Table of Contents


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 April 22,July 15, 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

aaplogocolornotaga391a01.jpg
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
_________________________
Delaware54-2049910
(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 classTrading symbolName of each exchange on which registered
Common Stock, $0.0001 par valueAAPNew 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 filerAccelerated filer
Non-accelerated filerSmaller 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 May 26,August 21, 2023, the number of shares of the registrant’s common stock outstanding was 59,443,85259,470,261 shares.


Table of Contents


TABLE OF CONTENTS
   
 Page
 
  
  
  
  
 
 
 
 
 


Table of Contents


NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this prospectus and any applicable prospectus supplement, including documents incorporated by reference herein or therein, 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 currently available as of the date of this prospectus 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, abilities to hire, train and retain qualified employees, 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. Except as may be required by law, we undertake no obligation to update any forward-looking statements made in this prospectus, including the documents incorporated by reference herein. 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.
1

Table of Contents


PART I. FINANCIAL INFORMATION
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data) (Unaudited)
AssetsAssetsApril 22, 2023December 31, 2022AssetsJuly 15, 2023December 31, 2022
Current assets:Current assets:  Current assets:  
Cash and cash equivalentsCash and cash equivalents$226,499 $269,282 Cash and cash equivalents$277,064 $269,282 
Receivables, netReceivables, net782,093 698,613 Receivables, net793,772 698,613 
Inventories, netInventories, net5,015,973 4,915,262 Inventories, net5,067,467 4,915,262 
Other current assetsOther current assets177,127 163,695 Other current assets188,169 163,695 
Total current assetsTotal current assets6,201,692 6,046,852 Total current assets6,326,472 6,046,852 
Property and equipment, net of accumulated depreciation of $2,672,665 and $2,590,3821,694,337 1,690,139 
Property and equipment, net of accumulated depreciation of $2,735,674 and $2,590,382Property and equipment, net of accumulated depreciation of $2,735,674 and $2,590,3821,688,891 1,690,139 
Operating lease right-of-use assetsOperating lease right-of-use assets2,628,899 2,607,690 Operating lease right-of-use assets2,618,822 2,607,690 
GoodwillGoodwill990,573 990,471 Goodwill991,871 990,471 
Other intangible assets, netOther intangible assets, net612,104 620,901 Other intangible assets, net606,450 620,901 
Other assetsOther assets54,633 62,429 Other assets71,870 62,429 
Total assetsTotal assets$12,182,238 $12,018,482 Total assets$12,304,376 $12,018,482 
Liabilities and Stockholders’ EquityLiabilities and Stockholders’ Equity  Liabilities and Stockholders’ Equity  
Current liabilities:Current liabilities:  Current liabilities:  
Accounts payableAccounts payable$3,682,749 $4,123,462 Accounts payable$3,780,215 $4,123,462 
Accrued expensesAccrued expenses718,290 634,447 Accrued expenses685,191 634,447 
Current portion of long-term debtCurrent portion of long-term debt116,000 185,000 Current portion of long-term debt95,000 185,000 
Other current liabilitiesOther current liabilities466,416 427,480 Other current liabilities465,972 427,480 
Total current liabilitiesTotal current liabilities4,983,455 5,370,389 Total current liabilities5,026,378 5,370,389 
Long-term debtLong-term debt1,784,596 1,188,283 Long-term debt1,785,074 1,188,283 
Noncurrent operating lease liabilitiesNoncurrent operating lease liabilities2,269,280 2,278,318 Noncurrent operating lease liabilities2,249,994 2,278,318 
Deferred income taxesDeferred income taxes422,984 415,997 Deferred income taxes432,680 415,997 
Other long-term liabilitiesOther long-term liabilities85,762 87,214 Other long-term liabilities87,063 87,214 
Total liabilitiesTotal liabilities9,546,077 9,340,201 Total liabilities9,581,189 9,340,201 
Commitments and contingenciesCommitments and contingenciesCommitments and contingencies
Stockholders’ equity:Stockholders’ equity:  Stockholders’ equity:  
Preferred stock, nonvoting, $0.0001 par valuePreferred stock, nonvoting, $0.0001 par value— — Preferred stock, nonvoting, $0.0001 par value— — 
Common stock, voting, $0.0001 par valueCommon stock, voting, $0.0001 par valueCommon stock, voting, $0.0001 par value
Additional paid-in capitalAdditional paid-in capital914,184 897,560 Additional paid-in capital925,411 897,560 
Treasury stock, at costTreasury stock, at cost(2,931,373)(2,918,768)Treasury stock, at cost(2,932,576)(2,918,768)
Accumulated other comprehensive lossAccumulated other comprehensive loss(44,355)(45,143)Accumulated other comprehensive loss(36,824)(45,143)
Retained earningsRetained earnings4,697,697 4,744,624 Retained earnings4,767,168 4,744,624 
Total stockholders’ equityTotal stockholders’ equity2,636,161 2,678,281 Total stockholders’ equity2,723,187 2,678,281 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$12,182,238 $12,018,482 Total liabilities and stockholders’ equity$12,304,376 $12,018,482 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
2

