also held senior supply chain leadership roles at XPO Logistics, Hudson Bay Company, The Parent Company, Urban Outfitters and Mary Kay. Mr. Gilbert earned a BBA in Management from the University of Texas at Arlington. View the full article

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RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America that serves both professional installer and do-it-yourself customers, announced its financial results for the third quarter ended October 4, 2025. "We delivered our strongest quarterly performance in over two years, thanks to the team's determination, commitment to our turnaround objectives, and their dedication to serving our customers," said Shane O'Kelly, president and chief executive officer. "Our comparable sales performance was led by growth in the Pro channel. The DIY channel also delivered positive comparable sales growth in the quarter. We continue to make progress on our strategic priorities, and based on our updated guidance we are on track to deliver approximately 200-basis points of annual margin expansion in the first year of our turnaround. Our initiatives are geared toward delivering sustained, profitable growth and we remain committed to advancing our strategic priorities to create shareholder value over the long-term." Third Quarter 2025 Results(1,2) Third quarter 2025 net sales totaled $2.0 billion, compared with $2.1 billion in the third quarter of the prior year. Comparable store sales for the third quarter 2025 increased 3.0%. The Company's third quarter 2025 gross profit was $0.9 billion, or 43.3% of net sales compared with $0.9 billion, or 42.3% in the third quarter of the prior year. Adjusted gross profit was $0.9 billion, or 44.8% of net sales compared with $0.9 billion, or 42.3% in the third quarter of the prior year. The margin expansion was driven by savings associated with the footprint optimization activity completed in March and reduction in product costs driven by strategic sourcing initiatives. __________________________________ (1) All comparisons are based on continuing operations for the same time period in the prior year. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). (2) Comparative financial information related to results from continuing operations has been recast to reflect the presentation of our former Worldpac, Inc. business (“Worldpac”) as discontinued operations. Refer to the Company’s Annual Report on Form 10-K for 2024, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025. The Company's third quarter 2025 selling, general and administrative (SG&A) expenses were $0.9 billion, or 42.2% of net sales compared with $0.9 billion, or 42.3% in the third quarter of the prior year. Adjusted SG&A expenses were $0.8 billion, or 40.4% of net sales in the third quarter of 2025 compared with $0.9 billion, or 41.5% in the third quarter of 2024. The reduction in SG&A expenses was primarily related to operation of fewer stores compared to last year. The Company's third quarter 2025 operating income was $22 million, or 1.1% of net sales, compared with break-even operating income, or 0.0% in the third quarter of the prior year. Adjusted operating income was $90 million, or 4.4% of net sales, compared with adjusted operating income of $16 million, or 0.7% in the third quarter of 2024. The Company's diluted earnings (loss) per share for the quarter was $(0.02), compared with $(0.42) in the third quarter of 2024. The Company's adjusted diluted earnings (loss) per share was $0.92 compared with adjusted diluted earnings per share of $(0.05) in the third quarter of 2024. Net cash used in operating activities was $118 million through the third quarter of 2025 versus $81 million of cash provided by operating activities in the same period of the prior year. Free cash flow through the third quarter of 2025 was an outflow of $277 million compared with an outflow of $49 million in the same period of the prior year. Free cash flow through the third quarter of 2025 includes approximately $130 million of cash charges related to restructuring and other related expenses. Capital Allocation On October 27, 2025, the Company declared a regular cash dividend of $0.25 per share to be paid on January 23, 2026, to all common stockholders of record as of January 9, 2026. Full Year 2025 Guidance (53 weeks) The Company has updated full year guidance to reflect operating assumptions for the fourth quarter