Form 10-Q - Quarterly report [Sections 13 or 15(d)]

Share Name	Share Symbol	Market	Type
Advance Auto Parts	NYSE:AAP	NYSE	Common Stock

	Price Change	% Change	Share Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.10	0.26%	38.79				1,543	12:31:11

Table of Contents

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 5, 2024

☐ 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 11, 2024, the number of shares of the registrant’s common stock outstanding was 59,734,513 shares.

Table of Contents


TABLE OF CONTENTS
			Page
NOTE REGARDING FORWARD LOOKING STATEMENTS			1
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries (unaudited)	2
		Condensed Consolidated Balance Sheets	2
		Condensed Consolidated Statements of Operations	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
		Condensed Consolidated Statements of Cash Flows	7
		Notes to the Condensed Consolidated Financial Statements	1
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
	Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	28
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 5.	Other Information	27
	Item 6.	Exhibits	30
SIGNATURE			31

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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,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization plans, and the estimated amounts and types of costs the company will incur in connection with such plans, financial objectives, operational plans and objectives, statements about the sale of the Company’s Worldpac business, including statements regarding the benefits of the sale and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s 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, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, deterioration of general macroeconomic conditions, geopolitical factors, the highly competitive nature of the industry, demand for the Company’s products and services, ongoing risks associated with the disposition of Worldpac, the Company’s ability to maintain credit ratings, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please refer to “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s 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.

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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	October 5, 2024		December 30, 2023
Current assets:
Cash and cash equivalents	$	464,492	$	488,049
Receivables, net	668,937		609,528
Inventories, net	4,042,200		3,893,569
Other current assets	180,448		180,402
Current assets held for sale	2,137,690		1,205,473
Total current assets	7,493,767		6,377,021
Property and equipment, net of accumulated depreciation of $2,913,816 and $2,729,208	1,479,738		1,555,985
Operating lease right-of-use assets	2,399,630		2,347,073
Goodwill	600,182		601,159
Other intangible assets, net	409,501		419,161
Other noncurrent assets	85,366		85,988
Noncurrent assets held for sale	—		889,939
Total assets	$	12,468,184	$	12,276,326
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,498,460	$	3,526,079
Accrued expenses	641,914		616,067

Other current liabilities	458,343		396,408
Current liabilities held for sale	994,824		768,851
Total current liabilities	5,593,541		5,307,405
Long-term debt	1,788,513		1,786,361
Noncurrent operating lease liabilities	2,018,383		2,039,908
Deferred income taxes	380,118		355,635
Other long-term liabilities	89,949		83,538
Noncurrent liabilities held for sale	—		183,751
Total liabilities	9,870,504		9,756,598

Commitments and contingencies

Stockholders’ equity:
Preferred stock, nonvoting, $0.0001 par value	—		—
Common stock, voting, $0.0001 par value	8		8
Additional paid-in capital	987,657		946,099
Treasury stock, at cost	(2,938,887)		(2,933,286)
Accumulated other comprehensive loss	(43,514)		(52,232)
Retained earnings	4,592,416		4,559,139
Total stockholders’ equity	2,597,680		2,519,728
Total liabilities and stockholders’ equity	$	12,468,184	$	12,276,326

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

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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 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Net sales	$	2,147,991	$	2,218,205	$	7,098,302	$	7,194,670
Cost of sales, including purchasing and warehousing costs	1,240,093		1,400,638		4,036,898		4,154,190
Gross profit	907,898		817,567		3,061,404		3,040,480
Selling, general and administrative expenses	907,495		896,145		2,954,707		2,959,238
Operating income (loss)	403		(78,578)		106,697		81,242
Other, net:
Interest expense	(18,805)		(19,375)		(62,127)		(69,948)
Other income (expense), net	2,393		(305)		12,769		232
Total other, net	(16,412)		(19,680)		(49,358)		(69,716)
(Loss) income before provision for income taxes	(16,009)		(98,258)		57,339		11,526
Provision for income taxes	9,354		(24,072)		34,763		6,360
Net (loss) income from continuing operations	(25,363)		(74,186)		22,576		5,166
Net income from discontinued operations	19,349		12,149		56,413		59,696
Net (loss) income	$	(6,014)	$	(62,037)	$	78,989	$	64,862

Basic (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.25)	$	0.38	$	0.09
Basic earnings per common share from discontinued operations	0.32		0.20		0.95		1.00
Basic (loss) earnings per common share	$	(0.10)	$	(1.05)	$	1.33	$	1.09
Basic weighted-average common shares outstanding	59,684		59,474		59,618		59,411

Diluted (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.24)	$	0.38	$	0.09
Diluted earnings per common share from discontinued operations	0.32		0.20		0.94		1.00
Diluted (loss) earnings per common share	$	(0.10)	$	(1.04)	$	1.32	$	1.09
Diluted weighted-average common shares outstanding	59,902		59,630		59,878		59,588

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

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Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands) (Unaudited)
	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Net (loss) income	$	(6,014)	$	(62,037)	$	78,989	$	64,862
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement benefits, net of tax (benefit) expense of $(11), $(13), $(42) and $43	(31)		(38)		(119)		121
Currency translation adjustments	1,048		(10,280)		8,837		(2,451)
Total other comprehensive (loss) income	1,017		(10,318)		8,718		(2,330)
Comprehensive (loss) income	$	(4,997)	$	(72,355)	$	87,707	$	62,532

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

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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 5, 2024
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at July 13, 2024	59,675	$	8	$	975,540	$	(2,937,903)	$	(44,531)	$	4,613,638	$	2,606,752
Net income	—	—		—		—		—		(6,014)		(6,014)
Total other comprehensive income	—	—		—		—		1,017		—		1,017

Restricted stock units and deferred stock units vested	51	—		312		—		—		—		312
Share-based compensation	—	—		10,910		—		—		—		10,910
Stock issued under employee stock purchase plan	26	—		895		—		—		—		895
Repurchases of common stock	(21)	—		—		(984)		—		—		(984)
Cash dividends declared ($0.25 per common share)	—	—		—		—		—		(15,208)		(15,208)

Balance at October 5, 2024	59,731	$	8	$	987,657	$	(2,938,887)	$	(43,514)	$	4,592,416	$	2,597,680

	Twelve Weeks Ended October 7, 2023
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at July 15, 2023	59,457	$	8	$	925,411	$	(2,932,576)	$	(36,707)	$	4,686,518	$	2,642,654
Net loss	—	—		—		—		—		(62,037)		(62,037)
Total other comprehensive loss	—	—		—		—		(10,318)		—		(10,318)

Restricted stock units and deferred stock units vested	18	—		—		—		—		—		—
Share-based compensation	—	—		10,582		—		—		—		10,582
Stock issued under employee stock purchase plan	14	—		1,047		—		—		—		1,047
Repurchases of common stock	(7)	—		—		(429)		—		—		(429)
Cash dividends declared ($0.25 per common share)	—	—		—		—		—		(15,163)		(15,163)

Balance at October 7, 2023	59,482	$	8	$	937,040	$	(2,933,005)	$	(47,025)	$	4,609,318	$	2,566,336

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

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Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (in thousands, except per share data) (Unaudited)

	Forty Weeks Ended October 5, 2024
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at December 30, 2023	59,512	$	8	$	946,099	$	(2,933,286)	$	(52,232)	$	4,559,139	$	2,519,728
Net income	—	—		—		—		—		78,989		78,989
Total other comprehensive income	—	—		—		—		8,718		—		8,718

Restricted stock units and deferred stock units vested	238	—		312		—		—		—		312
Share-based compensation	—	—		38,563		—		—		—		38,563
Stock issued under employee stock purchase plan	69	—		2,683		—		—		—		2,683
Repurchases of common stock	(88)	—		—		(5,601)		—		—		(5,601)
Cash dividends declared ($0.75 per common share)	—	—		—		—		—		(45,712)		(45,712)

Balance at October 5, 2024	59,731	$	8	$	987,657	$	(2,938,887)	$	(43,514)	$	4,592,416	$	2,597,680

	Forty Weeks Ended October 7, 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	59,264	$	8	$	897,560	$	(2,918,768)	$	(44,695)	$	4,665,087	$	2,599,192
Net income	—	—		—		—		—		64,862		64,862
Total other comprehensive income (loss)	—	—		—		—		(2,330)		—		(2,330)

Restricted stock units and deferred stock units vested	294	—		—		—		—		—		—
Share-based compensation	—	—		37,435		—		—		—		37,435
Stock issued under employee stock purchase plan	32	—		3,045		—		—		—		3,045
Repurchases of common stock	(108)	—		—		(14,237)		—		—		(14,237)
Cash dividends declared ($2.00 per common share)	—	—		—		—		—		(120,631)		(120,631)
Other	—	—		(1,000)		—		—		—		(1,000)
Balance at October 7, 2023	59,482	$	8	$	937,040	$	(2,933,005)	$	(47,025)	$	4,609,318	$	2,566,336

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

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Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands) (Unaudited)


	Forty Weeks Ended
	October 5, 2024		October 7, 2023
Cash flows from operating activities:
Net income	$	78,989	$	64,862
Net income from discontinued operations	56,413		59,696
Net income from continuing operations	22,576		5,166
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	217,197		206,658
Share-based compensation	33,810		33,777
(Gain) Loss on sale and impairment of long-lived assets	(14,273)		1,886

Provision for deferred income taxes	24,289		(27,811)
Other, net	2,986		2,436
Net change in:
Receivables, net	(60,383)		(161,629)
Inventories, net	(152,229)		(110,871)
Accounts payable	(25,225)		(77,336)
Accrued expenses	30,794		171,117
Other assets and liabilities, net	1,477		(71,707)
Net cash provided by (used in) operating activities of continuing operations	81,019		(28,314)
Net cash provided by operating activities of discontinued operations	76,917		57,148
Net cash provided by operating activities	157,936		28,834
Cash flows from investing activities:
Purchases of property and equipment	(129,714)		(174,186)

Proceeds from sales of property and equipment	13,232		2,001
Net cash used in investing activities of continuing operations	(116,482)		(172,185)
Net cash used in investing activities of discontinued operations	(7,988)		(13,015)
Net cash used in investing activities	(124,470)		(185,200)
Cash flows from financing activities:
Borrowings under credit facilities	—		4,805,000
Payments on credit facilities	—		(4,990,000)
Borrowings on senior unsecured notes	—		599,571
Dividends paid	(44,882)		(194,322)
Purchase of noncontrolling interest	(9,101)		—
Proceeds from the issuance of common stock	2,995		3,045
Repurchases of common stock	(5,601)		(14,237)
Other, net	(1,143)		(5,010)
Net cash (used in) provided by financing activities	(57,732)		204,047

Effect of exchange rate changes on cash	11,766		(1,932)

Net (decrease) increase in cash and cash equivalents	(12,500)		45,749
Cash and cash equivalents, beginning of period	503,471		270,805

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	Forty Weeks Ended
	October 5, 2024		October 7, 2023
Cash and cash equivalents, end of period	$	490,971	$	316,554





Non-cash transactions of continuing operations:
Accrued purchases of property and equipment	$	9,276	$	9,434
Transfers of property and equipment from (to) assets related to discontinued operations to (from) continuing operations	$	7,262	$	(105)

Summary of cash and cash equivalents:
Cash and cash equivalents of continuing operations, end of period	464,492		308,804
Cash and cash equivalents of discontinued operations, end of period	26,479		7,750
Cash and cash equivalents, end of period	$	490,971	$	316,554

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

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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. 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 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 “the Company”).

As discussed in No te 3 . “Discontinued Operati ons,” on August 22, 2024, the Company entered into a definitive purchase agreement to sell its Worldpac, Inc. business (“Worldpac”), which reflects a strategic shift in its business. The sale was completed on November 1, 2024. As a result of the Company’s entry into the purchase agreement, Worldpac is presented as discontinued operations beginning in the third quarter of 2024. The Company has reclassified the financial results of Worldpac to discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations for all periods presented. The Company also reclassified the related assets and liabilities as assets and liabilities held for sale on the accompanying Condensed Consolidated Balance Sheets as of October 5, 2024 and December 30, 2023. Cash flows from the Company’s discontinued operations are presented as such in the Condensed Consolidated Statements of Cash Flows for all periods presented. Refer to Note 15. Subsequent Events for additional information about the sale of Worldpac in November 2024.

As of October 5, 2024, the Company operated a total of 4,781 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of October 5, 2024, the Company served 1,125 independently owned Carquest branded stores across the same geographic locations served by the Company’s stores in addition to Mexico and various Caribbean islands. The Company’s stores operate primarily under the trade names “Advance Auto Parts” and “Carquest”.

The Company has one reportable segment and three operating segments. The operating segments are aggregated primarily due to the economic and operational similarities of each operating segment as the stores and branches have similar characteristics, including the nature of the products and services offered, customer base and the methods used to distribute products and provide services to its customers. Worldpac was one of the Company’s operating segments. As noted in Note 15 . Subsequent Events, the sale of Worldpac was completed November 1, 2024, resulting in the Company having two operating segments, “Advance Auto Parts/Carquest U.S.” and “Carquest Canada.”

Basis of Presentation

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 the Company’s Annual Report on Form 10-K for 2023 as filed with the SEC on March 12, 2024, and the amended Annual Report on Form 10-K/A filed with the SEC on May 30, 2024 (collectively the “2023 Form 10-K”).

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

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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)

periods are not necessarily indicative of the operating results to be expected for the full year. The Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.

Revision of Previously Issued Financial Statements for Correction of Immaterial Errors

During the year ended December 30, 2023, the Company identified errors in its consolidated results impacting cost of sales, selling, general and administrative expenses (“SG&A”) and other income (expense), net, of $62.9 million, $36.6 million and $1.7 million incurred in prior years but not previously recognized. These charges primarily related to product costs and vendor credits. Management assessed the materiality of the errors, including the presentation on prior period consolidated financial statements, on a qualitative and quantitative basis in accordance with SEC Staff Accounting Bulletin No. 99, Materiality, codified in Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections. The Company concluded that these errors and the related impacts did not result in a material misstatement of its previously issued consolidated financial statements as of and for the years ended December 31, 2022 and January 1, 2022 and its previously issued unaudited condensed consolidated interim financial statements as of and for the sixteen weeks ended April 22, 2023; the twelve and twenty-eight weeks ended July 15, 2023; and the twelve and forty weeks ended October 7, 2023. Correcting the cumulative effect of these errors in the fifty-two weeks ended December 30, 2023 would have had a significant effect on the results of operations for such period.

The Company has corrected the relevant prior periods of its consolidated financial statements and related footnotes for these and other immaterial corrections for comparative purposes, as previously disclosed in Note 18. Immaterial Restatement of Prior Period Financial Statements of the Company’s 2023 Form 10-K. The Company will also adjust previously reported financial information for such immaterial errors in future filings, as applicable. A summary of the corrections to the impacted financial statement line items from our previously issued financial statements are presented in Note 13. Immaterial Misstatement of Prior Period Financial Statements.

2. Significant Accounting Policies

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group from continuing operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Percentage of Sales:
Parts and Batteries	64	%	64	%	63	%	63	%
Accessories and Chemicals	21		21		22		22
Engine Maintenance	14		14		14		14
Other	1		1		1		1
Total	100	%	100	%	100	%	100	%

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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)

Recently Issued Accounting Pronouncements - Not Yet Adopted

Disclosure Improvements

In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements (“ASU 2023-06”), which defines when companies will be required to improve and clarify disclosure and presentation requirements. This ASU should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure. If the applicable requirements have not been removed by the SEC by June 30, 2027, this ASU will not become effective. Early adoption is prohibited. The Company is currently evaluating the impact of adopting ASU 2023-06 on the consolidated financial statements and related disclosures, and does not believe it will have a material impact on the consolidated financial statements.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a company to disclose additional, more detailed information about a reportable segment’s significant expenses, even if there is one reportable segment, and is intended to improve the disclosures about a public entity’s reportable segments. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2023-07 and believes that the adoption will result in additional disclosures, but will not have any other impact on its consolidated financial statements and segment reporting.

Income Tax Disclosure Improvements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (“ASU 2023-09”), which requires a company to enhance its income tax disclosures. In each annual reporting period, the company should disclose the specific categories used in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, including disaggregation of taxes paid by jurisdiction. The related disclosures are effective for the fiscal year beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09 on our consolidated financial statements and related disclosures and believes that the adoption will result in additional disclosures, but will not have any other impact on its consolidated financial statements.

Climate Disclosure Requirements

In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions and greenhouse gas emissions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. Additionally, the rule established disclosure requirements regarding material climate-related risks, descriptions of board oversight and risk management activities, the material impacts of these risks on a registrants' strategy, business model and outlook and any material climate-related targets or goals. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. Prior to the stay in the new rules, disclosures would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosure which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of the new rules on the consolidated financial statements and related disclosures.

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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)

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation (“ASU 2024-03”), which requires public entities to disclose more detailed information about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses and depreciation. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.

3. Discontinued Operations

On August 22, 2024, the Company entered into a definitive purchase agreement to sell Worldpac for $1.5 billion, with customary purchase price adjustments for working capital and other items. 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 transaction closed on November 1, 2024. As a result, the Company has classified the results of operations and cash flows of Worldpac as discontinued operations in its Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for all periods presented. The related assets and liabilities associated with the discontinued operations are classified as held for sale in the Condensed Consolidated Balance Sheets. Additionally, beginning August 22, 2024, in accordance with ASC 360, Property, Plant and Equipment, the Company ceased recording depreciation and amortization for Worldpac’s finite-lived intangible assets and operating lease right-of-use assets.

In connection with the Worldpac divestiture, the Company agreed to provide letters of credit in the aggregate amount of up to $200 million, issued under its unsecured revolving credit facility, for up to 12 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 zero no later than 24 months after closing. Worldpac will remain a parts supplier for the Company following the close of the sale. Worldpac has entered into an agreement to supply, sell and deliver to the Company. Under this agreement, the Company intends to purchase at least $145 million of Worldpac’s products during the period beginning on January 1, 2024 and ending on December 31, 2024. If the purchase minimum is met, the agreement automatically renews for one-year terms up to three years. Historically, the Company has made sales to Worldpac but there is no obligation to continue to do so as part of the purchase agreement.

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 twelve months, which may be extended by the Company and Worldpac for up to two three-month extension periods.

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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)

The following table represents the major classes of assets and liabilities of discontinued operations classified as held for sale in the Condensed Consolidated Balance Sheets as of October 5, 2024 and December 30, 2023:


	October 5, 2024		December 30, 2023
Carrying amounts of the major classes of assets included in discontinued operations1:
Cash	$	26,479	$	15,422
Receivables, net	208,942		190,613
Inventories, net	987,687		964,133
Other current assets	33,403		35,305
Property and equipment, net of accumulated depreciation	82,480		92,561
Operating lease right-of-use assets	243,763		231,703
Other intangible assets, net	163,408		174,180
Goodwill	390,256		390,584
Other noncurrent assets	1,272		911
Total assets of held for sale	$	2,137,690	$	2,095,412

Carrying amounts of the major classes of liabilities included in discontinued operations1:
Accounts payable	$	686,249	$	651,895
Accrued expenses	58,020		55,170
Other current liabilities	70,935		61,786
Noncurrent operating lease liabilities	171,093		175,858
Deferred income taxes	6,618		6,907
Other noncurrent liabilities	1,909		986
Total liabilities held for sale	$	994,824	$	952,602

1 Assets and liabilities of discontinued operations as of October 5, 2024 are classified as current on the consolidated balance sheet as the Company expects to close within twelve months of the balance sheet date.

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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)

The following table presents the major components of discontinued operations, net of income taxes, in the Company's Condensed Consolidated Statements of Operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Major classes of line items constituting income of discontinued operations before provision for income taxes:
Net Sales	$	496,749	$	500,874	$	1,635,745	$	1,628,068
Cost of sales, including purchasing and warehousing costs	329,532		348,161		1,078,651		1,095,887

Selling, general and administrative expenses	137,779		135,088		476,177		450,479


Interest expense	(149)		(32)		(370)		(46)
Other income (expense), net	329		(911)		(2,327)		(437)

Income from discontinued operations related to major classes before provision for income taxes	29,618		16,682		78,220		81,219



Provision for income taxes	10,269		4,533		21,807		21,523
Net income from discontinued operations	$	19,349	$	12,149	$	56,413	$	59,696

4. Inventories, net

The Company used the last in, first out (“LIFO”) method of accounting for approximately 92.3% of inventories as of October 5, 2024 and 92.8% as of December 30, 2023. As a result, the Company recorded a reduction to cost of sales of $34.7 million and $51.3 million for the twelve weeks ended October 5, 2024 and October 7, 2023 to state inventories at LIFO. For the forty weeks ended October 5, 2024 and October 7, 2023, the Company recorded a reduction to cost of sales of $69.1 million and $106.5 million to state inventories at LIFO.

Purchasing and warehousing costs included in inventories as of October 5, 2024 and December 30, 2023 were $429.7 million and $454.0 million.

