UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~________________________~~

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October 8, 2022~~

April 22, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________.

Commission file number 001-16797

~~________________________~~

ADVANCE AUTO PARTS, INC.

(Exact name of registrant as specified in its charter)

~~________________________~~_________________________


Delaware			54-2049910
(State or other jurisdiction of incorporation or organization)			(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)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, $0.0001 par value

AAP

New York Stock Exchange

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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 ~~November 14, 2022,~~May 26, 2023, the number of shares of the registrant’s common stock outstanding was ~~59,253,716~~59,443,852 shares.

Table of Contents


TABLE OF CONTENTS
			Page
NOTE REGARDING FORWARD LOOKING STATEMENTS			1
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries (unaudited)	2
		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income	3
		Condensed Consolidated Statements of Changes in Stockholders’ Equity	4
		Condensed Consolidated Statements of Cash Flows	65
		Notes to the Condensed Consolidated Financial Statements	76
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2018
	Item 4.	Controls and Procedures	2018
PART II.	OTHER INFORMATION
	Item 1.	~~Legal Proceedings~~	21
	~~Item~~ 1A.	Risk Factors	2120
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2120
	Item 6.	Exhibits	2221
SIGNATURE			2322

Table of Contents

NOTE REGARDING 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 our strategic initiatives, operational plans and objectives, expectations for economic conditions and recovery and future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect our views based on historical results, current information and assumptions related to future developments. Except as may be required by law, we undertake 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, factors related to the company’s leadership transition, the timing and implementation of strategic initiatives, including with respect to labor shortages or disruptions and the impact on our ability to complete store openings, deterioration of general macroeconomic conditions, the highly competitive nature of our industry, demand for our products and services, complexities in our inventory and supply chain and challenges with transforming and growing our ~~business and factors related to the current global pandemic.~~business. Please refer to “Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by our 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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except per share data) (Unaudited)


Assets	Assets	October 8, 2022		January 1, 2022		Assets	April 22, 2023		December 31, 2022
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	191,204	$	601,428	Cash and cash equivalents	$	226,499	$	269,282
Receivables, net	Receivables, net	845,667		782,785		Receivables, net	782,093		698,613
Inventories		4,926,579		4,659,018
Inventories, net						Inventories, net	5,015,973		4,915,262
Other current assets	Other current assets	199,069		232,245		Other current assets	177,127		163,695
Total current assets	Total current assets	6,162,519		6,275,476		Total current assets	6,201,692		6,046,852
Property and equipment, net of accumulated depreciation of $2,534,559 and $2,403,567		1,663,939		1,528,311
Property and equipment, net of accumulated depreciation of $2,672,665 and $2,590,382						Property and equipment, net of accumulated depreciation of $2,672,665 and $2,590,382	1,694,337		1,690,139
Operating lease right-of-use assets	Operating lease right-of-use assets	2,625,638		2,671,810		Operating lease right-of-use assets	2,628,899		2,607,690
Goodwill	Goodwill	989,946		993,744		Goodwill	990,573		990,471
Other intangible assets, net	Other intangible assets, net	625,673		651,217		Other intangible assets, net	612,104		620,901
Other assets	Other assets	64,364		73,651		Other assets	54,633		62,429
Total assets	Total assets	$	12,132,079	$	12,194,209	Total assets	$	12,182,238	$	12,018,482
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	4,097,412	$	3,922,007	Accounts payable	$	3,682,749	$	4,123,462
Accrued expenses	Accrued expenses	681,216		777,051		Accrued expenses	718,290		634,447
Current portion of long-term debt	Current portion of long-term debt	185,000		—		Current portion of long-term debt	116,000		185,000
Other current liabilities	Other current liabilities	479,273		481,249		Other current liabilities	466,416		427,480
Total current liabilities	Total current liabilities	5,442,901		5,180,307		Total current liabilities	4,983,455		5,370,389
Long-term debt	Long-term debt	1,187,916		1,034,320		Long-term debt	1,784,596		1,188,283
Noncurrent operating lease liabilities	Noncurrent operating lease liabilities	2,251,560		2,337,651		Noncurrent operating lease liabilities	2,269,280		2,278,318
Deferred income taxes	Deferred income taxes	433,717		410,606		Deferred income taxes	422,984		415,997
Other long-term liabilities	Other long-term liabilities	99,910		103,034		Other long-term liabilities	85,762		87,214
Total liabilities	Total liabilities	9,416,004		9,065,918		Total liabilities	9,546,077		9,340,201

Commitments and contingencies	Commitments and contingencies					Commitments and contingencies

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, nonvoting, $0.0001 par value	Preferred stock, nonvoting, $0.0001 par value	—		—		Preferred stock, nonvoting, $0.0001 par value	—		—
Common stock, voting, $0.0001 par value	Common stock, voting, $0.0001 par value	8		8		Common stock, voting, $0.0001 par value	8		8
Additional paid-in capital	Additional paid-in capital	886,438		845,407		Additional paid-in capital	914,184		897,560
Treasury stock, at cost	Treasury stock, at cost	(2,842,896)		(2,300,288)		Treasury stock, at cost	(2,931,373)		(2,918,768)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(54,298)		(22,627)		Accumulated other comprehensive loss	(44,355)		(45,143)
Retained earnings	Retained earnings	4,726,823		4,605,791		Retained earnings	4,697,697		4,744,624
Total stockholders’ equity	Total stockholders’ equity	2,716,075		3,128,291		Total stockholders’ equity	2,636,161		2,678,281
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	12,132,079	$	12,194,209	Total liabilities and stockholders’ equity	$	12,182,238	$	12,018,482

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share data) (Unaudited)


		Twelve Weeks Ended				Forty Weeks Ended					Sixteen Weeks Ended
		October 8, 2022		October 9, 2021		October 8, 2022		October 9, 2021			April 22, 2023		April 23, 2022
Net sales	Net sales	$	2,641,341	$	2,621,229	$	8,680,977	$	8,601,014	Net sales	$	3,417,594	$	3,374,210
Cost of sales, including purchasing and warehousing costs	Cost of sales, including purchasing and warehousing costs	1,461,490		1,438,775		4,808,888		4,744,383		Cost of sales, including purchasing and warehousing costs	1,946,931		1,867,690
Gross profit	Gross profit	1,179,851		1,182,454		3,872,089		3,856,631		Gross profit	1,470,663		1,506,520
Selling, general and administrative expenses	Selling, general and administrative expenses	1,002,653		953,256		3,289,940		3,130,376		Selling, general and administrative expenses	1,380,664		1,303,250
Operating income	Operating income	177,198		229,198		582,149		726,255		Operating income	89,999		203,270
Other, net:	Other, net:									Other, net:
Interest expense	Interest expense	(12,039)		(8,587)		(35,114)		(28,085)		Interest expense	(29,718)		(12,868)
Loss on early redemption of senior unsecured notes	Loss on early redemption of senior unsecured notes	—		—		(7,408)		—		Loss on early redemption of senior unsecured notes	—		(7,408)
Other (expense) income, net	Other (expense) income, net	(17,741)		1,810		(18,314)		7,790		Other (expense) income, net	(674)		136
Total other, net	Total other, net	(29,780)		(6,777)		(60,836)		(20,295)		Total other, net	(30,392)		(20,140)
Income before provision for income taxes	Income before provision for income taxes	147,418		222,421		521,313		705,960		Income before provision for income taxes	59,607		183,130
Provision for income taxes	Provision for income taxes	36,436		52,608		126,137		171,521		Provision for income taxes	16,956		43,339
Net income	Net income	$	110,982	$	169,813	$	395,176	$	534,439	Net income	$	42,651	$	139,791

Basic earnings per common share	Basic earnings per common share	$	1.85	$	2.70	$	6.52	$	8.28	Basic earnings per common share	$	0.72	$	2.28
Weighted-average common shares outstanding	Weighted-average common shares outstanding	60,053		62,854		60,656		64,555		Weighted-average common shares outstanding	59,334		61,261
Diluted earnings per common share	Diluted earnings per common share	$	1.84	$	2.68	$	6.47	$	8.22	Diluted earnings per common share	$	0.72	$	2.26
Weighted-average common shares outstanding	Weighted-average common shares outstanding	60,384		63,348		61,045		65,008		Weighted-average common shares outstanding	59,544		61,732

Condensed Consolidated Statements of Comprehensive Income

(in thousands) (Unaudited)


		Twelve Weeks Ended				Forty Weeks Ended					Sixteen Weeks Ended
		October 8, 2022		October 9, 2021		October 8, 2022		October 9, 2021			April 22, 2023		April 23, 2022
Net income	Net income	$	110,982	$	169,813	$	395,176	$	534,439	Net income	$	42,651	$	139,791
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement costs, net of tax of $25, $25, $41 and $69		(70)		(70)		(116)		(194)
Other comprehensive income (loss):										Other comprehensive income (loss):
Changes in net unrecognized other postretirement benefits, net of tax of $70 and $9										Changes in net unrecognized other postretirement benefits, net of tax of $70 and $9	197		24
Currency translation adjustments	Currency translation adjustments	(33,439)		1,527		(31,555)		5,127		Currency translation adjustments	591		(18,462)
Total other comprehensive (loss) income		(33,509)		1,457		(31,671)		4,933
Total other comprehensive income (loss)										Total other comprehensive income (loss)	788		(18,438)
Comprehensive income	Comprehensive income	$	77,473	$	171,270	$	363,505	$	539,372	Comprehensive income	$	43,439	$	121,353

