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ADVANCE AUTO PARTS INC - Annual Report: 2024 (Form 10-K)

  Current liabilities held for sale  Total current liabilities  Long-term debt  Non-current operating lease liabilities  Deferred income taxes  Other long-term liabilities  Noncurrent liabilities held for sale—  Total liabilitiesCommitments and contingenciesStockholders’ equity:  
Preferred stock, nonvoting, $ par value,
shares authorized; shares issued or outstanding
  
Common stock, voting, $ par value, shares authorized;
          shares issued and outstanding at December 28, 2024 and
          shares issued and outstanding at December 30, 2023
  Additional paid-in capital  
Treasury stock, at cost, and shares
()()Accumulated other comprehensive loss()()Retained earnings  Total stockholders’ equity  Total liabilities and stockholders’ equity$ $ 

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

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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Operations
(in thousands, except per share data)
Year Ended
December 28, 2024December 30, 2023December 31, 2022
Net sales$ $ $ 
Cost of sales   
Gross profit   
Selling, general and administrative expenses, exclusive of restructuring and related expenses
   
Restructuring and related expenses
   
Selling, general and administrative expenses   
Operating (loss) income()  
Other, net: 
Interest expense()()()
Loss on early redemptions of senior unsecured notes  ()
Other income (expense), net
  ()
Total other, net()()()
(Loss) Income before provision for income taxes()() 
Provision for income taxes()() 
Net (loss) income from continuing operations()() 
Net income from discontinued operations
   
Net (loss) income$()$ $ 
Basic (loss) earnings per common share from continuing operations$()$()$ 
Basic earnings per common share from discontinued operations
   
Basic (loss) earnings per common share$()$ $ 
Basic weighted-average common shares outstanding   
Diluted (loss) earnings per common share from continuing operations$()$()$ 
Diluted earnings per common share from discontinued operations
   
Diluted earnings (loss) per common share$()$ $ 
Diluted weighted-average common shares outstanding   

Consolidated Statements of Comprehensive Income
(in thousands)
 Year Ended
December 28, 2024December 30, 2023December 31, 2022
Net (loss) income$()$ $ 
Other comprehensive loss:
Changes in net unrecognized other postretirement benefit costs,
net of tax of $, $() and $
() ()
Currency translation adjustments ()()
Total other comprehensive loss
 ()()
Comprehensive (loss) income$()$ $ 

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

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Table of Contents
Advance Auto Parts, Inc. and Subsidiaries
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands, except per share data)
 Common StockAdditional Paid-in CapitalTreasury Stock, at cost
Accumulated Other Comprehensive Loss
Retained EarningsTotal Stockholders’ Equity
 SharesAmount
Balance, January 1, 2022 $ $ $()$()$ $ 
Net income — — — — —   
Total other comprehensive income— — — — ()— ()
Issuance of shares upon the exercise of stock options —  — — —  
Restricted stock units and deferred stock units vested — — — — — — 
Share-based compensation— —  — — —  
Stock issued under employee stock purchase plan —  — — —  
Repurchases of common stock()— — ()— — ()
Cash dividends declared ($ per common share)
— — — — — ()()
Other — ()— — — ()
Balance, December 31, 2022   ()()  
Net income — — — — —   
Total other comprehensive income— — — — ()— ()
Issuance of shares upon the exercise of stock options— — — — — — — 
Restricted stock units and deferred stock units vested — — — — — — 
Share-based compensation— —  — — —  
Stock issued under employee stock purchase plan —  — — —  
Repurchases of common stock()— — ()— — ()
Cash dividends declared ($ per common share)
— — — — — ()()
Other— — ()— — — ()
Balance, December 30, 2023   ()()  
Net (loss)— — — — — ()()
Total other comprehensive loss— — — —  —  
 )$ 

6.     

 $ Vendor  Other  Total receivables  Less: allowance for credit losses()()Receivables, net$ $ 
For the year ended December 28, 2024, the allowance for credit losses increased $ million, primarily due to incremental reserves established as a result of the 2024 Restructuring Plan. Refer to Note 3. Restructuring of the Notes to the Consolidated Financial Statements included herein.


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7.    

