Advance Auto Parts (NYSE: AAP) lifts margins as restructuring winds down
Rhea-AI Filing Summary
Advance Auto Parts reported a small profit for its first quarter of 2026 as margins improved and restructuring costs fell sharply. Net sales were $2.6 billion, up 1.2% year over year, with comparable store sales rising 3.5%.
Gross profit margin reached 45.1% of net sales, a 221 basis point increase, while selling, general and administrative expenses excluding restructuring fell to 41.3% of sales, down 216 basis points. Operating income improved to $69 million from a $131 million loss a year earlier, though net income held at $24 million, or diluted earnings per share of $0.39 versus $0.40.
The company used $19 million in cash for operating activities, significantly better than the $156 million use a year ago, and ended the quarter with $2.96 billion in cash and cash equivalents and access to $896 million under its asset-based revolver. Restructuring and related expenses dropped to $32 million from $118 million, and management estimates only $20 million to $30 million of additional restructuring costs through fiscal 2026, after incurring about $1.0 billion to date. The company continues to monitor potential refunds of certain tariffs after a U.S. Supreme Court decision but has not recorded any recovery. Store count inched up to 4,308 locations.
Positive
- None.
Negative
- None.
Insights
Margins and operations improved, but cash flow and leverage still matter.
Advance Auto Parts showed better underlying profitability, with gross margin at 45.1% and SG&A (excluding restructuring) at 41.3% of net sales. This turned last year’s operating loss into $69M of operating income on $2.614B of sales.
Restructuring and related expenses dropped to $32M from $118M, and cumulative restructuring spend reached about $1.0B, with only $20M–$30M expected through fiscal 2026. Cash from operations was still negative $19M, though far better than the prior-year outflow, and long-term debt stood near $3.5B.
Liquidity remains substantial with $2.956B of cash and $896M of ABL availability as of April 25, 2026, partly supported by $2.3B held in Qualified Cash Accounts. Subsequent filings may provide more detail on tariff refund realizations and how quickly restructuring translates into sustained positive cash generation.
Key Figures
Key Terms
last in, first out (LIFO) financial
asset-based loan revolving credit facility financial
supply chain financing programs financial
International Emergency Economic Powers (IEEPA) Act regulatory
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
For the transition period from ________ to ________.
Commission file number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class |
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Not Applicable
(Former name, former address and former fiscal year, if changed since last report).
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 18, 2026, the number of shares of the registrant’s common stock outstanding was
Table of Contents
TABLE OF CONTENTS
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NOTE REGARDING FORWARD LOOKING STATEMENTS |
1 |
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PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Condensed Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries (unaudited) |
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Condensed Consolidated Balance Sheets |
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Condensed Consolidated Statements of Operations |
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Condensed Consolidated Statements of Comprehensive Income |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity |
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Condensed Consolidated Statements of Cash Flows |
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Notes to the Condensed Consolidated Financial Statements |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
Controls and Procedures |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
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Item 1A. |
Risk Factors |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 5. |
Other Information |
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Item 6. |
Exhibits |
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SIGNATURE |
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26 |
Table of Contents
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, 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, tariff refunds, 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, petroleum supply and prices, 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 innovative technologies, 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.
1
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions, except par value amounts) (Unaudited)
Assets |
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April 25, 2026 |
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January 3, 2026 |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Receivables, net |
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Inventories, net |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill |
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Other intangible assets, net |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders' Equity: |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Operating lease liabilities |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, nonvoting, $ |
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Common stock, voting, and additional paid-in capital, $ |
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Treasury stock, at cost |
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Accumulated other comprehensive loss |
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Retained earnings |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
2
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in millions, except per share data) (Unaudited)
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Sixteen Weeks Ended |
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April 25, 2026 |
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April 19, 2025 |
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Net sales |
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$ |
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$ |
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Cost of sales |
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Gross profit |
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Selling, general and administrative expenses, exclusive of restructuring expenses |
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Restructuring and related expenses |
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Selling, general and administrative expenses |
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Operating income (loss) |
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Other, net: |
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Interest expense |
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Other income, net |
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Total other, net |
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Income (loss) before income tax expense |
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( |
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Income tax expense (benefit) |
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( |
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Net income |
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$ |
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$ |
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Basic earnings per common share |
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$ |
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$ |
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Basic weighted-average common shares outstanding |
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Diluted earnings per common share |
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$ |
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$ |
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Diluted weighted-average common shares outstanding |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
3
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(in millions) (Unaudited)
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Sixteen Weeks Ended |
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April 25, 2026 |
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April 19, 2025 |
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Net income |
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$ |
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$ |
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Other comprehensive income: |
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Currency translation adjustments |
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Total other comprehensive income |
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Comprehensive income |
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$ |
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$ |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
4
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in millions, except per share data) (Unaudited)
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Sixteen Weeks Ended April 25, 2026 |
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Common Stock and |
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Treasury |
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Accumulated |
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Total |
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Additional Paid-in Capital |
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Stock, at |
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Comprehensive |
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Retained |
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Stockholders' |
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Shares |
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Amount |
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cost |
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Loss |
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Earnings |
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Equity |
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Balance at January 3, 2026 |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Total other comprehensive income |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Common stock issued under employee benefit plans |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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— |