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except per share data) (Unaudited)
Twelve Weeks Ended October 8, 2022
Common Stock Additional
Paid-in Capital Treasury Stock, at Cost Accumulated Other
Comprehensive Loss Retained Earnings Total
Stockholders’ Equity
Shares Amount
Balance at July 16, 2022 60,118 $ 8 $ 875,500 $ (2,766,457) $ (20,789) $ 4,706,547 $ 2,794,809
Net income — — — — — 110,982 110,982
Total other comprehensive loss — — — — (33,509) — (33,509)
Issuance of shares upon the exercise of stock options 1 — 142 — — — 142
Restricted stock units and deferred stock units vested 22 — — — — — —
Share-based compensation — — 10,946 — — — 10,946
Stock issued under employee stock purchase plan 7 — 1,050 — — — 1,050
Repurchases of common stock (452) — — (76,439) — — (76,439)
Cash dividends declared ($1.50 per common share) — — — — — (90,706) (90,706)
Other — — (1,200) — — — (1,200)
Balance at October 8, 2022 59,696 $ 8 $ 886,438 $ (2,842,896) $ (54,298) $ 4,726,823 $ 2,716,075
Twelve Weeks Ended October 9, 2021
Common Stock Additional
Paid-in Capital Treasury Stock, at Cost Accumulated Other
Comprehensive Loss Retained Earnings Total
Stockholders’ Equity
Shares Amount
Balance at July 17, 2021 63,499 $ 8 $ 818,126 $ (1,973,371) $ (23,283) $ 4,480,085 $ 3,301,565
Net income — — — — — 169,813 169,813
Total other comprehensive income — — — — 1,457 — 1,457
Restricted stock units and deferred stock units vested 29 — — — — — —
Share-based compensation — — 16,040 — — — 16,040
Stock issued under employee stock purchase plan 4 — 868 — — — 868
Repurchases of common stock (1,119) — — (230,213) — — (230,213)
Cash dividends declared ($1.00 per common share) — — — — — (62,994) (62,994)
Other — — (1) — — — (1)
Balance at October 9, 2021 62,413 $ 8 $ 835,033 $ (2,203,584) $ (21,826) $ 4,586,904 $ 3,196,535

~~The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.~~

~~Table of Contents~~


Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)	Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)																			Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)

																					Sixteen Weeks Ended April 22, 2023
																					Common Stock								Additional Paid-in Capital				Treasury Stock, at Cost				Accumulated Other Comprehensive Loss				Retained Earnings				Total Stockholders’ Equity
																					Shares					Amount
Balance at December 31, 2022																				Balance at December 31, 2022	59,264					$	8				$	897,560					$	(2,918,768)			$	(45,143)			$	4,744,624			$	2,678,281
Net income																				Net income	—					—			—				—				—				42,651				42,651
Total other comprehensive income																				Total other comprehensive income	—					—			—				—				788				—				788

Restricted stock units and deferred stock units vested																				Restricted stock units and deferred stock units vested	256					—			—				—				—				—				—
Share-based compensation																				Share-based compensation	—					—			16,524				—				—				—				16,524
Stock issued under employee stock purchase plan																				Stock issued under employee stock purchase plan	18					—			1,100				—				—				—				1,100
Repurchases of common stock																				Repurchases of common stock	(94)					—			—				(12,605)				—				—				(12,605)
Cash dividends declared ($1.50 per common share)																				Cash dividends declared ($1.50 per common share)	—					—			—				—				—				(89,578)				(89,578)
Other																				Other	—					—			(1,000)				—				—				—				(1,000)
Balance at April 22, 2023																				Balance at April 22, 2023	59,444					$	8		$	914,184			$	(2,931,373)			$	(44,355)			$	4,697,697			$	2,636,161

		Forty Weeks Ended October 8, 2022																			Sixteen Weeks Ended April 23, 2022
		Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss				Retained Earnings					Total Stockholders’ Equity			Common Stock								Additional Paid-in Capital				Treasury Stock, at Cost				Accumulated Other Comprehensive Loss				Retained Earnings				Total Stockholders’ Equity
		Shares	Amount														Shares					Amount
Balance at January 1, 2022	Balance at January 1, 2022	62,009	$	8	$	845,407	$	(2,300,288)			$	(22,627)			$	4,605,791					$	3,128,291		Balance at January 1, 2022	62,009			$			8				$	845,407			$	(2,300,288)			$	(22,627)			$	4,605,791			$	3,128,291
Net income	Net income	—	—		—		—		—				395,176					395,176		Net income	—					—			—					—				—				139,791				139,791
Total other comprehensive loss	Total other comprehensive loss	—	—		—		—		(31,671)				—					(31,671)		Total other comprehensive loss	—					—			—				—				(18,438)				—				(18,438)
Issuance of shares upon the exercise of stock options	Issuance of shares upon the exercise of stock options	3	—		496		—		—				—					496		Issuance of shares upon the exercise of stock options	1					—			233				—				—				—				233
Restricted stock units and deferred stock units vested	Restricted stock units and deferred stock units vested	281	—		—		—		—				—					—		Restricted stock units and deferred stock units vested	234					—			—				—				—				—				—
Share-based compensation	Share-based compensation	—	—		40,291		—		—				—					40,291		Share-based compensation	—					—			16,978				—				—				—				16,978
Stock issued under employee stock purchase plan	Stock issued under employee stock purchase plan	25	—		3,144		—		—				—					3,144		Stock issued under employee stock purchase plan	10					—			933				—				—				—				933
Repurchases of common stock	Repurchases of common stock	(2,622)	—		—		(542,608)		—				—					(542,608)		Repurchases of common stock	(1,156)					—			—				(264,469)				—				—				(264,469)
Cash dividends declared ($4.50 per common share)		—	—		—		—		—				(274,144)					(274,144)
Cash dividends declared ($1.50 per common share)																				Cash dividends declared ($1.50 per common share)	—					—			—				—				—				(92,539)				(92,539)
Other	Other	—	—		(2,900)		—		—				—					(2,900)		Other	—					—			(1,100)				—				—				—				(1,100)
Balance at October 8, 2022		59,696	$	8	$	886,438	$	(2,842,896)	$	(54,298)			$	4,726,823				$	2,716,075

		Forty Weeks Ended October 9, 2021
		Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss				Retained Earnings					Total Stockholders’ Equity
		Shares	Amount
Balance at January 2, 2021		66,361	$	8	$	783,709	$	(1,394,080)			$	(26,759)			$	4,196,634						$	3,559,512
Net income		—	—		—		—		—				534,439					534,439
Total other comprehensive income		—	—		—		—		4,933				—					4,933
Restricted stock units and deferred stock units vested		277	—		—		—		—				—					—
Share-based compensation		—	—		49,631		—		—				—					49,631
Stock issued under employee stock purchase plan		23	—		1,737		—		—				—					1,737
Repurchases of common stock		(4,285)	—		—		(809,504)		—				—					(809,504)
Cash dividends declared ($2.25 per common share)		—	—		—		—		—				(144,169)					(144,169)
Other		37	—		(44)		—		—				—					(44)
Balance at October 9, 2021		62,413	$	8	$	835,033	$	(2,203,584)	$	(21,826)			$	4,586,904				$	3,196,535
Balance at April 23, 2022																				Balance at April 23, 2022	61,098					$	8		$	862,451			$	(2,564,757)			$	(41,065)			$	4,653,043			$	2,909,680

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands) (Unaudited)


		Forty Weeks Ended					Sixteen Weeks Ended
		October 8, 2022		October 9, 2021			April 22, 2023		April 23, 2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	395,176	$	534,439	Net income	$	42,651	$	139,791
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:						Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	215,224		194,737		Depreciation and amortization	92,554		85,581
Share-based compensation	Share-based compensation	40,291		49,631		Share-based compensation	16,524		16,978
Loss and impairment of long-lived assets	Loss and impairment of long-lived assets	2,858		7,570		Loss and impairment of long-lived assets	90		1,237
Loss on early redemption of senior unsecured notes	Loss on early redemption of senior unsecured notes	7,408		—		Loss on early redemption of senior unsecured notes	—		7,408
Provision for deferred income taxes	Provision for deferred income taxes	24,144		32,425		Provision for deferred income taxes	6,899		9,681
Other, net	Other, net	2,064		1,388		Other, net	391		1,020
Net change in:	Net change in:					Net change in:
Receivables, net	Receivables, net	(66,902)		(180,605)		Receivables, net	(83,370)		(174,895)
Inventories		(284,271)		90,993
Inventories, net						Inventories, net	(100,178)		(119,550)
Accounts payable	Accounts payable	187,331		108,393		Accounts payable	(440,995)		20,225
Accrued expenses	Accrued expenses	(34,046)		137,395		Accrued expenses	85,035		(98,978)
Other assets and liabilities, net	Other assets and liabilities, net	(6,183)		(51,430)		Other assets and liabilities, net	1,534		56,562
Net cash provided by operating activities		483,094		924,936
Net cash used in operating activities						Net cash used in operating activities	(378,865)		(54,940)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(333,639)		(190,983)		Purchases of property and equipment	(89,996)		(114,854)

Proceeds from sales of property and equipment	Proceeds from sales of property and equipment	1,821		2,102		Proceeds from sales of property and equipment	325		828
Net cash used in investing activities	Net cash used in investing activities	(331,818)		(188,881)		Net cash used in investing activities	(89,671)		(114,026)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Borrowings under credit facilities	Borrowings under credit facilities	1,123,000		—		Borrowings under credit facilities	2,886,000		275,000
Payments on credit facilities	Payments on credit facilities	(938,000)		—		Payments on credit facilities	(2,955,000)		(275,000)
Borrowings on senior unsecured notes	Borrowings on senior unsecured notes	348,618		—		Borrowings on senior unsecured notes	599,571		348,618
Payments on senior unsecured notes	Payments on senior unsecured notes	(201,081)		—		Payments on senior unsecured notes	—		(201,081)
Dividends paid	Dividends paid	(336,230)		(160,925)		Dividends paid	(89,487)		(154,796)
Repurchases of common stock	Repurchases of common stock	(542,608)		(809,504)		Repurchases of common stock	(12,605)		(264,469)
Other, net	Other, net	463		1,691		Other, net	(2,819)		(2,007)
Net cash used in financing activities		(545,838)		(968,738)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	425,660		(273,735)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(15,662)		2,336		Effect of exchange rate changes on cash	93		(19,994)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(410,224)		(230,347)		Net decrease in cash and cash equivalents	(42,783)		(462,695)
Cash and cash equivalents, beginning of period	Cash and cash equivalents, beginning of period	601,428		834,992		Cash and cash equivalents, beginning of period	269,282		601,428
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	191,204	$	604,645	Cash and cash equivalents, end of period	$	226,499	$	138,733

Non-cash transactions:	Non-cash transactions:					Non-cash transactions:
Accrued purchases of property and equipment	Accrued purchases of property and equipment	$	13,126	$	8,632	Accrued purchases of property and equipment	$	6,909	$	15,272

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

1. 1. Nature of Operations and Basis of Presentation

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 condensed consolidated financial statements have been prepared by us and 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 “Advance,” “we,” “us” or “our”).

