UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 8, 2022
April 22, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission file number 001-16797
________________________
ADVANCE AUTO PARTS, INC.
(Exact name of registrant as specified in its charter)
_________________________________________________
| | | | | |
Delaware | 54-2049910 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
4200 Six Forks Road, Raleigh, North Carolina 27609
(Address of principal executive offices) (Zip Code)
(540) 362-4911
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
Title of each class | | Trading symbol | | Name of each exchange on which registered |
Common Stock, $0.0001 par value | | AAP | | New York Stock Exchange |
Not Applicable
(Former name, former address and former fiscal year, if changed since last report).
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 14, 2022,May 26, 2023, the number of shares of the registrant’s common stock outstanding was 59,253,71659,443,852 shares.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our strategic initiatives, operational plans and objectives, expectations for economic conditions and recovery and future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect our views based on historical results, current information and assumptions related to future developments. Except as may be required by law, we undertake no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, factors related to the company’s leadership transition, the timing and implementation of strategic initiatives, including with respect to labor shortages or disruptions and the impact on our ability to complete store openings, deterioration of general macroeconomic conditions, the highly competitive nature of our industry, demand for our products and services, complexities in our inventory and supply chain and challenges with transforming and growing our business and factors related to the current global pandemic.business. Please refer to “Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by our subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.
PART I. FINANCIAL INFORMATION
ITEM 1.CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except per share data) (Unaudited) | Assets | Assets | October 8, 2022 | | January 1, 2022 | Assets | April 22, 2023 | | December 31, 2022 |
Current assets: | Current assets: | | | | Current assets: | | | |
Cash and cash equivalents | Cash and cash equivalents | $ | 191,204 | | | $ | 601,428 | | Cash and cash equivalents | $ | 226,499 | | | $ | 269,282 | |
Receivables, net | Receivables, net | 845,667 | | | 782,785 | | Receivables, net | 782,093 | | | 698,613 | |
Inventories | 4,926,579 | | | 4,659,018 | | |
Inventories, net | | Inventories, net | 5,015,973 | | | 4,915,262 | |
Other current assets | Other current assets | 199,069 | | | 232,245 | | Other current assets | 177,127 | | | 163,695 | |
Total current assets | Total current assets | 6,162,519 | | | 6,275,476 | | Total current assets | 6,201,692 | | | 6,046,852 | |
Property and equipment, net of accumulated depreciation of $2,534,559 and $2,403,567 | 1,663,939 | | | 1,528,311 | | |
Property and equipment, net of accumulated depreciation of $2,672,665 and $2,590,382 | | Property and equipment, net of accumulated depreciation of $2,672,665 and $2,590,382 | 1,694,337 | | | 1,690,139 | |
Operating lease right-of-use assets | Operating lease right-of-use assets | 2,625,638 | | | 2,671,810 | | Operating lease right-of-use assets | 2,628,899 | | | 2,607,690 | |
Goodwill | Goodwill | 989,946 | | | 993,744 | | Goodwill | 990,573 | | | 990,471 | |
Other intangible assets, net | Other intangible assets, net | 625,673 | | | 651,217 | | Other intangible assets, net | 612,104 | | | 620,901 | |
Other assets | Other assets | 64,364 | | | 73,651 | | Other assets | 54,633 | | | 62,429 | |
Total assets | Total assets | $ | 12,132,079 | | | $ | 12,194,209 | | Total assets | $ | 12,182,238 | | | $ | 12,018,482 | |
Liabilities and Stockholders’ Equity | Liabilities and Stockholders’ Equity | | | | Liabilities and Stockholders’ Equity | | | |
Current liabilities: | Current liabilities: | | | | Current liabilities: | | | |
Accounts payable | Accounts payable | $ | 4,097,412 | | | $ | 3,922,007 | | Accounts payable | $ | 3,682,749 | | | $ | 4,123,462 | |
Accrued expenses | Accrued expenses | 681,216 | | | 777,051 | | Accrued expenses | 718,290 | | | 634,447 | |
Current portion of long-term debt | Current portion of long-term debt | 185,000 | | | — | | Current portion of long-term debt | 116,000 | | | 185,000 | |
Other current liabilities | Other current liabilities | 479,273 | | | 481,249 | | Other current liabilities | 466,416 | | | 427,480 | |
Total current liabilities | Total current liabilities | 5,442,901 | | | 5,180,307 | | Total current liabilities | 4,983,455 | | | 5,370,389 | |
Long-term debt | Long-term debt | 1,187,916 | | | 1,034,320 | | Long-term debt | 1,784,596 | | | 1,188,283 | |
Noncurrent operating lease liabilities | Noncurrent operating lease liabilities | 2,251,560 | | | 2,337,651 | | Noncurrent operating lease liabilities | 2,269,280 | | | 2,278,318 | |
Deferred income taxes | Deferred income taxes | 433,717 | | | 410,606 | | Deferred income taxes | 422,984 | | | 415,997 | |
Other long-term liabilities | Other long-term liabilities | 99,910 | | | 103,034 | | Other long-term liabilities | 85,762 | | | 87,214 | |
Total liabilities | Total liabilities | 9,416,004 | | | 9,065,918 | | Total liabilities | 9,546,077 | | | 9,340,201 | |
| Commitments and contingencies | Commitments and contingencies | | Commitments and contingencies | |
| Stockholders’ equity: | Stockholders’ equity: | | | | Stockholders’ equity: | | | |
Preferred stock, nonvoting, $0.0001 par value | Preferred stock, nonvoting, $0.0001 par value | — | | | — | | Preferred stock, nonvoting, $0.0001 par value | — | | | — | |
Common stock, voting, $0.0001 par value | Common stock, voting, $0.0001 par value | 8 | | | 8 | | Common stock, voting, $0.0001 par value | 8 | | | 8 | |
Additional paid-in capital | Additional paid-in capital | 886,438 | | | 845,407 | | Additional paid-in capital | 914,184 | | | 897,560 | |
Treasury stock, at cost | Treasury stock, at cost | (2,842,896) | | | (2,300,288) | | Treasury stock, at cost | (2,931,373) | | | (2,918,768) | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (54,298) | | | (22,627) | | Accumulated other comprehensive loss | (44,355) | | | (45,143) | |
Retained earnings | Retained earnings | 4,726,823 | | | 4,605,791 | | Retained earnings | 4,697,697 | | | 4,744,624 | |
Total stockholders’ equity | Total stockholders’ equity | 2,716,075 | | | 3,128,291 | | Total stockholders’ equity | 2,636,161 | | | 2,678,281 | |
Total liabilities and stockholders’ equity | Total liabilities and stockholders’ equity | $ | 12,132,079 | | | $ | 12,194,209 | | Total liabilities and stockholders’ equity | $ | 12,182,238 | | | $ | 12,018,482 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share data) (Unaudited)
| | | Twelve Weeks Ended | | Forty Weeks Ended | | Sixteen Weeks Ended |
| | October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 | | April 22, 2023 | | April 23, 2022 |
Net sales | Net sales | $ | 2,641,341 | | | $ | 2,621,229 | | | $ | 8,680,977 | | | $ | 8,601,014 | | Net sales | $ | 3,417,594 | | | $ | 3,374,210 | |
Cost of sales, including purchasing and warehousing costs | Cost of sales, including purchasing and warehousing costs | 1,461,490 | | | 1,438,775 | | | 4,808,888 | | | 4,744,383 | | Cost of sales, including purchasing and warehousing costs | 1,946,931 | | | 1,867,690 | |
Gross profit | Gross profit | 1,179,851 | | | 1,182,454 | | | 3,872,089 | | | 3,856,631 | | Gross profit | 1,470,663 | | | 1,506,520 | |
Selling, general and administrative expenses | Selling, general and administrative expenses | 1,002,653 | | | 953,256 | | | 3,289,940 | | | 3,130,376 | | Selling, general and administrative expenses | 1,380,664 | | | 1,303,250 | |
Operating income | Operating income | 177,198 | | | 229,198 | | | 582,149 | | | 726,255 | | Operating income | 89,999 | | | 203,270 | |
Other, net: | Other, net: | | | | | | | | Other, net: | | | |
Interest expense | Interest expense | (12,039) | | | (8,587) | | | (35,114) | | | (28,085) | | Interest expense | (29,718) | | | (12,868) | |
Loss on early redemption of senior unsecured notes | Loss on early redemption of senior unsecured notes | — | | | — | | | (7,408) | | | — | | Loss on early redemption of senior unsecured notes | — | | | (7,408) | |
Other (expense) income, net | Other (expense) income, net | (17,741) | | | 1,810 | | | (18,314) | | | 7,790 | | Other (expense) income, net | (674) | | | 136 | |
Total other, net | Total other, net | (29,780) | | | (6,777) | | | (60,836) | | | (20,295) | | Total other, net | (30,392) | | | (20,140) | |
Income before provision for income taxes | Income before provision for income taxes | 147,418 | | | 222,421 | | | 521,313 | | | 705,960 | | Income before provision for income taxes | 59,607 | | | 183,130 | |
Provision for income taxes | Provision for income taxes | 36,436 | | | 52,608 | | | 126,137 | | | 171,521 | | Provision for income taxes | 16,956 | | | 43,339 | |
Net income | Net income | $ | 110,982 | | | $ | 169,813 | | | $ | 395,176 | | | $ | 534,439 | | Net income | $ | 42,651 | | | $ | 139,791 | |
| Basic earnings per common share | Basic earnings per common share | $ | 1.85 | | | $ | 2.70 | | | $ | 6.52 | | | $ | 8.28 | | Basic earnings per common share | $ | 0.72 | | | $ | 2.28 | |
Weighted-average common shares outstanding | Weighted-average common shares outstanding | 60,053 | | | 62,854 | | | 60,656 | | | 64,555 | | Weighted-average common shares outstanding | 59,334 | | | 61,261 | |
Diluted earnings per common share | Diluted earnings per common share | $ | 1.84 | | | $ | 2.68 | | | $ | 6.47 | | | $ | 8.22 | | Diluted earnings per common share | $ | 0.72 | | | $ | 2.26 | |
Weighted-average common shares outstanding | Weighted-average common shares outstanding | 60,384 | | | 63,348 | | | 61,045 | | | 65,008 | | Weighted-average common shares outstanding | 59,544 | | | 61,732 | |
Condensed Consolidated Statements of Comprehensive Income
(in thousands) (Unaudited)
| | | Twelve Weeks Ended | | Forty Weeks Ended | | Sixteen Weeks Ended |
| | October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 | | April 22, 2023 | | April 23, 2022 |
