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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 19, 2025
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission file number 001-16797
_______________________________
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
_________________________
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Delaware |
54-2049910 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
4200 Six Forks Road, Raleigh, North Carolina 27609
(Address of principal executive offices) (Zip Code)
(540) 362-4911
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading symbol |
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Name of each exchange on which registered |
Common Stock, $0.0001 par value |
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AAP |
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New York Stock Exchange |
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
☒ |
Accelerated filer |
☐ |
Non-accelerated filer |
☐ |
Smaller reporting company |
☐ |
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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 20, 2025, the number of shares of the registrant’s common stock outstanding was 59,925,637 shares.
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, restructuring and asset optimization, financial objectives, operational plans and objectives, statements about the benefits of the sale of the Company’s Worldpac business and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, 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, 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 and challenges with transforming and growing its business. Please see “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.
PART I. FINANCIAL INFORMATION
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in millions, except par value amounts) (Unaudited)
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Assets |
April 19, 2025 |
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December 28, 2024 |
Current assets: |
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Cash and cash equivalents |
$ |
1,672 |
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$ |
1,869 |
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Receivables, net |
494 |
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544 |
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Inventories, net |
3,731 |
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3,612 |
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Other current assets |
183 |
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118 |
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Total current assets |
6,080 |
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6,143 |
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Property and equipment, net |
1,265 |
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1,334 |
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Operating lease right-of-use assets |
2,185 |
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2,243 |
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Goodwill |
600 |
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598 |
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Other intangible assets, net |
404 |
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406 |
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Other assets |
83 |
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74 |
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Total assets |
$ |
10,617 |
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$ |
10,798 |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
3,425 |
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3,408 |
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Accrued expenses |
663 |
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|
784 |
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Current portion of long-term debt |
299 |
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— |
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Other current liabilities |
406 |
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473 |
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Total current liabilities |
4,793 |
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4,665 |
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Long-term debt |
1,491 |
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1,789 |
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Operating lease liabilities |
1,881 |
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1,897 |
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Deferred income taxes |
171 |
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193 |
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Other long-term liabilities |
84 |
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84 |
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Total liabilities |
8,420 |
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8,628 |
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Commitments and contingencies (Note 13) |
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Stockholders’ equity: |
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Preferred stock, nonvoting, $0.0001 par value,
10 million shares authorized; no shares issued or outstanding
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— |
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— |
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Common stock, voting, and additional paid-in capital, $0.0001 par value, 200 million shares authorized;
78 million shares issued and 60 million outstanding at April 19, 2025 and
78 million shares issued and 60 million outstanding at December 28, 2024
|
1,007 |
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994 |
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Treasury stock, at cost |
(2,942) |
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(2,940) |
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Accumulated other comprehensive loss |
(40) |
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(47) |
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Retained earnings |
4,172 |
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4,163 |
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Total stockholders’ equity |
2,197 |
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|
2,170 |
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Total liabilities and stockholders’ equity |
$ |
10,617 |
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$ |
10,798 |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in millions, except per share data) (Unaudited)
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Sixteen Weeks Ended |
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April 19, 2025 |
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April 20, 2024 |
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Net sales |
$ |
2,583 |
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$ |
2,772 |
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Cost of sales |
1,474 |
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1,568 |
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Gross profit |
1,109 |
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1,204 |
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Selling, general and administrative expenses, exclusive of restructuring and related expenses |
1,122 |
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1,151 |
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Restructuring and related expenses |
118 |
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— |
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Selling, general and administrative expenses |
1,240 |
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1,151 |
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Operating (loss) income |
(131) |
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53 |
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Other, net: |
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Interest expense |
(27) |
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(25) |
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Other income, net |
27 |
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1 |
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Total other, net |
— |
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(24) |
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(Loss) income before income taxes |
(131) |
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29 |
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Income tax (benefit) expense |
(155) |
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12 |
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Net income from continuing operations |
24 |
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17 |
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Net income from discontinued operations |
— |
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23 |
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Net income |
$ |
24 |
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$ |
40 |
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Basic earnings per common share from continuing operations |
$ |
0.40 |
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$ |
0.29 |
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Basic earnings per common share from discontinued operations |
— |
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0.38 |
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Basic earnings per common share |
$ |
0.40 |
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$ |
0.67 |
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Basic weighted-average common shares outstanding |
59.8 |
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59.6 |
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Diluted earnings per common share from continuing operations |
$ |
0.40 |
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$ |
0.29 |
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Diluted earnings per common share from discontinued operations |
— |
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0.38 |
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Diluted earnings per common share |
$ |
0.40 |
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$ |
0.67 |
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Diluted weighted-average common shares outstanding |
60.2 |
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59.8 |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
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Condensed Consolidated Statements of Comprehensive Income |
(in millions) (Unaudited) |
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Sixteen Weeks Ended |
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April 19, 2025 |
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April 20, 2024 |
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Net income |
$ |
24 |
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40 |
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Other comprehensive income: |
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Currency translation adjustments |
7 |
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6 |
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Total other comprehensive income |
7 |
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6 |
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Comprehensive income |
$ |
31 |
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$ |
46 |
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The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
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Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(in millions, except per share data) (Unaudited)
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Sixteen Weeks Ended April 19, 2025 |
|
Common Stock and Additional Paid-In Capital |
|
|
|
Treasury Stock, at Cost |
|
Accumulated Other Comprehensive Loss |
|
Retained Earnings |
|
Total Stockholders’ Equity |
|
Shares |
|
Amount |
|
|
|
|
|
Balance at December 28, 2024 |
60 |
|
|
$ |
994 |
|
|
|
|
$ |
(2,940) |
|
|
$ |
(47) |
|
|
$ |
4,163 |
|
|
$ |
2,170 |
|
Net income |
— |
|
|
— |
|
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|
|
— |
|
|
— |
|
|
24 |
|
|
24 |
|
Total other comprehensive income |
— |
|
|
— |
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|
|
|
— |
|
|
7 |
|
|
— |
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
— |
|
|
11 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
11 |
|
Common stock issued under employee benefit plans |
— |
|
|
2 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
2 |
|
Repurchases of common stock |
— |
|
|
— |
|
|
|
|
(2) |
|
|
— |
|
|
— |
|
|
(2) |
|
Cash dividends declared ($0.25 per common share) |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
(15) |
|
|
(15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 19, 2025 |
60 |
|
|
1,007 |
|
|
|
|
$ |
(2,942) |
|
|
$ |
(40) |
|
|
$ |
4,172 |
|
|
$ |
2,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended April 20, 2024 |
|
Common Stock and Additional Paid-In Capital |
|
|
|
Treasury Stock, at Cost |
|
Accumulated Other Comprehensive Loss |
|
Retained Earnings |
|
Total Stockholders’ Equity |
|
Shares |
|
Amount |
|
|
|
|
|
Balance at December 30, 2023 |
60 |
|
|
$ |
946 |
|
|
|
|
$ |
(2,933) |
|
|
$ |
(52) |
|
|
$ |
4,559 |
|
|
$ |
2,520 |
|
Net income |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
40 |
|
|
40 |
|
Total other comprehensive income |
— |
|
|
— |
|
|
|
|
— |
|
|
6 |
|
|
— |
|
|
6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
— |
|
|
17 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
17 |
|
Common stock issued under employee benefit plans |
— |
|
|
1 |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
1 |
|
Repurchases of common stock |
— |
|
|
— |
|
|
|
|
(4) |
|
|
— |
|
|
— |
|
|
(4) |
|
Cash dividends declared ($0.25 per common share) |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
(15) |
|
|
(15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 20, 2024 |
60 |
|
|
964 |
|
|
|
|
$ |
(2,937) |
|
|
$ |
(46) |
|
|
$ |
4,584 |
|
|
$ |
2,565 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
April 19, 2025 |
|
April 20, 2024 |
Cash flows from operating activities: |
|
|
|
Net income |
$ |
24 |
|
|
$ |
40 |
|
Net income from discontinued operations |
— |
|
|
23 |
|
Net income from continuing operations |
24 |
|
|
17 |
|
Adjustments to reconcile net income to net cash used in operating activities: |
|
|
|
Depreciation and amortization |
89 |
|
|
83 |
|
Share-based compensation |
11 |
|
|
15 |
|
Loss (Gain) on sale and impairment of long-lived assets, net |
10 |
|
|
(18) |
|
Provision for deferred income taxes |
(22) |
|
|
3 |
|
Other, net |
3 |
|
|
1 |
|
Net change in: |
|
|
|
Receivables, net |
51 |
|
|
3 |
|
Inventories, net |
(114) |
|
|
1 |
|
Operating lease right of use assets |
50 |
|
|
(1) |
|
Other assets |
(69) |
|
|
(15) |
|
Accounts payable |
14 |
|
|
(134) |
|
Accrued expenses |
(119) |
|
|
16 |
|
Operating lease liabilities |
(81) |
|
|
30 |
|
Other liabilities |
(3) |
|
|
(4) |
|
Net cash used in operating activities of continuing operations |
(156) |
|
|
(3) |
|
Net cash provided by operating activities of discontinued operations |
— |
|
|
6 |
|
Net cash (used in) provided by operating activities |
(156) |
|
|
3 |
|
Cash flows from investing activities: |
|
|
|
Purchases of property and equipment |
(42) |
|
|
(46) |
|
Proceeds from sales of property and equipment |
15 |
|
|
10 |
|
Net cash used in investing activities of continuing operations |
(27) |
|
|
(36) |
|
Net cash used in investing activities of discontinued operations |
— |
|
|
(3) |
|
Net cash used in investing activities |
(27) |
|
|
(39) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
(15) |
|
|
(15) |
|
Purchase of noncontrolling interest |
— |
|
|
(7) |
|
Proceeds from the issuance of common stock |
2 |
|
|
1 |
|
Repurchases of common stock |
(2) |
|
|
(3) |
|
Other, net |
(2) |
|
|
(1) |
|
Net cash used in financing activities |
(17) |
|
|
(25) |
|
|
|
|
|
Effect of exchange rate changes on cash |
3 |
|
|
9 |
|
|
|
|
|
Net decrease in cash and cash equivalents |
(197) |
|
|
(52) |
|
Cash and cash equivalents, beginning of period |
1,869 |
|
|
503 |
|
Cash and cash equivalents, end of period |
$ |
1,672 |
|
|
$ |
451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
April 19, 2025 |
|
April 20, 2024 |
|
|
|
|
Non-cash transactions of continuing operations: |
|
|
|
Accrued purchases of property and equipment |
$ |
12 |
|
|
$ |
9 |
|
|
|
|
|
|
|
|
|
Summary of cash and cash equivalents: |
|
|
|
Cash and cash equivalents of continuing operations, end of period |
1,672 |
|
|
437 |
|
Cash and cash equivalents of discontinued operations, end of period |
— |
|
|
14 |
|
Cash and cash equivalents, end of period |
$ |
1,672 |
|
|
$ |
451 |
|
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, 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 unaudited condensed consolidated financial statements 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 “the Company”).
As of April 19, 2025, the Company operated a total of 4,285 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 19, 2025, the Company served 881 independently owned Carquest branded stores across the same geographic locations served by the Company’s stores in addition to Mexico and various Caribbean islands. The Company’s stores operate primarily under the trade names “Advance Auto Parts” and “Carquest”.
The Company has one reportable segment. As of December 28, 2024, the Company had two operating segments, which were aggregated as a single reportable segment; however, following the stabilization of the Company’s new organizational structure in the first quarter of fiscal 2025, due to significant restructuring activities, the Company now operates under the single operating segment of “Advance Auto Parts/Carquest”. See Note 11. Segment Reporting and Note 3. Restructuring, of the notes to the condensed consolidated financial statements included herein for additional information on the Company’s segments and restructuring activities.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and unaudited notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). 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 SEC interim reporting principles.
The accompanying condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The accounting policies followed in the presentation of these condensed consolidated financial statements are consistent with those followed on an annual basis.
These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for fiscal year 2024 (“2024 Form 10-K”) as filed with the SEC on February 26, 2025. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with prior years, the Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.
Change in Presentation
Prior to fiscal 2025, the Company presented its condensed consolidated financial statements and notes to the condensed consolidated financial statements in thousands. Effective in fiscal 2025, such amounts are presented in millions, except par value share amounts and per share data, unless otherwise stated. Certain prior year amounts have been reclassified to conform to the current year presentation, including the separate disclosure of operating lease right of use assets, other assets, operating lease liabilities and other liabilities, on the condensed consolidated statements of cash flows. This change in presentation does not have a material impact on the condensed consolidated financial statements.
Further, consistent with the presentation in the Company’s 2024 Form 10-K, the Company has presented the sale of the Worldpac, Inc. business (“Worldpac”) as discontinued operations in its condensed consolidated financial statements. Comparative interim period amounts have been updated to reflect this presentation.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Recently Issued Accounting Pronouncements - Not Yet Adopted
Income Tax Disclosure Improvements
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (“ASU 2023-09”), which requires a company to enhance its income tax disclosures. In each annual reporting period, the company should disclose the specific categories used in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, including disaggregation of taxes paid by jurisdiction. The related disclosures are effective for the fiscal year beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09 on the Company’s consolidated financial statements and related disclosures and believes that the adoption will result in additional disclosures, but will not have any other impact on its consolidated financial statements.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation (“ASU 2024-03”), which requires public entities to disclose more detailed information about certain costs and expenses presented in the income statement, including (among other items) the amount of inventory purchases, employee compensation, selling expenses, depreciation and amortization of intangible assets. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.
2. Revenues
The following table summarizes disaggregated revenue from contracts with customers by product group from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|
|
April 19, 2025 |
|
April 20, 2024 |
|
|
|
|
Percentage of Net Sales: |
|
|
|
|
|
|
|
Parts and Batteries |
62 |
% |
|
62 |
% |
|
|
|
|
Accessories and Chemicals |
23 |
|
|
23 |
|
|
|
|
|
Engine Maintenance |
14 |
|
|
14 |
|
|
|
|
|
Other |
1 |
|
|
1 |
|
|
|
|
|
Total |
100 |
% |
|
100 |
% |
|
|
|
|
There were no major customers individually accounting for 10% or more of consolidated net revenues.
3. Restructuring
2024 Restructuring Plan
On November 13, 2024, the Company’s Board of Directors approved a restructuring and asset optimization plan (“2024 Restructuring Plan”) designed to improve the Company’s profitability and growth potential and streamline its operations. This plan includes the closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions. The Company completed the closure of all of these locations during the first quarter of 2025.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Expenses associated with the 2024 Restructuring Plan included: 1) noncash asset impairment and accelerated amortization and depreciation of operating lease Right-of-Use (“ROU”) assets and property and equipment, 2) personnel expenses related to severance and transition expenses, which were offered to certain employees who would provide services through key dates to ensure completion of closure activities and 3) other location closure-related activity, including nonrecurring services rendered by third-party vendors assisting with the turnaround initiatives and other related expenses, including incremental revisions to receivable collectability due to termination of contracts with independents associated with the 2024 Restructuring Plan.
Other Restructuring Initiatives
In November 2023, the Company announced a strategic and operational plan with anticipated savings of $150 million of which $50 million would be reinvested into frontline team members. In addition to a reduction in workforce, this plan streamlines the Company’s supply chain by configuring a multi-echelon supply chain by leveraging current asset and operating fewer, more productive distribution centers that focus on replenishment and move more parts closer to the customer. In achieving this plan, the Company is in process of converting certain distribution centers and stores into market hubs. In addition to providing replenishment to near-by stores, market hubs support retail operations. In addition to the distribution network optimization costs, other restructuring expenses included certain other items as further detailed in the table below.
The Company has recorded all restructuring and related expenses as a component of selling, general and administrative expenses in the condensed consolidated statement of operations, with the exception of inventory related expenses that are recorded as a component of cost of sales on the condensed consolidated statement of operations. No inventory related expenses were incurred during the first quarter of fiscal 2025 related to restructuring and related activities. No restructuring and related activities were incurred during the first quarter of fiscal 2024.
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
2024 Restructuring Plan Expenses: |
April 19, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses: |
|
|
|
|
|
Impairment and write-down of long-lived assets |
$ |
41 |
|
|
|
|
|
Severance and other personnel expenses |
15 |
|
|
|
|
|
Other location closure related expenses (1) |
49 |
|
|
|
|
|
|
|
|
|
|
|
2024 Restructuring Plan Expenses |
$ |
105 |
|
|
|
|
|
|
|
|
|
|
|
Other Restructuring Plan Expenses: |
|
|
|
|
|
Selling, general and administrative expenses: |
|
|
|
|
|
Distribution network optimization |
$ |
3 |
|
|
|
|
|
Impairment and write-down of long-lived assets |
4 |
|
|
|
|
|
Worldpac post transaction-related expenses |
3 |
|
|
|
|
|
Other restructuring expenses (2) |
3 |
|
|
|
|
|
Other Restructuring Plan Expenses |
$ |
13 |
|
|
|
|
|
(1) Other location closure related activity includes $30 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan, $7 million related to incremental reserves on loan guarantees and the remaining other related expenses are associated with closures, including the transfer of assets.
(2) Other restructuring expenses primarily consists of severance and other personnel expenses.
The following table shows the change in the restructuring liability in the period, which excludes operating lease liabilities and associated expenses. The restructuring liabilities are classified within accounts payable, accrued liabilities and other current liabilities in the condensed consolidated balance sheets.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional service fees |
|
Severance and other personnel expenses |
Balance at December 28, 2024 |
|
|
$ |
23 |
|
|
$ |
14 |
|
Restructuring expenses during the period |
|
|
30 |
|
|
19 |
|
Cash payments |
|
|
(50) |
|
|
(30) |
|
Balance at April 19, 2025 |
|
|
$ |
3 |
|
|
$ |
3 |
|
As of April 19, 2025, the cumulative amount incurred to date for active restructuring plans totaled $858 million, consisting of write-down of inventory to net realizable value in the fourth quarter of fiscal 2024, lease termination impacts, other exit-related expenses related to ceased use buildings and certain employee termination benefits. The Company estimates that it will incur additional expenses of approximately $75 million to $100 million These expenses primarily relate to lease terminations, professional services, and other exit costs to be incurred by the end of fiscal year 2025.