An actual valuation of inventory under the LIFO method is performed at the end of each fiscal year based on inventory levels and carrying costs at that time. Accordingly, interim LIFO calculations are based on the Company’s estimates of expected inventory levels and costs at the end of the year.

Inventory balances were as follows:


	October 5, 2024		December 30, 2023
Inventories at first in, first out (“FIFO”)	$	4,076,359	$	3,996,877
Adjustments to state inventories at LIFO	(34,159)		(103,308)
Inventories at LIFO	$	4,042,200	$	3,893,569

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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)

5. Intangible Assets

The Company’s definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $2.6 million and $2.9 million for the twelve weeks ended October 5, 2024 and October 7, 2023, and $9.4 million and $10.2 million for the forty weeks ended October 5, 2024 and October 7, 2023.

6. Receivables, net

Receivables, net, consisted of the following:


	October 5, 2024		December 30, 2023
Trade	$	466,805	$	421,293
Vendor	217,221		199,580
Other	17,593		12,271
Total receivables	701,619		633,144
Less: allowance for credit losses	(32,682)		(23,616)
Receivables, net	$	668,937	$	609,528

7. Long-term Debt and Fair Value of Financial Instruments

Long-term debt consisted of the following:


	October 5, 2024		December 30, 2023
5.90% Senior Unsecured Notes due March 9, 2026	$	298,939	$	298,369
1.75% Senior Unsecured Notes due October 1, 2027	347,952		347,514
5.95% Senior Unsecured Notes due March 9, 2028	298,466		298,116
3.90% Senior Unsecured Notes due April 15, 2030	496,603		496,149
3.50% Senior Unsecured Notes due March 15, 2032	346,553		346,213

Total long-term debt	1,788,513		1,786,361
Less: Current portion of long-term debt	—		—
Long-term debt, excluding the current portion	$	1,788,513	$	1,786,361
Fair value of long-term debt	$	1,643,832	$	1,641,409

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.

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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)

Bank Debt

On February 26, 2024, the Company entered into Amendment No. 4 (“Amendment No. 4”) to the Company’s unsecured revolving credit facility (“2021 Credit Agreement”) to enable certain addbacks to the definition of Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“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 10% of consolidated net tangible assets with $400 million, and eliminated the $250 million basket for accounts receivable securitization transactions. Amendment No. 4 made no other material changes to the terms of the 2021 Credit Agreement. See Note 15. Subsequent Events for changes to the Company’s 2021 Credit Agreement as defined in Amendment No. 5.

The 2021 Credit Agreement contains customary covenants restricting the ability of: (a) Advance Auto Parts, Inc. and its subsidiaries to, among other things, (i) create, incur or assume additional debt (only with respect to subsidiaries of Advance Auto Parts, Inc.), (ii) incur liens, (iii) guarantee obligations, and (iv) change the nature of their business; (b) Advance Auto Parts, Inc., Advance Stores and their subsidiaries to, among other things (i) enter into certain hedging arrangements, (ii) enter into restrictive agreements limiting their ability to incur liens on any of their property or assets, pay distributions, repay loans, or guarantee indebtedness of their subsidiaries; and (c) Advance Auto Parts, Inc., among other things, to change its holding company status. The Company is also required to comply with financial covenants with respect to a maximum leverage ratio and a minimum coverage ratio. The 2021 Credit Agreement also provides for customary events of default, including non-payment defaults, covenant defaults and cross-defaults of Advance’s other material indebtedness. The Company was in compliance with the financial covenants with respect to the 2021 Credit Agreement as of October 5, 2024. See Note 15. Subsequent Events for changes to the Company’s 2021 Credit Agreement as defined in Amendment No. 5.

As of October 5, 2024 and December 30, 2023, the Company had no outstanding borrowings, $1.2 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement.

As of October 5, 2024 and December 30, 2023, the Company had $90.8 million and $91.2 million 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 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, the Company 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.

The Company’s 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, the Company incurred $2.9 million of debt issuance costs.

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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)

The Company’s 3.50% senior unsecured notes due 2032 (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, the Company incurred $3.2 million of debt issuance costs.

The Company’s 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, the Company incurred $1.6 million of debt issuance costs.

The Company’s 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, the Company incurred $1.9 million of debt issuance costs.

The Company may redeem some or all of the 2026 Notes and 2028 Notes (the “Notes”) at any time, or from time to time, prior to March 9, 2026 in the case of the 2026 Notes, or February 9, 2028 in the case of the 2028 Notes, at the redemption price described in the related indenture for the Notes (the “Indenture”). In the event of a change of control triggering event, as defined in the Indenture, the Company will be required to offer the repurchase of the Notes at a price equal to 101% 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 unsecured basis by guarantor and subsidiary guarantees, as defined by the Indenture.

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. These loans totaled $102.4 million and $106.9 million as of October 5, 2024 and December 30, 2023 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 $183.6 million and $221.2 million as of October 5, 2024 and December 30, 2023. The Company believes that the likelihood of performance under these guarantees is remote.

8. Leases

Substantially all of the Company’s leases are for facilities, vehicles and equipment. The initial term for facilities is typically five to ten years, with renewal options typically at five-year intervals, with the exercise of lease renewal options at the Company’s sole discretion. The Company’s vehicle and equipment lease terms are typically three to six years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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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 SG&A in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income. Total lease costs comprised of the following:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Operating lease cost	$	121,322	$	116,082	$	396,333	$	381,326
Variable lease cost	33,888		33,666		119,237		108,896
Total lease cost	$	155,210	$	149,748	$	515,570	$	490,222

Other information relating to the Company’s lease liabilities was as follows:


	Forty Weeks Ended
	October 5, 2024		October 7, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	400,551	$	386,668
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	387,266	$	312,808

During first quarter of 2024, the Company entered into a sale-leaseback transaction where the Company sold a building and land and entered into a three-year lease of the property upon the sale. This transaction resulted in a gain of $22.3 million and is included in selling, general and administrative expenses on the condensed consolidated statement of operations.

9. Share Repurchase Program

The Company’s Board of Directors had previously authorized $2.7 billion to its share repurchase program. The share repurchase program permits the repurchase of the Company’s common stock on the open market and in privately negotiated transactions from time to time. Amendment No. 5 to the Company’s 2021 Credit Agreement generally prohibits open market share repurchases.

During the twelve and forty weeks ended October 5, 2024 and October 7, 2023, the Company did not purchase any shares of the Company’s common stock under the share repurchase program. The Company had $947.3 million remaining under the share repurchase program as of October 5, 2024.

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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)

10. Earnings per Share

The computations of basic and diluted earnings per share were as follows:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Numerator
(Loss) income from continuing operations	$	(25,363)	$	(74,186)	$	22,576	$	5,166
Income from discontinued operations	19,349		12,149		56,413		59,696
Net (loss) income applicable to common shares	$	(6,014)	$	(62,037)	$	78,989	$	64,862

Denominator
Basic weighted-average common shares	59,684		59,474		59,618		59,411
Dilutive impact of share-based awards	218		156		260		177
Diluted weighted-average common shares(1)	59,902		59,630		59,878		59,588

Basic (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.25)	$	0.38	$	0.09
Basic earnings per common share from discontinued operations	0.32		0.20		0.95		1.00
Basic (loss) earnings per common share	$	(0.10)	$	(1.05)	$	1.33	$	1.09

Diluted (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.24)	$	0.38	$	0.09
Diluted earnings per common share from discontinued operations	0.32		0.20		0.94		1.00
Diluted (loss) earnings per common share	$	(0.10)	$	(1.04)	$	1.32	$	1.09

(1) For the twelve weeks ended October 5, 2024 and October 7, 2023, 570 thousand and 515 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the forty weeks ended October 5, 2024 and October 7, 2023, 536 thousand and 299 thousand RSUs were excluded from the diluted calculation as their inclusion would have been anti-dilutive.

11. Share-Based Compensation

The Company grants time based RSUs, market based RSUs and options to purchase common stock to certain employees under the Company’s 2023 Omnibus Incentive Compensation Plan. The general terms of the time-based and market-based RSUs and stock options are similar to awards previously granted by the Company. The Company records compensation expense for the grant date fair value of the option awards evenly over the vesting period.

During the twelve and forty weeks ended October 5, 2024, the Company granted the following time-based and market-based RSUs:

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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)


	Twelve Weeks Ended		Forty Weeks Ended

Time-based RSUs
Number of awards	16.7		499.1
Weighted-average fair value	$	49.11	$	76.84

Market-based RSUs
Number of awards	—		143.9
Weighted-average fair value	$	—	$	113.31

For time-based RSUs, the fair value of each award was determined based on the market price of the Company’s stock on the date of grant adjusted for expected dividends during the vesting period, as applicable. The fair value of each market-based RSU was determined using a Monte Carlo simulation model.

During the twelve and forty weeks ended October 5, 2024, the Company granted the following stock options:


	Twelve Weeks Ended		Forty Weeks Ended
Number of awards	—		195.4
Weighted-average fair value	$	—	$	31.86

The fair value of each option was estimated on the date of grant by applying the Black-Scholes option-pricing valuation model.


	Twelve Weeks Ended		Forty Weeks Ended
Risk-free interest rate (1)	—	%	4.1	-	4.2	%
Expected term (2)	—		6 years
Expected volatility (3)	—	%	41.6	-	42.6	%
Expected dividend yield (4)	—	%	1.4	-	1.5	%

(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 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. The Company utilized historical trends and the implied volatility of the Company’s publicly traded financial instruments in developing the volatility estimate for its 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 twelve and forty weeks ended October 5, 2024 was $2.4 million and $8.4 million. As of October 5, 2024, there was $85.4 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted-average period of 1.6 years.

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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)

12. Supplier Finance Programs

The Company maintains supply chain financing agreements with third-party financial institutions to provide the Company’s suppliers with enhanced receivables options. Through these agreements, the Company’s suppliers, at their sole discretion, may elect to sell their receivables due from the Company to the third-party financial institution at terms negotiated between the supplier and the third-party financial institution. The Company does not provide any guarantees to any third party in connection with these financing arrangements. The Company’s obligations to 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 and represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in the Company’s Condensed Consolidated Balance Sheets. As of October 5, 2024, and December 30, 2023, $3.26 billion and $3.36 billion of the Company’s accounts payable were to suppliers participating in these financing arrangements.

13. Immaterial Restatement of Prior Period Financial Statements

As discussed in Note 1. Basis of Presentation, the Company made corrections to the consolidated financial statements for periods ended December 31, 2022, January 1, 2022, and the quarterly periods of 2023. A summary of the corrections related to prior periods presented are as follows (tables may not foot or cross foot due to rounding):


Condensed Consolidated Statement of Operations
October 7, 2023
	Twelve Weeks Ended
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Cost of sales	$	1,732,420	$	16,379	$	1,748,799	$	348,161	$	1,400,638
Gross profit	986,659		(16,379)		970,280		152,713		817,567
Selling, general and administrative expenses	1,030,355		878		1,031,233		135,088		896,145
Operating (loss) income	(43,696)		(17,257)		(60,953)		17,625		(78,578)





(Loss) Income before provision for income taxes	(64,319)		(17,257)		(81,576)		16,682		(98,258)
Provision for income taxes	(15,686)		(3,853)		(19,539)		4,533		(24,072)
Net (loss) income	$	(48,633)	$	(13,404)	$	(62,037)	$	12,149	$	(74,186)

Basic (loss) earnings per share	$	(0.82)	$	(0.23)	$	(1.05)	$	0.20	$	(1.25)


Diluted (loss) earnings per common share	$	(0.82)	$	(0.22)	$	(1.04)	$	0.20	$	(1.24)

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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)


Condensed Consolidated Statement of Operations
October 7, 2023
	Forty Weeks Ended
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Cost of sales	$	5,220,200	$	29,877	$	5,250,077	$	1,095,887	$	4,154,190
Gross profit	3,602,538		(29,877)		3,572,661		532,181		3,040,480
Selling, general and administrative expenses	3,407,445		2,272		3,409,717		450,479		2,959,238
Operating income (loss)	195,093		(32,149)		162,944		81,702		81,242





Income (loss) before provision for income taxes	124,894		(32,149)		92,745		81,219		11,526
Provision for income taxes	34,649		(6,766)		27,883		21,523		6,360
Net income (loss)	$	90,245	$	(25,383)	$	64,862	$	59,696	$	5,166

Basic earnings (loss) per share	$	1.52	$	(0.43)	$	1.09	$	1.00	$	0.09


Diluted earnings (loss) per common share	$	1.51	$	(0.42)	$	1.09	$	1.00	$	0.09


Condensed Consolidated Statement of Comprehensive Income
October 7, 2023
	Twelve Weeks Ended
	As Previously Reported		Adjustments		As Corrected
Net (loss) income	$	(48,633)	$	(13,404)	$	(62,037)
Currency translation adjustments	(10,737)		457		(10,280)
Total other comprehensive loss	(10,775)		457		(10,318)
Comprehensive (loss) income	$	(59,408)	$	(12,947)	$	(72,355)


Condensed Consolidated Statement of Comprehensive Income
October 7, 2023
	Forty Weeks Ended
	As Previously Reported		Adjustments		As Corrected
Net income	$	90,245	$	(25,383)	$	64,862
Currency translation adjustments	(2,577)		126		(2,451)
Total other comprehensive loss	(2,456)		126		(2,330)
Comprehensive income	$	87,789	$	(25,257)	$	62,532

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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)


Condensed Consolidated Statements of Changes in Stockholders’ Equity
Twelve Weeks Ended October 7, 2023
	Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Twelve Weeks Ended As Previously Reported
Balance at July 15, 2023	$	(36,824)	$	4,767,168	$	2,723,187
Net loss	—		(48,633)		(48,633)
Total other comprehensive loss	(10,775)		—		(10,775)
Balance at October 7, 2023	$	(47,599)	$	4,690,424	$	2,646,868
Adjustments
Balance at July 15, 2023	$	117	$	(80,650)	$	(80,533)
Net loss(1)	—		(13,404)		(13,404)
Total other comprehensive income	457		—		457
Balance at October 7, 2023	$	574	$	(81,106)	$	(80,532)
As Corrected
Balance at July 15, 2023	$	(36,707)	$	4,686,518	$	2,642,654
Net loss	—		(62,037)		(62,037)
Total other comprehensive loss	(10,318)		—		(10,318)
Balance at October 7, 2023	$	(47,025)	$	4,609,318	$	2,566,336

(1) Adjustments to retained earnings does not foot due to the previous adjustments made in third quarter 2023.


Condensed Consolidated Statements of Changes in Stockholders’ Equity
Forty Weeks Ended October 7, 2023
	Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Forty Weeks Ended As Previously Reported
Balance at December 31, 2022	$	(45,143)	$	4,744,624	$	2,678,281
Net income	—		90,245		90,245
Total other comprehensive loss	(2,456)		—		(2,456)
Balance at October 7, 2023	$	(47,599)	$	4,690,424	$	2,646,868
Adjustments
Balance at December 31, 2022	$	448	$	(79,537)	$	(79,089)
Net loss(1)	—		(25,383)		(25,383)
Total other comprehensive income	126		—		126
Balance at October 7, 2023	$	574	$	(81,106)	$	(80,532)
As Corrected
Balance at December 31, 2022	$	(44,695)	$	4,665,087	$	2,599,192
Net income	—		64,862		64,862
Total other comprehensive loss	(2,330)		—		(2,330)
Balance at October 7, 2023	$	(47,025)	$	4,609,318	$	2,566,336

(1) Adjustments to retained earnings does not foot due to the previous adjustments made in third quarter 2023.

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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)


Condensed Consolidated Statement of Cash Flows
Forty Weeks Ended October 7, 2023
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Net income	$	90,245	$	(25,383)	$	64,862	$	59,696	$	5,166
Provision for deferred income taxes	(33,059)		5,248		(27,811)		—		(27,811)
Other, net	1,499		937		2,436		—		2,436
Net change in:
Receivables, net	(170,371)		(9,519)		(179,890)		(18,261)		(161,629)
Inventories, net	(41,025)		15,442		(25,583)		85,288		(110,871)
Accounts payable	(191,871)		28,500		(163,371)		(86,035)		(77,336)
Accrued expenses	145,704		21,521		167,225		(3,892)		171,117
Other assets and liabilities, net	(45,015)		(38,316)		(83,331)		(11,624)		(71,707)
Net cash provided by (used in) operating activities	30,404		(1,570)		28,834		57,148		(28,314)
Other, net (1)	(4,073)		(937)		(5,010)		—		(5,010)
Net cash provided by financing activities	204,984		(937)		204,047
Effect of exchange rate changes on cash	(1,942)		10		(1,932)
Net increase (decrease) in cash and cash equivalents	48,246		(2,497)		45,749
Cash and cash equivalents, beginning of period	269,282		1,523		270,805		50,670		220,135
Cash and cash equivalents, end of period	$	317,528	$	(974)	$	316,554	$	7,750	$	308,804

(1) The summary of corrections table above inadvertently omitted disclosure for proceeds from the issuance of common stock as follows: $3.0 million as previously reported, $0 adjustments and $3.0 million as corrected.

14. Contingencies

On October 9, 2023, and October 27, 2023, two 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. 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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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)

15. Subsequent Events

Sale of Worldpac

On November 1, 2024, the Company completed the sale of Worldpac for a cash consideration of $1.5 billion, with customary adjustments for working capital and other items. The Company received net proceeds of approximately $1.2 billion from the transaction after paying transaction fees and taxes. The Company intends to use net proceeds from the transaction for general corporate purposes, which may include the provision of additional working capital, funding internal operational improvement initiatives and repayment or refinancing of outstanding indebtedness.

Credit Agreement Amendment No. 5

On November 13, 2024, the Company entered into Amendment No. 5 to the 2021 Credit Agreement. Amendment No. 5 (i) permits up to $575 million of certain restructuring charges to be added back to Consolidated EBITDAR (as defined therein), (ii) permits up to $800 million of unrestricted cash to be netted out of debt in the calculation of the Leverage Ratio (as defined therein), and (iii) reduces the minimum Consolidated Coverage Ratio (as defined therein) to 1.50 to 1.00 through July 12, 2025 and 1.75 to 1.00 thereafter. Amendment No. 5 also reduced the unsecured revolving credit facility under the 2021 Credit Agreement from $1.2 billion to $1.0 billion and amended the pricing on the loans thereunder in connection with changes in the Company’s credit ratings, as described below.

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 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 0.795% to 1.525% for Term SOFR (with margins of 1.325% or greater applying when credit ratings are below BBB/Baa2) and from 0.00% to 0.525% for alternate base rate (with margins of 0.325% 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 0.08% to 0.35% (with rates of 0.250% or greater applying when credit ratings are below BB+/Ba1) per annum based on the assigned debt ratings of the Company.

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 $750 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 91 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.

Restructuring Plan

On November 13, 2024, the Company’s Board of Directors approved a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. This plan anticipates closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions.

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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)

The costs that will be incurred as a result of the Company’s plan include severance and employee benefit costs, voluntary termination benefits, and other exit costs that qualify as exit and disposal costs. Additionally, the Company expects to incur costs related to the closure of stores, independent locations and distribution centers, including asset-related charges, lease termination fees and other incremental costs to exit facilities. The Company currently estimates that it will incur approximately $45 million of involuntary and voluntary severance costs and benefits, a range of approximately $100 - $250 million of net costs associated with lease terminations, a range of approximately $130 - $150 million of other closure-related costs, including closure costs for stores and distribution centers and related consultant fees, and a range of approximately $75 - $350 million of asset-related charges and other non-cash costs.

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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 the Company’s Annual Report on Form 10-K for the year ended December 30, 2023 (filed with the SEC on March 12, 2024, and the amended Annual Report on Form 10-K/A filed with the SEC on May 30, 2024 (collectively the “2023 Form 10-K”)), and the Company’s condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. The Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.

Management Overview

A high-level summary of the Company’s financial results for continuing operations for the third quarter of 2024 includes:

•Net sales during the third quarter of 2024 were $2.15 billion, a decrease of 3.2% compared with the third quarter of 2023. Comparable store sales declined 2.3%.

•Gross profit margin for the third quarter of 2024 was 42.3% of net sales, an increase of 541 basis points compared with the third quarter of 2023. Gross profit margin was positively impacted due to lapping the one-time impact in the change for inventory reserves in the prior year coupled with stabilizing product costs in the current year. This was offset by strategic pricing investments.

•Selling, general and administrative (“SG&A”) expenses for the third quarter of 2024 were 42.2% of net sales, an increase of 185 basis points compared with the third quarter of 2023. This increase was primarily due to wage investments in frontline team members, implementation of the Company’s strategic plan and the expenses related to the remediation of the previously disclosed material weaknesses. This was partially offset by a reduction in marketing expenses.

•The Company generated diluted loss per share of $0.42 during the third quarter of 2024, compared with diluted loss per share of $1.24 for the comparable period of 2023.