Net income | Net income | $ | 110,982 | | | $ | 169,813 | | | $ | 395,176 | | | $ | 534,439 | | Net income | $ | 42,651 | | | $ | 139,791 | |
Other comprehensive (loss) income: | | |
Changes in net unrecognized other postretirement costs, net of tax of $25, $25, $41 and $69 | (70) | | | (70) | | | (116) | | | (194) | | |
Other comprehensive income (loss): | | Other comprehensive income (loss): | |
Changes in net unrecognized other postretirement benefits, net of tax of $70 and $9 | | Changes in net unrecognized other postretirement benefits, net of tax of $70 and $9 | 197 | | | 24 | |
Currency translation adjustments | Currency translation adjustments | (33,439) | | | 1,527 | | | (31,555) | | | 5,127 | | Currency translation adjustments | 591 | | | (18,462) | |
Total other comprehensive (loss) income | (33,509) | | | 1,457 | | | (31,671) | | | 4,933 | | |
Total other comprehensive income (loss) | | Total other comprehensive income (loss) | 788 | | | (18,438) | |
Comprehensive income | Comprehensive income | $ | 77,473 | | | $ | 171,270 | | | $ | 363,505 | | | $ | 539,372 | | Comprehensive income | $ | 43,439 | | | $ | 121,353 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited) |
| | | | | | | | | | | | | |
| Twelve Weeks Ended October 8, 2022 |
| Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity |
| Shares | | Amount | | | | | |
Balance at July 16, 2022 | 60,118 | | | $ | 8 | | | $ | 875,500 | | | $ | (2,766,457) | | | $ | (20,789) | | | $ | 4,706,547 | | | $ | 2,794,809 | |
Net income | — | | | — | | | — | | | — | | | — | | | 110,982 | | | 110,982 | |
Total other comprehensive loss | — | | | — | | | — | | | — | | | (33,509) | | | — | | | (33,509) | |
Issuance of shares upon the exercise of stock options | 1 | | | — | | | 142 | | | — | | | — | | | — | | | 142 | |
Restricted stock units and deferred stock units vested | 22 | | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based compensation | — | | | — | | | 10,946 | | | — | | | — | | | — | | | 10,946 | |
Stock issued under employee stock purchase plan | 7 | | | — | | | 1,050 | | | — | | | — | | | — | | | 1,050 | |
Repurchases of common stock | (452) | | | — | | | — | | | (76,439) | | | — | | | — | | | (76,439) | |
Cash dividends declared ($1.50 per common share) | — | | | — | | | — | | | — | | | — | | | (90,706) | | | (90,706) | |
Other | — | | | — | | | (1,200) | | | — | | | — | | | — | | | (1,200) | |
Balance at October 8, 2022 | 59,696 | | | $ | 8 | | | $ | 886,438 | | | $ | (2,842,896) | | | $ | (54,298) | | | $ | 4,726,823 | | | $ | 2,716,075 | |
| | | | | | | | | | | | | |
| Twelve Weeks Ended October 9, 2021 |
| Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity |
| Shares | | Amount | | | | | |
Balance at July 17, 2021 | 63,499 | | | $ | 8 | | | $ | 818,126 | | | $ | (1,973,371) | | | $ | (23,283) | | | $ | 4,480,085 | | | $ | 3,301,565 | |
Net income | — | | | — | | | — | | | — | | | — | | | 169,813 | | | 169,813 | |
Total other comprehensive income | — | | | — | | | — | | | — | | | 1,457 | | | — | | | 1,457 | |
Restricted stock units and deferred stock units vested | 29 | | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based compensation | — | | | — | | | 16,040 | | | — | | | — | | | — | | | 16,040 | |
Stock issued under employee stock purchase plan | 4 | | | — | | | 868 | | | — | | | — | | | — | | | 868 | |
Repurchases of common stock | (1,119) | | | — | | | — | | | (230,213) | | | — | | | — | | | (230,213) | |
Cash dividends declared ($1.00 per common share) | — | | | — | | | — | | | — | | | — | | | (62,994) | | | (62,994) | |
Other | — | | | — | | | (1) | | | — | | | — | | | — | | | (1) | |
Balance at October 9, 2021 | 62,413 | | | $ | 8 | | | $ | 835,033 | | | $ | (2,203,584) | | | $ | (21,826) | | | $ | 4,586,904 | | | $ | 3,196,535 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
| Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited) | Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited) | Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited) |
| | | | Sixteen Weeks Ended April 22, 2023 |
| | | Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity |
| | | Shares | | Amount | |
Balance at December 31, 2022 | | Balance at December 31, 2022 | 59,264 | | | $ | 8 | | | $ | 897,560 | | | $ | (2,918,768) | | | $ | (45,143) | | | $ | 4,744,624 | | | $ | 2,678,281 | |
Net income | | Net income | — | | | — | | | — | | | — | | | — | | | 42,651 | | | 42,651 | |
Total other comprehensive income | | Total other comprehensive income | — | | | — | | | — | | | — | | | 788 | | | — | | | 788 | |
| Restricted stock units and deferred stock units vested | | Restricted stock units and deferred stock units vested | 256 | | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based compensation | | Share-based compensation | — | | | — | | | 16,524 | | | — | | | — | | | — | | | 16,524 | |
Stock issued under employee stock purchase plan | | Stock issued under employee stock purchase plan | 18 | | | — | | | 1,100 | | | — | | | — | | | — | | | 1,100 | |
Repurchases of common stock | | Repurchases of common stock | (94) | | | — | | | — | | | (12,605) | | | — | | | — | | | (12,605) | |
Cash dividends declared ($1.50 per common share) | | Cash dividends declared ($1.50 per common share) | — | | | — | | | — | | | — | | | — | | | (89,578) | | | (89,578) | |
Other | | Other | — | | | — | | | (1,000) | | | — | | | — | | | — | | | (1,000) | |
Balance at April 22, 2023 | | Balance at April 22, 2023 | 59,444 | | | $ | 8 | | | $ | 914,184 | | | $ | (2,931,373) | | | $ | (44,355) | | | $ | 4,697,697 | | | $ | 2,636,161 | |
| | | Forty Weeks Ended October 8, 2022 | | Sixteen Weeks Ended April 23, 2022 |
| | Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity | | Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity |
| | Shares | | Amount | | | | | Shares | | Amount | | | |
Balance at January 1, 2022 | Balance at January 1, 2022 | 62,009 | | | $ | 8 | | | $ | 845,407 | | | $ | (2,300,288) | | | $ | (22,627) | | | $ | 4,605,791 | | | $ | 3,128,291 | | Balance at January 1, 2022 | 62,009 | | | $ | 8 | | | $ | 845,407 | | | $ | (2,300,288) | | | $ | (22,627) | | | $ | 4,605,791 | | | $ | 3,128,291 | |
Net income | Net income | — | | | — | | | — | | | — | | | — | | | 395,176 | | | 395,176 | | Net income | — | | | — | | | — | | | — | | | — | | | 139,791 | | | 139,791 | |
Total other comprehensive loss | Total other comprehensive loss | — | | | — | | | — | | | — | | | (31,671) | | | — | | | (31,671) | | Total other comprehensive loss | — | | | — | | | — | | | — | | | (18,438) | | | — | | | (18,438) | |
Issuance of shares upon the exercise of stock options | Issuance of shares upon the exercise of stock options | 3 | | | — | | | 496 | | | — | | | — | | | — | | | 496 | | Issuance of shares upon the exercise of stock options | 1 | | | — | | | 233 | | | — | | | — | | | — | | | 233 | |
Restricted stock units and deferred stock units vested | Restricted stock units and deferred stock units vested | 281 | | | — | | | — | | | — | | | — | | | — | | | — | | Restricted stock units and deferred stock units vested | 234 | | | — | | | — | | | — | | | — | | | — | | | — | |
Share-based compensation | Share-based compensation | — | | | — | | | 40,291 | | | — | | | — | | | — | | | 40,291 | | Share-based compensation | — | | | — | | | 16,978 | | | — | | | — | | | — | | | 16,978 | |
Stock issued under employee stock purchase plan | Stock issued under employee stock purchase plan | 25 | | | — | | | 3,144 | | | — | | | — | | | — | | | 3,144 | | Stock issued under employee stock purchase plan | 10 | | | — | | | 933 | | | — | | | — | | | — | | | 933 | |
Repurchases of common stock | Repurchases of common stock | (2,622) | | | — | | | — | | | (542,608) | | | — | | | — | | | (542,608) | | Repurchases of common stock | (1,156) | | | — | | | — | | | (264,469) | | | — | | | — | | | (264,469) | |
Cash dividends declared ($4.50 per common share) | — | | | — | | | — | | | — | | | — | | | (274,144) | | | (274,144) | | |
Cash dividends declared ($1.50 per common share) | | Cash dividends declared ($1.50 per common share) | — | | | — | | | — | | | — | | | — | | | (92,539) | | | (92,539) | |
Other | Other | — | | | — | | | (2,900) | | | — | | | — | | | — | | | (2,900) | | Other | — | | | — | | | (1,100) | | | — | | | — | | | — | | | (1,100) | |
Balance at October 8, 2022 | 59,696 | | | $ | 8 | | | $ | 886,438 | | | $ | (2,842,896) | | | $ | (54,298) | | | $ | 4,726,823 | | | $ | 2,716,075 | | |
| | Forty Weeks Ended October 9, 2021 | |
| Common Stock | | Additional Paid-in Capital | | Treasury Stock, at Cost | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Total Stockholders’ Equity | |
| Shares | | Amount | | | | |
Balance at January 2, 2021 | 66,361 | | | $ | 8 | | | $ | 783,709 | | | $ | (1,394,080) | | | $ | (26,759) | | | $ | 4,196,634 | | | $ | 3,559,512 | | |
Net income | — | | | — | | | — | | | — | | | — | | | 534,439 | | | 534,439 | | |
Total other comprehensive income | — | | | — | | | — | | | — | | | 4,933 | | | — | | | 4,933 | | |
Restricted stock units and deferred stock units vested | 277 | | | — | | | — | | | — | | | — | | | — | | | — | | |
Share-based compensation | — | | | — | | | 49,631 | | | — | | | — | | | — | | | 49,631 | | |
Stock issued under employee stock purchase plan | 23 | | | — | | | 1,737 | | | — | | | — | | | — | | | 1,737 | | |
Repurchases of common stock | (4,285) | | | — | | | — | | | (809,504) | | | — | | | — | | | (809,504) | | |
Cash dividends declared ($2.25 per common share) | — | | | — | | | — | | | — | | | — | | | (144,169) | | | (144,169) | | |
Other | 37 | | | — | | | (44) | | | — | | | — | | | — | | | (44) | | |
Balance at October 9, 2021 | 62,413 | | | $ | 8 | | | $ | 835,033 | | | $ | (2,203,584) | | | $ | (21,826) | | | $ | 4,586,904 | | | $ | 3,196,535 | | |
Balance at April 23, 2022 | | Balance at April 23, 2022 | 61,098 | | | $ | 8 | | | $ | 862,451 | | | $ | (2,564,757) | | | $ | (41,065) | | | $ | 4,653,043 | | | $ | 2,909,680 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(in thousands) (Unaudited) | | | Forty Weeks Ended | | Sixteen Weeks Ended |
| | October 8, 2022 | | October 9, 2021 | | April 22, 2023 | | April 23, 2022 |
Cash flows from operating activities: | Cash flows from operating activities: | | | | Cash flows from operating activities: | | | |
Net income | Net income | $ | 395,176 | | | $ | 534,439 | | Net income | $ | 42,651 | | | $ | 139,791 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | |
