Advance Auto Parts (AAP) investor relations material

Executive summary

• Returned to profitability in Q2 2025, reaching the upper end of expectations, with comparable sales up 0.1% year-over-year, driven by Pro business growth and DIY stabilization.

• Strategic initiatives in merchandising, supply chain, and store investments progressed ahead of schedule, focusing on long-term value and sustained growth.

• Completed a proactive reorganization of the debt structure, enhancing financial flexibility and supporting supply chain financing.

• Major restructuring led to 514 store closures and $148M in related expenses, reducing the store base to 4,292.

• Issued $1.95B in senior notes and entered a new $1B asset-backed revolving credit facility to strengthen liquidity.

Financial highlights

• Q2 2025 net sales were $2.0B, down 7.7% year-over-year, mainly due to store optimization and closures.

• Comparable store sales grew 0.1% in Q2 2025.

• Adjusted gross margin was 43.8%, up 16 bps year-over-year; gross profit was $874M (43.5% margin).

• Adjusted operating income was $61M (3.0% margin), up 19–20 bps year-over-year; operating income was $22M (1.1% margin).

• Adjusted diluted EPS was $0.69, up from $0.62; diluted EPS was $0.25, down from $0.51.

Outlook and guidance

• Full-year 2025 net sales expected between $8.4B and $8.6B; comparable sales growth of 0.5%–1.5%.

• Adjusted operating income margin guidance of 2.0%–3.0%; Q3 margin planned above 4%.

• Adjusted diluted EPS guidance revised to $1.20–$2.20 due to higher interest expense from new debt.

• Free cash flow guidance between $(85)M and $(25)M, with capital expenditures around $300M.

• Company expects $35–$50M in additional restructuring expenses by year-end 2025.