of 2025 along with reaffirming the midpoint of its prior full year comparable store sales and adjusted operating income margin expectations. Full year 2025 guidance assumes current tariffs remain in place for the remainder of 2025. As of October 30, 2025 Prior Guidance ($ in millions, except per share data) Low High Low High Net sales from continuing operations(1) $8,550 $8,600 $8,400 $8,600 Comparable store sales (52 weeks)(2) 0.7% 1.3% 0.5% 1.5% Adjusted operating income margin from continuing operations(3) 2.4% 2.6% 2.0% 3.0% Adjusted diluted EPS from continuing operations(3) $1.75 $1.85 $1.20 $2.20 Capital expenditures Approx. $250 Approx. $300 Free cash flow(3) ($90) - ($80) ($85) - ($25) New store growth Store openings 30 new stores 30 new stores Market hub openings 14 new market hubs 10 new market hubs (1) Includes approximately $100 to $120 million of net sales in the 53rd week. (2) The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. (3) Adjusted operating income margin from continuing operations, Adjusted diluted EPS from continuing operations and Free cash flow are non-GAAP measures. For a better understanding of the Company's non-GAAP adjustments, refer to the reconciliation of non-GAAP financial measures in the accompanying financial tables. The Company is not able to provide a reconciliation of these forward-looking non-GAAP measures because it is unable to predict with reasonable accuracy the value of certain adjustments and as a result, the comparable GAAP measures are unavailable without unreasonable efforts. Investor Conference Call The Company will detail its results for the third quarter ended October 4, 2025, via a webcast scheduled to begin at 8 a.m. Eastern Time on Thursday, October 30, 2025. The webcast will be accessible via the Investor Relations page of the Company's website (ir.AdvanceAutoParts.com). To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the Company suggests registering a day in advance or at minimum 10 minutes before the start of the call. A replay of the conference call will be available on the Company's Investor Relations website for one year. About Advance Auto Parts Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. As of October 4, 2025, Advance operated 4,297 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 814 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com. Forward-Looking Statements Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization plans, financial objectives, including with respect to the Company's reorganized debt capital structure, operational plans and objectives, statements about the benefits of the Company's Worldpac sale and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, risks relating to incurrence of indebtedness and increased leverage, risks relating to the Company's credit ratings or perceived creditworthiness, deterioration of general macroeconomic conditions, geopolitical factors including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please refer to “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (In millions) (unaudited) Assets October 4, 2025(1) December 28, 2024(1) Current assets: Cash and cash equivalents $ 3,174 $ 1,869 Receivables, net 483 544 Inventories, net 3,694 3,612 Other current assets 167 118 Total current assets 7,518 6,143 Property and equipment, net 1,269 1,334 Operating lease right-of-use assets 2,184 2,243 Goodwill 599 598 Other intangible assets, net 401 406 Other assets 88 74 Total assets $ 12,059 $ 10,798 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 3,177 3,408 Accrued expenses 761 784 Other current liabilities 411 473 Total current liabilities 4,349 4,665 Long-term debt 3,411 1,789 Operating lease liabilities 1,850 1,897 Deferred income taxes 166 193 Other long-term liabilities 88 84 Total liabilities 9,864 8,628 Total stockholders' equity 2,195 2,170 Total liabilities and stockholders’ equity $ 12,059 $ 10,798 (1) This condensed consolidated balance sheet has been prepared on a basis consistent with the Company's previously prepared balance sheets filed with the Securities and Exchange Commission ("SEC"), but does not include the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”). Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (In millions, except per share data) (unaudited) Twelve Weeks Ended Forty Weeks Ended October 4, 2025(1) October 5, 2024(1) October 4, 2025(1) October 5, 2024(1) Net sales $ 2,036 $ 2,148 $ 6,628 $ 7,098 Cost of sales 1,155 1,240 3,764 4,037 Gross profit 881 908 2,864 3,061 Selling, general and administrative expenses, exclusive of restructuring and related expenses 826 895 2,771 2,933 Restructuring and related expenses 33 13 180 21 Selling, general and administrative expenses 859 908 2,951 2,954 Operating (loss) income 22 — (87 ) 107 Other, net: Interest expense (40 ) (19 ) (86 ) (62 ) Other income, net 16 2 61 12 Total other, net (24 ) (17 ) (25 ) (50 ) (Loss) income before income taxes (2 ) (17 ) (112 ) 57 Income tax (benefit) expense (1 ) 8 (150 ) 34 Net income (loss) from continuing operations (1 ) (25 ) 38 23 Net income from discontinued operations — 19 — 56 Net income (loss) $ (1 ) $ (6 ) $ 38 $ 79 Basic earnings (loss) per common share from continuing operations $ (0.02 ) $ (0.42 ) $ 0.63 $ 0.38 Basic earnings per common share from discontinued operations — 0.32 — 0.95 Basic earnings (loss) per common share $ (0.02 ) $ (0.10 ) $ 0.63 $ 1.33 Basic weighted-average common shares outstanding 60.0 59.7 59.9 59.6 Diluted earnings (loss) per common share from continuing operations $ (0.02 ) $ (0.42 ) $ 0.63 $ 0.38 Diluted earnings per common share from discontinued operations — 0.32 — 0.94 Diluted earnings (loss) per common share $ (0.02 ) $ (0.10 ) $ 0.63 $ 1.32 Diluted weighted-average common shares outstanding 60.0 59.9 60.5 59.9 (1) These preliminary condensed consolidated statements of operations have been prepared on a basis consistent with the Company's previously prepared statements of operations filed with the SEC, but do not include the footnotes required by GAAP. Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (In millions) (unaudited) Forty Weeks Ended October 4, 2025(1) October 5, 2024(1) Cash flows from operating activities: Net income $ 38 $ 79 Net income from discontinued operations — 56 Net income from continuing operations 38 23 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 214 217 Share-based compensation 29 34 Loss (gain) on sale and impairment of long-lived assets, net 23 (14 ) Expected future credit losses, net 50 23 Provision for deferred income taxes (27 ) 24 Other, net 14 3 Net change in: Receivables, net 46 (84 ) Inventories, net (75 ) (152 ) Operating lease right of use assets 41 (43 ) Other assets (57 ) (3 ) Accounts payable (270 ) (25 ) Accrued expenses (37 ) 31 Operating lease liabilities (108 ) 47 Other liabilities 1 — Net cash (used in) provided by operating activities of continuing operations (118 ) 81 Net cash provided by operating activities of discontinued operations — 77 Net cash (used in) provided by operating activities (118 ) 158 Cash flows from investing activities: Purchases of property and equipment (159 ) (130 ) Proceeds from sales of property and equipment 22 14 Net cash used in investing activities of continuing operations (137 ) (116 ) Net cash used in investing activities of discontinued operations — (8 ) Net cash used in investing activities (137 ) (124 ) Cash flows from financing activities: Proceeds from issuance of long-term debt 1,950 — Repayment of long-term debt (300 ) — Debt issuance costs (42 ) — Dividends paid (45 ) (45 ) Forty Weeks Ended October 4, 2025(1) October 5, 2024(1) Proceeds from the issuance of common stock 3 3 Repurchases of common stock (4 ) (6 ) Other, net (3 ) (10 ) Net cash provided by (used in) financing activities 1,559 (58 ) Effect of exchange rate changes on cash 1 12 Net increase (decrease) in cash and cash equivalents 1,305 (12 ) Cash and cash equivalents, beginning of period 1,869 503 Cash and cash equivalents, end of period $ 3,174 $ 491 Non-cash transactions of continuing operations: Accrued purchases of property and equipment $ 23 $ 9 Transfers of property and equipment from (to) assets related to discontinued operations to (from) continuing operations — 7 Accrued debt issuance costs 4 — Summary of cash and cash equivalents: Cash and cash equivalents of continuing operations, end of period $ 3,174 $ 464 Cash and cash equivalents of discontinued operations, end of period — 27 Cash and cash equivalents, end of period $ 3,174 $ 491 (1) This condensed consolidated statement of cash flows has been prepared on a basis consistent with the Company's previously prepared statements of operations filed with the SEC, but does not include the footnotes required by GAAP. Reconciliation of Non-GAAP Financial Measures The Company uses certain non-GAAP financial