4. Inventories, net
The Company used the last in, first out (“LIFO”) method of accounting for approximately 92% of inventories as of April 19, 2025 and December 28, 2024. An actual valuation of inventory under the LIFO method is performed at the end of each fiscal year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on the Company’s estimates of expected inventory levels and costs at the end of the year. The Company’s LIFO debit/(credit) reserve balance was $3 million and $(11) million as of April 19, 2025 and December 28, 2024, respectively, to state inventories at LIFO. Increases to the Company’s LIFO credit reserve balance are recorded as a noncash charge to cost of sales and decreases are recorded as a non-cash benefit to cost of sales. The non-cash (benefit) expense recorded to cost of sales related to the change in the LIFO credit reserve for the periods presented was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|
April 19, 2025 |
|
April 20, 2024 |
|
LIFO credit reserve (benefit) expense |
$ |
(14) |
|
|
$ |
(9) |
|
|
As of April 19, 2025, the effect of LIFO liquidations was a decrease to cost of sales of $4 million and an increase to net earnings of $3 million ($0.05) per diluted share.
Purchasing and warehousing costs included in inventories as of April 19, 2025 and December 28, 2024 were $382 million and $368 million, respectively.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
5. Receivables, net
Receivables, net, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 19, 2025 |
|
December 28, 2024 |
Trade |
$ |
411 |
|
|
$ |
417 |
|
Vendor |
131 |
|
|
157 |
|
Other |
16 |
|
|
28 |
|
Total receivables |
558 |
|
|
602 |
|
Less: allowance for credit losses |
(64) |
|
|
(58) |
|
Receivables, net |
$ |
494 |
|
|
$ |
544 |
|
6. Long-term Debt and Fair Value of Financial Instruments
Long-term debt net of unamortized discount and debt issuance costs consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
April 19, 2025 |
|
December 28, 2024 |
5.90% Senior Unsecured Notes due March 9, 2026 |
$ |
299 |
|
|
$ |
299 |
|
1.75% Senior Unsecured Notes due October 1, 2027 |
349 |
|
|
348 |
|
5.95% Senior Unsecured Notes due March 9, 2028 |
298 |
|
|
298 |
|
3.90% Senior Unsecured Notes due April 15, 2030 |
497 |
|
|
497 |
|
3.50% Senior Unsecured Notes due March 15, 2032 |
347 |
|
|
347 |
|
|
|
|
|
Total long-term debt and current maturities of long-term debt |
1,790 |
|
|
1,789 |
|
Less: Current portion of long-term debt |
(299) |
|
|
— |
|
Long-term debt, excluding the current portion |
$ |
1,491 |
|
|
$ |
1,789 |
|
|
|
|
|
|
|
|
|
Fair Value of Financial Assets and Liabilities
As of April 19, 2025 and December 28, 2024, the fair value of the Company’s long-term debt, which includes the current portion of long-term debt, was approximately $1,640 million and $1,649 million, respectively. The fair value of the Company’s long-term debt was determined using Level 2 inputs based on quoted market prices. The carrying amounts of the Company’s 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.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Credit Facilities
As of April 19, 2025 and December 28, 2024, the Company had no outstanding borrowings under the 2021 Credit Agreement. As of April 19, 2025 the Company had $885 million of borrowing availability and $115 million letters of credit outstanding under the 2021 Credit Agreement. As of December 28, 2024, the Company had $1 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement. The Company is required to maintain certain financial covenants related to the 2021 Credit Agreement. On February 25, 2025, the Company entered into Amendment No. 6 (“Amendment No. 6”) to the 2021 Credit Agreement to, among other things, (i) expand the scope of domestic subsidiaries that would be required to grant security interests and guarantee the Company’s obligations under the 2021 Credit Agreement upon the occurrence of a Springing Lien Trigger Event (as defined therein) to include all of the Company’s subsidiaries other than the Company’s Insignificant Subsidiaries (as defined in Amendment No. 6), (ii) revise the definition of Consolidated Coverage Ratio to exclude up to $175 million of accelerated rent charges related to lease buyouts and to permit the minimum Consolidated Coverage Ratio to remain at 1.50 to 1.00 for one additional quarter before increasing to 1.75 to 1.00 on and after the fiscal quarter ending on January 3, 2026, (iii) revise the definition of Consolidated EBITDA to increase the threshold for Identified Restructuring Charges (as defined therein) from $575 million to $625 million, and (iv) expand the scope of the guaranteed obligations to include bank product obligations and cash management obligations. As of April 19, 2025, the Company was in compliance with its financial covenants under the 2021 Credit Agreement.
As of April 19, 2025 and December 28, 2024, the Company had $90 million and $91 million, respectively, of bilateral letters of credit issued separately from the 2021 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 the Company’s self-insurance policies.
Debt Guarantees
The Company is a guarantor of loans made by banks to various independently-owned Carquest-branded stores that are customers of the Company totaling $89 million and $98 million as of April 19, 2025 and December 28, 2024, respectively. These loans 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 $161 million and $181 million as of April 19, 2025 and December 28, 2024, respectively. The Company continuously assesses the likelihood of performance under these guarantees and believes that performance is remote as of April 19, 2025.
7. Leases
Substantially all of the Company’s leases are for facilities, vehicles, and equipment. The initial term for facilities is typically five to ten years, with renewal options typically at five-year intervals, with the exercise of lease renewal options at the Company’s sole discretion. The Company’s vehicle and equipment lease terms are typically three to six years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
Total lease cost is included in cost of sales and total selling, general and administrative expenses in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income. Total lease costs are comprised of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|
April 19, 2025 |
|
April 20, 2024 |
|
Operating lease cost |
$ |
168 |
|
|
$ |
157 |
|
|
Variable lease cost |
51 |
|
|
48 |
|
|
Total lease cost |
$ |
219 |
|
|
$ |
205 |
|
|
During the first quarter of fiscal 2025, the Company recorded $29 million primarily related to accelerated amortization on leases the Company expects to exit before the end of the contractual term, and non-cash asset impairment net of gains on lease modifications and terminations. These amounts are recorded in restructuring and related expenses within the accompanying condensed consolidated statements of operations. See Note 3. Restructuring, of the notes to the condensed consolidated financial statements included herein.
Other information relating to the Company’s lease liabilities was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
April 19, 2025 |
|
April 20, 2024 |
Cash paid for amounts included in the measurement of lease liabilities: |
|
|
|
Operating cash flows from operating leases |
$ |
179 |
|
|
$ |
133 |
|
Right-of-use assets obtained in exchange for lease obligations: |
|
|
|
Operating leases |
$ |
91 |
|
|
$ |
132 |
|
During the first quarter of 2024, the Company entered into a sale-leaseback transaction where the Company sold a building and land and entered into a three-year lease of the property upon the sale. This transaction resulted in a gain of $21 million and is included in selling, general and administrative expenses on the condensed consolidated statement of operations for the sixteen weeks ended April 20, 2024.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
8. Earnings per Share
The computations of basic and diluted earnings per share were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|
|
April 19, 2025 |
|
April 20, 2024 |
|
|
|
|
Numerator |
|
|
|
|
|
|
|
Income from continuing operations |
$ |
24 |
|
|
$ |
17 |
|
|
|
|
|
Income from discontinued operations |
— |
|
|
23 |
|
|
|
|
|
Net income applicable to common shares |
$ |
24 |
|
|
$ |
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
Basic weighted-average common shares |
59.8 |
|
|
59.6 |
|
|
|
|
|
Dilutive impact of share-based awards |
0.4 |
|
|
0.2 |
|
|
|
|
|
Diluted weighted-average common shares(1) |
60.2 |
|
|
59.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share from continuing operations |
$ |
0.40 |
|
|
$ |
0.29 |
|
|
|
|
|
Basic earnings per common share from discontinued operations |
— |
|
|
0.38 |
|
|
|
|
|
Basic earnings per common share |
$ |
0.40 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share from continuing operations |
$ |
0.40 |
|
|
$ |
0.29 |
|
|
|
|
|
Diluted earnings per common share from discontinued operations |
— |
|
|
0.38 |
|
|
|
|
|
Diluted earnings per common share |
$ |
0.40 |
|
|
$ |
0.67 |
|
|
|
|
|
(1) For the sixteen weeks ended April 19, 2025 and April 20, 2024, $0.9 million and $0.4 million, respectively, of restricted stock units (“RSUs”) were excluded from the diluted weighted-average common share count calculation as their inclusion would have been anti-dilutive.
9. Supplier Finance Programs
The Company maintains supply chain financing agreements with third-party financial institutions to provide the Company’s suppliers with enhanced receivables options. Through these agreements, the Company’s suppliers, at their sole discretion, may elect to sell their receivables due from the Company to the third-party financial institution at terms negotiated between the supplier and the third-party financial institution. The Company does not provide any guarantees to any third party in connection with these financing arrangements. The Company’s obligations to 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 the Company’s condensed consolidated balance sheets. As of both April 19, 2025, and December 28, 2024, the confirmed obligations outstanding under these supplier finance programs to third-party financial institutions were $3.2 billion. As of April 19, 2025, and December 28, 2024, $0.2 billion and $0.4 billion, respectively, is excluded from the Company’s accounts payable balance on the Company’s condensed consolidated balance sheets, as such amounts represent liabilities of Worldpac transferred with the sale of the business in fiscal 2024. Under the provisions of the sale, the Company will provide certain letters of credit to the buyer to support supply chain financing for the buyer. See Note 12. Discontinued Operations, of the notes to the condensed consolidated financial statements included herein.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
10. Commitments and Contingencies
On October 9, 2023, and October 27, 2023, two putative class actions on behalf of purchasers of the Company’s securities who purchased or otherwise acquired their securities between November 16, 2022, and May 30, 2023, inclusive (the “Class Period”), were commenced against the Company and certain of the Company’s former officers in the United States District Court for the Eastern District of North Carolina. The plaintiffs allege that the defendants made certain false and materially misleading statements during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. These cases were consolidated on February 9, 2024, and the court-appointed lead plaintiff filed a consolidated and amended complaint on April 22, 2024. The consolidated and amended complaint proposes a Class Period of November 16, 2022 to November 15, 2023, and alleges that defendants made false and misleading statements in connection with (a) the Company’s 2023 guidance and (b) certain accounting issues previously disclosed by the Company. On June 21, 2024, defendants filed a motion to dismiss the consolidated and amended complaint. On January 23, 2025, the motion to dismiss was granted by the United States District Court for the Eastern District of North Carolina. On February 21, 2025, plaintiffs filed an appeal to the 4th Circuit Court of Appeals. The Company strongly disputes the allegations and intends to defend the case vigorously.
On January 17, 2024, February 20, 2024, and February 26, 2024, derivative shareholder complaints were commenced against the Company’s directors and certain former officers alleging derivative liability for the allegations made in the securities class action complaints noted above. On April 9, 2024, the court consolidated these actions and appointed co-lead counsel. On June 10, 2024, the court issued a stay order on the consolidated derivative complaint pending resolution of the motion to dismiss for the underlying securities class action complaint.
11. Segment Reporting
The Company has one operating segment and one reportable segment, effective during the first quarter of fiscal year 2025, resulting from the stabilization of the Company’s new organizational structure due to the significant restructuring activities announced in fiscal year 2024 as further described in Note 3. Restructuring, of the notes to the condensed consolidated financial statements included herein. Following this restructuring, the Company no longer has two operating segments, which were previously aggregated into a single reportable segment. The Company conducts its operations principally in the geographical areas of the U.S. and Canada through its Advance Auto Parts and Carquest trade brands. The products sold by the Company, across all geographic areas, have similar economic characteristics, are sourced from the Company’s suppliers in a similar manner, and are available for sale to all of the Company’s customers through the Company’s stores and self-service e-commerce sites. All of the Company’s stores have similar characteristics, including the nature of the products and services, the type and class of customers, and the methods used to distribute products and provide service to its customers. Due to these reasons, the Company has one operating segment, referred to as Advance Auto Parts/Carquest. As geographic information is not a key component of how the chief operating decision maker (“CODM”) reviews performance and allocates resources, such entity-wide information is not disclosed on a quarterly basis.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
The Company’s CODM is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. Discrete information is not regularly provided to and/or reviewed by the Company’s CODM at a lower level than the consolidated level, inclusive of segment asset level detail. The CODM primarily focuses on net income to evaluate its reportable segment. The CODM also uses net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees. Significant segment expenses regularly provided to the CODM, which represent the difference between segment revenue and segment net income, consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
April 19, 2025 |
|
April 20, 2024 |
|
Net sales |
$ |
2,583 |
|
|
$ |
2,772 |
|
|
Less: |
|
|
|
|
Cost of sales |
$ |
1,474 |
|
|
$ |
1,568 |
|
|
Selling, general and administrative expenses (1) |
1,085 |
|
|
1,084 |
|
|
Restructuring and related expenses |
118 |
|
|
— |
|
|
Depreciation and amortization expense (2) |
37 |
|
|
67 |
|
|
Interest expense |
27 |
|
|
25 |
|
|
Other segment items (3) |
(27) |
|
|
(1) |
|
|
Income tax (benefit) expense |
(155) |
|
|
12 |
|
|
Net (loss) income from continuing operations |
$ |
24 |
|
|
$ |
17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Selling, general and administrative expenses, excludes restructuring and related expenses and depreciation and amortization.
(2) Excludes depreciation and amortization related to restructuring which is included in restructuring and related expenses.
(3) Other segment items relates to interest income included in total other, net, in the accompanying condensed consolidated statements of operations.
12. Discontinued Operations
In fiscal 2024, the Company completed the sale of Worldpac for $1.5 billion, with customary purchase price adjustments for working capital and other items as well as the provision of letters of credit in an aggregate amount of up to $200 million for up to 12 months following the closing of the transaction, which letter of credit exposure will reduce to zero no later than 24 months after the closing, to support supply chain financing for the buyer. The transaction closed on November 1, 2024. Net proceeds from the transaction after paying expenses and excluding the impact of taxes were approximately $1.47 billion. The Company’s sale of Worldpac was progress towards changing the landscape of the business with increased focus on the Advance blended-box model. As a result, the Company classified the results of operations and cash flows of Worldpac as discontinued operations in its condensed consolidated statements of operations and condensed consolidated statements of cash flows for prior periods presented.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in millions, except per share data, unless otherwise stated)
(Unaudited)
The following table presents the major components of discontinued operations in the Company's condensed consolidated statements of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
|
|
|
|
April 20, 2024 |
|
|
|
|
Major classes of line items constituting income of discontinued operations before provision for income taxes: |
|
|
|
|
|
|
|
Net Sales |
|
|
$ |
634 |
|
|
|
|
|
Cost of sales, including purchasing and warehousing costs |
|
|
409 |
|
|
|
|
|
Gross Profit |
|
|
225 |
|
|
|
|
|
Selling, general and administrative expenses |
|
|
192 |
|
|
|
|
|
Operating income |
|
|
33 |
|
|
|
|
|
Other, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net |
|
|
(3) |
|
|
|
|
|
Total other, net |
|
|
(3) |
|
|
|
|
|
Income from discontinued operations related to major classes before provision for income taxes |
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
7 |
|
|
|
|
|
Net income from discontinued operations |
|
|
$ |
23 |
|
|
|
|
|
13. Income Taxes
The Company’s effective tax rate for the first quarter of fiscal 2025 was lower than the estimated annual effective tax rate, primarily due to a net discrete tax benefit of $126 million realized in the first quarter of fiscal 2025 related to certain tax benefits associated with capital loss deductions.
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 the Company’s Annual Report on Form 10-K for the year ended December 28, 2024 (filed with the SEC on February 26, 2025) which the Company refers to as the “2024 Form 10-K”), and the Company’s unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with the previous fiscal year, the Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.
First Quarter Fiscal 2025 Management Overview
The Company’s financial results for continuing operations for the first quarter of 2025 includes:
•Net sales during the first quarter of fiscal 2025 were $2.6 billion, a decrease of 6.8% compared with the first quarter of fiscal 2024. Comparable store sales declined 0.6%.
•Gross profit margin for the first quarter of 2025 was 42.9% of net sales, a decrease of (50) basis points compared with the first quarter of fiscal 2024.
•Selling, general and administrative expenses for the first quarter of fiscal 2025 were 48.0% of net sales, an increase of 648 basis points compared with the first quarter of fiscal 2024.
•The Company generated diluted earnings per share of $0.40 during the first quarter of fiscal 2025, compared with diluted earnings per share of $0.29 for the comparable period of 2024.
Business and Risks Update
The Company continues to make progress on the various elements of its business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers. Key updates for the first quarter of fiscal 2025 include:
•Completed all store location closures under the 2024 Restructuring Plan designed to improve the Company’s profitability and growth potential, and streamline its operations; and
•Continued focus on cost and supply chain optimization.
For further information related to restructuring and related activities, see Note 3. Restructuring of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
During the first quarter of fiscal 2025, new global trade tariffs were announced on imports to the U.S., including additional tariffs on various countries from which the Company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others. Various modifications and delays to the U.S. tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. The ultimate impact of tariffs on the Company’s business remains uncertain. See Part II, Item 1A, “Risk Factors” of this Quarterly Report.