Table of Contents


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data) (Unaudited)
Sixteen Weeks Ended Twelve Weeks EndedTwenty-Eight Weeks Ended
April 22, 2023April 23, 2022July 15, 2023July 16, 2022July 15, 2023July 16, 2022
Net salesNet sales$3,417,594 $3,374,210 Net sales$2,686,066 $2,665,426 $6,103,659 $6,039,636 
Cost of sales, including purchasing and warehousing costs
Cost of sales, including purchasing and warehousing costs
1,946,931 1,867,690 
Cost of sales, including purchasing and warehousing costs
1,537,997 1,479,707 3,484,927 3,347,397 
Gross profitGross profit1,470,663 1,506,520 Gross profit1,148,069 1,185,719 2,618,732 2,692,239 
Selling, general and administrative expensesSelling, general and administrative expenses1,380,664 1,303,250 Selling, general and administrative expenses1,013,701 984,037 2,394,365 2,287,287 
Operating incomeOperating income89,999 203,270 Operating income134,368 201,682 224,367 404,952 
Other, net:Other, net:Other, net:
Interest expenseInterest expense(29,718)(12,868)Interest expense(20,869)(10,207)(50,587)(23,075)
Loss on early redemption of senior unsecured notesLoss on early redemption of senior unsecured notes— (7,408)Loss on early redemption of senior unsecured notes— — — (7,408)
Other (expense) income, net(674)136 
Other income (expense), netOther income (expense), net1,684 (711)1,009 (575)
Total other, netTotal other, net(30,392)(20,140)Total other, net(19,185)(10,918)(49,578)(31,058)
Income before provision for income taxesIncome before provision for income taxes59,607 183,130 Income before provision for income taxes115,183 190,764 174,789 373,894 
Provision for income taxesProvision for income taxes16,956 43,339 Provision for income taxes29,821 46,362 46,776 89,701 
Net incomeNet income$42,651 $139,791 Net income$85,362 $144,402 $128,013 $284,193 
Basic earnings per common shareBasic earnings per common share$0.72 $2.28 Basic earnings per common share$1.44 $2.39 $2.16 $4.67 
Weighted-average common shares outstandingWeighted-average common shares outstanding59,334 61,261 Weighted-average common shares outstanding59,451 60,452 59,384 60,914 
Diluted earnings per common shareDiluted earnings per common share$0.72 $2.26 Diluted earnings per common share$1.43 $2.38 $2.15 $4.63 
Weighted-average common shares outstandingWeighted-average common shares outstanding59,544 61,732 Weighted-average common shares outstanding59,604 60,782 59,570 61,328 


Condensed Consolidated Statements of Comprehensive Income
(in thousands) (Unaudited)
 Sixteen Weeks Ended
April 22, 2023April 23, 2022
Net income$42,651 $139,791 
Other comprehensive income (loss):
Changes in net unrecognized other postretirement benefits, net of tax of $70 and $9197 24 
Currency translation adjustments591 (18,462)
Total other comprehensive income (loss)788 (18,438)
Comprehensive income$43,439 $121,353 

 Twelve Weeks EndedTwenty-Eight Weeks Ended
July 15, 2023July 16, 2022July 15, 2023July 16, 2022
Net income$85,362 $144,402 $128,013 $284,193 
Other comprehensive income:
Changes in net unrecognized other postretirement benefits, net of tax (benefit) expense of $(14), $25, $56 and $16(38)(70)159 (46)
Currency translation adjustments7,569 20,346 8,160 1,884 
Total other comprehensive income7,531 20,276 8,319 1,838 
Comprehensive income$92,893 $164,678 $136,332 $286,031 

The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
3

Table of Contents


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of 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, 2023Twelve Weeks Ended July 15, 2023
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmountSharesAmount
Balance at December 31, 202259,264 $$897,560 $(2,918,768)$(45,143)$4,744,624 $2,678,281 
Balance at April 22, 2023Balance at April 22, 202359,444 $$914,184 $(2,931,373)$(44,355)$4,697,697 $2,636,161 
Net incomeNet income— — — — — 42,651 42,651 Net income— — — — — 85,362 85,362 
Total other comprehensive incomeTotal other comprehensive income— — — — 788 — 788 Total other comprehensive income— — — — 7,531 — 7,531 
Issuance of shares upon the exercise of stock optionsIssuance of shares upon the exercise of stock options— — 62 — — — 62 
Restricted stock units and deferred stock units vestedRestricted stock units and deferred stock units vested256 — — — — — — Restricted stock units and deferred stock units vested20 — — — — — — 
Share-based compensationShare-based compensation— — 16,524 — — — 16,524 Share-based compensation— — 10,267 — — — 10,267 
Stock issued under employee stock purchase planStock issued under employee stock purchase plan18 — 1,100 — — — 1,100 Stock issued under employee stock purchase plan— — 898 — — — 898 
Repurchases of common stockRepurchases of common stock(94)— — (12,605)— — (12,605)Repurchases of common stock(7)— — (1,203)— — (1,203)
Cash dividends declared ($1.50 per common share)— — — — — (89,578)(89,578)
Other— — (1,000)— — — (1,000)
Balance at April 22, 202359,444 $$914,184 $(2,931,373)$(44,355)$4,697,697 $2,636,161 
Cash dividends declared ($0.25 per common share)Cash dividends declared ($0.25 per common share)— — — — — (15,891)(15,891)
Balance at July 15, 2023Balance at July 15, 202359,457 $$925,411 $(2,932,576)$(36,824)$4,767,168 $2,723,187 
Sixteen Weeks Ended April 23, 2022Twelve Weeks Ended July 16, 2022
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmountSharesAmount
Balance at January 1, 202262,009 $$845,407 $(2,300,288)$(22,627)$4,605,791 $3,128,291 
Balance at April 23, 2022Balance at April 23, 202261,098 $$862,451 $(2,564,757)$(41,065)$4,653,043 $2,909,680 
Net incomeNet income— — — — — 139,791 139,791 Net income— — — — — 144,402 144,402 
Total other comprehensive lossTotal other comprehensive loss— — — — (18,438)— (18,438)Total other comprehensive loss— — — — 20,276 — 20,276 
Issuance of shares upon the exercise of stock optionsIssuance of shares upon the exercise of stock options— 233 — — — 233 Issuance of shares upon the exercise of stock options— 121 — — — 121 
Restricted stock units and deferred stock units vestedRestricted stock units and deferred stock units vested234 — — — — — — Restricted stock units and deferred stock units vested25 — — — — — — 
Share-based compensationShare-based compensation— — 16,978 — — — 16,978 Share-based compensation— — 12,367 — — — 12,367 
Stock issued under employee stock purchase planStock issued under employee stock purchase plan10 — 933 — — — 933 Stock issued under employee stock purchase plan— 1,161 — — — 1,161 
Repurchases of common stockRepurchases of common stock(1,156)— — (264,469)— — (264,469)Repurchases of common stock(1,014)— — (201,700)— — (201,700)
Cash dividends declared ($1.50 per common share)Cash dividends declared ($1.50 per common share)— — — — — (92,539)(92,539)Cash dividends declared ($1.50 per common share)— — — — — (90,898)(90,898)
OtherOther— — (1,100)— — — (1,100)Other— — (600)— — — (600)
Balance at April 23, 202261,098 $$862,451 $(2,564,757)$(41,065)$4,653,043 $2,909,680 
Balance at July 16, 2022Balance at July 16, 202260,118 $$875,500 $(2,766,457)$(20,789)$4,706,547 $2,794,809 