Adjustments to reconcile net income to net cash used in operating activities: | | Adjustments to reconcile net income to net cash used in operating activities: | |
Depreciation and amortization | Depreciation and amortization | 215,224 | | | 194,737 | | Depreciation and amortization | 92,554 | | | 85,581 | |
Share-based compensation | Share-based compensation | 40,291 | | | 49,631 | | Share-based compensation | 16,524 | | | 16,978 | |
Loss and impairment of long-lived assets | Loss and impairment of long-lived assets | 2,858 | | | 7,570 | | Loss and impairment of long-lived assets | 90 | | | 1,237 | |
Loss on early redemption of senior unsecured notes | Loss on early redemption of senior unsecured notes | 7,408 | | | — | | Loss on early redemption of senior unsecured notes | — | | | 7,408 | |
Provision for deferred income taxes | Provision for deferred income taxes | 24,144 | | | 32,425 | | Provision for deferred income taxes | 6,899 | | | 9,681 | |
Other, net | Other, net | 2,064 | | | 1,388 | | Other, net | 391 | | | 1,020 | |
Net change in: | Net change in: | | Net change in: | |
Receivables, net | Receivables, net | (66,902) | | | (180,605) | | Receivables, net | (83,370) | | | (174,895) | |
Inventories | (284,271) | | | 90,993 | | |
Inventories, net | | Inventories, net | (100,178) | | | (119,550) | |
Accounts payable | Accounts payable | 187,331 | | | 108,393 | | Accounts payable | (440,995) | | | 20,225 | |
Accrued expenses | Accrued expenses | (34,046) | | | 137,395 | | Accrued expenses | 85,035 | | | (98,978) | |
Other assets and liabilities, net | Other assets and liabilities, net | (6,183) | | | (51,430) | | Other assets and liabilities, net | 1,534 | | | 56,562 | |
Net cash provided by operating activities | 483,094 | | | 924,936 | | |
Net cash used in operating activities | | Net cash used in operating activities | (378,865) | | | (54,940) | |
Cash flows from investing activities: | Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Purchases of property and equipment | Purchases of property and equipment | (333,639) | | | (190,983) | | Purchases of property and equipment | (89,996) | | | (114,854) | |
| Proceeds from sales of property and equipment | Proceeds from sales of property and equipment | 1,821 | | | 2,102 | | Proceeds from sales of property and equipment | 325 | | | 828 | |
Net cash used in investing activities | Net cash used in investing activities | (331,818) | | | (188,881) | | Net cash used in investing activities | (89,671) | | | (114,026) | |
Cash flows from financing activities: | Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
Borrowings under credit facilities | Borrowings under credit facilities | 1,123,000 | | | — | | Borrowings under credit facilities | 2,886,000 | | | 275,000 | |
Payments on credit facilities | Payments on credit facilities | (938,000) | | | — | | Payments on credit facilities | (2,955,000) | | | (275,000) | |
Borrowings on senior unsecured notes | Borrowings on senior unsecured notes | 348,618 | | | — | | Borrowings on senior unsecured notes | 599,571 | | | 348,618 | |
Payments on senior unsecured notes | Payments on senior unsecured notes | (201,081) | | | — | | Payments on senior unsecured notes | — | | | (201,081) | |
Dividends paid | Dividends paid | (336,230) | | | (160,925) | | Dividends paid | (89,487) | | | (154,796) | |
Repurchases of common stock | Repurchases of common stock | (542,608) | | | (809,504) | | Repurchases of common stock | (12,605) | | | (264,469) | |
Other, net | Other, net | 463 | | | 1,691 | | Other, net | (2,819) | | | (2,007) | |
Net cash used in financing activities | (545,838) | | | (968,738) | | |
Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | 425,660 | | | (273,735) | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | (15,662) | | | 2,336 | | Effect of exchange rate changes on cash | 93 | | | (19,994) | |
Net decrease in cash and cash equivalents | Net decrease in cash and cash equivalents | (410,224) | | | (230,347) | | Net decrease in cash and cash equivalents | (42,783) | | | (462,695) | |
Cash and cash equivalents, beginning of period | Cash and cash equivalents, beginning of period | 601,428 | | | 834,992 | | Cash and cash equivalents, beginning of period | 269,282 | | | 601,428 | |
Cash and cash equivalents, end of period | Cash and cash equivalents, end of period | $ | 191,204 | | | $ | 604,645 | | Cash and cash equivalents, end of period | $ | 226,499 | | | $ | 138,733 | |
| | Non-cash transactions: | Non-cash transactions: | | Non-cash transactions: | |
Accrued purchases of property and equipment | Accrued purchases of property and equipment | $ | 13,126 | | | $ | 8,632 | | Accrued purchases of property and equipment | $ | 6,909 | | | $ | 15,272 | |
The accompanying notes to the condensed consolidated financial statements are an integral part of these statements.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
1. 1. Nature of Operations and Basis of Presentation
Description of Business
Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both professional installers (“professional”) and “do-it-yourself” (“DIY”) customers. The accompanying condensed consolidated financial statements have been prepared by us and include the accounts of Advance Auto Parts, Inc., its wholly owned subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and their subsidiaries (collectively referred to as “Advance,” “we,” “us” or “our”).
As of October 8, 2022,April 22, 2023, we operated a total of 4,7474,778 stores and 313318 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of October 8, 2022,April 22, 2023, we served 1,3351,315 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico and various Caribbean islands. Our stores operate primarily under the trade names “Advance Auto Parts” and “Carquest” and our branches operate under the “Worldpac” and “Autopart International” trade names.
The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), have been condensed or omitted based upon the Securities and Exchange Commission (“SEC”) interim reporting principles. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for 20212022 as filed with the SEC on February 15, 2022.28, 2023.
The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our remaining three quarters each consist of twelve weeks.
Out-of-Period Charge
2.
The sixteen weeks ended April 22, 2023 included an out-of-period charge of $17.3 million, reflected in Selling, general and administrative (“SG&A”) expenses, and related tax benefit of $4.3 million in the Condensed Consolidated Statement of Operations, related to costs incurred in prior years but not previously expensed. The out-of-period charge was not material to the current period or any previously issued financial statements.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
2. Significant Accounting Policies
Revenues
The following table summarizes disaggregated revenue from contracts with customers by product group:
| | | Twelve Weeks Ended | | Forty Weeks Ended | | Sixteen Weeks Ended |
| | October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 | | April 22, 2023 | | April 23, 2022 |
Percentage of Sales: | Percentage of Sales: | | | | | | | | Percentage of Sales: | | | |
Parts and Batteries | Parts and Batteries | 67 | % | | 68 | % | | 66 | % | | 66 | % | Parts and Batteries | 66 | % | | 66 | % |
Accessories and Chemicals | Accessories and Chemicals | 20 | | | 19 | | | 20 | | | 21 | | Accessories and Chemicals | 20 | | | 20 | |
Engine Maintenance | Engine Maintenance | 12 | | | 12 | | | 13 | | | 12 | | Engine Maintenance | 13 | | | 13 | |
Other | Other | 1 | | | 1 | | | 1 | | | 1 | | Other | 1 | | | 1 | |
Total | Total | 100 | % | | 100 | % | | 100 | % | | 100 | % | Total | 100 | % | | 100 | % |
Recently Issued Accounting Pronouncements - Adopted
Supplier Finance Programs
In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”), which requires a buyer in a supplier finance program to disclose sufficient information about the program, enabling users of the financial statements to understand the nature of the program and activity and changes during the period. ASU 2022-04 was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the requirement on rollforward information, which is effective for fiscal years beginning after December 15, 2023. During the first quarter 2023, we adopted ASU 2022-04, which did not have a material impact on our consolidated financial position, results of operations and cash flows. Refer toNote 11. Supplier Finance Programs for further details.
3. 3. Inventories, net
Inventories, net, are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 90.8%92% of inventories as of October 8, 2022April 22, 2023 and 89.8% of inventories as of January 1,December 31, 2022. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the fortysixteen weeks ended October 8, 2022April 22, 2023 and prior years. As a result of changes in the LIFO reserve, we recorded an increasea reduction to Cost of sales of $67.5 million and $29.4$6.6 million for the twelvesixteen weeks ended October 8, 2022 and October 9, 2021April 22, 2023 and an increase to Cost of sales of $240.8 million and $71.6$81.5 million for the fortysixteen weeks ended October 8,April 23, 2022 and October 9, 2021 to state inventories at LIFO.
An actual valuation of inventory under the LIFO method is performed by us at the end of each fiscal year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
An actual valuation of inventory under the LIFO method is performed by us at the end of each year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.
Inventory balances were as follows:
| | | | | | | | | | | |
| October 8, 2022 | | January 1, 2022 |
Inventories at first in, first out (“FIFO”) | $ | 5,134,220 | | | $ | 4,625,900 | |
Adjustments to state inventories at LIFO | (207,641) | | | 33,118 | |
Inventories at LIFO | $ | 4,926,579 | | | $ | 4,659,018 | |
| | | | | | | | | | | |
| April 22, 2023 | | December 31, 2022 |
Inventories at first in, first out (“FIFO”) | $ | 5,287,977 | | | $ | 5,193,911 | |
Adjustments to state inventories at LIFO | (272,004) | | | (278,649) | |
Inventories at LIFO | $ | 5,015,973 | | | $ | 4,915,262 | |
4. 4. Intangible Assets
Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $7.0$9.2 million and $7.2$9.5 million for the twelvesixteen weeks ended October 8, 2022April 22, 2023 and October 9, 2021 and $23.6 million and $24.1 million for the forty weeks ended October 8, 2022 and October 9, 2021.April 23, 2022.
