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 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): May 29, 2024
 
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ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
 
Delaware001-1679754-2049910
(State or other jurisdiction of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)
 
4200 Six Forks Road, Raleigh, North Carolina 27609
(Address of principal executive offices) (Zip Code)
 
(540) 362-4911
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, $0.0001 par valueAAPNew York Stock Exchange

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:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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 May 29, 2024, Advance Auto Parts, Inc. (the "Company") issued a press release setting forth its financial results for its first quarter ended April 20, 2024. 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 Current Report on Form 8-K 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
101.1Pursuant to Rule 406 of Regulation S-T, the cover page to this Current Report on Form 8-K is formatted in Inline XBRL.
104.1Cover 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.

ADVANCE AUTO PARTS, INC.
Date: May 29, 2024/s/ Elizabeth E. Dreyer
Elizabeth E. Dreyer
Senior Vice President, Controller and Chief Accounting Officer


Exhibit 99.1
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Advance Auto Parts Reports First Quarter 2024 Results




RALEIGH, N.C., May 29, 2024 - 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 first quarter ended April 20, 2024.

“Our team continues to execute against our decisive actions, including commencing our supply chain consolidation and making meaningful progress toward the potential sale of Worldpac,” said Shane O’Kelly, president and chief executive officer. “While the industry experienced a slower start to 2024 compared with our expectations, the actions we began in the back half of last year will help us streamline our operations for the long term. Our leadership team and I continue to focus on improving the core fundamentals of our business while reducing costs, which is reflected in our year-over-year SG&A reduction. As previously announced, we are reinvesting a portion of the savings back into the foundation of our business, including frontline compensation and training. We also made progress on our other decisive actions, including beginning three of our DC to market hub conversions.

“We continue to work on improving our overall performance by removing complexities and distractions to increase our value proposition and deliver shareholder value. We recognize we still have significant work ahead of us, however the actions we're taking will put us on the path to delivering improved results. I want to thank all our team members for their continued commitment to serving our customers as we navigate through this pivotal year for Advance.”



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First Quarter 2024 Results (1,2)
First quarter 2024 net sales totaled $3.4 billion, a 0.3% decrease compared with the first quarter of the prior year. Comparable store sales decreased 0.2%.

The company's gross profit decreased 2.2% to $1.4 billion. Gross profit margin of 42.0% decreased 82 basis points compared with the first quarter of the prior year. This was primarily driven by increased costs that were not fully covered by pricing actions. These were partially offset by supply chain productivity.

SG&A expenses were $1.3 billion, which improved to 39.4% of net sales compared with 39.9% in the first quarter of 2023. This was primarily driven by the cost control efforts initiated at the end of 2023, including reduced corporate expenditures from the decrease in headcount and significant reduction of marketing expenses as well as a net gain on asset sales. These were partially offset by the reinvestment in field wages and training as well as typical expense inflationary pressure.

The company's operating income was $86.0 million, or 2.5% of net sales, compared with 2.9% in the first quarter of 2023.

The company's effective tax rate was 33.2%, compared with 28.5% in the first quarter of 2023. The higher effective income tax rate was due to a discrete charge for share-based compensation. The company's diluted EPS was $0.67, compared with $0.81 in the first quarter of 2023.

Net cash provided by operating activities was $2.7 million through the first quarter of 2024 versus $382.5 million of cash used in operating activities in the same period of the prior year. Free cash flow through the first quarter of 2024 was an outflow of $46.3 million compared with an outflow of $472.5 million in the same period of the prior year.

Capital Allocation
On May 21, 2024, the company declared a regular cash dividend of $0.25 per share to be paid on July 26, 2024 to all common stockholders of record as of July 12, 2024.