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— |
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( |
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— |
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— |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at April 25, 2026 |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
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Sixteen Weeks Ended April 19, 2025 |
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Common Stock and |
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Treasury |
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Accumulated |
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Total |
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Additional Paid-in Capital |
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Stock, at |
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Comprehensive |
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Retained |
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Stockholders' |
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Shares |
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Amount |
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cost |
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Loss |
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Earnings |
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Equity |
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Balance at December 28, 2024 |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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Net income |
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— |
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— |
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— |
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— |
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Total other comprehensive income |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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Common stock issued under employee benefit plans |
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— |
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— |
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— |
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— |
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Repurchase of common stock |
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— |
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— |
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( |
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— |
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— |
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( |
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Cash dividends declared ($ |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at April 19, 2025 |
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$ |
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$ |
( |
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$ |
( |
) |
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$ |
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$ |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
5
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions) (Unaudited)
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Sixteen Weeks Ended |
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April 25, 2026 |
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April 19, 2025 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Loss on sale and impairment of long-lived assets |
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Expected future credit losses, net |
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Provision for deferred income taxes |
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( |
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Other, net |
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Net change in: |
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Receivables, net |
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( |
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Inventories, net |
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( |
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( |
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Operating lease right-of-use assets |
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Other assets |
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( |
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Accounts payable |
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Accrued expenses |
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( |
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( |
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Operating lease liabilities |
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( |
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( |
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Other liabilities |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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( |
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( |
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Proceeds from sales of property and equipment |
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Other, net |
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( |
) |
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Net cash used in investing activities of continuing operations |
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( |
) |
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( |
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Net cash used in investing activities of discontinued operations |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities: |
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Dividends paid |
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( |
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( |
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Other, net |
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( |
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( |
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Net cash used in financing activities |
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( |
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( |
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Effect of exchange rate changes on cash |
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Net decrease in cash and cash equivalents |
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Cash and cash equivalents, beginning of period |
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Cash and cash equivalents, end of period |
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$ |
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$ |
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Non-cash transactions: |
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Accrued purchases of property and equipment |
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$ |
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$ |
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Supplemental cash flow information: |
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Interest paid |
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$ |
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$ |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
6
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Description of Business
Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both professional installers (“professional”) and “do-it-yourself” (“DIY”) customers. The accompanying unaudited condensed consolidated financial statements include the accounts of Advance Auto Parts, Inc., its wholly owned subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and their subsidiaries (collectively referred to as “the Company”).
As of April 25, 2026, the Company operated a total of
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and unaudited notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted based upon the SEC interim reporting principles.
The accompanying condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The accounting policies followed in the presentation of these condensed consolidated financial statements are consistent with those followed on an annual basis.
These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for fiscal year 2025 (“2025 Form 10-K”) as filed with the SEC on February 13, 2026. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with prior years, the Company’s first quarter of the year contained sixteen weeks. The Company’s remaining quarters each consist of twelve weeks.
The sixteen weeks ended April 25, 2026 included a payment to settle the customary final working capital amounts related to the Company's sale of Worldpac, which was reflected as a cash outflow for discontinued operations on the condensed consolidated statements of cash flows. The charge was recorded in the fourth quarter of fiscal 2025 and reflects a working capital adjustment recognized as an adjustment to the original estimated purchase price and a reduction in the gain on divestiture recorded as a component of discontinued operations in fiscal 2025 and 2024.
7
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Change in Presentation
Prior year amounts related to the separate disclosure of non-cash expense for expected future credit losses have been reclassified to conform to the current year presentation on the condensed consolidated statements of cash flows. This change in presentation did not have a material impact on the condensed consolidated financial statements.
Recently Issued Accounting Pronouncements - Adopted
Targeted Improvements to the Accounting for Internal-Use Software
In September 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-06, Intangibles - Goodwill and Other - Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which makes targeted improvements to the accounting for internal-use software by removing references to “development stages”. The update also clarifies the criteria for capitalization, which begins when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. The amendment in ASU 2025-06 can be applied prospectively, retrospectively, or via a modified prospective transition method. The Company adopted ASU 2025-06 on a prospective basis as of the beginning of fiscal 2026 for all projects, including in-process projects. The adoption did not have a material impact on the condensed consolidated financial statements and related disclosures.
Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company adopted ASU 2025-05 on a prospective basis as of the beginning of fiscal 2026. The adoption did not have a material impact on the condensed consolidated financial statements and related disclosures.
Recently Issued Accounting Pronouncements - Not Yet Adopted
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation (“ASU 2024-03”), which requires public entities to disclose more detailed information about certain costs and expenses presented in the income statement, including (among other items) the amount of inventory purchases, employee compensation, selling expenses and depreciation and amortization of intangible assets. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.
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Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
The following table summarizes disaggregated revenue from contracts with customers by product group:
|
|
Sixteen Weeks Ended |
|
|||||
|
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Percentage of Net Sales: |
|
|
|
|
|
|
||
Parts and Batteries |
|
|
% |
|
|
% |
||
Accessories and Chemicals |
|
|
% |
|
|
% |
||
Engine Maintenance |
|
|
% |
|
|
% |
||
Other |
|
|
% |
|
|
% |
||
Total |
|
|
% |
|
|
% |
||
There were
The Company used the last in, first out (“LIFO”) method of accounting for approximately
The non-cash expense (benefit) recorded to cost of sales related to the change in the LIFO credit reserve for the periods presented was as follows:
|
|
Sixteen Weeks Ended |
|
|||||
|
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
LIFO credit reserve expense (benefit) |
|
$ |
|
|
$ |
( |
) |
|
Purchasing and warehousing costs included in inventories as of April 25, 2026 and January 3, 2026 were $
Receivables, net, consisted of the following:
|
|
April 25, 2026 |
|
|
January 3, 2026 |
|
||
Trade |
|
$ |
|
|
$ |
|
||
Vendor |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total receivables |
|
|
|
|
|
|
||
Less: allowance for credit losses |
|
|
( |
) |
|
|
( |
) |
Receivables, net |
|
$ |
|
|
$ |
|
||
Changes in the allowance for expected credit losses were as follows:
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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Allowance for credit losses |
|
April 25, 2026 |
|
|
Balance at beginning of period |
|
$ |
|
|
Additions |
|
|
|
|
Write offs |
|
|
( |
) |
Balance at end of period |
|
$ |
|
|
The Company regularly reviews accounts receivable, vendor and other balances and maintains allowances for credit losses estimated whenever events or circumstances indicate the carrying value may not be recoverable and updates its estimate of credit losses each reporting period based on new information that becomes available. The Company considers the following factors when determining if collection is reasonably assured: customer creditworthiness, past transaction history with the customer, current economic and industry trends and changes in customer payment terms. The Company controls credit risk through credit approvals, credit limits and accounts receivable and credit monitoring procedures.
On February 20, 2026, the U.S. Supreme Court overturned certain U.S. tariffs imposed under the International Emergency Economic Powers ("IEEPA") Act. During fiscal 2025, the Company incurred product costs directly related to the IEEPA tariffs. Tariffs directly paid by the Company are subject to direct refund via the IEEPA tariff refund process. Given the significant uncertainty around the recovery of tariffs that were previously paid, the Company has not recognized any amounts related to IEEPA tariff recoveries within its condensed consolidated financial statements as of April 25, 2026. The Company will continue to assess the recoverability of these tariffs, and will recognize any recoveries when realized or realizable, the amounts of which could be material to the Company’s condensed consolidated financial statements.
Fair Value of Financial Assets and Liabilities
As of April 25, 2026 and January 3, 2026, the fair value of the Company’s long-term debt, which includes the current portion of long-term debt, was approximately $
Credit Facilities
As of April 25, 2026 and January 3, 2026, the Company had
In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts as defined in the ABL Facility. As of April 25, 2026 and January 3, 2026, $
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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
become restricted in the event of default or a breach of such covenants. The Company was in compliance with its covenants related to the ABL Facility in all periods presented.
Debt Guarantees
The Company is a guarantor of loans made by banks to various independently-owned Carquest-branded stores that are or, prior to the Company’s restructuring and asset optimization plan approved in November 2024 ("2024 Restructuring Plan"), were customers of the Company, totaling $
Substantially all of the Company’s leases are for facilities, vehicles, and equipment. The initial term for facilities is typically to
Total lease cost is included in cost of sales and total selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income.