5. 5. Receivables, net
Receivables, net, consisted of the following:
| | | October 8, 2022 | | January 1, 2022 | | April 22, 2023 | | December 31, 2022 |
Trade | Trade | $ | 659,373 | | | $ | 506,725 | | Trade | $ | 626,922 | | | $ | 576,548 | |
Vendor | Vendor | 193,019 | | | 201,933 | | Vendor | 163,755 | | | 126,640 | |
Other (1) | Other (1) | 13,820 | | | 84,289 | | Other (1) | 9,465 | | | 10,638 | |
Total receivables | Total receivables | 866,212 | | | 792,947 | | Total receivables | 800,142 | | | 713,826 | |
Less: allowance for credit losses | Less: allowance for credit losses | (20,545) | | | (10,162) | | Less: allowance for credit losses | (18,049) | | | (15,213) | |
Receivables, net | Receivables, net | $ | 845,667 | | | $ | 782,785 | | Receivables, net | $ | 782,093 | | | $ | 698,613 | |
(1) The decrease in Other receivables as
6. Long-term Debt and Fair Value of October 8, 2022 was primarily attributable to the releaseFinancial Instruments
Long-term debt consists of the settlement in the second quarter of 2022 for the amount of $49.3 million, which was related to the securities class action litigation and was fully paid by our insurance carriers upon final court approval on June 13, 2022.following:
| | | | | | | | | | | |
| April 22, 2023 | | December 31, 2022 |
5.90% Senior Unsecured Notes due March 9, 2026 | $ | 297,941 | | | $ | — | |
1.75% Senior Unsecured Notes due October 1, 2027 | 347,122 | | | 346,947 | |
5.95% Senior Unsecured Notes due March 9, 2028 | 297,882 | | | — | |
3.90% Senior Unsecured Notes due April 15, 2030 | 495,743 | | | 495,562 | |
3.50% Senior Unsecured Notes due March 15, 2032 | 345,908 | | | 345,774 | |
Revolver credit facility | 116,000 | | | 185,000 | |
| $ | 1,900,596 | | | $ | 1,373,283 | |
Less: Current portion of long-term debt | (116,000) | | | (185,000) | |
Long-term debt, excluding the current portion | $ | 1,784,596 | | | $ | 1,188,283 | |
Fair value of long-term debt | $ | 1,784,176 | | | $ | 1,021,396 | |
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
6. Long-term Debt and Fair Value of Financial Instruments
Long-term debt consists of the following:
| | | | | | | | | | | |
| October 8, 2022 | | January 1, 2022 |
4.50% Senior Unsecured Notes due December 1, 2023 | $ | — | | | $ | 193,220 | |
1.75% Senior Unsecured Notes due October 1, 2027 | 346,816 | | | 346,382 | |
3.90% Senior Unsecured Notes due April 15, 2030 | 495,427 | | | 494,718 | |
3.50% Senior Unsecured Notes due March 15, 2032 | 345,673 | | | — | |
Revolver credit facility | 185,000 | | | — | |
| $ | 1,372,916 | | | $ | 1,034,320 | |
Less: Current portion of long-term debt | (185,000) | | | — | |
Long-term debt, excluding the current portion | $ | 1,187,916 | | | $ | 1,034,320 | |
Fair value of long-term debt | $ | 998,000 | | | $ | 1,092,000 | |
Fair Value of Financial Assets and Liabilities
The fair value of our senior unsecured notes was determined using Level 2 inputs based on quoted market prices. The carrying amounts of our Cash and cash equivalents, Receivables, net, Accounts payable and Accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.
Bank Debt
On February 27, 2023, we entered into Amendment No. 1 (the “Amendment”) to the 2021 Credit Agreement. The Amendment extends the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment also replaces an adjusted LIBOR benchmark rate with a term secured overnight financing rate benchmark rate, as adjusted by an increase of ten basis points, plus the applicable margin under 2021 Credit Agreement. The Amendment made no other material changes to the terms of the 2021 Credit Agreement.
As of October 8, 2022,April 22, 2023, we had $185.0$116.0 million of outstanding borrowings, $1.0$1.1 billion of borrowing availability and no letters of credit outstanding under our unsecured revolving credit facility (the “Credit Agreement”). As of January 1,December 31, 2022, we had no$185.0 million outstanding borrowings, $1.2$1.0 billion of borrowing availability and no letters of credit outstanding under our Credit Agreement.
As of October 8, 2022April 22, 2023 and January 1,December 31, 2022, we had $90.2$91.0 million and $92.0$90.2 million of bilateral letters of credit issued separately from the Credit Agreement, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and primarily serve as collateral for our self-insurance policies.
We were in compliance with financial covenants required by our debt arrangements as of October 8, 2022.April 22, 2023.
Senior Unsecured Notes
Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest, payable semi-annually in arrears on June 1 and December 1, at a rate of 4.50% per year. Pursuant to a cash tender offer that was completed on September 29, 2020, we repurchased $256.3 million of the 2023 Notes with the net proceeds from the 2027 Notes. In connection with this tender offer, we incurred charges related to tender premiums and debt issuance costs of $30.5 million and $1.4 million. On April 4, 2022, we redeemed the remaining $193.2 million principal amount of our outstanding 2023 Notes with the net proceeds from the issuance of the 3.50% senior unsecured notes due March 15, 2032 (the “2032 Notes”). In connection with this early redemption, we incurred charges related to the make-whole provision and debt issuance costs of $7.0 million and $0.4 million.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
Our 3.90% senior unsecured notes due April 15, 2030 (the “Original Notes”) were issued April 16, 2020, at 99.65% of the principal amount of $500.0 million, and were not registered under the Securities Act of 1933, as amended (the “Securities Act”). The Original Notes bear interest, payable semi-annually in arrears on April 15 and October 15, at a rate of 3.90% per year. On July 28, 2020, we completed an exchange offer whereby the Original Notes in the aggregate principal amount of $500.0 million were exchanged for a like principal amount (the “Exchange Notes” or “2030 Notes”), and which have been registered under the Securities Act. The Original Notes were substantially identical to the Exchange Notes, except the Exchange Notes are registered under the Securities Act and are not subject to the transfer restrictions and certain registration rights agreement provisions applicable to the Original Notes.
Our 1.75% senior unsecured notes due October 1, 2027 (the “2027 Notes”) were issued September 29, 2020, at 99.67% of the principal amount of $350.0 million. The 2027 Notes bear interest, payable semi-annually in arrears on April 1 and October 1, at a rate of 1.75% per year. In connection with the 2027 Notes offering, we incurred $2.9 million of debt issuance costs.
Our 3.50% senior unsecured notes due 2032 Notes(the “2032 Notes”) were issued March 4, 2022, at 99.61% of the principal amount of $350.0 million. The 2032 Notes bear interest, payable semi-annually in arrears on March 15 and September 15, at a rate of 3.50% per year. In connection with the 2032 Notes offering, we incurred $3.2 million of debt issuance costs.
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
Our 5.90% senior unsecured notes due March 9, 2026 (the “2026 Notes”) were issued March 9, 2023, at 99.94% of the principal amount of $300.0 million. The 2026 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of 5.90% per year. In connection with the 2026 Notes offering, we incurred $1.6 million of debt issuance costs.
Our 5.95% senior unsecured notes due March 9, 2028 (the “2028 Notes”) were issued March 9, 2023, at 99.92% of the principal amount of $300.0 million. The 2028 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of 5.95% per year. In connection with the 2028 Notes offering, we incurred $1.7 million of debt issuance costs.
We may redeem some or all of the 2032our 2026 Notes and 2028 Notes (the “Notes”) at any time, or from time to time, prior to December 15, 2031,March 9, 2026 in the case of our 2026 Notes, or February 9, 2028 in the case of our 2028 Notes, at the redemption price described in the related indenture for the 2032 Notes (the “Indenture”). In addition, in the event of a change of control triggering event, as defined in the Indenture, we will be required to offer tothe repurchase of the 2032 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. Currently, the 2032 Notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by guarantor and subsidiary guarantees, as defined by the Indenture.
Debt Guarantees
We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are customers of ours. These loans totaled $66.5$104.0 million and $31.7$96.9 million as of October 8, 2022April 22, 2023 and January 1,December 31, 2022 and are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements was $143.9$177.7 million and $86.9$174.6 million as of October 8, 2022April 22, 2023 and January 1,December 31, 2022. We believe that the likelihood of performance under these guarantees is remote.
7. Leases
Substantially all of our leases are for facilities and vehicles. The initial term for facilities is typically five to ten years, with renewal options typically at five-yearfive-year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment leaseslease terms are typically three to six years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
OperatingTotal lease liabilities consisted of the following:
| | | | | | | | | | | |
| October 8, 2022 | | January 1, 2022 |
Total operating lease liabilities | $ | 2,713,940 | | | $ | 2,802,772 | |
Less: Current portion of operating lease liabilities | (462,380) | | | (465,121) | |
Noncurrent operating lease liabilities | $ | 2,251,560 | | | $ | 2,337,651 | |
The current portion of operating lease liabilitiescost is included in Other current liabilitiesCost of sales and Selling, general and administrative expenses (“SG&A”) in the accompanying Condensed Consolidated Balance Sheets.Statements of Operations and is recorded net of immaterial sublease income. Total lease cost comprised of the following:
| | | | | | | | | | | |
| Sixteen Weeks Ended |
| April 22, 2023 | | April 23, 2022 |
Operating lease cost | $ | 173,659 | | | $ | 173,035 | |
Variable lease cost | 51,346 | | | 53,296 | |
Total lease cost | $ | 225,005 | | | $ | 226,331 | |
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
Total lease cost is included in Cost of sales and Selling, general and administrative expenses (“SG&A”) in the accompanying Condensed Consolidated Statements of Operations and is recorded net of immaterial sublease income. Total lease cost was comprised of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 |
Operating lease cost | $ | 130,108 | | | $ | 124,084 | | | $ | 433,147 | | | $ | 410,253 | |
Variable lease cost | 40,910 | | | 35,144 | | | 136,183 | | | 112,864 | |
Total lease cost | $ | 171,018 | | | $ | 159,228 | | | $ | 569,330 | | | $ | 523,117 | |
The future maturity of lease liabilities as of October 8, 2022 were as follows:
| | | | | | |
Remainder of 2022 | | $ | 71,651 | |
2023 | | 564,385 | |
2024 | | 504,295 | |
2025 | | 470,989 | |
2026 | | 360,570 | |
Thereafter | | 1,085,608 | |
Total lease payments | | 3,057,498 | |
Less: Imputed interest | | (343,558) | |
Total operating lease liabilities | | $ | 2,713,940 | |
As of October 8, 2022, our operating lease liabilities included $54.0 million related to options to extend lease terms that are reasonably certain of being exercised and excluded $100.0 million of legally binding minimum lease payments for leases signed but not yet commenced.
The weighted-average remaining lease term and weighted-average discount rate for our operating leases were 7.0 years and 3.3% as of October 8, 2022. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.
