Advance Auto Parts (AAP) investor relations material

Executive summary

• Achieved strongest quarterly performance in over two years, with 3% comparable sales growth and margin expansion, driven by both Pro and DIY channels and supported by turnaround initiatives and technology investments.

• Strategic initiatives included debt capital structure reorganization, raising nearly $2 billion in cash, and significant progress on turnaround and cost optimization priorities.

• Focused on merchandising excellence, supply chain optimization, and store operations improvements to drive efficiency and customer service.

• Technology investments in AI and analytics are supporting merchandising, supply chain, and pricing decisions.

• All planned store closures under the restructuring plan were completed in Q1 2025, reducing the store count to 4,297.

Financial highlights

• Q3 2025 net sales from continuing operations were $2.0 billion, down 5.2% year-over-year due to store optimization and closures; comparable store sales grew 3.0%.

• Adjusted gross profit was $913 million (44.8% of net sales), with gross margin up 260 basis points year-over-year.

• Adjusted operating income margin expanded to 4.4%, up 370 basis points year-over-year.

• Adjusted diluted EPS from continuing operations was $0.92, compared to a loss of $0.05 last year.

• Year-to-date free cash flow was negative $277 million, mainly due to inventory payments, restructuring, and store optimization costs.

Outlook and guidance

• Full-year 2025 net sales expected between $8.55 and $8.6 billion, with comparable sales growth of 0.7% to 1.3%.

• Adjusted operating income margin guidance reaffirmed at 2.4% to 2.6% for Q4 and full year.

• Adjusted EPS guidance updated to $1.75 to $1.85 for the year.

• CapEx target revised to $250 million for the year; free cash flow expected between negative $90 million and $80 million.

• Plans for 30 new store openings and 14 new market hub openings in 2025.