As of ~~October 8, 2022,~~April 22, 2023, we operated a total of ~~4,747~~4,778 stores and ~~313~~318 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of ~~October 8, 2022,~~April 22, 2023, we served ~~1,335~~1,315 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico and various Caribbean islands. Our stores operate primarily under the trade names “Advance Auto Parts” and “Carquest” and our branches operate under the “Worldpac” and “Autopart International” trade names.

The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. 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 Securities and Exchange Commission (“SEC”) interim reporting principles. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for ~~2021~~2022 as filed with the SEC on February ~~15, 2022.~~28, 2023.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our remaining three quarters each consist of twelve weeks.

Out-of-Period Charge

The sixteen weeks ended April 22, 2023 included an out-of-period charge of $17.3 million, reflected in Selling, general and administrative (“SG&A”) expenses, and related tax benefit of $4.3 million in the Condensed Consolidated Statement of Operations, related to costs incurred in prior years but not previously expensed. The out-of-period charge was not material to the current period or any previously issued financial statements.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

2. Significant Accounting Policies

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group:


		Twelve Weeks Ended				Forty Weeks Ended					Sixteen Weeks Ended
		October 8, 2022		October 9, 2021		October 8, 2022		October 9, 2021			April 22, 2023		April 23, 2022
Percentage of Sales:	Percentage of Sales:									Percentage of Sales:
Parts and Batteries	Parts and Batteries	67	%	68	%	66	%	66	%	Parts and Batteries	66	%	66	%
Accessories and Chemicals	Accessories and Chemicals	20		19		20		21		Accessories and Chemicals	20		20
Engine Maintenance	Engine Maintenance	12		12		13		12		Engine Maintenance	13		13
Other	Other	1		1		1		1		Other	1		1
Total	Total	100	%	100	%	100	%	100	%	Total	100	%	100	%

Recently Issued Accounting Pronouncements - Adopted

Supplier Finance Programs

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”), which requires a buyer in a supplier finance program to disclose sufficient information about the program, enabling users of the financial statements to understand the nature of the program and activity and changes during the period. ASU 2022-04 was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information, which is effective for fiscal years beginning after December 15, 2023. During the first quarter 2023, we adopted ASU 2022-04, which did not have a material impact on our consolidated financial position, results of operations and cash flows. Refer toNote 11. Supplier Finance Programs for further details.

3. 3. Inventories, net

Inventories, net, are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately ~~90.8%~~92% of inventories as of ~~October 8, 2022~~April 22, 2023 and ~~89.8% of inventories as of January 1,~~December 31, 2022. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the ~~forty~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 and prior years. As a result of changes in the LIFO reserve, we recorded ~~an increase~~a reduction to Cost of sales of ~~$67.5 million and $29.4~~$6.6 million for the ~~twelve~~sixteen weeks ended ~~October 8, 2022 and October 9, 2021~~April 22, 2023 and an increase to Cost of sales of ~~$240.8 million and $71.6~~$81.5 million for the ~~forty~~sixteen weeks ended ~~October 8,~~April 23, 2022 ~~and October 9, 2021~~ to state inventories at LIFO.

An actual valuation of inventory under the LIFO method is performed by us at the end of each fiscal year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

An actual valuation of inventory under the LIFO method is performed by us at the end of each year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.

Inventory balances were as follows:

October 8, 2022 January 1, 2022
Inventories at first in, first out (“FIFO”) $ 5,134,220 $ 4,625,900
Adjustments to state inventories at LIFO (207,641) 33,118
Inventories at LIFO $ 4,926,579 $ 4,659,018


	April 22, 2023		December 31, 2022
Inventories at first in, first out (“FIFO”)	$	5,287,977	$	5,193,911
Adjustments to state inventories at LIFO	(272,004)		(278,649)
Inventories at LIFO	$	5,015,973	$	4,915,262

4. 4. Intangible Assets

Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was ~~$7.0~~$9.2 million and ~~$7.2~~$9.5 million for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 and ~~October 9, 2021 and $23.6 million and $24.1 million for the forty weeks ended October 8, 2022 and October 9, 2021.~~April 23, 2022.

5. 5. Receivables, net

Receivables, net, consisted of the following:


		October 8, 2022		January 1, 2022			April 22, 2023		December 31, 2022
Trade	Trade	$	659,373	$	506,725	Trade	$	626,922	$	576,548
Vendor	Vendor	193,019		201,933		Vendor	163,755		126,640
Other ~~(1)~~	Other ~~(1)~~	13,820		84,289		Other ~~(1)~~	9,465		10,638
Total receivables	Total receivables	866,212		792,947		Total receivables	800,142		713,826
Less: allowance for credit losses	Less: allowance for credit losses	(20,545)		(10,162)		Less: allowance for credit losses	(18,049)		(15,213)
Receivables, net	Receivables, net	$	845,667	$	782,785	Receivables, net	$	782,093	$	698,613

~~(1)~~ ~~The decrease in Other receivables as~~

6. Long-term Debt and Fair Value of ~~October 8, 2022 was primarily attributable to the release~~Financial Instruments

Long-term debt consists of the settlement in the second quarter of 2022 for the amount of $49.3 million, which was related to the securities class action litigation and was fully paid by our insurance carriers upon final court approval on June 13, 2022.following:


	April 22, 2023		December 31, 2022
5.90% Senior Unsecured Notes due March 9, 2026	$	297,941	$	—
1.75% Senior Unsecured Notes due October 1, 2027	347,122		346,947
5.95% Senior Unsecured Notes due March 9, 2028	297,882		—
3.90% Senior Unsecured Notes due April 15, 2030	495,743		495,562
3.50% Senior Unsecured Notes due March 15, 2032	345,908		345,774
Revolver credit facility	116,000		185,000
	$	1,900,596	$	1,373,283
Less: Current portion of long-term debt	(116,000)		(185,000)
Long-term debt, excluding the current portion	$	1,784,596	$	1,188,283
Fair value of long-term debt	$	1,784,176	$	1,021,396

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

~~6. Long-term Debt and Fair Value of Financial Instruments~~

~~Long-term debt consists of the following:~~

October 8, 2022 January 1, 2022
4.50% Senior Unsecured Notes due December 1, 2023 $ — $ 193,220
1.75% Senior Unsecured Notes due October 1, 2027 346,816 346,382
3.90% Senior Unsecured Notes due April 15, 2030 495,427 494,718
3.50% Senior Unsecured Notes due March 15, 2032 345,673 —
Revolver credit facility 185,000 —
$ 1,372,916 $ 1,034,320
Less: Current portion of long-term debt (185,000) —
Long-term debt, excluding the current portion $ 1,187,916 $ 1,034,320
Fair value of long-term debt $ 998,000 $ 1,092,000

Fair Value of Financial Assets and Liabilities

The fair value of our senior unsecured notes was determined using Level 2 inputs based on quoted market prices. The carrying amounts of our Cash and cash equivalents, Receivables, net, Accounts payable and Accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.

Bank Debt

On February 27, 2023, we entered into Amendment No. 1 (the “Amendment”) to the 2021 Credit Agreement. The Amendment extends the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment also replaces an adjusted LIBOR benchmark rate with a term secured overnight financing rate benchmark rate, as adjusted by an increase of ten basis points, plus the applicable margin under 2021 Credit Agreement. The Amendment made no other material changes to the terms of the 2021 Credit Agreement.

As of ~~October 8, 2022,~~April 22, 2023, we had ~~$185.0~~$116.0 million of outstanding borrowings, ~~$1.0~~$1.1 billion of borrowing availability and no letters of credit outstanding under our unsecured revolving credit facility (the “Credit Agreement”). As of ~~January 1,~~December 31, 2022, we had no$185.0 million outstanding borrowings, ~~$1.2~~$1.0 billion of borrowing availability and no letters of credit outstanding under our Credit Agreement.

As of ~~October 8, 2022~~April 22, 2023 and ~~January 1,~~December 31, 2022, we had ~~$90.2~~$91.0 million and ~~$92.0~~$90.2 million of bilateral letters of credit issued separately from the Credit Agreement, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and primarily serve as collateral for our self-insurance policies.

We were in compliance with financial covenants required by our debt arrangements as of ~~October 8, 2022.~~April 22, 2023.

Senior Unsecured Notes

Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest, payable semi-annually in arrears on June 1 and December 1, at a rate of 4.50% per year. Pursuant to a cash tender offer that was completed on September 29, 2020, we repurchased $256.3 million of the 2023 Notes with the net proceeds from the 2027 Notes. In connection with this tender offer, we incurred charges related to tender premiums and debt issuance costs of $30.5 million and $1.4 million. On April 4, 2022, we redeemed the remaining $193.2 million principal amount of our outstanding 2023 Notes with the net proceeds from the issuance of the 3.50% senior unsecured notes due March 15, 2032 (the “2032 Notes”). In connection with this early redemption, we incurred charges related to the make-whole provision and debt issuance costs of $7.0 million and $0.4 million.

~~Table of Contents~~

~~Advance Auto Parts, Inc. and Subsidiaries~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Amounts presented in thousands, except per share data, unless otherwise stated)~~

~~(Unaudited)~~

Our 3.90% senior unsecured notes due April 15, 2030 (the “Original Notes”) were issued April 16, 2020, at 99.65% of the principal amount of $500.0 million, and were not registered under the Securities Act of 1933, as amended (the “Securities Act”). The Original Notes bear interest, payable semi-annually in arrears on April 15 and October 15, at a rate of 3.90% per year. On July 28, 2020, we completed an exchange offer whereby the Original Notes in the aggregate principal amount of $500.0 million were exchanged for a like principal amount (the “Exchange Notes” or “2030 Notes”), and which have been registered under the Securities Act. The Original Notes were substantially identical to the Exchange Notes, except the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Original Notes.

Our 1.75% senior unsecured notes due October 1, 2027 (the “2027 Notes”) were issued September 29, 2020, at 99.67% of the principal amount of $350.0 million. The 2027 Notes bear interest, payable semi-annually in arrears on April 1 and October 1, at a rate of 1.75% per year. In connection with the 2027 Notes offering, we incurred $2.9 million of debt issuance costs.

