Advance Auto Parts (AAP) Q3 2026 earnings summary

Executive summary

• Q3 net sales were $2.012B, down 1.2% YoY; comparable sales trends improved through the quarter and turned positive in the final four weeks.

• Adjusted operating margin was 4.5%; year-to-date free cash flow was $109M, and FY2026 free cash flow guidance rose to ~$150M.

Financial highlights

• Adjusted gross profit was $899M, or 44.7% of sales, down 16 bps YoY; GAAP gross profit was $897M versus $881M.

• Adjusted SG&A was $808M, or 40.2% of sales; adjusted operating income was $91M, or 4.5% of sales, up 10 bps YoY.

• Adjusted diluted EPS was $0.79 versus $0.92; GAAP net income was $15M and diluted EPS was $0.25, versus a $1M loss and a $0.02 loss per share.

• Forty-week net sales were $6.626B, net income was $94M, and operating cash flow was $311M versus cash used of $118M in the prior-year period.

Outlook and guidance

• FY2026 net sales guidance is $8.485B-$8.575B, with comparable sales growth of ~1.0%.

• FY adjusted operating margin guidance is 4.0%-4.3% and adjusted diluted EPS guidance is $2.75-$3.10; ranges narrowed from 3.8%-4.5% and $2.60-$3.30, respectively.

• FY free cash flow guidance rose from ~$100M to ~$150M; CapEx remains ~$300M, with 30-35 new stores and 15-20 market hubs planned.

• Q4 gross margin is expected in the mid-44% range; FY LIFO expense is expected at $50M, ~$10M above prior expectations.