Business and Risks Update

The Company continues to make progress on the various elements of its 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, the Company has undertaken planned strategic actions to help build a foundation for long-term success across the organization, which include:

•The completion of the sale of Worldpac for $1.5 billion, with customary adjustments for working capital and other items. The transaction closed on November 1, 2024;

•Reducing costs to remain competitive while reinvesting in the frontline;

•Making organizational changes to position the Company for success;

•Completing an assessment of the productivity of all assets, including company-owned stores and Carquest Independents; and

•Consolidating the Company’s supply chain.

In addition, the Company has outlined a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. The plan focuses on initiatives and actions in store operations, merchandising excellence and supply chain.

As discussed in Note 3. Discontinued Operations, on August 22, 2024, the Company entered into a definitive purchase agreement to sell Worldpac, which subsequently closed on November 1, 2024. Unless otherwise noted, the discussion below relates to the Company’s continuing operations.

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Industry Update

Operating within the automotive aftermarket industry, the Company is 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

•Cost of fuel

•Miles driven

•Unemployment rates

•Interest rates

•Consumer confidence and purchasing power

•Competition

•Changes in new car sales

•Economic and geopolitical uncertainty

•Increased foreign currency exchange volatility

Stores

Key factors in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, competitive landscape, and the cost of real estate. During the forty weeks ended October 5, 2024, 24 stores were opened/converted and 29 were closed, resulting in a total of 4,781 stores as of the end of the third fiscal quarter compared with a total of 4,786 stores as of December 30, 2023.

Results of Operations


	Twelve Weeks Ended									$ Favorable/ (Unfavorable)		Basis Points
($ in millions)	October 5, 2024					October 7, 2023
Net sales	$	2,148.0		100.0	%	$	2,218.2	100.0	%	$	(70.2)	—
Cost of sales	1,240.1			57.7		1,400.6		63.1		160.5		541
Gross profit	907.9		907.9	42.3		817.6		36.9		90.3		541
SG&A	907.5			42.2		896.1		40.4		(11.4)		(185)
Operating income	0.4			0.1		(78.5)		(3.5)		78.9		356
Interest expense	(18.8)			(0.9)		(19.4)		(0.9)		0.6		—

Other income (loss), net	2.4			0.1		(0.3)		—		2.7		13
Provision for income taxes	9.4			0.4		(24.1)		(1.1)		(33.5)		(152)
Net (loss) income	$	(25.4)		(1.2)	%	$	(74.2)	(3.3)	%	$	48.7	217

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	Forty Weeks Ended								$ Favorable/ (Unfavorable)		Basis Points
($ in millions)	October 5, 2024				October 7, 2023
Net sales	$	7,098.3	100.0	%	$	7,194.7	100.0	%	$	(96.4)	—
Cost of sales	4,036.9		56.9		4,154.2		57.7		117.3		(87)
Gross profit	3,061.4		43.1		3,040.5		42.3		20.9		87
SG&A	2,954.7		41.6		2,959.2		41.1		4.5		(50)
Operating income	106.7		1.5		81.3		1.1		25.4		37
Interest expense	(62.1)		(0.9)		(69.9)		(1.0)		7.8		10

Other income, net	12.8		0.2		0.2		—		12.6		18
Provision for income taxes	34.8		0.5		6.4		0.1		(28.4)		(40)
Net income	$	22.6	0.3	%	$	5.2	0.1	%	$	17.4	25

Note: Table amounts may not foot due to rounding.

Net Sales

For the third quarter of 2024, net sales decreased 3.2% and comparable store sales declined 2.3% compared with the third quarter of 2023. Net sales were negatively impacted by volume decline coupled with strategic pricing investments, partially offset by favorable channel mix. Category growth was led by batteries and filters, partially offset by discretionary categories.

Net sales for the forty weeks ended October 5, 2024, decreased 1.3% compared with the same period in 2023. Comparable store sales decreased 0.62% for the forty weeks ended October 5, 2024, compared with the forty weeks ended October 7, 2023. Category growth was led by batteries, filters and engine management, partially offset by discretionary categories.

The Company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. Acquired stores are included in the Company’s comparable store sales one year after acquisition. The Company includes sales from relocated stores in comparable store sales from the original date of opening.

Gross Profit

Gross profit for the third quarter of 2024 was $907.9 million, or 42.3% of net sales, compared with $817.6 million, or 36.9% of net sales, for the third quarter of 2023. This increase was primarily due to lapping the one-time impact in the change for inventory reserves in the prior year coupled with stabilizing product costs. This was offset by strategic pricing investments.

Gross profit for the forty weeks ended October 5, 2024 and October 7, 2023 was $3.06 billion, or 43.1% of net sales, and $3.04 billion, or 42.3% of net sales. This increase was primarily due to lapping the one-time impact in the change for inventory reserves in the prior year. Gross profit margin expansion was partially offset by lower sales and strategic pricing investments.

Selling, General and Administrative Expenses

SG&A expenses for the third quarter of 2024 were $907.5 million, or 42.2% of net sales, compared with $896.1 million, or 40.4% of net sales, for the third quarter of 2023. SG&A expenses for the forty weeks ended October 5, 2024 were $2.95 billion, or 41.6% of Net sales, compared with $2.96 billion, or 41.1% of Net sales, for the forty weeks ended October 7, 2023. The increase of SG&A as a percentage of net sales was due to wage investments in frontline team members, implementation of the Company’s distribution optimization network and the

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remediation of the previously disclosed material weaknesses. This was partially offset by a reduction in marketing expenses.

Provision for Income Taxes

The Company’s provision for income taxes for the third quarter of 2024 was an expense of $9.4 million compared with a benefit of $24.1 million for the same period in 2023. The Company’s provision for income taxes for the forty weeks ended October 5, 2024 and October 7, 2023 was $34.8 million and $6.4 million. The increase in tax expense for the third quarter of 2024 and the forty weeks ended October 5, 2024 was a result of higher income before taxes and $10 million in tax expense related to a book to tax difference in the stock basis of Worldpac Canada as a result of the sale of Worldpac.

The Company’s effective tax rate was 60.6% and 55.2% for the forty weeks ended October 5, 2024 and October 7, 2023. The increase in the effective tax rate was due to the $10 million charge incurred by the Company as a related to book to tax basis difference in the stock basis of Worldpac Canada as a result of the sale of Worldpac.

Discontinued Operations

On August 22, 2024, the Company entered into a definitive purchase agreement to sell its Worldpac business and on November 1, the Company completed the sale. As a result, the Company has classified the results and cash flows of the Worldpac business as discontinued operations in its Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows for all periods presented. The related assets and liabilities associated with the discontinued operations are classified as held for sale, in the Condensed Consolidated Balance Sheets. See Note 3. Discontinued Operations in the Company’s condensed consolidated financial statements included elsewhere in this report for additional information.

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, Adjusted EPS, Adjusted SG&A Margin, and Adjusted Operating Income, 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.

The company has presented these non-GAAP financial measures as the company believes that the presentation of the financial results that exclude (1) transformation expenses under the company’s turnaround plan, (2) other significant costs and (3) nonrecurring tax expense are useful and indicative of the company's base operations because the expenses vary from period to period in terms of size, nature and significance. These measures assist in comparing the company’s current operating results with past periods and with the operational performance of other companies in the industry. The disclosure of these measures allows investors to evaluate the company’s 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 the company has determined are not normal, recurring cash operating expenses necessary to operate the company’s business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures.

Transformation Expenses — Costs incurred in connection with the company's turnaround plan and specific transformative activities related to asset optimization that the company does not view to be normal cash operating expenses. These expenses primarily include:

•Distribution network optimization — Costs primarily relating to the conversion of the stores and DCs to market hubs, including temporary labor, team member severance, long-lived asset write off charges and incremental depreciation, as a result of accelerating depreciation of long-lived assets over a shorter useful life as a result of the optimization plans.

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•Third-party professional services — Costs relating to non-recurring services rendered by third-party vendors assisting with the turnaround initiatives.

Other Expenses — Costs incurred by the company that are not viewed as normal cash operating expenses and vary from period to period in terms of size, nature, and significance, including but not limited to executive turnover and incremental costs associated with remediating the company's previously-disclosed material weaknesses in internal control over financial reporting.

Nonrecurring Tax Expense — Income tax incurred by the company from the book to tax basis difference in the Worldpac Canada stock directly resulting from the sale of Worldpac.

The following table includes a reconciliation of this information to the most comparable GAAP measures:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Net (loss) income from continuing operations (GAAP)	$	(25,363)	$	(74,186)	$	22,576	$	5,166
Selling, general and administrative adjustments:
Transformation expenses:
Distribution network optimization	8,909		—		13,943		—
Third-party professional services	3,582		50		5,301		320

Other charges:
Executive turnover	87		3,799		1,561		5,360
Material weakness remediation	1,293		429		3,649		429
Other significant costs(1)	2,394		—		3,491		—
Provision for income taxes on adjustments(2)	(4,066)		(1,070)		(6,986)		(1,527)
Nonrecurring tax expense	10,000		—		10,000		—
Adjusted net (loss) income (Non-GAAP)	$	(3,164)	$	(70,978)	$	53,535	$	9,748

Diluted (loss) earnings per share from continuing operations (GAAP)	$	(0.42)	$	(1.24)	$	0.38	$	0.09
Adjustments, net of tax	0.37		0.05		0.52		0.07
Adjusted EPS (Non-GAAP)	$	(0.05)	$	(1.19)	$	0.90	$	0.16

(1) During the twelve and forty weeks ended October 5, 2024, the Company recorded expense of $2.4 million and $3.5 million for costs incurred following a cybersecurity incident that occurred over these periods.
(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

The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, including payment of interest on the Company’s long-term debt. Historically, the Company has also used available funds to repay borrowings under the Company’s credit facility, to periodically repurchase shares of the Company’s common stock under the share repurchase program, to pay the Company’s quarterly cash dividend and for acquisitions. The Company also anticipates using cash in

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connection with its restructuring and asset optimization plan, as more fulsomely described in Note 15. Subsequent Events. The Company’s future uses of cash may differ, including with respect to the weight the Company places on the preservation of cash and liquidity, degree of investment in the Company’s business and other capital allocation priorities.

Typically, the Company has funded its cash requirements primarily through cash generated from operations, supplemented by borrowings under the Company’s credit facilities and note offerings as needed. On August 22, 2024, the Company entered into a definitive purchase agreement to sell its Worldpac business for $1.5 billion, with customary adjustments for working capital and other items, as well as provision of letters of credit in an aggregate amount of up to $200 million for up to 12 months following the closing of the transaction, which letter of credit exposure will reduce to zero no later than 24 months after the closing, to support supply chain financing for the buyer. The transaction closed on November 1, 2024. Net proceeds from the transaction after paying expenses and taxes was approximately $1.2 billion. The Company intends to use net proceeds from the transaction for general corporate purposes, which may include the provision of additional working capital, funding internal operational improvement initiatives and repayment or refinancing of outstanding indebtedness. The Company believes funds generated from its expected results of operations, available cash and cash equivalents, net proceeds from the Worldpac sale and available borrowings under credit facilities and note offerings as needed will be sufficient to fund its obligations for the next year and beyond.

The Company’s supplier finance programs did not have a material impact on its liquidity or capital resources in the periods presented nor does the Company expect such arrangements to have a material impact on its liquidity for the foreseeable future. However, as further described below, a future decline in our credit ratings would be expected to result in a significant impact to bank participation in the Company’s supplier finance programs. While the Company does not expect such an impact to have a material impact on our overall liquidity, the Company does expect that it would have a material impact on its capital resources and capital allocation. See Note 12. Supplier Finance Programs of the Company’s condensed consolidated financial statements for further discussion.

On November 13, 2024, the Company entered into Amendment No. 5 to the 2021 Credit Agreement. Amendment No. 5 (i) permits up to $575 million of certain restructuring charges to be added back to Consolidated EBITDAR (as defined therein), (ii) permits up to $800 million of unrestricted cash to be netted out of debt in the calculation of the Leverage Ratio (as defined therein), and (iii) reduces the minimum Consolidated Coverage Ratio (as defined therein) to 1.50 to 1.00 through July 12, 2025 and 1.75 to 1.00 thereafter. Amendment No. 5 also reduced the unsecured revolving credit facility under the 2021 Credit Agreement from $1.2 billion to $1.0 billion, amended the pricing on the loans thereunder in connection with changes in the Company’s credit ratings and imposed certain other restrictions as described more fulsomely in Note 15. Subsequent Events.

Share Repurchase Program

The Company’s share repurchase program permits the repurchase of the Company’s common stock on the open market and in privately negotiated transactions from time to time. The Company’s most recent amendment to the 2021 Credit Agreement generally prohibits open market share repurchases.

During the third quarter and forty weeks ended October 5, 2024 and October 7, 2023, the Company did not purchase any shares of its common stock under the share repurchase program. The Company had $947.3 million remaining under the share repurchase program as of October 5, 2024.

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Analysis of Cash Flows

The following table summarizes the Company’s cash flows from operating, investing and financing activities:


	Forty Weeks Ended
(in thousands)	October 5, 2024		October 7, 2023
Cash flows provided by (used in) operating activities	$	81,019	$	(28,314)
Cash flows used in investing activities	(116,482)		(172,185)
Cash flows (used in) provided by financing activities	(57,732)		204,047
Effect of exchange rate changes on cash	11,766		(1,932)
Net (decrease) increase in cash and cash equivalents	$	(81,429)	$	1,616

* Net (decrease) increase in cash and cash equivalents is presented on a continuing basis which varies from the Condensed Consolidated Statements of Cash Flows which is presented on a consolidated basis.

Operating Activities

For the forty weeks ended October 5, 2024, cash flows provided by operating activities increased by $109.3 million to $81.0 million compared with the same period of prior year. The net increase in cash flows provided by operating activities was primarily attributable to a decrease in net working capital compared with prior year.

Investing Activities

For the forty weeks ended October 5, 2024, cash flows used in investing activities decreased by $55.7 million to $116.5 million compared with the same period of prior year. The decrease in cash used in investing activities was attributable to lower capital spend due to fewer store openings and fewer IT projects partially offset by an increase in spend on distribution network optimizations.

Financing Activities

For the forty weeks ended October 5, 2024, cash flows used in financing activities was $57.7 million, an increase of $261.8 million compared with the same period of prior year. The increase in cash used in financing activities was due to the issuances of senior unsecured notes in the prior year. This was partially offset by a decrease in dividends paid in the current year compared with the prior year.

The Company’s 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 the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Board of Directors. In addition, Amendment No. 5 to the 2021 Credit Agreement prevents the Company from increasing the amount of our cash dividends.

Long-Term Debt

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 the Issuer’s 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. The Company’s captive insurance subsidiary, an insignificant wholly owned subsidiary of the Issuer, does not serve as guarantor of its senior unsecured notes.

For additional information, refer to Note 7. Long-term Debt and Fair Value of Financial Instruments of the Notes to the Condensed Consolidated Financial Statements included herein.

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As of October 5, 2024, the Company had a credit rating from S&P of BB+ and from Moody’s Investor Service of Baa3. As of October 5, 2024, the outlooks by Standard & Poor’s and Moody’s on the Company’s credit rating were stable and negative, respectively. The current pricing grid used to determine the Company’s borrowing rate under the Credit Agreement is based on the Company’s credit ratings. The Company anticipates that it may receive a future downgrade in its credit ratings dependent on the strength of its balance sheet and the success and timing of its efforts to improve business operations. If the Company’s credit ratings decline, the interest rate on outstanding balances may increase and the Company’s access to additional financing on favorable terms may be limited. The most recent amendment to the Company’s 2021 Credit Agreement provides for securitization of amounts outstanding under the facility in the event that the Company’s ratings decline to a certain level. In addition, declines could reduce the attractiveness of certain supplier finance programs whereby third-party institutions finance arrangements to the Company’s vendors based on the Company’s credit rating, which could result in increased working capital requirements. The Company expects that a future decline in its credit ratings would have a significant impact on bank participation in its supplier finance programs, resulting in increased working capital requirements. The Company believes that its sources of cash, together with its ability to generate cash through existing or new credit facilities and notes offerings as needed, will be sufficient to fund any increases in working capital requirements.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in the Company’s exposure to market risk since December 30, 2023. Refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2023 Form 10-K.

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 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 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.

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 5, 2024. 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 solely due to the material weakness related to account reconciliations described below.

Material Weaknesses in Internal Control over Financial Reporting

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.

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Details on Accounting Resources Material Weakness

In our Form 10-Q for the 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 of 2023. The Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter 2023.

The Company has devoted significant time and resources to complete its remediation of the material weakness described above and has made significant progress towards the remediation during the third quarter of 2024. The following components of the remediation plan, among others, have been executed:

•Backfilled open roles and hired approximately 40 experienced personnel, an increase of 37% from the first quarter of 2024, (both permanent employees and contract labor) with the requisite accounting and internal controls knowledge and experience to sufficiently complement the existing global controllership organization;

•Completed the review of the organizational structure of the global controllership function by a third-party consultant and implemented recommended changes;

•Assessed our methodologies, policies, and procedures to ensure adequate design and effectiveness of processes supporting internal control over financial reporting;

•Assessed the specific training needs for newly hired and existing personnel and developed and delivered training programs designed to uphold our internal controls standards. Monthly trainings have been held with account reconciliation preparers and reviewers along with target trainings for individual control owners; and

•Following the departure of the Company’s Chief Financial Officer during the third fiscal quarter of 2023, hired a new Chief Financial Officer who began employment with the Company on November 27, 2023.

The Company considers that the actions described above are comprehensive and have sufficiently strengthened the Company’s internal control over financial reporting. The significant progress observed to date provides evidence that the remediation efforts are effective in improving the control environment. Based on management’s evaluation of the Company’s accounting resources and personnel used to fulfill internal control responsibilities over a sustained period of financial reporting, the Company has concluded that the material weakness over accounting resources has been fully remediated as of October 5, 2024.

Details on Account Reconciliation Material Weakness

In addition, as disclosed in our Form 10-Q for the period ended April 20, 2024, in connection with the preparation of the financial statements for the first quarter of 2024, management identified certain cash account reconciliations whereby a former employee in the Company’s India-based shared services center circumvented a cash reconciliation controls policy and concealed unreconciled items. This individual did not follow the Company’s policy to display all reconciling items in the reconciliation process. The company has taken appropriate remediation measures as previously disclosed including adding redundant or compensating controls, and has implemented a quality control function. Consistent with prior quarter, the Company is targeting completion of the account reconciliation material weaknesses in the second half of fiscal 2024.

Management believes that the Condensed Consolidated Financial Statements and related financial information included in this Form 10-Q present fairly, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.

Changes in Internal Control Over Financial Reporting

Except for the changes described above, there has been no change in the Company’s internal control over financial reporting during the third quarter ended October 5, 2024, that has materially affected or is reasonably likely to materially affect its internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

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PART II. OTHER INFORMATION

None.

ITEM 1. LEGAL PROCEEDINGS

On October 9, 2023, and October 27, 2023, two 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. The Company strongly disputes the allegations and intends to defend the case vigorously.

ITEM 1A.RISK FACTORS

Restructuring our operations is a significant undertaking and introduces risk to the continuity and results of our operations.

In November 2024, we announced a plan to restructure our operations to improve profitability and growth potential and streamline our operations. This plan is supplemental to other ongoing initiatives to simplify our business and improve profitable growth and entails, among other items, certain store and independent location closures as well as headcount reductions and organizational design changes to align our workforce to the expected needs of our business. We are also pursuing efficiencies in procurement, pricing and professional and outside services, in addition to operational efficiencies. These measures are subject to known and unknown risks and uncertainties, including whether we have targeted the appropriate areas for our cost-saving efforts and at the appropriate scale, our ability to successfully execute the restructuring plan and achieve the cost-savings anticipated while minimally disrupting our operations and whether, if required in the future, we will be able to appropriately target any additional areas for our cost-saving efforts.

We expect to incur restructuring charges and undertake other exit-related activities as a result of such initiatives. For example, execution of our plan is expected to result in the termination of certain leases, leading to exits of certain properties over time and the incurrence of expenses, including but not limited to impairment charges and contingent obligations, which could be material. The terms, scope and timing of any additional changes to our lease obligations, as well as any other effects on our landlord relationships or reputation with other real estate owners, are uncertain. As a result of the restructuring plan, we expect to incur approximately $300 - 500 million of cash charges, primarily as a result of closure sites and the reduction in force. Our expectations for charges to be incurred and cash to be expended in connection with the restructuring activities are based on a number of assumptions, and we may experience unanticipated consequences, such as higher than anticipated lease termination and facility closure costs, asset impairment or other unforeseen expenses related to the restructuring.

Implementing any restructuring plan, including the one we have outlined, presents potential risks that may impair our ability to achieve or sustain anticipated cost reductions or operational improvements. These risks include the

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potential for management distraction from ongoing business activities, requirement of capital investment that could otherwise be used for the operation and growth of our existing business, inadequate support of important business functions due to staffing changes and other cost reduction efforts, delays or inability to achieve targeted efficiencies as a result of economic, competitive or other factors, failure to maintain adequate controls and procedures while executing our restructuring plans, disruptions to important business relationships, and damage to our reputation and brand. Additionally, as a result of restructuring initiatives, we may experience a loss of continuity and accumulated knowledge or increased employee attrition and difficulty attracting and retaining highly skilled employees, which may, among other things, slow the progress of our turnaround initiatives or impair our ability to maintain and enhance our internal controls and procedures.