Our 3.50% senior unsecured notes due 2032 ~~Notes~~(the “2032 Notes”) were issued March 4, 2022, at 99.61% of the principal amount of $350.0 million. The 2032 Notes bear interest, payable semi-annually in arrears on March 15 and September 15, at a rate of 3.50% per year. In connection with the 2032 Notes offering, we incurred $3.2 million of debt issuance costs.

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

Our 5.90% senior unsecured notes due March 9, 2026 (the “2026 Notes”) were issued March 9, 2023, at 99.94% of the principal amount of $300.0 million. The 2026 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of 5.90% per year. In connection with the 2026 Notes offering, we incurred $1.6 million of debt issuance costs.

Our 5.95% senior unsecured notes due March 9, 2028 (the “2028 Notes”) were issued March 9, 2023, at 99.92% of the principal amount of $300.0 million. The 2028 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of 5.95% per year. In connection with the 2028 Notes offering, we incurred $1.7 million of debt issuance costs.

We may redeem some or all of ~~the 2032~~our 2026 Notes and 2028 Notes (the “Notes”) at any time, or from time to time, prior to ~~December 15, 2031,~~March 9, 2026 in the case of our 2026 Notes, or February 9, 2028 in the case of our 2028 Notes, at the redemption price described in the related indenture for the ~~2032~~ Notes (the “Indenture”). In ~~addition, in~~ the event of a change of control triggering event, as defined in the Indenture, we will be required to offer tothe repurchase of the ~~2032~~ Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. Currently, the ~~2032~~ Notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by guarantor and subsidiary guarantees, as defined by the Indenture.

Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are customers of ours. These loans totaled ~~$66.5~~$104.0 million and ~~$31.7~~$96.9 million as of ~~October 8, 2022~~April 22, 2023 and ~~January 1,~~December 31, 2022 and are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements was ~~$143.9~~$177.7 million and ~~$86.9~~$174.6 million as of ~~October 8, 2022~~April 22, 2023 and ~~January 1,~~December 31, 2022. We believe that the likelihood of performance under these guarantees is remote.

7. Leases

Substantially all of our leases are for facilities and vehicles. The initial term for facilities is typically five to ten years, with renewal options typically at ~~five-year~~five-year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment ~~leases~~lease terms are typically three to six years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

~~Operating~~Total lease ~~liabilities consisted of the following:~~

October 8, 2022 January 1, 2022
Total operating lease liabilities $ 2,713,940 $ 2,802,772
Less: Current portion of operating lease liabilities (462,380) (465,121)
Noncurrent operating lease liabilities $ 2,251,560 $ 2,337,651

~~The current portion of operating lease liabilities~~cost is included in ~~Other current liabilities~~Cost of sales and Selling, general and administrative expenses (“SG&A”) in the accompanying Condensed Consolidated ~~Balance Sheets.~~Statements of Operations and is recorded net of immaterial sublease income. Total lease cost comprised of the following:


	Sixteen Weeks Ended
	April 22, 2023		April 23, 2022
Operating lease cost	$	173,659	$	173,035
Variable lease cost	51,346		53,296
Total lease cost	$	225,005	$	226,331

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

Total lease cost is included in Cost of sales and Selling, general and administrative expenses (“SG&A”) in the accompanying Condensed Consolidated Statements of Operations and is recorded net of immaterial sublease income. Total lease cost was comprised of the following:

Twelve Weeks Ended Forty Weeks Ended
October 8, 2022 October 9, 2021 October 8, 2022 October 9, 2021
Operating lease cost $ 130,108 $ 124,084 $ 433,147 $ 410,253
Variable lease cost 40,910 35,144 136,183 112,864
Total lease cost $ 171,018 $ 159,228 $ 569,330 $ 523,117

~~The future maturity of lease liabilities as of October 8, 2022 were as follows:~~

Remainder of 2022 $ 71,651
2023 564,385
2024 504,295
2025 470,989
2026 360,570
Thereafter 1,085,608
Total lease payments 3,057,498
Less: Imputed interest (343,558)
Total operating lease liabilities $ 2,713,940

~~As of October 8, 2022, our operating lease liabilities included~~ ~~$54.0 million~~ ~~related to options to extend lease terms that are reasonably certain of being exercised and excluded~~ ~~$100.0 million~~ ~~of legally binding minimum lease payments for leases signed but not yet commenced.~~

The weighted-average remaining lease term and weighted-average discount rate for our operating leases were 7.0 years and 3.3% as of October 8, 2022. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rat~~es of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.~~

Other information relating to our lease liabilities is as follows:


		Forty Weeks Ended					Sixteen Weeks Ended
		October 8, 2022		October 9, 2021			April 22, 2023		April 23, 2022
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	478,658	$	418,596	Operating cash flows from operating leases	$	153,363	$	190,542
Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:					Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	343,950	$	460,351	Operating leases	$	181,167	$	147,015

8. 8. Share Repurchase Program

~~On February 8, 2022, our~~Our Board of Directors had previously authorized ~~an additional $1.0~~$2.7 billion to ~~the existing~~our share repurchase program. ~~This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors.~~ Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.

During the sixteen weeks ended April 22, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteen weeks ended April 23, 2022, we repurchased 1.1 million shares at an aggregate cost of $248.2 million, or an average price of $231.41 per share. We had $947.3 million remaining under our share repurchase program as of April 22, 2023.

9. Earnings per Share

The computations of basic and diluted earnings per share were as follows:


	Sixteen Weeks Ended
	April 22, 2023		April 23, 2022
Numerator
Net income applicable to common shares	$	42,651	$	139,791
Denominator
Basic weighted-average common shares	59,334		61,261
Dilutive impact of share-based awards	210		471
Diluted weighted-average common shares (1)	59,544		61,732

Basic earnings per common share	$	0.72	$	2.28
Diluted earnings per common share	$	0.72	$	2.26

(1)For the sixteen weeks ended April 22, 2023 and April 23, 2022, 190 thousand and 21 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

10. Share-Based Compensation

During the sixteen weeks ended April 22, 2023, we granted 237 thousand time-based RSUs, 22 thousand performance-based RSUs, 73 thousand market-based RSUs and 148 thousand stock options. The general terms of the time-based and market-based RSUs are similar to awards previously granted by us. The performance-based RSUs granted may vest following a one-year period subject to the achievements of certain financial goals and employment service as specified in the grant agreement. We grant options to purchase common stock to certain employees under our 2014 Long-Term Incentive Plan. The general terms of the stock options are similar to awards

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Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Amounts presented in thousands, except per share data, unless otherwise stated)

(Unaudited)

During the twelve weeks ended October 8, 2022 and October 9, 2021, we repurchased 0.4 million and 1.1 million shares of our common stock under our share repurchase program at an aggregate cost of $75.0 million and $228.3 million, or an average price of $168.93 and $205.65 per share. During the forty weeks ended October 8, 2022 and October 9, 2021, we repurchased 2.5 million and 4.2 million shares of our common stock under our share repurchase program at an aggregate cost of $523.2 million and $791.7 million, or an average price of $207.50 and $189.43 per share. We had $1.0 billion remaining under our share repurchase program as of October 8, 2022.

~~9. Earnings per Share~~

~~The computations of basic and diluted earnings per share are as follows:~~

Twelve Weeks Ended Forty Weeks Ended
October 8, 2022 October 9, 2021 October 8, 2022 October 9, 2021
Numerator
Net income applicable to common shares $ 110,982 $ 169,813 $ 395,176 $ 534,439
Denominator
Basic weighted-average common shares 60,053 62,854 60,656 64,555
Dilutive impact of share-based awards 331 494 389 453
Diluted weighted-average common shares (1)
60,384 63,348 61,045 65,008
Basic earnings per common share $ 1.85 $ 2.70 $ 6.52 $ 8.28
Diluted earnings per common share $ 1.84 $ 2.68 $ 6.47 $ 8.22

~~(1)~~For the twelve weeks ended October 8, 2022, 163 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the twelve weeks ended October 9, 2021, there were no RSUs that were anti-dilutive. For the forty weeks ended October 8, 2022 and October 9, 2021, 122 thousand and 11 thousand RSUs were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

~~10. Share-Based Compensation~~

During the forty weeks ended October 8, 2022, we granted 188 thousand time-based RSUs, 58 thousand market-based RSUs and 114 thousand stock options. The general terms of the time-based and market-based RSUs are similar to awards previously granted by us. We grant options to purchase common stock to certain employees under our 2014 Long-Term Incentive Plan. The general terms of the stock options are similar to awards previously granted by us. We record compensation expense for the grant date fair value of the option awards evenly over the vesting period.

The weighted-average fair values of the time-based, performance-based and market-based RSUs granted during the ~~forty~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 were ~~$201.89~~$135.13, $135.13 and ~~$205.52~~$139.75 per share. The fair value of each market-based RSU was determined using a Monte Carlo simulation model. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our stock on the date of grant adjusted for expected dividends during the vesting period, as applicable.

The weighted-average fair value of stock options granted during the sixteen weeks ended April 22, 2023 was $35.38 per share. The fair value was estimated on the date of grant by applying the Black-Scholes option-pricing valuation model.


	Sixteen Weeks Ended
	April 22, 2023
Risk-free interest rate (1)	4.1	%
Expected term (2)	6 years
Expected volatility (3)	35.1	%
Expected dividend yield (4)	4.1	%

(1) The risk-free interest rate is based on the yield in effect at grant for zero-coupon U.S. Treasury notes with maturities equivalent to the expected term of the stock options.

(2) The expected term represents the period of time options granted are expected to be outstanding. As we do not have sufficient historical data, we utilized the simplified method provided by the SEC to calculate the expected term as the average of the contractual term and vesting period.

(3) Expected volatility is the measure of the amount by which the stock price has fluctuated or is expected to fluctuate. We utilized historical trends and the implied volatility of our publicly traded financial instruments in developing the volatility estimate for our stock options.

(4) The expected dividend yield is calculated based on our expected quarterly dividend and the three month average stock price as of the grant date.

The total income tax benefit related to share-based compensation expense for the ~~forty~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 was ~~$9.9~~$4.0 million. As of ~~October 8, 2022,~~April 22, 2023, there was ~~$76.0~~$95.7 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted-average period of ~~1.5~~1.7 years.