% Senior Unsecured Notes (net of unamortized discount and debt issuance costs of $ and$ at December 28, 2024, and December 30, 2023) due March 9, 2026$ $ 
% Senior Unsecured Notes (net of unamortized discount and debt issuance costs of $ and $ at December 28, 2024 and December 30, 2023) due October 1, 2027
  
% Senior Unsecured Notes (net of unamortized discount and debt issuance costs of $ and $ at December 28, 2024 and December 30, 2023) due March 9, 2028
  
% Senior Unsecured Notes (net of unamortized discount and debt issuance costs of $ and $ at December 28, 2024, and December 30, 2023) due April 15, 2030
  
% Senior Unsecured Notes (net of unamortized discount and debt issuance costs of $ and $ at December 28, 2024, and December 30, 2023) due March 15, 2032
     Less: Current portion of long-term debt  Long-term debt, excluding the current portion$ $ Fair value of long-term debt$ $ 

Fair Value of Financial Assets and Liabilities

The fair value of the Company’s senior unsecured notes was determined using Level 2 inputs based on quoted market prices. The carrying amounts of the Company’s cash and cash equivalents, receivables, net, accounts payable and accrued expenses approximate their fair values due to the relatively short-term nature of these instruments.

Bank Debt

On November 9, 2021, the Company entered into a credit agreement that provided a $ billion unsecured revolving credit facility (the “2021 Credit Agreement”) with Advance Auto Parts, Inc., as Borrower, Advance Stores, as a Guarantor, the lenders party thereto, and Bank of America, N.A., as the Administrative Agent, and replaced the previous credit agreement. The revolver under the 2021 Credit Agreement replaced the revolver under the previous credit agreement. The revolver under the 2021 Credit Agreement provides for the issuance of letters of credit with a sublimit of $ million. The Company may request that the total revolving commitment be increased by an amount not exceeding $ million during the term of the 2021 Credit Agreement.

On February 27, 2023, the Company entered into Amendment No. 1 (“Amendment No. 1”) to the 2021 Credit Agreement. Amendment No. 1 extended the maturity date of the 2021 Credit Agreement by one year from November 9, 2026, to November 9, 2027. Amendment No. 1 also replaced an adjusted LIBOR benchmark rate with a term secured overnight financing rate benchmark rate, as adjusted by an increase of basis points, plus the applicable margin under 2021 Credit Agreement.


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to 1.00 for each period of four fiscal quarters ending on October 7, 2023 through and including the period of four fiscal quarters ending on October 5, 2024, (b) to 1.00 for each period of four fiscal quarters ending on December 28, 2024 through and including the period of four fiscal quarters ending on October 4, 2025 and (c) to 1.00 for each period of four fiscal quarters ending after October 4, 2025. Amendment No. 2. and Amendment No. 3 made no other material changes to the terms of the 2021 Credit Agreement.

On February 26, 2024, the Company entered into Amendment No. 4 (“Amendment No. 4”) to the 2021 Credit Agreement to enable certain addbacks to the definition of Consolidated EBITDA contained therein for specific write-downs of inventory and vendor receivables. Amendment No. 4 also updated certain limitations on future incurrences of other indebtedness and liens, replacing the cap thereon of % of consolidated net tangible assets with $ million, and eliminated the $ million basket for accounts receivable securitization transactions. Amendment No. 4 made no other material changes to the terms of the 2021 Credit Agreement.

On November 13, 2024, the Company entered into Amendment No. 5 to the 2021 Credit Agreement. Amendment No. 5 (i) permits up to $ million of certain restructuring charges to be added back to Consolidated EBITDAR (as defined therein), (ii) permits up to $ million of unrestricted cash to be netted out of debt in the calculation of the Leverage Ratio (as defined therein), and (iii) reduced the minimum Consolidated Coverage Ratio (as defined therein) to to 1.00 through July 12, 2025 and to 1.00 thereafter. Amendment No. 5 also reduced the unsecured revolving credit facility under the 2021 Credit Agreement from $ billion to $ billion and amended the pricing on the loans thereunder in connection with changes in the Company’s credit ratings, as described below.

Amendment No. 5 also updated certain covenants and other limitations on the Company, including (i) expanding the scope of the covenant restricting the ability to create, incur or assume additional debt to cover Advance Auto Parts, Inc., (ii) restricting the Company’s rights to complete share repurchases and increase cash dividend amounts, (iii) requiring the Company to grant liens on deposit accounts, inventory and accounts receivables if credit ratings are downgraded below a minimum threshold, (iv) imposing an additional monthly minimum daily liquidity financial covenant of $ million, (v) providing for the maturity date under the 2021 Credit Agreement to automatically spring forward to the extent necessary for the 2021 Credit Agreement to mature at least days prior to any scheduled maturity date under any of the Company’s senior unsecured notes, (vi) prohibiting further extensions of the maturity date under the 2021 Credit Agreement beyond the existing maturity date, and (vii) eliminating certain baskets for additional indebtedness, liens and asset sales.