Total lease costs are comprised of the following:
|
|
Sixteen Weeks Ended |
|
|||||
|
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Operating lease cost |
|
$ |
|
|
$ |
|
||
Variable lease cost |
|
|
|
|
|
|
||
Total lease cost |
|
$ |
|
|
$ |
|
||
During the sixteen weeks ended April 25, 2026 and sixteen weeks ended April 19, 2025 the Company recorded $
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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Other information relating to the Company’s lease liabilities was as follows:
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|||||
|
|
|
|
|
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
|
|
|
|
|
|
|
||
Operating cash flows from operating leases |
|
|
|
|
|
$ |
|
|
$ |
|
||
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
|
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
|
$ |
|
|
$ |
|
||
The computations of basic and diluted earnings per share were as follows:
|
Sixteen Weeks Ended |
|
||||
|
April 25, 2026 |
|
April 19, 2025 |
|
||
Numerator |
|
|
|
|
||
Net income |
$ |
|
$ |
|
||
|
|
|
|
|
||
Denominator |
|
|
|
|
||
Basic weighted average common shares |
|
|
|
|
||
Dilutive impact of share-based awards |
|
|
|
|
||
Diluted weighted average common shares(1) |
|
|
|
|
||
|
|
|
|
|
||
Basic earnings per share |
$ |
|
$ |
|
||
|
|
|
|
|
||
Diluted earnings per share |
$ |
|
$ |
|
||
Certain of the Company’s suppliers enter into agreements with third-party financial institutions to obtain enhanced receivables options. These arrangements are commonly referred to and known in the industry as supply chain financing programs. Through these agreements, the Company’s suppliers, at their sole discretion, may elect to sell their receivables due from the Company to the third-party financial institutions at terms negotiated between the supplier and the third-party financial institutions. The Company’s obligations to suppliers, including amounts due and scheduled payment terms, are not impacted, and no assets are pledged under the agreements. All outstanding amounts due to third-party financial institutions related to suppliers participating in such financing arrangements are recorded within accounts payable and represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in the Company’s condensed consolidated balance sheets. As of April 25, 2026, and January 3, 2026, the confirmed obligations outstanding under these supplier finance programs to third-party financial institutions were $
Currently and from time to time, the Company is subject to litigation, claims and other disputes, including legal and regulatory proceedings, arising in the normal course of business. The Company records a loss contingency liability when a loss is considered
12
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
probable and the amount can be reasonably estimated. Although the final outcome of pending legal matters cannot be determined, based on the facts presently known, it is management’s opinion that the final outcome of any pending matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.
On October 9, 2023, and October 27, 2023, two putative class actions on behalf of purchasers of the Company’s securities who purchased or otherwise acquired their securities between November 16, 2022, and May 30, 2023, inclusive (the “Class Period”), were commenced against the Company and certain of the Company’s former officers in the United States District Court for the Eastern District of North Carolina. The plaintiffs allege that the defendants made certain false and materially misleading statements during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. These cases were consolidated on February 9, 2024, and the court-appointed lead plaintiff filed a consolidated and amended complaint on April 22, 2024. The consolidated and amended complaint proposes a Class Period of November 16, 2022 to November 15, 2023, and alleges that defendants made false and misleading statements in connection with (a) the Company’s 2023 guidance and (b) certain accounting issues previously disclosed by the Company. On June 21, 2024, defendants filed a motion to dismiss the consolidated and amended complaint. On January 23, 2025, the motion to dismiss was granted by the United States District Court for the Eastern District of North Carolina. On April 17, 2026, the 4th Circuit Court of Appeals affirmed the dismissal in full.
On January 17, 2024, February 20, 2024, and February 26, 2024, derivative shareholder complaints were commenced against the Company’s directors and certain former officers alleging derivative liability for the allegations made in the securities class action complaints noted above. On April 9, 2024, the court consolidated these actions and appointed co-lead counsel. On June 10, 2024, the court issued a stay order on the consolidated derivative complaint pending resolution of the motion to dismiss for the underlying securities class action complaint.
The Company conducts its operations principally in the geographical areas of the U.S. and Canada through its Advance Auto Parts and Carquest trade brands. The products sold by the Company, across all geographic areas, have similar economic characteristics, are sourced from the Company’s suppliers in a similar manner, and are available for sale to all of the Company’s customers through the Company’s stores and self-service e-commerce sites. All of the Company’s stores have similar characteristics, including the nature of the products and services, the type and class of customers, and the methods used to distribute products and provide service to its customers. Due to these reasons, the Company has
13
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
The Company’s CODM is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. Discrete information is not regularly provided to and/or reviewed by the Company’s CODM at a lower level than the consolidated level, inclusive of segment asset level detail. The CODM primarily focuses on net income to evaluate its reportable segment. The CODM also uses net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees.