Other information relating to our lease liabilities is as follows:
| | | Forty Weeks Ended | | Sixteen Weeks Ended |
| | October 8, 2022 | | October 9, 2021 | | April 22, 2023 | | April 23, 2022 |
Cash paid for amounts included in the measurement of lease liabilities: | Cash paid for amounts included in the measurement of lease liabilities: | | | | Cash paid for amounts included in the measurement of lease liabilities: | | | |
Operating cash flows from operating leases | Operating cash flows from operating leases | $ | 478,658 | | | $ | 418,596 | | Operating cash flows from operating leases | $ | 153,363 | | | $ | 190,542 | |
Right-of-use assets obtained in exchange for lease obligations: | Right-of-use assets obtained in exchange for lease obligations: | | Right-of-use assets obtained in exchange for lease obligations: | |
Operating leases | Operating leases | $ | 343,950 | | | $ | 460,351 | | Operating leases | $ | 181,167 | | | $ | 147,015 | |
8. 8. Share Repurchase Program
On February 8, 2022, ourOur Board of Directors had previously authorized an additional $1.0$2.7 billion to the existingour share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.
During the sixteen weeks ended April 22, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteen weeks ended April 23, 2022, we repurchased 1.1 million shares at an aggregate cost of $248.2 million, or an average price of $231.41 per share. We had $947.3 million remaining under our share repurchase program as of April 22, 2023.
9. Earnings per Share
The computations of basic and diluted earnings per share were as follows:
| | | | | | | | | | | |
| Sixteen Weeks Ended |
| April 22, 2023 | | April 23, 2022 |
Numerator | | | |
Net income applicable to common shares | $ | 42,651 | | | $ | 139,791 | |
Denominator | | | |
Basic weighted-average common shares | 59,334 | | | 61,261 | |
Dilutive impact of share-based awards | 210 | | | 471 | |
Diluted weighted-average common shares (1) | 59,544 | | | 61,732 | |
| | | |
Basic earnings per common share | $ | 0.72 | | | $ | 2.28 | |
Diluted earnings per common share | $ | 0.72 | | | $ | 2.26 | |
(1)For the sixteen weeks ended April 22, 2023 and April 23, 2022, 190 thousand and 21 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive.
10. Share-Based Compensation
During the sixteen weeks ended April 22, 2023, we granted 237 thousand time-based RSUs, 22 thousand performance-based RSUs, 73 thousand market-based RSUs and 148 thousand stock options. The general terms of the time-based and market-based RSUs are similar to awards previously granted by us. The performance-based RSUs granted may vest following a one-year period subject to the achievements of certain financial goals and employment service as specified in the grant agreement. We grant options to purchase common stock to certain employees under our 2014 Long-Term Incentive Plan. The general terms of the stock options are similar to awards
Advance Auto Parts, Inc. and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
(Amounts presented in thousands, except per share data, unless otherwise stated)
(Unaudited)
During the twelve weeks ended October 8, 2022 and October 9, 2021, we repurchased 0.4 million and 1.1 million shares of our common stock under our share repurchase program at an aggregate cost of $75.0 million and $228.3 million, or an average price of $168.93 and $205.65 per share. During the forty weeks ended October 8, 2022 and October 9, 2021, we repurchased 2.5 million and 4.2 million shares of our common stock under our share repurchase program at an aggregate cost of $523.2 million and $791.7 million, or an average price of $207.50 and $189.43 per share. We had $1.0 billion remaining under our share repurchase program as of October 8, 2022.
9. Earnings per Share
The computations of basic and diluted earnings per share are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 |
Numerator | | | | | | | |
Net income applicable to common shares | $ | 110,982 | | | $ | 169,813 | | | $ | 395,176 | | | $ | 534,439 | |
Denominator | | | | | | | |
Basic weighted-average common shares | 60,053 | | | 62,854 | | | 60,656 | | | 64,555 | |
Dilutive impact of share-based awards | 331 | | | 494 | | | 389 | | | 453 | |
Diluted weighted-average common shares (1) | 60,384 | | | 63,348 | | | 61,045 | | | 65,008 | |
| | | | | | | |
Basic earnings per common share | $ | 1.85 | | | $ | 2.70 | | | $ | 6.52 | | | $ | 8.28 | |
Diluted earnings per common share | $ | 1.84 | | | $ | 2.68 | | | $ | 6.47 | | | $ | 8.22 | |
(1)For the twelve weeks ended October 8, 2022, 163 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the twelve weeks ended October 9, 2021, there were no RSUs that were anti-dilutive. For the forty weeks ended October 8, 2022 and October 9, 2021, 122 thousand and 11 thousand RSUs were excluded from the diluted calculation as their inclusion would have been anti-dilutive.
10. Share-Based Compensation
During the forty weeks ended October 8, 2022, we granted 188 thousand time-based RSUs, 58 thousand market-based RSUs and 114 thousand stock options. The general terms of the time-based and market-based RSUs are similar to awards previously granted by us. We grant options to purchase common stock to certain employees under our 2014 Long-Term Incentive Plan. The general terms of the stock options are similar to awards previously granted by us. We record compensation expense for the grant date fair value of the option awards evenly over the vesting period.
The weighted-average fair values of the time-based, performance-based and market-based RSUs granted during the fortysixteen weeks ended October 8, 2022April 22, 2023 were $201.89$135.13, $135.13 and $205.52$139.75 per share. The fair value of each market-based RSU was determined using a Monte Carlo simulation model. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our stock on the date of grant adjusted for expected dividends during the vesting period, as applicable.
The weighted-average fair value of stock options granted during the sixteen weeks ended April 22, 2023 was $35.38 per share. The fair value was estimated on the date of grant by applying the Black-Scholes option-pricing valuation model.
| | | | | |
| Sixteen Weeks Ended |
| April 22, 2023 |
Risk-free interest rate (1) | 4.1 | % |
Expected term (2) | 6 years |
Expected volatility (3) | 35.1 | % |
Expected dividend yield (4) | 4.1 | % |
(1) The risk-free interest rate is based on the yield in effect at grant for zero-coupon U.S. Treasury notes with maturities equivalent to the expected term of the stock options.
(2) The expected term represents the period of time options granted are expected to be outstanding. As we do not have sufficient historical data, we utilized the simplified method provided by the SEC to calculate the expected term as the average of the contractual term and vesting period.
(3) Expected volatility is the measure of the amount by which the stock price has fluctuated or is expected to fluctuate. We utilized historical trends and the implied volatility of our publicly traded financial instruments in developing the volatility estimate for our stock options.
(4) The expected dividend yield is calculated based on our expected quarterly dividend and the three month average stock price as of the grant date.
The total income tax benefit related to share-based compensation expense for the fortysixteen weeks ended October 8, 2022April 22, 2023 was $9.9$4.0 million. As of October 8, 2022,April 22, 2023, there was $76.0$95.7 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted-average period of 1.51.7 years.
11. Supplier Finance Programs
We maintain supply chain financing agreements with third-party financial institutions to provide our suppliers with enhanced receivables options. Through these agreements, our suppliers, at their sole discretion, may elect to sell its receivables due from us to the third-party financial institution at terms negotiated between the supplier and the third-party financial institution. We do not provide any guarantees to any third party in connection with these financing arrangements. Our obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted, and no assets are pledged under the agreements. All outstanding amounts due to third-party financial institutions related to suppliers participating in such financing arrangements are recorded within Accounts payable represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in our Condensed Consolidated Balance Sheets. As of April 22, 2023 and December 31, 2022, $3.1 billion and $3.2 billion of our Accounts payable were to suppliers participating in these financing arrangements.
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended January 1,December 31, 2022 (filed with the SEC on February 15, 2022)28, 2023), which we refer to as our 20212022 Form 10-K, and our condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report.
Management Overview
Net sales increased 0.8% in the third quarter of 2022 compared with the same period in the prior year, primarily driven by improvements in strategic pricing and growth in new store openings. Comparable store sales decreased 0.7% for the quarter primarily due to owned brand penetration. Category growth was led by batteries, fluids and chemicals and brakes.
We generated Diluted earnings per share (“Diluted EPS”) of $1.84 during our third quarter of 2022, inclusive of foreign currency impact of $0.20 per diluted share, compared with $2.68 for the comparable period of 2021. When adjusted for non-operational items outlined in the following table, our Adjusted diluted earnings per share (“Adjusted EPS”), a non-GAAP measure, for the twelve weeks ended October 8, 2022 and October 9, 2021 was $2.84 and $3.21.
| | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
| October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 |
Last-in, first-out (“LIFO”) impacts | $ | 0.83 | | | $ | 0.35 | | | $ | 2.96 | | | $ | 0.82 | |
Transformation expenses | 0.09 | | | 0.10 | | | 0.37 | | | 0.64 | |
General Parts International, Inc. (“GPI”) amortization of acquired intangible assets | 0.08 | | | 0.08 | | | 0.26 | | | 0.25 | |
Other Income adjustments | — | | | — | | | 0.09 | | | — | |
Total adjustments, net of tax | $ | 1.00 | | | $ | 0.53 | | | $ | 3.68 | | | $ | 1.71 | |
| | | | | | | |
Refer to “Reconciliation of Non-GAAP Financial Measures” for a definition and reconciliation of Adjusted EPS and other non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.
A high-level summary of our financial results for the thirdfirst quarter of 20222023 includes:
•Net sales during the thirdfirst quarter of 20222023 was $2.64$3.42 billion, an increase of 0.8%1.3% compared with the thirdfirst quarter of 2021,2022, driven predominately by improvements in strategic pricing and growth in new store openings.openings, partially offset by a decline in comparable store sales. Comparable store sales decreased 0.7%declined 0.4% primarily driven by a decrease in demand within our professional business, partially offset by an increase in owned brand penetration.our DIY omnichannel business.
•Gross profit margin for the thirdfirst quarter of 20222023 was 44.7%43.0% of Net sales, a decrease of 44162 basis points compared with the thirdfirst quarter of 2021.2022. Gross profit margin was negatively impacted by inflationary product costs, including the impact of LIFO related expenses, unfavorable channel mix andwhich were not fully covered by pricing actions. Additionally, supply chain headwinds dueand unfavorable product mix contributed to inflation in labor and transportation costs. These costs were partially offset by improvements in strategic pricing and owned brand expansion.gross margin decline.
•Selling, General & Administrative (“SG&A”) expenses for the thirdfirst quarter of 20222023 were 38.0%40.4% of Net sales, an increase of 159177 basis points compared with the thirdfirst quarter of 2021.2022. This increase was primarily driven by inflation in labor and benefit-related expenses as well as deleverage associated with new store labor, medical and fuel costs.openings, partially offset by a decrease in startup costs related to our California expansion. Additionally, SG&A expenses included an out-of-period charge of $17.3 million related to costs incurred in prior years but not previously expensed.
•We generated Diluted earnings per share (“Diluted EPS”) of $0.72 during our first quarter of 2023, compared with $2.26 for the comparable period of 2022.