On February 25, 2025, the Company entered into Amendment No. 6 (“Amendment No. 6”) to the 2021 Credit Agreement to, among other things, (i) expand the scope of domestic subsidiaries that would be required to grant security interests and guarantee the Company’s obligations under the 2021 Credit Agreement upon the occurrence of a Springing Lien Trigger Event (as defined therein) to include all of the Company’s subsidiaries other than the Company’s Insignificant Subsidiaries (as defined in Amendment No. 6), (ii) revise the definition of Consolidated Coverage Ratio to exclude up to $175 million of accelerated rent charges related to lease buyouts and to permit the minimum Consolidated Coverage Ratio to remain at 1.50 to 1.00 for one additional quarter before increasing to 1.75 to 1.00 on and after the fiscal quarter ending on January 3, 2026, (iii) revise the definition of Consolidated EBITDA to increase the threshold for Identified Restructuring Charges (as defined therein) from $575 million to $625 million, and (iv) expand the scope of the guaranteed obligations to include bank product obligations and cash management obligations.

The interest rates on outstanding amounts, if any, on the revolving facility under the 2021 Credit Agreement will be based, at the Company’s option, on Term Secured Overnight Financing Rate (“SOFR”) (as defined in the 2021 Credit Agreement), plus a margin, or an alternate base rate, plus a margin. The margins per annum for the revolving loan will vary from % to % for Term SOFR (with margins of % or greater applying when credit ratings are below BBB/Baa2) and from % to % for alternate base rate (with margins of % or greater applying when credit ratings are below BBB/Baa2) based on the assigned debt ratings of the Company. A facility fee will be charged on the total revolving facility commitment, payable quarterly in arrears, in an amount that will vary from % to % (with rates of % or greater applying when credit ratings are below BB+/Ba1) per annum based on the assigned debt ratings of the Company.


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outstanding borrowings or letters of credit outstanding under the 2021 Credit Agreement. As of December 28, 2024, the borrowing availability was $ billion. As of December 30, 2023, the borrowing availability was $ billion.

As of December 28, 2024 and December 30, 2023, the Company had $ million and $ million, respectively, of bilateral letters of credit issued separately from the 2021 Credit Agreement, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and primarily serve as collateral for the Company’s self-insurance policies.

Senior Unsecured Notes

The Company’s % senior unsecured notes due April 15, 2030 (the “Original Notes”) were issued April 16, 2020, at % of the principal amount of $ 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 % per year. On July 28, 2020, the Company completed an exchange offer whereby the Original Notes in the aggregate principal amount of $ million, which were not registered under the Securities Act, were exchanged for a like principal amount of % senior unsecured notes due 2030 (the “Exchange Notes” or “2030 Notes”), which have been registered under the Securities Act. The Original Notes were substantially identical to the Exchange Notes, except that 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.

The Company’s % senior unsecured notes due October 1, 2027 (the “2027 Notes”) were issued September 29, 2020, at % of the principal amount of $ million. The 2027 Notes bear interest, payable semi-annually in arrears on April 1 and October 1, at a rate of % per year. In connection with the 2027 Notes offering, the Company incurred $ million of debt issuance costs.

The Company’s % senior unsecured notes due March 15, 2032 (the “2032 Notes”) were issued March 4, 2022, at % of the principal amount of $ million. The 2032 Notes bear interest, payable semi-annually in arrears on March 15 and September 15, at a rate of % per year. In connection with the 2032 Notes offering, the Company incurred $ million of debt issuance costs.

The Company’s % senior unsecured notes due March 9, 2026 (the “2026 Notes”) were issued March 9, 2023, at % of the principal amount of $ million. The 2026 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of % per year. In connection with the 2026 Notes offering, the Company incurred $ million of debt issuance costs.

The Company’s % senior unsecured notes due March 9, 2028 (the “2028 Notes”) were issued March 9, 2023, at % of the principal amount of $ million. The 2028 Notes bear interest, payable semi-annually in arrears on March 9 and September 9, at a rate of % per year. In connection with the 2028 Notes offering, the Company incurred $ million of debt issuance costs.


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% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. Currently, the Notes are fully and unconditionally guaranteed, jointly and severally, on an unsubordinated and unsecured basis by guarantor and subsidiary guarantees, as defined by the Indenture.

The Indentures contain customary provisions for events of default including for: (i) failure to pay principal or interest when due and payable; (ii) failure to comply with covenants or agreements in the Indentures or the Notes and failure to cure or obtain a waiver of such default upon notice; (iii) a default under any debt for money borrowed by us or any of our subsidiaries that results in acceleration of the maturity of such debt, or failure to pay any such debt within any applicable grace period after final stated maturity, in an aggregate amount greater than $ million without such debt having been discharged or acceleration having been rescinded or annulled within after receipt by us of notice of the default by the Trustee or holders of not less than % in aggregate principal amount of the Notes then outstanding; and (iv) events of bankruptcy, insolvency or reorganization affecting us and certain of its subsidiaries. In the case of an event of default, the principal amount of the Notes plus accrued and unpaid interest may be accelerated. The Indentures also contain covenants limiting the ability to incur debt secured by liens and to enter into certain sale and lease-back transactions.