Industry Update
Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. In addition to the “Business and Risk Update” section included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, these factors include, but are not limited to:
•Significant changes in U.S trade policies, including the recently enacted and/or proposed new global trade tariffs
•Inflationary pressures, including logistics and labor
•Global supply chain disruptions
•Cost of fuel
•Miles driven
•Unemployment rates
•Interest rates
•Consumer confidence and purchasing power
•Competition
•Changes in new car sales
•Economic and geopolitical uncertainty
•Foreign currency exchange volatility
While these factors tend to fluctuate, the Company remains confident in the long-term growth prospects for the automotive parts industry.
Stores
The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the sixteen weeks ended April 19, 2025, 10 stores were opened and 513 were closed, resulting in a total of 4,285 stores as of the end of the first fiscal quarter compared with a total of 4,788 stores as of December 28, 2024. The significant reduction in stores in the first quarter of fiscal 2025 relates to actions taken under the Company’s restructuring and related activities. See Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Results of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
|
Change(1)
|
|
Basis Points |
($ in millions) |
April 19, 2025 |
|
April 20, 2024 |
|
|
Net sales |
$ |
2,583 |
|
|
100.0 |
% |
|
$ |
2,772 |
|
|
100.0 |
% |
|
$ |
(189) |
|
|
— |
|
Cost of sales |
1,474 |
|
|
57.1 |
|
|
1,568 |
|
|
56.6 |
|
|
94 |
|
|
50 |
|
Gross profit |
1,109 |
|
|
42.9 |
|
|
1,204 |
|
|
43.4 |
|
|
(95) |
|
|
(50) |
|
Selling, general and administrative expenses, exclusive of restructuring and related expenses |
1,122 |
|
|
43.4 |
|
|
1,151 |
|
|
41.5 |
|
|
29 |
|
|
(192) |
|
Restructuring and related expenses |
118 |
|
|
4.6 |
|
|
— |
|
|
— |
|
|
(118) |
|
|
(457) |
|
Selling, general and administrative expenses |
1,240 |
|
|
48.0 |
|
|
1,151 |
|
|
41.5 |
|
|
(89) |
|
|
(648) |
|
Operating (loss) income |
(131) |
|
|
(5.1) |
|
|
53 |
|
1.9 |
|
|
(184) |
|
|
(698) |
|
Interest expense |
(27) |
|
|
(1.0) |
|
|
(25) |
|
|
(0.9) |
|
|
(2) |
|
|
(14) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income, net |
27 |
|
|
1.1 |
|
|
1 |
|
|
— |
|
|
26 |
|
|
101 |
|
Income tax (benefit) expense |
(155) |
|
|
(6.0) |
|
|
12 |
|
|
0.4 |
|
|
167 |
|
|
643 |
|
Net income |
$ |
24 |
|
|
0.9 |
% |
|
$ |
17 |
|
|
0.6 |
% |
|
$ |
7 |
|
|
32 |
|
(1) Represents favorable (unfavorable) year over year change
Note: Sums may not equal totals due to rounding.
Net Sales
For the first quarter of fiscal 2025, net sales decreased 6.8% and comparable store sales declined 0.6% compared with the first quarter of fiscal 2024. The decline was driven by lower sales as a result of store closures executed under the 2024 Restructuring Plan during the first quarter of fiscal 2025.
The Company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Gross Profit
Gross profit for the first quarter of fiscal 2025 was $1,109 million, or 42.9% of net sales, compared with $1,204 million, or 43.4% of net sales, for the first quarter of fiscal 2024. The decrease in gross profit margin was due to lower margin liquidation sales associated with the 2024 Restructuring Plan. Total gross profit also decreased as a result of lower net sales driven by store closures executed under the 2024 Restructuring Plan.
Selling, General and Administrative Expenses, Exclusive of Restructuring and Related Expenses
Selling, general and administrative (SG&A) expenses, exclusive of restructuring and related expenses for the first quarter of fiscal 2025 were $1,122 million, or 43.4% of net sales, compared with $1,151 million, or 41.5% of net sales, for the first quarter of fiscal 2024. Overall SG&A expenses decreased year over year as a result of store closures executed under the 2024 Restructuring Plan. SG&A expenses as a percentage of net sales in the first quarter of fiscal 2024 benefited from a net gain on asset sales, see Note 7. Leases, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item1.
Restructuring and Related Expenses
Restructuring and related expenses for the first quarter of 2025 were $118 million, or 4.6% of net sales. The increase in expenses as compared to the same period in fiscal 2024, relates to the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024. The Company estimates that it will incur additional expenses of approximately $75 million to $100 million. These expenses primarily relate to lease terminations, professional services, and other exit costs to be incurred by the end of fiscal year 2025. See Note 3. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.
Other Income, Net
Other income, net increased as compared to the same period in fiscal 2024 due to higher interest income earned resulting from higher cash and cash equivalent balances held, driven by the proceeds received from the sale of the Worldpac business in the fourth quarter of fiscal 2024. Other income, net in the first quarter of fiscal 2025 also includes income recognized from the transition services (“TSA Services”) agreement with Worldpac that commenced in the fourth quarter of fiscal 2024.
Income Tax (Benefit) Expense
The Company’s provision for income taxes for the first quarter of 2025 was a benefit of $155 million compared with a expense of $12 million for the same period in 2024. The decrease in tax expense for the first quarter of 2025 was a result of lower income before taxes and a net discrete tax benefit of $126 million related to certain tax benefits associated with capital loss deductions.
The Company’s effective tax rate was a benefit of (118.3)% and an expense of 41.4% for the sixteen weeks ended April 19, 2025 and April 20, 2024, respectively. The reduction in the effective tax rate compared to the same period in fiscal 2024 was due to a net discrete tax benefit of $126 million related to certain tax benefits associated with capital loss deductions.
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 the Company’s financial performance, enhance the overall understanding of the Company’s past performance and future prospects, and allow for greater transparency with respect to important metrics used by the Company’s management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by the Company’s management to evaluate its business and financial performance. The Company believes that these measures provide investors increased comparability of the Company’s core financial performance over multiple periods with other companies in the Company’s industry. The Company may make reference to certain financial measures not derived in accordance with GAAP within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report. Non-GAAP financial measures, including Adjusted Net (loss) income, Adjusted diluted (loss) Earnings Per Share (“Adjusted Diluted EPS”), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Sales, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating (loss) Income and Adjusted Operating (loss) Income Margin, should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing the Company’s 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 plan, inclusive of the Worldpac divestiture and (2) other significant expenses, 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 also 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.
•Impairment and write-down of long-lived assets: Expenses relating to the impairment of operating lease ROU assets and property and equipment, incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, depreciation of long-lived assets and 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 temporary labor, incremental depreciation, as a result of accelerating long-lived assets over a shorter useful life, 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 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.
The following table includes a reconciliation of this information to the most comparable GAAP measures (in millions):
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Sixteen Weeks Ended |
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|
Classification |
|
April 19, 2025 |
|
April 20, 2024 |
|
|
|
|
Net income from continuing operations (GAAP) |
|
|
$ |
24 |
|
|
$ |
17 |
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|
|
|
|
Selling, general and administrative adjustments: |
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|
|
|
|
Transformation expenses: |
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|
|
|
|
|
|
|
Restructuring and other related expenses (1) |
Restructuring |
|
63 |
|
|
— |
|
|
|
|
|
Impairment and write-down of long-lived assets (2) |
Restructuring |
|
45 |
|
|
— |
|
|
|
|
|
Distribution network optimization |
Restructuring |
|
3 |
|
|
— |
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|
|
|
|
Other expenses: |
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|
|
|
|
|
|
|
|
Other professional service fees |
Non-restructuring (5) |
|
4 |
|
|
1 |
|
|
|
|
|
Worldpac post transaction-related expenses |
Restructuring |
|
3 |
|
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|
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|
|
|
Executive turnover |
Restructuring |
|
4 |
|
|
|
|
|
|
|
Material weakness remediation |
Non-restructuring |
|
1 |
|
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2 |
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Other income adjustments: |
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TSA services |
|
|
(4) |
|
|
— |
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|
|
|
|
Provision for income taxes on adjustments (3) |
|
|
(30) |
|
|
— |
|
|
|
|
|
Other tax (benefit) expense adjustments (4) |
|
|
(126) |
|
|
— |
|
|
|
|
|
Adjusted net (loss) income (Non-GAAP) |
|
|
$ |
(13) |
|
|
$ |
20 |
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|
|
|
|
|
|
|
|
|
|
Diluted earnings per share from continuing operations (GAAP) |
|
|
$ |
0.40 |
|
|
$ |
0.29 |
|
|
|
|
|
Adjustments, net of tax |
|
|
(0.62) |
|
|
0.04 |
|
|
|
|
|
Adjusted diluted (loss) earnings per share (Non-GAAP) (6) |
|
|
$ |
(0.22) |
|
|
$ |
0.33 |
|
|
|
|
|
(1) Restructuring and other related expenses included $30 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan, $15 million of severance and other labor related costs, $7 million related to incremental reserves on loan guarantees and $11 million of other related expenses associated with closures, including the transfer of assets.
(2) The Company recorded impairment charges for ROU assets and property and equipment of $9 million, net of gains on sale, and incremental accelerated depreciation and amortization for property and equipment and ROU assets of $36 million.
(3) The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments.
(4) Income tax (benefit) expenses included a discrete non-recurring tax benefit associated with capital loss deductions effectuated in the first quarter of fiscal 2025. The benefit has been excluded from Non-GAAP results in order to provide a clearer understanding of ongoing Non-GAAP tax rate and after-tax earnings.
(5) Other professional service fees in fiscal 2024 were classified as restructuring and related expenses based on the underlying activity to which they related.
(6) Refer to the reconciliation of diluted weighted-average common shares outstanding (GAAP) to adjusted diluted weighted-average common shares outstanding (Non-GAAP) which is the denominator utilized to calculate adjusted diluted (loss) earnings per share (Non-GAAP). Adjusted diluted weighted-average common shares outstanding (Non-GAAP) excludes the dilutive impact of share-based awards as such shares are considered anti-dilutive in consideration of the Company’s Non-GAAP loss for the period.
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|
|
|
|
|
|
|
Reconciliation of Adjusted Diluted Weighted-Average Common Shares Outstanding |
|
|
|
Sixteen Weeks Ended |
(shares in millions) |
|
|
April 19, 2025 |
|
|
|
April 20, 2024 |
Diluted Weighted-Average Common Shares Outstanding (GAAP) |
|
|
60.2 |
|
|
|
|
59.8 |
|
Anti-dilutive impact of share-based awards |
|
|
0.4 |
|
|
|
|
— |
|
Adjusted Diluted Weighted-Average Common Shares Outstanding (Non-GAAP) |
|
|
59.8 |
|
|
|
|
59.8 |
|
Liquidity and Capital Resources
Overview
The Company’s principal sources of liquidity are cash and cash equivalents. The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, such as restructuring and asset optimization plans. In addition, cash is required to pay the Company’s dividend and to pay interest and principle on the Company’s long-term debt when due. The following tables present selected financial information related to the Company’s liquidity (in millions):
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|
|
April 19, 2025 |
|
December 28, 2024 |
|
Change |
Cash and cash equivalents |
|
$ |
1,672 |
|
|
$ |
1,869 |
|
|
$ |
(197) |
|
In addition to cash and cash equivalents presented above, as of April 19, 2025, the Company also maintained access to $885 million in undrawn capacity through the Company’s revolving credit facility (the “2021 Credit Agreement”) as further described below. The Company also maintains certain supplier finance programs. See Note 9. Supplier Finance Programs, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
The decrease in cash and cash equivalents was primarily due to net cash used in operating activities of $156 million, primarily as a result of a decrease in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan, $27 million used for purchases of property and equipment, net of proceeds from sales, and the payment of $15 million in dividends.
The Company believes that its cash and cash equivalents and sources of liquidity will satisfy its working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future.
Analysis of Cash Flows
In the fourth quarter of fiscal 2024, the Company completed the sale of Worldpac. As a result, the Company classified the results of operations and cash flows of Worldpac as discontinued operations in its condensed consolidated statements of operations and condensed consolidated statements of cash flows for prior periods presented. The Company’s cash flows from operating, investing and financing activities were as follows (in millions):
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|
|
|
|
|
|
|
|
|
Sixteen Weeks Ended |
(in millions) |
April 19, 2025 |
|
April 20, 2024 |
Net cash used in operating activities of continuing operations |
$ |
(156) |
|
|
$ |
(3) |
|
Net cash provided by operating activities of discontinued operations |
— |
|
|
6 |
|
Net cash used in investing activities of continuing operations |
(27) |
|
|
(36) |
|
Net cash used in investing activities of discontinued operations |
— |
|
|
(3) |
|
Net cash used in financing activities |
(17) |
|
|
(25) |
|
Effect of exchange rate changes on cash |
3 |
|
|
9 |
|
Net decrease in cash and cash equivalents |
$ |
(197) |
|
|
$ |
(52) |
|
Operating Activities
For the sixteen weeks ended April 19, 2025, cash used in operating activities decreased by $153 million compared with the same period of prior year. The decrease as compared to the comparative period was primarily driven by a decrease in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan.
Investing Activities
For the sixteen weeks ended April 19, 2025, cash flows used in investing activities decreased by $9 million to $27 million as compared with the first quarter of fiscal 2024. The decrease in cash used in investing activities was attributable to lower spend on property and equipment and higher proceeds from the sale of property and equipment.
Financing Activities
For the sixteen weeks ended April 19, 2025, cash flows used in financing activities was $17 million, a decrease of $8 million as compared with the first quarter of fiscal 2024. The decrease in cash used in financing activities was due to the noncontrolling interest purchase payments in the first quarter of fiscal 2024 with no such payments made in the first quarter of fiscal 2025.
The Company’s 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 the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Board of Directors. In addition, Amendment No. 5 to the 2021 Credit Agreement prevents the Company from increasing the amount of the Company’s cash dividends.
Restructuring Activities
On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan, which was designed to improve the Company’s profitability and growth potential and streamline its operations. In fiscal 2023, the Company also announced a strategic and operational plan to streamline the Company’s supply chain by configuring a multi-echelon supply chain by leveraging current asset and operating fewer, more productive distribution centers that focus on replenishment and move more parts closer to the customer. The Company estimates that it will incur additional expenses of approximately $75 million to $100 million including $50 million to $75 million of cash expenses primarily composed of lease terminations and other exit expenses and professional services, by the end of fiscal year 2025. For further information, see Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Long-Term Debt
As of April 19, 2025 the Company had outstanding long-term debt totaling $1,790 million, of which $299 million is classified as short-term related to the 5.90% Senior Unsecured Notes due March 9, 2026. For further details, see Note 6. Long-term Debt and Fair Value of Financial Instruments, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Credit Facilities
As of April 19, 2025 and December 28, 2024, the Company had no outstanding borrowings under the 2021 Credit Agreement. As of April 19, 2025 the Company had $885 million of borrowing availability and $115 million letters of credit outstanding under the 2021 Credit Agreement. As of December 28, 2024, the Company had $1 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement. The Company is required to maintain certain financial covenants related to the 2021 Credit Agreement and as of April 19, 2025, the Company was in compliance with such financial covenants. On February 25, 2025, the Company entered into Amendment No. 6 (“Amendment No. 6”) to the 2021 Credit Agreement.
As of April 19, 2025 and December 28, 2024, the Company also had $90 million and $91 million, respectively, of bilateral letters of credit issued separately from the 2021 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 the Company’s self-insurance policies.
For further details, see Note 6. Long-term Debt and Fair Value of Financial Instruments, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
As of April 19, 2025, the Company had a credit rating from S&P of BB+ and from Moody’s Investor Service of Ba1. As of April 19, 2025, the outlooks by Standard & Poor’s and Moody’s on the Company’s credit rating were negative and stable, respectively. The current pricing grid used to determine the Company’s borrowing rate under the Credit Agreement is based on the Company’s credit ratings. A downgrade in the Company’s credit ratings could occur if its business operations deteriorate, its leverage increases or if available liquidity becomes insufficient to maintain operations. If the Company’s credit ratings decline, the interest rate on outstanding balances may increase, the 2021 Credit Agreement would become securitized pursuant to its terms and the Company’s access to additional financing on favorable terms may be limited. A decline in credit ratings or perceived creditworthiness, among other factors, may impact participation in supplier finance programs, which in turn could shorten payable terms, result in an increase in working capital requirements or otherwise negatively impact capital resources, potentially materially. See Note 9. Supplier Finance Programs, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
Additional Capital Requirements
Expected working and other capital requirements, including Contractual and Off-Balance Sheet Obligations are described in the Company’s 2024 Annual Report on Form 10-K in “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of April 19, 2025, other than for the changes disclosed in the “Notes to Condensed Consolidated Financial Statements”, and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to the Company’s expected working and other capital requirements described in the Company’s 2024 Annual Report on Form 10-K.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in the Company’s exposure to market risk since December 28, 2024. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2024 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 Exchange Act) are management’s controls and other procedures that are designed to ensure that information required to be disclosed by management in the Company’s reports that are filed or submitted 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 management, including the Company’s 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 may vary over time.
Management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures as of April 19, 2025. Based on this evaluation, the principal executive officer and the principal financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.
Changes in Internal Control Over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the first quarter ended April 19, 2025, that has materially affected or is reasonably likely to materially affect its internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
PART II. OTHER INFORMATION
None.
ITEM 1. LEGAL PROCEEDINGS
Information regarding certain legal proceedings is provided in this Quarterly Report. See Note 10. Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.
ITEM 1A.RISK FACTORS
The Company’s future business, operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, which could adversely affect the Company’s business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of the Company’s common stock. Except for the risk factor set forth below, there have been no material changes to the Company’s risk factors since the 2024 Form 10-K.
An unstable global economic and geopolitical landscape increases uncertainty about key areas of doing business internationally and may have a negative impact on our business.