11. Supplier Finance Programs

We maintain supply chain financing agreements with third-party financial institutions to provide our suppliers with enhanced receivables options. Through these agreements, our suppliers, at their sole discretion, may elect to sell its receivables due from us to the third-party financial institution at terms negotiated between the supplier and the third-party financial institution. We do not provide any guarantees to any third party in connection with these financing arrangements. Our obligations to our 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 represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in our Condensed Consolidated Balance Sheets. As of April 22, 2023 and December 31, 2022, $3.1 billion and $3.2 billion of our Accounts payable were to suppliers participating in these financing arrangements.

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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 our Annual Report on Form 10-K for the year ended ~~January 1,~~December 31, 2022 (filed with the SEC on February ~~15, 2022)~~28, 2023), which we refer to as our ~~2021~~2022 Form 10-K, and our condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report.

Management Overview

Net sales increased 0.8% in the third quarter of 2022 compared with the same period in the prior year, primarily driven by improvements in strategic pricing and growth in new store openings. Comparable store sales decreased 0.7% for the quarter primarily due to owned brand penetration. Category growth was led by batteries, fluids and chemicals and brakes.

We generated Diluted earnings per share (“Diluted EPS”) of $1.84 during our third quarter of 2022, inclusive of foreign currency impact of $0.20 per diluted share, compared with $2.68 for the comparable period of 2021. When adjusted for non-operational items outlined in the following table, our Adjusted diluted earnings per share (“Adjusted EPS”), a non-GAAP measure, for the twelve weeks ended October 8, 2022 and October 9, 2021 was $2.84 and $3.21.

Twelve Weeks Ended Forty Weeks Ended
October 8, 2022 October 9, 2021 October 8, 2022 October 9, 2021
Last-in, first-out (“LIFO”) impacts $ 0.83 $ 0.35 $ 2.96 $ 0.82
Transformation expenses 0.09 0.10 0.37 0.64
General Parts International, Inc. (“GPI”) amortization of acquired intangible assets 0.08 0.08 0.26 0.25
Other Income adjustments — — 0.09 —
Total adjustments, net of tax $ 1.00 $ 0.53 $ 3.68 $ 1.71

~~Refer to~~ “~~Reconciliation of Non-GAAP Financial Measures~~” ~~for a definition and reconciliation of Adjusted EPS and other non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.~~

A high-level summary of our financial results for the ~~third~~first quarter of ~~2022~~2023 includes:

•Net sales during the ~~third~~first quarter of ~~2022~~2023 was ~~$2.64~~$3.42 billion, an increase of ~~0.8%~~1.3% compared with the ~~third~~first quarter of ~~2021,~~2022, driven predominately by ~~improvements in strategic pricing and growth in~~ new store ~~openings.~~openings, partially offset by a decline in comparable store sales. Comparable store sales ~~decreased 0.7%~~declined 0.4% primarily driven by a decrease in demand within our professional business, partially offset by an increase in ~~owned brand penetration.~~our DIY omnichannel business.

•Gross profit margin for the ~~third~~first quarter of ~~2022~~2023 was ~~44.7%~~43.0% of Net sales, a decrease of 44162 basis points compared with the ~~third~~first quarter of ~~2021.~~2022. Gross profit margin was negatively impacted by inflationary product costs, ~~including the impact of LIFO related expenses, unfavorable channel mix and~~which were not fully covered by pricing actions. Additionally, supply chain headwinds ~~due~~and unfavorable product mix contributed to ~~inflation in labor and transportation costs. These costs were partially offset by improvements in strategic pricing and owned brand expansion.~~gross margin decline.

•Selling, General & Administrative (“SG&A”) expenses for the ~~third~~first quarter of ~~2022~~2023 were ~~38.0%~~40.4% of Net sales, an increase of ~~159~~177 basis points compared with the ~~third~~first quarter of ~~2021.~~2022. This increase was primarily driven by inflation in labor and benefit-related expenses as well as deleverage associated with new store ~~labor, medical and fuel costs.~~openings, partially offset by a decrease in startup costs related to our California expansion. Additionally, SG&A expenses included an out-of-period charge of $17.3 million related to costs incurred in prior years but not previously expensed.

•We generated Diluted earnings per share (“Diluted EPS”) of $0.72 during our first quarter of 2023, compared with $2.26 for the comparable period of 2022.

Business and Risks Update

We continue to make progress on the various elements of our strategic business plan, which is focused on improving the customer experience, margin expansion and driving consistent execution for both professional and DIY customers. To achieve these improvements, we have undertaken planned strategic initiatives to help build a foundation for long-term success across the organization, which include:

•Continued ~~development~~refinement of a demand-based assortment, leveraging purchase and search history from our common ~~catalog, versus our existing push-down supply approach.~~catalog.

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•Advancement towards optimizing our footprint by market ~~including consolidating our Worldpac and Autopart International businesses,~~ to drive share, repurpose our in-market store and asset base and streamline our distribution network.

•Continued evolution of our marketing campaigns, which focus on our customers and how we serve them every day with care and speed and innovate to meet their needs, inclusive of the iconic DieHard® brand.

•Progress in the implementation of a more efficient end-to-end supply chain ~~process~~ to deliver our broad assortment ~~and to help lessen the impact~~ of ~~external constraints.~~

•~~Enhancement of Advance Same Day~~® ~~Curbside Pick Up, Advance Same Day~~® ~~Home Delivery and our mobile application and e-commerce performance.~~inventory.

•Actively pursuing new store openings in 2023, including through lease acquisition opportunities as available and appropriate, in existing markets and new ~~markets, as well as expansion of our independent Carquest network.~~markets.

•Continued negotiations with vendors on strategic sourcing and pricing to help mitigate inflationary pressures.

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Industry Update

Operating within the automotive aftermarket industry, we are influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry, and include but are not limited to:

•Inflationary pressures, including logistics and labor

•Global supply chain disruptions

•Rising fuel costs

•Miles driven

•Unemployment rates

•Consumer confidence and purchasing power

•Competition

•Changes in new car sales

•Economic and geopolitical uncertainty

•Increased foreign currency exchange volatility

Stores and Branches

Key factors in selecting sites and market locations in which we operate include population, demographics, traffic count, vehicle profile, competitive landscape and the cost of real estate. During the ~~forty~~sixteen weeks ended ~~October 8, 2022, 115~~April 22, 2023, 21 stores and branches were opened and 2711 were closed or consolidated, resulting in a total of ~~5,060~~5,096 stores and branches compared with a total of ~~4,972~~5,086 stores and branches as of ~~January 1,~~December 31, 2022.

Results of Operations

Twelve Weeks Ended $ Favorable/ (Unfavorable) Basis Points
($ in millions) October 8, 2022 October 9, 2021
Net sales $ 2,641.3 100.0 % $ 2,621.2 100.0 % $ 20.1 —
Cost of sales 1,461.5 55.3 1,438.8 54.9 (22.7) (44)
Gross profit 1,179.8 44.7 1,182.5 45.1 (2.6) (44)
SG&A 1,002.7 38.0 953.3 36.4 (49.4) (159)
Operating income 177.2 6.7 229.2 8.7 (52.0) (204)
Interest expense (12.0) (0.5) (8.6) (0.3) (3.4) (13)
Other (expense) income, net (17.8) (0.7) 1.8 0.1 (19.6) (74)
Provision for income taxes 36.4 1.4 52.6 2.0 16.2 63
Net income $ 111.0 4.2 % $ 169.8 6.5 % $ (58.8) (228)

~~Note: Table amounts may not foot due to rounding.~~

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Forty Weeks Ended $ Favorable/ (Unfavorable) Basis Points
($ in millions) October 8, 2022 October 9, 2021
Net sales $ 8,681.0 100.0 % $ 8,601.0 100.0 % $ 80.0 —
Cost of sales 4,808.9 55.4 4,744.4 55.2 (64.5) (23)
Gross profit 3,872.1 44.6 3,856.6 44.8 15.5 (23)
SG&A 3,289.9 37.9 3,130.4 36.4 (159.5) (150)
Operating income 582.2 6.7 726.3 8.4 (144.0) (173)
Interest expense (35.1) (0.4) (28.1) (0.3) (7.0) —
Loss on early redemption of senior unsecured notes (7.4) (0.1) — — (7.4) —
Other (expense) income, net (18.3) (0.2) 7.8 0.1 (26.1) (30)
Provision for income taxes 126.1 1.5 171.5 2.0 45.4 54
Net income $ 395.2 4.6 % $ 534.4 6.2 % $ (139.1) (149)


	Sixteen Weeks Ended								$ Favorable/ (Unfavorable)		Basis Points
($ in millions)	April 22, 2023				April 23, 2022
Net sales	$	3,417.6	100.0	%	$	3,374.2	100.0	%	$	43.4	—
Cost of sales	1,946.9		57.0		1,867.7		55.4		(79.2)		(162)
Gross profit	1,470.7		43.0		1,506.5		44.6		(35.8)		(162)
SG&A (1)	1,380.7		40.4		1,303.3		38.6		(77.4)		(177)
Operating income	90.0		2.6		203.3		6.0		(113.2)		(339)
Interest expense	(29.7)		(0.9)		(12.9)		(0.4)		(16.8)		(49)
Loss on early redemptions of senior unsecured notes	—		—		(7.4)		(0.2)		7.4		22
Other (expense) income, net	(0.7)		0.0		0.1		—		(0.8)		(2)
Provision for income taxes	17.0		0.5		43.3		1.3		26.3		79
Net income	$	42.7	1.2	%	$	139.8	4.1	%	$	(97.1)	(289)

Note: Table amounts may not foot due to rounding.

(1) The sixteen weeks ended April 22, 2023 included an out-of-period charge of $17.3 million related to costs incurred in prior years but not expensed in the corresponding periods. The company determined the cumulative impact was not material to the current period or any previously issued financial statements.

Net Sales

Net sales for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 increased ~~0.8%~~1.3% compared with the same period in ~~2021,~~2022, driven predominately by ~~improvements in strategic pricing and growth in~~ new store ~~openings. Comparable~~openings. This was partially offset by a decline of comparable store sales ~~decreased 0.7%~~of 0.4% for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 compared with the ~~twelve~~sixteen weeks ended ~~October 9, 2021, primarily driven by owned brand penetration.~~April 23, 2022. Category growth was led by ~~batteries, fluids~~motor oil and ~~chemicals and~~ brakes.