Future Payments

 2026 2027 2028 2029 Thereafter $ 

Debt Guarantees

The Company is a guarantor of loans made by banks to various independently-owned Carquest-branded stores that are customers of the Company totaling $ million as of December 28, 2024 and $ million as of December 30, 2023. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements was $ million as of December 28, 2024 and $ million as of December 30, 2023. The Company continuously assesses the likelihood of performance under these guarantees and believes that performance is remote as of December 28, 2024.


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8.    
years$ $ Buildings
- years
  Building and leasehold improvements
- years
  Furniture, fixtures and equipment
- years
  Vehicles
years
  Construction in progress    Less: Accumulated depreciation()()Property and equipment, net$ $ 
(1) Land is deemed to have an indefinite life.

As of December 28, 2024 and December 30, 2023, the Company had capitalized software costs of $ billion and $ million, respectively, and accumulated depreciation of $ million and $ million, respectively. Depreciation expense relating to property and equipment was $ million, $ million and $ million for 2024, 2023 and 2022, respectively.

As of December 28, 2024, the Company recorded $ of non-cash asset impairment and write-down charges, including impairment and incremental depreciation as a result of accelerating assets over a shorter useful life in connection with the 2024 Restructuring Plan and the Other Restructuring Plan which is included in restructuring and related expenses within the accompanying Consolidated Statements of Operations. Refer to Note 3. Restructuring of the notes to the Consolidated Financial Statements included herein.

9.    

, with renewal options at intervals, with the exercise of lease renewal options at the Company’s sole discretion. The Company’s vehicle and equipment leases are typically three to . The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

 $ Less: Current portion of operating lease liabilities()()Non-current operating lease liabilities$ $ 

The current portion of operating lease liabilities was included in other current liabilities in the accompanying Consolidated Balance Sheets.


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 $ Variable lease cost  Total lease cost$ $ 

 2026 2027 2028 2029 Thereafter Total lease payments Less: Imputed interest()Total operating lease liabilities$ 

Operating lease liabilities included $ million related to options to extend lease terms that are reasonably certain of being exercised and excluded $ million of legally binding lease obligations for leases signed, but not yet commenced.

The weighted average remaining lease term and weighted average discount rate for the Company’s operating leases were years and % as of December 28, 2024. The Company calculated the weighted average discount rates using incremental borrowing rates, which equal the rates of interest that the Company would pay to borrow funds on a fully collateralized basis over a similar term.

As of December 28, 2024, the Company recorded $ million of non-cash asset impairment and write-down charges, including impairment and incremental lease abandonment expenses as a result of accelerated amortization on leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations which is included in restructuring and related expenses within the accompanying Consolidated Statements of Operations. Refer to Note 3. Restructuring of the Notes to the Consolidated Financial Statements included herein.

 $ Right-of-use assets obtained in exchange for lease obligations:Operating leases$ $ 


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million and were not accrued in the Company’s Consolidated Balance Sheet.

During the first quarter of 2024, the Company entered into a sale-leaseback transaction where the Company sold a building and land and entered into a lease of the property upon the sale. This transaction resulted in a gain of $ million and is included in SG&A on the Consolidated Statement of Operations.

10.    
 $ Taxes payable  Self-insurance reserves  Inventory related accruals  Accrued rebates  Accrued professional services/legal  Capital expenditures  Other  Total accrued expenses$ $ 

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billion toward the existing share repurchase program. Previously in April 2021 and November 2019, the Company’s Board of Directors authorized $ billion and $ million for the Company’s share repurchase program. The Company’s share repurchase program permitted the repurchase of the Company’s common stock on the open market and in privately negotiated transactions from time to time. The Board of Directors were able to increase or otherwise modify, renew, suspend or terminate the share repurchase program without prior notice. However, Amendment No. 5 to the Company’s 2021 Credit Agreement generally prohibits open market share repurchases.

During 2024 and 2023, the Company did not repurchase any shares of the Company’s common stock under the Company’s share repurchase program. The Company had $ million remaining under the Company’s share repurchase program as of December 28, 2024 and December 30, 2023.


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12.    

)$()$ 
Net income from discontinued operations
   Net (loss) income$()$ $ DenominatorBasic weighted average common shares   Dilutive impact of share-based awards   
Diluted weighted average common shares(1)
   Basic (loss) earnings per common share from continuing operations$()$()$ Basic earnings per common share from discontinued operations   Basic (loss) earnings per common share$()$ $ Diluted (loss) earnings per common share from continuing operations$()$()$ Diluted earnings per common share from discontinued operations   Diluted earnings (loss) per common share$()$ $ 
 thousand,  thousand and thousand, respectively.


