Advance Auto Parts Reports Fourth Quarter and Full Year 2025 Results; Releases Full Year 2026 Guidance Highlighting Continued Progress on Strategic Plan

• Q4'25 comparable sales growth of 1.1%; Positive sales performance in the last eight weeks
• FY25 adjusted operating margin of 2.5%; Over 200-basis points of year-over-year expansion

Advance Auto Parts, Inc. (NYSE:AAP), a leading automotive aftermarket parts provider in North America, that serves both professional installer and do-it-yourself customers, announced its financial results for the fourth quarter and full year ended January 3, 2026.

"I am pleased with the progress achieved during 2025 and I want to thank our team members for their hard work," said Shane O'Kelly, president and chief executive officer. "In 2025, we laid the foundation to build a better future for the Company. Our actions are delivering progress on operational goals and financial commitments to our shareholders. We returned to full year positive comparable sales growth following three years of negative results and expanded adjusted operating income margin by over 200-basis points, which were both in line with our full year 2025 guidance range."

"In 2026, we will continue to execute our strategic plan with a focus on the customer and the fundamentals of selling auto parts. This execution is being supported by a solid balance sheet with healthy liquidity to fuel our initiatives. Today, we are announcing 2026 guidance targeting an acceleration in full year comparable sales growth of 1.0% to 2.0% and adjusted operating income margin in the range of 3.8% to 4.5%, which builds on the foundation established thus far."

Fourth Quarter 2025 Results ^(1,2)

The Company's results for the fourth quarter ended January 3, 2026 included one additional week (the "additional week") as compared to the fourth quarter of the prior year ended December 28, 2024.

Fourth quarter 2025 net sales totaled $2.0 billion, compared with $2.0 billion in the fourth quarter of the prior year. The additional week in fourth quarter 2025 added approximately $132 million to net sales. Fourth quarter 2024 net sales included approximately $74 million related to sales at stores closed in Q1'25 as a result of our optimization program associated with our 2024 Restructuring Plan. Comparable store sales for the fourth quarter 2025 increased 1.1%. The calculation for comparable store sales excludes net sales related to closed stores under the 2024 Restructuring Plan and the additional week.

The Company's fourth quarter 2025 gross profit was $0.9 billion, or 44.0% of net sales compared with $0.3 billion, or 17.4% in the fourth quarter of the prior year. Adjusted gross profit was $0.9 billion, or 44.2% of net sales compared with $0.8 billion, or 39.0% in the fourth quarter of the prior year. The increase in gross profit as a percentage of net sales compared to the same period in the prior year was driven by cycling of atypical items related to our 2024 Restructuring Plan, operational savings associated with the footprint optimization activity completed in Q1'25 associated with our 2024 Restructuring Plan and improvements in product margins from strategic sourcing initiatives.

The Company's fourth quarter 2025 selling, general and administrative (SG&A) expenses were $0.8 billion, or 41.8% of net sales compared with $1.2 billion, or 58.5% of net sales in the fourth quarter of the prior year. Adjusted SG&A expenses were $0.8 billion, or 40.5% of net sales in the fourth quarter of 2025 compared with $0.9 billion, or 43.9% of net sales in the prior year quarter. The reduction in SG&A expenses as a percentage of net sales compared to the same period in the prior year was driven by cycling of atypical items related to our 2024 Restructuring Plan, and the operation of fewer stores compared to last year.

The Company's fourth quarter 2025 operating income was $44 million, or 2.2% of net sales, compared with operating loss of $820 million, or (41.1)% of net sales in the fourth quarter of the prior year. Adjusted fourth quarter 2025 operating income was $73 million or 3.7% of net sales, compared with a loss of $99 million or (5.0)% of net sales in the prior year quarter. The additional week in fourth quarter 2025 added approximately $9 million to adjusted operating income.

The Company's diluted earnings per share was $0.49, compared with a loss of $(10.16) in the fourth quarter of 2024. The Company's adjusted diluted earnings per share was $0.86 compared with a loss $(1.18) in the fourth quarter of 2024. The additional week in fourth quarter 2025 added approximately $0.08 to adjusted diluted earnings per share.

Full Year 2025 Results ^(1,2)

The Company's results for the full year ended January 3, 2026 included one additional week (the "additional week") as compared to the fiscal year ended December 28, 2024.

Full year 2025, net sales totaled $8.6 billion, compared with $9.1 billion in full year 2024. Full year 2025 net sales included $51 million related to the store optimization program associated with our 2024 Restructuring Plan, compared with approximately $74 million in full year 2024. The additional week added approximately $132 million to net sales in full year 2025. Comparable store sales for full year 2025 increased 0.8%. The calculation for comparable store sales excludes net sales related to the store optimization program and the additional week.