The implementation of our restructuring efforts, including the potential reduction of our facilities and workforce, may not improve our operational and cost structure or result in greater efficiency of our organization; and we may not be able to support sustainable profitable growth following our restructuring actions. Failure to achieve or sustain the expected cost reductions and other benefits related to these restructuring initiatives could have a material adverse effect on our results of operations, financial condition and cash flows.

Please refer to “Item 1A. Risk Factors” found in the 2023 Form 10-K filed for the year ended December 30, 2023 for risks that, if they were to occur, could materially adversely affect the Company’s business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of the Company’s 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 the Company’s common stock for the quarter ended October 5, 2024:


	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)
July 14, 2024 to August 10, 2024	11	$	64.93	—	$	947,339
August 11, 2024 to September 7, 2024	8,412	$	46.29	—	$	947,339
September 8, 2024 to October 5, 2024	11,809	$	42.10	—	$	947,339
Total	20,232	$	43.85	—

(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 $0.9 million, or an average price of $43.85 per share, during the third quarter of 2024.

ITEM 5. OTHER INFORMATION

During the third quarter of 2024, no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by the Company’s officers or directors as each term is defined in Item 408 of Regulation S-K.

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EXHIBIT INDEX

Incorporated by Reference

Filed

Exhibit No.

Exhibit Description

Form

Exhibit

Filing Date

Herewith

3.1

Fifth Amendment to Restated Certificate of Incorporation, effective August 9, 2024

10-Q

3.1

8/22/2024

3.2

Composite Restated Certificate of Incorporation of Advance Auto Parts, Inc., effective August 9, 2024

10-Q

3.2

8/22/2024

3.3

Amended and Restated Bylaws of Advance Auto Parts, Inc., effective August 8, 2023.

10-Q

3.2

8/18/2020

10.1

Sale and Purchase Agreement, dated August 22, 2024, between Advance Auto Parts, Inc. and Wheels Bidco, Inc.

8-K

10.1

8/22/2024

10.2

Amendment effective September 13, 2024 to Employment Agreement effective October 2, 2022 between Advance Auto Parts, Inc. and Herman Word, Jr.

8-K

10.1

9/13/2024

10.3

Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives (as amended and restated effective August 7, 2024)

10.4

Form of Indemnification Agreement with Directors and Officers

10.5

Amendment No. 5 to the Credit Agreement dated as of November 13 , 2024

8-K

10.1

11/14/2024

22.1

List of the Issuer and its Guarantor Subsidiaries.

10-Q

22.1

4/20/2024

31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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 the Inline XBRL Documents and Included in Exhibit).

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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.


						ADVANCE AUTO PARTS, INC.

Date: November 14, 2024						/s/ Ryan P. Grimsland
						Ryan P. Grimsland Executive Vice President, Chief Financial Officer

Exhibit 10.3

DEFERRED STOCK UNIT PLAN

FOR NON-EMPLOYEE DIRECTORS AND

SELECTED EXECUTIVES

(As Amended and Restated Effective as of August 7 2024)

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Page

Article 1

GENERAL

Section 1.1

Purpose

Section 1.2

Status of Plan

Section 1.3

Effective Date

Section 1.4

Pre-2005 Deferrals

Article 2

DEFINITIONS

Section 2.1

Administrative Committee

Section 2.2

Affiliated Company

Section 2.3

Aggregated Plans

Section 2.4

Base Salary

Section 2.5

Beneficiary

Section 2.6

Board

Section 2.7

Board Service Period

Section 2.8

Bonus Compensation

Section 2.9

Code

Section 2.10

Company

Section 2.11

Compensation Committee

Section 2.12

Deferral Account

Section 2.13

Deferral Election Agreement

Section 2.14

Deferral Period

Section 2.15

Deferred Amount

Section 2.16

Deferred Stock Unit or DSU

Section 2.17

Deferred Stock Unit Account or DSU Account

Section 2.18

Director

Section 2.19

Disabled

Section 2.20

Dividend Equivalents

Section 2.21

Eligible Compensation

Section 2.22

Eligible Executive

Section 2.23

Eligible Individual

Section 2.24

Employee

Section 2.25

Employer

Section 2.26

ERISA

Section 2.27

Participant

Section 2.28

Plan

Section 2.29

Plan Year

Section 2.30

Qualified Change in Control Event

Section 2.31

Quarterly Bonus

Section 2.32

Retainer

Section 2.33

Retirement

Section 2.34

Annual Bonus

Section 2.35

Separation from Service

Section 2.36

Section 2.37

Shares Grant

Section 2.38

Specified Employee

Section 2.39

Specified Time

Article 3

PARTICIPATION AND DEFERRAL ELECTIONS

Section 3.1

Eligibility

Section 3.2

Duration of Participation

Section 3.3

Deferral Election Agreements

Section 3.4

Deferred Amount

Section 3.5

Designated Payment Event

Section 3.6

Form of Payment

Section 3.7

Forms of Investment

Section 3.8

Deferral Election Deadline

Section 3.9

Director’s Election for First Year of Eligibility

Section 3.10

Irrevocability of Election

Section 3.11

Default Rules

Section 3.12

Non-Elective LTIP Shares Grant Deferrals

Article 4

MAINTENANCE AND INVESTMENT OF ACCOUNTS

Section 4.1

DSU Accounts

Section 4.2

Status of Accounts

Section 4.3

Vesting

Article 5

DISTRIBUTIONS

Section 5.1

Eligibility for Distributions

Section 5.2

Retirement Distributions

Section 5.3

Specified Time Distributions

Section 5.4

Other Payment Events

Section 5.5

No Acceleration of Scheduled Distributions

Section 5.6

No Acceleration of Scheduled Distributions

Section 5.7

No Acceleration of Scheduled Distributions

Section 5.8

Extension of Specified Time Deferral Period

Section 5.9

Delay of Payments Under Certain Circumstances

Section 5.10

Payment Medium

Section 5.11

Unforeseeable Emergency Withdrawal

Section 5.12

Withholding of Taxes

Section 5.13

USERRA Rights

Article 6

PLAN TERMINATION PAYMENTS UPON QUALIFIED CHANGE IN CONTROL EVENT

Section 6.1

Termination of Plan Upon Change in Control

Section 6.2

Qualified Change in Control Event

Section 6.3

Change in the Ownership of a Corporation

Section 6.4

Change in the Effective Control of a Corporation

Section 6.5

Change in the Ownership of Substantial Portion of Assets

Section 6.6

Definitions and Operating Rules

Section 6.7

Special Rule for Certain Delayed Payments

Article 7

BENEFICIARY DESIGNATION

Section 7.1

Beneficiary Designation

Section 7.2

No Beneficiary Designation

Article 8

ADMINISTRATION OF PLAN

Section 8.1

Named Fiduciaries

Section 8.2

Claim Procedure

Article 9

AMENDMENT AND TERMINATION OF PLAN

Section 9.1

Amendment

Section 9.2

Company’s Right to Terminate

Article 10

MISCELLANEOUS

Section 10.1

Unfunded Plan

Section 10.2

Nonassignability

Section 10.3

Validity and Severability

Section 10.4

Governing Law

Section 10.5

Employment Status

Section 10.6

No Stockholder Rights Conferred

Section 10.7

Underlying Incentive Plans and Programs

Section 10.8

Funding and Financial Health Restrictions

Article 11

TYPE 1 AND TYPE 2 DSU SHARES

Section 11.1

Overview

Section 11.2

Non-Elective Deferrals

Section 11.3

Vesting

Section 11.4

Timing and Form of Distributions

Deferral Account

Hypothetical Investment Benchmarks

iii

Article 1

GENERAL

Section 1.1 Purpose. It is the intention of Advance Auto Parts, Inc. (the “Company”) to continue to maintain and provide for the administration of the Advance Auto Parts, Inc. Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives (the “Plan”) in accordance with the provisions of Section 409A of the Code, and in accordance with other provisions of law relating to non-qualified deferred compensation plans. The purpose of the Plan is to provide an additional mechanism to encourage stock ownership, as well as to provide a means to allow eligible individuals to defer the receipt of compensation that would otherwise be currently payable to the individual.

Section 1.2 Status of Plan. The Plan is maintained by the Company primarily for the purpose of providing deferred compensation to non-employee members of the Company’s Board of Directors, and to members of a select group of management or highly compensated employees within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). It is the intention of the Company that the Plan be unfunded for tax purposes and for purposes of Title I of ERISA. The Plan constitutes a mere promise by the Company to make deferred compensation payments in the future. As to such deferred compensation benefits, Participants under the Plan have the status of a general, unsecured creditors of the Company. The benefits provided under this Plan to Eligible Executives are in addition to those made available under the Advance Auto Parts, Inc. Deferred Compensation Plan.

Section 1.3 Effective Date. The Plan is a continuation of the Plan that was originally adopted effective as of May 19, 2004. The Plan was amended and restated effective as of January 1, 2008 for the purpose of becoming compliant with final Code Section 409A regulations issued by the Internal Revenue Service, and thereafter further amended from time to time. The provisions of the Plan as herein restated will be effective as of August 7, 2024, except as may be specifically provided otherwise. Except as may be required by ERISA or the Code, the rights of any person whose status as a Participant has terminated will be determined pursuant to the Plan as in effect on the date such status terminated, unless a subsequently adopted provision of the Plan is made specifically applicable to such person.

Section 1.4 Pre-2005 Deferrals. Deferrals made under the Plan for periods occurring on or before December 31, 2004 will be segregated and administered in accordance with the terms of this Plan as herein restated.

Article 2

DEFINITIONS

For the purposes of this Plan, the following words and phrases will have the meanings indicated, unless the context clearly indicates otherwise:

Section 2.1 Administrative Committee. “Administrative Committee” means the committee that is responsible for the operation and administration of the Plan, as identified in Section 8.1(c).

Section 2.2 Affiliated Company. “Affiliated Company” means the Company and each other corporation or enterprise, which as of a given date, is then a member of the same controlled group of corporations or the same group of trades or businesses under common control, determined in accordance with Sections 414(b) and (c) of the Code, as is the Company.

Section 2.3 Aggregated Plans. “Aggregated Plans” means the Advance Auto Parts, Inc. Deferred Compensation Plan, and any other account balance form of deferred compensation plan allowing elective deferrals that is sponsored by an Affiliated Company, and which is required to be aggregated with this Plan pursuant to IRS Regulation

§1.409A-1(c)(2).

Section 2.4 Base Salary.

(a) The “Base Salary” of an Eligible Executive for a Plan Year means the base rate of cash compensation otherwise payable by an Employer to or for the benefit of the Eligible Executive for services rendered or labor performed while that Eligible Executive is a Participant in this Plan for such Plan Year, including the base pay that an Eligible Executive could have received in cash in lieu of:

(i) Compensation deferrals elected to be made under this Plan or the Advance Auto Parts, Inc. Deferred Compensation Plan, or under any other non-qualified deferred compensation plan maintained by the Company or other Affiliated Company; and

(ii) Contributions made by or on the Eligible Executive’s behalf to any qualified retirement plan, or to any Code Section 125 cafeteria plan or other employee benefit plan maintained by the Company or other Affiliated Company.

(b) Any compensation paid to an Eligible Executive after the last day of a Plan Year solely for services performed during the final payroll period (as described in Code Section 3401(b)) containing the last day of the Plan Year will be treated as compensation for services performed in the subsequent Plan Year. For example, if a payroll period begins on December 23 of Year 1 and ends on January 5 of Year 2, then the compensation for that payroll period will be treated as Year 2 compensation.

Section 2.5 Beneficiary. “Beneficiary” means the person, persons or entity designated by the Participant or by the terms of the Plan to receive any benefits payable under the Plan pursuant to Article 7.

Section 2.6 Board. Except as provided in Section 6.1, “Board” means the Board of Directors of the Company as constituted from time to time.

Section 2.7 Board Service Period. “Board Service Period” means, with respect to a Director, the period beginning on the date of each annual meeting of the Board (or, in the case of a newly-elected Director, beginning on the first day of the Director’s membership on the Board) and ending on the date immediately preceding the following annual meeting of the Board, or such other designated annual period of service as a member of the Board.

Section 2.8 Bonus Compensation. "Bonus Compensation" for any Eligible Executive for any period means any Quarterly Bonus or Annual Bonus awarded to such Eligible Executive for services rendered or performance achieved for such period.

Section 2.9 Code. “Code” will mean the Internal Revenue Code of 1986, as amended. References to any provision of the Code or regulation (including a proposed regulation) thereunder will include any successor provisions or regulations.

Section 2.10 Company. “Company” means Advance Auto Parts, Inc., its successors, and any organization into which or with which Advance Auto Parts, Inc. may merge or consolidate or to which all or substantially all of its assets may be transferred.

Section 2.11 Compensation Committee. “Compensation Committee” means the Compensation Committee of the Board, or any successor to such committee.

Section 2.12 Deferral Account. “Deferral Account” means each DSU Account established and maintained on behalf of each Participant pursuant to Section 4.1 or 4.2.

Section 2.13 Deferral Election Agreement. “Deferral Election Agreement” (sometimes referred to simply as a “Deferral Election”) means the agreement governing an Eligible Individual’s deferral of the receipt of Eligible Compensation as submitted by the Eligible Individual under the Plan in accordance with Section 3.3.

Section 2.14 Deferral Period. “Deferral Period” means the period defined in Section 3.5.

Section 2.15 Deferred Amount. “Deferred Amount” means the amount defined in Section 3.4.

Section 2.16 Deferred Stock Unit or DSU. “Deferred Stock Unit” or “DSU” will mean a bookkeeping entry that represents the right to receive one Share at a future date. To the extent the Company pays a dividend, DSUs will include the right to receive Dividend Equivalents, which are credited in the form of additional DSUs.

Section 2.17 Deferred Stock Unit Account or DSU Account. “Deferred Stock Unit Account” or “DSU Account” means an account in which Deferred Amounts are valued as if they were invested in Company stock.

Section 2.18 Director. “Director” will mean a member of the Board.

Section 2.19 Disabled. A Participant will be considered to be or have become “Disabled” for purposes of the Plan if, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, the Participant:

(a) Is unable to engage in any substantial gainful activity; or

(b) Is receiving, and has received for a period of not less than three months, income replacement benefits under another accident and health plan covering employees of the Participant’s Employer.

A Participant will be deemed to be Disabled if the Participant has been determined to be disabled (i) by the Social Security Administration, or (ii) under a disability insurance program having a definition of disability that satisfies the standard prescribed above.

Section 2.20 Dividend Equivalents. “Dividend Equivalents” will mean an amount equal to the regular cash dividends paid by the Company upon one Share.

Section 2.21 Eligible Compensation.

(a) The “Eligible Compensation” of any Eligible Executive for any period means the Base Salary and Bonus Compensation, if any, otherwise payable to the Eligible Executive for services performed or performances achieved during such period.

(b) The “Eligible Compensation” of a Director for any period means the Retainer, or portion thereof, payable to the Director for services performed during such period.

Section 2.22 Eligible Executive. “Eligible Executive” means an Employee of an Employer who with respect to the Plan Year at issue:

(a) Holds a position with the Company, or an Affiliated Company, of a Senior Vice President, or a position senior to, or recognized as being equivalent to, a Senior Vice President; and

(b) Satisfies any such other eligibility requirements as the Compensation Committee may establish from time to time.

Section 2.23 Eligible Individual. “Eligible Individual” for a Plan Year means a Director or Eligible Executive who is eligible to participate in the Plan for that Plan Year.

Section 2.24 Employee. “Employee” will mean any employee of the Company or any Affiliated Company.

Section 2.25 Employer. “Employer” means each Affiliated Company having Employees who are eligible to participate in the Plan. If an Affiliated Company acquires a corporation or other trade or business, and if the acquired entity is thereupon maintained as a separate Employer or operating unit with respect an Affiliated Company in general, then such entity will not be deemed to be an Employer with respect to the Plan, and the Employees employed by that entity will not be eligible to participate in the Plan, unless and until the Company directly, or acting through the Administrative Committee, affirmatively designates the acquired entity as an Employer.

Section 2.26 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Section 2.27 Participant. “Participant” means a Director or an Eligible Executive who has elected to participant in the Plan by filing a Deferral Election Agreement as provided in Article 3. Each Director who is awarded Shares Grants will also be a Participant with respect to such awards.

Section 2.28 Plan. “Plan” means this Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives, as may be amended from time to time.

Section 2.29 Plan Year. “Plan Year” means a 12-month period beginning January 1 and ending the following December 31.

Section 2.30 Qualified Change in Control Event. “Qualified Change in Control Event” is a change in control of an Employer, as more fully prescribed in Article 6.

Section 2.31 Quarterly Bonus. “Quarterly Bonus” means the amount awarded to an Eligible Executive for each quarterly performance period within a Plan Year pursuant to any approved incentive plan maintained by an Employer.

Section 2.32 Retainer. “Retainer” means any retainers or other compensation payable to a Director for services performed for the Board Service Period, including, if applicable, any supplemental Board meeting fees, chair fees or committee meeting fees payable to the Director.

Section 2.33 Retirement. “Retirement” or “Retires” means:

(a) In the case of a Participant who is an Eligible Executive, the Participant’s Separation from Service after both attaining age 55 and completing at least 10 continuous years of service with the Affiliated Companies; and

(b) In the case of a Participant who is a Director, the Participant’s Separation from Service.

Section 2.34 Annual Bonus. “Annual Bonus” means the bonus awarded to an Eligible Executive for a calendar year performance period under an incentive plan maintained by an Employer.

Section 2.35 Separation from Service.

(a) A Director will incur a Separation from Service when the Director ceases to be a member of the Board; provided that (i) the cessation constitutes a good-faith and complete termination of the Director’s service relationship with the Company, and (ii) it is not anticipated that the services of the Director will be renewed, either as a Director, or as an independent contractor or an Employee of the Company or another Affiliated Company.

(b) Subject to the further provisions of this Section 2.37, a Participant who is an Eligible Executive will incur a Separation from Service for purposes of the Plan if the Eligible Executive dies, retires, or otherwise has a termination of employment as to all the Affiliated Companies.

(c) An Eligible Executive’s employment relationship with an Affiliated Company will be treated as continuing intact, and thus the Eligible Executive will not be deemed to have incurred a Separation from Service, while the Eligible Executive is on military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the Eligible Executive retains a right to reemployment with the Affiliated Company under an applicable statute or by contract. A leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Eligible Executive will return to perform services for the Affiliated Company. If the period of leave exceeds six months and the Eligible Executive does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first day immediately following such six-month period.

(d) Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Affiliated Company and the Eligible Executive reasonably anticipated

that no further services would be performed after a certain date, or that the level of bona fide services the Eligible Executive would perform after such date (whether as an Employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Affiliated Companies if the Eligible Executive has been providing services to the Affiliated Companies less than 36 months). An Eligible Executive is presumed to have incurred a Separation from Service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the Eligible Executive during the immediately preceding 36-month period. An Eligible Executive will be presumed not to have incurred a Separation from Service where the level of bona fide services performed continues at a level that is 50 percent or more of the average levelof service performed by the Eligible Executive during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent, and less than 50 percent, of the average level of bona fide services performed during the immediately preceding 36-month period.

Section 2.36 Share. “Share” will mean a share of common stock of the Company, par value $.0001 per share.

Section 2.37 Shares Grant. “Shares Grant” means the grant of Shares, if any, awarded by the Company to a Director as authorized by the Company’s 2004 Long Term Incentive Plan (“2004 LTIP”), the 2014 Long-Term Incentive Plan (“2014 LTIP”) or the 2023 Omnibus Incentive Plan (“2023 LTIP”).

Section 2.38 Specified Employee.

(a) Each Participant who is an Eligible Executive, or an Employee serving as a Director, will be deemed to be a Specified Employee for purposes of the Plan, and therefore will be subject to distribution restrictions prescribed under Section 5.6 of the Plan.

(b) A Participant who is not an Eligible Executive, or an Employee serving as a Director, (i.e., an “outside” Director) is not a Specified Employee, and therefore is not a Specified Employee for purposes of the Plan.

Section 2.39 Specified Time. “Specified Time” means a designated Deferral Period with respect to a DSU Account that based on a stated number of years, as prescribed in Section 3.5(b).

Article 3

PARTICIPATION AND DEFERRAL ELECTIONS

Section 3.1 Eligibility.

(a) Each individual who becomes a Director will be immediately eligible to become a Participant in the Plan.

(b) An Employee will be eligible to participate in the Plan for a Plan Year if the Team Member (i) will be an Eligible Executive as of the first day of such Plan Year, and (ii) is employed by an Employer on November 30 of the preceding Plan Year.

