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Press Release Details

Advance Auto Parts Reports Third Quarter 2023 Results and Provides Updates on Strategic and Operational Review

11/15/2023

Q3 Net Sales Increased 2.9% to $2.7 Billion; Comparable Store Sales Increased 1.2%

Executing on New $150 Million Cost Reduction Program

Initiates Sale Processes for Worldpac and Canadian Business

RALEIGH, N.C.--(BUSINESS WIRE)-- Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive aftermarket parts provider in North America, that serves both professional installer and do-it-yourself customers, announced its financial results for the third quarter ended October 7, 2023.

“Since joining Advance, I have partnered with the board and management team to move with speed in conducting a comprehensive review of the business,” said Shane O'Kelly, president and chief executive officer. “We are taking decisive actions to position Advance for long-term success and create meaningful value for our shareholders. Today we are announcing initial actions from our review process that will allow us to capitalize on significant opportunities ahead. First, we are launching a new cost reduction program that we expect will generate at least $150 million in savings on an annualized basis. We expect to reinvest up to $50 million of these savings in our team members with a clear focus on improving the retention of our frontline team members. At the same time, we have made a strategic decision to focus on our blended box business model and are therefore initiating separate sale processes for Worldpac as well as our Canadian business.

“We are committed to stabilizing the company and returning Advance to profitable growth, and our frontline team’s passion and extensive knowledge is integral to how we succeed. Seeing our frontline team members in action delivering for customers, coupled with robust industry fundamentals and strong vendor relationships, has reaffirmed my optimism that by making rigorous strategic and operational decisions now, Advance will be well positioned to capitalize on the opportunities ahead and deliver value for shareholders.”

Third Quarter 2023 Results (1)

Third quarter 2023 Net sales totaled $2.7 billion, a 2.9% increase compared with the third quarter of the prior year. Comparable store sales increased to 1.2%.

Gross profit decreased 16.3% to $1.0 billion. Gross profit margin was 36.3% of Net sales compared with 44.6% of Net sales in the third quarter of the prior year. This was primarily driven by a change in estimate for inventory reserves that resulted in a one-time impact of approximately $119 million. In addition, the company incurred higher product costs that were not fully covered by pricing actions and elevated supply chain costs. This was partially offset by a reduction in LIFO-related expenses.

SG&A expenses were $1.0 billion, which were 37.9% of Net sales compared with 38.2% in the third quarter of the prior year.

The company's Operating loss was $43.7 million, or (1.6)% of Net sales, compared with 6.5% in the third quarter of the prior year.

The company's effective tax rate was 24.4%, compared with 24.7% in the third quarter of the prior year. The company's Diluted loss per share was $(0.82), compared with Diluted earnings per share of $1.92 in the third quarter of the prior year.

Net cash provided by operating activities was $30.4 million through the third quarter of 2023 versus $483.1 million in the same period of the prior year. This was primarily driven by lower Net income and an increase in cash used in working capital. Through the third quarter of 2023, Free cash flow was an outflow of $156.8 million compared with an inflow of $149.5 million in the same period of the prior year.

All comparisons are based on the corrected results of the same time period in the prior year as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results.

Strategic Review Update

The company has initiated separate sale processes for the potential divestiture of Worldpac and the company’s Canada business. Worldpac, a leading automotive wholesale distributor of original equipment and aftermarket parts for all makes/all models, is highly recognized for its world class technology, catalog, product brand assortment and training. The company's Canadian business, which predominantly serves commercial customers, goes to market under the Carquest banner.

The company has engaged Centerview Partners to assist in the sale processes. The company has not set a timetable for the conclusion of the sale processes and does not intend to comment on or provide updates regarding these matters unless and until the processes are concluded or it determines that further disclosure is appropriate or required.

(1) Comparable store sales include locations open for 13 complete accounting periods and excludes sales to independently owned Carquest locations.

Capital Allocation

On October 31, 2023, the company declared a regular cash dividend of $0.25 per share to be paid on January 26, 2024 to all common stockholders of record as of January 12, 2024.