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13.    

 $()$()State ()()Foreign () $ $()$()2023Federal$ $()$()State ()()Foreign () $ $()$()2022Federal$ $ $ State   Foreign () $ $ $ 

% for 2024, 2023 and 2022)$()$()$ 
State income taxes, net of federal income tax
()() Other, net ()()Provision for income taxes$()$()$ 

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 $ Share-based compensation  Accrued medical and workers compensation  Net operating loss carryforwards  Operating lease liabilities  Other, net  Total deferred income tax assets before valuation allowances  Less: Valuation allowance()()Total deferred income tax assets  Deferred income tax liabilities:Property and equipment()()Inventories()()Intangible assets()()Operating lease right-of-use assets()()Total deferred income tax liabilities()()Net deferred income tax liabilities$()$()

As of December 28, 2024 and December 30, 2023, the Company’s net operating loss (“NOL”) carryforwards comprised state NOLs of $ million and $ million, respectively. These NOLs may be used to reduce future taxable income and expire periodically through 2039. Due to uncertainties related to the realization of these NOLs in certain jurisdictions, as well as other credits available to the Company has recorded a valuation allowance of $ million as of December 28, 2024 and $ million as of December 30, 2023. In addition, the Company recorded a $ million valuation allowance on foreign tax credit carryforwards as of December 28, 2024. The amount of deferred income tax assets realizable could change in the future if projections of future taxable income change.

The Company has not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely invested outside of the U.S. As of December 28, 2024 and December 30, 2023, these accumulated net earnings generated by foreign operations were $ million and $ million, respectively, which did not include earnings deemed to be repatriated as part of the U.S. Tax Cuts and Jobs Act. It is not practicable to determine the income tax liability that would be payable if such earnings were repatriated.


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 $ $ Increases related to prior period tax positions   Decreases related to prior period tax positions  ()Increases related to current period tax positions   Settlements  ()Expiration of statute of limitations()()()Unrecognized tax benefits, end of period$ $ $ 

As of December 28, 2024, December 30, 2023 and December 31, 2022, the entire amount of unrecognized tax benefits, if recognized, would reduce the Company’s annual effective tax rate of %, % and %, respectively. During 2024, the Company recorded income tax-related interest and penalty expense of $ million, and in 2023 and 2022, the Company recorded income tax-related interest and penalty benefits of $ million and $ million, respectively, due to uncertain tax positions included in the Provision for income taxes in the accompanying Consolidated Statements of Operations. As of December 28, 2024 and December 30, 2023, the Company recorded a liability for potential interest of $ million and $ million, respectively, and for potential penalties of $ million and $ million, respectively. The Company does not provide for any penalties associated with tax contingencies unless considered probable of assessment. The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months. With few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2021.

14.    

putative class actions on behalf of purchasers of the Company’s securities who purchased or otherwise acquired their securities between November 16, 2022, and May 30, 2023, inclusive (the “Class Period”), were commenced against the Company and certain of the Company’s former officers in the United States District Court for the Eastern District of North Carolina. The plaintiffs allege that the defendants made certain false and materially misleading statements during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. These cases were consolidated on February 9, 2024, and the court-appointed lead plaintiff filed a consolidated and amended complaint on April 22, 2024. The consolidated and amended complaint proposes a Class Period of November 16, 2022 to November 15, 2023, and alleges that defendants made false and misleading statements in connection with (a) the Company’s 2023 guidance and (b) certain accounting issues previously disclosed by the Company. On June 21, 2024, defendants filed a motion to dismiss the consolidated and amended complaint. On January 23, 2025, the motion to dismiss was granted by the United States District Court for the Eastern District of North Carolina. On February 21, 2025, plaintiffs filed an appeal to the 4th Circuit Court of Appeals. The Company strongly disputes the allegations and intends to defend the case vigorously.

On January 17, 2024, February 20, 2024, and February 26, 2024, derivative shareholder complaints were commenced against the Company’s directors and certain former officers alleging derivative liability for the allegations made in the securities class action complaints noted above. On April 9, 2024, the court consolidated these actions and appointed co-lead counsel. On June 10, 2024, the court issued a stay order on the consolidated derivative complaint pending resolution of the motion to dismiss for the underlying securities class action complaint.


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15.    

million, $ million and $ million in 2024, 2023 and 2022, respectively.