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

4

Table of Contents


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except per share data) (Unaudited)
Twenty-Eight Weeks Ended July 15, 2023
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
Balance at December 31, 202259,264 $$897,560 $(2,918,768)$(45,143)$4,744,624 $2,678,281 
Net income— — — — — 128,013 128,013 
Total other comprehensive income— — — — 8,319 — 8,319 
Issuance of shares upon the exercise of stock options— — 62 — — — 62 
Restricted stock units and deferred stock units vested276 — — — — — — 
Share-based compensation— — 26,791 — — — 26,791 
Stock issued under employee stock purchase plan18 — 1,998 — — — 1,998 
Repurchases of common stock(101)— — (13,808)— — (13,808)
Cash dividends declared ($1.75 per common share)— — — — — (105,469)(105,469)
Other— — (1,000)— — — (1,000)
Balance at July 15, 202359,457 $$925,411 $(2,932,576)$(36,824)$4,767,168 $2,723,187 
Twenty-Eight Weeks Ended July 16, 2022
Common StockAdditional
Paid-in Capital
Treasury Stock, at CostAccumulated Other
Comprehensive Loss
Retained EarningsTotal
Stockholders’ Equity
SharesAmount
Balance at January 1, 202262,009 $$845,407 $(2,300,288)$(22,627)$4,605,791 $3,128,291 
Net income— — — — — 284,193 284,193 
Total other comprehensive loss— — — — 1,838 — 1,838 
Issuance of shares upon the exercise of stock options— 354 — — — 354 
Restricted stock units and deferred stock units vested259 — — — — — — 
Share-based compensation— — 29,345 — — — 29,345 
Stock issued under employee stock purchase plan18 — 2,094 — — — 2,094 
Repurchases of common stock(2,170)— — (466,169)— — (466,169)
Cash dividends declared ($3.00 per common share)— — — — — (183,437)(183,437)
Other— — (1,700)— — — (1,700)
Balance at July 16, 202260,118 $$875,500 $(2,766,457)$(20,789)$4,706,547 $2,794,809 


The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
45

Table of Contents


Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands) (Unaudited)
Sixteen Weeks Ended Twenty-Eight Weeks Ended
April 22, 2023April 23, 2022July 15, 2023July 16, 2022
Cash flows from operating activities:Cash flows from operating activities:  Cash flows from operating activities:  
Net incomeNet income$42,651 $139,791 Net income$128,013 $284,193 
Adjustments to reconcile net income to net cash used in 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 amortizationDepreciation and amortization92,554 85,581 Depreciation and amortization162,974 148,691 
Share-based compensationShare-based compensation16,524 16,978 Share-based compensation26,791 29,345 
Loss and impairment of long-lived assetsLoss and impairment of long-lived assets90 1,237 Loss and impairment of long-lived assets859 2,970 
Loss on early redemption of senior unsecured notesLoss on early redemption of senior unsecured notes— 7,408 Loss on early redemption of senior unsecured notes— 7,408 
Provision for deferred income taxesProvision for deferred income taxes6,899 9,681 Provision for deferred income taxes16,249 8,779 
Other, netOther, net391 1,020 Other, net1,170 1,575 
Net change in:Net change in:Net change in:
Receivables, netReceivables, net(83,370)(174,895)Receivables, net(93,539)(149,255)
Inventories, netInventories, net(100,178)(119,550)Inventories, net(145,148)(176,300)
Accounts payableAccounts payable(440,995)20,225 Accounts payable(346,808)168,219 
Accrued expensesAccrued expenses85,035 (98,978)Accrued expenses120,888 (46,887)
Other assets and liabilities, netOther assets and liabilities, net1,534 56,562 Other assets and liabilities, net(36,008)29,805 
Net cash used in operating activities(378,865)(54,940)
Net cash (used in) provided by operating activitiesNet cash (used in) provided by operating activities(164,559)308,543 
Cash flows from investing activities:Cash flows from investing activities:  Cash flows from investing activities:  
Purchases of property and equipmentPurchases of property and equipment(89,996)(114,854)Purchases of property and equipment(144,874)(211,212)
Proceeds from sales of property and equipmentProceeds from sales of property and equipment325 828 Proceeds from sales of property and equipment1,532 830 
Net cash used in investing activitiesNet cash used in investing activities(89,671)(114,026)Net cash used in investing activities(143,342)(210,382)
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Borrowings under credit facilitiesBorrowings under credit facilities2,886,000 275,000 Borrowings under credit facilities4,327,000 743,000 
Payments on credit facilitiesPayments on credit facilities(2,955,000)(275,000)Payments on credit facilities(4,417,000)(643,000)
Borrowings on senior unsecured notesBorrowings on senior unsecured notes599,571 348,618 Borrowings on senior unsecured notes599,571 348,618 
Payments on senior unsecured notesPayments on senior unsecured notes— (201,081)Payments on senior unsecured notes— (201,081)
Dividends paidDividends paid(89,487)(154,796)Dividends paid(179,347)(245,599)
Repurchases of common stockRepurchases of common stock(12,605)(264,469)Repurchases of common stock(13,808)(466,169)
Other, netOther, net(2,819)(2,007)Other, net(2,013)(1,329)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities425,660 (273,735)Net cash provided by (used in) financing activities314,403 (465,560)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash93 (19,994)Effect of exchange rate changes on cash1,280 6,522 
Net decrease in cash and cash equivalents(42,783)(462,695)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents7,782 (360,877)
Cash and cash equivalents, beginning of period
Cash and cash equivalents, beginning of period
269,282 601,428 
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
$226,499 $138,733 
Cash and cash equivalents, end of period
$277,064 $240,551 
Non-cash transactions:Non-cash transactions:Non-cash transactions:
Accrued purchases of property and equipmentAccrued purchases of property and equipment$6,909 $15,272 Accrued purchases of property and equipment$10,177 $19,628 


The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
56

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.    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 April 22,July 15, 2023, we operated a total of 4,7784,790 stores and 318319 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 22,July 15, 2023, we served 1,3151,307 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.

