Advance Auto Parts (NYSE: AAP) swings to profit and lifts 2026 margin outlook
Rhea-AI Filing Summary
Advance Auto Parts reported a sharp improvement in profitability for Q4 and full year 2025 while revenue declined. Fourth quarter 2025 net sales were
For full year 2025, net sales were
At
Positive
- Strong earnings turnaround with expanding margins: 2025 adjusted operating income rose to
$216 million with margin of2.5% (up from0.4% ), and adjusted diluted EPS improved to$2.26 from a loss of$(0.29) , showing substantial profitability recovery despite lower sales.
Negative
- None.
Insights
Advance Auto Parts shows a margin-focused turnaround, but cash flow and leverage remain key constraints.
Advance Auto Parts delivered a notable earnings recovery in 2025 despite lower sales. Full-year net sales fell to
The improvement is tied to the 2024 Restructuring Plan and footprint optimization, including 522 store closures in 2025. These actions helped lift full-year gross margin to
Balance sheet and cash generation are mixed. Cash rose to
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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. ☐
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2.02 Results of Operations and Financial Condition.
On February 13, 2026, Advance Auto Parts, Inc. (the "Company") issued a press release setting forth its financial results for its fourth quarter and year ended January 3, 2026. The press release is furnished as Exhibit 99.1 to this Report and is hereby incorporated by reference in this Item 2.02.
As provided in General Instruction B.2 of Form 8-K, the information and exhibit contained in this Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Exhibit Description |
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99.1 |
Press Release, dated February 13, 2026, issued by Advance Auto Parts, Inc. |
101.1 |
Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL. |
104.1 |
Cover Page Interactive Data File (embedded within the Inline XBRL document included in Exhibit 101.1) |
SIGNATURES
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 hereunto duly authorized.
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ADVANCE AUTO PARTS, INC. |
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February 13, 2026 |
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/s/ Ryan P. Grimsland |
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Ryan P. Grimsland |
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Executive Vice President, Chief Financial Officer |
Exhibit 99.1
Advance Auto Parts Reports Fourth Quarter and Full Year 2025 Results;
Releases Full Year 2026 Guidance Highlighting Continued Progress on Strategic Plan
l Q4'25 comparable sales growth of 1.1%; Positive sales performance in the last eight weeks
l FY25 adjusted operating margin of 2.5%; Over 200-basis points of year-over-year expansion
RALEIGH, N.C., February 13, 2026 — 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.
Capital Allocation
On February 10, 2026, the Company declared a regular cash dividend of $0.25 per share to be paid on April 24, 2026 to all common stockholders of record as of April 10, 2026.
Full Year 2026 Guidance(1)
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As of February 13, 2026 |
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($ in millions, except per share data) |
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Low |
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High |
Net sales |
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$8,485 |
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$8,575 |
Comparable store sales (52 weeks)(2) |
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1.00% |
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2.00% |
Adjusted operating income margin |
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3.80% |
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4.50% |
Adjusted diluted EPS(3) |
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$2.40 |
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$3.10 |
Capital expenditures |
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Approx. $300 |
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Free cash flow |
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Approx. $100 |
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Store growth |
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Store Openings |
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40 - 45 |
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Market hub openings |
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10 - 15 |
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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.
Investor Relations Contact: |
Media Contact: |
Lavesh Hemnani |
Nicole Ducouer |
T: (919) 227-5466 |
T: (984) 389-7207 |
E: invrelations@advance-auto.com |
E: AAPcommunications@advance-auto.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 |
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January 3, 2026 |
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December 28, 2024 |
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Current assets: |
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Cash and cash equivalents |
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$ |
3,123 |
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$ |
1,869 |
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Receivables, net |
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380 |
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544 |
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Inventories, net |
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3,646 |
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3,612 |
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Other current assets |
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141 |
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118 |
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Total current assets |
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7,290 |
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6,143 |
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Property and equipment, net |
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1,269 |
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1,334 |
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Operating lease right-of-use assets |
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2,157 |
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2,243 |
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Goodwill |
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600 |
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598 |
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Other intangible assets, net |
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400 |
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406 |
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Other assets |
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110 |
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74 |
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Total assets |
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$ |
11,826 |
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$ |
10,798 |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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|
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Accounts payable |
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$ |
2,977 |
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$ |
3,408 |
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Accrued expenses |
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|
756 |
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|
784 |
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Other current liabilities |
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443 |
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473 |
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Total current liabilities |
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4,176 |
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4,665 |
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Long-term debt |
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3,412 |
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1,789 |
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Operating lease liabilities |
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1,812 |
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|
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1,897 |
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Deferred income taxes |
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142 |
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193 |
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Other long-term liabilities |
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86 |
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|
|
84 |
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Total liabilities |
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9,628 |
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8,628 |
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Total stockholders' equity |
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2,198 |
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|
|
2,170 |
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Total liabilities and stockholders' equity |
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$ |
11,826 |
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|
$ |
10,798 |
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(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)
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Thirteen Weeks Ended |
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Twelve Weeks Ended |
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Fifty-Three Weeks Ended |
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Fifty-Two Weeks Ended |
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January 3, 2026 |
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December 28, 2024 |
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January 3, 2026 |
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December 28, 2024 |
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Net sales |
$ |
1,973 |
|
|
$ |
1,996 |
|
|
$ |
8,601 |
|
|
$ |
9,094 |
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Cost of sales |
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1,104 |
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|
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1,649 |
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|
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4,868 |
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|
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5,685 |
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Gross profit |
|
869 |
|
|
|
347 |
|
|
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3,733 |
|
|
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3,409 |
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Selling, general and administrative expenses, exclusive of restructuring expenses |
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802 |
|
|
|
879 |
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|
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3,572 |
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|
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3,813 |
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Restructuring and related expenses |
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23 |
|
|
|
288 |
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|
|
204 |
|
|
|
309 |
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Selling, general and administrative expenses |
|
825 |
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|
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1,167 |
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3,776 |
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4,122 |
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Operating income (loss) |
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44 |
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|
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(820 |
) |
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(43 |
) |
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(713 |
) |
Other, net: |
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- |
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- |
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Interest expense |
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(53 |
) |
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(19 |
) |
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(139 |
) |
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(81 |
) |
Other income, net |
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30 |
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14 |
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91 |
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26 |
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Total other, net |
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(23 |
) |
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(5 |
) |
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(48 |
) |
|
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(55 |
) |
Income (loss) before income tax expense |
|
21 |
|
|
|
(825 |
) |
|
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(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 |
) |
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|
|
|
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Basic earnings (loss) per common share from continuing operations |
$ |
0.50 |
|
|
$ |
(10.20 |
) |
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$ |
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 |
|
|
|
|
|
|
|
|
|
|
|
|
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||||
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 |
|
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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: |
|
|
|
|
|
|
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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: |
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|
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|
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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:
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:
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 |
|
FAQ
How did Advance Auto Parts (AAP) perform financially in Q4 2025?
What were Advance Auto Parts’ full-year 2025 results?
What guidance did Advance Auto Parts give for full-year 2026?
How did restructuring affect Advance Auto Parts’ 2025 results?
What is the cash and debt position of Advance Auto Parts at year-end 2025?
How many stores does Advance Auto Parts operate after its 2024 Restructuring Plan?
What dividend did Advance Auto Parts declare in early 2026?
Filing Exhibits & Attachments
2 documentsPress Releases