measures described below to supplement the Company's unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company's core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by our management to evaluate our business and financial performance. The Company believes that these measures provide investors increased comparability of our core financial performance over multiple periods with other companies in our industry. The Company's Non-GAAP financial measures reflect results from continuing operations, including Adjusted Net (loss) Income, Adjusted Diluted (loss) Earnings Per Share (“Adjusted Diluted EPS”), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Selling, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating (loss) Income, Adjusted Operating (loss) Income Margin, Free Cash Flow and Adjusted Net Debt to Adjusted EBITDAR, and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows. The Company has presented these non-GAAP financial measures as the Company believes that the presentation of the financial results that exclude (1) transformation expenses under the Company’s turnaround plan, inclusive of the Worldpac divestiture and (2) other significant expenses, are useful and indicative of the Company's base operations because the expenses vary from period to period in terms of size, nature and significance. The income tax impact of these non-GAAP adjustments is also adjusted for using the estimated tax rate in effect for the respective non-GAAP adjustments. These measures assist in comparing the Company’s current operating results with past periods and with the operational performance of other companies in the industry. The disclosure of these measures allows investors to evaluate the Company’s performance using the same measures management uses in developing internal budgets and forecasts and in evaluating management’s compensation. Included below is a description of the expenses the Company has determined are not normal, recurring cash operating expenses necessary to operate the Company’s business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures. Transformation Expenses Expenses incurred in connection with the Company's turnaround plan and specific transformative activities related to asset optimization that the Company does not view to be normal cash operating expenses. These expenses primarily include: Restructuring and other related expenses: Expenses relating to strategic initiatives, including severance expense, retention bonuses offered to store-level employees to help facilitate the closing of stores, incremental reserves related to the collectibility of receivables resulting from contract terminations with certain independents associated with the 2024 Restructuring Plan and third-party professionals assisting in the development and execution of the strategic initiatives. Impairment and write-down of long-lived assets: Expenses relating to the impairment of operating lease ROU assets and property and equipment, incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, depreciation of long-lived assets and ROU asset amortization after store closure, and incremental lease abandonment expenses as a result of accelerating ROU asset amortization for leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations, in connection with the 2024 Restructuring Plan and Other Restructuring Plan. Distribution network optimization: Expenses primarily relating to the conversion of the stores and distribution centers to market hubs, including, realized losses on liquidated inventory, temporary labor, nonrecurring professional service fees and team member severance. Other Expenses Expenses incurred by the Company that are not viewed as normal cash operating expenses and vary from period to period in terms of size, nature, and significance. These expenses primarily include: Other professional service fees: Expenses relating to nonrecurring services rendered by third-party vendors engaged to perform a strategic business review, including the Company’s transformation initiatives. Worldpac post transaction-related expenses: Expenses primarily relating to non-recurring separation activities provided by third-party professionals subsequent to the sale of Worldpac. Executive turnover: Expenses associated with executive level reorganization, including expenses for executive severance, the hiring search for leadership positions and certain compensation