|
|
Sixteen Weeks Ended |
|
|||||
|
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Net sales |
|
$ |
|
|
$ |
|
||
Less: |
|
|
|
|
|
|
||
Cost of sales |
|
|
|
|
|
|
||
Selling, general and administrative expenses(1) |
|
|
|
|
|
|
||
Restructuring and related expenses |
|
|
|
|
|
|
||
Depreciation and amortization expense(2) |
|
|
|
|
|
|
||
Interest expense |
|
|
|
|
|
|
||
Other segment items(3) |
|
|
( |
) |
|
|
( |
) |
Income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
Net income |
|
$ |
|
|
$ |
|
||
2024 Restructuring Plan
On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan, a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. This plan contemplated the closure of approximately
Expenses associated with the 2024 Restructuring Plan included: (1) inventory write down of inventory to net realizable value due to liquidation sales as a result of store closures and streamlining assortment associated with the 2024 Restructuring Plan, (2) non-cash asset impairment and accelerated amortization and depreciation of operating lease right-of-use (“ROU”) assets and property and equipment, (3) personnel expenses related to severance and transition expenses, which were offered to certain employees who would provide services through key dates to ensure completion of closure activities and (4) other location closure-related activity, including nonrecurring services rendered by third-party vendors assisting with the turnaround initiatives and other related expenses, including incremental revisions to receivable collectability due to termination of contracts with independents associated with the 2024 Restructuring Plan.
Other Restructuring Initiatives
In November 2023, the Company announced a strategic and operational plan with anticipated savings of $
14
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
process of converting certain distribution centers and stores into market hubs. In addition to providing replenishment to near-by stores, market hubs support retail operations. In addition to the distribution network optimization costs, other restructuring expenses include certain other items as further detailed in the table below. The Company continues to incur charges associated with this plan and expects to incur additional charges through the end of fiscal 2026, primarily consisting of conversion costs associated with the conversion of certain distribution centers and severance and other personnel expenses.
The Company has recorded all restructuring and related expenses as a component of selling, general and administrative expenses in the condensed consolidated statement of operations, with the exception of inventory related expenses that are recorded as a component of cost of sales in the condensed consolidated statement of operations.
Restructuring and related expenses for the periods presented was as follows:
|
|
Sixteen Weeks Ended |
|
|||||
2024 Restructuring Plan Expenses: |
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Cost of sales: |
|
|
|
|
|
|
||
Inventory (recovery) write-down |
|
$ |
( |
) |
|
$ |
|
|
Selling, general and administrative expenses: |
|
|
|
|
|
|
||
Impairment and write-down of long-lived assets |
|
|
|
|
|
|
||
Severance and other personnel expenses |
|
|
|
|
|
|
||
Other location closure related expenses(1) |
|
|
|
|
|
|
||
2024 Restructuring Plan Expenses |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Other Restructuring Plan Expenses: |
|
|
|
|
|
|
||
Cost of sales expenses: |
|
|
|
|
|
|
||
Distribution network optimization |
|
$ |
|
|
$ |
|
||
Selling, general and administrative expenses: |
|
|
|
|
|
|
||
Distribution network optimization |
|
|
|
|
|
|
||
Impairment and write-down of long-lived assets |
|
|
|
|
|
|
||
Worldpac post transaction-related expenses |
|
|
|
|
|
|
||
Other restructuring expenses(2) |
|
|
|
|
|
|
||
Other Restructuring Plan Expenses |
|
$ |
|
|
$ |
|
||
Restructuring liabilities were immaterial as of April 25, 2026 and January 3, 2026.
As of April 25, 2026, the cumulative amount incurred to date for active restructuring plans totaled $
15
Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
The Company’s effective tax rate for the sixteen weeks ended April 25, 2026 was higher than the estimated annual effective tax rate, primarily due to a discrete charge for stock-based compensation. The Company's effective tax rate for the sixteen weeks ended April 19, 2025 was lower than the estimated annual effective tax rate, primarily due to a net discrete tax benefit of $
16
Table of Contents
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026 (filed with the SEC on February 13, 2026) which the Company refers to as the “2025 Form 10-K”), and the Company’s unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with the previous fiscal year, the Company’s first quarter of the year contained sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.
First Quarter Fiscal 2026 Management Overview
The Company’s financial results for the first quarter of 2026 includes:
Business and Risks Update
The Company continues to make progress on the various elements of its business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers.
On February 20, 2026, the U.S. Supreme Court overturned certain U.S. tariffs imposed under the International Emergency Economic Powers ("IEEPA") Act. During fiscal 2025, the Company incurred product costs directly related to the IEEPA tariffs. Tariffs directly paid by the Company are subject to direct refund via the IEEPA tariff refund process. Given the significant uncertainty around the recovery of tariffs that were previously paid, the Company has not recognized any amounts related to IEEPA tariff recoveries within its condensed consolidated financial statements as of April 25, 2026. The Company will continue to assess the recoverability of these tariffs, and will recognize any recoveries when realized or realizable, the amounts of which could be material to the Company’s condensed consolidated financial statements.
The recent geopolitical events in the Middle East have caused significant disruption in the normal flow of oil, refined petroleum products and related commodities, which has increased the price of oil and non-petroleum products. Although the length and impact of these events are highly unpredictable, they could lead to market disruptions, including significant volatility in prices, supply, credit and capital market, consumer behavior and supply chain disruptions. These items, along with actual or perceived weakness in the economic and business climate, could have an adverse impact on our financial condition and results of operations in future periods.