Full Year 2023 Guidance

Tony Iskander, interim chief financial officer, said, “Based on our year-to-date results and current business trends, we are adjusting our previously provided full year outlook ranges. Our updates include the impact of non-recurring expenses in Q3 as well as continued pressure in Q4 from higher product costs that we do not expect to offset with price. We are taking significant steps to improve our cost structure and remain focused on returning the business to profitable growth.”

 

Prior FY 2023 Outlook

 

Updated FY 2023 Outlook

 

As of August 23, 2023

 

As of November 15, 2023

($ in millions, except per share data)

Low

 

High

 

Low

 

High

Net sales

 

11,250

 

 

$

11,350

 

 

$

11,250

 

 

$

11,300

 

Comparable store sales (1)

 

(0.5

)%

 

 

0.5

%

 

 

(0.5

)%

 

 

0.0

%

Operating income margin

 

4.0

%

 

 

4.3

%

 

 

1.8

%

 

 

2.0

%

Income tax rate

 

25.0

%

 

 

25.0

%

 

 

25.0

%

 

 

25.0

%

Diluted EPS

 

4.50

 

 

$

5.10

 

 

$

1.40

 

 

$

1.80

 

Capital expenditures

 

200

 

 

$

250

 

 

$

200

 

 

$

250

 

Free cash flow (2)

 

150

 

 

$

250

 

 

$

50

 

 

$

100

 

New store and branch openings

 

40

 

 

 

60

 

 

 

55

 

 

 

65

 

(1)

Comparable store sales include locations open for 13 complete accounting periods and excludes sales to independently owned Carquest locations.

(2)

Free cash flow is a non-GAAP measure. For a better understanding of the company's non-GAAP adjustments, refer to the reconciliation of non-GAAP financial measures in the accompanying financial tables included herein.

Investor Conference Call

The company will detail its results for the third quarter ended October 7, 2023 via a webcast scheduled to begin at 8 a.m. Eastern Time on Wednesday, November 15, 2023. The webcast will be accessible via the Investor Relations page of the company's website (ir.AdvanceAutoParts.com).

To join by phone, please pre-register online for dial-in and passcode information. Upon registering, participants will receive a confirmation with call details and a registrant ID. While registration is open through the live call, the company suggests registering a day in advance or at minimum 10 minutes before the start of the call. A replay of the conference call will be available on the company's Investor Relations website for one year.

About Advance Auto Parts

Advance Auto Parts, Inc. is a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers. As of October 7, 2023 Advance operated 4,785 stores and 320 Worldpac branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The company also served 1,307 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Additional information about Advance, including employment opportunities, customer services, and online shopping for parts, accessories and other offerings can be found at www.AdvanceAutoParts.com.

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, including cost reduction initiatives, our ability to complete the potential divestiture of Worldpac and the company’s Canada business and expectations for economic conditions, future business results and future 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, the company undertakes 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, our ability to hire, train and retain qualified employees, 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. 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.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands) (unaudited)

 

 

October 7,
2023(1)

 

December 31,
2022 (2,3)

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

317,528

 

$

269,282

Receivables, net

 

868,305

 

 

698,613

Inventories, net

 

4,940,037

 

 

4,911,053

Other current assets

 

185,249

 

 

163,695

Total current assets

 

6,311,119

 

 

6,042,643

Property and equipment, net

 

1,663,080

 

 

1,690,139

Operating lease right-of-use assets

 

2,600,946

 

 

2,607,690

Goodwill

 

989,934

 

 

990,471

Other intangible assets, net

 

598,699

 

 

620,901

Other assets

 

75,809

 

 

62,429

Total assets

$

12,239,587

 

$

12,014,273

Liabilities and Stockholders' Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

3,942,591

 

$

4,136,415

Accrued expenses

 

712,112

 

 

641,099

Current portion of long-term debt

 

 

 

185,000

Other current liabilities

 

478,603

 

 

427,480

Total current liabilities

 

5,133,306

 

 

5,389,994

Long-term debt

 

1,785,717

 

 

1,188,283

Noncurrent operating lease liabilities

 

2,209,899

 

 

2,278,318

Deferred income taxes

 

382,840

 

 

415,997

Other long-term liabilities

 

87,669

 

 

87,214

Total stockholders' equity

 

2,640,156

 

 

2,654,467

Total liabilities and stockholders’ equity

$

12,239,587

 

$

12,014,273

(1)

This preliminary condensed consolidated balance sheet has been prepared on a basis consistent with the company's previously prepared consolidated balance sheets filed with the Securities and Exchange Commission (“SEC”), but does not include the footnotes required by accounting principles generally accepted in the United States of America (“GAAP”).