Deferred Compensation

The Company maintains a non-qualified deferred compensation plan for certain team members. This plan provides for a minimum and maximum deferral percentage of the team member’s base salary and bonus as determined by the Retirement Plan Committee. The Company established and maintained a deferred compensation liability for this plan. As of December 28, 2024 and December 30, 2023, these liabilities were $ million and $ million, respectively, and were included within Accrued Expenses in the Consolidated Balance Sheets.

16.    

and vest one-third annually over . The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period.

At December 28, 2024, there were million shares of common stock available for future issuance under the 2023 Plan based on management’s current estimate of the probable vesting outcome for performance-based awards. Shares forfeited become available for reissuance and are included in availability.

Restricted Stock Units

For time-based RSUs, the fair value of each award was determined based on the market price of the Company’s common stock on the date of grant. Time-based RSUs generally vest over a period in equal annual installments beginning on the first anniversary of the grant date. During the vesting period, holders of RSUs are entitled to receive dividend equivalents, but are not entitled to voting rights.

For performance-based RSUs, the fair value of each award was determined based on the market price of the Company’s common stock on the date of grant. Performance-based awards generally may vest following a period subject to the achievement of certain financial goals as specified in the grant agreements. Depending on the Company’s results during the performance period, the actual number of awards vesting at the end of the period generally ranges from % to % of the performance award. Performance-based RSUs generally do not have dividend equivalent rights and do not have voting rights until the shares are earned and issued following the applicable performance period. The number of performance-based awards outstanding is based on the number of awards that the Company believes were probable of vesting at December 28, 2024.

There were  performance-based RSUs granted during 2024. There were  thousand performance-based RSUs granted during 2023 and no performance-based RSUs granted during 2022. The change in units based on performance represents the change in the number of granted awards expected to vest based on the updated probability assessment as of December 28,

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million, $ million and $ million in 2024, 2023 and 2022, respectively, was determined based on management’s estimate of the probable vesting outcome.

 % % %Expected dividend yield % % %
Expected stock price volatility(2)
 % % %
(1)The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate having a term consistent with the vesting period of the award.
(2)Expected volatility is determined based on historical volatility over a matching look-back period and is consistent with the correlation coefficients between the Company’s stock prices and the Company’s peer group.

Additionally, the Company estimated a liquidity discount of % using the Chaffe Model to adjust the fair value for the post-vest restrictions. Vesting of market-based RSUs depends on the Company’s relative total shareholder return among a designated group of peer companies during a period and will be subject to a holding period after vesting.

 $  $  $ Granted $  $  $ 
 Change in units based on performance
 $  $  $ 
Vested (1)
()$ ()$ ()$ Forfeited()$  $ ()$ Nonvested at December 28, 2024 $  $  $ 
(1) The vested shares of market-based RSUs were not exercised due to low multiplier effect for 2020 awards.

The following table summarizes certain information concerning activity for time-based, performance-based and market-based RSUs:
 $ $ Total grant date fair value of RSUs vested$ $ $ Performance-based:Weighted average fair value of RSUs granted$ $ $ Total grant date fair value of RSUs vested$ $ $ Market-based:Weighted average fair value of RSUs granted$ $ $ Total grant date fair value of RSUs vested$ $ $ 

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thousand units.

Stock Options

In 2024, the Company granted thousand stock options where the weighted average fair value of stock options granted was $ per share. The fair value was estimated on the date of grant by applying the Black-Scholes-Merton option-pricing valuation model.

 $ Granted $ Exercised $ Forfeited()$ Outstanding at December 28, 2024 $ $ Exercisable at December 28, 2024 $ $ 

%
–
%
Expected life (2)
years
Expected volatility (3)
%
–
%
Expected dividend yield (4)
%
–
%
(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 the Company does not have sufficient historical data, the Company utilized the simplified method provided by the Securities and Exchange Commission 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. The Company utilized historical trends and the implied volatility of the Company’s publicly traded financial instruments in developing the volatility estimate for the Company’s stock options.
(4) The expected dividend yield is calculated based on the Company’s expected quarterly dividend and the three-month average stock price as of the grant date.

Other Considerations

Total income tax benefit related to share-based compensation expense for 2024, 2023 and 2022 was $ million, $ million and $ million, respectively.

As of December 28, 2024, there was $ million of unrecognized compensation expense related to all share-based awards that were expected to be recognized over a weighted average period of years.


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service period. Additionally, the DSU Plan provides for the deferral of compensation earned in the form of (i) an annual retainer for directors and (ii) wages for certain highly compensated team members. These DSUs are settled in common stock with the participants at a future date, or over a specified time period, as elected by the participants in accordance with the DSU Plan.