Business and Risks Update
We continue to make progress on the various elements of our strategic business plan, which is focused on improving the customer experience, margin expansion and driving consistent execution for both professional and DIY customers. To achieve these improvements, we have undertaken planned strategic initiatives to help build a foundation for long-term success across the organization, which include:
•Continued developmentrefinement of a demand-based assortment, leveraging purchase and search history from our common catalog, versus our existing push-down supply approach.catalog.
•Advancement towards optimizing our footprint by market including consolidating our Worldpac and Autopart International businesses, to drive share, repurpose our in-market store and asset base and streamline our distribution network.
•Continued evolution of our marketing campaigns, which focus on our customers and how we serve them every day with care and speed and innovate to meet their needs, inclusive of the iconic DieHard® brand.
•Progress in the implementation of a more efficient end-to-end supply chain process to deliver our broad assortment and to help lessen the impact of external constraints.
•Enhancement of Advance Same Day® Curbside Pick Up, Advance Same Day® Home Delivery and our mobile application and e-commerce performance.inventory.
•Actively pursuing new store openings in 2023, including through lease acquisition opportunities as available and appropriate, in existing markets and new markets, as well as expansion of our independent Carquest network.markets.
•Continued negotiations with vendors on strategic sourcing and pricing to help mitigate inflationary pressures.
Industry Update
Operating within the automotive aftermarket industry, we are influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry, and include but are not limited to:
•Inflationary pressures, including logistics and labor
•Global supply chain disruptions
•Rising fuel costs
•Miles driven
•Unemployment rates
•Consumer confidence and purchasing power
•Competition
•Changes in new car sales
•Economic and geopolitical uncertainty
•Increased foreign currency exchange volatility
Stores and Branches
Key factors in selecting sites and market locations in which we operate include population, demographics, traffic count, vehicle profile, competitive landscape and the cost of real estate. During the fortysixteen weeks ended October 8, 2022, 115April 22, 2023, 21 stores and branches were opened and 2711 were closed or consolidated, resulting in a total of 5,0605,096 stores and branches compared with a total of 4,9725,086 stores and branches as of January 1,December 31, 2022.
Results of Operations
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | $ Favorable/ (Unfavorable) | | Basis Points |
($ in millions) | October 8, 2022 | | October 9, 2021 | | |
Net sales | $ | 2,641.3 | | | 100.0 | % | | $ | 2,621.2 | | | 100.0 | % | | $ | 20.1 | | | — | |
Cost of sales | 1,461.5 | | | 55.3 | | | 1,438.8 | | | 54.9 | | | (22.7) | | | (44) | |
Gross profit | 1,179.8 | | | 44.7 | | | 1,182.5 | | | 45.1 | | | (2.6) | | | (44) | |
SG&A | 1,002.7 | | | 38.0 | | | 953.3 | | | 36.4 | | | (49.4) | | | (159) | |
Operating income | 177.2 | | | 6.7 | | | 229.2 | | | 8.7 | | | (52.0) | | | (204) | |
Interest expense | (12.0) | | | (0.5) | | | (8.6) | | | (0.3) | | | (3.4) | | | (13) | |
| | | | | | | | | | | |
Other (expense) income, net | (17.8) | | | (0.7) | | | 1.8 | | | 0.1 | | | (19.6) | | | (74) | |
Provision for income taxes | 36.4 | | | 1.4 | | | 52.6 | | | 2.0 | | | 16.2 | | | 63 | |
Net income | $ | 111.0 | | | 4.2 | % | | $ | 169.8 | | | 6.5 | % | | $ | (58.8) | | | (228) | |
Note: Table amounts may not foot due to rounding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Forty Weeks Ended | | $ Favorable/ (Unfavorable) | | Basis Points |
($ in millions) | October 8, 2022 | | October 9, 2021 | | |
Net sales | $ | 8,681.0 | | | 100.0 | % | | $ | 8,601.0 | | | 100.0 | % | | $ | 80.0 | | | — | |
Cost of sales | 4,808.9 | | | 55.4 | | | 4,744.4 | | | 55.2 | | | (64.5) | | | (23) | |
Gross profit | 3,872.1 | | | 44.6 | | | 3,856.6 | | | 44.8 | | | 15.5 | | | (23) | |
SG&A | 3,289.9 | | | 37.9 | | | 3,130.4 | | | 36.4 | | | (159.5) | | | (150) | |
Operating income | 582.2 | | | 6.7 | | | 726.3 | | | 8.4 | | | (144.0) | | | (173) | |
Interest expense | (35.1) | | | (0.4) | | | (28.1) | | | (0.3) | | | (7.0) | | | — | |
Loss on early redemption of senior unsecured notes | (7.4) | | | (0.1) | | | — | | | — | | | (7.4) | | | — | |
Other (expense) income, net | (18.3) | | | (0.2) | | | 7.8 | | | 0.1 | | | (26.1) | | | (30) | |
Provision for income taxes | 126.1 | | | 1.5 | | | 171.5 | | | 2.0 | | | 45.4 | | | 54 | |
Net income | $ | 395.2 | | | 4.6 | % | | $ | 534.4 | | | 6.2 | % | | $ | (139.1) | | | (149) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Sixteen Weeks Ended | | $ Favorable/ (Unfavorable) | | Basis Points |
($ in millions) | April 22, 2023 | | April 23, 2022 | | |
Net sales | $ | 3,417.6 | | | 100.0 | % | | $ | 3,374.2 | | | 100.0 | % | | $ | 43.4 | | | — | |
Cost of sales | 1,946.9 | | | 57.0 | | | 1,867.7 | | | 55.4 | | | (79.2) | | | (162) | |
Gross profit | 1,470.7 | | | 43.0 | | | 1,506.5 | | | 44.6 | | | (35.8) | | | (162) | |
SG&A (1) | 1,380.7 | | | 40.4 | | | 1,303.3 | | | 38.6 | | | (77.4) | | | (177) | |
Operating income | 90.0 | | | 2.6 | | | 203.3 | | | 6.0 | | | (113.2) | | | (339) | |
Interest expense | (29.7) | | | (0.9) | | | (12.9) | | | (0.4) | | | (16.8) | | | (49) | |
Loss on early redemptions of senior unsecured notes | — | | | — | | | (7.4) | | | (0.2) | | | 7.4 | | | 22 | |
Other (expense) income, net | (0.7) | | | 0.0 | | | 0.1 | | | — | | | (0.8) | | | (2) | |
Provision for income taxes | 17.0 | | | 0.5 | | | 43.3 | | | 1.3 | | | 26.3 | | | 79 | |
Net income | $ | 42.7 | | | 1.2 | % | | $ | 139.8 | | | 4.1 | % | | $ | (97.1) | | | (289) | |
Note: Table amounts may not foot due to rounding.
(1) The sixteen weeks ended April 22, 2023 included an out-of-period charge of $17.3 million related to costs incurred in prior years but not expensed in the corresponding periods. The company determined the cumulative impact was not material to the current period or any previously issued financial statements.
Net Sales
Net sales for the twelvesixteen weeks ended October 8, 2022April 22, 2023 increased 0.8%1.3% compared with the same period in 2021,2022, driven predominately by improvements in strategic pricing and growth in new store openings. Comparableopenings. This was partially offset by a decline of comparable store sales decreased 0.7%of 0.4% for the twelvesixteen weeks ended October 8, 2022April 22, 2023 compared with the twelvesixteen weeks ended October 9, 2021, primarily driven by owned brand penetration.April 23, 2022. Category growth was led by batteries, fluidsmotor oil and chemicals and brakes.
Net sales for the forty weeks ended October 8, 2022 increased 0.9% compared with the same period in 2021, driven by improvements in strategic pricing and growth in new store openings, partially offset by softness in our DIY omnichannel. Comparable store sales declined slightly for the forty weeks ended October 8, 2022 compared with the forty weeks ended October 9, 2021. Category growth was led by fluids and chemicals as well as batteries.
We calculate comparable store sales based on the change in store or branch sales starting once a location has been open for 13 complete accounting periods (approximately one year) and by including e-commerce sales. Sales to independently owned Carquest stores are excluded from our comparable store sales. Acquired stores are included in our comparable store sales once the stores have completed 13 complete accounting periods following the acquisition date. We include sales from relocated stores in comparable store sales from the original date of opening.
Gross Profit
Gross profit for the twelvesixteen weeks ended October 8, 2022April 22, 2023 was $1.18$1.47 billion, or 44.7%43.0% of Net sales, compared with $1.18$1.51 billion, or 45.1%44.6% of Net sales, for the twelvesixteen weeks ended October 9, 2021.April 23, 2022. During the twelvesixteen weeks ended October 8, 2022,
April 22, 2023, Gross profit margin was negatively impacted by continued inflationary product costs, including the impact of LIFO related expenses,which were not fully covered by pricing actions. Additionally, unfavorable channelproduct mix and supply chain headwinds duecontributed to increases in labor and transportation costs. These costs were primarily offset by improvements in strategic pricing as well as owned brand expansion.
Gross profit for the forty weeks ended October 8, 2022 was $3.87 billion, or 44.6% of Net sales, compared with $3.86 billion, or 44.8% of Net sales, for the forty weeks ended October 9, 2021. This decrease in Gross profit as a percentage of Net sales was primarily due to inflationary product costs, including the impact of LIFO related expenses and unfavorable channel mix, partially offset by strategic pricing, product mix and owned brand expansion.gross margin decline.
As a result of changes in our LIFO reserve, an expense of $67.5 million and $29.4 million were included in the twelve weeks ended October 8, 2022 and October 9, 2021. An expense of $240.8 million and $71.6 million were included in the forty weeks ended October 8, 2022 and October 9, 2021.
Selling, General and Administrative Expenses
SG&A expenses for the twelvesixteen weeks ended October 8, 2022April 22, 2023 were $1.0$1.38 billion, or 38.0%40.4% of Net sales, compared with $1.0$1.30 billion, or 36.4%38.6% of Net sales, for the twelvesixteen weeks ended October 9, 2021.April 23, 2022. The increase in SG&A as a percentage of Net sales for the twelve weeks ended was primarily driven by inflation in labor and benefit-related expenses as well as costs associated with new store labor, medical and fuel costs.
openings, partially offset by a decrease in startup costs related to our California expansion. SG&A expenses for the fortysixteen weeks ended October 8, 2022 were $3.29 billion, or 37.9%April 22, 2023 also included an out-of-period charge of Net sales, compared with $3.13 billion, or 36.4% of Net sales, for the forty weeks ended October 9, 2021. For the forty weeks ended October 8, 2022, the increase was primarily driven by inflation in store labor and fuel costs as well as costs$17.3 million related to new store openings. These costs were partially offset by a year over year decreaseincurred in incentive compensation and COVID-19 related expenses.