(1) All comparisons are based on the same time period in the prior year. Comparable store sales include locations open for 13 complete accounting periods and exclude sales fulfilled by distribution centers to independently owned Carquest locations.
(2) As reported in the company’s fourth quarter and full year 2023 earnings release, the company corrected non-material errors in certain previously reported financials. All comparisons are based on the corrected historical results as presented in the company’s prior earnings release dated February 29, 2024.
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Full Year 2024 Guidance

As of May 29, 2024
($ in millions, except per share data)LowHigh
Net sales$11,300 $11,500 
Comparable store sales (1)
0.0 %1.0 %
Operating income margin3.2 %3.5 %
Diluted EPS$3.75 $4.25 
Capital expenditures$200 $250 
Free cash flow (2)
Minimum $250
(1)    Comparable store sales include locations open for 13 complete accounting periods and exclude sales fulfilled by distribution centers to independently owned Carquest locations.
(2)    Free cash flow is a non-GAAP measure. For a better understanding of the company's non-GAAP adjustments, refer to the reconciliation of non-GAAP financial measures in the accompanying financial tables included herein.

Investor Conference Call
The company will detail its results for the first quarter ended April 20, 2024 via a webcast scheduled to begin at 8 a.m. Eastern Time on Wednesday, May 29, 2024. The webcast will be accessible via the Investor Relations page of the company's website (ir.AdvanceAutoParts.com).

To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the company suggests registering a day in advance or at minimum 10 minutes before the start of the call. A replay of the conference call will be available on the company's Investor Relations website for one year.
















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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 April 20, 2024 Advance operated 4,777 stores and 320 Worldpac branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The company also served 1,152 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:
Elisabeth EislebenDarryl Carr
T: (919) 227-5466T: (984) 389-7207
E: invrelations@advanceautoparts.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,” “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, including cost reduction initiatives, the company's ability to complete the potential divestitures of the Worldpac and Carquest Canada, operational plans and objectives, expectations for economic conditions, future business and financial performance, 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 complete the potential divestitures of Worldpac and Carquest Canada, the company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, deterioration of general macroeconomic conditions, geopolitical conflicts, the highly competitive nature of the industry, demand for the company’s products and services, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please refer to “Item 1A. Risk Factors” of the company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the company's subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.


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Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
April 20, 2024 (1)
December 30, 2023 (1)
(Unaudited)(Audited)
Assets
Current assets:
Cash and cash equivalents$451,003 $503,471 
Receivables, net825,384 800,141 
Inventories4,828,314 4,857,702 
Other current assets236,507 215,707 
Total current assets6,341,208 6,377,021 
Property and equipment, net1,611,251 1,648,546 
Operating lease right-of-use assets2,589,504 2,578,776 
Goodwill989,921 991,743 
Other intangible assets, net583,547 593,341 
Other assets85,679 86,899 
Total assets$12,201,110 $12,276,326 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$4,031,299 $4,177,974 
Accrued expenses668,205 671,237 
Other current liabilities510,345 458,194 
Total current liabilities5,209,849 5,307,405 
Long-term debt1,787,221 1,786,361 
Noncurrent operating lease liabilities2,191,201 2,215,766 
Deferred income taxes364,564 362,542 
Other long-term liabilities83,625 84,524 
Total stockholders' equity2,564,650 2,519,728 
Total liabilities and stockholders’ equity$12,201,110 $12,276,326 

(1)These condensed consolidated balance sheets have been prepared on a basis consistent with the company's previously prepared consolidated balance sheets filed with the Securities and Exchange Commission (“SEC”), or derived from the audited consolidated financial statements at that date, but does not include the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”).

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Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data) (unaudited)
Sixteen Weeks Ended
April 20, 2024
April 22, 2023 (1)
Net sales$3,406,254 $3,417,594 
Cost of sales, including purchasing and warehousing costs
1,977,180 1,955,666 
Gross profit1,429,074 1,461,928 
Selling, general and administrative expenses
1,343,053 1,363,990 
Operating income86,021 97,938 
Other, net:
Interest expense(24,875)(29,718)
Other expense, net
(1,290)(674)
Total other, net(26,165)(30,392)
Income before provision for income taxes59,856 67,546 
Provision for income taxes19,844 19,223 
Net income$40,012 $48,323 
Basic earnings per common share $0.67 $0.81 
Weighted-average common shares outstanding59,558 59,334 
Diluted earnings per common share$0.67 $0.81 
Weighted-average common shares outstanding59,841 59,544 

(1)The condensed consolidated statement of operations for the sixteen weeks ended April 22, 2023 reflects the correction of non-material errors the company discovered in previously reported results.