benefits. Material weakness remediation: Incremental expenses associated with the remediation of the Company’s previously disclosed material weaknesses in internal control over financial reporting. Cybersecurity incident: Expenses related to the response and remediation of a cybersecurity incident. Other: Includes a non-cash charge related to expected future credit losses on vendor receivables due from a vendor that filed voluntary petitions for Chapter 11 bankruptcy protection. Other tax adjustments: Certain tax items that are unrelated to the fiscal year in which they are recorded are excluded in order to provide a clearer understanding of the Company's ongoing Non-GAAP tax rate and after-tax earnings. Reconciliation of Diluted Earnings (loss) Per Share (GAAP) and Adjusted Diluted (Loss) Earnings Per Share (Non-GAAP) Twelve Weeks Ended Forty Weeks Ended (in millions, except per share data) Classification October 4, 2025 October 5, 2024 October 4, 2025 October 5, 2024 Net income (loss) from continuing operations (GAAP) $ (1 ) $ (25 ) $ 38 $ 23 Cost of sales adjustments: Transformation expenses: Distribution network optimization Restructuring 4 — 9 — Expected future credit loss related to vendor receivables(1) Non-restructuring 28 — 28 — Selling, general and administrative adjustments: Transformation expenses: Restructuring and other related expenses(2) Restructuring 7 4 78 5 Impairment and write-down of long-lived assets(3) Restructuring 18 — 76 — Distribution network optimization Restructuring 6 9 15 14 Other expenses: Other professional service fees Non-restructuring(6) 3 — 12 — Worldpac post transaction-related expenses Restructuring 2 — 7 — Executive turnover Restructuring — — 4 2 Material weakness remediation Non-restructuring — 1 1 4 Cybersecurity incident Non-restructuring — 2 — 3 Other income adjustments: TSA services (1 ) — (8 ) — Losses on extinguishment of debts 9 — 9 — Provision for income taxes on adjustments(4) (19 ) (4 ) (58 ) (7 ) Other tax (benefit) expense adjustments(5) — 10 (126 ) 10 Adjusted net income (loss) (Non-GAAP) $ 56 $ (3 ) $ 85 $ 54 Diluted earnings (loss) per share from continuing operations (GAAP) $ (0.02 ) $ (0.42 ) $ 0.63 $ 0.38 Adjustments, net of tax 0.94 0.37 0.77 0.52 Adjusted diluted earnings (loss) per share (Non-GAAP)(7) $ 0.92 $ (0.05 ) $ 1.40 $ 0.90 (1) Reflects a charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025. (2) Restructuring and other related expenses for the twelve weeks ended October 4, 2025 includes $2 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan and $5 million of other related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the forty weeks ended October 4, 2025 includes $37 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan, $15 million of severance and other labor related costs, $7 million for reserves on independent loans and $19 million of other related expenses associated with location closures, including the transfer of assets. (3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $7 million and impairment charges for ROU assets and property and equipment of $11 million net of gains on sales, for the twelve weeks ended October 4, 2025. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $55 million and impairment charges for ROU assets and property and equipment of $21 million, net of gains on sale, for the forty weeks ended October 4, 2025. (4) The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments. (5) Income tax (benefit) expenses included a discrete non-recurring tax benefit associated with capital loss deductions effectuated in the first quarter of fiscal 2025. The benefit has been excluded from Non-GAAP results in order to provide a clearer understanding of ongoing Non-GAAP tax rate and after-tax earnings. (6) Other professional service fees in fiscal 2024 were classified as restructuring and related expenses based on the underlying activity to which they related. (7) Refer to the reconciliation of diluted weighted-average common shares outstanding (GAAP) to adjusted diluted weighted-average common shares outstanding (Non-GAAP) which is the denominator utilized to calculate adjusted diluted earnings (loss) per share (Non-GAAP). Adjusted diluted weighted-average common shares outstanding (Non-GAAP) includes the dilutive impact of share-based awards as such shares are considered dilutive in consideration of the Company’s Non-GAAP earnings for the period. Reconciliation