The Company granted thousand, thousand and thousand DSUs in 2024, 2023 and 2022, respectively. The weighted average fair value of DSUs granted during 2024, 2023 and 2022 was $, $ and $, respectively. The DSUs were awarded at a price equal to the market price of the Company’s underlying common stock on the date of the grant. For 2024, 2023 and 2022, the Company recognized $ million, $ million and $ million, respectively, of share-based compensation expense for these DSU grants.

Employee Stock Purchase Plan

The Company also offers an employee stock purchase plan (“ESPP”). Under the ESPP, eligible team members may elect salary deferrals to purchase the Company’s common stock at a discount of % from its fair market value on the date of purchase. There are annual limitations on the amounts a team member may elect of either $ thousand per team member or % of compensation, whichever is less. As of December 28, 2024, there were million shares available to be issued under the ESPP.

17.    

 $()$()2022 activity()()()Balance, December 31, 2022 ()()2023 activity ()()Balance, December 30, 2023 ()()2024 activity()  Balance, December 28, 2024$ $()$()

18.

billion and $ billion, respectively.

70


 Confirmed invoices paid during the year()Confirmed obligations outstanding at the end of the year$ 


71

19.    

reportable segment as the remaining operating segments, “Advance Auto Parts/Carquest U.S.” and “Carquest Canada,” are aggregated due to their economic and operational similarities. Both operating segments sell similar products across channels, operate in markets with parallel (or similar) economic conditions, sell to related customer bases, leverage similar methods to distribute products and provide services to its customers. The accounting policies of both operating segments are the same as those described in the summary of significant accounting policies. Due to the assessed quantitative and qualitative economic and operational similarities between the operating segments, management does not believe there would be additional value gained from disaggregated disclosure.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. The CODM primarily focuses on net income to evaluate its reportable segment. The CODM also uses net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees.

 $ $ Less: Cost of sales $ $ $ 
SG&A (1)
   Restructuring and related expenses   
Depreciation and amortization expense (2)
   Interest expense   
Other segment items (3)
()() Provision for income taxes()() Net (loss) income from continuing operations$$$ 
(1) SG&A excludes Restructuring and related expenses and depreciation and amortization.
(2) The 2024 amount has been reduced by depreciation and amortization related to restructuring which is included in Restructuring and related expenses.

 $ $ Canada   Total$ $ $ 

No asset information has been provided for the reportable segment as the CODM does not regularly review asset information by reportable segment. As of December 28, 2024 and December 30, 2023, assets held in the U.S. accounted for % and % of total assets.

There were no major customers individually accounting for 10% or more of consolidated net revenues.


72

20.

billion, with customary purchase price adjustments for working capital and other items. The transaction closed on November 1, 2024. Net proceeds from the transaction after paying expenses and excluding the impact of taxes were approximately $ billion. The Company’s sale of Worldpac was progress towards the changing landscape of the business with increased focus on the Advance blended-box model. The Company classified the results of operations and cash flows of Worldpac as discontinued operations in its Consolidated Statements of Operations and Consolidated Statements of Cash Flows for all periods presented. The related assets and liabilities associated with the discontinued operations are not included in the Consolidated Balance Sheet as of December 28, 2024. Additionally, beginning August 22, 2024, the Company ceased recording depreciation and amortization for Worldpac’s finite-lived intangible assets and operating lease ROU assets.

In connection with the Worldpac divestiture, the Company agreed to provide letters of credit in the aggregate amount of up to $ million, issued under its unsecured revolving credit facility, for up to twelve months after closing of the transaction as credit support for Worldpac’s new supply chain financing program, which letter of credit exposure will reduce to no later than months after closing.

Additionally, the Company and Worldpac entered into a Transition Services Agreement and Reverse Transition Services Agreement, pursuant to which the two entities will provide certain services to each other during the post-closing period. The minimum terms of the agreements are for , which may be extended by the Company and Worldpac for up to extension periods.

 Receivables, net 
Inventories
 Other current assets Property and equipment, net of accumulated depreciation Operating lease right-of-use assets Other intangible assets, net Goodwill Other noncurrent assets Total assets of held for sale$ Carrying amounts of the major classes of liabilities included in discontinued operations:Accounts payable$ Accrued expenses Other current liabilities Noncurrent operating lease liabilities Deferred income taxes Other noncurrent liabilities Total liabilities held for sale$ 

73

 $ $ 
Cost of sales, including purchasing and warehousing costs
   
Gross profit
   Selling, general and administrative expenses   Operating income    Other, net: Interest expense()()()
Other (expense) income, net
() ()Gain on divestiture   Total other, net  ()Income before provision for income taxes   Provision for income taxes   Net income from discontinued operations$ $ $ 



74

 $ $()$ December 30, 2023$ $ $()$ December 28, 2024$ $ $()$ 

For the year ended December 28, 2024, the allowance for credit losses increased $ million, primarily due to incremental reserves established as a result of the 2024 Restructuring Plan. Refer to Note 6. Receivables, net, of the Notes to the Consolidated Financial Statements included herein.