Basis of Presentation

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 2022 as filed with the SEC on February 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 sixteentwenty-eight weeks ended April 22,July 15, 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, which was originally disclosed in our interim report on Form 10-Q for the period ended April 22, 2023, was not material to the current period or any previously issued financial statements.

67

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)

2.    Significant Accounting Policies

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group:
Sixteen Weeks EndedTwelve Weeks EndedTwenty-Eight Weeks Ended
April 22, 2023April 23, 2022July 15, 2023July 16, 2022July 15, 2023July 16, 2022
Percentage of Sales:Percentage of Sales:Percentage of Sales:
Parts and BatteriesParts and Batteries66 %66 %Parts and Batteries66 %65 %66 %66 %
Accessories and ChemicalsAccessories and Chemicals20 20 Accessories and Chemicals20 21 20 21 
Engine MaintenanceEngine Maintenance13 13 Engine Maintenance13 13 13 12 
OtherOtherOther
TotalTotal100 %100 %Total100 %100 %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 to Note 11. Supplier Finance Programs for further details.

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 92%91.9% of inventories as of April 22,July 15, 2023 and 92.2% of inventories as of 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 sixteentwenty-eight weeks ended April 22,July 15, 2023 and prior years. As a result of changes in the LIFO reserve, we recorded a reduction to Cost of sales of $6.6$26.8 million for the sixteentwelve weeks ended April 22,July 15, 2023 and an increase to Cost of sales of $81.5$91.8 million for the sixteentwelve weeks ended April 23,July 16, 2022 to state inventories at LIFO. For the twenty-eight weeks ended July 15, 2023 and July 16, 2022, we recorded a reduction to Cost of Sales of $33.5 million and an increase to Cost of sales of $173.3 million 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.

78

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)

Inventory balances were as follows:
April 22, 2023December 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 
July 15, 2023December 31, 2022
Inventories at first in, first out (“FIFO”), net$5,312,651 $5,193,911 
Adjustments to state inventories at LIFO(245,184)(278,649)
Inventories at LIFO, net$5,067,467 $4,915,262 

4.    Intangible Assets

Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $9.2$6.8 million and $9.5$7.1 million for the sixteentwelve weeks ended April 22,July 15, 2023 and April 23,July 16, 2022 and $16.0 million and $16.6 million for the twenty-eight weeks ended July 15, 2023 and July 16, 2022.

5.    Receivables, net

Receivables, net, consisted of the following:
April 22, 2023December 31, 2022July 15, 2023December 31, 2022
TradeTrade$626,922 $576,548 Trade$622,623 $576,548 
VendorVendor163,755 126,640 Vendor175,336 126,640 
OtherOther9,465 10,638 Other13,904 10,638 
Total receivablesTotal receivables800,142 713,826 Total receivables811,863 713,826 
Less: allowance for credit lossesLess: allowance for credit losses(18,049)(15,213)Less: allowance for credit losses(18,091)(15,213)
Receivables, netReceivables, net$782,093 $698,613 Receivables, net$793,772 $698,613 

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

Long-term debt consists of the following:
April 22, 2023December 31, 2022July 15, 2023December 31, 2022
5.90% Senior Unsecured Notes due March 9, 20265.90% Senior Unsecured Notes due March 9, 2026$297,941 $— 5.90% Senior Unsecured Notes due March 9, 2026$298,028 $— 
1.75% Senior Unsecured Notes due October 1, 20271.75% Senior Unsecured Notes due October 1, 2027347,122 346,947 1.75% Senior Unsecured Notes due October 1, 2027347,252 346,947 
5.95% Senior Unsecured Notes due March 9, 20285.95% Senior Unsecured Notes due March 9, 2028297,882 — 5.95% Senior Unsecured Notes due March 9, 2028297,906 — 
3.90% Senior Unsecured Notes due April 15, 20303.90% Senior Unsecured Notes due April 15, 2030495,743 495,562 3.90% Senior Unsecured Notes due April 15, 2030495,878 495,562 
3.50% Senior Unsecured Notes due March 15, 20323.50% Senior Unsecured Notes due March 15, 2032345,908 345,774 3.50% Senior Unsecured Notes due March 15, 2032346,010 345,774 
Revolver credit facilityRevolver credit facility116,000 185,000 Revolver credit facility95,000 185,000 
$1,900,596 $1,373,283 $1,880,074 $1,373,283 
Less: Current portion of long-term debtLess: Current portion of long-term debt(116,000)(185,000)Less: Current portion of long-term debt(95,000)(185,000)
Long-term debt, excluding the current portionLong-term debt, excluding the current portion$1,784,596 $1,188,283 Long-term debt, excluding the current portion$1,785,074 $1,188,283 
Fair value of long-term debtFair value of long-term debt$1,784,176 $1,021,396 Fair value of long-term debt$1,706,403 $1,021,396 

89

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)

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”“Amendment No. 1”) 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. TheAgreement”). Amendment extendsNo. 1 extended the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment also replaces2027 and replaced 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 the 2021 Credit Agreement. The Amendment No.1 made no other material changes to the terms of the 2021 Credit Agreement. On August 21, 2023, we entered into Amendment No. 2 (“Amendment No. 2”) to the 2021 Credit Agreement in order to amend certain financial covenants related to the Consolidated Coverage Ratio (as defined therein). Pursuant to Amendment No. 2, we will not permit the Consolidated Coverage Ratio for each period of four fiscal quarters to be less than (a) 1.75 to 1.00 for quarters ending on October 7, 2023 and December 30, 2023, (b) 2.0 to 1.00 for quarters ending on April 20, 2024 through and including the quarters ending on October 4, 2025 and (c) 2.25 to 1.00 for quarters ending after October 4, 2025. Amendment No. 2 made no other material changes to the terms of the 2021 Credit Agreement.

As of April 22,July 15, 2023, we had $116.0$95.0 million of outstanding borrowings, $1.1 billion of borrowing availability and no letters of credit outstanding under our unsecured revolving credit facility (the “Credit Agreement”). As of December 31, 2022, we had $185.0 million outstanding borrowings, $1.0 billion of borrowing availability and no letters of credit outstanding under our Credit Agreement.