The Company's full year 2025 gross profit was $3.7 billion, or 43.4% of net sales compared with $3.4 billion or 37.5% of net sales in the prior year. Adjusted full year 2025 gross profit was $3.8 billion or 43.9% of net sales, compared with $3.8 billion or 42.2% of net sales in the prior year.

The Company's full year 2025 SG&A was $3.8 billion, or 43.9% of net sales, compared with $4.1 billion, or 45.3% of net sales in the prior year. Adjusted full year 2025 SG&A was $3.6 billion, or 41.4% of net sales, compared with $3.8 billion, or 41.8% of net sales, in the prior year.

The Company's full year 2025 operating loss was $43 million, or (0.5)% of net sales, compared with a loss of $713 million or (7.8)% of net sales in the prior year. Adjusted full year 2025 operating income was $216 million or 2.5% of net sales, compared with adjusted operating income of $35 million or 0.4% of net sales in the prior year. The store optimization program associated with our 2024 Restructuring Plan negatively impacted full year 2025 adjusted operating income by approximately $37 million. The additional week in full year 2025 added approximately $9 million to adjusted operating income.

The Company's full year 2025 diluted earnings per share was $1.13, compared with a loss of $(9.80) in the prior year. Adjusted full year 2025 diluted earnings per share was $2.26, compared with a loss of $(0.29) in the prior year. The additional week in full year 2025 added approximately $0.08 to adjusted diluted earnings per share.

Net cash used in operating activities was $46 million for the full year 2025 versus $141 million provided by operating activities for the prior year. Free cash flow for the full year 2025 was an outflow of $298 million, compared with an outflow of $40 million in the prior year. Free cash flow through the fourth quarter of 2025 includes approximately $140 million of cash charges related to restructuring and other related expenses.

Capital Allocation

On February 10, 2026, the Company declared a regular cash dividend of $0.25 per share to be paid on April 24, 2026 to all common stockholders of record as of April 10, 2026.

Full Year 2026 Guidance⁽¹⁾

Investor Conference Call

The Company will detail its results for the fourth quarter and full year 2025 via a webcast scheduled to begin at 8 a.m. Eastern Time on Friday, February 13, 2026. The webcast will be accessible via the Investor Relations page of the Company's website (ir.AdvanceAutoParts.com).

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

About Advance Auto Parts

Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers. As of January 3, 2026, Advance operated 4,305 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also served 809 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services, and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com.

Forward-Looking Statements

Certain statements herein are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as "anticipate," "believe," "could," "estimate," "expect," "forecast, "guidance," "intend," "likely," "may," "plan," "position," "possible," "potential," "probable," "project," "should," "strategy," "target," "will," or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company's strategic initiatives, future business and financial performance, revenue, earnings, cash flow, liquidity, restructuring and asset optimization plans, financial objectives, including with respect to the Company's reorganized debt capital structure, operational plans and objectives, capital expenditures, organizational changes, cost reductions, expectations for macroeconomic conditions, marketing strategies, inflation, impairments, consumer behavior and preferences, labor costs and availability, supply chain and merchandising strategies and effects, technology investments, effective tax rates, regulatory changes and impacts, anticipated impacts of tariffs and other trade barriers, compliance with debt covenants, statements about the status of, and capacity and utilization under, the Company's supply chain financing arrangements and statements about the Company's future credit ratings and outlook as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company's views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company's ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company's restructuring and asset optimization plans, risks relating to incurrence of indebtedness and increased leverage, risks relating to the Company's credit ratings or perceived creditworthiness, deterioration of general macroeconomic conditions, geopolitical factors, including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company's products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company's inventory and supply chain, implementation and operation of information and technology systems, and challenges with transforming and growing its business. Please refer to "Item 1A. Risk Factors" of the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"), as updated by the Company's subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.

Reconciliation of Non-GAAP Financial Measures

The Company uses certain non-GAAP financial measures described below to supplement the Company's unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company's core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, and allow for greater transparency with respect to important metrics used by management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by our management to evaluate our business and financial performance. The Company believes that these measures provide investors increased comparability of our core financial performance over multiple periods with other companies in our industry. The Company's Non-GAAP financial measures reflect results from continuing operations, including Adjusted Net (loss) Income, Adjusted Diluted (loss) Earnings Per Share ("Adjusted Diluted EPS"), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Selling, General and Administrative expense ("Adjusted SG&A"), Adjusted SG&A Margin, Adjusted Operating (loss) Income, Adjusted Operating (loss) Income Margin, Free Cash Flow and Adjusted Net Debt to Adjusted EBITDAR ("Net Leverage Ratio"), and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows.