During the first quarter of fiscal 2025, new global trade tariffs were announced on imports to the U.S., including additional tariffs on various countries from which the Company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other measures. Various modifications and delays to the U.S. tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. Additionally, the current administration has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, enforcement priorities, sanctions, treaties and tariffs. Significant uncertainty continues to exist about the future economic and political relationship between the U.S. and other countries. The ultimate impact of tariffs on the Company’s business will depend on several factors, including whether additional or incremental U.S. tariffs or other measures are announced, revised, or rescinded, to what extent other countries implement tariffs or other measures in response, and the overall magnitude and duration of these items. These developments, or the perception that any of them could occur, may have a material effect on global economic conditions, the stability of global financial markets, or global trade, and may impact the Company’s product cost, pricing, or competitive conditions, disrupt supply chains, impact the broader macroeconomic environment and consumer sentiment or otherwise negatively impact the Company’s business, financial condition and results of operations.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth the information with respect to repurchases of the Company’s common stock for the quarter ended April 19, 2025:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Shares Purchased (1) |
|
Average Price Paid per Share (1) |
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) |
December 29, 2024 to January 25, 2025 |
|
144 |
|
|
$ |
44.14 |
|
|
— |
|
|
$ |
947 |
|
January 26, 2025 to February 22, 2025 |
|
74 |
|
|
$ |
46.41 |
|
|
— |
|
|
$ |
947 |
|
February 23, 2025 to March 22, 2025 |
|
60,127 |
|
|
$ |
36.65 |
|
|
— |
|
|
$ |
947 |
|
March 23, 2025 to April 19, 2025 |
|
228 |
|
|
$ |
37.50 |
|
|
— |
|
|
$ |
947 |
|
Total |
|
60,573 |
|
|
$ |
36.69 |
|
|
— |
|
|
|
(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 $2 million, or an average price of $36.69 per share, during the first quarter of 2025.
Dividend Restrictions
In accordance with Amendment No. 5 to the 2021 Credit Agreement, the Company is restricted from increasing the amount of the Company’s cash dividends. See “Liquidity and Capital Resources” within Part II, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
ITEM 5. OTHER INFORMATION
During the first quarter of 2025, no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company’s officers or directors as each term is defined in Item 408 of Regulation S-K.
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EXHIBIT INDEX |
Incorporated by Reference |
Filed |
|
Exhibit No. |
Exhibit Description |
Form |
Exhibit |
Filing Date |
Herewith |
|
|
|
10-Q |
3.2 |
8/22/2024 |
|
|
|
|
10-Q |
3.1 |
8/18/2020 |
|
|
|
|
8-K |
10.1 |
2/25/2025 |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
X |
|
|
|
10-Q |
22.1 |
4/20/2024 |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
X |
|
|
|
|
|
|
X |
|
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. |
|
|
|
X |
|
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
|
|
|
X |
|
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
|
|
|
X |
|
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
|
|
|
X |
|
101.LAB |
Inline XBRL Taxonomy Extension Labels Linkbase Document. |
|
|
|
X |
|
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
|
|
|
X |
|
104.1 |
Cover Page Interactive Data file (Embedded within the Inline XBRL Documents and Included in Exhibit). |
|
|
|
X |
|
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.
|
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|
|
ADVANCE AUTO PARTS, INC. |
|
|
|
Date: May 22, 2025 |
|
/s/ Ryan P. Grimsland |
|
|
Ryan P. Grimsland Executive Vice President, Chief Financial Officer |
EX-10.2
2
aap_exhibit102x4192025.htm
EX-10.2
Document
Advance Auto Parts, Inc.
2025 Performance-Based Restricted Stock Unit Award Agreement
This certifies that Advance Auto Parts, Inc. (the “Company”) has granted to <Participant Name> (the “Participant”) this award of Performance-Based Restricted Stock Units (this “Award”) and the Participant acknowledges and agrees that this Award and the opportunity to vest in the Performance-Based Restricted Stock Units (the “PSUs”) is sufficient consideration for the restrictive covenants set forth in this Performance-Based Restricted Stock Unit Award Agreement (this “Agreement”). This Award represents the right to receive a like number of shares (“Shares”) of Advance Auto Parts, Inc. Common Stock, $.0001 par value per share (the “Common Stock”), as indicated in the terms outlined below, subject to certain restrictions and on the terms and conditions contained in this Agreement and the Advance Auto Parts, Inc. 2023 Omnibus Incentive Compensation Plan (the “Plan”). In the event of any conflict between the terms of the Plan and this Agreement, the terms of the Plan shall govern. Any terms not defined herein shall have the meaning set forth in the Plan.
1.Grant of PSUs: As specified below, on the Award Date, the following Award of PSUs (at target level) has been granted to the Participant:
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|
|
|
Award Date |
Number of PSUs Granted (at target level) |
Award Date |
Number of PSUs Granted |
2. Vesting: Subject to the remaining provisions of this Agreement:
The Participant’s PSUs may vest, in an amount up to the maximum vesting PSUs (defined below) on the Performance Vesting Date (defined below) subject to Participant’s continued employment or other association with the Company through such date and except as otherwise provided in Section 3 of this Agreement. The number of PSUs that may vest will be determined in accordance with the following rules, subject to certification by the Committee of the Company’s performance based on three-year average Comparable Store Sales, Fiscal 2027 Adjusted EPS and Relative Total Shareholder Return modifier (“Relative TSR”) for the applicable Performance Period, each as defined in this section 2. For Comparable Stores Sales and Fiscal 2027 Adjusted EPS, the applicable Performance Period shall be the 2025 through 2027 fiscal years, and for Relative TSR modifier the applicable Performance Period shall be the three-year period commencing on fiscal years 2025 through 2027.
a.A designated portion of the Participant’s PSUs may vest based upon the Company’s average annual Comparable Store Sales growth over the applicable Performance Period, calculated in a manner consistent with the Company’s current Comparable Store Sales policy, according to the schedule established by the Committee as shown in Exhibit 1 to this Agreement. If the Company’s achieves target level performance, the payout amount shall be the Number of Shares to Vest (at Target Level) listed in this Section 2. Payout amounts based on performance results between payout levels as shown in Exhibit 1 will be determined using straight line interpolation between specified points of performance. If the Company’s average annual Comparable Stores Sales growth over the applicable Performance Period is less than the threshold level of Comparable Store Sales growth set forth in Exhibit 1 to this Agreement, no PSUs based on Comparable Store Sales growth will vest.
b.A designated portion of the Participants PSUs may vest based on the Company’s Fiscal 2027Adjusted EPS performance during the applicable Performance Period, according to the schedule established by the Committee as shown in Exhibit 1 to this Agreement. If the Company achieves target level performance, the payout amount shall be the Number of Shares to Vest (at Target Level) listed in this Section 2. Payout amounts based on performance results between payout levels as shown in Exhibit 1 will be determined using straight line interpolation between specified points of performance. If the Company’s Fiscal 2027Adjusted EPS performance over the applicable Performance Period is less than the threshold level of Fiscal 2027Adjusted EPS set forth in Exhibit 1 to this Agreement, no PSUs based on the Company’s Fiscal 2027 Adjusted EPS will vest.
c.Any vesting PSUs based on the aforementioned criteria of the Participant’s PSUs will be modified based upon the Company’s Relative TSR Modifier for the applicable Performance Period, relative to the S&P 1500 Specialty Retail Index. Payout amounts based on performance results can be adjusted plus or minus by 25% depending on performance against the Relative TSR target as set forth on Exhibit 1 to this Agreement.
The Participant’s “maximum vesting PSUs” is 300% of the number of PSUs indicated above in the box labeled “Number of PSUs Granted (at target level).”
3. Termination of Service: If, prior to the Performance Vesting Date, the Participant’s employment or other association with the Company and its affiliates ends for any reason, the Participant’s rights to unvested PSUs shall be immediately and irrevocably forfeited and the unvested Shares canceled and neither the Company nor any affiliate shall have any further obligations to the Participant under this Agreement. The foregoing notwithstanding, the following exceptions to the forfeiture of unvested PSUs apply:
a.Retirement: If termination of employment or other affiliation is on account of Retirement (as defined below), then the Participant’s PSUs will vest on the Performance Vesting Date on a pro-rata basis for the number of full months worked during the applicable Performance Period and based on the actual level of achievement of the performance criteria outlined in this Agreement. “Retirement” is defined as termination of employment with the Company following attainment of the following minimum age and tenure requirements:
1. Age: 55 years of age; AND
2. Tenure: 10 years of service, provided further that in the event the Participant came to be employed by the Company in conjunction with or as a result of a merger with or acquisition by the Company and received any service credit as a result of previous employment, the last three consecutive years of service must occur following the effective date of such merger or acquisition.
3. If, after termination of Participant’s employment or other association with the Company on account of Retirement and prior to the third anniversary of the Award Date, Participant is employed in any capacity by Amazon Auto, AutoZone, Inc., O’Reilly Automotive, Inc. Genuine Parts Company and/or NAPA Auto Parts, or any aftermarket automotive parts distributor owned or operated by Icahn Automotive Group, LLC (including, but not limited to, Pep Boys and Auto Plus), any PSUs that have not vested as of the date of such employment shall be immediately and irrevocably forfeited.
b. Disability: If termination of employment or other association with the Company is on account of Participant’s Disability, then the Participant’s PSUs will vest on the Performance Vesting Date on a pro-rata basis for the number of full months worked during the applicable Performance Period and based on the actual level of achievement of the performance criteria set forth in this Agreement. For purposes of this Agreement, “Disability” is defined as having become disabled within the meaning of Section 22 (e)(3) of the Code or, if applicable, as defined in your Employment Agreement or Loyalty Agreement with the Company in effect as of the Award Date.
c. Death: If termination of employment or other association with the Company is on account of the Participant’s death, then PSUs will vest on the Performance Vesting Date on a pro-rata basis for the number of full months worked during the applicable Performance Period and based on the actual level of achievement of the performance criteria set forth in this Agreement.
d. Termination by the Company other than for Due Cause or Resignation for Good Reason:
i. For SVPs: If Participant’s employment or other association with the Company is involuntarily terminated prior to the Performance Vesting Date by the Company other than for “Due Cause,” as that term is defined in Participant’s Loyalty Agreement, the PSUs will vest on the Performance Vesting Date on a pro-rata basis for the number of full months worked during the applicable Performance Period and in accordance with the performance criteria set forth in this Agreement.
ii. For CEO/EVPs: If Participant’s employment or other association with the Company is involuntarily terminated by the Company other than for “Due Cause” or by Participant for “Good Reason”, as those terms are defined in Participant’s Employment Agreement, prior to the Performance Vesting Date, the PSUs will vest on the Performance Vesting Date on a pro-rata basis for the number of full months worked during the applicable Performance Period and in accordance with the performance criteria set forth in this Agreement.
4. Change of Control: Upon a Change of Control, the Company will determine the number of PSUs that are earned based on the actual level of achievement of the performance criteria outlined in this Agreement through the Change of Control date and any portion of the PSUs not earned will be forfeited. Following this determination, the earned PSUs will vest based on the Participant’s continued service with the Company through the original Performance Vesting Date in the event the Company’s corporate successor assumes, converts or replaces the Award. Any portion of the Participant’s earned PSUs (as determined pursuant to this Section 4) that have not yet vested will vest immediately upon:
a.the Change of Control date in the event the Company’s successor or its affiliate does not assume, convert, or replace the Award; or
b.the termination of the Participant’s employment or other association with the Company or its successor in the event the Award continues or the Company’s successor assumes, converts or replaces the Award, and the Participant’s employment or other association with the Company or its successor is terminated by the Company without “Due Cause,” as that term is defined in the Participant’s Loyalty Agreement, within 24 months of the Change of Control, or, if applicable, by the Company without “Due Cause” or by the Participant for “Good Reason” as those terms are defined in the Participant’s Employment Agreement, within 24 months following the Change of Control date.
5. Non-Transferability of PSUs and DSUs: In the case of the DSUs described in Section 2 of this Award, until Shares are issued after the mandatory holding period has ended pursuant to this Agreement, the PSUs or DSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer unvested PSUs or DSUs for which the mandatory holding period has not ended, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber PSUs or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the PSUs shall be forfeited by the transferee and all of the transferee’s rights to such PSUs shall immediately terminate without any payment or consideration by the Company. The Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise rights to receive any property distributable with respect to DSUs upon the Participant’s death.
6. No Rights as a Stockholder; Dividend Equivalents: The Participant shall have no rights of a stockholder with respect to the Shares of Common Stock underlying the PSUs unless and until the date on which the Shares of Common Stock are issued in accordance with Section 7 of this Agreement. Solely with respect to PSUs that vest, you will be entitled to receive Dividend Equivalents to the extent that dividends are declared and paid on the Common Stock of the Company during the Performance Period. These Dividend Equivalents will be paid in cash as soon as practicable following the determination of the number of PSUs that vest, and in no case later than the end of the calendar year in which this determination is made by the Committee or, if later, the 15th day of the third month following the date of this determination. In addition, with respect to PSUs that are converted to DSUs as set forth in Section 2 of this Agreement, during the holding period you will be entitled to receive Dividend Equivalents to the extent that dividends are declared and paid on the Common Stock of the Company during such period. The Company shall pay currently (and in no case later than the end of the calendar year in which the dividend was paid to the holders of the Common Stock or, if later, the 15th day of the third month following the date the dividend is paid to holders of Common Stock), in cash, an amount equal to the Dividend Equivalents with respect to Participant’s DSUs. Any Dividend Equivalent described in this paragraph shall be paid, if at all, without interest or other earnings. Except as may be provided under Section 5 of the Plan, the Company will make no adjustment for dividends (ordinary or extraordinary and whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the Performance Vesting Date of a PSU.
7. Issuing Shares: Upon the expiration of the holding period for DSUs pursuant to Section 2 of this Agreement and payment of the Applicable Taxes pursuant to Section 11 below, the Company shall cause the Shares of Common Stock to be issued in book-entry form, registered in the Participant’s name. Payment shall be made within thirty days of the expiration of the holding period for DSUs pursuant to Section 2, but not later than March 15, 2027.
8. Notices: Except as otherwise provided herein, all notices, requests, demands and other communications under this Award shall be in writing, and if by telecopy, shall be deemed to have been validly served, given or delivered when sent, or if by personal delivery or messenger or courier service, shall be deemed to have been validly served, given or delivered upon actual delivery (but in no event may notice be given by deposit in the United States mail), at the following addresses, telephone and facsimile numbers (or such other address(es), telephone and facsimile numbers a party may designate for itself by like notice):
a.If to the Company: Advance Auto Parts, Inc. located at 4200 Six Forks Road, Raleigh, NC, 27609, Attention: General Counsel or by telephone at (540) 561-1173 or telecopy at (540) 561-1448; and
b. If to you, then to your home address on record at Advance Auto Parts or your business address at Advance Auto Parts.
9. Restrictive Covenants. Except as may be prohibited by law, all Participants agree as follows:
a.Non-Competition. Participant acknowledges and agrees that the Company is engaged in a highly competitive business, and that by virtue of Participant’s position and responsibilities as an employee or consultant of the Company and Participant’s access to Confidential Information, engaging in a business that is directly competitive with the Company will cause it great and irreparable harm. Accordingly, Participant agrees and covenants that during the Restricted Period, Participant shall not, on his/her own behalf or on another’s behalf, (a) accept employment by or provide services for Amazon Auto, AutoZone Inc., O’Reilly Automotive, Inc., Genuine Parts Company, NAPA Auto Parts, Fisher Auto Parts or Parts Depot, Inc. and/or any aftermarket automotive parts distributor owned or operated by Icahn Automotive Group, LLC (including, but not limited to, Pep Boys and Auto Plus) (any of the foregoing, a “Restricted Company”) in any capacity, role or position with substantially the same or similar duties as Participant performed during Participant’s employment, service, or association with the Company; (b) provide services, including consulting or contractor services, for or on behalf of a Restricted Company which are the same or substantially similar as the duties Participant performed during Participant’s last two (2) years of employment, service, or association with the Company; or (c) otherwise provide services, including consulting or contractor services, which are the same as, substantially similar to, or an adequate substitute for the duties Participant performed during Participant’s employment with the Company or which would involve services or prospective services provided by or researched by the Company about which Participant acquired Confidential Information, which would be directly competitive with the Company. Participant understands that the business of the Company and Participant’s responsibilities on behalf of the Company have been nationwide and companywide in scope. Accordingly, Participant agrees that this restriction will apply in those areas within the United States, including the United States’ territories and possessions (including, but not limited to, Puerto Rico and the U.S. Virgin Islands), as well as Canada, including its provinces, territories and possessions, within which the Participant was assigned or with respect to which Participant had responsibility during the last two (2) years of Participant’s employment with the Company.
b. Non-Interference. Participant further agrees and covenants that during the Restricted Period, Participant shall not, without the prior written consent of the Company, directly or through others, either on behalf of Participant or any other person or entity, Interfere with the Company.
For purposes of this Agreement, “Interfere” shall mean (a) to solicit, entice, persuade, induce, influence or attempt to influence, directly or through others, suppliers or prospective suppliers, employees, agents or independent contractors of the Company to restrict, reduce, sever or otherwise alter their relationship with the Company for purposes that are competitive with the Company; or (b) to hire on the Participant’s own behalf or on behalf of any other person or entity, directly or through others, any current or former employee or independent contractor of the Company. For purposes of this Agreement, this provision shall only apply to those suppliers or prospective suppliers, employees, agents or independent contractors of the Company with whom Participant had material contact during the last two (2) years of Participant’s employment with the Company or about whom Participant had access to Confidential Information during the last two (2) years of Participant’s employment with the Company.