(2)

The balance sheet at December 31, 2022 has been derived from the audited consolidated financial statements at that date, but does not include the footnotes required by GAAP.

(3)

The balance sheet at December 31, 2022 reflects the corrected results as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data) (unaudited)

 

 

 

 

 

 

Twelve Weeks Ended

 

Forty Weeks Ended

 

October 7, 2023 (1)

 

October 8, 2022 (1,2)

 

October 7, 2023 (1)

 

October 8, 2022 (1,2)

Net sales

$

2,719,079

 

 

$

2,641,341

 

 

$

8,822,738

 

 

$

8,680,977

 

Cost of sales, including purchasing and warehousing costs

 

1,732,420

 

 

 

1,462,094

 

 

 

5,220,200

 

 

 

4,821,037

 

Gross profit

 

986,659

 

 

 

1,179,247

 

 

 

3,602,538

 

 

 

3,859,940

 

Selling, general and administrative expenses (2)

 

1,030,355

 

 

 

1,008,226

 

 

 

3,407,445

 

 

 

3,301,959

 

Operating (loss) income

 

(43,696

)

 

 

171,021

 

 

 

195,093

 

 

 

557,981

 

Other expense, net:

 

 

 

 

 

 

 

Interest expense

 

(19,407

)

 

 

(12,039

)

 

 

(69,993

)

 

 

(35,114

)

Loss on early redemption of senior unsecured notes

 

 

 

 

 

 

 

 

 

 

(7,408

)

Other income (expense), net

 

(1,216

)

 

 

(5,054

)

 

 

(206

)

 

 

(5,282

)

Total other, net

 

(20,623

)

 

 

(17,093

)

 

 

(70,199

)

 

 

(47,804

)

(Loss) Income before provision for income taxes

 

(64,319

)

 

 

153,928

 

 

 

124,894

 

 

 

510,177

 

Provision for income taxes

 

(15,686

)

 

 

38,047

 

 

 

34,649

 

 

 

123,383

 

Net (loss) income

$

(48,633

)

 

$

115,881

 

 

$

90,245

 

 

$

386,794

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per common share

$

(0.82

)

 

$

1.93

 

 

$

1.52

 

 

$

6.38

 

Weighted-average common shares outstanding

 

59,474

 

 

 

60,053

 

 

 

59,411

 

 

 

60,656

 

 

 

 

 

 

 

 

 

Diluted (loss) earnings per common share

$

(0.82

)

 

$

1.92

 

 

$

1.51

 

 

$

6.34

 

Weighted-average common shares outstanding

 

59,630

 

 

 

60,384

 

 

 

59,588

 

 

 

61,045

 

(1)

These preliminary condensed consolidated statements of operations have been prepared on a basis consistent with the company's previously prepared consolidated statements of operations filed with the SEC, but do not include the footnotes required by GAAP.

(2)

The twelve and forty weeks ended October 8, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of the non-material errors the company discovered in previously reported results.

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands) (unaudited)

 

 

 

 

 

Forty Weeks Ended

 

October 7, 2023 (1)

 

October 8, 2022 (1,2)

Cash flows from operating activities:

 

 

 

Net income

$

90,245

 

 

$

386,794

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

234,976

 

 

 

215,224

 

Share-based compensation

 

37,435

 

 

 

40,291

 

Loss and impairment on property and equipment, net

 

1,886

 

 

 

2,858

 

Loss on early redemption of senior unsecured notes

 

 

 

 

7,408

 

Provision for deferred income taxes

 

(33,059

)

 

 

24,144

 

Other, net

 

1,499

 

 

 

2,064

 

Net change in:

 

 

 

Receivables, net

 

(170,371

)

 

 

(64,107

)

Inventories, net

 

(41,025

)

 

 

(274,926

)

Accounts payable

 

(191,871

)

 

 

177,103

 