Net sales for the forty weeks ended October 8, 2022 increased 0.9% compared with the same period in 2021, driven by improvements in strategic pricing and growth in new store openings, partially offset by softness in our DIY omnichannel. Comparable store sales declined slightly for the forty weeks ended October 8, 2022 compared with the forty weeks ended October 9, 2021. Category growth was led by fluids and chemicals as well as batteries.

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We calculate comparable store sales based on the change in store or branch sales starting once a location has been open for 13 complete accounting periods (approximately one year) and by including e-commerce sales. Sales to independently owned Carquest stores are excluded from our comparable store sales. Acquired stores are included in our comparable store sales once the stores have completed 13 complete accounting periods following the acquisition date. We include sales from relocated stores in comparable store sales from the original date of opening.

Gross Profit

Gross profit for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 was ~~$1.18~~$1.47 billion, or ~~44.7%~~43.0% of Net sales, compared with ~~$1.18~~$1.51 billion, or ~~45.1%~~44.6% of Net sales, for the ~~twelve~~sixteen weeks ended ~~October 9, 2021.~~April 23, 2022. During the ~~twelve~~sixteen weeks ended ~~October 8, 2022,~~

April 22, 2023, Gross profit margin was negatively impacted by continued inflationary product costs, ~~including the impact of LIFO related expenses,~~which were not fully covered by pricing actions. Additionally, unfavorable ~~channel~~product mix and supply chain headwinds ~~due~~contributed to ~~increases in labor and transportation costs. These costs were primarily offset by improvements in strategic pricing as well as owned brand expansion.~~

Gross profit for the forty weeks ended October 8, 2022 was $3.87 billion, or 44.6% of Net sales, compared with $3.86 billion, or 44.8% of Net sales, for the forty weeks ended October 9, 2021. This decrease in Gross profit as a percentage of Net sales was primarily due to inflationary product costs, including the impact of LIFO related expenses and unfavorable channel mix, partially offset by strategic pricing, product mix and owned brand expansion.gross margin decline.

As a result of changes in our LIFO reserve, an expense of $67.5 million and $29.4 million were included in the twelve weeks ended October 8, 2022 and October 9, 2021. An expense of $240.8 million and $71.6 million were included in the forty weeks ended October 8, 2022 and October 9, 2021.

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Selling, General and Administrative Expenses

SG&A expenses for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 were ~~$1.0~~$1.38 billion, or ~~38.0%~~40.4% of Net sales, compared with ~~$1.0~~$1.30 billion, or ~~36.4%~~38.6% of Net sales, for the ~~twelve~~sixteen weeks ended ~~October 9, 2021.~~April 23, 2022. The increase in SG&A as a percentage of Net sales ~~for the twelve weeks ended~~ was primarily driven by inflation in labor and benefit-related expenses as well as costs associated with new store ~~labor, medical and fuel costs.~~

openings, partially offset by a decrease in startup costs related to our California expansion. SG&A expenses for the ~~forty~~sixteen weeks ended ~~October 8, 2022 were $3.29 billion, or 37.9%~~April 22, 2023 also included an out-of-period charge of Net sales, compared with $3.13 billion, or 36.4% of Net sales, for the forty weeks ended October 9, 2021. For the forty weeks ended October 8, 2022, the increase was primarily driven by inflation in store labor and fuel costs as well as costs$17.3 million related to ~~new store openings. These~~ costs ~~were partially offset by a year over year decrease~~incurred in ~~incentive compensation and COVID-19 related expenses.~~

~~Loss on Early Redemption of Senior Unsecured Notes~~

During the forty weeks ended October 8, 2022, we incurred charges related to a make-whole provision and debt issuance costs of $7.0 million and $0.4 million in connection with the early redemption of our 4.50% senior unsecured notes due December 1, 2023 (“2023 Notes”).prior years but not previously expensed.

Provision for Income Taxes

Our Provision for income taxes for the ~~twelve~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 was ~~$36.4~~$17.0 million compared with ~~$52.6~~$43.3 million for the ~~twelve~~sixteen weeks ended ~~October 9, 2021. Our effective tax rate was 24.7% and 23.7% for the twelve weeks ended October 8, 2022 and October 9, 2021.~~April 23, 2022. The decrease in tax expense primarily resulted from lower Income before provision for income taxes compared with prior year.

~~Our Provision for income taxes for the forty weeks ended October 8, 2022 was $126.1 million, compared with $171.5 million for the forty weeks ended October 9, 2021.~~ Our effective tax rate was ~~24.2%~~28.4% and ~~24.3%~~23.7% for the ~~forty~~sixteen weeks ended ~~October 8, 2022~~April 22, 2023 and ~~October 9, 2021.~~April 23, 2022. The ~~decrease in~~higher effective income tax ~~expense resulted from lower Income before provision~~rate for ~~income taxes~~the sixteen weeks ended April 22, 2023 compared with ~~prior year.~~April 23, 2022 reflected a discrete charge related to share based compensation.

~~Reconciliation of Non-GAAP Financial Measures~~

“~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~” includes certain financial measures not derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Non-GAAP financial measures, including Adjusted net income and Adjusted EPS, should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing our operating performance, financial position or cash flows. We have presented these non-GAAP financial measures as we believe that the presentation of our financial results that exclude (1) LIFO impacts; (2) transformation expenses under our strategic business plan; (3) non-cash amortization related to the acquired GPI intangible assets; and (4) other non-recurring adjustments are useful and indicative of our base operations because the expenses vary from period to period in terms of size, nature and significance and/or relate to store closure and consolidation activity in excess of historical levels. These measures assist in comparing our current operating results with past periods and with the operational performance of other companies in our industry. The disclosure of these measures allows investors to evaluate our 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 we have determined are not normal, recurring cash operating expenses necessary to operate our business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures.

~~LIFO Impacts~~ — To assist in comparing our current operating results with the operational performance of other companies in our industry, the impact of LIFO on our results of operations is a reconciling item to arrive at non-GAAP financial measures.

~~Transformation Expenses~~ — Costs incurred in connection with our business plan that focuses on specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise, that we do not view to be normal cash operating expenses. These expenses include, but are not limited to the following:

•Restructuring costs - Costs primarily relating to the early termination of lease obligations, asset impairment charges, other facility closure costs and team member severance in connection with our voluntary retirement program and continued optimization of our organization.

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•Third-party professional services - Costs primarily relating to services rendered by vendors for assisting us with the development of various information technology and supply chain projects in connection with our enterprise integration initiatives.

•Other significant costs - Costs primarily relating to accelerated depreciation of various legacy information technology and supply chain systems in connection with our enterprise integration initiatives and temporary off-site workspace for project teams who are primarily working on the development of specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise.

~~GPI Amortization of Acquired Intangible Assets~~ — As part of our acquisition of GPI, we obtained various intangible assets, including customer relationships, non-compete contracts and favorable lease agreements, which we expect to be subject to amortization through 2025.

~~We have included a reconciliation of this information to the most comparable GAAP measures in the following table:~~

Twelve Weeks Ended Forty Weeks Ended
(in thousands, except per share data) October 8, 2022 October 9, 2021 October 8, 2022 October 9, 2021
Net income (GAAP) $ 110,982 $ 169,813 $ 395,176 $ 534,439
Cost of sales adjustments:
LIFO impacts 67,491 29,410 240,758 71,599
Transformation expenses — 143 2,572 2,611
SG&A adjustments:
GPI amortization of acquired intangible assets 6,308 6,341 21,065 21,246
Transformation expenses:
Restructuring costs 964 2,360 3,270 27,063
Third-party professional services 4,877 4,823 20,429 18,394
Other significant costs 1,155 1,492 4,231 7,406
Other income adjustment (1)
— 36 7,408 —
Provision for income taxes on adjustments (2)
(20,198) (11,151) (74,933) (37,080)
Adjusted net income (Non-GAAP) $ 171,579 $ 203,267 $ 619,976 $ 645,678
Diluted earnings per share (GAAP) $ 1.84 $ 2.68 $ 6.47 $ 8.22
Adjustments, net of tax 1.00 0.53 3.68 1.71
Adjusted EPS (Non-GAAP) $ 2.84 $ 3.21 $ 10.15 $ 9.93

~~(1)~~During the forty weeks ended October 8, 2022, we incurred charges related to a make-whole provision and debt issuance costs of $7.0 million and $0.4 million, in connection with the early redemption of our 2023 Notes.

~~(2)The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments.~~

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Liquidity and Capital Resources

Overview

Our primary cash requirements necessary to maintain our current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives under our strategic business plan and other operational priorities, including payment of interest on our long-term debt. Historically, we have also used available funds to repay borrowings under our credit facility, to periodically repurchase shares of our common stock under our ~~stock~~share repurchase program, to pay our quarterly cash ~~dividends~~dividend and for ~~acquisitions; however, in consideration of ongoing uncertainties related to general global macroeconomic conditions,~~acquisitions. However, our future uses of cash may differ, ~~if our relative priorities,~~ including with respect to the weight we place on the preservation of cash and liquidity, ~~change.~~ degree of investment in our business and other capital allocation factors.

Typically, we have funded our cash requirements primarily through cash generated from operations, supplemented by borrowings under our credit facilities and notes offerings as needed. We believe funds generated from our expected results of operations, available cash and cash equivalents, and available borrowings under our credit facility will be sufficient to fund our obligations for the ~~long term.~~next year. We also believe such funds, cash and available borrowings, together with our ability to generate cash through credit facilities and notes offerings as needed, will be sufficient to fund our ongoing obligations.

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Our supplier finance programs did not have a material impact on our liquidity or capital resources in the periods presented nor do we expect such arrangements to have a material impact on our liquidity or capital resources for the foreseeable future. See Note 11. Supplier Finance Programs of our condensed consolidated financial statements for further discussion.