For purposes of this Agreement, “Interfere” shall also mean (a) to solicit, entice, persuade, induce, influence or attempt to influence, directly or through others, customers or prospective customers of the Company to restrict, reduce, sever or otherwise alter their relationship with the Company for purposes that are competitive with the Company; or (b) whether as a direct solicitor or provider of such services, or in a management or supervisory capacity over others who solicit or provide such services, to solicit or provide services that fall within the definition of Restricted Activities as defined below to any customer of the Company.
For purposes of this Agreement, this provision shall apply only to those customers or prospective customers with whom Participant had material contact during the last two (2) years of Participant’s employment with the Company or about whom Participant had access to Confidential Information during the last two (2) years of Participant’s employment with the Company.
For purposes of this Agreement, “Restricted Activities” shall mean (1) the retail, commercial and/or wholesale sale, rental, and/or distribution of parts, accessories, supplies, equipment and/or maintenance items for automobiles, light and heavy duty trucks (both commercial and noncommercial), off-road equipment, buses, recreational vehicles, and/or agricultural equipment, and/or (2) the provision of any automotive-related service (including, but not limited to, shop management, inventory control, and/or vehicle repair software or marketing) to auto repair shops, garages, and/or specialty-service providers (e.g. any business that specializes in automotive oil changes, tires, mufflers, brakes, transmission, and/or body work).
c. Remedies. Participant agrees that any breach by Participant of the covenants contained in this Section 9 will result in irreparable injury to Company, for which money damages could not adequately compensate the Company. Therefore, the Company shall have the right (in addition to any other rights and remedies which it may have at law or in equity) to seek to enforce this Section 9 and any of its provisions by injunction, specific performance, or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach, or threatened breach, of the covenants set forth in this Section 9. Participant agrees that in any action in which the Company seeks injunction, specific performance, or other equitable relief, Participant will not assert or contend that any of the provisions of this Section 9 are unreasonable or otherwise unenforceable.
In addition, if Participant breaches any of the covenants in this Section 9, Participant shall return to the Company any Shares of Common Stock received by Participant or Participant’s personal representative that vested on or after any such violation and pay to the Company in cash the amount of any proceeds received by Participant or Participant’s personal representative from the disposition or transfer of any such stock, and Participant’s unvested PSUs and DSUs shall be immediately and irrevocably forfeited.
d. Definitions. For purposes of this Section 9, the following terms are defined as follows:
i. “Confidential Information” means any proprietary information prepared or maintained in any format, including personnel information or data of the Company, technical data, trade secrets or know-how in which the Company or its Affiliates or related entities have an interest, including, but not limited to, business records, contracts, research, product or service plans, products, services, customer lists and customers (including, but not limited to, vendors to the Company or its Affiliates and related entities on whom Participant called, with whom Participant dealt or with whom Participant became acquainted during the term of Participant’s employment, service, or other association with the Company), pricing data, costs, markets, expansion plans, summaries, marketing and other business strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration or marketing, financial or other business information obtained by Participant or disclosed to Participant by the Company or its Affiliates or related entities or any other person or entity during the term of Participant’s employment, service, or other association with the Company or its Affiliates, either directly or through others, electronically, in writing, orally, by drawings, by observation of services, systems or other aspects of the business of the Company or its Affiliates or related entities or otherwise. Confidential Information does not include information that: (A) was available to the public prior to the time of disclosure; or (B) becomes available to the public through no act or omission of Participant. Participant acknowledges that the Confidential Information has been developed by the Company at significant expense and effort.
ii. For purpose of this Section 9, the definition of “Company” shall be limited to (a) Advance Stores Company, Incorporated and its subsidiaries; and (b) those related/affiliated companies: (i) for which Participant performed services during the last two (2) years of Participant’s employment with the Company; (ii) on behalf of which Participant had significant business-related contact or dealings during the last two (2) years of Participant’s employment with the Company, (iii) about which Participant had access to Confidential Information or Trade Secrets during the last two (2) years of Participant’s employment with the Company.
iii. “Restricted Period” shall mean the period of Participant’s employment, service, or other association with the Company and one (1) year period following termination thereof; provided, however, that the Restricted Period shall be tolled and shall not expire during any period in which Participant is in violation of this Section 9, and therefore the Restricted Period shall be extended for a period equal to the duration of Participant’s violation hereof so that the Company receives the Non-Competition and Non-Interference period to which Participant agreed herein.
10. Confidentiality: Due to the confidential information contained in this Agreement, including long-term performance measures, the Participant agrees not to disclose the terms of this Agreement to anyone other than the members of the Participant’s immediate family, Participant’s legal counsel, Participant’s accountant(s) and/or tax advisor(s) and/or Participant’s financial advisor(s), or as otherwise provided in Section 9 of this Agreement. Should the details of this Agreement be shared with the aforementioned, it shall be on a confidential basis.
11. Tax Matters:
a.The Company makes no representation or warranty as to the tax treatment of your receipt or vesting of the PSUs or upon your sale or other disposition of the Shares received upon vesting of your PSUs. You should rely on your own tax advisors for such advice. In order to comply with all applicable tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable income taxes, employment taxes, social insurance, social security, national insurance contribution, payroll taxes, contributions, levies, payment on account obligations or other amounts required to be collected, withheld or accounted for with respect to this Award (the “Applicable Taxes”), which are your sole and absolute responsibility, are withheld or collected from you at the time of vesting. The Company will inform you of alternative methods to settle any Applicable Taxes due prior to the first vesting date of your Award.
b.For the purposes of determining when Shares otherwise issuable on account of your termination of employment or other association with Company will be issued, “termination of employment” or words of similar import, as used in this Agreement, shall mean the date as of which the Company and you reasonably anticipate that no further services will be performed by you, and shall be construed as the date that you first incur a “separation from service” for purposes of Code Section 409A on or following termination of employment or other association with the Company. Furthermore, if you are a “specified employee” of a public company as determined pursuant to Code Section 409A as of your separation from service with the Company, any Shares otherwise issuable on account of your separation from service which constitute deferred compensation within the meaning of Code Section 409A and which are otherwise payable during the first six months following your separation from service shall be issued to you on the earlier of (1) the date of your death and (2) the first business day of the seventh calendar month immediately following the month in which your separation from service occurs, to the extent such delay would be required to comply with Code Section 409A.
12. Clawback: The Participant acknowledges and agrees that this Award is subject to any applicable Clawback Policy and may be subject to Clawback pursuant to that policy or as a result of breach of any restrictive covenant or engagement in any activity that constitutes Cause under a loyalty or employment agreement.
a. To the extent permitted by applicable law, including without limitation Code Section 409A, this Award is subject to offset in the event that the Participant has an outstanding Clawback, recoupment or forfeiture obligation to the Company under the terms of an applicable Clawback Policy, in the event that Participant breaches any restrictive covenant obligation or in the event that Participant engagement in activity that constitutes Cause under a loyalty or employment agreement. In the event of a Clawback, recoupment or forfeiture event, the amount required to be clawed back, recouped or forfeited pursuant to such policy, shall be deemed not to have been earned under the terms of the Plan, and the Company is entitled to recover from the Participant the amount specified to be clawed back, recouped, or forfeited (which amount, as applicable, shall be deemed an advance that remained subject to the Participant satisfying all eligibility conditions for earning this Award).
b. If the Board of Directors or the Committee, as applicable, determines that Clawback is required or appropriate, in addition to the recoupment methods available under the terms of any applicable Clawback Policy, to the extent permitted by applicable law, the Company shall, as determined by the Committee in its sole discretion, take any of the following actions: (i) seek repayment from the Participant of any amounts or awards distributed under the Plan; (ii) reduce (subject to applicable law and the terms and conditions of the Plan or any other applicable plan, program, policy or arrangement) the amount that would otherwise be awarded or payable to the Participant under the Award, the Plan or any other compensatory plan, program, or arrangement maintained by the Company; (iii) withhold payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices; or (iv) by any combination of the foregoing. Any determination regarding the Participant’s conduct, and repayment or reduction under this provision, shall be within the sole discretion of the Committee and shall be final and binding on the Participant and the Company. The Participant, in consideration of the grant of the Award, and by the Participant’s execution of this Agreement, acknowledges the Participant’s understanding of this provision and hereby agrees to make and allow an immediate and complete repayment or reduction in accordance with this provision in the event of a call for repayment or other action by the Company or Committee to effect its terms with respect to the Participant, the Award and/or any other compensation described in this Agreement.
c. This Award is not considered earned, and the eligibility requirements with respect to this Award is not considered met, until all requirements of the Plan, this Agreement, and any Clawback Policy are met.
13. Miscellaneous:
a.This Award is made under the provisions of the Plan and shall be interpreted in a manner consistent with it. To the extent that any provision in this Agreement is inconsistent with the Plan, the provisions of the Plan shall control. The interpretation of the Committee (or the Committee’s successor) of any provision of the Plan, this Agreement, or the Award, and any determination with respect thereto or hereto by the Committee, shall be binding on all parties. Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and operated so that the payment of the benefits set forth herein shall either be exempt from the requirements of Code Section 409A or shall comply with the requirements of such provision; provided, however, that in no event shall the Company be liable to the Participant for or with respect to any taxes, penalties or interest which may be imposed upon the Participant pursuant to Code Section 409A. To the extent that any Award granted by the Company is subject to Code Section 409A, such Award shall be subject to the terms and conditions that comply with the requirements of Code Section 409A to avoid adverse tax consequences under Code Section 409A.
b.Nothing contained in this Agreement shall confer, intend to confer or imply any rights to an employment relationship or rights to a continued employment relationship with the Company or any Affiliate in your favor or limit the ability of the Company or an Affiliate, as the case may be, to terminate, with or without Cause, in its sole and absolute discretion, your employment relationship with the Company or such Affiliate, subject to the terms of any written employment agreement to which you are a party.
c.None of the Plan, this Agreement, or the Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and you or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to the Award, such right shall be no greater than the right of any unsecured creditor of the Company or any Affiliate.
d.The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
e.An original record of this Agreement and all the terms hereof, executed by the Company, is held on file by the Company. To the extent there is any conflict between the terms contained in this Agreement and the terms contained in the original held by the Company, the terms of the original held by the Company shall control.
f.If any provision in this Agreement is determined to be invalid, void or unenforceable by the decision of any court of competent jurisdiction, which determination is not appealed or appealable for any reason whatsoever, the provision in question shall not be deemed to affect or impair the validity or enforceability of any other provision of this Agreement and such invalid or unenforceable provision or portion thereof shall be severed from the remainder of this Agreement.
g.This Agreement is intended to be consistent with your Employment Agreement or Loyalty Agreement with the Company, if applicable, in effect on the Award Date first written above. To the extent that any provision of this Agreement is inconsistent with the terms of such agreement with the Company in effect as of the Award Date, the provisions of this Agreement shall control with respect to this Award.
h.This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf) or by any other electronic means intended to preserve the original appearance of a document, will have the same effect as physical delivery of a paper document bearing an original signature.
i.Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof and accepts the PSUs subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting of PSUs, settlement of DSUs, or disposition of the underlying Shares and the Participant has been advised to consult a tax advisor prior to such vesting, settlement or disposition.
j.Notwithstanding anything to the contrary herein, participants residing and/or working outside of the United States shall be subject to the Additional Terms and Conditions for Non-U.S. Participants attached hereto as Addendum A and to any Country-Specific Terms and Conditions attached hereto as Addendum B. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing or working or if the Participant relocates to one of the countries included in the Country-Specific Terms and Conditions after the grant of the Award, the special terms and conditions for such country will apply to the Participant to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Additional Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement and are incorporated herein by reference.
In Witness Whereof, this Award has been executed by the Company as of the date first above written.
ADVANCE AUTO PARTS, INC.
By:
/s/ Kristen Soler
Kristen Soler
Executive Vice President, Chief Human Resources Officer
Accepted and agreed, including specifically but without limitation as to the treatment of this Award in accordance with the terms of the Plan and this Award notwithstanding any terms of an Employment Agreement / Loyalty Agreement between the Company and the undersigned to the contrary:
By:
Electronic Signature Acceptance Date
Exhibit 1: Performance Vesting Criteria for Performance-Based RSUs
1. Fiscal 2027 Adjusted EPS: 3-Year Achievement
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Achievement |
Attainment Levels |
Payout |
Threshold |
60th Percentile Attainment |
35% of Target Shares to Vest |
Low Range |
90th Percentile Attainment |
90% of Target Shares to Vest |
Target |
100th Percentile Attainment |
100% of Target Shares to Vest |
Exceeding |
110th Percentile Attainment |
125% of Target Shares to Vest |
High Range |
120th Percentile Attainment |
200% of Target Shares to Vest |
Maximum |
140th Percentile Attainment |
300% of Target Shares to Vest |
•Results between specified points will be determined using straight line interpolation
•No payout will be due if results fall below 60th percentile attainment
2. 3 Year Average Comparable Store Sales: 3-Year Achievement
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Achievement |
Attainment Levels |
Payout |
Threshold |
0.0% Comp Sales |
60% of Target Shares to Vest |
Low Range |
1.0% Comp Sales |
80% of Target Shares to Vest |
Target |
2.0% Comp Sales |
100% of Target Shares to Vest |
Exceeding |
3.0% Comp Sales |
125% of Target Shares to Vest |
High Range |
4.0% Comp Sales |
200% of Target Shares to Vest |
Maximum |
5.0% Comp Sales |
300% of Target Shares to Vest |
•Results between specified points will be determined using straight line interpolation
•No payout will be due if 3 year Average Comparable Store Sales falls below 0%.
3. Relative Total Shareholder Return Modifier: 3-Year Relative Achievement
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Performance Level |
Payout Multiplier |
Below 25th Percentile vs Peers |
-25% |
25th – 74th Percentile vs. Peers |
0% |
75th Percentile and Above vs. Peers |
+25% |
•Shares subject to the multiplier will require a 1- year post-vesting holding period.
•Maximum payout for LTI capped at 300%
ADDENDUM A TO THE AGREEMENT
ADDITIONAL TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Addendum A includes additional terms and conditions that govern the Award granted to the Participant if the Participant works or resides outside the United States.
Capitalized terms used but not defined herein are defined in the Plan or the Agreement and have the meanings set forth therein.
1.Vesting. For purposes of the Agreement and notwithstanding Section 11(b) of the Agreement, the Participant’s employment or other association with the Company and its Affiliates shall be deemed to terminate on the date on which the Participant ceases to be actively employed by the Company or any of its Affiliates, which shall not be extended by any notice period, whether mandated or implied under local law during which the Participant is not actually employed (e.g., garden leave or similar leave) or during or for which the Participant receives pay in lieu of notice or severance pay. The Company shall have the sole discretion to determine when the Participant’s employment or other association with the Company and its Affiliates terminates for purposes of the Agreement without reference to any other agreement, written or oral, including the Participant’s contract of employment, if applicable.
2.No Acquired Right. The Participant acknowledges and agrees that:
a.The Plan is established voluntarily by the Company, the grant of awards under the Plan is made at the discretion of the Committee and the Plan may be modified, amended, suspended or terminated by the Company at any time. All decisions with respect to future awards, if any, will be at the sole discretion of the Committee.
b.The Award (and any similar awards the Company may in the future grant to the Participant, even if such awards are made repeatedly or regularly, and regardless of their amount) and the Shares acquired under the Plan (i) are wholly discretionary and occasional, are not a term or condition of employment and do not form part of a contract of employment, or any other working arrangement, between the Participant and the Company or any Affiliate; (ii) do not create any contractual entitlement to receive future awards or benefits in lieu thereof and are not intended to replace any pension rights or compensation, as applicable; and (iii) do not form part of normal or expected salary or remuneration for purposes of determining pension payments or any other purposes, including without limitation termination indemnities, severance, resignation, payment in lieu of notice, redundancy, end of service payments, bonuses, long-term service awards, pension or retirement benefits, welfare benefits or similar payments, if applicable, except as otherwise required by the applicable law of any governmental entity to whose jurisdiction the award is subject.
c.The Award and the Shares acquired under the Plan are not intended to replace any pension rights or compensation.
d.The Participant is voluntarily participating in the Plan.
e.In the event that the Participant is an employee and the Participant’s employer is not the Company, the grant of the Award and any similar awards the Company may grant in the future to the Participant will not be interpreted to form an employment contract or relationship with the Company and, furthermore, the grant of the Award and any similar awards the Company may grant in the future to the Participant will not be interpreted to form an employment contract with the Participant’s employer or any Affiliate.
f.The future value of the underlying Shares is unknown and cannot be predicted with certainty. Neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Award or the Shares.
g.The Participant shall have no rights, claim or entitlement to compensation or damages as a result of the Participant’s cessation of employment or other association for any reason whatsoever, whether or not later found to be invalid or in breach of contract or local labor law, insofar as these rights, claim or entitlement arise or may arise from the Participant’s ceasing to have rights under the Award as a result of such cessation or loss or diminution in value of the Award or any of the Shares issuable under the Award as a result of such cessation, and the Participant irrevocably releases the Participant’s employer, the Company and its Affiliates, as applicable, from any such rights, entitlement or claim that may arise. If, notwithstanding the foregoing, any such right or claim is found by a court of competent jurisdiction to have arisen, then, by signing the Agreement, the Participant shall be deemed to have irrevocably waived the Participant’s entitlement to pursue such rights or claim.