Accrued expenses

 

145,704

 

 

 

(27,576

)

Other assets and liabilities, net

 

(45,015

)

 

 

(6,183

)

Net cash provided by operating activities

 

30,404

 

 

 

483,094

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(187,201

)

 

 

(333,639

)

Proceeds from sales of property and equipment

 

2,001

 

 

 

1,821

 

Net cash used in investing activities

 

(185,200

)

 

 

(331,818

)

Cash flows from financing activities:

 

 

 

Borrowings under credit facilities

 

4,805,000

 

 

 

1,123,000

 

Payments on credit facilities

 

(4,990,000

)

 

 

(938,000

)

Borrowings on senior unsecured notes

 

599,571

 

 

 

348,618

 

Payments on senior unsecured notes

 

 

 

 

(201,081

)

Dividends paid

 

(194,322

)

 

 

(336,230

)

Repurchases of common stock

 

(14,237

)

 

 

(542,608

)

Other, net

 

(1,028

)

 

 

463

 

Net cash provided by (used in) financing activities

 

204,984

 

 

 

(545,838

)

Effect of exchange rate changes on cash

 

(1,942

)

 

 

(15,662

)

Net increase (decrease) in cash and cash equivalents

 

48,246

 

 

 

(410,224

)

Cash and cash equivalents, beginning of period

 

269,282

 

 

 

601,428

 

Cash and cash equivalents, end of period

$

317,528

 

 

$

191,204

 

(1)

These preliminary condensed consolidated statements of cash flows have been prepared on a consistent basis with the company's previously prepared statements of cash flows filed with the SEC, but do not include the footnotes required by GAAP.

(2)

The forty weeks ended October 8, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of the non-material error the company discovered in previously reported results.

Restatement of Previously Issued Financial Statements

In connection with the preparation of the financial statements for the third quarter of 2023, the company identified additional errors impacting cost of sales and selling, general and administrative costs. The company evaluated the errors and determined that the related impacts were not material to the previously issued consolidated financial statements for any prior period. A summary of the corrections to the impacted financial statement line items in our previously issued Consolidated Balance Sheets, Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Stockholders’ Equity and Consolidated Statement of Cash Flows for the year ended December 31, 2022 included in previously filed Annual Reports on Form 10-K and Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Stockholders’ Equity and Condensed Consolidated Statements of Cash Flows for periods presented below, which were presented in previously filed Quarterly Reports on Form 10-Q, are as follows:

Corrected Condensed Consolidated Balance Sheet

October 8, 2022

 

As Previously Reported

Adjustments

As Corrected

Assets

 

 

 

Receivables, net

$

845,667

 

$

(2,795

)

$

842,872

 

Total current assets

 

6,162,520

 

 

(2,795

)

 

6,159,725

 

Total assets

$

12,132,079

 

$

(2,795

)

$

12,129,284

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

Accounts payable

$

4,097,412

 

$

(16,579

)

$

4,080,833

 

Accrued expenses

 

681,216

 

 

10,312

 

 

691,528

 

Total current liabilities

 

5,442,901

 

 

(6,267

)

 

5,436,634

 

Total liabilities

 

9,416,004

 

 

(6,267

)

 

9,409,737

 

Accumulated other comprehensive loss

(54,298

)

6,364

(47,934

)

Retained earnings

 

4,726,823

 

 

(2,892

)

 

4,723,931

 

Total stockholders’ equity

 

2,716,075

 

 

3,472

 

 

2,719,547

 

Total liabilities and stockholders’ equity

$

12,132,079

 

$

(2,795

)

$

12,129,284

 

Corrected Condensed Consolidated Balance Sheet

December 31, 2022

 

As Previously Reported

 

Adjustments

 

As Corrected

Assets

 

 

 

 

 

Inventories, net

$

4,915,262

 

$

(4,209

)

 

$

4,911,0523

Total current assets

 

6,046,852

 

 

(4,209

)

 

 

6,042,643

 

Total assets

 

12,018,482

 

 

(4,209

)

 

 

12,014,273

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Accounts payable

 

4,123,462

 

 

12,953

 

 

 

4,136,415

 

Accrued expenses

 

634,447

 

 