On March ~~4, 2022,~~9, 2023, we issued our ~~3.50%~~5.90% senior unsecured notes due ~~2032~~2026 (the ~~“2032~~“2026 Notes”) and our 5.95% senior unsecured notes due 2028 (the “2028 Notes”). Refer to Note 6. Long-term Debt and Fair Value of Financial Instruments of the Notes to the Condensed Consolidated Financial Statements included herein for further details. Proceeds from our ~~2032~~2026 Notes and 2028 Notes were utilized to ~~fund the early redemption of~~make repayments on our ~~2023 Notes~~revolving facility and supplement operational and capital expenditures.

On February 27, 2023, we entered into Amendment No. 1 (the “Amendment”) to the Credit Agreement, dated November 9, 2021, with Advance Auto Parts, Inc., as Borrower, Advance Stores Company, Incorporated, as a Guarantor, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “2021 Credit Agreement”). The Amendment extends the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment also replaces an adjusted LIBOR benchmark rate with a Term Secured Overnight Financing Rate (“Term SOFR”) benchmark rate, as adjusted by an increase of ten basis points, plus the applicable margin under 2021 Credit Agreement. The Amendment made no other material changes to the terms of the 2021 Credit Agreement.

Share Repurchase Program

On February 8, 2022, our Board of Directors authorized an additional $1.0 billion towards the existing share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time. We expect to continue our temporary pause on repurchases under our existing share repurchase program and to continue to evaluate current and expected business conditions with respect to resumption of share repurchase activity.

During the ~~twelve~~sixteen weeks ended ~~October 8,~~April 22, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteen weeks ended April 23, 2022, ~~and October 9, 2021,~~ we repurchased ~~0.4 million and~~ 1.1 million shares of our common stock under our share repurchase program at an aggregate cost of ~~$75.0 million and $228.3~~$248.2 million, or an average price of $168.93 and $205.65 per share. During the forty weeks ended October 8, 2022 and October 9, 2021, we repurchased 2.5 million and 4.2 million shares of our common stock under our share repurchase program. The shares repurchased in connection with our share repurchase program during the forty weeks ended October 8, 2022 and October 9, 2021 were at an aggregate cost of $523.2 million and $791.7 million, or an average price of $207.50 and $189.43$231.41 per share. We had ~~$1.0 billion~~$947.3 million remaining under our share repurchase program as of ~~October 8, 2022.~~

April 22, 2023.

Analysis of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities:


		Forty Weeks Ended					Sixteen Weeks Ended
(in thousands)	(in thousands)	October 8, 2022		October 9, 2021		(in thousands)	April 22, 2023		April 23, 2022
Cash flows provided by operating activities		$	483,094	$	924,936
Cash flows used in operating activities						Cash flows used in operating activities	$	(378,865)	$	(54,940)
Cash flows used in investing activities	Cash flows used in investing activities	(331,818)		(188,881)		Cash flows used in investing activities	(89,671)		(114,026)
Cash flows used in financing activities		(545,838)		(968,738)
Cash flows provided by (used in) financing activities						Cash flows provided by (used in) financing activities	425,660		(273,735)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(15,662)		2,336		Effect of exchange rate changes on cash	93		(19,994)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	$	(410,224)	$	(230,347)	Net decrease in cash and cash equivalents	$	(42,783)	$	(462,695)

Operating Activities

For the ~~forty~~sixteen weeks ended ~~October 8, 2022,~~April 22, 2023, Cash flows ~~provided by~~used in operating activities ~~decreased~~increased by ~~$441.8~~$323.9 million to ~~$483.1~~$378.9 million compared with the same period of prior year. The net ~~decrease~~increase in cash flows used in operating ~~cash flows~~activities was primarily driven by lower Net income and ~~a decrease in overall working capital compared with the same period of prior year. The decrease in working capital was primarily driven by~~ an increase in cash used ~~by Inventories, attributable to direct product cost increases driven by inflationary pressures and an increase of inventory on hand.~~in working capital, primarily in Accounts payable.

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Investing Activities

For the ~~forty~~sixteen weeks ended ~~October 8, 2022,~~April 22, 2023, Cash flows used in investing activities ~~increased~~decreased by ~~$142.9~~$24.4 million to ~~$331.8~~$89.7 million compared with the same period of prior year. ~~Cash~~The decrease in cash used in investing activities ~~for the forty weeks ended October 8, 2022 consisted~~was primarily ~~of purchases of property and equipment of $333.6 million~~ attributable to ~~investments~~lower capital spend in ~~information technology, as we remain focused on a complete back office integration throughout~~ the ~~enterprise, as well as investments in leasehold improvements for new store openings.~~current year.

Financing Activities

For the ~~forty~~sixteen weeks ended ~~October 8, 2022,~~April 22, 2023, Cash flows ~~used in~~provided by financing activities was ~~$545.8~~$425.7 million, ~~a decrease~~an increase of ~~$422.9~~$699.4 million compared with the same period of prior year. The ~~net decrease~~increase in cash ~~used in~~provided by financing activities was attributable to net proceeds received from the issuance of the ~~2032~~2026 Notes and 2028 Notes, a decrease in share repurchases of our common stock ~~of $266.9 million~~ and ~~proceeds from net borrowings under our unsecured revolving credit facility of $185.0 million during the forty weeks ended October 8, 2022. The~~a decrease ~~in cash used was partially offset by the early redemption of our 2023 Notes and an increase~~ in dividends paid ~~of $175.3 million~~ during the ~~forty~~sixteen weeks ended ~~October 8, 2022 compared with the forty weeks ended October 9, 2021.~~April 22, 2023.

Our 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 our Board of Directors and will depend upon our results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors.

Long-Term Debt

On March ~~4, 2022,~~9, 2023, we issued ~~$350.0~~$300.0 million aggregate principal amount of our ~~2032~~2026 Notes and $300.0 million aggregate principal amount of our 2028 Notes. The ~~2032~~2026 Notes were issued at ~~99.61%~~99.94% of the principal amount of ~~$350.0~~$300.0 million, are due March ~~15, 2032~~9, 2026 and bear interest at ~~3.50%~~5.90% per year payable semi-annually in arrears on March 159 and September 159 of each year.

~~On April 3, 2022, we redeemed~~ The 2028 Notes were issued at 99.92% of the ~~remaining $193.2 million~~ principal amount of ~~our outstanding 2023 Notes. In connection with this early redemption, we incurred charges related to the make-whole provision~~$300.0 million, are due March 9, 2028 and ~~debt issuance costs~~bear interest at 5.95% per year payable semi-annually in arrears on March 9 and September 9 of ~~$7.0 million and $0.4 million.~~each year.

For additional information, refer to Note 6. Long-term Debt and Fair Value of Financial Instruments of the Notes to the Condensed Consolidated Financial Statements included herein.

As of ~~October 8, 2022,~~April 22, 2023, we had a credit rating from Standard & Poor’s of BBB- and from Moody’s Investor Service of Baa2. ~~The current~~As of April 22, 2023, the outlooks by Standard & Poor’s and Moody’s ~~are positive~~on our credit rating were stable. On June 5, 2023, Standard & Poor’s and ~~stable.~~Moody’s updated their outlooks to negative. The current pricing grid used to determine our borrowing rate under the Credit Agreement is based on our credit ratings. If ~~these~~our credit ratings decline, our interest rate on outstanding balances may increase and our access to additional financing on favorable terms may be limited. In addition, declines could reduce the attractiveness of certain vendor payment programs whereby third-party institutions finance arrangements to our vendors based on our credit rating, which could result in increased working capital requirements. Conversely, if these credit ratings improve, our interest rate may decrease.

With respect to all senior unsecured notes for which Advance Auto Parts, Inc. (“Issuer”) is an issuer or provides full and unconditional guarantee, Advance Stores, a wholly owned subsidiary of the Issuer, serves as the guarantor (“Guarantor Subsidiary”). The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of the Issuer to obtain funds from its Guarantor Subsidiary. Our captive insurance subsidiary, an insignificant wholly owned subsidiary of the Issuer, does not serve as guarantor of our senior unsecured notes.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with GAAP. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments

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by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates.

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During the ~~forty~~sixteen weeks ended ~~October 8, 2022,~~April 22, 2023, there were no changes to the critical accounting policies discussed in our ~~2021~~2022 Form 10-K. For a complete discussion of our critical accounting policies, refer to the ~~2021~~2022 Form 10-K.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our exposure to market risk since ~~January 1,~~December 31, 2022. Refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our ~~2021~~2022 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit 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 our management, including our 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 of our internal controls may vary over time.

Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of ~~October 8, 2022.~~April 22, 2023. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to accomplish their objectives at the reasonable assurance ~~level.~~level solely due to the material weakness described below.

Control Environment

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. In the course of preparing our financial statements for the interim period ended April 22, 2023, management identified a material weakness in our internal control over financial reporting that existed due to turnover of key accounting positions during the first quarter. The Company was not able to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience as of April 22, 2023.

Management believes that the Condensed Consolidated Financial Statements and related financial information included in this Form 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.

As an initial step in remediation of this material weakness, we are engaging temporary third-party resources with the appropriate level of knowledge and experience in accounting and internal control matters to complement the existing organizational structure.

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We are also actively developing and implementing a comprehensive remediation plan. We have engaged a leading public accounting firm to support this work. We expect the remediation plan will include the following:

•hire, develop and retain incremental personnel with appropriate accounting and internal controls expertise;

•review and update (as appropriate) the organizational design of the controllership function;

•review and update (as appropriate) our methodologies, policies and procedures designed to ensure adequate internal control over financial reporting, including underlying information technology and business process controls; and

•review and update (as appropriate) training programs on relevant internal control over financial reporting matters.

The material weakness will not be considered remediated until management completes the remediation plan and keeps it in place for a sufficient period of time. The Company is committed to the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement its remediation plan for the material weakness, including responding as necessary to any additional employee turnover or other internal or external factors that may impact execution of the plan.