3.Data Protection (Jurisdictions other than European Union/European Economic Area/United Kingdom).
a.In order to facilitate the Participant’s participation in the Plan and the administration of the Award, it will be necessary for contractual and legal purposes for the Company (or its Affiliates or payroll administrators) to collect, hold and process certain personal information and sensitive personal information about the Participant (including, without limitation, the Participant’s name, home address, telephone number, date of birth, nationality, social insurance or other identification number and job title and details of the Award and other awards granted, cancelled, exercised, vested, unvested or outstanding and Shares held by the Participant). The Participant consents explicitly, willingly, and unambiguously to the Company (or its Affiliates or payroll administrators) collecting, holding and processing the Participant’s personal data and transferring this data (in electronic or other form) by and among, as applicable, the Participant’s employer, the Company and its Affiliates and other third parties (collectively, the “Data Recipients”) insofar as is reasonably necessary to implement, administer and manage the Plan and the Award. The Participant authorizes the Data Recipients to receive, possess, use, retain and transfer the data for the purposes of implementing, administering and managing the Plan and the Award. The Participant understands that the data may be transferred to a broker or third party as may be selected by the Company in the future which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the Data Recipients may be located in the United States or elsewhere, and that the recipient’s country may have a lower standard of data privacy laws and protections than the Participant’s country.
b.The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of the Plan and the Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current. The Participant understands that the data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan.
c.The Participant understands that the Participant may, at any time, make a request to view the Participant’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company and that these rights are subject to legal restrictions but acknowledges that without the use of such data it may not be practicable for the Company to administer the Participant’s involvement in the Plan in a timely fashion or at all and this may be detrimental to the Participant and may result in the possible exclusion of the Participant from continued participation with respect to the Award or any future awards under the Plan.
4.Foreign Asset/Account Reporting Requirements; Exchange Controls. Depending on the Participant’s country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the vesting of the PSUs, the acquisition, holding and/or transfer of Shares or cash resulting from participation in the Plan and/or the opening and maintaining of a brokerage or bank account in connection with the Plan. The Participant may be required to report such assets, accounts, account balances and values, and/or related transactions to the applicable authorities in the Participant’s country. The Participant may also be required to repatriate sale proceeds or other funds received as a result of his or her participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that the Participant is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting and other requirements. The Participant further understands that the Participant should consult the Participant’s personal tax and legal advisors, as applicable, on these matters.
5.Withholding; Responsibility for Taxes. This provision supplements Section 11 of the Agreement.
The Participant authorizes the Company and/or the Affiliate employing or retaining the Participant, or their respective agents, at their discretion, to satisfy the obligations with respect to all Applicable Taxes by withholding from any wages or other cash compensation paid to the Participant by the Company and/or Affiliate. The Participant acknowledges that regardless of any action the Company (or any Affiliate employing or retaining the Participant) takes with respect to any or all Applicable Taxes, the ultimate liability for all Applicable Taxes legally due by the Participant is and remains the Participant’s responsibility and that the Company (and its Affiliates) (i) make no representations or undertakings regarding the treatment of any Applicable Taxes in connection with any aspect of the Award, including the grant, vesting or settlement of the PSUs, and the subsequent sale of any Shares acquired at settlement; and (ii) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Applicable Taxes. Further, if the Participant is subject to taxation in more than one jurisdiction between the Award Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Participant’s employer (or former employer, as applicable) may be required to withhold or account for Applicable Taxes (if any) in more than one jurisdiction.
ADDENDUM B TO THE AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
These Country-Specific Terms and Conditions include additional terms and conditions that govern the Award granted to the Participant under the Plan if the Participant resides or works in one of the countries listed below. Capitalized terms used but not defined in these Country-Specific Terms and Conditions are defined in the Plan or the Agreement and have the meanings set forth therein.
Canada
Award Payable Only in Shares. Notwithstanding any discretion in the Plan or anything to the contrary in the Agreement, the grant of the Award does not provide Participant any right to receive a cash payment and the Award may be settled only in Shares. For greater certainty, notwithstanding Section 6 of the Agreement, the Participant shall not be entitled to, or credited with, a Dividend Equivalent paid or payable in cash.
Termination. Notwithstanding anything else in the Plan or the Agreement (including Addendum A), for purposes of the Agreement, the Participant’s employment or other association with the Company and its Affiliates shall be deemed to end on the date on which the Participant ceases to be actively employed by the Company and its Affiliates, which term “actively employed” shall include any minimum period for which the Participant is deemed to be actively employed for purposes of applicable employment standards legislation, and shall exclude any other period of non-working notice of termination or any notice period, whether mandated or implied under local law during which the Participant is not actually employed (e.g., garden leave or similar leave) or during or for which the Participant receives pay in lieu of notice or severance pay. The Company shall have the sole discretion to determine when the Participant is no longer actively employed for purposes of the Agreement without reference to any other agreement, written or oral, including the Participant’s contract of employment, if applicable.
Non-Competition for Non-Executive Ontario Employees. For any Participant’s whose employment by the Company and its Affiliates is governed by Ontario law, save and except any Participant who is an executive (as defined in section 67.2(5) of the Ontario Employment Standards Act, 2000), the “Restricted Period” is the period of time in which the Participant is an employee of the Employer.
Non-Solicitation. Section 9(b) of the Agreement is replaced as follows:
Participant further agrees and covenants that during the Restricted Period, Participant shall not, without the prior written consent of the Company, directly or indirectly (a) solicit, recruit or attempt to persuade any person to terminate such person’s employment, service, or other association with the Company or any Affiliate, whether or not such person is a full-time employee or service provider and whether or not such employment, service, or other association is pursuant to a written agreement or is at-will, or (b) solicit, contact or attempt to persuade any current or prospective customer of the Company or any Affiliate, as of or during the one (1) year period prior to Participant’s termination of employment or other association and with whom the Participant had contact with on behalf of the Company or any Affiliate or had Confidential Information in respect of, to alter such customer’s or prospective customer’s relationship with the Company or any Affiliate.
Definition of “Due Cause” for Ontario Employees. For any Participant whose employment with the Company and its Affiliates is governed by Ontario law, “Due Cause” shall, notwithstanding anything else in the Plan or the Participant’s Loyalty Agreement or Employment Agreement, mean conduct that constitutes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Participant’s employer.
Definition of “Due Cause” for Québec Employees. Notwithstanding anything else in the Plan or the Agreement or the Participant’s Loyalty Agreement or Employment Agreement, for the purposes of this Agreement, for any Participant whose employment with the Company and its Affiliates is governed by Québec laws, “Due Cause” shall include, without limitation: (i) any dishonest act such as theft, fraud, embezzlement or misappropriation of funds in connection with the Company and its Affiliates or its directors, shareholders, clients, suppliers, sub-contractors, consultants or employees or any attempt to commit such a dishonest act; (ii) any breach of the Participant’s duty of loyalty, any conflict of interest or behavior that adversely affects the legitimate interests of the Company and its Affiliates; (iii) non-compliance with the requirements or legitimate expectations of the Company and its Affiliates, including as a result of voluntary or involuntary underperformance or incompetence; (iv) a breach of the conditions of this Agreement; (v) the refusal to follow the reasonable guidelines or instructions of the Company and its Affiliates; (vi) a material breach of any policy, rule or procedure of the Company and its Affiliates; (vii) any other serious reason within the meaning of Article 2094 of the Civil code of Québec.
Definition of “Disability". Notwithstanding anything else in the Plan or the Agreement, for purposes of the Agreement, “Disability” shall mean, subject to compliance with applicable human rights legislation, having become disabled within the meaning of Section 22 (e)(3) of the Code or, if applicable, as defined in your Employment Agreement or Loyalty Agreement with the Company in effect as of the Award Date.
No Acquired Right. Section 2(g) of Addendum A is replaced as follows:
The Participant shall have no rights, claim or entitlement to compensation or damages as a result of the Participant’s cessation of employment or other association for any reason whatsoever, whether or not later found to be invalid or in breach of contract or local labor law, insofar as these rights, claim or entitlement arise or may arise from the Participant’s ceasing to have rights under the Award as a result of such cessation or loss or diminution in value of the Award or any of the Shares issuable under the Award as a result of such cessation, and, subject to applicable employment standards legislation, the Participant irrevocably releases the Participant’s employer, the Company and its Affiliates, as applicable, from any such rights, entitlement or claim that may arise. If, notwithstanding the foregoing, any such right or claim is found by a court of competent jurisdiction to have arisen, then, by signing the Agreement, the Participant shall be deemed to have irrevocably waived the Participant’s entitlement to pursue such rights or claim.
Securities Law Information. For the purposes of compliance with National Instrument 45-106 Prospectus Exemptions (and in Québec, Regulation 45-106 respecting Prospectus exemptions, collectively, “45-106”), the prospectus requirement does not apply to a distribution by an issuer in a security of its own issue with an employee, executive officer, director or consultant of the issuer or a related entity of the issuer, provided participation in the distribution is voluntary. Shares acquired under the Plan are subject to certain restrictions on resale imposed by Canadian provincial and territorial securities laws, as applicable. Notwithstanding any other provision of the Plan to the contrary, any transfer or resale of any shares acquired by the Participant pursuant to the Plan must be in accordance with the resale rules under applicable Canadian provincial and territorial securities laws, including (a) Ontario Securities Commission Rule 72-503 Distributions Outside Canada (“72-503”), if the Participant is a resident of the Province of Ontario; (b) National Instrument 45-102 Resale of Securities (and in Québec, Regulation 45-102 respecting Resale of securities, collectively “45-102”), if the Participant is a resident in the Provinces of British Columbia, New Brunswick, Nova Scotia, Québec, Prince Edward Island and Newfoundland; and (c) Alberta Securities Commission Rule 72-501 Distributions to Purchasers Outside Alberta (“72-501”), if the Participant is a resident of the Province of Alberta. In Ontario, the prospectus requirement does not apply to the first trade of shares issued in connection with the purchase rights, provided the conditions set forth in section 2.8 of 72-503 are satisfied. In British Columbia, New Brunswick, Nova Scotia, Québec, Prince Edward Island and Newfoundland, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the conditions set forth in section 2.14 of 45-102 are satisfied. In Alberta, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the conditions set forth in Section 10 of 72-501 are satisfied. In Manitoba, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the trade is not a “control distribution” as defined in section 1.1 of 45-102. The Shares acquired under the Plan may not be transferred or sold in Canada or to a Canadian resident other than in accordance with applicable provincial or territorial securities laws. The Participant is advised to consult his or her legal advisor prior to any resale of Shares.
Data Protection. Section 3 of Addendum A is replaced with paragraphs (a)-(c) below.
a.In order to facilitate the Participant’s participation in the Plan and the administration of the Award, it will be necessary for contractual and legal purposes for the Company (or its Affiliates or payroll administrators) to collect, hold and process certain personal data and sensitive personal information about the Participant (including, without limitation, the Participant’s name, home address, telephone number, date of birth, nationality, social insurance or other identification number and job title and details of the Award and other awards granted, cancelled, exercised, vested, unvested or outstanding and Shares held by the Participant). The Participant consents explicitly, willingly, and unambiguously to the Company (or its Affiliates or payroll administrators) collecting, holding and processing the Participant’s personal data and transferring this data (in electronic or other form, to the extent necessary) by and among, as applicable, the Participant’s employer, the Company and its Affiliates and any third party service provider assisting in the implementation, administration and management of the Plan, including legal, finance and accounting, stock plan administrators, information technology and human resources or similar consultants and advisors (“Third Party Service Providers”) (collectively, the “Data Recipients”) insofar as is reasonably necessary to implement, administer and manage the Plan and the Award. The Participant authorizes the Data Recipients to receive, possess, use, retain and transfer the data for the purposes of implementing, administering and managing the Plan and the Award. The Participant understands that the data may be transferred to a broker or Third Party Service Provider as may be selected by the Company in the future which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the Data Recipients may be located in the United States or elsewhere, and that the recipient’s country may have a lower standard of data privacy laws and protections than the Participant’s country. In connection therewith, it is possible that personal data may be disclosed to governments, courts or law enforcement or regulatory agencies in that other country in accordance with the laws of that country.
b. The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of the Plan and the Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current. The Participant understands that the data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. Internal access to data is strictly limited to those employees who have a need to know such data in the performance of their duties.
c. Subject to limitations under applicable law, the Participant understands that the Participant may, at any time, make a request to view the Participant’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company and that these rights are subject to legal restrictions but acknowledges that without the use of such data it may not be practicable for the Company to administer the Participant’s involvement in the Plan in a timely fashion or at all and this may be detrimental to the Participant and may result in the possible exclusion of the Participant from continued participation with respect to the Award or any future awards under the Plan.
Additional Provisions Applicable to Participants Resident in Quebec.
Language Consent. The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à la présente convention.
Data Protection. The following provision supplements the Data Privacy section above in this Addendum B:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information, including Data, from all personnel, professional or not, involved in the administration and operation of the Plan.
The Participant further authorizes the Company and its Subsidiaries and the Committee, to disclose and discuss the Plan with their advisors, which may involve the disclosure of Data, to the extent necessary for the administration and operation of the Plan. The Participant further authorizes the Company and any Subsidiary to record such information and to keep such information in the Participant’s employee file.
India
Exchange Control Notification
Proceeds from the sale of Shares must be remitted to India during a designated period in accordance with applicable exchange control and other requirements. The Participant should consult the Participant’s advisor with respect to such requirements.
Taiwan
Securities Law Information
The Shares are not and will not be registered in Taiwan and therefore the Shares may not be offered to the public in Taiwan. Nothing in this document should be construed as the making of a public offer of securities in Taiwan.
EX-10.3
3
aap_exhibit103x4192025.htm
EX-10.3
Document
Advance Auto Parts, Inc.
2025 Time-Based Restricted Stock Unit Award Agreement
This certifies that Advance Auto Parts, Inc. (the “Company”) has granted to <Participant Name> (the “Participant”) this award of Restricted Stock Units (this “Award”) and the Participant acknowledges and agrees that this Award and the opportunity to vest in the Restricted Stock Units (“RSUs”) is sufficient consideration for the restrictive covenants set forth in this Time-Based Restricted Stock Unit Award Agreement (this “Agreement”) . This Award represents the right to receive a like number of shares (“Shares”) of Advance Auto Parts, Inc. Common Stock, $.0001 par value per share (the “Common Stock”), as indicated in the terms outlined below, subject to certain restrictions and on the terms and conditions contained in this Agreement and the Advance Auto Parts, Inc. 2023 Omnibus Incentive Compensation Plan (the “Plan”). In the event of any conflict between the terms of the Plan and this Agreement, the terms of the Plan shall govern. Any terms not defined herein shall have the meaning set forth in the Plan.
1. Grant of RSUs: The following Award has hereby been granted to the Participant:
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Award Date |
Number of RSUs Granted |
Award Date |
Number of RSUs Granted |
2. Vesting Schedule: Subject to the remaining provisions of this Award, the time-based RSUs shall vest in approximately equal one-third installments on each of the first three anniversaries of the Award Date, commencing on the first anniversary of the Award Date and becoming fully vested on the third anniversary of the Award Date if the Participant remains continuously employed by the Company until each respective vesting date.
Vesting Date / # of shares vested
3. Termination of Service: If, prior to vesting of the time-based RSUs pursuant to this Agreement, the Participant’s employment or other association with the Company and its Affiliates ends for any reason, the Participant’s rights to unvested time-based RSUs shall be immediately and automatically forfeited and unvested shares canceled and neither the Company nor any Affiliate shall have any further obligations to the Participant under this Agreement. The foregoing notwithstanding, the following exceptions to the forfeiture of unvested RSUs apply:
a. Disability: If termination of employment or other association is on account of Participant’s Disability, then any unvested time-based RSUs will vest immediately as of the date of Participant’s termination on account of Disability. For the purposes of this Agreement, Disability is defined as the Participant having become disabled within the meaning of Section 22 (e)(3) of the Code or, if applicable, as defined in your Employment Agreement or Loyalty Agreement with the Company in effect as of the Award Date.
b. Death: If termination of employment or other association is on the account of the Participant’s death, then any unvested time-based RSUs will vest immediately as of the date of Participant’s death.
4. Change of Control: Upon a Change of Control, any then remaining unvested time-based RSUs granted pursuant to this Award will vest immediately upon:
a. the Change of Control date in the event that the Company’s successor or its affiliate does not assume, convert, or replace the Award; or
b. the termination of the Participant’s employment or other association with the Company or its successor in the event the Award continues or the Company’s successor assumes, converts or replaces the Award and Participant’s employment or other association with the Company or its successor is terminated without Cause (as defined in the applicable Employment Agreement or Loyalty Agreement), as determined by the Committee or its applicable successor, within 24 months following the Change of Control date.
5. Non-Transferability of RSUs: Until Shares are issued with respect to the RSUs that vest pursuant to this Agreement, the RSUs may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of or encumbered, and no attempt to transfer unvested RSUs, whether voluntary or involuntary, by operation of law or otherwise, shall vest the transferee with any interest or right in or with respect to the Shares. Any attempt to assign, alienate, pledge, attach, sell or otherwise transfer or encumber unvested RSUs or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the unvested RSUs shall be forfeited by the transferee and all of the transferee’s rights to such RSUs shall immediately terminate without any payment or consideration by the Company. The Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise rights to receive any property distributable with respect to RSUs upon the Participant’s death.
6. No Rights as a Stockholder; Dividend Equivalents: The Participant shall have no rights of a stockholder with respect to Shares of Common Stock underlying the RSUs unless and until the date on which the Shares of Common Stock are issued in accordance with Section 7 of this Agreement. Solely with respect to RSUs that vest, you will be entitled to receive Dividend Equivalents to the extent that dividends are declared and paid on the Common Stock of the Company during the period from the Award Date until the RSUs vest. An amount equal to the Dividend Equivalents with respect to Participant’s vested time-based RSUs will be paid in cash when Shares of Common Stock are issued in accordance with Section 7 of this Agreement, and in no case later than the end of the calendar year in which the time-based RSUs become vested or, if later the 15th day of the third month following such vesting date. Any such Dividend Equivalents shall be paid, if at all, without interest or other earnings. Except as may be provided under Section 5 of the Plan, the Company will make no adjustment for dividends (ordinary or extraordinary and whether in cash, securities or other property) or distributions of other rights for which the record date is prior to the Vesting Date of a time-based RSU.