6,652

 

 

 

641,099

Total current liabilities

 

5,370,389

 

 

19,605

 

 

 

5,389,994

 

Total liabilities

 

9,340,201

 

 

19,605

 

 

 

9,359,806

 

Retained earnings

 

4,744,624

 

 

(23,814

)

 

 

4,720,810

Total stockholders’ equity

 

2,678,281

 

 

(23,814

)

 

 

2,654,467

Total liabilities and stockholders’ equity

$

12,018,482

 

$

(4,209

)

 

$

12,014,273

 

Corrected Condensed Consolidated Statement of Operations

October 8, 2022

 

Twelve Weeks Ended

 

Forty Weeks Ended

 

As Previously Reported

Adjustments

As Corrected

 

As Previously Reported

Adjustments

As Corrected

Cost of sales

$

1,461,490

 

$

604

 

$

1,462,094

 

 

$

4,808,888

 

$

12,149

 

$

4,821,037

 

Gross profit

 

1,179,851

 

 

(604

)

 

1,179,247

 

 

 

3,872,089

 

 

(12,149

)

 

3,859,940

 

Selling, general and administrative expenses

 

1,002,653

 

 

5,573

 

 

1,008,226

 

 

 

3,289,940

 

 

12,019

 

 

3,301,959

 

Operating income

 

177,198

 

 

(6,177

)

 

171,021

 

 

 

582,149

 

 

(24,168

)

 

557,981

 

Other income (expense), net

 

(17,741

)

 

12,687

 

 

(5,054

)

 

 

(18,314

)

 

13,032

 

 

(5,282

)

Total other, net

 

(29,780

)

 

12,687

 

 

(17,093

)

 

 

(60,836

)

 

13,032

 

 

(47,804

)

Income before provision for income taxes

 

147,418

 

 

6,510

 

 

153,928

 

 

 

521,313

 

 

(11,136

)

 

510,177

 

Provision for income taxes

 

36,436

 

 

1,611

 

 

38,047

 

 

 

126,137

 

 

(2,754

)

 

123,383

 

Net income

$

110,982

 

$

4,899

 

$

115,881

 

 

$

395,176

 

$

(8,382

)

$

386,794

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.85

 

$

0.08

 

$

1.93

 

 

$

6.52

 

$

(0.14

)

$

6.38

 

Basic weighted average shares

 

60,053

 

 

 

60,053

 

 

 

60,656

 

 

 

60,656

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

1.84

 

$

0.08

 

 

1.92

 

 

$

6.47

 

$

(0.13

)

 

6.34

 

Diluted weighted average shares

60,384

 

 

60,384

 

 

61,045

 

 

61,045

 

Corrected Statement of Cash Flows (unaudited)

Forty Weeks Ended October 8, 2022

 

As Previously Reported

 

Adjustments

 

As Corrected

Net income

$

395,176

 

 

$

(8,382

)

 

$

386,794

 

Net change in:

 

 

 

 

 

Receivables, net

 

(66,902

)

 

 

(22,402

)

 

 

(89,304

)

Inventories

 

(284,271

)

 

 

34,542

 

 

 

(249,729

)

Accounts payable

 

187,331

 

 

 

(10,228

)

 

 

177,103

 

Accrued expenses

 

(34,046

)

 

 

6,470

 

 

 

(27,576

)

Net cash provided by operating activities

$

483,094

 

 

$

 

 

$

483,094

 

Reconciliation of Non-GAAP Financial Measure

The company's financial results include certain financial measures not derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses Free cash flow as a measure of its liquidity and believes it is a useful indicator to investors or potential investors of the company's ability to implement growth strategies and service debt. Free cash flow is a non-GAAP measure and should be considered in addition to, but not as a substitute for, information contained in the company's condensed consolidated statement of cash flows as a measure of liquidity.