The Company has presented these non-GAAP financial measures as the Company believes that the presentation of the financial results that exclude (1) transformation expenses under the Company's turnaround plans, inclusive of the Worldpac divestiture (2) other significant expenses and (3) nonrecurring tax expense are useful and indicative of the Company's base operations because the expenses vary from period to period in terms of size, nature and significance. The income tax impact of these non-GAAP adjustments is adjusted for using the estimated tax rate in effect for the respective non-GAAP adjustments. These measures assist in comparing the Company's current operating results with past periods and with the operational performance of other companies in the industry. The disclosure of these measures allows investors to evaluate the Company's performance using the same measures management uses in developing internal budgets and forecasts and in evaluating management's compensation. Included below is a description of the expenses the Company has determined are not normal, recurring cash operating expenses necessary to operate the Company's business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures.

Transformation Expenses

Expenses incurred in connection with the Company's turnaround plan and specific transformative activities related to asset optimization that the Company does not view to be normal cash operating expenses. These expenses primarily include:

• Restructuring and other related expenses: Expenses relating to strategic initiatives, including severance expense, retention bonuses offered to store-level employees to help facilitate the closing of stores, incremental reserves related to the collectibility of receivables resulting from contract terminations with certain independents associated with the 2024 Restructuring Plan and third-party professionals assisting in the development and execution of the strategic initiatives.

• Inventory write-down: Expenses relating to the incremental write-down of inventory to net realizable value due to liquidation sales and streamlining inventory assortment due to store and distribution center closures associated with the 2024 Restructuring Plan.

• Impairment and write-down of long-lived assets: Expenses relating to the impairment of operating lease right-of-use ("ROU") assets and property and equipment, incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, ROU asset amortization after store closure, and incremental lease abandonment expenses as a result of accelerating ROU asset amortization for leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations, in connection with the 2024 Restructuring Plan and Other Restructuring Plan.

• Distribution network optimization: Expenses primarily relating to the conversion of the stores and distribution centers to market hubs, including, realized losses on liquidated inventory, temporary labor, nonrecurring professional service fees and team member severance.

Other Expenses

Expenses incurred by the Company that are not viewed as normal cash operating expenses and vary from period to period in terms of size, nature, and significance. These expenses primarily include:

• Other professional service fees: Expenses relating to nonrecurring services rendered by third-party vendors engaged to perform a strategic business review, including the Company's transformation initiatives.

• Worldpac post transaction-related expenses: Expenses primarily relating to non-recurring separation activities provided by third-party professionals subsequent to the sale of Worldpac.

• Executive turnover: Expenses associated with executive level reorganization, including expenses for executive severance, the hiring search for leadership positions and certain compensation benefits.

• Material weakness remediation: Incremental expenses associated with the remediation of the Company's previously-disclosed material weaknesses in internal control over financial reporting.

• Cybersecurity incident: Expenses related to the response and remediation of a cybersecurity incident.
• Other: Includes a non-cash charge related to expected future credit losses on vendor receivables due from a vendor that filed voluntary petitions for Chapter 11 bankruptcy protection.
• Other tax adjustments: Certain tax items that are unrelated to the fiscal year in which they are recorded are excluded in order to provide a clearer understanding of the Company's ongoing Non-GAAP tax rate and after-tax earnings.

Reconciliation of Diluted Earnings (loss) Per Share (GAAP) and Adjusted Diluted Earnings (loss) Per Share (Non-GAAP):

Reconciliation of Adjusted Gross Profit

Reconciliation of Adjusted Selling, General and Administrative Expenses

Reconciliation of Adjusted Operating Income:

Reconciliation of Free Cash Flow:

Reconciliation of Adjusted Net Debt to Adjusted EBITDAR⁽¹⁾

Store Information:

During the fifty-three weeks ended January 3, 2026, 39 stores were opened and 522 were closed, resulting in a total of 4,305 stores as of January 3, 2026, compared with a total of 4,788 stores as of December 28, 2024.

The below table summarizes the changes in the number of company-operated stores during the thirteen and fifty-three weeks ended January 3, 2026:

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Investor Relations Contact:

Lavesh Hemnani

T: (919) 227-5466

E: [email protected]

Media Contact:

Nicole Ducouer

T: (984) 389-7207

E: [email protected]