Loss on Early Redemption of Senior Unsecured Notes
During the forty weeks ended October 8, 2022, we incurred charges related to a make-whole provision and debt issuance costs of $7.0 million and $0.4 million in connection with the early redemption of our 4.50% senior unsecured notes due December 1, 2023 (“2023 Notes”).prior years but not previously expensed.
Provision for Income Taxes
Our Provision for income taxes for the twelvesixteen weeks ended October 8, 2022April 22, 2023 was $36.4$17.0 million compared with $52.6$43.3 million for the twelvesixteen weeks ended October 9, 2021. Our effective tax rate was 24.7% and 23.7% for the twelve weeks ended October 8, 2022 and October 9, 2021.April 23, 2022. The decrease in tax expense primarily resulted from lower Income before provision for income taxes compared with prior year.
Our Provision for income taxes for the forty weeks ended October 8, 2022 was $126.1 million, compared with $171.5 million for the forty weeks ended October 9, 2021. Our effective tax rate was 24.2%28.4% and 24.3%23.7% for the fortysixteen weeks ended October 8, 2022April 22, 2023 and October 9, 2021.April 23, 2022. The decrease inhigher effective income tax expense resulted from lower Income before provisionrate for income taxesthe sixteen weeks ended April 22, 2023 compared with prior year.April 23, 2022 reflected a discrete charge related to share based compensation.
Reconciliation of Non-GAAP Financial Measures
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes certain financial measures not derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Non-GAAP financial measures, including Adjusted net income and Adjusted EPS, should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing our operating performance, financial position or cash flows. We have presented these non-GAAP financial measures as we believe that the presentation of our financial results that exclude (1) LIFO impacts; (2) transformation expenses under our strategic business plan; (3) non-cash amortization related to the acquired GPI intangible assets; and (4) other non-recurring adjustments are useful and indicative of our base operations because the expenses vary from period to period in terms of size, nature and significance and/or relate to store closure and consolidation activity in excess of historical levels. These measures assist in comparing our current operating results with past periods and with the operational performance of other companies in our industry. The disclosure of these measures allows investors to evaluate our performance using the same measures management uses in developing internal budgets and forecasts and in evaluating management’s compensation. Included below is a description of the expenses we have determined are not normal, recurring cash operating expenses necessary to operate our business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures.
LIFO Impacts — To assist in comparing our current operating results with the operational performance of other companies in our industry, the impact of LIFO on our results of operations is a reconciling item to arrive at non-GAAP financial measures.
Transformation Expenses — Costs incurred in connection with our business plan that focuses on specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise, that we do not view to be normal cash operating expenses. These expenses include, but are not limited to the following:
•Restructuring costs - Costs primarily relating to the early termination of lease obligations, asset impairment charges, other facility closure costs and team member severance in connection with our voluntary retirement program and continued optimization of our organization.
•Third-party professional services - Costs primarily relating to services rendered by vendors for assisting us with the development of various information technology and supply chain projects in connection with our enterprise integration initiatives.
•Other significant costs - Costs primarily relating to accelerated depreciation of various legacy information technology and supply chain systems in connection with our enterprise integration initiatives and temporary off-site workspace for project teams who are primarily working on the development of specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise.
GPI Amortization of Acquired Intangible Assets — As part of our acquisition of GPI, we obtained various intangible assets, including customer relationships, non-compete contracts and favorable lease agreements, which we expect to be subject to amortization through 2025.
We have included a reconciliation of this information to the most comparable GAAP measures in the following table:
| | | | | | | | | | | | | | | | | | | | | | | |
| Twelve Weeks Ended | | Forty Weeks Ended |
(in thousands, except per share data) | October 8, 2022 | | October 9, 2021 | | October 8, 2022 | | October 9, 2021 |
Net income (GAAP) | $ | 110,982 | | | $ | 169,813 | | | $ | 395,176 | | | $ | 534,439 | |
Cost of sales adjustments: | | | | | | | |
LIFO impacts | 67,491 | | | 29,410 | | | 240,758 | | | 71,599 | |
Transformation expenses | — | | | 143 | | | 2,572 | | | 2,611 | |
| | | | | | | |
SG&A adjustments: | | | | | | | |
GPI amortization of acquired intangible assets | 6,308 | | | 6,341 | | | 21,065 | | | 21,246 | |
Transformation expenses: | | | | | | | |
Restructuring costs | 964 | | | 2,360 | | | 3,270 | | | 27,063 | |
Third-party professional services | 4,877 | | | 4,823 | | | 20,429 | | | 18,394 | |
Other significant costs | 1,155 | | | 1,492 | | | 4,231 | | | 7,406 | |
Other income adjustment (1) | — | | | 36 | | | 7,408 | | | — | |
Provision for income taxes on adjustments (2) | (20,198) | | | (11,151) | | | (74,933) | | | (37,080) | |
Adjusted net income (Non-GAAP) | $ | 171,579 | | | $ | 203,267 | | | $ | 619,976 | | | $ | 645,678 | |
| | | | | | | |
Diluted earnings per share (GAAP) | $ | 1.84 | | | $ | 2.68 | | | $ | 6.47 | | | $ | 8.22 | |
Adjustments, net of tax | 1.00 | | | 0.53 | | | 3.68 | | | 1.71 | |
Adjusted EPS (Non-GAAP) | $ | 2.84 | | | $ | 3.21 | | | $ | 10.15 | | | $ | 9.93 | |
(1)During the forty weeks ended October 8, 2022, we incurred charges related to a make-whole provision and debt issuance costs of $7.0 million and $0.4 million, in connection with the early redemption of our 2023 Notes.
(2)The income tax impact of non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective non-GAAP adjustments.
Liquidity and Capital Resources
Overview
Our primary cash requirements necessary to maintain our current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives under our strategic business plan and other operational priorities, including payment of interest on our long-term debt. Historically, we have also used available funds to repay borrowings under our credit facility, to periodically repurchase shares of our common stock under our stockshare repurchase program, to pay our quarterly cash dividendsdividend and for acquisitions; however, in consideration of ongoing uncertainties related to general global macroeconomic conditions,acquisitions. However, our future uses of cash may differ, if our relative priorities, including with respect to the weight we place on the preservation of cash and liquidity, change. degree of investment in our business and other capital allocation factors.
Typically, we have funded our cash requirements primarily through cash generated from operations, supplemented by borrowings under our credit facilities and notes offerings as needed. We believe funds generated from our expected results of operations, available cash and cash equivalents, and available borrowings under our credit facility will be sufficient to fund our obligations for the long term.next year. We also believe such funds, cash and available borrowings, together with our ability to generate cash through credit facilities and notes offerings as needed, will be sufficient to fund our ongoing obligations.
Our supplier finance programs did not have a material impact on our liquidity or capital resources in the periods presented nor do we expect such arrangements to have a material impact on our liquidity or capital resources for the foreseeable future. See Note 11. Supplier Finance Programs of our condensed consolidated financial statements for further discussion.
On March 4, 2022,9, 2023, we issued our 3.50%5.90% senior unsecured notes due 20322026 (the “2032“2026 Notes”) and our 5.95% senior unsecured notes due 2028 (the “2028 Notes”). Refer to Note 6. Long-term Debt and Fair Value of Financial Instruments of the Notes to the Condensed Consolidated Financial Statements included herein for further details. Proceeds from our 20322026 Notes and 2028 Notes were utilized to fund the early redemption ofmake repayments on our 2023 Notesrevolving facility and supplement operational and capital expenditures.
On February 27, 2023, we entered into Amendment No. 1 (the “Amendment”) to the Credit Agreement, dated November 9, 2021, with Advance Auto Parts, Inc., as Borrower, Advance Stores Company, Incorporated, as a Guarantor, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “2021 Credit Agreement”). The Amendment extends the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. The Amendment also replaces an adjusted LIBOR benchmark rate with a Term Secured Overnight Financing Rate (“Term SOFR”) benchmark rate, as adjusted by an increase of ten basis points, plus the applicable margin under 2021 Credit Agreement. The Amendment made no other material changes to the terms of the 2021 Credit Agreement.
Share Repurchase Program
On February 8, 2022, our Board of Directors authorized an additional $1.0 billion towards the existing share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time. We expect to continue our temporary pause on repurchases under our existing share repurchase program and to continue to evaluate current and expected business conditions with respect to resumption of share repurchase activity.
During the twelvesixteen weeks ended October 8,April 22, 2023, we purchased no shares of our common stock under our share repurchase program. During the sixteen weeks ended April 23, 2022, and October 9, 2021, we repurchased 0.4 million and 1.1 million shares of our common stock under our share repurchase program at an aggregate cost of $75.0 million and $228.3$248.2 million, or an average price of $168.93 and $205.65 per share. During the forty weeks ended October 8, 2022 and October 9, 2021, we repurchased 2.5 million and 4.2 million shares of our common stock under our share repurchase program. The shares repurchased in connection with our share repurchase program during the forty weeks ended October 8, 2022 and October 9, 2021 were at an aggregate cost of $523.2 million and $791.7 million, or an average price of $207.50 and $189.43$231.41 per share. We had $1.0 billion$947.3 million remaining under our share repurchase program as of October 8, 2022.
April 22, 2023.
Analysis of Cash Flows
The following table summarizes our cash flows from operating, investing and financing activities:
| | | Forty Weeks Ended | | Sixteen Weeks Ended |
(in thousands) | (in thousands) | October 8, 2022 | | October 9, 2021 | (in thousands) | April 22, 2023 | | April 23, 2022 |
Cash flows provided by operating activities | $ | 483,094 | | | $ | 924,936 | | |
Cash flows used in operating activities | | Cash flows used in operating activities | $ | (378,865) | | | $ | (54,940) | |
Cash flows used in investing activities | Cash flows used in investing activities | (331,818) | | | (188,881) | | Cash flows used in investing activities | (89,671) | | | (114,026) | |
Cash flows used in financing activities | (545,838) | | | (968,738) | | |
Cash flows provided by (used in) financing activities | | Cash flows provided by (used in) financing activities | 425,660 | | | (273,735) | |
Effect of exchange rate changes on cash | Effect of exchange rate changes on cash | (15,662) | | | 2,336 | | Effect of exchange rate changes on cash | 93 | | | (19,994) | |
Net decrease in cash and cash equivalents | Net decrease in cash and cash equivalents | $ | (410,224) | | | $ | (230,347) | | Net decrease in cash and cash equivalents | $ | (42,783) | | | $ | (462,695) | |
Operating Activities
For the fortysixteen weeks ended October 8, 2022,April 22, 2023, Cash flows provided byused in operating activities decreasedincreased by $441.8$323.9 million to $483.1$378.9 million compared with the same period of prior year. The net decreaseincrease in cash flows used in operating cash flowsactivities was primarily driven by lower Net income and a decrease in overall working capital compared with the same period of prior year. The decrease in working capital was primarily driven by an increase in cash used by Inventories, attributable to direct product cost increases driven by inflationary pressures and an increase of inventory on hand.in working capital, primarily in Accounts payable.