Reconciliation of Free Cash Flow: (1)

 

 

 

 

Forty Weeks Ended

(in thousands)

October 7, 2023

 

October 8, 2022

Cash flows provided by operating activities

$

30,404

 

 

$

483,094

 

Purchases of property and equipment

 

(187,201

)

 

 

(333,639

)

Free cash flow

$

(156,797

)

 

$

149,455

 

Adjusted Debt to Adjusted EBITDAR: (1,2)

 

 

 

 

Four Quarters Ended

(In thousands, except adjusted debt to adjusted EBITDAR ratio)

October 7, 2023

 

December 31, 2022

Total GAAP debt

$

1,785,717

 

$

1,373,283

Add: Operating lease liabilities

 

2,675,921

 

 

2,692,861

Adjusted debt

$

4,461,638

 

$

4,066,144

 

 

 

 

GAAP Net income

$

176,664

 

$

473,213

Depreciation and amortization

 

302,670

 

 

283,800

Interest expense

 

85,938

 

 

51,060

Other (income) expense, net

 

2,348

 

 

 

7,242

Provision for income taxes

 

48,445

 

 

137,180

Rent expense

 

600,261

 

 

594,838

Share-based compensation

 

48,122

 

 

50,978

Other noncash charges

 

59,975

 

 

7,408

Transformation related charges

 

26,367

 

 

Adjusted EBITDAR

$

1,350,148

 

$

1,605,259

 

 

 

 

Adjusted Debt to Adjusted EBITDAR

 

3.3

 

 

2.5

(1)

The forty weeks ended October 8, 2022 and four quarters ended December 31, 2022 reflect the corrected results as depicted in the financial tables herein, which include the correction of non-material errors the company discovered in previously reported results.

(2)

Beginning in first quarter 2023, the company no longer excludes transformation-related activities in non-GAAP measures. Prior period has been recast to conform to current year presentation.

NOTE: Management believes its Adjusted Debt to Adjusted EBITDAR ratio (“leverage ratio”) is a key financial metric for debt securities, as reviewed by rating agencies, and believes its debt levels are best analyzed using this measure. The company’s goal is to maintain an investment grade rating. The company's credit rating directly impacts the interest rates on borrowings under its existing credit facility and could impact the company's ability to obtain additional funding. If the company was unable to maintain its investment grade rating this could negatively impact future performance and limit growth opportunities. Similar measures are utilized in the calculation of the financial covenants and ratios contained in the company's financing arrangements. The leverage ratio calculated by the company is a non-GAAP measure and should not be considered a substitute for debt to net earnings, net earnings or debt as determined in accordance with GAAP. The company adjusts the calculation to remove rent expense and to add back the company’s existing operating lease liabilities related to their right-of-use assets to provide a more meaningful comparison with the company’s peers and to account for differences in debt structures and leasing arrangements. The company’s calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.

Store Information

During the forty weeks ended October 7, 2023, 51 stores and branches were opened and 32 were closed, resulting in a total of 5,105 stores and branches as of October 7, 2023, compared with a total of 5,086 stores and branches as of December 31, 2022.

The below table summarizes the changes in the number of company-operated store and branch locations during the twelve and forty weeks ended October 7, 2023:

 

 

Twelve Weeks Ended

 

 

AAP

 

CARQUEST

 

WORLDPAC (1)

 

Total

July 15, 2023

 

4,471

 

 

319

 

 

319

 

5,109

 

New

 

10

 

 

1

 

 

1

 

12

 

Closed

 

(5

)

 

(11

)

 

 

(16

)

Relocated

 

1

 

 

(1

)

 

 

 

October 7, 2023

 

4,477

 

 

308

 

 

320

 

5,105

 

 

 

Forty Weeks Ended

 

 

AAP

 

CARQUEST

 

WORLDPAC (1)

 

Total

December 31, 2022

 

4,440

 

 

330

 

 

316

 

5,086

 

New

 

46

 

 

1

 

 

4

 

51

 

Closed

 

(10

)

 

(22

)

 

 

(32

)

Relocated

 

1

 

 

(1

)

 

 

 

October 7, 2023

 

4,477

 

 

308

 

 

320

 

5,105

 

(1) Certain converted Autopart International ("AI") locations will remain branded as AI going forward.

 

Investor Relations Contact:
Elisabeth Eisleben
T: (919) 227-5466
E: invrelations@advanceautoparts.com

Media Contact:
Darryl Carr
T: (984) 389-7207
E: AAPCommunications@advance-auto.com

Source: Advance Auto Parts, Inc.