(c) An individual who initially becomes employed by an Employer as an Eligible Executive during a Plan Year (including by reason of a transfer of employment from an Affiliated Company that is not an Employer with respect to the Plan), or a former Participant who is rehired by an Employer as an Eligible Executive during a Plan Year (whether or not within the same Plan Year as of a Separation of Service) will not be eligible to participate in the Plan until the following Plan Year, subject in all cases to the eligibility provisions of subsection (b) above.

(d) An Eligible Executive who is transferred from an Employer to employment with an Affiliated Company that is not an Employer with respect to the Plan, or who while continuing in the employ of an Employer ceases to be an Eligible Executive (a “Transferred Participant”), will not be considered to have incurred a Separation from Service. The Transferred Participant will continue to be eligible to make deferrals under the Plan through the end of the Plan Year in which such transfer occurs, or for such additional period as may be permitted by the Compensation Committee.

(e) Notwithstanding the foregoing, an individual is not eligible to participate in the Plan unless the individual is a citizen or permanent legal resident of the United States.

Section 3.2 Duration of Participation. Each Participant will remain a Participant under the Plan until the balance of all of the Participant’s Deferral Accounts has been distributed to the Participant or the Participant’s Beneficiary.

Section 3.3 Deferral Election Agreements.

(a) For each Board Service Period, each Director will be permitted to submit a Deferral Election Agreement with respect to the Retainers otherwise payable to the Director for services performed during the Board Service Period.

(b) For each Plan Year, each Eligible Executive for that Plan Year will be permitted to submit separate Deferral Election Agreements pertaining to, respectively, the Base Salary and Bonus Compensation (if any) otherwise payable to the Eligible Executive for services performed or performance achieved during the Plan Year. The submission of a Deferral Election Agreement must be made in writing or otherwise in accordance with such policies and procedures established by the Administrative Committee and communicated to Eligible Individuals, which procedures may permit or require elections to be made by electronic media. Eligible Individuals who submit a

Deferral Election Agreement will be provided written or electronic confirmation of the terms of each Deferral Election Agreement.

(c) The Deferral Election Agreement with respect to each form of Eligible Compensation will include the elections and descriptions prescribed below.

(i) The amount of the Participant’s Eligible Compensation to be deferred for the Board Service Period or Plan Year, as applicable (i.e., the “Deferred Amount,” as described more fully in Section 3.4);

(ii) The designated payment event for such Deferred Amount, as described more fully in Section 3.5;

(iii) The form in which the Deferred Amount is elected to be paid, as described more fully in Section 3.6; and

(iv) In the case of a Director, the manner in which the Deferred Amount will be deemed to be invested, as described more fully in Section 3.7.

Section 3.4 Deferred Amount.

(a) The Deferral Election Agreement of a Participant for a Board Service Period or Plan Year, as applicable, will designate the amount of each form of the Eligible Compensation for the period that the Participant elects to have deferred under the Plan (the “Deferred Amount”).

(b) The maximum amount of the deferral of Retainers that may be elected by a Director for a Board Service Period is 100% of his or her Retainers for such Board Service Period.

(c) The maximum or minimum amount of deferral that may be elected by an Eligible Executive for a Plan Year with respect to each form of Eligible Compensation will be established by the Administrative Committee. The maximum or minimum amount may differ as to Eligible Executives or classes of Eligible Executives.

(d) The aspect of a Deferral Election Agreement regarding the elected Deferred Amount will not apply to any pay period for which the amount of the Eligible Compensation remaining to be paid to the Participant (but for the deferral election), after making any other deductions or withholdings of income, would be less than the Deferred Amount prescribed in the Deferral Election Agreement.

Section 3.5 Designated Payment Event.

(a) A Participant’s Deferral Election Agreement must designate the event that will give rise to the payment of the Deferred Amount. The period of the deferral through the date of the event giving rise to the payment of the Deferred Amount is sometimes referred to herein as the “Deferral Period.” Subject to the terms of the Plan, including Section 5.6 (regarding the restriction on distributions to Specified Employees), a Participant may elect to have the Deferred Amount pertaining to services performed in any Board Service Period or Plan Year, as applicable, become payable upon either of the following alternative events:

(i) The Participant’s Retirement or other Separation from Service; or

(ii) The last day of a future calendar year; provided, however, that such designated calendar year cannot be earlier than the second calendar year following the calendar year in which falls the first day of the Board Service Period or Plan Year, as applicable, to which the deferred compensation pertains (i.e., as of a “Specified Time”). For example, a Director may elect the designated payment event for a Deferral Account pertaining to the Board Service Period beginning as of the annual Board meeting held in May of Year 1 to be December 31 of Year 3, or the last day of any subsequent calendar year.

(b) Notwithstanding the terms of a Deferral Election Agreement, a Participant’s Retirement will be a designated payment event with respect to each of the Participant’s Deferral Accounts. Accordingly, if such Retirement occurs prior to the occurrence of the Specified Time designated in any Deferral Election Agreement for any Deferral Account, then the Retirement will supplant the Specified Time election with respect to that Deferral Account.

Section 3.6 Form of Payment. A Participant’s Deferral Election Agreement will designate the form in which the Deferred Amount will be paid if such payments arise by reason of a designated payment event prescribed in Section 3.5 above. The permissive forms of payment are:

(a) A lump sum; or

(b) Substantially equal annual installments over a period (as the Participant will designate) of not less than two years and not more than 10 years.

Section 3.7 Forms of Investment.

(a) Deferred Amounts elected by Eligible Executives or Directors will be invested solely in Deferred Stock Units.

Section 3.8 Deferral Election Deadline.

(a) A Deferral Election pertaining to a Director’s Retainers that may otherwise become payable to the Director for services performed to the Board during a Board Service Period must be filed on or before December 31 of the Plan Year immediately preceding the beginning of the Board Service Period for which it is effective (the “Statutory Deadline”), or as of such earlier submission date established by the Administrative Committee (such as by the end of the open enrollment period applicable to such Plan Year).

(b) A Deferral Election pertaining to Base Salary or Bonus Compensation that may otherwise become payable to an Eligible Executive for services performed or performance achieved during a Plan Year, including in regard to the Annual Bonus or the fourth quarter Quarterly Bonus for a Plan Year that will be paid after the end of that Plan Year, must be submitted on or before December 31 of the Plan Year immediately preceding the Plan Year for which it is effective (the “Statutory Deadline”), or as of such earlier submission date established by the Administrative Committee (such as by the end of the open enrollment period applicable to such Plan Year).

(c) Notwithstanding subsection (b) above, the Administrative Committee in its discretion may permit an Eligible Executive to submit the Deferral Election for the Annual Bonus pertaining to any Plan Year on or before June 30 falling within the applicable Plan Year (the “Statutory Deadline”), or as of such

earlier submission date established by the Administrative Committee (such as by the end of the open enrollment period applicable to such Plan Year), subject to the following conditions:

(i) The Annual Bonus for the Plan Year must be payable by reason of the Eligible Executive’s satisfaction of organizational or individual performance criteria that is measured on the basis of a calendar year performance period or such other performance period of not less than 12 months;

(ii) The Eligible Executive must have performed services for the Employer continuously during the period beginning on the later of the beginning of the performance period or the date the applicable performance criteria are established, and ending on the date the election is made; and

(iii) The election must be made before the amount of the Annual Bonus becomes readily ascertainable.

Section 3.9 Director’s Election for First Year of Eligibility. Notwithstanding Section 3.8 above, the provisions of this Section 3.9 will apply with respect to a Director who initially becomes eligible to participate in the Plan.

(a) The timing of the Director’s initial Deferral Election will be governed by the rules prescribed below.

(i) The initial Deferral Election must be made within 30 days after the date the Director first becomes eligible to participate in the Plan. Except as provided in paragraph (ii) below, the Director’s initial Deferral Election, or the decision to not make an initial Deferral Election, will become irrevocable as of the expiration of such 30-day election period.

(ii) In no event may the deadline for making an initial Deferral Election under this Plan with respect to any Director for any Plan Year be subsequent to the deadline imposed on that Director for making a Deferral Election for such Plan Year under any other Aggregated Plan.

(b) A former Participant who has again become a Director will be treated as first becoming eligible to participate in the Plan, and thus will be subject to the special election rules of this Section 3.9, under either of the following circumstances:

(i) The former Participant has been paid all amounts deferred under the Plan and all other Aggregated Plans, and the Participant ceased to be eligible to elect to continue to participate in the Plan or an Aggregated Plan on or before the date of the last such payment; or

(ii) The former Participant was not eligible to participate in the Plan or an Aggregated Plan during the 24-month period ending on the date of again becoming eligible to participate in the Plan or an Aggregated Plan.

(c) The compensation to which such initial Deferral Election will apply will be determined in accordance with the rules set forth below.

(i) The Director’s initial Deferral Election will apply only to the Retainer otherwise payable for services performed by the Director subsequent to the date the Deferral Election has become irrevocable pursuant to subsection (a) above.

(ii) For purposes of paragraph (i) above, as with respect to a Deferral Election by an Eligible Executive pertaining to Bonus Compensation (i.e., the Quarterly Bonuses and Annual Bonus), if the initial Deferral Election is made after the beginning of the applicable Board Service Period, the Deferral Election will apply to the total amount of the Director’s applicable Retainer for the Board Service Period multiplied by a fraction, the numerator of which is the number of days remaining in the performance period after the election has become irrevocable, and the denominator of which is the total number of days in the Board Service Period.

Section 3.10 Irrevocability of Election.

(a) Once the applicable Statutory Deadline to make a Deferral Election for any form of Eligible Compensation with respect to any Board Service Period or Plan Year, as applicable, has passed, as prescribed in Section 3.8, or once the deadline for making an initial Deferral Election pursuant to Section 3.9 above has expired, the Deferral Election will generally become irrevocable. The consequences of such include the following:

(i) The amount of the Eligible Compensation that the Participant elected to defer for the Board Service Period or Plan Year, as applicable, or the election not to defer any amount, cannot be canceled or modified;

(ii) The form of payment for the Deferral Account to which the Deferred Election applies cannot be modified; and

(iii) The designated date of payment for the Deferral Account to which the Deferred Election applies cannot be modified, except as provided in Section 5.8.

(b) Notwithstanding subsection (a) above, the Deferral Election of a Participant who receives an Unforeseeable Emergency withdrawal from the Plan pursuant to Section 5.11 will be cancelled on a prospective basis. Such cancellation will continue in effect for the remainder of the Plan Year in which the withdrawal is made. The Participant, if otherwise so eligible, will be permitted to elect to make elective deferrals under the Plan for the subsequent Plan Year.

Section 3.11 Default Rules. If an Eligible Individual has timely made an effective, affirmative Deferral Election for a Plan Year, but the Deferral Election Agreement did not specify a form of distribution, or did not specify a Deferral Period, then the default rules prescribed below will apply.

(a) If the Deferral Election Agreement did not specify a form of payment, then the default form of payment pertaining to the Deferral Election is a lump sum.

(b) If the Deferral Election Agreement did not specify a Deferral Period, then the Deferral Period pertaining to the Deferral Election will be the expiration of two full calendar years following the Board Period Service or Plan Year, as applicable, to which the deferred compensation pertains. For example, the default Deferral Period pertaining to Year 1 compensation is the period ending on December 31 of Year 3.

(c) Notwithstanding the foregoing, as generally prescribed in Section 3.5, a Participant’s Retirement is the designated payment event with respect to each of the Participant’s Deferral Accounts. Accordingly, if such Retirement occurs prior to the occurrence of the deemed Specified Time Deferral Election for any Deferral Account, then the Retirement will supplant the deemed Specified Time Deferral Election with respect to that Deferral Account.

Section 3.12 Non-Elective LTIP Shares Grant Deferrals.

(a) Each Shares Grant awarded to a Director under the 2004 LTIP, the 2014 LTIP or the 2023 LTIP will be automatically deferred under the Plan on a non-elective basis, and will be credited to the Director’s Deferral Account.

(b) A Director who receives a Shares Grant for any Board Service Period will be deemed to have made the same election as to the timing and form of payment, manner of investment, and the Deferral Account to which the Shares Grant is credited as the election that was made (or which was deemed to have been made pursuant to Section 3.11 above) in connection with the deferral of the Director’s Retainer for such Board Service Period. In the event the Director did not make (and is not deemed to have made) a Deferral Election for such Board Service Period, then the Director will be deemed to have elected to have the balance of the Deferral Account pertaining to such Shares Grant paid in a lump sum upon Retirement.

Article 4

MAINTENANCE AND INVESTMENT OF ACCOUNTS

Section 4.1 DSU Accounts.

(a) Separate DSU Accounts will be maintained for each Eligible Executive, and for each Director who elects to have all or a portion of the Director’s Retainer invested in Deferred Stock Units. More than one DSU Account may be maintained for a Participant as necessary to reflect separate Deferral Election Agreements specifying different Deferral Periods or forms of payment.

(b) A DSU Account will be credited with the number of DSUs calculated to the nearest thousandth of a DSU, determined by dividing the Deferred Amount on the date of deferral by the closing market price of the Company’s common stock as reported on the Consolidated Tape of the New York Stock Exchange listed shares on such date of deferral.

(c) To the extent the Company pays dividends, on each dividend payment date, a Participant’s DSU Account will be credited with Dividend Equivalents in additional DSUs determined by multiplying the number of DSUs in the Participant’s DSU Account on the related dividend record date by any per share cash dividends declared by the Company on its own common stock and dividing the product by the closing market price of the Company’s common stock as reported on the Consolidated Tape of the New York Stock Exchange listed shares on such dividend payment date. At the Compensation Committee’s discretion, the DSU Accounts may also be credited with DSUs by multiplying the number of DSUs in a Participant’s DSU Account by any stock dividends declared by the Company on its common stock, unless the DSU Accounts are adjusted pursuant to Section 4.3

(d) The number of DSUs in a Participant’s DSU Account will be adjusted, as the Board or Compensation Committee deems appropriate, to reflect stock dividends, stock splits, reclassifications, spinoffs, and other extraordinary distributions, as if those DSUs were actual Shares.

(e) The Administrative Committee will submit to each Participant quarterly statements of his or her DSU Accounts, in such form as the Administrative Committee deems desirable, setting forth the balance to the credit of such Participant in his or her DSU Accounts as of the end of the most recently completed quarter.

(f) Each DSU Account established under this Article 4 will be maintained for bookkeeping purposes only. Neither the Plan nor any of the DSU Accounts established under the Plan will hold any actual funds or assets. The DSU Accounts established hereunder will be used solely to determine the amounts to be paid hereunder, will not be or represent an equity security of the Company, will not be convertible into or otherwise entitle a Participant to acquire an equity security of the Company and will not carry any voting rights.

Section 4.2 Status of Accounts. A Participant’s Deferral Accounts will be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant pursuant to this Plan, and will not constitute or be treated as a trust fund of any kind.

Section 4.3 Vesting. A Participant will be 100% vested in the balance of each of his or her Deferral Accounts at all times.

Article 5

DISTRIBUTIONS

Section 5.1 Eligibility for Distributions. Except as otherwise provided herein, a distribution from a Participant’s Deferral Account may be made only on account of one of the following events incurred by or with respect to the Participant:

(a) The Participant’s Separation from Service. In this regard, a distribution by reason of a Participant’s Retirement will be permitted only if the Retirement constitutes a Separation from Service;

(b) The Participant becoming Disabled;

(d) A Specified Time, as prescribed under the Participant’s Deferral Election Agreement;

(e) An Unforeseeable Emergency, as prescribed in Section 5.11 below; or

(f) The termination of the Plan, or portion of the Plan, prescribed in Section 9.2.

Section 5.2 Retirement Distributions. Subject to Section 5.6 below, in either of the circumstances described below, upon a Participant’s Retirement, the value of the Participant’s Deferral Accounts will be then distributed to the Participant in installments or in a lump sum as designated in the applicable Deferral Election Agreement.

(a) The Participant had elected to receive payment of a Deferral Account upon Retirement; or

(b) The Deferral Period elected by the Participant for that Deferral Account was a Specified Time, but the Participant Retires before the end of that Specified Time.

Section 5.3 Specified Time Distributions. Subject to Sections 5.6 and 5.8 below, if the Deferral Period elected by a Participant with respect to a DSU Account is a Specified Time, and the Participant did not Retire before the end of that Specified Time, then upon the end of that Specified Time, the value of the Deferral Account at issue will be distributed to the Participant in installments or in a lump sum as designated in the applicable Deferral Election Agreement.

Section 5.4 Other Payment Events. Notwithstanding the provisions of any Deferral Election Agreement, if prior to Retirement a Participant dies, becomes Disabled but remains employed, or incurs a Separation from Service, the entire balance of all of the Participant’s Deferral Accounts will be distributed to the Participant or the Participant’s Beneficiary or Beneficiaries (as the case may be) in a lump sum payment.

Section 5.5 Designated Payment Date.

(a) The designated date as of which the value of a Participant’s Deferral Account is to be distributed, or will commence being distributed, will be as prescribed below.

(i) The designated payment date with respect to a Deferral Account to be distributed in a lump sum payment will be by the fifth business day of the month following the month in which occurs the event giving rise to the lump sum payment (or, if later, following the month in which occurs the final deferral with respect to the Deferral Election Agreement pertaining to the Deferral Account is withheld from the Participant’s paycheck).

(ii) • In the case of distributions to be made to a Participant in the form of installment payments, the designated payment dates will be by the fifth business day of the month following the month in which occurs the event that gives rise to the payment, and each annual anniversary of that initial designated payment date.

(iii) If a Participant dies prior to a payment event with respect to a Deferral Account, the entire balance of such Deferral Account will be paid to the Participant’s Beneficiary or Beneficiaries in a lump sum payment. If a Participant who is receiving installment payments dies before all payments have been made, all remaining amounts will be paid to the Participant's Beneficiary or Beneficiaries in a lump sum payment. Such payment will be made within the period prescribed in Section 5.5(c)(ii) below.

(iv) The designated payment date with respect to a withdrawal due to an Unforeseeable Emergency pursuant to Section 5.9 below will be by the fifth day of the month following the month in which occurs the date as of which the withdrawal request is approved by the Administrative Committee.

(b) For purposes of the administrative provisions of this Plan, a payment will be treated as having been made upon the date specified under subsection (a) above if the payment is made:

(i) On such date or a later date within the same calendar year; or

(ii) If later, by the 15th day of the third calendar month following the date so specified.

For clarity, the timing of distributions is intended to depend on the timing of the notification of separatione, as well as the type of distribution elected:

o If notification to separate occurs prior to the 15th of the month, distribution will occur by the fifth business day of the month following the month in which occurs the event giving rise to the payment;

o If notification to separate occurs after the 15th of the month, distribution will occur by the fifth business day of the month that commences following a 30-day administrative window after the event giving rise to the payment

(i) If the calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or the Participant’s estate), the payment will be treated as made upon the specified date if the payment is made during the first calendar year in which the payment is administratively practicable.

(ii) A payment to be made to a Beneficiary upon the date of the death of a Participant, or upon the death of a Beneficiary who has become entitled to payment due to the Participant’s death, will be made during the period ending on December 31 of the first calendar year following the calendar year during which the death occurs. The Beneficiary may designate the year of payment.

(iii) For purposes of administrative convenience, payment may be made to a Participant no earlier than 30 days before the designated payment date prescribed in subsection (a) above.

(d) In no event will a Participant be permitted, directly or indirectly, to designate the taxable year of the distribution.

(e) The amount to be distributed to a Participant or a Beneficiary will be determined on the basis of the value of the applicable Deferral Account as of the first business day of the month immediately preceding the designated payment date with respect to the distribution at issue.

Section 5.6 Restriction on Distributions to Specified Employees.

(a) Notwithstanding the provisions of Section 5.5 above, if a Participant becomes entitled to a distribution from the Plan by reason of Retirement or other Separation from Service, and if the Participant is a Specified Employee as of the date of such Retirement or other Separation from Service, then the amounts held in the Participant’s Deferral Accounts will become payable as of the first day of the seventh month following the date of the Participant’s Retirement or other Separation from Service (or, if earlier, as of the date of the Participant’s death).

(b) If the distributions to the Specified Employee are to be made in annual installments, the delay in payment prescribed in subsection (a)(ii) above will apply solely to the first installment payment. Each subsequent installment payment will be made as of the date such payment otherwise would have been made pursuant to Section 5.5.

(c) The distribution restrictions prescribed in subsection (a)(ii) above will not apply to a payment to be made pursuant to Section 5.7(b)(i) or (ii) (regarding the payment of employment taxes and compensation deferred under the Plan or a certificate of divesture compliance distributions), or Section 10.2(b) (regarding domestic relations orders).

Section 5.7 No Acceleration of Scheduled Distributions.

(a) Except as otherwise provided in the Plan, the time or schedule of any distribution of any portion of a Participant’s Deferral Accounts will not be permitted to be accelerated, either at the election of the Participant or at the discretion of the Compensation Committee or the Administrative Committee.