Industry Update
Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. In addition to the “Business and Risk Update” section
17
Table of Contents
included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, these factors include, but are not limited to:
While these factors tend to fluctuate, the Company remains confident in the long-term growth prospects for the automotive parts industry.
Stores
The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the sixteen weeks ended April 25, 2026, four stores were opened and one store was closed, resulting in a total of 4,308 stores as of the end of the first fiscal quarter compared with a total of 4,305 stores as of January 3, 2026.
Results of Operations
|
Sixteen Weeks Ended |
|
|
|
|
|
|
|||||||||||||
($ in millions) |
April 25, 2026 |
|
|
April 19, 2025 |
|
|
Change(1) |
|
Basis |
|
||||||||||
Net sales |
$ |
2,614 |
|
|
100.0 |
% |
|
$ |
2,583 |
|
|
100.0 |
% |
|
$ |
31 |
|
|
— |
|
Cost of sales |
|
1,434 |
|
|
54.9 |
|
|
|
1,474 |
|
|
57.1 |
|
|
|
40 |
|
|
(221 |
) |
Gross profit |
|
1,180 |
|
|
45.1 |
|
|
|
1,109 |
|
|
42.9 |
|
|
|
71 |
|
|
221 |
|
Selling, general and administrative expenses, exclusive of restructuring and related expenses |
|
1,079 |
|
|
41.3 |
|
|
|
1,122 |
|
|
43.4 |
|
|
|
43 |
|
|
(216 |
) |
Restructuring and related expenses |
|
32 |
|
|
1.2 |
|
|
|
118 |
|
|
4.6 |
|
|
|
86 |
|
|
(334 |
) |
Selling, general and administrative expenses |
|
1,111 |
|
|
42.5 |
|
|
|
1,240 |
|
|
48.0 |
|
|
|
129 |
|
|
(550 |
) |
Operating income (loss) |
|
69 |
|
|
2.6 |
|
|
|
(131 |
) |
|
(5.1 |
) |
|
|
200 |
|
|
771 |
|
Interest expense |
|
(65 |
) |
|
(2.5 |
) |
|
|
(27 |
) |
|
(1.0 |
) |
|
|
(38 |
) |
|
(144 |
) |
Other income, net |
|
31 |
|
|
1.2 |
|
|
|
27 |
|
|
1.0 |
|
|
|
4 |
|
|
14 |
|
Income tax expense (benefit) |
|
11 |
|
|
0.4 |
|
|
|
(155 |
) |
|
(6.0 |
) |
|
|
(166 |
) |
|
642 |
|
Net income |
$ |
24 |
|
|
0.9 |
% |
|
$ |
24 |
|
|
0.9 |
% |
|
$ |
— |
|
|
— |
|
18
Table of Contents
Note: Sums may not equal totals due to rounding.
Net Sales
For the sixteen weeks ended April 25, 2026, net sales increased 1.2% and comparable store sales increased 3.5% compared with the same period in 2025. Net sales increased due to higher average sales prices, partially offset by lower transaction volume and the reduction in sales resulting from store closures during the sixteen weeks ended April 19, 2025 associated with our 2024 Restructuring Plan.
The Company calculates comparable store sales based on the change in store or branch 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”).
Gross Profit
For the sixteen weeks ended April 25, 2026 and April 19, 2025, gross profit was $1.2 billion, or 45.1% of net sales, and $1.1 billion, or 42.9% of net sales, respectively. The increase in gross profit as a percentage of net sales compared to the prior comparative period was driven by expansion in product margin and the impact of lower margin liquidation sales related to our 2024 Restructuring Plan, which negatively impacted gross profit margin in the sixteen weeks ended April 19, 2025.
Selling, General and Administrative Expenses, Exclusive of Restructuring and Related Expenses
For the sixteen weeks ended April 25, 2026, SG&A expenses, exclusive of restructuring and related expenses, were $1.1 billion, or 41.3% of net sales, compared with $1.1 billion, or 43.4% of net sales, for the sixteen weeks ended April 19, 2025. Overall SG&A expenses decreased in the sixteen weeks ended April 25, 2026, as compared to prior comparative periods, as a result of operating costs eliminated for stores closed during the sixteen weeks ended April 19, 2025 as a result of our 2024 Restructuring Plan.
Restructuring and Related Expenses
For the sixteen weeks ended April 25, 2026, restructuring and related expenses were $32 million, or 1.2% of net sales, compared to $118 million, or 4.6% of net sales, in the prior year comparable period. The decrease in expenses as compared to the same period in fiscal 2025, relates to timing of the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024, with the majority of costs being incurred by the end of first quarter of fiscal 2025 following the closure of all stores under the Plan. Substantially all of the costs under the restructuring plans have been incurred as of April 25, 2026. The Company estimates that it will incur additional expenses of approximately $20 million to $30 million through the remainder of fiscal 2026 related to the active restructuring plans. See Note 11. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.