As of April 22,July 15, 2023 and December 31, 2022, we had $91.0 million and $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 April 22, 2023.July 15, 2023, and believe we will be in compliance for the next twelve months.

Senior Unsecured Notes
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.

10

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 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 (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.

9

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 our 2026 Notes and 2028 Notes (the “Notes”) at any time, or from time to time, prior to 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 Notes (the “Indenture”). In the event of a change of control triggering event, as defined in the Indenture, we will be required to offer the repurchase of the Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. Currently, the 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 $104.0$106.1 million and $96.9 million as of April 22,July 15, 2023 and 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 $177.7$219.4 million and $174.6 million as of April 22,July 15, 2023 and 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 intervals, withand the exercise of lease renewal options at our sole discretion. Our vehicle and equipment lease terms are typically three to six years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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 comprised of the following:
Sixteen Weeks Ended
April 22, 2023April 23, 2022
Operating lease cost$173,659 $173,035 
Variable lease cost51,346 53,296 
Total lease cost$225,005 $226,331 

1011

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)

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 EndedTwenty-Eight Weeks Ended
July 15, 2023July 16, 2022July 15, 2023July 16, 2022
Operating lease cost$130,931 $130,003 $304,590 $303,038 
Variable lease cost41,087 41,977 92,433 95,273 
Total lease cost$172,018 $171,980 $397,023 $398,311 

Other information relating to our lease liabilities is as follows:
Sixteen Weeks EndedTwenty-Eight Weeks Ended
April 22, 2023April 23, 2022July 15, 2023July 16, 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 leasesOperating cash flows from operating leases$153,363 $190,542 Operating cash flows from operating leases$298,175 $336,143 
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 leasesOperating leases$181,167 $147,015 Operating leases$271,182 $254,013 

8.    Share Repurchase Program

Our Board of Directors had previously authorized $2.7 billion to our share repurchase program. 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 sixteentwelve weeks ended April 22,and twenty-eight weeks ended July 15, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteentwelve weeks ended April 23,July 16, 2022, we repurchased 1.11.0 million shares at an aggregate cost of $248.2$200.0 million, or an average price of $231.41$199.02 per share. During the twenty-eight weeks ended July 16, 2022, we repurchased 2.1 million shares of our common stock under our share repurchase program at an aggregate cost of $448.2 million, or an average price of $215.74 per share. We had $947.3 million remaining under our share repurchase program as of April 22,July 15, 2023.

12

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)

9.    Earnings per Share

The computations of basic and diluted earnings per share were as follows:
Sixteen Weeks Ended Twelve Weeks EndedTwenty-Eight Weeks Ended
April 22, 2023April 23, 2022July 15, 2023July 16, 2022July 15, 2023July 16, 2022
NumeratorNumeratorNumerator
Net income applicable to common sharesNet income applicable to common shares$42,651 $139,791 Net income applicable to common shares$85,362 $144,402 $128,013 $284,193 
DenominatorDenominatorDenominator
Basic weighted-average common sharesBasic weighted-average common shares59,334 61,261 Basic weighted-average common shares59,451 60,452 59,384 60,914 
Dilutive impact of share-based awardsDilutive impact of share-based awards210 471 Dilutive impact of share-based awards153 330 186 414 
Diluted weighted-average common shares (1)
Diluted weighted-average common shares (1)
59,544 61,732 
Diluted weighted-average common shares (1)
59,604 60,782 59,570 61,328 
Basic earnings per common shareBasic earnings per common share$0.72 $2.28 Basic earnings per common share$1.44 $2.39 $2.16 $4.67 
Diluted earnings per common shareDiluted earnings per common share$0.72 $2.26 Diluted earnings per common share$1.43 $2.38 $2.15 $4.63 

(1)For the sixteentwelve weeks ended April 22,July 15, 2023 and April 23,July 16, 2022, 190402 thousand and 21169 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the twenty-eight weeks ended July 15, 2023 and July 16, 2022, 289 thousand and 33 thousand RSUs were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

10.    Share-Based Compensation

During the sixteentwenty-eight weeks ended April 22,July 15, 2023, we granted 237414 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 achievementsachievement 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. Our 2014 Long-Term Incentive Plan was recently replaced by our 2023 Omnibus Incentive Compensation Plan, and future option grants will be granted under the 2023 Omnibus Incentive Compensation Plan.The general terms of the stock options arewill be similar to awards
11

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)

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 sixteentwenty-eight weeks ended April 22,July 15, 2023 were $135.13,$105.95, $135.13 and $139.75$205.52 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 sixteentwenty-eight weeks ended April 22,July 15, 2023 was $4.0$6.5 million. As of April 22,July 15, 2023, there was $95.7$88.3 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted-average period of 1.71.6 years.

11. Supplier Finance Programs

We maintain supply chain financing agreements with third-party financial institutions to provide our suppliers
13

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)

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 and represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in our Condensed Consolidated Balance Sheets. As of April 22,July 15, 2023 and December 31, 2022, $3.1 billion and $3.2 billion of our Accounts payable were to suppliers participating in these financing arrangements.
1214

Table of Contents
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2022 (filed with the SEC on February 28, 2023), which we refer to as our 2022 Form 10-K, and our condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report.

Management Overview

A high-level summary of our financial results for the firstsecond quarter of 2023 includes:included:
 
Net sales during the firstsecond quarter of 2023 was $3.42$2.69 billion, an increase of 1.3%0.8% compared with the firstsecond quarter of 2022, driven predominately by new store openings, and partially offset by a decline in comparable store sales. Comparable store sales declined 0.4%0.6% compared with the second quarter of 2022, primarily driven by a decrease in demand within our professional business, and partially offset by an increase in our DIY omnichannel business.
Gross profit margin for the firstsecond quarter of 2023 was 43.0%42.7% of Net sales, a decrease of 162174 basis points compared with the firstsecond quarter of 2022. Gross profit margin was negatively impacted by inflationaryhigher product costs whichand supply chain deleverage that were not fully covered by pricing actions. Additionally, supply chain headwinds and unfavorable product mix contributed to gross margin decline.actions, partially offset by a reduction in LIFO-related expenses.
Selling, General & Administrative (“SG&A”) expenses for the firstsecond quarter of 2023 were 40.4%37.7% of Net sales, an increase of 17782 basis points compared with the firstsecond quarter of 2022. This increase as a percentage of Net sales was primarily driven by inflation in labor and benefit-related expenses as well as deleverage associated with new store 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.costs.
We generated Diluted earnings per share (“Diluted EPS”) of $0.72$1.43 during our firstthe second quarter of 2023, compared with $2.26 for$2.38 in the comparable periodsecond quarter 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 refinement of a demand-based assortment, leveraging purchase and search history from our common catalog.
Advancement towards optimizing our footprint by market 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 and optimized end-to-end supply chain to deliver our broad assortment of inventory.
Actively pursuing new store openings in 2023 including through lease acquisition opportunities as available and appropriate, in existing markets and new markets.
Continued negotiations with vendors on strategic sourcing and pricing to help mitigate inflationary pressures.