(b) Notwithstanding the foregoing, distributions may be made to or on behalf of a Participant prior to the otherwise applicable designated payment date in the following situations:

(i) As may be necessary to comply with a certificate of divestiture (as defined in Code Section 1043(b)(2));

(ii) To pay FICA taxes on amounts deferred under the Plan, or income taxes on additional charges arising from the Employer’s payment of FICA taxes or for amounts attributable to the pyramiding of wages and taxes; or

(iii) If the Plan at any time fails to meet the requirements of Code Section 409A and the underlying regulations. In that event, however, the accelerated payment may not exceed the amount required to be included in the Participant’s income as a result of the Plan’s failure to comply with the Code Section 409A requirements.

Section 5.8 Extension of Specified Time Deferral Period. Section 3.5(b) of the Plan permits a Participant to select a Deferral Period of a stated period of calendar years (i.e., a “Specified Time Deferral Period”). In this connection, a Participant will be permitted to extend a Specified Time Deferral Period with respect to a Deferral Account, subject to the conditions set forth below.

(a) An election to extend the Specified Time Deferral Period with respect to any Deferral Account must be submitted under the Plan in accordance with the Administrative Committee’s established procedures.

(b) Any such election will not take effect under the Plan until 12 months after the date on which the election is properly submitted.

(c) An election to extend a Specified Time Deferral Period must provide for the lengthening of the Specified Time Deferral Period for a period of not less than an additional five years.

(d) Any election to extend a Specified Time Deferral Period must be made at least 12 months prior to the designated payment date (as prescribed in Section 5.5(a)) for the first scheduled payment from the applicable Deferral Account. A deferral extension election may be modified or revoked prior to such deadline date. If not modified or revoked, the election will generally become irrevocable as of such deadline date.

(e) For purposes of this Section 5.8:

(i) The entitlement to installment payments will be treated as the entitlement to a single payment; and

(ii) The applicable designated payment date otherwise applicable to a Specified Time Deferral Period will be determined without regard to the restrictions on distributions to Specified Employees prescribed in Section 5.6.

Section 5.9 Delay of Payments Under Certain Circumstances. Notwithstanding any provision of the Plan to the contrary, payment to a Participant will be delayed to a date after the designated payment date otherwise prescribed under Section 5.5 under any of the circumstances prescribed below.

(a) A payment to a Participant will be delayed where the Compensation Committee reasonably anticipates that the Company’s or other Affiliated Company’s income tax deduction with respect to such payment otherwise would be limited or eliminated by application of Code Section 162(m); provided, however, that in such event, the payment will be made either at the earliest date at which the Compensation Committee reasonably anticipates that the deduction of the payment of the

amount will not be limited or eliminated by application of Code Section 162(m), or the calendar year in which the Participant Separates from Service.

(b) A payment to a Participant will be delayed where the Compensation Committee reasonably anticipates that the making of the payment will violate federal securities laws or other applicable law; provided, however, that in such event, the payment to be made at the earliest date at which the Company or other Affiliated Company reasonably anticipates that the making of the payment will not cause such violation. For purposes of this subsection (c), the making of a payment that would cause inclusion in gross income or other application of any penalty provision or other provision of the Code is not treated as a violation of applicable law.

(c) A payment to a Participant will be delayed upon such other events and conditions as may be prescribed in generally applicable guidance issued by the Internal Revenue Service.

Section 5.10 Payment Medium.

(a) All payments to a Participant (or to a Participant’s Beneficiary) with respect to the Participant’s DSU Accounts will be paid in Shares, unless the Compensation Committee in its discretion directs that such amounts be paid in cash. If Shares are not traded on The New York Stock Exchange on any day on which a payment of Shares is to be made under the Plan, then that payment will be made on the next day on which Shares are traded on the New York Stock Exchange. Shares paid from this Plan will be drawn from shareholder-approved stock incentive plans.

(b) The value of any fractional Shares otherwise payable with respect to a Participant will be paid in cash. Such value will be determined as of the last business day of the month immediately preceding the date of the payment or final payment, as the case may be.

Section 5.11 Unforeseeable Emergency Withdrawal. A Participant who incurs an Unforeseeable Emergency (as defined below) may submit a request to the Administrative Committee for a withdrawal equal to that portion (or all) of the Participant’s Deferral Accounts as is then needed to alleviate the financial hardship resulting therefrom. Such withdrawals will be subject to the following provisions of this Section 5.11.

(a) For purposes of this Section 5.11:

(i) An “Unforeseeable Emergency” means a severe financial hardship to a Participant resulting from an illness or accident of the Participant, or of the spouse, a dependent (as defined in Code Section 152(a)) or a primary beneficiary (as defined below) of the Participant; the loss of the Participant’s property due to casualty; or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant; and

(ii) A “primary beneficiary” of a Participant is an individual who is named as a Beneficiary of the Participant under the Plan, and who has an unconditional right to all, or a portion of, the balance of the Participant’s Deferral Account upon the death of the Participant.

(b) The circumstances that will constitute an Unforeseeable Emergency will depend upon the facts of each case. Examples of circumstances that may qualify as an Unforeseeable Emergency (provided that the other conditions of this Section 5.11 are satisfied) are:

(i) The imminent foreclosure of, or eviction from, the Participant’s primary residence;

(ii) The need to pay for medical expenses, including non-refundable deductibles or the cost of prescription drugs; and

(iii) The need to pay for the funeral expenses of the spouse, or dependent or primary beneficiary of the Participant.

(c) The purchase of a home and the payment of college tuition are not Unforeseeable Emergencies for purposes of this Plan.

(d) A withdrawal will not be permitted under this Section 5.11 to the extent that the hardship resulting from the Unforeseeable Emergency is, or may be, relieved:

(i) Through the reimbursement or compensation by insurance or otherwise;

(ii) By the liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship; or

(iii) By the cessation of deferrals under the Plan.

(e) The amount of any Unforeseeable Emergency withdrawal will be limited to that which the Administrative Committee determines is reasonably necessary to alleviate the hardship resulting from the occurrence of the Unforeseeable Emergency (which may include any amount necessary to pay any federal or state income taxes or penalties reasonably anticipated to result from the distribution). The determination of the amount reasonably necessary to satisfy the emergency need must take into account any additional compensation that is available to the Participant upon cancellation of the Participant’s deferral election due to the Unforeseeable Emergency withdrawal that is effected pursuant to Section 3.10(b). However, such determination is not required to take into account any additional Unforeseeable Emergency withdrawal that is available under another nonqualified deferred compensation plan, but which has not actually been paid from that other plan.

(f) After reviewing each Unforeseeable Emergency withdrawal request, the Administrative Committee will make a determination as to whether the circumstances satisfy the Unforeseeable Emergency standards prescribed above, and will thereupon notify the requesting Participant of the determination. If the request is approved, the Administrative Committee will process payment of the withdrawal

(g) The Administrative Committee may establish a policy and procedures regarding the order in which Unforeseeable Emergency withdrawals are to be charged against the particular Deferral Accounts of a Participant.

Section 5.12 Withholding of Taxes. Notwithstanding any other provision of this Plan, an Employer has the right to cause the withholding from payments made hereunder, or to require a Participant to remit to the Employer, any amount required for the Employer to satisfy all federal, state or local tax withholding obligations pertaining to the Participant.

Section 5.13 USERRA Rights. Notwithstanding any provision of this Article 5 to the contrary, the Plan will permit a Participant to elect a change in the time or the form of payment as may be required to comply with the Uniformed Services Employment and Reemployment Rights Act (“USERRA”).

Article 6

PLAN TERMINATION PAYMENTS UPON QUALIFIED CHANGE IN CONTROL EVENT

Section 6.1 Termination of Plan Upon Change in Control. Notwithstanding any provision of the Plan to the contrary, upon the occurrence of a Qualified Change in Control Event involving the Company or other Relevant Employer (as defined in Section 6.6(a) below), the Board as constituted immediately prior to the event may in its discretion terminate the Plan, or the portion of the Plan pertaining to the Relevant Employer, and cause to be distributed to each affected Participant the entire balance of all of the Participant’s Deferral Accounts. The termination by such Board must occur within the 30 days preceding, or within the 12-month period following, the Qualified Change in Control Event. Such Plan termination distributions will be permitted only if:

(a) All substantially similar non-qualified deferred compensation programs maintained by the Company and all other Affiliated Companies are terminated upon such Qualified Change in Control Event; and

(b) All compensation deferred and held under each such deferred compensation program is distributed to Participants within 12 months of the date of termination of the applicable program.

Section 6.2 Qualified Change in Control Event. For purposes of this Article 6, a “Qualified Change in Control Event” with respect to any Participant means any of the following events:

(a) A Qualified change in the ownership of a corporation that is a Relevant Employer (as prescribed in Section 6.3);

(b) A Qualified change in effective control of a corporation that is a Relevant Employer (as prescribed in Section 6.4); and

(c) A Qualified Change in the ownership of a substantial portion of the assets of a corporation that is a Relevant Employer (as prescribed in Section 6.5).

Section 6.3 Change in the Ownership of a Corporation.

(a) For purposes of this Article 6, a change in the ownership of a corporation occurs on the date that any one person, or more than one person acting as a group, acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of such corporation. If any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total fair market value or total voting power of the stock of a corporation, the acquisition of additional stock by the same person or persons is not considered to cause a change in the ownership of the corporation (or to cause a change in the effective control of the corporation within the meaning of Section 6.4 below).

(b) For purposes of this Section 6.3, an increase in the percentage of stock owned by any one person, or by persons acting as a group, as a result of a transaction in which the corporation acquires its stock in exchange for property will be treated as an acquisition of stock.

(c) In all regards, for purposes of this Section 6.3, a change in the ownership of a corporation will be deemed to have occurred only when there is a transfer of stock of a corporation (or issuance of stock of a corporation), and stock in such corporation remains outstanding after the transaction.

Section 6.4 Change in the Effective Control of a Corporation.

(a) For purposes of this Article 6, a change in the effective control of a corporation occurs on the date that either:

(i) A majority of members of the Company’s Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board prior to the date of the appointment or election; or

(ii) Any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the applicable corporation possessing 30 percent or more of the total voting power of the stock of such corporation.

(b) A change in effective control of a corporation may also occur in any transaction in which either of the two corporations involved in the transaction incurs a change in control event described under Section 6.3 or 6.5.

Section 6.5 Change in the Ownership of Substantial Portion of Assets.

(a) For purposes of this Article 6, a change in the ownership of a substantial portion of a corporation's assets occurs on the date that any one person, or more than one person acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

(b) A transfer of assets by a corporation will not be treated as a change in the ownership of such assets, and such transfer will thus not constitute a Qualified Change in Control Event, if the assets are transferred to:

(i) A shareholder of the corporation (immediately before the asset transfer) in exchange for or with respect to its stock;

(ii) An entity, 50 percent or more of the total value or voting power of which is owned, directly or indirectly, by the corporation;

(iii) A person, or more than one person acting as a group, that owns, directly or indirectly, 50 percent or more of the total value or voting power of all the outstanding stock of the corporation; or

(iv) An entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described in paragraph (iii).

(c) For purposes of subsection (b) above, a person's status is determined immediately after the transfer of the assets. Thus, for example, a transfer to a corporation in which the transferor corporation has no ownership interest before the transaction, but which is a majority-owned subsidiary of the transferor corporation after the transaction is not treated as a change in the ownership of the assets of the transferor corporation.

Section 6.6 Definitions and Operating Rules. The following definitions and operating rules will apply for purposes of this Article 6.

(a) Relevant Employer. To constitute a Qualified Change in Control Event as to the particular Participant, the event must relate to one of the following corporate employers:

(i) The Company;

(ii) A subsidiary corporate Employer for whom the Participant is performing services at the time of the Qualified Change in Control Event; or

(iii) A subsidiary corporate Employer that is a majority shareholder of an Employer identified in paragraph (ii) above, or any corporate Employer in a chain of corporations in which each corporation is a majority shareholder of another corporation in the chain, ending in a corporation identified in paragraph (ii) above. For purposes of this paragraph (iii), a majority shareholder of a corporate Employer is a shareholder owning more than 50% of the total fair market value and total voting power of such Employer.

(b) Persons Acting as a Group. Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering. However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the corporation. If a person, including an entity, owns stock in both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction, such shareholder is considered to be acting as a group with other shareholders in a corporation prior to the transaction giving rise to the change and not with respect to the ownership interest in the other corporation.

(c) Ownership Attribution. The ownership attribution rules of Code Section 318(a) will apply to determine stock ownership. Stock underlying a vested option is considered owned by the individual who holds the vested option (and the stock underlying an unvested option is not considered owned by the individual who holds the unvested option). For purposes of the preceding sentence, however, if a vested option is exercisable for stock that is not substantially vested (as defined in IRS Regulation § 1.83-3(b) and (j)), the stock underlying the option is not treated as owned by the individual who holds the option.

Section 6.7 Special Rule for Certain Delayed Payments. Payment from a Participant’s DSU Accounts that are calculated by reference to the value of Company stock will be treated as paid at a specified time or pursuant to a fixed schedule in conformity with the requirements of the Plan if such amounts are paid on the same schedule and under the same terms and conditions as payments to shareholders generally pursuant to a Qualified Change in Control Event described in Section 6.3 above (i.e., a change in the ownership of a corporation) or as payments to the Participant pursuant to a Qualified Change in Control Event described in Section 6.5 above (i.e., a change in the

ownership of a substantial portion of a corporation’s assets). Any amounts paid pursuant to such a schedule and such terms and conditions will not be treated as violating the initial or subsequent deferral election rules, to the extent that such amounts are paid not later than five years after the Qualified Change in Control Event.

Article 7

BENEFICIARY DESIGNATION

Section 7.1 Beneficiary Designation. Each Participant will have the right, at any time, to designate any person, persons or entity as his Beneficiary or Beneficiaries. A Beneficiary designation will be made, and may be amended, by the Participant by filing a written designation with the Administrative Committee, on such form and in accordance with such procedures as the Administrative Committee will establish from time to time.

Section 7.2 No Beneficiary Designation. If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, then the Participant’s Beneficiary will be the Participant’s estate.

Article 8

ADMINISTRATION OF PLAN

Section 8.1 Named Fiduciaries. The persons identified in this Section 8.1 are named as fiduciaries under this Plan and will be the only named fiduciaries with respect to the Plan.

(a) Advance Stores Company, Incorporated (“Advance Stores”) serves as the Plan Sponsor, and is responsible for all fiduciary functions under the Plan except insofar as any such authority or responsibility is assigned by or pursuant to the Plan to another name fiduciary, or is delegated to another fiduciary pursuant to subsection (b) below. In that regard, Advance Stores is the “Administrator” of the Plan within the meaning of ERISA. The authority and responsibility reserved or assigned to Advance Stores will be exercised by an authorized officer or by the Compensation Committee.

(b) The Compensation Committee has the authority and responsibility in regard to the design of the Plan, establishing the criteria for Employees who are to be designated as Eligible Executives for any Plan Year and as otherwise delegated herein. The Compensation Committee may delegate to a committee or to any officer of Advance Stores or any Affiliated Company any authority or responsibility reserved or assigned to it or to Advance Stores pursuant to the Plan. In the event of any such delegation, any references to the authority, right or power of Advance Stores or the Compensation Committee to act which are contained in any notice, disclosure or communication made with a view toward effectuating the purposes of the Plan will be construed to include authority for such actions by the committee or officer to whom the Compensation Committee has delegated its authority. Notwithstanding any other provision of the Plan, in the event that an action or direction of any person to whom authority reposed with Advance Stores or the Compensation Committee under the Plan has been delegated by the Compensation Committee conflicts with an action or direction of the Board of Directors, Advance Stores, or the Compensation Committee, then the authority of the Board of Directors, Advance Stores, or the Compensation Committee, as applicable, will supersede that of the delegate with respect to such action or direction.

(c) An Administrative Committee has the responsibility and authority to control the operation and administration of the Plan in accordance with the terms of the Plan.

(i) The members of the Administrative Committee will be the individuals serving in the roles of, respectively, the Executive Vice President of Human Resources and the Senior Vice President, Total Rewards for the Employers, and such other individuals who are appointed to the Administrative Committee by such Executive Vice President of Human Resources (or, in the event of a vacancy in such position, by the Senior Vice President, Total Rewards).

(ii) The Administrative Committee may designate one of its members as a chairperson, and may retain and supervise outside providers, third party administrators, record keepers and professionals (including in-house professionals) to perform any or all of the duties delegated to it hereunder.

(d) The Administrative Committee will be responsible for the administration of this Plan and will have all powers necessary to administer this Plan, including discretionary authority to determine eligibility for benefits and to decide claims under the terms of this Plan, except to the extent that any such powers are vested in any other person administering this Plan by the Compensation Committee. The Administrative Committee may from time to time establish rules for the administration of this Plan, and it will have the exclusive right to interpret this Plan and to decide any matters arising in connection with the administration and operation of this Plan. All rules, interpretations and decisions of the Administrative Committee will be conclusive and binding on the Company, the Employers, Participants and Beneficiaries.

(e) The Administrative Committee is expressly reposed with the discretionary authority and powers in regard to all facets of any claims for benefits made under the Plan. In turn, the Compensation Committee is expressly reposed with the discretionary authority and powers in regard to all facets of the review of a denied claim for benefits. Such authority and powers include, but are not limited to, the following:

(i) Construing and interpreting the terms of the Plan and of any documents pertaining to the Plan;

(ii) Construing and interpreting all laws and regulations as applicable to any claims for benefits made under the Plan;

(iii) Making any factual determinations, and applying such determinations to the terms of the Plan and issues arising under the Plan; and

(iv) Otherwise deciding all questions regarding an individual’s benefit entitlements under the Plan, and the manner and timing of any payments to be made to or with respect to any individual under the Plan.

(f) No member of the Board, Compensation Committee or Administrative Committee will be liable for any act or action hereunder, whether of omission or commission, by any other member or Employee or by any agent to whom duties in connection with the administration of this Plan have been delegated or for anything done or omitted to be done in connection with this Plan.

(g) The Company will, to the fullest extent permitted by law, indemnify each director, officer or Employee of the Company or any Affiliated Company (including the heirs, executors, administrators and other personal representatives of such person), each member of the Compensation Committee and Administrative Committee against expenses (including attorneys’ fees), judgments, fines, amounts paid in settlement, actually and reasonably incurred by such person in connection with any threatened, pending or actual suit, action or proceeding (whether civil, criminal, administrative or investigative in nature or otherwise) in which such person may be involved by reason of the fact that he or she is or was serving this Plan in any capacity at the request of the Company or any other Affiliated Company, the Compensation Committee or the Administrative Committee.

(h) Any expense incurred by the Company, an Employer, the Compensation Committee or the Administrative Committee relative to the administration of this Plan will be paid by the Company or other Affiliated Company and/or may be deducted from the DSU Accounts of the Participants as determined by the Compensation Committee.

(i) Any member of the Compensation Committee or the Administrative Committee may also be a Participant, but no committee member will have power to take part in any discretionary decision or action affecting his own interest as a Participant under this Plan unless such decision or action is upon a matter which affects all other Participants similarly situated and confers no special right, benefit or privilege not simultaneously conferred upon all other such Participants.

Section 8.2 Claim Procedure.

(a) If a Participant or Beneficiary makes a written request alleging a right to receive payments under this Plan or alleging a right to receive an adjustment in benefits being paid under this Plan, such actions will be treated as a claim for benefits. All claims for benefits under this Plan will be sent to the Administrative Committee.

(b) If the Administrative Committee determines that any individual who has claimed a right to receive benefits, or different benefits, under this Plan is not entitled to receive all or any part of the benefits claimed, the Administrative Committee will inform the claimant in writing of such determination and the reasons thereof in terms calculated to be understood by the claimant. The notice will be sent within 90 days of the claim unless the Administrative Committee determines that additional time, not exceeding 90 days, is needed and so notifies the Participant. The notice will make specific reference to the pertinent Plan provisions on which the denial is based, and will describe any additional material or information that is necessary. Such notice will, in addition, inform the claimant of the procedure that the claimant should follow to take advantage of the review procedures set forth below in the event the claimant desires to contest the denial of the claim, and the right of the claimant to bring a civil action under ERISA if the claim is denied upon further review. Upon request, and free of charge, the claimant will be provided with reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits.

(c) The claimant may within 90 days thereafter submit in writing to the Administrative Committee a notice that the claimant contests the denial of his or her claim and desires a further review of the denied claim. The request for review will be directed to the Compensation Committee, which will review the claim and authorize the claimant to review pertinent documents and submit issues and comments relating to the claim. The Compensation Committee will render a final decision with specific reasons thereof in writing and will transmit it to the claimant within 60 days of the written request for review, unless the Compensation Committee determines that additional time, not exceeding 60 days, is needed, and so notifies the Participant. If the claim is to be denied in whole or in part upon review, the written notice to the claimant will include the following:

(i) The specific reason or reasons for the denial;

(ii) Reference to the specific Plan provisions upon which the denial is based;

(iii) A statement that the claimant is entitled to receive, upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim appeal; and

(iv) A statement of the claimant’s right to file a civil lawsuit under ERISA.