Interest Expense
For the sixteen weeks ended April 25, 2026, interest expense increased as compared to the same periods in fiscal 2025, due to an increase in the principal amount of interest bearing long-term debt from the debt issuance completed in the third quarter of fiscal 2025.
Other Income, Net
For the sixteen weeks ended April 25, 2026, other income, net increased as compared to the same period in fiscal 2025, due to higher interest income earned from higher cash and cash equivalent balances held due to the net proceeds received from the issuance of $1.95 billion in Senior Unsecured Notes in the third quarter of fiscal 2025. This was partially offset by lower interest rates and a reduction in income recognized from the transition services (“TSA Services”) agreement with Worldpac.
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Income Tax Expense (Benefit)
For the sixteen weeks ended April 25, 2026, the Company’s provision for income taxes reflected an expense of $11 million compared with an income tax benefit of $155 million for the same period in 2025. The income tax benefit in fiscal 2025 resulted from a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million, related to an internal legal entity restructuring event completed in the fiscal year treated as a taxable stock disposition for U.S. federal income tax purposes. As a result, the Company recognized a capital loss deduction which was utilized against capital gain income.
Liquidity and Capital Resources
Overview
The Company’s principal sources of liquidity are cash and cash equivalents and borrowing availability under the ABL facility. The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, such as restructuring and asset optimization plans. In addition, cash is required to pay the Company’s dividends and to pay interest and principle on the Company’s long-term debt when due. The following table presents selected financial information related to the Company’s liquidity (in millions):
|
April 25, 2026 |
|
|
January 3, 2026 |
|
|
Change |
|
|||
Cash and cash equivalents |
$ |
2,956 |
|
|
$ |
3,123 |
|
|
$ |
(167 |
) |
ABL Facility borrowing availability |
|
896 |
|
|
|
896 |
|
|
|
— |
|
The decrease in cash and cash equivalents was primarily due to the final working capital payment made related to the Company's sale of Worldpac totaling $55 million, $55 million used for purchases of property and equipment, net of proceeds from sales, the payment of $30 million in dividends and net cash used in operating activities of $19 million, primarily as a result of changes in net working capital.
The Company believes that its cash and cash equivalents and sources of liquidity will satisfy its working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future.
Analysis of Cash Flows
The Company’s cash flows from operating, investing and financing activities were as follows (in millions):
|
Year ended |
|
|||||
|
April 25, 2026 |
|
|
April 19, 2025 |
|
||
Net cash used in operating activities |
$ |
(19 |
) |
|
$ |
(156 |
) |
Net cash used in investing activities of continuing operations |
|
(57 |
) |
|
|
(27 |
) |
Net cash used in investing activities of discontinued operations |
|
(55 |
) |
|
|
— |
|
Net cash used in financing activities |
|
(37 |
) |
|
|
(17 |
) |
Effect of exchange rate changes on cash |
|
1 |
|
|
|
3 |
|
Net decrease in cash and cash equivalents |
$ |
(167 |
) |
|
$ |
(197 |
) |
Operating Activities
For the sixteen weeks ended April 25, 2026, cash used in operating activities changed favorably by $137 million compared with the same period of prior year. The increase as compared to the comparative period was due to lower cash charges related to the 2024 Restructuring Plan and other changes in net working capital.
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Investing Activities
For the sixteen weeks ended April 25, 2026, cash flows used in investing activities of continuing operations increased by $30 million compared with the sixteen weeks ended April 19, 2025, with higher spend on property and equipment in the current period, partially offset by lower proceeds from the sale of property and equipment.
Net cash used in investing activities of discontinued operations for the sixteen weeks ended April 25, 2026, increased by $55 million compared with the sixteen weeks ended April 19, 2025, due to the timing of the final working capital payment made related to the Company's sale of Worldpac.
Financing Activities
For the sixteen weeks ended April 25, 2026, cash flows used in financing activities was $37 million, an increase of $20 million as compared with sixteen weeks ended April 19, 2025. The increase in cash used in financing activities was due to two dividend payments being made during the sixteen weeks ended April 25, 2026 as compared to one dividend payment made during the sixteen weeks ended April 19, 2025.
The Company’s Board of Directors has declared a cash dividend every quarter since 2006. Any payments of dividends in the future will be at the discretion of the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Board of Directors. The Company’s ABL Facility has certain restrictions that may limit the Company’s ability to increase the amount of the Company’s cash dividends above its current levels.
Long-Term Debt
As of April 25, 2026 and January 3, 2026, the Company had outstanding principal of long-term debt totaling $3.5 billion.
For further details, see Note 5. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.