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Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands) (unaudited)
Sixteen Weeks Ended
April 20, 2024
April 22, 2023 (1)
Cash flows from operating activities:
Net income$40,012 $48,323 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization94,711 92,554 
Share-based compensation16,696 16,524 
Loss on property and equipment, net(18,368)90 
Provision for deferred income taxes2,637 6,899 
Other, net1,164 849 
Net change in:
Receivables, net(27,469)(85,827)
Inventories20,017 (104,355)
Accounts payable(141,323)(424,190)
Accrued expenses1,270 89,666 
Other assets and liabilities, net13,341 (23,057)
Net cash provided by (used in) operating activities2,688 (382,524)
Cash flows from investing activities:
Purchases of property and equipment(48,957)(89,996)
Proceeds from sales of property and equipment10,028 325 
Net cash used in investing activities(38,929)(89,671)
Cash flows from financing activities:
Borrowings under credit facilities— 2,886,000 
Payments on credit facilities— (2,955,000)
Borrowings on senior unsecured notes— 599,571 
Dividends paid(14,966)(89,487)
Purchases of noncontrolling interests(7,149)— 
Proceeds from the issuance of common stock946 1,100 
Repurchases of common stock(3,338)(12,605)
Other, net(1,137)(4,377)
Net cash (used in) provided by financing activities(25,644)425,202 
Effect of exchange rate changes on cash9,417 68 
Net decrease in cash and cash equivalents(52,468)(46,925)
Cash and cash equivalents, beginning of period
503,471 270,805 
Cash and cash equivalents, end of period
$451,003 $223,880 

(1)The condensed consolidated statement of cash flows for the sixteen weeks ended April 22, 2023 reflects the correction of non-material errors the company discovered in previously reported results.

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Restatement of Previously Issued Financial Statements
During the fiscal year ended December 30, 2023, the company identified errors primarily impacting cost of sales, selling, general and administrative costs and other income/expenses, net, incurred in prior years but not previously recognized. The company evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period. A summary of the corrections to the impacted financial statement line items in the company's Consolidated Balance Sheet as of April 22, 2023 and the company's Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the sixteen weeks ended April 22, 2023 included in the company's previously filed Annual Report on Form 10-K are presented below:

Condensed Consolidated Statement of Operations
April 22, 2023
Sixteen Weeks Ended
As Previously ReportedAdjustmentsAs Corrected
Cost of sales$1,946,931 $8,735 $1,955,666 
Gross profit1,470,663 (8,735)1,461,928 
Selling, general and administrative expenses1,380,664 (16,674)1,363,990 
Operating income89,999 7,939 97,938 
Income before provision for income taxes59,607 7,939 67,546 
Provision for income taxes16,956 2,267 19,223 
Net income$42,651 $5,672 $48,323 
Basic earnings per share$0.72 $0.09 $0.81 
Diluted earnings per common share$0.72 $0.09 $0.81 

Condensed Consolidated Statement of Cash Flows
Sixteen Weeks Ended April 22, 2023
As Previously ReportedAdjustmentsAs Corrected
Net income$42,651 $5,672 $48,323 
Other, net391 458 849 
Net change in:
Receivables, net(83,370)(2,457)(85,827)
Inventories, net(100,178)(4,177)(104,355)
Accounts payable(440,995)16,805 (424,190)
Accrued expenses85,035 4,631 89,666 
Other assets and liabilities, net1,534 (24,591)(23,057)
Net cash used in operating activities(378,865)(3,659)(382,524)
Other, net(3,919)(458)(4,377)
Net cash used in financing activities425,660 (458)425,202 
Effect of exchange rate changes on cash93 (25)68 
Net decrease in cash and cash equivalents
(42,783)(4,142)(46,925)
Cash and cash equivalents, beginning of period269,282 1,523 270,805 
Cash and cash equivalents, end of period$226,499 $(2,619)$223,880 

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Reconciliation of Non-GAAP Financial Measures
The company's financial results include certain financial measures not derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses Free cash flow as a measure of its liquidity and believes it is a useful indicator for potential investors of the company's ability to implement growth strategies and service debt. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity.