(d) Notwithstanding subsection (c) above, if the Compensation Committee holds regularly scheduled meetings at least quarterly, the Compensation Committee will make a claim review determination no later than the date of the meeting of the committee that immediately follows the Plan’s receipt of a request for review, unless the request for review is filed within 30 days preceding the date of such meeting. In such case, a claim review determination may be made by no later than the date of the second meeting following the Plan’s receipt of the request for review. If special circumstances (such as the need to hold hearing) require a further extension of time for processing, a determination will be rendered not later than the third meeting of the committee following the Plan’s receipt of the request for review. If such an extension of time for review is required because of special circumstances, the claimant will be provided with written notice of the extension, describing the special circumstances and the date as of which the claim review determination will be made, prior to the commencement of the extension. The claimant will be notified of the claim review determination as soon as possible, but not later than five days after the determination is made.

Article 9

AMENDMENT AND TERMINATION OF PLAN

Section 9.1 Amendment. The Board or the Compensation Committee may at any time amend this Plan in whole or in part, provided, however, that no amendment will be effective to decrease the balance in, or otherwise alter the election made with respect to, any Deferral Account as accrued at the time of such amendment, nor will any amendment otherwise have a retroactive effect. In addition, any amendment that has the effect of changing the time or form of payment under the Plan with respect to any Participant will be subject to the provisions of Sections 5.7 and 5.8 (regarding the prohibition against the acceleration of payments and the restrictions on changes in the time or form of payments).

Section 9.2 Company’s Right to Terminate. The Board or the Compensation Committee may at any time terminate the Plan with respect to future Deferral Election Agreements. However, the Plan cannot otherwise be terminated, and DSU Accounts thereupon distributed, except as provided below.

(a) The Plan may be terminated and distributions thereupon made upon a Qualified Change in Control Event, as prescribed in Section 6.1.

(b) The Plan may be terminated and distributions thereupon made within 12 months of the Company’s corporate dissolution taxed under Code Section 331, or with the approval of a bankruptcy court pursuant to 11 USC § 503(b)(1)(A), provided that the amounts deferred under the Plan are distributed for inclusion in the gross income of the Participant in the latest of:

(v) The calendar year in which the Plan termination occurs;

(vi) The calendar year in which the deferred amount is no longer subject to a substantial risk of forfeiture; or

(vii) The first calendar year in which the termination distribution is administratively practicable.

(i) Each other “account balance” deferred compensation plan maintained by the Company and any other Affiliated Company that also covers any Participant in this Plan is concurrently terminated;

(ii) No payments (other than payments that would be payable under the terms of the terminated programs if the terminations had not occurred) are made within 12 months of the termination of the programs;

(iii) All payments are made within 24 months of the termination of the applicable programs; and

(iv) During the three-year period following the termination of the Plan, neither the Company, nor any other Affiliated Company, adopts an account balance deferred compensation program covering any individual who was a Participant in the Plan upon its termination.

Article 10

MISCELLANEOUS

Section 10.1 Unfunded Plan. This Plan is intended to be an unfunded plan. All payments pursuant to the Plan will be made from the general funds of the Employers and no special or separate fund will be established or other segregation of assets made to assure payment. No Participant or other person will have under any circumstances any interest in any particular property or assets of the Employers as a result of participating in the Plan. Notwithstanding the foregoing, the Employers may (but will not be obligated to) create one or more grantor trusts, the assets of which are subject to the claims of the Employers’ creditors, to assist it in accumulating funds to pay its obligations under the Plan.

Section 10.2 Nonassignability.

(a) Except as specifically set forth in the Plan with respect to the designation of Beneficiaries, neither a Participant nor any other person will have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable will, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

(b) Notwithstanding the foregoing, the balance of a Participant’s Deferral Accounts, or any portion thereof, will be distributed in accordance with the terms of any domestic relations order which the Administrative Committee determines to be a qualified domestic relations order (“QDRO”) described in Section 414(p) of the Code.

Section 10.3 Validity and Severability. The invalidity or unenforceability of any provision of this Plan will not affect the validity or enforceability of any other provision of this Plan, which will remain in full force and effect, and any prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.

Section 10.4 Governing Law. The validity, interpretation, construction and performance of this Plan will in all respects be governed by the laws of the Commonwealth of Virginia, without reference to principles of conflict of law, except to the extent preempted by federal law.

Section 10.5 Employment Status. This Plan does not constitute a contract of employment or impose on the Participant or any Employer any obligation for the Participant to remain an Employee of the Employer or change the status of the Participant’s employment or the policies of the Employer and its affiliates regarding termination of employment. The establishment or existence of the Plan also does not constitute a contract of employment and will not confer upon any individual the right to be continued as a Director.

Section 10.6 No Stockholder Rights Conferred. Nothing contained in the Plan will confer upon any Participant or Beneficiary any rights of a stockholder of the Company, unless and until Shares are in fact issued or transferred to such Participant or Beneficiary in accordance with Article 5.

Section 10.7 Underlying Incentive Plans and Programs. Nothing in this Plan will prevent the Company or other Employer from modifying, amending or terminating the compensation or the incentive plans and programs pursuant to which cash awards are earned and which are deferred under this Plan.

Section 10.8 Funding and Financial Health Restrictions. In no event will any amounts attributable to any DSU Account be held in an offshore trust within the meaning of Code Section 409A(b)(1). In addition, the assets of any Affiliated Company will not be restricted to the payment of benefits under the Plan upon a change in the Affiliated Company’s financial health within the meaning of Code Section 409A(b)(2).

Article 11

TYPE 1 AND TYPE 2 DSU SHARES

Section 11.1 Overview. For each Board Service Period, the Company may grant to each Director one or both of two categories of Deferred Stock Units (“DSUs”). For purposes of this Article 11, these categories of DSUs are referred to as “Type 1 DSUs” and “Type 2 DSUs,” respectively. Except as may be required under the terms of a written agreement, the Company is not obligated to award Type 1 or Type 2 DSUs for any Board Service Period, and the number of DSUs awarded may increase or decrease for subsequent Board Service Periods. The Type 1 and Type 2 DSUs will be held under the Plan, and will be subject to the terms and provisions of the Plan except as otherwise specifically provided in this Article 11.

Section 11.2 Non-Elective Deferrals. Each Type 1 and Type 2 DSU grant that is awarded to a Director will be automatically deferred under the Plan on a non-elective basis, and will be credited to the Director’s DSU Account.

Section 11.3 Vesting.

(a) The Type 1 and Type 2 DSUs that are granted to a Director for any Board Service Period (if any) will become fully vested on May 1 following the commencement of the Board Service Period, provided that the Director’s service as a member of the Board does not end prior to that date.

(b) If a Director’s service as a member of the Board ends prior to May 1 following the commencement of a Board Service Period, then the Type 1 and Type 2 DSU Shares granted to the Director for such Board Service Period (if any) will vest on the cessation of service date on a pro-rata basis. The pro- rata vesting will be based on a fraction: the numerator of which is the number of full or partial months of the Director’s service on the Board prior to the cessation of such service (measured from the date of commencement of the Board Service Period), and the denominator of which is twelve.

(c) Notwithstanding subsection (b) above, a Director whose service as a member of the Board ends due to death or having become Disabled, or upon a Qualified Change in Control Event, will become fully vested upon such cessation of service.

Section 11.4 Timing and Form of Distributions. Distributions of amounts from a Director’s DSU Account attributable to grants of Type 1 and Type 2 DSUs will be made as prescribed in this Section 11.4, unless the provisions of Article 5 provide for an earlier distribution date (such as in the event of the death or Disability of the Director).

(a) The value of a Director’s DSU Accounts pertaining to grants of Type 1 DSUs will be distributed upon a Director’s Retirement.

(b) The value of a Director’s DSU Accounts pertaining to a grant of Type 2 DSUs for a Board Service Period will be distributed as of the three-year anniversary of the commencement of such Board Service Period.

(c) Notwithstanding subject (b) above, a Director may elect to extend the distribution date of the Type 2 DSUs as prescribed in Section 5.8 of the Plan.

All such distributions will be made in the form of a lump sum payment paid out in common Company shares.

APPENDIX

The following provisions were applicable from January 1, 2021 to June 6, 2023 and shall continue to apply to amounts deferred in DSU Alternative Account during such period.

Section 2. “Definitions” contained the following defined terms:

Deferral Account. “Deferral Account” means each DSU Account or DSU Alternative Account established and maintained on behalf of each Participant pursuant to Section 4.1 or 4.2.

DSU Alternative Account. “DSU Alternative Account” means an account in which Deferred Amounts are invested at a Participant’s election in Hypothetical Investment Benchmarks in lieu of investments in Deferred Stock Units.

Hypothetical Investment Benchmarks. “Hypothetical Investment Benchmarks” means investment benchmarks that are used to measure the earnings credited to a Participant’s DSU Alternative Account.

Section 3.7 Forms of Investment read as follows:

(a) The Deferral Election Agreement for a Director will designate the form in which the Deferred Amount will be invested. The available forms of investments are:

(i) Deferred Stock Units in Company Stock;

(ii) A selection of Hypothetical Investment Benchmarks established by the Administrative Committee; or

(iii) A combination of Deferred Stock Units and Hypothetical Investment Benchmarks.

(b) Deferred Amounts elected by Eligible Executives will be invested solely in Deferred Stock Units.

Section 3.11 Default Rules contained an additional clause (a) as follows:

(a) If the Deferral Election Agreement for a Director did not specify the form of investment, the default form of investment will be Deferred Stock Units.

A Section 4.2 entitle DSU Alternative Accounts provided as follows:

DSU Alternative Accounts. Separate DSU Alternative Accounts will be maintained for each Director who elects to have all or a portion of the Director’s Retainer invested in Hypothetical Investment Benchmarks. More than one DSU Alternative Account may be maintained for a Director as necessary to reflect various selected Hypothetical Investment Benchmarks, or separate Deferral Election Agreements specifying different Deferral Periods and/or forms of payment. Notwithstanding anything to the contrary herein, earnings and losses based on a Director’s Hypothetical Investment Benchmarks elections will begin to accrue as of the date the Director’s Deferred Amounts are credited to the Director’s DSU Alternative Accounts.

Section 5.10 Payment Medium contained an additional clause (a) as follows:

All payments to a Participant (or to a Participant’s Beneficiary) with respect to the Participant’s DSU Alternative Accounts will be paid in cash.

Signature Page Follow

Pursuant to the authority granted by the Compensation Committee of the Board of Directors of Advance Auto Parts, Inc., the undersigned hereby executes this Amendment and Restatement of the Advance Auto Parts, Inc.

.Deferred Stock Unit Plan for Non-Employee Directors and Selected Executives on behalf of Advance Auto Parts, Inc.

COMPENSATION COMMITTEE OF

THE BOARD OF DIRECTORS OF

ADVANCE AUTO PARTS, INC.

By:

/s/ Kristen Soler

Kristen Soler

Executive Vice President, Chief Human Resources

Officer

Dated:

August 7, 2024

Exhibit 10.4

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made as of the [__] day of [____], 20[__] by and between Advance Auto Parts, Inc., a Delaware corporation, (the “Company”) and [Director or Officer Name] (the “Indemnitee”).

RECITALS

A.The Company’s board of directors (the “Board”) has determined that the increasing difficulty in attracting and retaining qualified persons as directors and officers is detrimental to the best interests of the Company’s stsockholders and that the Company should act to assure such persons that there will be adequate certainty of protection through insurance and indemnification against risks of claims and actions against them arising out of their service to and activities on behalf of the Company.

B.Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”) empowers the Company by agreement to indemnify and advance expenses to its officers, directors, employees and agents and to indemnify and advance expenses to persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification and advancement of expenses provided by Section 145 is not exclusive.

C.The Company has adopted provisions in its Bylaws providing for mandatory indemnification of its officers and directors to the fullest extent permitted by applicable law, subject to certain limitations specified in the Bylaws, and the Company wishes to clarify and enhance the rights and obligations of the Company and the Indemnitee with respect to indemnification.

D.To induce and encourage highly experienced and capable persons such as the Indemnitee to serve and continue to serve as directors and officers of the Company and in other capacities with respect to the Company and its affiliates, and to otherwise promote the desirable end that such persons will resist what they consider unjustified lawsuits and claims made against them in connection with the good faith performance of their duties to the Company, with the knowledge that certain costs, judgments, liabilities and expenses incurred by them in their defense of such litigation are to be borne by the Company, the Board has determined that this Agreement is reasonable and prudent to promote and ensure the best interests of the Company and its stockholders.

AGREEMENT

NOW, THEREFORE, in consideration of the Indemnitee’s service as a director or officer of the Company, or service at the Company’s request as a director, officer, employee or agent of other corporations or enterprises, after the date hereof, and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties to this Agreement, intending to be legally bound, agree as follows:

1.Service by Indemnitee. The Indemnitee will serve and/or continue to serve as a director or officer of the Company faithfully and to the best of the Indemnitee’s ability so long as the Indemnitee is duly elected or appointed and until such time as the Indemnitee is removed, terminated or resigns.

2.Indemnification.

(a)General. The Company shall indemnify the Indemnitee (i) as provided in this Agreement and (ii) subject to the provisions of this Agreement, to the fullest extent and in a manner permitted by applicable law.

(b)Proceedings Other Than Proceedings by or in the Right of the Company. Except as provided in Section 4, the Indemnitee shall be entitled to the rights of indemnification provided in this Section 2(b) if, by reason of the Indemnitee’s Corporate Status, the Indemnitee is or was, or is or was threatened to be made, a party to, or is or was otherwise involved in, a Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. The Indemnitee shall be indemnified pursuant to and in accordance with this Section 2(b) against all Losses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection with such a Proceeding or any claim, issue or matter therein, but only if the Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

(c)Proceedings by or in the Right of the Company. Except as provided in Section 4, the Indemnitee shall be entitled to the rights of indemnification provided in this Section 2(c) if, by reason of the Indemnitee’s Corporate Status, the Indemnitee is or was, or is or was threatened to be made, a party to, or is or was otherwise involved in, a Proceeding brought by or in the right of the Company to procure a judgment in its favor. The Indemnitee shall be indemnified pursuant to and in accordance with this Section 2(c) against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection with such a Proceeding or any claim, issue or matter therein, but only if the Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that no indemnification for such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged liable to the Company, except to the extent (and only to the extent) that the Court of Chancery of the State of Delaware (the “Delaware Chancery Court”) or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such expenses that the Delaware Chancery Court or such other court shall deem proper. Notwithstanding anything to the contrary in this Agreement, if the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made, a party to any Proceeding by or in the right of the Company to procure a judgment in its favor, then the Company shall not indemnify the Indemnitee for any judgment, penalty, fines or amounts paid in settlement to the Company in connection with such Proceeding.

(d)Indemnification for Expenses if Indemnitee is Wholly or Partly Successful. Notwithstanding anything to the contrary in this Agreement, to the extent that the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made, a party to any Proceeding and is successful, on the merits or otherwise, in defending such Proceeding (including dismissal without prejudice), the Indemnitee shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection with the defense of such Proceeding. If the Indemnitee is not wholly successful in defending any such Proceeding but is successful, on the merits or otherwise, in defending one or more but less than all of the claims, issues or matters in such Proceeding (including dismissal without prejudice of certain claims), the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in defending each such successfully resolved claim, issue or matter. To the extent the Indemnitee has been successful, on the merits or otherwise, in defending any Proceeding, or in defending any claim, issue or matter therein, the Indemnitee shall be entitled to indemnification as provided in this Section 2(d) regardless of whether the Indemnitee met the standards of conduct set forth in Sections 2(b) and 2(c).

(e)Indemnification for Expenses as a Witness. Notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted by applicable law, to the extent that the Indemnitee, by reason of the Indemnitee’s Corporate Status, is or was, or is or was threatened to be made,

a witness in any Proceeding to which the Indemnitee is not a party, the Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee or on the Indemnitee’s behalf in connection therewith. To the extent permitted by applicable law, the Indemnitee shall be entitled to indemnification for Expenses incurred in connection with being, or being threatened to be made, a witness, as provided in this Section 2(e), regardless of whether the Indemnitee met the standards of conduct set forth in Sections 2(b) and 2(c).

(f)Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some portion of the Losses actually and reasonably incurred by the Indemnitee in a Proceeding, but not for the total amount thereof, the Company shall indemnify the Indemnitee for the portion of such Losses to which the Indemnitee is entitled.

3.Advancement of Expenses. Notwithstanding anything to the contrary in this Agreement, but subject to Section 4, if, by reason of the Indemnitee’s Corporate Status, the Indemnitee is or was, or is or was threatened to be made, a party to, is or was otherwise involved in, or is or was, or is or was threatened to be made, a witness in any Proceeding (including a Proceeding brought by or in the right of the Company to procure a judgment in its favor), then the Company shall advance all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection with any such Proceeding in advance of the final disposition of such Proceeding within thirty (30) calendar days after the receipt by the Company of a written request for such advance or advances from time to time. Such written request shall include or be accompanied by a statement or statements reasonably evidencing the Expenses incurred by or on behalf of the Indemnitee and for which advancement is requested, and shall include or be preceded or accompanied by an undertaking by or on behalf of the Indemnitee to repay any Expenses advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that the Indemnitee is not entitled to be indemnified against such Expenses under this Agreement or otherwise. Such undertaking shall be sufficient for purposes of this Section 3 if it is in substantially the form attached hereto as Exhibit A. Any advances and undertakings to repay pursuant to this Section 3 shall be unsecured and interest free. The Indemnitee shall be entitled to advancement of Expenses as provided in this Section 3 regardless of any determination by or on behalf of the Company that the Indemnitee has not met the standards of conduct set forth in Sections 2(b) and 2(c).

4.Proceedings Against the Company; Certain Securities Laws Claims.

(a)Notwithstanding anything to the contrary in Section 2 or Section 3, except as provided in Section 7(d), with respect to a Proceeding initiated against the Company by the Indemnitee (whether initiated by the Indemnitee in or by reason of such person’s capacity as an officer or director of the Company or in or by reason of any other capacity, including as an employee or agent of the Company or a director, officer, employee or agent of Another Enterprise), the Company shall not be required to indemnify or advance Expenses to the Indemnitee in connection with prosecuting such Proceeding (or any part thereof) or in defending any counterclaim, cross-claim, affirmative defense or like claim of the Company in such Proceeding (or any part thereof) unless such Proceeding was authorized by the Board. For purposes of this Section 4, a compulsory counterclaim by the Indemnitee against the Company in connection with a Proceeding initiated against the Indemnitee by the Company shall not be considered a Proceeding (or part thereof) initiated against the Company by the Indemnitee, and the Indemnitee shall have all rights of indemnification and advancement with respect to any such compulsory counterclaim in accordance with and subject to the terms of this Agreement.

(b)Notwithstanding anything to the contrary in Section 2 (other than Section 2(d)) or Section 3, except as provided in Section 2(d) with respect to indemnification of Expenses in connection with whole or partial success on the merits or otherwise in defending any Proceeding, the Company shall not be required to indemnify the Indemnitee in connection with any claim made against the Indemnitee for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by the Indemnitee

of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or similar provisions of state statutory law or common law or (ii) any reimbursement of the Company by the Indemnitee for any bonus or other incentive-based or equity-based compensation or for any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by the Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act).

5.Procedure for Determination of Entitlement to Indemnification; Independent Counsel.

(a)To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company (following the final disposition of the applicable Proceeding) a written request for indemnification, including therein or therewith, except to the extent previously provided to the Company in connection with a request or requests for advancement pursuant to Section 3, a statement or statements reasonably evidencing all Losses incurred or paid by or on behalf of the Indemnitee and for which indemnification is requested. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.

(b)Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 5(a), if required by applicable law and to the extent not otherwise provided in Section 2(d) of this Agreement, a determination with respect to the Indemnitee’s entitlement to indemnification shall be made in the specific case as follows: (i) if a Change in Control shall have occurred and if so requested in writing by the Indemnitee, by Independent Counsel in a written opinion to the Board; or (ii) if a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent Counsel as provided in clause (i) of this Section 5(b)), (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board, (B) by a committee of Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum of the Board, (C) if there are no such Disinterested Directors, or if such Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board or (D) by the Company’s stockholders in accordance with applicable law. Notice in writing of any determination as to the Indemnitee’s entitlement to indemnification shall be delivered to the Indemnitee promptly after such determination is made, and if such determination of entitlement to indemnification has been made by Independent Counsel in a written opinion to the Board, then such notice shall be accompanied by a copy of such written opinion. If it is determined that the Indemnitee is entitled to indemnification, then payment to the Indemnitee of all amounts to which the Indemnitee is determined to be entitled shall be made within thirty (30) calendar days after such determination. If it is determined that the Indemnitee is not entitled to indemnification, then the written notice to the Indemnitee (or, if such determination has been made by Independent Counsel in a written opinion, the copy of such written opinion delivered to the Indemnitee) shall disclose the basis of such determination. The Indemnitee shall cooperate with the person, persons or entity making the determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification.