1315

Table of Contents
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 sixteentwenty-eight weeks ended April 22,July 15, 2023, 2139 stores and branches were opened and 1116 were closed, or consolidated, resulting in a total of 5,0965,109 stores and branches compared with a total of 5,086 stores and branches as of December 31, 2022. There were no consolidated, converted and relocated during the twenty-eight weeks ended July 15, 2023.

16

Table of Contents
Results of Operations
Sixteen Weeks Ended$ Favorable/ (Unfavorable)Basis PointsTwelve Weeks Ended$ Favorable/ (Unfavorable)Basis Points
($ in millions)($ in millions)April 22, 2023April 23, 2022($ in millions)July 15, 2023July 16, 2022
Net salesNet sales$3,417.6 100.0 %$3,374.2 100.0 %$43.4 — Net sales$2,686.1 100.0 %$2,665.4 100.0 %$20.7 — 
Cost of salesCost of sales1,946.9 57.0 1,867.7 55.4 (79.2)(162)Cost of sales1,538.0 57.3 1,479.7 55.5 (58.3)(174)
Gross profitGross profit1,470.7 43.0 1,506.5 44.6 (35.8)(162)Gross profit1,148.1 42.7 1,185.7 44.5 (37.6)(174)
SG&A (1)
SG&A (1)
1,380.7 40.4 1,303.3 38.6 (77.4)(177)
SG&A (1)
1,013.7 37.7 984.0 36.9 (29.7)(82)
Operating incomeOperating income90.0 2.6 203.3 6.0 (113.2)(339)Operating income134.4 5.0 201.7 7.6 (67.3)(256)
Interest expenseInterest expense(29.7)(0.9)(12.9)(0.4)(16.8)(49)Interest expense(20.9)(0.8)(10.2)(0.4)(10.7)(39)
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)
Other income (expense), netOther income (expense), net1.7 0.1 (0.7)— 2.4 
Provision for income taxesProvision for income taxes17.0 0.5 43.3 1.3 26.3 79 Provision for income taxes29.8 1.1 46.4 1.7 16.6 63 
Net incomeNet income$42.7 1.2 %$139.8 4.1 %$(97.1)(289)Net income$85.4 3.2 %$144.4 5.4 %$(59.0)(223)

Twenty-Eight Weeks Ended$ Favorable/ (Unfavorable)Basis Points
($ in millions)July 15, 2023July 16, 2022
Net sales$6,103.7 100.0 %$6,039.6 100.0 %$64.1 — 
Cost of sales3,484.9 57.1 3,347.4 55.4 (137.5)(167)
Gross profit2,618.7 42.9 2,692.2 44.6 (73.4)(167)
SG&A (1)
2,394.4 39.2 2,287.3 37.9 (107.1)(136)
Operating income224.4 3.7 405.0 6.7 (180.5)(303)
Interest expense(50.6)(0.8)(23.1)(0.4)(27.5)(45)
Loss on early redemptions of senior unsecured notes— — (7.4)(0.1)7.4 12 
Other income (expense), net1.0 0.0 (0.6)— 1.6 
Provision for income taxes46.8 0.8 89.7 1.5 42.9 72 
Net income$128.0 2.1 %$284.2 4.7 %$(156.1)(261)
Note: Table amounts may not foot due to rounding.
(1) The sixteentwenty-eight weeks ended April 22,July 15, 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 sixteentwelve weeks ended April 22,July 15, 2023 increased 1.3%0.8% compared with the same period in 2022, driven predominately by new store openings. The increase from new store openings was partially offset by a decrease of comparable store sales of 0.6% for the twelve weeks ended July 15, 2023 compared with the twelve weeks ended July 16, 2022. Category growth was led by brakes, motor oil and batteries.

.
Net sales for the twenty-eight weeks ended July 15, 2023 increased 1.1% compared with the same period in 2022, driven predominately by new store openings. This was partially offset by a declinedecrease of comparable store sales of 0.4%0.5% for the sixteentwenty-eight weeks ended April 22,July 15, 2023 compared with the sixteentwenty-eight weeks ended April 23,July 16, 2022. Category growth was led by motor oil and brakes.

1417

Table of Contents
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 sixteentwelve weeks ended April 22,July 15, 2023 was $1.47$1.15 billion, or 43.0%42.7% of Net sales, compared with $1.51$1.19 billion, or 44.5% of Net sales, for the twelve weeks ended July 16, 2022. For the twenty-eight weeks ended July 15, 2023 and July 16, 2022, Gross profit was $2.62 billion, or 42.9% of Net sales, and $2.69 billion, or 44.6% of Net sales, forsales.

During the sixteentwelve weeks ended April 23, 2022. During the sixteenand twenty-eight weeks ended April 22,July 15, 2023, Gross profit margin was negatively impacted by continued inflationaryhigher product costs whichand supply chain deleverage that were not fully covered by pricing actions. Additionally, unfavorable product mix and supply chain headwinds contributed to gross margin decline.This was partially offset by a reduction in LIFO-related expenses.

Selling, General and Administrative Expenses

SG&A expenses for the sixteentwelve weeks ended April 22,July 15, 2023 were $1.38$1.01 billion, or 40.4%37.7% of Net sales, compared with $1.30 billion,$984.0 million, or 38.6%36.9% of Net sales, for the sixteentwelve weeks ended April 23,July 16, 2022. The increase in SG&A as a percentage of Net sales was primarily driven by inflation inwithin labor and benefit-related expenses as well as costs associated with new store openings,benefits, partially offset by a decrease in startup costs related to our California expansion. new store start-up costs.