Credit Facilities
The ABL Facility provides for a five-year senior secured first lien asset-based revolving credit facility of up to $1 billion with an uncommitted accordion feature that provides for additional credit extensions up to $500 million.
In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts as defined in ABL Facility. As of April 25, 2026 and January 3, 2026, approximately $2.3 billion of cash and cash equivalents was designated as qualified cash and are subject to customary “springing” control agreements, as described in the ABL Facility Agreement.
As of April 25, 2026 and January 3, 2026, the Company had no outstanding borrowings, $896 million borrowing availability, and $104 million letters of credit outstanding under the ABL Facility. The Company was in compliance with its covenants related to the ABL Facility in all periods presented.
As of April 25, 2026 and January 3, 2026, the Company had no bilateral letters of credit issued separately from the ABL Agreement.
For further details, see Note 5. Long-term Debt and Fair Value of Financial Instruments of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1., respectively.
Additional Capital Requirements
Expected working and other capital requirements, including Contractual and Off-Balance Sheet Obligations are described in the Company’s 2025 Form 10-K in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of April 25, 2026, other than for the changes disclosed in the “Notes to the Condensed Consolidated Financial
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Statements”, and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to the Company’s expected working and other capital requirements described in the Company’s 2025 Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in the Company’s exposure to market risk since January 3, 2026. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2025 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are management’s controls and other procedures that are designed to ensure that information required to be disclosed by management in the Company’s reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the override of controls. Therefore, even those systems determined to be effective can provide only “reasonable assurance” with respect to the reliability of financial reporting and financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness may vary over time.
Management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures as of April 25, 2026. Based on this evaluation, the principal executive officer and the principal financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the first quarter ended April 25, 2026, that has materially affected or is reasonably likely to materially affect its internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
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Table of Contents
PART II. OTHER INFORMATION
None.
ITEM 1. LEGAL PROCEEDINGS
Information regarding certain legal proceedings is provided in this Quarterly Report. See Note 9. Commitments and Contingencies, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.
ITEM 1A. RISK FACTORS
The Company’s future business, operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026, which could adversely affect the Company’s business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of the Company’s common stock. Other than for matters disclosed in the "Business and Risks Update" in this Quarterly Report, there have been no material changes to the Company’s risk factors since the 2025 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth the information with respect to repurchases of the Company’s common stock for the quarter ended April 25, 2026:
Period |
Total Number of Shares Purchased (1) |
|
Average Price Paid per Share (1) |
|
Total Number of |
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
|
||||
January 4, 2026 to January 31, 2026 |
|
944 |
|
$ |
41.35 |
|
|
— |
|
$ |
947 |
|
February 1, 2026 to February 28, 2026 |
|
16 |
|
$ |
55.98 |
|
|
— |
|
$ |
947 |
|
March 1, 2026 to March 28, 2026 |
|
137,405 |
|
$ |
51.26 |
|
|
— |
|
$ |
947 |
|
March 29, 2026 to April 25, 2026 |
|
22 |
|
$ |
53.51 |
|
|
— |
|
$ |
947 |
|
Total |
|
138,387 |
|
$ |
51.20 |
|
|
— |
|
|
|
|
ITEM 5. OTHER INFORMATION
During the first quarter of 2026, no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were
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EXHIBIT INDEX
|
|
Incorporated by Reference |
Filed |
||
Exhibit No. |
Exhibit Description |
Form |
Exhibit |
Filing Date |
Herewith |
3.1 |
Fifth Amendment to Restated Certificate of Incorporation, effective August 9, 2024. |
10-Q |
3.2 |
8/22/2024 |
|
3.2 |
Amended and Restated Bylaws of Advance Auto Parts, Inc., effective August 8, 2023. |
10-Q |
3.1 |
8/18/2020 |
|
10.1 |
Form of 2026 Advance Auto Parts, Inc. Time-based Restricted Stock Unit Award Agreement |
|
|
|
X |
10.2 |
Form of 2026 Advance Auto Parts, Inc. Performance-Based Restricted Stock Unit Award Agreement |
|
|
|
X |
22.1 |
List of the Issuer and its Guarantor Subsidiaries. |
10-Q |
22.1 |
10/30/2025 |
|
31.1 |
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
X |
31.2 |
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
X |
32.1 |
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
X |
101.INS |
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
X |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
X |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
X |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
X |
101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document. |
|
|
|
X |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
X |
104.1 |
Cover Page Interactive Data file (Embedded within the Inline XBRL Documents and Included in Exhibit). |
|
|
|
X |
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Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
ADVANCE AUTO PARTS, INC. |
|
|
|
|
|
Date: May 21, 2026 |
|
/s/ Ryan P. Grimsland |
|
|
|
Ryan P. Grimsland Executive Vice President, Chief Financial Officer |
26