of Adjusted Diluted Weighted-Average Common Shares Outstanding Twelve Weeks Ended Forty Weeks Ended (shares in millions) October 4, 2025 October 5, 2024 October 4, 2025 October 5, 2024 Diluted Weighted-Average Common Shares Outstanding (GAAP) 60.0 59.9 60.5 59.9 Dilutive impact of share-based awards 0.9 — — — Adjusted Diluted Weighted-Average Common Shares Outstanding (Non-GAAP) 60.9 59.9 60.5 59.9 Reconciliation of Adjusted Gross Profit Twelve Weeks Ended Forty Weeks Ended (in millions) October 4, 2025 October 5, 2024 October 4, 2025 October 5, 2024 Gross Profit (GAAP) $ 881 $ 908 $ 2,864 $ 3,061 Gross Profit adjustments 32 — 37 — Adjusted Gross Profit (Non-GAAP) $ 913 $ 908 $ 2,901 $ 3,061 Gross Profit Margin (GAAP)(1) 43.3 % 42.3 % 43.2 % 43.1 % Adjusted Gross Profit Margin (Non-GAAP)(1) 44.8 % 42.3 % 43.8 % 43.1 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Adjusted Selling, General and Administrative Expenses Twelve Weeks Ended Forty Weeks Ended (in millions) October 4, 2025 October 5, 2024 October 4, 2025 October 5, 2024 Selling, general and administrative ("SG&A") expenses (GAAP) $ 859 $ 908 $ 2,951 $ 2,954 SG&A adjustments (36 ) (16 ) (193 ) (28 ) Adjusted SG&A (Non-GAAP) $ 823 $ 892 $ 2,758 $ 2,926 SG&A Margin (GAAP)(1) 42.2 % 42.3 % 44.5 % 41.6 % Adjusted SG&A Margin (Non-GAAP)(1) 40.4 % 41.5 % 41.6 % 41.2 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Adjusted Operating Income Twelve Weeks Ended Forty Weeks Ended (in millions) October 4, 2025 October 5, 2024 October 4, 2025 October 5, 2024 Operating (Loss) Income (GAAP) $ 22 $ — $ (87 ) $ 107 Gross Profit adjustments 32 — 37 — SG&A adjustments 36 16 193 28 Adjusted Operating Income (Non-GAAP) $ 90 $ 16 $ 143 $ 135 Operating (Loss) Income Margin (GAAP)(1) 1.1 % — % (1.3 )% 1.5 % Adjusted Operating Income Margin (Non-GAAP)(1) 4.4 % 0.7 % 2.2 % 1.9 % (1) These GAAP and Non-GAAP measures are calculated as a percentage of Net sales. Reconciliation of Free Cash Flow Forty Weeks Ended (in millions) October 4, 2025 October 5, 2024 Cash flows (used in) provided by operating activities of continuing operations(1) $ (118 ) $ 81 Purchases of property and equipment (159 ) (130 ) Free cash flow $ (277 ) $ (49 ) (1) Includes approximately $130 million of cash charges related to restructuring and other related expenses. Reconciliation of Adjusted Net Debt to Adjusted EBITDAR(1) Four Quarters Ended (In millions, except adjusted debt to adjusted EBITDAR ratio) October 4, 2025 Total Debt (GAAP) $ 3,411 Add: Operating lease liabilities 2,252 Less: Cash & cash equivalents (3,174 ) Adjusted Net Debt (Non-GAAP) $ 2,489 Net loss from continuing operations (GAAP) $ (571 ) Depreciation and amortization 289 Interest expense 105 Other income, net (74 ) Income tax benefit (366 ) Rent expense 597 Share-based compensation 40 Transformation and other charges(2) 928 Adjusted EBITDAR (Non-GAAP) $ 948 Debt to Net Loss from continuing operations (GAAP) (6.0 ) Adjusted Net Debt to Adjusted EBITDAR (Non-GAAP) 2.6 (1) Management believes its Adjusted Net Debt to Adjusted EBITDAR ratio (“net leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The Company’s goal is to maintain an investment grade rating. The Company's credit rating could impact the Company's ability to obtain additional funding. A negative change in the Company's investment rating, could negatively impact future performance and limit growth opportunities. The net leverage ratio calculated by the Company is a Non-GAAP measure and should not be considered a substitute for debt to net income, as determined in accordance with GAAP. The Company adjusts the calculation to remove rent expense, deduct available cash & cash equivalents and to add back the Company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the Company’s peers and to account for differences in debt structures and leasing arrangements. The Company’s calculation of its net leverage ratio may not be calculated in the same manner as other companies, and thus may not be comparable to similarly titled measures used by other companies. (2) The adjustments to the four quarters ended October 4, 2025, include expenses associated with our transformation and restructuring and related activities, in addition to other items, including a charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025, the Company's material weakness remediation efforts, professional fees and executive turnover. View the full article