7. Issuing Shares: Upon any of the time-based RSUs vesting pursuant to this Agreement and payment of the Applicable Taxes pursuant to Section 11 below, the Company shall cause the Shares of Common Stock to be promptly issued in book-entry form, registered in the Participant’s name, no later than March 15 of the calendar year following the calendar year in which such vesting occurs. For the avoidance of doubt, to the extent Participant does not vest in any RSUs, all interest in such RSUs shall be forfeited and the Participant shall have no right or interest in such forfeited RSUs.
8. Notices: Except as otherwise provided herein, all notices, requests, demands and other communications under this Award shall be in writing, and if by telecopy, shall be deemed to have been validly served, given or delivered when sent, or if by personal delivery or messenger or courier service, shall be deemed to have been validly served, given or delivered upon actual delivery (but in no event may notice be given by deposit in the United States mail), at the following addresses, telephone and facsimile numbers (or such other address(es), telephone and facsimile numbers a party may designate for itself by like notice):
a. If to the Company: Advance Auto Parts, Inc. located at 4200 Six Forks Road, Raleigh, NC, 27609, Attention: General Counsel or by telephone at (540) 561-1173 or telecopy at (540) 561-1448; and
b. If to you, the Participant, to your home address on record at Advance Auto Parts or your business address at Advance Auto Parts.
9. Restrictive Covenants. Except as may be prohibited by law, all Participants agree as follows:
a. Non-Competition. Participant acknowledges and agrees that the Company is engaged in a highly competitive business, and that by virtue of Participant’s position and responsibilities as an employee or consultant of the Company and Participant’s access to Confidential Information, engaging in a business that is directly competitive with the Company will cause it great and irreparable harm. Accordingly, Participant agrees and covenants that during the Restricted Period, Participant shall not, on his/her own behalf or on another’s behalf, (a) accept employment by or provide services for Amazon Auto, AutoZone Inc., O’Reilly Automotive, Inc., Genuine Parts Company, NAPA Auto Parts, Fisher Auto Parts or Parts Depot, Inc. and/or any aftermarket automotive parts distributor owned or operated by Icahn Automotive Group, LLC (including, but not limited to, Pep Boys and Auto Plus) (any of the foregoing, a “Restricted Company”) in any capacity, role or position with substantially the same or similar duties as Participant performed during Participant’s employment, service, or association with the Company; (b) provide services, including consulting or contractor services, for or on behalf of a Restricted Company which are the same or substantially similar as the duties Participant performed during Participant’s last two (2) years of employment, service, or association with the Company; or (c) otherwise provide services, including consulting or contractor services, which are the same as, substantially similar to, or an adequate substitute for the duties Participant performed during Participant’s employment with the Company or which would involve services or prospective services provided by or researched by the Company about which Participant acquired Confidential Information, which would be directly competitive with the Company. Participant understands that the business of the Company and Participant’s responsibilities on behalf of the Company have been nationwide and companywide in scope. Accordingly, Participant agrees that this restriction will apply in those areas within the United States, including the United States’ territories and possessions (including, but not limited to, Puerto Rico and the U.S. Virgin Islands), as well as Canada, including its provinces, territories and possessions, within which the Participant was assigned or with respect to which Participant had responsibility during the last two (2) years of Participant’s employment with the Company.
b. Non-Interference. Participant further agrees and covenants that during the Restricted Period, Participant shall not, without the prior written consent of the Company, directly or through others, either on behalf of Participant or any other person or entity, Interfere with the Company.
For purposes of this Agreement, “Interfere” shall mean (a) to solicit, entice, persuade, induce, influence or attempt to influence, directly or through others, suppliers or prospective suppliers, employees, agents or independent contractors of the Company to restrict, reduce, sever or otherwise alter their relationship with the Company for purposes that are competitive with the Company; or (b) to hire on the Participant’s own behalf or on behalf of any other person or entity, directly or through others, any current or former employee or independent contractor of the Company. For purposes of this Agreement, this provision shall only apply to those suppliers or prospective suppliers, employees, agents or independent contractors of the Company with whom Participant had material contact during the last two (2) years of Participant’s employment with the Company or about whom Participant had access to Confidential Information during the last two (2) years of Participant’s employment with the Company.
For purposes of this Agreement, “Interfere” shall also mean (a) to solicit, entice, persuade, induce, influence or attempt to influence, directly or through others, customers or prospective customers of the Company to restrict, reduce, sever or otherwise alter their relationship with the Company for purposes that are competitive with the Company; or (b) whether as a direct solicitor or provider of such services, or in a management or supervisory capacity over others who solicit or provide such services, to solicit or provide services that fall within the definition of Restricted Activities as defined below to any customer of the Company. For purposes of this Agreement, this provision shall apply only to those customers or prospective customers with whom Participant had material contact during the last two (2) years of Participant’s employment with the Company or about whom Participant had access to Confidential Information during the last two (2) years of Participant’s employment with the Company.
For purposes of this Agreement, “Restricted Activities” shall mean (1) the retail, commercial and/or wholesale sale, rental, and/or distribution of parts, accessories, supplies, equipment and/or maintenance items for automobiles, light and heavy duty trucks (both commercial and noncommercial), off-road equipment, buses, recreational vehicles, and/or agricultural equipment, and/or (2) the provision of any automotive-related service (including, but not limited to, shop management, inventory control, and/or vehicle repair software or marketing) to auto repair shops, garages, and/or specialty-service providers (e.g. any business that specializes in automotive oil changes, tires, mufflers, brakes, transmission, and/or body work).
c. Remedies. Participant agrees that any breach by Participant of the covenants contained in this Section 9 will result in irreparable injury to Company, for which money damages could not adequately compensate the Company. Therefore, the Company shall have the right (in addition to any other rights and remedies which it may have at law or in equity) to seek to enforce this Section 9 and any of its provisions by injunction, specific performance, or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach, or threatened breach, of the covenants set forth in this Section 9. Participant agrees that in any action in which the Company seeks injunction, specific performance, or other equitable relief, Participant will not assert or contend that any of the provisions of this Section 9 are unreasonable or otherwise unenforceable.
In addition, if Participant breaches any of the covenants in this Section 9, Participant shall return to the Company any Shares of Common Stock received by Participant or Participant’s personal representative that vested on or after any such violation and pay to the Company in cash the amount of any proceeds received by Participant or Participant’s personal representative from the disposition or transfer of any such stock, and Participant’s unvested RSUs shall be immediately and irrevocably forfeited.
d. Definitions. For purposes of this Section 9, the following terms are defined as follows:
i.“Confidential Information” means any proprietary information prepared or maintained in any format, including personnel information or data of the Company, technical data, trade secrets or know-how in which the Company or its Affiliates or related entities have an interest, including, but not limited to, business records, contracts, research, product or service plans, products, services, customer lists and customers (including, but not limited to, vendors to the Company or its Affiliates and related entities on whom Participant called, with whom Participant dealt or with whom Participant became acquainted during the term of Participant’s employment, service, or other association with the Company), pricing data, costs, markets, expansion plans, summaries, marketing and other business strategies, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration or marketing, financial or other business information obtained by Participant or disclosed to Participant by the Company or its Affiliates or related entities or any other person or entity during the term of Participant’s employment, service, or other association with the Company or its Affiliates, either directly or through others, electronically, in writing, orally, by drawings, by observation of services, systems or other aspects of the business of the Company or its Affiliates or related entities or otherwise. Confidential Information does not include information that: (A) was available to the public prior to the time of disclosure; or (B) becomes available to the public through no act or omission of Participant. Participant acknowledges that the Confidential Information has been developed by the Company at significant expense and effort.
ii.For purpose of this Section 9, the definition of “Company” shall be limited to (a) Advance Stores Company, Incorporated and its subsidiaries; and (b) those related/affiliated companies: (i) for which Participant performed services during the last two (2) years of Participant’s employment with the Company; (ii) on behalf of which Participant had significant business-related contact or dealings during the last two (2) years of Participant’s employment with the Company, (iii) about which Participant had access to Confidential Information or Trade Secrets during the last two (2) years of Participant’s employment with the Company.
iii. “Restricted Period” shall mean the period of Participant’s employment, service, or other association with the Company and one (1) year period following termination thereof; provided, however, that the Restricted Period shall be tolled and shall not expire during any period in which Participant is in violation of this Section 9, and therefore the Restricted Period shall be extended for a period equal to the duration of Participant’s violation hereof so that the Company receives the Non-Competition and Non-Interference period to which Participant agreed herein.
10. Confidentiality: The Participant agrees not to disclose the terms of this Agreement to anyone other than the members of the Participant’s immediate family, Participant’s legal counsel, Participant’s accountant(s) and/or tax advisor(s) and/or Participant’s financial advisor(s), or as otherwise provided in Section 9 of this Agreement. Should the details of this Agreement be shared with the aforementioned, it shall be on a confidential basis.
11. Tax Matters:
a.The Company makes no representation or warranty as to the tax treatment of your receipt or vesting of the time-based RSUs or upon your sale or other disposition of the Shares received upon vesting of your time-based RSUs. You should rely on your own tax advisors for such advice. In order to comply with all applicable tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable income taxes, employment taxes, social insurance, social security, national insurance contribution, payroll taxes, contributions, levies, payment on account obligations or other amounts required to be collected, withheld or accounted for with respect to this Award (the “Applicable Taxes”), which are your sole and absolute responsibility, are withheld or collected from you at the time of vesting. The Company will inform you of alternative methods to settle any Applicable Taxes due prior to the first vesting date of your Award.
b.For the purposes of determining when Shares otherwise issuable on account of your termination of employment or other association with Company will be issued, “termination of employment” or words of similar import, as used in this Agreement, shall mean the date as of which the Company and you reasonably anticipate that no further services will be performed by you, and shall be construed as the date that you first incur a “separation from service” for purposes of Code Section 409A on or following termination of employment or other association with the Company. Furthermore, if you are a “specified employee” of a public company as determined pursuant to Code Section 409A as of your separation from service with the Company, any Shares otherwise issuable on account of your separation from service which constitute deferred compensation within the meaning of Code Section 409A and which are otherwise payable during the first six months following your separation from service shall be issued to you on the earlier of (1) the date of your death and (2) the first business day of the seventh calendar month immediately following the month in which your separation from service occurs, to the extent such delay would be required to comply with Code Section 409A.
12. Clawback: The Participant acknowledges and agrees that this Award is subject to any applicable Clawback Policy and may be subject to Clawback pursuant to that policy or as a result of breach of any restrictive covenant or engagement in any activity that constitutes Cause under a loyalty or employment agreement.
a. To the extent permitted by applicable law, including without limitation Code Section 409A, this Award is subject to offset in the event that the Participant has an outstanding Clawback, recoupment or forfeiture obligation to the Company under the terms of an applicable Clawback Policy, in the event that Participant breaches any restrictive covenant obligation or in the event that Participant engagement in activity that constitutes Cause under a loyalty or employment agreement. In the event of a Clawback, recoupment or forfeiture event, the amount required to be clawed back, recouped or forfeited pursuant to such policy, shall be deemed not to have been earned under the terms of the Plan, and the Company is entitled to recover from the Participant the amount specified to be clawed back, recouped, or forfeited (which amount, as applicable, shall be deemed an advance that remained subject to the Participant satisfying all eligibility conditions for earning this Award).
b. If the Board of Directors or the Committee, as applicable, determines that Clawback is required or appropriate, in addition to the recoupment methods available under the terms of any applicable Clawback Policy, to the extent permitted by applicable law, the Company shall, as determined by the Committee in its sole discretion, take any of the following actions: (i) seek repayment from the Participant of any amounts or awards distributed under the Plan; (ii) reduce (subject to applicable law and the terms and conditions of the Plan or any other applicable plan, program, policy or arrangement) the amount that would otherwise be awarded or payable to the Participant under the Award, the Plan or any other compensatory plan, program, or arrangement maintained by the Company; (iii) withhold payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices; or (iv) by any combination of the foregoing. Any determination regarding the Participant’s conduct, and repayment or reduction under this provision, shall be within the sole discretion of the Committee and shall be final and binding on the Participant and the Company. The Participant, in consideration of the grant of the Award, and by the Participant’s execution of this Agreement, acknowledges the Participant’s understanding of this provision and hereby agrees to make and allow an immediate and complete repayment or reduction in accordance with this provision in the event of a call for repayment or other action by the Company or Committee to effect its terms with respect to the Participant, the Award and/or any other compensation described in this Agreement.
c.This Award is not considered earned, and the eligibility requirements with respect to this Award is not considered met, until all requirements of the Plan, this Agreement, and any Clawback Policy are met.
13. Miscellaneous:
a. This Award is made under the provisions of the Plan and shall be interpreted in a manner consistent with it. To the extent that any provision in this Agreement is inconsistent with the Plan, the provisions of the Plan shall control. The interpretation of the Committee (or the Committee’s successor) of any provision of the Plan, this Agreement, or the Award, and any determination with respect thereto or hereto by the Committee, shall be binding on all parties. Notwithstanding anything herein to the contrary, this Agreement is intended to be interpreted and operated so that the payment of the benefits set forth herein shall either be exempt from the requirements of Code Section 409A or shall comply with the requirements of such provision; provided, however, that in no event shall the Company be liable to the Participant for or with respect to any taxes, penalties or interest which may be imposed upon the Participant pursuant to Code Section 409A. To the extent that any Award granted by the Company is subject to Code Section 409A, such Award shall be subject to the terms and conditions that comply with the requirements of Code Section 409A to avoid adverse tax consequences under Code Section 409A.
b. Nothing contained in this Agreement shall confer, intend to confer or imply any rights to an employment relationship or rights to a continued employment relationship with the Company or any Affiliate in your favor or limit the ability of the Company or an Affiliate, as the case may be, to terminate, with or without Cause, in its sole and absolute discretion, your employment relationship with the Company or such Affiliate, subject to the terms of any written Employment Agreement or Loyalty Agreement to which you are a party.
c. None of the Plan, this Agreement, or the Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and you or any other person. To the extent that any person acquires a right to receive payments from the Company or any Affiliate pursuant to the Award, such right shall be no greater than the right of any unsecured creditor of the Company or any Affiliate.
d.The Company shall not be required to deliver any shares of Common Stock until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
e.An original record of this Agreement and all the terms hereof, executed by the Company, is held on file by the Company. To the extent there is any conflict between the terms contained in this Agreement and the terms contained in the original held by the Company, the terms of the original held by the Company shall control.
f.If any provision in this Agreement is determined to be invalid, void or unenforceable by the decision of any court of competent jurisdiction, which determination is not appealed or appealable for any reason whatsoever, the provision in question shall not be deemed to affect or impair the validity or enforceability of any other provision of this Agreement and such invalid or unenforceable provision or portion thereof shall be severed from the remainder of this Agreement.
g.This Award is intended to be consistent with your Employment Agreement or Loyalty Agreement with the Company, if applicable, in effect as of the Award Date first specified above. To the extent that any provision of this Agreement is inconsistent with the terms of such other agreement between you and the Company in effect as of the Award Date, the provisions of this Agreement shall control with respect to the Award.
h.This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf) or by any other electronic means intended to preserve the original appearance of a document, will have the same effect as physical delivery of a paper document bearing an original signature.
i.The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the RSUs subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting and settlement of RSUs or disposition of the underlying Shares and the Participant has been advised to consult a tax advisor prior to such vesting, settlement or disposition.
j.Notwithstanding anything to the contrary herein, participants residing and/or working outside of the United States shall be subject to the Additional Terms and Conditions for Non-U.S. Participants attached hereto as Addendum A and to any Country-Specific Terms and Conditions attached hereto as Addendum B. If the Participant is a citizen or resident of a country (or is considered as such for local law purposes) other than the one in which the Participant is currently residing or working or if the Participant relocates to one of the countries included in the Country-Specific Terms and Conditions after the grant of the Award, the special terms and conditions for such country will apply to the Participant to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan. The Additional Terms and Conditions for Non-U.S. Participants and the Country-Specific Terms and Conditions constitute part of this Agreement and are incorporated herein by reference.
In Witness Whereof, this Award has been executed by the Company as of the date first above written.
ADVANCE AUTO PARTS, INC.
By:
/s/ Kristen Soler
Kristen Soler
Executive Vice President, Chief Human Resources Officer
Accepted and agreed, including specifically but without limitation as to the treatment of this Award in accordance with the terms of the Plan and this Award notwithstanding any terms of an Employment/ Loyalty Agreement between the Company and the undersigned to the contrary:
By:
Electronic Signature Acceptance Date
ADDENDUM A TO THE AGREEMENT
ADDITIONAL TERMS AND CONDITIONS FOR NON-U.S. PARTICIPANTS
This Addendum A includes additional terms and conditions that govern the Award granted to the Participant if the Participant works or resides outside the United States.
Capitalized terms used but not defined herein are defined in the Plan or the Agreement and have the meanings set forth therein.
1.Vesting. For purposes of the Agreement and notwithstanding Section 11(b) of the Agreement, the Participant’s employment or other association with the Company and its Affiliates shall be deemed to terminate on the date on which the Participant ceases to be actively employed by the Company or any of its Affiliates, which shall not be extended by any notice period, whether mandated or implied under local law during which the Participant is not actually employed (e.g., garden leave or similar leave) or during or for which the Participant receives pay in lieu of notice or severance pay. The Company shall have the sole discretion to determine when the Participant’s employment or other association with the Company and its Affiliates terminates for purposes of the Agreement without reference to any other agreement, written or oral, including the Participant’s contract of employment, if applicable.