Changes in Internal Control Over Financial Reporting

~~There were no~~The Company is in the process of implementing certain changes in ~~our~~its internal controls to remediate the material weakness described above. There has been no change in the Company’s internal control over financial reporting ~~that occurred~~ during ~~our~~the quarter ended ~~October 8, 2022~~April 22, 2023 that ~~have~~has materially affected or ~~are~~is reasonably likely to materially affect ~~our~~its internal control over financial ~~reporting.~~reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

2019

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PART II. OTHER INFORMATION

~~ITEM 1.LEGAL PROCEEDINGS~~

On February 6, 2018, a putative class action on behalf of purchasers of our securities who purchased or otherwise acquired their securities between November 14, 2016 and August 15, 2017, inclusive (the “Class Period”), was commenced against us and certain of our current and former officers in the U.S. District Court for the District of Delaware. The plaintiff alleged that the defendants failed to disclose material adverse facts about our financial well-being, business relationships, and prospects during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On February 7, 2020, the court granted in part and denied in part our motion to dismiss. On November 6, 2020, the court granted the plaintiff’s motion for class certification. On March 15, 2021, we moved for reconsideration of the order denying in part our motion to dismiss, and on October 15, 2021, we filed a motion for summary judgment, seeking full dismissal of the case. Following mediation, on November 5, 2021, the parties executed a confidential binding term sheet to settle all claims and on December 23, 2021, the parties executed a settlement agreement fully documenting their agreement. The settlement agreement received final approval from the court on June 13, 2022. The settlement amount of $49.3 million was fully paid by our insurance carriers.

ITEM 1A.RISK FACTORS

Please refer to “Item 1A. Risk Factors” found in our ~~2021~~2022 Form 10-K filed for the year ended ~~January 1,~~December 31, 2022 for risks that, if they were to occur, could materially adversely affect our business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of our common stock.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the information with respect to repurchases of our common stock for the quarter ended ~~October 8, 2022:~~April 22, 2023:

Total Number of Shares Purchased (1)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in thousands)
July 17, 2022 to August 13, 2022 25 $ 190.65 — $ 1,097,338
August 14, 2022 to September 10, 2022 451,942 $ 169.12 443,969 $ 1,022,339
September 11, 2022 to October 08, 2022 7 $ 169.06 — $ 1,022,339
Total 451,974 $ 169.19 443,969


	Total Number of Shares Purchased (1)	Average Price Paid per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
January 1, 2023 to January 28, 2023	19	$	152.26	—	$	947,339
January 29, 2023 to February 25, 2023	1,699	$	141.52	—	$	947,339
February 26, 2023 to March 25, 2023	92,132	$	134.14	—	$	947,339
March 26, 2023 to April 22, 2023	33	$	94.48	—	$	947,339
Total	93,883	$	139.24	—

(1)The aggregate cost of repurchasing shares in connection with the net settlement of shares issued as a result of the vesting of restricted stock units was ~~$1.5~~$13.1 million, or an average price of ~~$183.67~~$139.24 per share, during the ~~twelve~~sixteen weeks ended ~~October 8, 2022.~~

~~(2)~~On February 8, 2022, our Board of Directors authorized an additional $1.0 billion to the existing share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors.April 22, 2023.

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ITEM 6.EXHIBITS

Incorporated by Reference
Exhibit No. Exhibit Description Form Exhibit Filing Date
3.1
Restated Certificate of Incorporation of Advance Auto Parts, Inc., effective May 24, 2017.
10-Q 3.1 8/14/2018
3.2
Amended and Restated Bylaws of Advance Auto Parts, Inc., effective August 12, 2020.
10-Q 3.2 8/18/2020
22.1
List of the Issuer and its Guarantor Subsidiaries.
10-K 22.1 2/15/2022
31.1*
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.
101.SCH* Inline XBRL Taxonomy Extension Schema Document.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104.1* Cover Page Interactive Data file (Embedded within Inline XBRL Documents and Included in Exhibit 101).

Incorporated by Reference

Exhibit No.

Exhibit Description

Form

Exhibit

Filing Date

3.1

Restated Certificate of Incorporation of Advance Auto Parts, Inc., effective May 24, 2017.

10-Q

3.1

8/14/2018

3.2

Amended and Restated Bylaws of Advance Auto Parts, Inc., effective August 12, 2020.

10-Q

3.2

8/18/2020

4.1

Tenth Supplemental Indenture, dated as of March 9, 2023, among Advance Auto Parts, Inc., Advance Stores Company, Incorporated and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as Trustee.

8-K

4.1

3/9/2023

4.2

Form of 5.900% Notes due 2026 (included in Exhibit 4.1).

8-K

4.2

3/9/2023

4.3

Form of 5.950% Notes due 2028 (included in Exhibit 4.1).

8-K

4.3

3/9/2023

10.1*

Advance Auto Parts, Inc. 2023 Omnibus Incentive Compensation Plan (the “2023 Plan”).

10.2*

Form of 2023 Advance Auto Parts, Inc. Time-Based Restricted Stock Unit Award Agreement under the 2014 Plan.

10.3*

Form of 2023 Advance Auto Parts, Inc. Performance-Based Restricted Stock Unit Award Agreement under the 2014 Plan.

10.4*

Form of 2023 Advance Auto Parts, Inc. Performance-Based Restricted Stock Unit Award Agreement under the 2014 Plan (CE O).

10.5*

Form of 2023 Advance Auto Parts, Inc. Nonqualified Stock Option Award Agreement under the 2014 Plan.

10.6*

Form of 2023 Advance Auto Parts, Inc. Time-Based Restricted Stock Unit Award Agreement under the 2023 Plan.

10.7*

Form of 2023 Advance Auto Parts, Inc. Performance-Based Restricted Stock Unit Award Agreement under the 2023 Plan.

10.8*

Form of 2023 Advance Auto Parts, Inc. Nonqualified Stock Option Award Agreement under the 2023 Plan.

10.9

Amendment to Employment Agreement between Robert B. Cushing and Advance Auto Parts, Inc. dated April 12, 2023.

8-K

10.1

4/13/2023

22.1*

List of the Issuer and its Guarantor Subsidiaries.

31.1*

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104.1*

Cover Page Interactive Data file (Embedded within Inline XBRL Documents and Included in Exhibit 101).

* Filed herewith

** Furnished herewith

2221

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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: ~~November 16, 2022~~June 5, 2023						/s/ William J. Pellicciotti Jr.
						William J. Pellicciotti Jr. Senior Vice President, Controller and Chief Accounting Officer

2322


Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)

	Twelve Weeks Ended October 8, 2022
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at July 16, 2022	60,118	$	8	$	875,500	$	(2,766,457)	$	(20,789)	$	4,706,547	$	2,794,809
Net income	—	—		—		—		—		110,982		110,982
Total other comprehensive loss	—	—		—		—		(33,509)		—		(33,509)
Issuance of shares upon the exercise of stock options	1	—		142		—		—		—		142
Restricted stock units and deferred stock units vested	22	—		—		—		—		—		—
Share-based compensation	—	—		10,946		—		—		—		10,946
Stock issued under employee stock purchase plan	7	—		1,050		—		—		—		1,050
Repurchases of common stock	(452)	—		—		(76,439)		—		—		(76,439)
Cash dividends declared ($1.50 per common share)	—	—		—		—		—		(90,706)		(90,706)
Other	—	—		(1,200)		—		—		—		(1,200)
Balance at October 8, 2022	59,696	$	8	$	886,438	$	(2,842,896)	$	(54,298)	$	4,726,823	$	2,716,075

	Twelve Weeks Ended October 9, 2021
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at July 17, 2021	63,499	$	8	$	818,126	$	(1,973,371)	$	(23,283)	$	4,480,085	$	3,301,565
Net income	—	—		—		—		—		169,813		169,813
Total other comprehensive income	—	—		—		—		1,457		—		1,457
Restricted stock units and deferred stock units vested	29	—		—		—		—		—		—
Share-based compensation	—	—		16,040		—		—		—		16,040
Stock issued under employee stock purchase plan	4	—		868		—		—		—		868
Repurchases of common stock	(1,119)	—		—		(230,213)		—		—		(230,213)
Cash dividends declared ($1.00 per common share)	—	—		—		—		—		(62,994)		(62,994)
Other	—	—		(1)		—		—		—		(1)
Balance at October 9, 2021	62,413	$	8	$	835,033	$	(2,203,584)	$	(21,826)	$	4,586,904	$	3,196,535


	October 8, 2022		January 1, 2022
4.50% Senior Unsecured Notes due December 1, 2023	$	—	$	193,220
1.75% Senior Unsecured Notes due October 1, 2027	346,816		346,382
3.90% Senior Unsecured Notes due April 15, 2030	495,427		494,718
3.50% Senior Unsecured Notes due March 15, 2032	345,673		—
Revolver credit facility	185,000		—
	$	1,372,916	$	1,034,320
Less: Current portion of long-term debt	(185,000)		—
Long-term debt, excluding the current portion	$	1,187,916	$	1,034,320
Fair value of long-term debt	$	998,000	$	1,092,000


	October 8, 2022		January 1, 2022
Total operating lease liabilities	$	2,713,940	$	2,802,772
Less: Current portion of operating lease liabilities	(462,380)		(465,121)
Noncurrent operating lease liabilities	$	2,251,560	$	2,337,651


Remainder of 2022	$	71,651
2023	564,385
2024	504,295
2025	470,989
2026	360,570
Thereafter	1,085,608
Total lease payments	3,057,498
Less: Imputed interest	(343,558)
Total operating lease liabilities	$	2,713,940


	Twelve Weeks Ended				Forty Weeks Ended
(in thousands, except per share data)	October 8, 2022		October 9, 2021		October 8, 2022		October 9, 2021
Net income (GAAP)	$	110,982	$	169,813	$	395,176	$	534,439
Cost of sales adjustments:
LIFO impacts	67,491		29,410		240,758		71,599
Transformation expenses	—		143		2,572		2,611

SG&A adjustments:
GPI amortization of acquired intangible assets	6,308		6,341		21,065		21,246
Transformation expenses:
Restructuring costs	964		2,360		3,270		27,063
Third-party professional services	4,877		4,823		20,429		18,394
Other significant costs	1,155		1,492		4,231		7,406
Other income adjustment (1)	—		36		7,408		—
Provision for income taxes on adjustments (2)	(20,198)		(11,151)		(74,933)		(37,080)
Adjusted net income (Non-GAAP)	$	171,579	$	203,267	$	619,976	$	645,678

Diluted earnings per share (GAAP)	$	1.84	$	2.68	$	6.47	$	8.22
Adjustments, net of tax	1.00		0.53		3.68		1.71
Adjusted EPS (Non-GAAP)	$	2.84	$	3.21	$	10.15	$	9.93