Investing Activities
For the fortysixteen weeks ended October 8, 2022,April 22, 2023, Cash flows used in investing activities increaseddecreased by $142.9$24.4 million to $331.8$89.7 million compared with the same period of prior year. CashThe decrease in cash used in investing activities for the forty weeks ended October 8, 2022 consistedwas primarily of purchases of property and equipment of $333.6 million attributable to investmentslower capital spend in information technology, as we remain focused on a complete back office integration throughout the enterprise, as well as investments in leasehold improvements for new store openings.current year.
Financing Activities
For the fortysixteen weeks ended October 8, 2022,April 22, 2023, Cash flows used inprovided by financing activities was $545.8$425.7 million, a decreasean increase of $422.9$699.4 million compared with the same period of prior year. The net decreaseincrease in cash used inprovided by financing activities was attributable to net proceeds received from the issuance of the 20322026 Notes and 2028 Notes, a decrease in share repurchases of our common stock of $266.9 million and proceeds from net borrowings under our unsecured revolving credit facility of $185.0 million during the forty weeks ended October 8, 2022. Thea decrease in cash used was partially offset by the early redemption of our 2023 Notes and an increase in dividends paid of $175.3 million during the fortysixteen weeks ended October 8, 2022 compared with the forty weeks ended October 9, 2021.April 22, 2023.
Our Board of Directors has declared a cash dividend every quarter since 2006. Any payments of dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors.
Long-Term Debt
On March 4, 2022,9, 2023, we issued $350.0$300.0 million aggregate principal amount of our 20322026 Notes and $300.0 million aggregate principal amount of our 2028 Notes. The 20322026 Notes were issued at 99.61%99.94% of the principal amount of $350.0$300.0 million, are due March 15, 20329, 2026 and bear interest at 3.50%5.90% per year payable semi-annually in arrears on March 159 and September 159 of each year.
On April 3, 2022, we redeemed The 2028 Notes were issued at 99.92% of the remaining $193.2 million principal amount of our outstanding 2023 Notes. In connection with this early redemption, we incurred charges related to the make-whole provision$300.0 million, are due March 9, 2028 and debt issuance costsbear interest at 5.95% per year payable semi-annually in arrears on March 9 and September 9 of $7.0 million and $0.4 million.each year.
As of October 8, 2022,April 22, 2023, we had a credit rating from Standard & Poor’s of BBB- and from Moody’s Investor Service of Baa2. The currentAs of April 22, 2023, the outlooks by Standard & Poor’s and Moody’s are positiveon our credit rating were stable. On June 5, 2023, Standard & Poor’s and stable.Moody’s updated their outlooks to negative. The current pricing grid used to determine our borrowing rate under the Credit Agreement is based on our credit ratings. If theseour credit ratings decline, our interest rate on outstanding balances may increase and our access to additional financing on favorable terms may be limited. In addition, declines could reduce the attractiveness of certain vendor payment programs whereby third-party institutions finance arrangements to our vendors based on our credit rating, which could result in increased working capital requirements. Conversely, if these credit ratings improve, our interest rate may decrease.
With respect to all senior unsecured notes for which Advance Auto Parts, Inc. (“Issuer”) is an issuer or provides full and unconditional guarantee, Advance Stores, a wholly owned subsidiary of the Issuer, serves as the guarantor (“Guarantor Subsidiary”). The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of the Issuer to obtain funds from its Guarantor Subsidiary. Our captive insurance subsidiary, an insignificant wholly owned subsidiary of the Issuer, does not serve as guarantor of our senior unsecured notes.
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with GAAP. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments
by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates.
During the fortysixteen weeks ended October 8, 2022,April 22, 2023, there were no changes to the critical accounting policies discussed in our 20212022 Form 10-K. For a complete discussion of our critical accounting policies, refer to the 20212022 Form 10-K.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 4.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the override of controls. Therefore, even those systems determined to be effective can provide only “reasonable assurance” with respect to the reliability of financial reporting and financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of our internal controls may vary over time.
Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of October 8, 2022.April 22, 2023. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to accomplish their objectives at the reasonable assurance level.level solely due to the material weakness described below.
Control Environment
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. In the course of preparing our financial statements for the interim period ended April 22, 2023, management identified a material weakness in our internal control over financial reporting that existed due to turnover of key accounting positions during the first quarter. The Company was not able to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience as of April 22, 2023.
Management believes that the Condensed Consolidated Financial Statements and related financial information included in this Form 10-Q fairly present, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.
As an initial step in remediation of this material weakness, we are engaging temporary third-party resources with the appropriate level of knowledge and experience in accounting and internal control matters to complement the existing organizational structure.
We are also actively developing and implementing a comprehensive remediation plan. We have engaged a leading public accounting firm to support this work. We expect the remediation plan will include the following:
•hire, develop and retain incremental personnel with appropriate accounting and internal controls expertise;
•review and update (as appropriate) the organizational design of the controllership function;
•review and update (as appropriate) our methodologies, policies and procedures designed to ensure adequate internal control over financial reporting, including underlying information technology and business process controls; and
•review and update (as appropriate) training programs on relevant internal control over financial reporting matters.
The material weakness will not be considered remediated until management completes the remediation plan and keeps it in place for a sufficient period of time. The Company is committed to the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement its remediation plan for the material weakness, including responding as necessary to any additional employee turnover or other internal or external factors that may impact execution of the plan.
Changes in Internal Control Over Financial Reporting
There were noThe Company is in the process of implementing certain changes in ourits internal controls to remediate the material weakness described above. There has been no change in the Company’s internal control over financial reporting that occurred during ourthe quarter ended October 8, 2022April 22, 2023 that havehas materially affected or areis reasonably likely to materially affect ourits internal control over financial reporting.reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
PART II. OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS
On February 6, 2018, a putative class action on behalf of purchasers of our securities who purchased or otherwise acquired their securities between November 14, 2016 and August 15, 2017, inclusive (the “Class Period”), was commenced against us and certain of our current and former officers in the U.S. District Court for the District of Delaware. The plaintiff alleged that the defendants failed to disclose material adverse facts about our financial well-being, business relationships, and prospects during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On February 7, 2020, the court granted in part and denied in part our motion to dismiss. On November 6, 2020, the court granted the plaintiff’s motion for class certification. On March 15, 2021, we moved for reconsideration of the order denying in part our motion to dismiss, and on October 15, 2021, we filed a motion for summary judgment, seeking full dismissal of the case. Following mediation, on November 5, 2021, the parties executed a confidential binding term sheet to settle all claims and on December 23, 2021, the parties executed a settlement agreement fully documenting their agreement. The settlement agreement received final approval from the court on June 13, 2022. The settlement amount of $49.3 million was fully paid by our insurance carriers.
ITEM 1A.RISK FACTORS
Please refer to “Item 1A. Risk Factors” found in our 20212022 Form 10-K filed for the year ended January 1,December 31, 2022 for risks that, if they were to occur, could materially adversely affect our business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of our common stock.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth the information with respect to repurchases of our common stock for the quarter ended October 8, 2022:April 22, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Number of Shares Purchased (1) | | Average Price Paid per Share (1) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in thousands) |
July 17, 2022 to August 13, 2022 | | 25 | | | $ | 190.65 | | | — | | | $ | 1,097,338 | |
August 14, 2022 to September 10, 2022 | | 451,942 | | | $ | 169.12 | | | 443,969 | | | $ | 1,022,339 | |
September 11, 2022 to October 08, 2022 | | 7 | | | $ | 169.06 | | | — | | | $ | 1,022,339 | |
Total | | 451,974 | | | $ | 169.19 | | | 443,969 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Total Number of Shares Purchased (1) | | Average Price Paid per Share (1) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) |
January 1, 2023 to January 28, 2023 | | 19 | | | $ | 152.26 | | | — | | | $ | 947,339 | |
January 29, 2023 to February 25, 2023 | | 1,699 | | | $ | 141.52 | | | — | | | $ | 947,339 | |
February 26, 2023 to March 25, 2023 | | 92,132 | | | $ | 134.14 | | | — | | | $ | 947,339 | |
March 26, 2023 to April 22, 2023 | | 33 | | | $ | 94.48 | | | — | | | $ | 947,339 | |
Total | | 93,883 | | | $ | 139.24 | | | — | | | |
(1)The aggregate cost of repurchasing shares in connection with the net settlement of shares issued as a result of the vesting of restricted stock units was $1.5$13.1 million, or an average price of $183.67$139.24 per share, during the twelvesixteen weeks ended October 8, 2022.
(2)On February 8, 2022, our Board of Directors authorized an additional $1.0 billion to the existing share repurchase program. This authorization is incremental to the $1.7 billion that was previously authorized by our Board of Directors.April 22, 2023.
ITEM 6.EXHIBITS
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| | Incorporated by Reference |
Exhibit No. | Exhibit Description | Form | Exhibit | Filing Date |
| | 10-Q | 3.1 | 8/14/2018 |
| | 10-Q | 3.2 | 8/18/2020 |
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| | 10-K | 22.1 | 2/15/2022 |
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101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | | | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | | |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | | | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | | |
104.1* | Cover Page Interactive Data file (Embedded within Inline XBRL Documents and Included in Exhibit 101). | | | |
| | | | | | | | | | | | | | |
| | Incorporated by Reference |
Exhibit No. | Exhibit Description | Form | Exhibit | Filing Date |
| | 10-Q | 3.1 | 8/14/2018 |
| | 10-Q | 3.2 | 8/18/2020 |
| Tenth Supplemental Indenture, dated as of March 9, 2023, among Advance Auto Parts, Inc., Advance Stores Company, Incorporated and Computershare Trust Company, N.A., as successor to Wells Fargo Bank, National Association, as Trustee. | 8-K | 4.1 | 3/9/2023 |
| | 8-K | 4.2 | 3/9/2023 |
| | 8-K | 4.3 | 3/9/2023 |
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| | 8-K | 10.1 | 4/13/2023 |
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101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | | | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | | | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | | | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | | | |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | | | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | | | |
104.1* | Cover Page Interactive Data file (Embedded within Inline XBRL Documents and Included in Exhibit 101). | | | |
* Filed herewith
** Furnished herewith
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. |
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Date: November 16, 2022June 5, 2023 | | /s/ William J. Pellicciotti Jr. |
| | William J. Pellicciotti Jr. Senior Vice President, Controller and Chief Accounting Officer |