Other valuation and qualifying accounts have not been reported in this schedule because they are either not applicable or because the information has been included elsewhere in this report.

75
Table of Contents
EXHIBIT INDEX
  Incorporated by ReferenceFiled
Exhibit No.Exhibit DescriptionFormExhibitFiling DateHerewith
10-Q3.1 8/22/2024
8-K
3.1 8/14/2023
10-K4.0 2/18/2020
8-K4.1 4/29/2010
8-K10.45 6/3/2011
8-K4.4 1/17/2012
8-K4.5 12/21/2012
8-K4.6 4/19/2013
8-K4.7 12/9/2013
10-Q4.11 5/28/2014
8-K4.1 4/17/2020
8-K4.6 9/30/2020
8-K4.1 3/4/2022
8-K
4.1 3/9/2023
8-K
4.1 3/9/2023
8-K
4.6 9/30/2020
8-K
4.1 3/9/2023
8-K
4.1 4/17/2020

76
Table of Contents
  Incorporated by ReferenceFiled
Exhibit No.Exhibit DescriptionFormExhibitFiling DateHerewith
8-K4.1 3/4/2022
10-Q10.4 11/14/2024
10-Q10.3 11/14/2024
10-Q
10.3 5/30/2024
10-Q
10.4 5/30/2024
10-Q
10.5 5/30/2024
10-K10.8 3/12/2024
10-K
10.57 2/9/2019
10-Q10.2 5/24/2022
10-Q10.3 5/24/2022
10-Q10.4 5/24/2022
10-Q10.3 6/6/2023
10-Q
10.4 6/6/2023
10-Q
10.5 6/6/2023
10-Q
10.1 6/6/2023
10-Q
10.6 6/6/2023
10-Q
10.7 6/6/2023
10-Q
10.8 6/6/2023
10-K
10.45 2/22/2021
10-K10.24 3/12/2024
10-K10.31 3/12/2024
8-K10.1 9/13/2024
8-K
10.01 8/23/2023
8-K
10.01 11/15/2023

77
Table of Contents
  Incorporated by ReferenceFiled
Exhibit No.Exhibit DescriptionFormExhibitFiling DateHerewith
8-K10.1 11/15/2021
8-K10.2 11/15/2021
10-K
10.2902/28/2023

10-Q
10.1 8/23/2023
10-Q
10.5 11/21/2023
8-K
10.1 2/28/2024
8-K
10.1 11/14/2024
8-K10.1 2/26/2025
8-K
10.1 3/12/2024
X
X
X
8-K10.1 8/22/2024
10-K
10.39 3/12/2024
X
X
X
X
X
X
X
101.INSXBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.X
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Labels Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
104.1Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit).X
*Indicates a management contract or compensatory plan.

78
Table of Contents

Item 16. Form 10-K Summary.

None.

79

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ADVANCE AUTO PARTS, INC.
Dated: February 26, 2025By:/s/ Ryan P. Grimsland
Ryan P. Grimsland
Executive Vice President, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SignatureTitle
Date
/s/ Shane M. O’KellyPresident and Chief Executive Officer and DirectorFebruary 26, 2025
Shane M. O’Kelly(Principal Executive Officer)
/s/ Ryan P. GrimslandExecutive Vice President, Chief Financial OfficerFebruary 26, 2025
Ryan P. Grimsland(Principal Financial Officer)
/s/ Michael P. BelandSenior Vice President, Controller and Chief Accounting OfficerFebruary 26, 2025
Michael P. Beland(Principal Accounting Officer)
/s/ Eugene I. Lee, Jr.Chairman and DirectorFebruary 26, 2025
Eugene I. Lee, Jr.
/s/ Carla J. BailoDirectorFebruary 26, 2025
Carla J. Bailo
/s/ John F. FerraroDirectorFebruary 26, 2025
John F. Ferraro
/s/ Joan M. HilsonDirectorFebruary 26, 2025
Joan M. Hilson
/s/ Jeffrey J. Jones IIDirectorFebruary 26, 2025
Jeffrey J. Jones II
/s/ Douglas A. PertzDirectorFebruary 26, 2025
Douglas A. Pertz
/s/ Gregory L. SmithDirectorFebruary 26, 2025
Gregory L. Smith
/s/ Thomas W. SeboldtDirectorFebruary 26, 2025
Thomas W. Seboldt
/s/ Sherice R. TorresDirectorFebruary 26, 2025
Sherice R. Torres
/s/ A. Brent WindomDirectorFebruary 26, 2025
A. Brent Windom


80

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