2.No Acquired Right. The Participant acknowledges and agrees that:
a.The Plan is established voluntarily by the Company, the grant of awards under the Plan is made at the discretion of the Committee and the Plan may be modified, amended, suspended or terminated by the Company at any time. All decisions with respect to future awards, if any, will be at the sole discretion of the Committee.
b.The Award (and any similar awards the Company may in the future grant to the Participant, even if such awards are made repeatedly or regularly, and regardless of their amount) and the Shares acquired under the Plan (i) are wholly discretionary and occasional, are not a term or condition of employment and do not form part of a contract of employment, or any other working arrangement, between the Participant and the Company or any Affiliate; (ii) do not create any contractual entitlement to receive future awards or benefits in lieu thereof and are not intended to replace any pension rights or compensation, as applicable; and (iii) do not form part of normal or expected salary or remuneration for purposes of determining pension payments or any other purposes, including without limitation termination indemnities, severance, resignation, payment in lieu of notice, redundancy, end of service payments, bonuses, long-term service awards, pension or retirement benefits, welfare benefits or similar payments, if applicable, except as otherwise required by the applicable law of any governmental entity to whose jurisdiction the award is subject.
c.The Award and the Shares acquired under the Plan are not intended to replace any pension rights or compensation.
d.The Participant is voluntarily participating in the Plan.
e.In the event that the Participant is an employee and the Participant’s employer is not the Company, the grant of the Award and any similar awards the Company may grant in the future to the Participant will not be interpreted to form an employment contract or relationship with the Company and, furthermore, the grant of the Award and any similar awards the Company may grant in the future to the Participant will not be interpreted to form an employment contract with the Participant’s employer or any Affiliate.
f.The future value of the underlying Shares is unknown and cannot be predicted with certainty. Neither the Company nor any Affiliate shall be liable for any foreign exchange rate fluctuation between the Participant’s local currency and the United States Dollar that may affect the value of the Award or the Shares.
g.The Participant shall have no rights, claim or entitlement to compensation or damages as a result of the Participant’s cessation of employment or other association for any reason whatsoever, whether or not later found to be invalid or in breach of contract or local labor law, insofar as these rights, claim or entitlement arise or may arise from the Participant’s ceasing to have rights under the Award as a result of such cessation or loss or diminution in value of the Award or any of the Shares issuable under the Award as a result of such cessation, and the Participant irrevocably releases the Participant’s employer, the Company and its Affiliates, as applicable, from any such rights, entitlement or claim that may arise. If, notwithstanding the foregoing, any such right or claim is found by a court of competent jurisdiction to have arisen, then, by signing the Agreement, the Participant shall be deemed to have irrevocably waived the Participant’s entitlement to pursue such rights or claim.
3.Data Protection (Jurisdictions other than European Union/European Economic Area/United Kingdom).
a.In order to facilitate the Participant’s participation in the Plan and the administration of the Award, it will be necessary for contractual and legal purposes for the Company (or its Affiliates or payroll administrators) to collect, hold and process certain personal information and sensitive personal information about the Participant (including, without limitation, the Participant’s name, home address, telephone number, date of birth, nationality, social insurance or other identification number and job title and details of the Award and other awards granted, cancelled, exercised, vested, unvested or outstanding and Shares held by the Participant). The Participant consents explicitly, willingly, and unambiguously to the Company (or its Affiliates or payroll administrators) collecting, holding and processing the Participant’s personal data and transferring this data (in electronic or other form) by and among, as applicable, the Participant’s employer, the Company and its Affiliates and other third parties (collectively, the “Data Recipients”) insofar as is reasonably necessary to implement, administer and manage the Plan and the Award. The Participant authorizes the Data Recipients to receive, possess, use, retain and transfer the data for the purposes of implementing, administering and managing the Plan and the Award. The Participant understands that the data may be transferred to a broker or third party as may be selected by the Company in the future which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the Data Recipients may be located in the United States or elsewhere, and that the recipient’s country may have a lower standard of data privacy laws and protections than the Participant’s country.
b.The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of the Plan and the Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current. The Participant understands that the data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan.
c.The Participant understands that the Participant may, at any time, make a request to view the Participant’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company and that these rights are subject to legal restrictions but acknowledges that without the use of such data it may not be practicable for the Company to administer the Participant’s involvement in the Plan in a timely fashion or at all and this may be detrimental to the Participant and may result in the possible exclusion of the Participant from continued participation with respect to the Award or any future awards under the Plan.
4.Foreign Asset/Account Reporting Requirements; Exchange Controls. Depending on the Participant’s country, the Participant may be subject to foreign asset/account, exchange control and/or tax reporting requirements as a result of the vesting of the RSUs, the acquisition, holding and/or transfer of Shares or cash resulting from participation in the Plan and/or the opening and maintaining of a brokerage or bank account in connection with the Plan. The Participant may be required to report such assets, accounts, account balances and values, and/or related transactions to the applicable authorities in the Participant’s country. The Participant may also be required to repatriate sale proceeds or other funds received as a result of his or her participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that the Participant is responsible for ensuring compliance with any applicable foreign asset/account, exchange control and tax reporting and other requirements. The Participant further understands that the Participant should consult the Participant’s personal tax and legal advisors, as applicable, on these matters.
5.Withholding; Responsibility for Taxes. This provision supplements Section 11 of the Agreement.
The Participant authorizes the Company and/or the Affiliate employing or retaining the Participant, or their respective agents, at their discretion, to satisfy the obligations with respect to all Applicable Taxes by withholding from any wages or other cash compensation paid to the Participant by the Company and/or Affiliate. The Participant acknowledges that regardless of any action the Company (or any Affiliate employing or retaining the Participant) takes with respect to any or all Applicable Taxes, the ultimate liability for all Applicable Taxes legally due by the Participant is and remains the Participant’s responsibility and that the Company (and its Affiliates) (i) make no representations or undertakings regarding the treatment of any Applicable Taxes in connection with any aspect of the Award, including the grant, vesting or settlement of the RSUs, and the subsequent sale of any Shares acquired at settlement; and (ii) do not commit to structure the terms of the grant or any aspect of the Award to reduce or eliminate the Participant’s liability for Applicable Taxes. Further, if the Participant is subject to taxation in more than one jurisdiction between the Award Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Participant’s employer (or former employer, as applicable) may be required to withhold or account for Applicable Taxes (if any) in more than one jurisdiction.
ADDENDUM B TO THE AGREEMENT
COUNTRY-SPECIFIC TERMS AND CONDITIONS
These Country-Specific Terms and Conditions include additional terms and conditions that govern the Award granted to the Participant under the Plan if the Participant resides or works in one of the countries listed below. Capitalized terms used but not defined in these Country-Specific Terms and Conditions are defined in the Plan or the Agreement and have the meanings set forth therein.
Canada
Award Payable Only in Shares. Notwithstanding any discretion in the Plan or anything to the contrary in the Agreement, the grant of the Award does not provide Participant any right to receive a cash payment and the Award may be settled only in Shares. For greater certainty, notwithstanding Section 6 of the Agreement, the Participant shall not be entitled to, or credited with, a Dividend Equivalent paid or payable in cash.
Termination. Notwithstanding anything else in the Plan or the Agreement (including Addendum A), for purposes of the Agreement, the Participant’s employment or other association with the Company and its Affiliates shall be deemed to end on the date on which the Participant ceases to be actively employed by the Company and its Affiliates, which term “actively employed” shall include any minimum period for which the Participant is deemed to be actively employed for purposes of applicable employment standards legislation, and shall exclude any other period of non-working notice of termination or any notice period, whether mandated or implied under local law during which the Participant is not actually employed (e.g., garden leave or similar leave) or during or for which the Participant receives pay in lieu of notice or severance pay. The Company shall have the sole discretion to determine when the Participant is no longer actively employed for purposes of the Agreement without reference to any other agreement, written or oral, including the Participant’s contract of employment, if applicable.
Non-Competition for Non-Executive Ontario Employees. For any Participant’s whose employment by the Company and its Affiliates is governed by Ontario law, save and except any Participant who is an executive (as defined in section 67.2(5) of the Ontario Employment Standards Act, 2000), the “Restricted Period” is the period of time in which the Participant is an employee of the Employer.
Non-Solicitation. Section 9(b) of the Agreement is replaced as follows:
Participant further agrees and covenants that during the Restricted Period, Participant shall not, without the prior written consent of the Company, directly or indirectly (a) solicit, recruit or attempt to persuade any person to terminate such person’s employment, service, or other association with the Company or any Affiliate, whether or not such person is a full-time employee or service provider and whether or not such employment, service, or other association is pursuant to a written agreement or is at-will, or (b) solicit, contact or attempt to persuade any current or prospective customer of the Company or any Affiliate, as of or during the one (1) year period prior to Participant’s termination of employment or other association and with whom the Participant had contact with on behalf of the Company or any Affiliate or had Confidential Information in respect of, to alter such customer’s or prospective customer’s relationship with the Company or any Affiliate.
Definition of “Cause” for Ontario Employees. For any Participant whose employment with the Company and its Affiliates is governed by Ontario law, “Cause” shall, notwithstanding anything else in the Plan or the Participant’s Loyalty Agreement or Employment Agreement, mean conduct that constitutes willful misconduct, disobedience or willful neglect of duty that is not trivial and has not been condoned by the Participant’s employer.
Definition of “Cause” for Québec Employees. Notwithstanding anything else in the Plan or the Agreement or the Participant’s Loyalty Agreement or Employment Agreement, for the purposes of this Agreement, for any Participant whose employment with the Company and its Affiliates is governed by Québec laws, “Cause” shall include, without limitation: (i) any dishonest act such as theft, fraud, embezzlement or misappropriation of funds in connection with the Company and its Affiliates or its directors, shareholders, clients, suppliers, sub-contractors, consultants or employees or any attempt to commit such a dishonest act; (ii) any breach of the Participant’s duty of loyalty, any conflict of interest or behavior that adversely affects the legitimate interests of the Company and its Affiliates; (iii) non-compliance with the requirements or legitimate expectations of the Company and its Affiliates, including as a result of voluntary or involuntary underperformance or incompetence; (iv) a breach of the conditions of this Agreement; (v) the refusal to follow the reasonable guidelines or instructions of the Company and its Affiliates; (vi) a material breach of any policy, rule or procedure of the Company and its Affiliates; (vii) any other serious reason within the meaning of Article 2094 of the Civil code of Québec.
Definition of “Disability". Notwithstanding anything else in the Plan or the Agreement, for purposes of the Agreement, “Disability” shall mean, subject to compliance with applicable human rights legislation, having become disabled within the meaning of Section 22 (e)(3) of the Code or, if applicable, as defined in your Employment Agreement or Loyalty Agreement with the Company in effect as of the Award Date.
No Acquired Right. Section 2(g) of Addendum A is replaced as follows:
The Participant shall have no rights, claim or entitlement to compensation or damages as a result of the Participant’s cessation of employment or other association for any reason whatsoever, whether or not later found to be invalid or in breach of contract or local labor law, insofar as these rights, claim or entitlement arise or may arise from the Participant’s ceasing to have rights under the Award as a result of such cessation or loss or diminution in value of the Award or any of the Shares issuable under the Award as a result of such cessation, and, subject to applicable employment standards legislation, the Participant irrevocably releases the Participant’s employer, the Company and its Affiliates, as applicable, from any such rights, entitlement or claim that may arise. If, notwithstanding the foregoing, any such right or claim is found by a court of competent jurisdiction to have arisen, then, by signing the Agreement, the Participant shall be deemed to have irrevocably waived the Participant’s entitlement to pursue such rights or claim.
Securities Law Information. For the purposes of compliance with National Instrument 45-106 Prospectus Exemptions (and in Québec, Regulation 45-106 respecting Prospectus exemptions, collectively, “45-106”), the prospectus requirement does not apply to a distribution by an issuer in a security of its own issue with an employee, executive officer, director or consultant of the issuer or a related entity of the issuer, provided participation in the distribution is voluntary.
Shares acquired under the Plan are subject to certain restrictions on resale imposed by Canadian provincial and territorial securities laws, as applicable. Notwithstanding any other provision of the Plan to the contrary, any transfer or resale of any shares acquired by the Participant pursuant to the Plan must be in accordance with the resale rules under applicable Canadian provincial and territorial securities laws, including (a) Ontario Securities Commission Rule 72-503 Distributions Outside Canada (“72-503”), if the Participant is a resident of the Province of Ontario; (b) National Instrument 45-102 Resale of Securities (and in Québec, Regulation 45-102 respecting Resale of securities, collectively “45-102”), if the Participant is a resident in the Provinces of British Columbia, New Brunswick, Nova Scotia, Québec, Prince Edward Island or Newfoundland; and (c) Alberta Securities Commission Rule 72-501 Distributions to Purchasers Outside Alberta (“72-501”), if the Participant is a resident of the Province of Alberta. In Ontario, the prospectus requirement does not apply to the first trade of shares issued in connection with the purchase rights, provided the conditions set forth in section 2.8 of 72-503 are satisfied. In British Columbia, New Brunswick, Nova Scotia, Québec, Prince Edward Island and Newfoundland, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the conditions set forth in section 2.14 of 45-102 are satisfied. In Alberta, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the conditions set forth in Section 10 of 72-501 are satisfied. In Manitoba, the prospectus requirement does not apply to the first trade of Shares issued in connection with the Award, provided the trade is not a “control distribution” as defined in section 1.1 of 45-102. The Shares acquired under the Plan may not be transferred or sold in Canada or to a Canadian resident other than in accordance with applicable provincial or territorial securities laws. The Participant is advised to consult his or her legal advisor prior to any resale of Shares.
Data Protection. Section 3 of Addendum A is replaced with paragraphs (a)-(c) below.
a. In order to facilitate the Participant’s participation in the Plan and the administration of the Award, it will be necessary for contractual and legal purposes for the Company (or its Affiliates or payroll administrators) to collect, hold and process certain personal data and sensitive personal information about the Participant (including, without limitation, the Participant’s name, home address, telephone number, date of birth, nationality, social insurance or other identification number and job title and details of the Award and other awards granted, cancelled, exercised, vested, unvested or outstanding and Shares held by the Participant). The Participant consents explicitly, willingly, and unambiguously to the Company (or its Affiliates or payroll administrators) collecting, holding and processing the Participant’s personal data and transferring this data (in electronic or other form, to the extent necessary) by and among, as applicable, the Participant’s employer, the Company and its Affiliates and any third party service provider assisting in the implementation, administration and management of the Plan, including legal, finance and accounting, stock plan administrators, information technology and human resources or similar consultants and advisors (“Third Party Service Providers”) (collectively, the “Data Recipients”) insofar as is reasonably necessary to implement, administer and manage the Plan and the Award. The Participant authorizes the Data Recipients to receive, possess, use, retain and transfer the data for the purposes of implementing, administering and managing the Plan and the Award. The Participant understands that the data may be transferred to a broker or Third Party Service Provider as may be selected by the Company in the future which is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the Data Recipients may be located in the United States or elsewhere, and that the recipient’s country may have a lower standard of data privacy laws and protections than the Participant’s country. In connection therewith, it is possible that personal data may be disclosed to governments, courts or law enforcement or regulatory agencies in that other country in accordance with the laws of that country.
b. The Data Recipients will treat the Participant’s personal data as private and confidential and will not disclose such data for purposes other than the management and administration of the Plan and the Award and will take reasonable measures to keep the Participant’s personal data private, confidential, accurate and current. The Participant understands that the data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. Internal access to data is strictly limited to those employees who have a need to know such data in the performance of their duties.
c. Subject to limitations under applicable law, the Participant understands that the Participant may, at any time, make a request to view the Participant’s personal data, require any necessary corrections to it or withdraw the consents herein in writing by contacting the Company and that these rights are subject to legal restrictions but acknowledges that without the use of such data it may not be practicable for the Company to administer the Participant’s involvement in the Plan in a timely fashion or at all and this may be detrimental to the Participant and may result in the possible exclusion of the Participant from continued participation with respect to the Award or any future awards under the Plan.
Additional Provisions Applicable to Participants Resident in Quebec.
Language Consent. The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.
Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents exécutés, avis donnés et procédures judiciaires intentées, directement ou indirectement, relativement à la présente convention.
Data Protection. The following provision supplements the Data Privacy section above in this Addendum B:
The Participant hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information, including Data, from all personnel, professional or not, involved in the administration and operation of the Plan. The Participant further authorizes the Company and its Subsidiaries and the Committee, to disclose and discuss the Plan with their advisors, which may involve the disclosure of Data, to the extent necessary for the administration and operation of the Plan. The Participant further authorizes the Company and any Subsidiary to record such information and to keep such information in the Participant’s employee file.
India
Exchange Control Notification
Proceeds from the sale of Shares must be remitted to India during a designated period in accordance with applicable exchange control and other requirements. The Participant should consult the Participant’s advisor with respect to such requirements.
Taiwan
Securities Law Information
The Shares are not and will not be registered in Taiwan and therefore the Shares may not be offered to the public in Taiwan. Nothing in this document should be construed as the making of a public offer of securities in Taiwan.
EX-31.1
4
aap_exhibit311x4192025.htm
EX-31.1
Document
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Shane M. O'Kelly, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Shane M. O'Kelly |
Shane M. O'Kelly |
President and Chief Executive Officer |
EX-31.2
5
aap_exhibit312x4192025.htm
EX-31.2
Document
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ryan P. Grimsland, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Ryan P. Grimsland |
Ryan P. Grimsland |
Executive Vice President, Chief Financial Officer |
EX-32.1
6
aap_exhibit321x4192025.htm
EX-32.1
Document
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Shane M. O'Kelly, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarterly period ended April 19, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying Report.
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Date: May 22, 2025 |
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/s/ Shane M. O'Kelly |
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Shane M. O'Kelly |
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President and Chief Executive Officer |
I, Ryan P. Grimsland, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarterly period ended April 19, 2025 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying Report.
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Date: May 22, 2025 |
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/s/ Ryan P. Grimsland |
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Ryan P. Grimsland |
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Executive Vice President, Chief Financial Officer |