SG&A expenses for the sixteentwenty-eight weeks ended April 22,July 15, 2023 also includedwere $2.39 billion, or 39.2% of Net sales, compared with $2.29 billion, or 37.9% of Net sales, for the twenty-eight weeks ended July 16, 2022. The increase in SG&A as a percentage of Net sales was primarily driven by inflation within labor and benefits, as well as an out-of-period charge as further described in Note 1. Basis of $17.3 million related to costs incurredPresentation, partially offset by a decrease in prior years but not previously expensed.new store start-up costs.

Provision for Income Taxes

Our Provision for income taxes for the sixteentwelve weeks ended April 22,July 15, 2023 was $17.0$29.8 million compared with $43.3$46.4 million for the sixteentwelve weeks ended April 23,July 16, 2022. For the twenty-eight weeks ended July 15, 2023 and July 16, 2022, our Provision for income taxes was $46.8 million and $89.7 million. The decrease in tax expense primarily resulted from lower Income before provision for income taxes compared with prior year.

Our effective tax rate was 28.4%25.9% and 23.7%24.3% for the sixteentwelve weeks ended April 22,July 15, 2023 and April 23,July 16, 2022. Our effective tax rate was 26.8% and 24.0% for the twenty-eight weeks ended July 15, 2023 and July 16, 2022. The higher effective income tax rate for the sixteentwelve weeks ended April 22,and twenty-eight weeks ended July 15, 2023 compared with April 23,July 16, 2022 reflected a discrete charge related to share based compensation.

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 share repurchase program, to pay our quarterly cash dividend
18

Table of Contents
and for acquisitions. However, our future uses of cash may differ, including with respect to the weight we place on the preservation of cash and liquidity, 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 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.

15

Table of Contents
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 ofHowever, as further described below, a decline in our condensed consolidated financial statements for further discussion.credit ratings could result in lower supplier or bank participation in our supplier finance programs, which would likely have a material negative impact on our liquidity or capital resources.

On March 9, 2023, we issued our 5.90% senior unsecured notes due 2026 (the “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 2026 Notes and 2028 Notes were utilized to make repayments on our revolving facility and supplement operational and capital expenditures.

On February 27, 2023, we entered into Amendment No. 1 (the “Amendment”“Amendment No. 1”) 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 No. 1 extends the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment No. 1 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 No. 1 made no other material changes to the terms of the 2021 Credit Agreement. On August 21, 2023, we entered into Amendment No. 2 (“Amendment No. 2”) to the 2021 Credit Agreement in order to amend certain financial covenants related to the Consolidated Coverage Ratio (as defined therein). Pursuant to Amendment No. 2, we will not permit the Consolidated Coverage Ratio for each period of four fiscal quarters to be less than (a) 1.75 to 1.00 for quarters ending on October 7, 2023 and December 30, 2023, (b) 2.0 to 1.00 for quarters ending on April 20, 2024 through and including the quarters ending on October 4, 2025 and (c) 2.25 to 1.00 for quarters ending after October 4, 2025. Amendment No. 2 made no other material changes to the terms of the 2021 Credit Agreement.

Share Repurchase Program

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 towill continue our temporary pause on repurchases under our existing share repurchase program for the remainder of 2023 and towill continue to evaluate current and expected business conditions with respect to possible resumption of share repurchase activity.activity in 2024.

During the sixteentwelve weeks ended April 22,and twenty-eight weeks ended July 15, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteentwelve weeks ended April 23,July 16, 2022, we repurchased 1.11.0 million shares at an aggregate cost of $200.0 million, or an average price of $199.02 per share. During the twenty-eight weeks ended July 16, 2022, we repurchased 2.1 million shares of our common stock under our share repurchase program at an aggregate cost of $248.2$448.2 million, or an average price of $231.41$215.74 per share. We had $947.3 million remaining under our share repurchase program as of April 22,July 15, 2023.

19

Table of Contents
Analysis of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities:
Sixteen Weeks EndedTwenty-Eight Weeks Ended
(in thousands)(in thousands)April 22, 2023April 23, 2022(in thousands)July 15, 2023July 16, 2022
Cash flows used in operating activities$(378,865)$(54,940)
Cash flows (used in) provided by operating activitiesCash flows (used in) provided by operating activities$(164,559)$308,543 
Cash flows used in investing activitiesCash flows used in investing activities(89,671)(114,026)Cash flows used in investing activities(143,342)(210,382)
Cash flows provided by (used in) financing activitiesCash flows provided by (used in) financing activities425,660 (273,735)Cash flows provided by (used in) financing activities314,403 (465,560)
Effect of exchange rate changes on cashEffect of exchange rate changes on cash93 (19,994)Effect of exchange rate changes on cash1,280 6,522 
Net decrease in cash and cash equivalents$(42,783)$(462,695)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents$7,782 $(360,877)

Operating Activities

For the sixteentwenty-eight weeks ended April 22,July 15, 2023, Cash flows used in operating activities increaseddecreased by $323.9$473.1 million to $378.9$164.6 million compared with the same period of prior year. The net increasedecrease in cash flows used in operating activities was primarily driven by lower Net income and an increase in cash used in working capital, primarily in Accounts payable.

16

Table of Contents
Investing Activities

For the sixteentwenty-eight weeks ended April 22,July 15, 2023, Cash flows used in investing activities decreased by $24.4were $143.3 million, to $89.7a decrease of $67.0 million compared with the same period of prior year. The decrease in cash used in investing activities was primarily attributable to lower capital spend incompared with the currentprior year.