Reconciliation of Free Cash Flow:(1)
Sixteen Weeks Ended
(in thousands)April 20, 2024April 22, 2023
Cash flows provided by operating activities$2,688 $(382,524)
Purchases of property and equipment(48,957)(89,996)
Free cash flow$(46,269)$(472,520)

Adjusted Debt to Adjusted EBITDAR: (1)
Four Quarters Ended
(In thousands, except adjusted debt to adjusted EBITDAR ratio)April 20, 2024December 30, 2023
Total GAAP debt$1,787,221 $1,786,361 
Add: Operating lease liabilities2,692,672 2,660,827 
Adjusted debt$4,479,893 $4,447,188 
GAAP Net income$21,424 $29,735 
Depreciation and amortization308,610 306,454 
Interest expense83,212 88,055 
Other income (expense), net(4,909)(5,525)
Provision for income taxes2,734 2,112 
Rent expense628,144 613,859 
Share-based compensation45,819 45,647 
Other nonrecurring charges (2)
21,697 12,419 
Transformation related charges29,684 29,719 
Adjusted EBITDAR$1,136,415 $1,122,475 
Adjusted Debt to Adjusted EBITDAR 3.9 4.0 
(1) The four quarters ended April 20, 2024 includes the correction of non-material errors the company discovered in previously reported results.
(2) The adjustments to the four quarters ended April 20, 2024 and December 30, 2023 include expenses associated with the company's remediation efforts and professional executive recruiting fees.

NOTE: Management believes its Adjusted Debt to Adjusted EBITDAR ratio (“leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The company’s goal is to maintain an investment grade rating. The company's credit rating directly impacts the interest rates on borrowings under its existing credit facility and could impact the company's ability to obtain additional funding. If the company was unable to maintain its investment grade rating, this could negatively impact future performance and limit growth opportunities. Similar measures are utilized in the calculation of the financial covenants and ratios contained in the company's financing arrangements. The leverage ratio calculated by the company is a non-GAAP measure and should not be considered a substitute for debt to net earnings, as determined in accordance with GAAP. The company adjusts the calculation
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to remove rent expense 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 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.


Store Information

During the sixteen weeks ended April 20, 2024, 7 stores and branches were opened and 17 were closed, resulting in a total of 5,097 stores and branches as of April 20, 2024, compared with a total of 5,107 stores and branches as of December 30, 2023.

The below table summarizes the changes in the number of company-operated store and branch locations during the sixteen weeks ended April 20, 2024:

AAPCARQUEST
WORLDPAC (1)
Total
December 30, 20234,484 302 321 5,107 
New7 — — 7 
Closed(9)(7)(1)(17)
Relocated1 (1)— — 
April 20, 20244,483 294 320 5,097 

(1) Certain converted Autopart International ("AI") locations will remain branded as AI going forward.
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v3.24.1.1.u2
Cover
May 29, 2024
Cover Page [Abstract]  
Document Type 8-K
Document Period End Date May 29, 2024
Entity Registrant Name ADVANCE AUTO PARTS, INC.
Entity Address, Address Line One 4200 Six Forks Road
Entity Address, City or Town Raleigh
Entity Address, State or Province NC
Entity Address, Postal Zip Code 27609
City Area Code 540
Local Phone Number 362-4911
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Entity Central Index Key 0001158449
Amendment Flag false
Title of 12(b) Security Common Stock, $0.0001 par value
Security Exchange Name NYSE
Entity Incorporation, State or Country Code DE
Entity File Number 001-16797
Entity Tax Identification Number 54-2049910
Trading Symbol AAP
Advance Auto Parts (NYSE:AAP)
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