Financing Activities

For the sixteentwenty-eight weeks ended April 22,July 15, 2023, Cash flows provided by financing activities was $425.7$314.4 million, an increase of $699.4$780.0 million compared with the same period of prior year. The increase in cash provided by financing activities was attributable to net proceeds received from the issuance of the 2026 Notes and 2028 Notes, a decrease in share repurchases of our common stock and a decrease in dividends paid during the sixteentwenty-eight weeks ended April 22,July 15, 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 9, 2023, we issued $300.0 million aggregate principal amount of our 2026 Notes and $300.0 million aggregate principal amount of our 2028 Notes. The 2026 Notes were issued at 99.94% of the principal amount of $300.0 million, are due March 9, 2026 and bear interest at 5.90% per year payable semi-annually in arrears on March 9 and September 9 of each year. The 2028 Notes were issued at 99.92% of the principal amount of $300.0 million, are due March 9, 2028 and bear interest at 5.95% per year payable semi-annually in arrears on March 9 and September 9 of 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.

20

Table of Contents
As of April 22,July 15, 2023, we had a credit rating from Standard & Poor’s of BBB- and from Moody’s Investor Service of Baa2. As of April 22,July 15, 2023, the outlooks by Standard & Poor’s and Moody’s on our credit rating were stable. On June 5, 2023, Standard & Poor’s and 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 our credit ratings decline,improve, our interest rate on outstanding balancesfuture borrowing under the Credit Agreement may increasedecrease. However, if our credit ratings decline, it would negatively impact our interest rate, and our access to additional financing on favorable terms may be limited. In addition, declines coulda decline in our credit ratings would reduce the attractiveness of certain vendor paymentour supplier finance programs, whereby third-party institutions financeour suppliers are provided financing arrangements to our vendors based on our credit rating, whichrating. This could result in increasedsignificantly lower supplier or bank participation in those programs. Meaningfully lower participation in our supplier payment programs would shorten our payable terms, resulting in an increase in our working capital requirements. Conversely, if these credit ratings improve,requirements, and would likely have a material negative impact on our interest rate may decrease.liquidity and capital resources.

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
17

Table of Contents
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.

During the sixteentwenty-eight weeks ended April 22,July 15, 2023, there were no changes to the critical accounting policies discussed in our 2022 Form 10-K. For a complete discussion of our critical accounting policies, refer to the 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 December 31, 2022. Refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our 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.

21

Table of Contents
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 April 22,July 15, 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 solely due to the material weakness described below.

Control Environment

As previously disclosed in our Form 10-Q for the 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 of 2023. The Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter.

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 present 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 withRemediation Efforts to Address the appropriate level of knowledge and experience in accounting and internal control matters to complement the existing organizational structure.Previously Disclosed Material Weakness

18

TableThe Company has devoted, and will continue to devote, significant time and resources to execute our plan to remediate the aforementioned material weakness and enable us to conclude full remediation on or before December 30, 2023. The following components of Contents
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:among others, have been completed or are in process:

hire, developHired experienced personnel (both permanent employees and retain incremental personnelcontract labor) with appropriatethe requisite accounting and internal controls expertise;knowledge and experience to sufficiently complement the existing global controllership organization;
Engaged a third-party consultant to review and(and update (as appropriate)as appropriate when completed) the organizational designstructure of the global controllership function;
reviewAssessed (with estimated completion by third quarter of 2023) and updateupdated (as appropriate) our methodologies, policies and procedures designed to ensure adequate design and effectiveness of processes supporting internal control over financial reporting, including underlying information technology and business process controls;reporting; and
reviewAssessed the specific training needs for newly hired and update (as appropriate)existing personnel to develop and deliver training programs, on relevantdesigned to uphold our internal control over financial reporting matters.controls standards, during the third quarter of 2023.

The Company is continuing to implement its remediation plan, including its determination if additional updates are appropriate in the enumerated points above. In accordance with the Company’s defined internal controls policies, the material weakness will not be considered fully remediated until management completes the remediation planactions above are remediated and keeps it in placehave operated effectively for a sufficient period of time. The Company is committed to validating that the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement itschanges implemented are operating as intended within our 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

The Company is inExcept for the process of implementing certain changes in its internal controls to remediate the material weakness described above. Thereabove, there has been no change in the Company’s internal control over financial reporting during the quarter ended April 22,July 15, 2023 that has materially affected or is reasonably likely to materially affect its internal control over financial reporting (asas defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
1922

Table of Contents
PART II. OTHER INFORMATION
 
ITEM 1A.RISK FACTORS

Please refer to “Item 1A. Risk Factors found in our 2022 Form 10-K filed for the year ended 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 April 22,July 15, 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 ProgramsMaximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
January 1, 2023 to January 28, 202319 $152.26 — $947,339 
January 29, 2023 to February 25, 20231,699 $141.52 — $947,339 
February 26, 2023 to March 25, 202392,132 $134.14 — $947,339 
March 26, 2023 to April 22, 202333 $94.48 — $947,339 
Total93,883 $139.24 — 
Total Number of Shares Purchased (1)
Average Price Paid per Share (1)
Total Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
April 23, 2023 to May 20, 202323 $121.38 — $947,338,896 
May 21, 2023 to June 17, 20237,453 $94.54 — $947,338,896 
June 18, 2023 to July 15, 202324 $72.61 — $947,338,896 
Total7,500 $96.65 — 

(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 $13.1$0.7 million, or an average price of $139.24$96.65 per share, during the sixteentwelve weeks ended April 22,July 15, 2023.

ITEM 5.     OTHER INFORMATION

During the twelve weeks ended July 15, 2023, no “Rule 10b5-1 trading arrangements” were adopted or terminated by the Company’s officers or directors. Additionally, no “non-Rule 10b5-1 trading arrangements” were adopted or terminated by the Company’s officers or directors during the twelve weeks ended July 15, 2023, as each term is defined in Item 408 of Regulation S-K.
20
23

Table of Contents
ITEM 6.EXHIBITS
  Incorporated by Reference
Exhibit No.Exhibit DescriptionFormExhibitFiling Date
10-Q3.18/14/2018
10-Q3.28/18/2020
8-K4.13/9/2023
8-K4.23/9/2023
8-K4.33/9/2023
8-K10.14/13/2023
   
   
   
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 DescriptionFormExhibitFiling Date
10-Q3.18/14/2018
10-Q3.28/8/2023
   
   
   
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
2124

Table of Contents



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ADVANCE AUTO PARTS, INC.
Date: June 5,August 23, 2023/s/ William J. Pellicciotti Jr.
William J. Pellicciotti Jr.
Senior Vice President, Controller and Chief Accounting Officer
2225