(c)If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b), the Independent Counsel shall be selected as provided in this Section 5(c). If a Change in Control shall not have occurred (or if a Change in Control shall have occurred but the Indemnitee shall not have requested that indemnification be determined by Independent

Counsel as provided in clause (i) of Section 5(b)), then the Independent Counsel shall be selected by the Board, and the Company shall give written notice to the Indemnitee advising the Indemnitee of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred and the Indemnitee shall have requested that indemnification be determined by Independent Counsel, then the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and the Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, the Indemnitee or the Company, as the case may be, may, within ten (10) calendar days after such written notice of selection has been given, deliver to the Company or to the Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the law firm or person so selected does not meet the requirements of “Independent Counsel” as defined in Section 23, and the objection shall set forth the basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and substantiated, the law firm or person so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Chancery Court or another court of competent jurisdiction in the State of Delaware has determined that such objection is without merit. If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b) and, following the expiration of twenty (20) calendar days after submission by the Indemnitee of a written request for indemnification pursuant to Section 5(a), Independent Counsel shall not have been selected, or an objection thereto has been made and not withdrawn, then either the Company or the Indemnitee may petition the Delaware Chancery Court or other court of competent jurisdiction in the State of Delaware for resolution of any objection that shall have been made by the Company or the Indemnitee to the other’s selection of Independent Counsel and/or for appointment as Independent Counsel of a law firm or person selected by such court (or selected by such person as the court shall designate), and the law firm or person with respect to whom all objections are so resolved or the law firm or person so appointed shall act as Independent Counsel under Section 5(b). Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 7(a), Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b), then the Company agrees to pay the reasonable fees and expenses of such Independent Counsel and to fully indemnify and hold harmless such Independent Counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

6.Burden of Proof, Defenses and Presumptions.

(a)In any judicial proceeding or arbitration pursuant to Section 7 brought by the Indemnitee to enforce rights to indemnification or an advancement of expenses hereunder, or in any action, suit or proceeding brought by the Company to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), the burden shall be on the Company to prove that the Indemnitee is not entitled to be indemnified, or to such an advancement of expenses, as the case may be.

(b)It shall be a defense in any judicial proceeding or arbitration pursuant to Section 7 to enforce rights to indemnification under Section 2(b) or Section 2(c) (but not in any judicial proceeding or arbitration pursuant to Section 7 to enforce a right to an advancement of expenses under Section 3) that the Indemnitee has not met the standards of conduct set forth in Section 2(b) or Section 2(c), as the case may be, but the burden of proving such defense shall be on the Company. With respect to any judicial proceeding or arbitration pursuant to Section 7 brought by the Indemnitee to enforce a right to indemnification hereunder, or any action, suit or proceeding brought by the Company to recover an advancement of expenses (whether pursuant to the terms of an undertaking or otherwise), neither (i) the failure of the Company (including by its directors or Independent Counsel) to have made a determination

prior to the commencement of such action, suit, proceeding or arbitration that indemnification is proper in the circumstances because the Indemnitee has met the applicable standards of conduct, nor (ii) an actual determination by the Company (including by its directors or Independent Counsel) that the Indemnitee has not met such applicable standards of conduct, shall create a presumption that the Indemnitee has not met the applicable standards of conduct or, in the case of a judicial proceeding or arbitration pursuant to Section 7 brought by the Indemnitee seeking to enforce a right to indemnification hereunder, be a defense to such proceeding or arbitration.

(c)The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendre or its equivalent, shall not, of itself, adversely affect the right of the Indemnitee to indemnification hereunder or create a presumption (i) that the Indemnitee did not act in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or (ii) with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that the Indemnitee’s conduct was unlawful.

(d)For purposes of any determination of good faith, the Indemnitee shall be deemed to have acted in good faith if the Indemnitee’s action is based on (i) the records or books of account of the Company or Another Enterprise (if the Indemnitee is or was serving as a director, officer, employee, agent, or fiduciary of such Other Enterprise at the request of the Company), including financial statements, (ii) information supplied to the Indemnitee by the officers of the Company or Another Enterprise in the course of their duties, (iii) the advice of legal counsel for the Company or Another Enterprise or (iv) information or records given or reports made to the Company or Another Enterprise by an independent certified public accountant, appraiser or other expert selected by the Company or Another Enterprise. The provisions of this Section 6(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standards of conduct set forth in this Agreement.

(e)The knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Company or Another Enterprise shall not be imputed to the Indemnitee for purposes of determining the Indemnitee’s right to indemnification under this Agreement.

7.Remedies of Indemnitee.

(a)In the event that (i) a determination is made pursuant to Section 5 that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 3, (iii) except when the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b), no determination of entitlement to indemnification shall have been made pursuant to Section 5(b) within sixty (60) calendar days after receipt by the Company of the Indemnitee’s written request for indemnification, (iv) under circumstances in which the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5(b), no determination of entitlement to indemnification shall have been made pursuant to Section 5(b) within eighty (80) calendar days after receipt by the Company of the Indemnitee’s written request for indemnification (unless an objection to the selection of such Independent Counsel has been made and substantiated and not withdrawn, in which case the applicable time period shall be seventy (70) calendar days after the Delaware Chancery Court or another court of competent jurisdiction in the State of Delaware (or such person as is appointed by such court to make such determination) has determined or appointed the person to act as Independent Counsel pursuant to Section 5(b)), (v) payment of indemnification is not made pursuant to Section 2(d) or Section 2(e) within twenty (20) calendar days after receipt by the Company of a written request therefor or (vi) payment of indemnification pursuant to Section 2(b) or Section 2(c) is not made within twenty (20) calendar days after a determination has been made pursuant to Section 5(b) that the Indemnitee is entitled to indemnification, then the Indemnitee shall be entitled to seek an adjudication by the Delaware Chancery

Court of the Indemnitee’s entitlement to such indemnification or advancement of Expenses. Alternatively, if the foregoing conditions have been satisfied, the Indemnitee, at the Indemnitee’s option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. The Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within one hundred eighty (180) calendar days following the date on which the Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a); provided, however, that the foregoing clause shall not apply in respect of a proceeding brought by the Indemnitee to enforce the Indemnitee’s rights to indemnification under Section 2(d).

(b)In the event that a determination shall have been made pursuant to Section 5(b) that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and the Indemnitee shall not be prejudiced by reason of that adverse determination.

(c)If a determination shall have been made pursuant to Section 5(b) that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 7, absent (i) a misstatement or misrepresentation by the Indemnitee (or anyone acting on the Indemnitee’s behalf) of a material fact, or an omission of a material fact necessary to make the Indemnitee’s statement (or statements of persons acting on behalf of the Indemnitee) not materially misleading, in connection with the request for indemnification or in connection with the provision of information or documentation pursuant to the last sentence of Section 5(b) or (ii) a prohibition of such indemnification under applicable law.

(d)In the event that the Indemnitee, pursuant to this Section 7, seeks a judicial adjudication or an award in arbitration to enforce the Indemnitee’s rights under, or to recover damages for breach of, this Agreement, then the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in such judicial adjudication or arbitration, but only if (and only to the extent) the Indemnitee prevails therein. If it shall be determined in said judicial adjudication or arbitration that the Indemnitee is entitled to receive part but not all of the indemnification or advancement of Expenses sought, the expenses incurred by the Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

8.Non-Exclusivity. Except to the extent expressly provided herein, the rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Company’s Certificate of Incorporation, the Company’s Bylaws, any agreement, a vote of stockholders, or a resolution of directors, or otherwise, both as to action in or by reason of the Indemnitee’s Corporate Status and as to action in or by reason of any other capacity of the Indemnitee while serving as a director or officer of the Company. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. In the event of any change after the date of this Agreement in any applicable law, statute or rule that expands the power of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that the Indemnitee shall enjoy by this Agreement the greatest benefits afforded by such change. Notwithstanding anything to the contrary in this Section 8, to the extent the time periods specified in Section 3 and Section 7(a) with respect to the time at which the Indemnitee shall be entitled to seek an adjudication or an award in arbitration as to the Indemnitee’s entitlement to indemnification or advancement differ from similar time periods specified in the Company’s Certificate of Incorporation or Bylaws, the time periods set forth in Section 3 and Section 7(a) shall control and be binding on the Indemnitee and the Company and shall be deemed a waiver of any contrary right specified in the Company’s Certificate of Incorporation or Bylaws.

The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

9.Insurance, Subrogation and Other Sources of Payment.

(a)To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees or agents of the Company or Another Enterprise, the Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a notice of a Proceeding pursuant to Section 15, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees or agents of the Company or Another Enterprise, the provision of directors’ and officers’ liability insurance as provided in this Section 9(a) shall be in addition to the Company’s obligations under Section 2 and Section 3 and shall not be deemed to be in satisfaction of those obligations.

(b)In the event of any payment to or on behalf of the Indemnitee under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(c)Except to the extent required by applicable law, the Company shall not be liable under this Agreement to make any payment to the Indemnitee with respect to amounts otherwise indemnifiable (or for which advancement is otherwise required) if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise. Nothing in this Agreement is intended to affect any right of contribution of or against the Company in the event the Company and any other person or persons have co-equal obligations to indemnify or advance expenses to the Indemnitee.

(d)The Company’s obligation to indemnify or advance Expenses under this Agreement to the Indemnitee, in connection with or by reason of the Indemnitee’s service at the request of the Company as a director, officer, employee, agent or fiduciary of Another Enterprise, shall be reduced by any amount that the Indemnitee has actually received as indemnification or advancement of Expenses from such Other Enterprise with respect to the Proceeding for which indemnification or advancement of Expenses is sought.

10.Contribution. To the fullest extent permitted by applicable law, if, in connection with any Proceeding (or part thereof) in respect of which the Indemnitee would otherwise be entitled to indemnification hereunder, the indemnification provided for in this Agreement is unavailable to the Indemnitee for any reason whatsoever, then the Company, in lieu of indemnifying the Indemnitee, shall contribute to the amount that is incurred by the Indemnitee in connection with such Proceeding (or such part thereof) and that would otherwise have been subject to indemnification hereunder, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding to reflect (a) the relative benefits received by the Company, on the one hand, and the Indemnitee, on the other hand, as a result of the event(s) and/or transaction(s) giving cause to such Proceeding (or such part thereof); and/or (b) the relative fault of the Company (and its directors, officers, employees and agents), on the one hand, and the Indemnitee, on the other hand, in connection with such event(s) and/or transaction(s).

11.Settlements. Notwithstanding anything to the contrary in this Agreement or the Company’s Certificate of Incorporation or Bylaws, the Company shall have no obligation to indemnify the Indemnitee for any amounts paid by or on behalf of the Indemnitee in settlement of any Proceeding, unless the Company has consented in writing to such settlement, which consent shall not be unreasonably withheld. The Company shall not settle any claim in any manner that would impose any fine or obligation on the Indemnitee without the Indemnitee’s prior written consent, which consent shall not be unreasonably withheld.

12.Survival of Rights, Binding Effect and Successors and Assigns.

(a)The indemnification and advancement of Expenses and other rights provided by, or granted pursuant to, this Agreement shall continue during the period that the Indemnitee is a director or officer of the Company and shall continue through and after the Termination Date so long as the Indemnitee shall, by reason of the Indemnitee’s Corporate Status, be subject to any possible Proceeding (including any appeal thereto) with respect to any action taken or omitted (or that is alleged to have been taken or omitted) by the Indemnitee, or any facts or events that occurred (or that are alleged to have occurred), on or before the Termination Date, and shall further continue for such period of time following the conclusion of any such Proceeding as may be reasonably necessary for the Indemnitee to enforce rights and remedies pursuant to this Agreement as provided in Section 7.

(b)This Agreement shall be binding upon the Indemnitee and upon the Company and its successors and assigns, and shall inure to the benefit of the Indemnitee and the Indemnitee’s heirs, personal representatives, executors, administrators and assigns and to the benefit of the Company and its successors and assigns.

(c)The Company further agrees that in the event the Company or any of its successors or assigns (i) consolidates with or merges into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any corporation or entity, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Company as a result of such transaction assume the obligations of the Company set forth in this Agreement, including any requirements with respect to directors’ and officers’ liability insurance set forth in Section 9.

13.Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

14.Acknowledgement. The Company expressly acknowledges, confirms and agrees that it has entered into this Agreement and has assumed the obligations imposed on the Company hereby to induce the Indemnitee to serve or continue to serve as a director or officer of the Company, and the

Company acknowledges that the Indemnitee is relying upon this Agreement in serving and continuing to serve in such capacity. In addition, both the Company and the Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, agents or fiduciaries under this Agreement or otherwise. The Indemnitee understands and acknowledges that the Company may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s rights under public policy to indemnify the Indemnitee.

15.Notice by Indemnitee. The Indemnitee agrees to notify the Company promptly and in writing upon being served with any summons, citation, subpoena, complaint, petition, indictment, information or other document relating to the actual or threatened commencement of any Proceeding or matter that may be subject to indemnification or advancement of Expenses covered by this Agreement. The failure of the Indemnitee to so notify the Company shall not relieve the Company of any obligation that it may have to the Indemnitee under this Agreement or otherwise, except to the extent the Company is materially prejudiced by such failure.

16.Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) if delivered by hand to the party to whom said notice or other communication shall have been directed, on the date so delivered or (b) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed. All such notices, requests, demands and other communications shall be delivered to the Indemnitee or to the Company, as the case may be, at the following addresses:

If to the Indemnitee, to the address set forth on the signature page this Agreement

If to the Company, to:

Advance Auto Parts, Inc.

4200 Six Forks Road

Raleigh, NC 27609

Attn: Tammy M. Finley

Executive Vice President, General Counsel & Corporate Secretary

or to such other address as may have been furnished to the Indemnitee by the Company or to the Company by the Indemnitee, as the case may be, by like notice.

17.Counterparts; Execution and Exchange by Electronic Means. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. The execution and delivery of this Agreement by facsimile, electronic mail (including email, .pdf or other digital copies of signatures) or another form of electronic signature or transmission shall be sufficient to evidence the signatories’ intent to sign this Agreement and sufficient to bind the parties to the terms and provisions of this Agreement.

18.Interpretation.

(a)The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

(b)(i) The terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar words refer to this entire Agreement, including Exhibits hereto, (ii) any reference herein to a “Section” is to a Section of this Agreement unless otherwise specified, (iii) the terms “include,” “includes,”

“including” and words of similar import when used in this Agreement mean “including, without limitation” unless otherwise specified, (iv) the term “any” means “any and all” and (v) the term “or” shall not be exclusive and shall mean “and/or”.

(c)(i) References to “days” mean calendar days unless Business Days are expressly specified and (ii) references to “written” or “in writing” include in electronic form.

(d)Whenever the context requires, words in the singular shall be held to include the plural and vice versa, and words of one gender shall be held to include the other gender as the context requires.

(e)References herein to “fines” shall include any excise tax assessed with respect to any employee benefit plan.

(f)References herein to a director of Another Enterprise or a director of an Other Enterprise shall include, in the case of any entity that is not managed by a board of directors, such other position, such as manager or trustee or member of the governing body of such entity, that entails responsibility for the management and direction of such entity’s affairs, including the general partner of any partnership (general or limited) and the manager or managing member of any limited liability company.

(g)(i) References herein to serving at the request of the Company as a director, officer, employee, agent or fiduciary of Another Enterprise shall include any service as a director, officer, employee or agent of the Company that imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan of the Company or any of its affiliates, other than solely as a participant or beneficiary of such a plan; and (ii) if the Indemnitee has acted in good faith and in a manner the Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, the Indemnitee shall be deemed to have acted in a manner not opposed to the best interests of the Company for purposes of this Agreement.

19.Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

20.Modification and Waiver.

(a)No amendment, modification, supplementation or repeal of this Agreement or any provision hereof shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

(b)No amendment, modification, supplementation or repeal of this Agreement or any provision hereof shall limit or restrict any rights of the Indemnitee under this Agreement in respect of any action taken or omitted by the Indemnitee in or by reason of the Indemnitee’s Corporate Status prior to such amendment, modification, supplementation or repeal.

21.Governing Law; Submission to Jurisdiction; Service of Process.

(a)This Agreement and the legal relations among the parties with respect to the matters addressed hereby shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.

(b)Except with respect to any arbitration commenced by the Indemnitee pursuant to Section 7(a) and except to the extent permitted by Section 2(c) with respect to a determination by a court in which an underlying Proceeding was brought that the Indemnitee is entitled to indemnification of Expenses notwithstanding an adjudication of liability to the Company, each of the Company and the Indemnitee hereby irrevocably and unconditionally (i) agrees and consents to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action, suit or proceeding that arises out of or relates to this Agreement and agrees that any such action instituted under this Agreement shall be brought only in the Delaware Chancery Court (or in any other state court of the State of Delaware if the Delaware Chancery Court does not have subject matter jurisdiction over such action), and not in any other state or federal court in the United States of America or any court or tribunal in any other country; (ii) consents to submit to the exclusive jurisdiction of the courts of the State of Delaware for purposes of any action or proceeding arising out of or in connection with this Agreement; (iii) waives any objection to the laying of venue of any such action or proceeding in the courts of the State of Delaware; and (iv) waives, and agrees not to plead or to make, any claim that any such action or proceeding brought in the courts of the State of Delaware has been brought in an improper or otherwise inconvenient forum.

(c)Each of the Company and the Indemnitee hereby consents to service of any summons and complaint and any other process that may be served in any action, suit or proceeding arising out of or relating to this Agreement in any court of the State of Delaware by mailing by certified or registered mail, with postage prepaid, copies of such process to such party at its address for receiving notice pursuant to Section 16. Nothing in this Agreement shall preclude service of process by any other means permitted by applicable law.

22.Nature of Agreement. This Agreement shall not be deemed an employment contract between the Company and the Indemnitee, and, if the Indemnitee is an officer or employee of the Company, the Indemnitee specifically acknowledges that the Indemnitee may be discharged as an officer or employee of the Company at any time for any reason, with or without cause, and with or without severance compensation, except as may be otherwise provided in a separate written contract between the Company and the Indemnitee.

23.Definitions. For purposes of this Agreement:

(a)“Another Enterprise” and “Other Enterprise” mean a corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other form of enterprise, in each case, other than the Company.

(b)“Change in Control” means, and shall be deemed to have occurred if, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting stock, (ii) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation that would result in the voting stock of the Company outstanding immediately prior thereto

continuing to represent (either by remaining outstanding or by being converted into voting stock of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting stock of the Company or such surviving entity outstanding immediately after such merger or consolidation or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of related transactions) of all or substantially all of the Company’s assets.

(c)“Corporate Status” means (i) the Indemnitee’s status as a present or former director or officer of the Company, (ii) the Indemnitee’s present or former status, at any time while serving as a director or officer of the Company, as a director, officer, employee, agent or fiduciary of Another Enterprise to the extent the Indemnitee is or was serving in such capacity with respect to such Other Enterprise at the request of Company or (iii) the Indemnitee’s present or former status as a director, officer, employee, agent or fiduciary of Another Enterprise to the extent the Indemnitee served in such capacity with respect to such Other Enterprise while serving as a director or officer of the Company, continued serving in such capacity with respect to such Other Enterprise after ceasing to be a director or officer of the Company, and is or was serving in such capacity with respect to such Other Enterprise at the request of Company.

(d)“Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by the Indemnitee.

(e)“Expenses” means any of the following: reasonable attorneys’ fees; retainers; disbursements of counsel; court costs; filing fees; transcript costs; fees and expenses of experts; fees and expenses of witnesses; fees and expenses of accountants and other consultants (excluding public relations consultants unless approved in advance by the Company); travel expenses; duplicating and imaging costs; printing and binding costs; telephone charges; facsimile transmission charges; computer legal research costs; postage; delivery service fees; fees and expenses of third-party vendors; and the premium, security for, and other costs associated with any bond (including supersedeas or appeal bonds, injunction bonds, cost bonds, appraisal bonds or their equivalents), in each case incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in a Proceeding (including any judicial or arbitration Proceeding brought to enforce the Indemnitee’s rights under, or to recover damages for breach of, this Agreement), as well as all other “expenses” within the meaning of that term as used in Section 145 of the DGCL and all other disbursements or expenses of types customarily and reasonably incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in actions, suits or proceedings similar to or of the same type as the Proceeding with respect to which such disbursements or expenses were incurred; provided, however, that “Expenses” shall not include amounts of judgments, penalties or fines actually levied against, or amounts paid in settlement by, the Indemnitee in connection with any Proceeding.

(f)“Independent Counsel” means a law firm, or a person admitted to practice law in any State of the United States, that is experienced in matters of corporation law and neither presently is, nor in the past three years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party (other than with respect to serving as Independent Counsel (or similar independent legal counsel position) as to matters concerning the rights of the Indemnitee under this Agreement, the rights of other indemnitees under similar indemnification agreements or the rights of the Indemnitee or other indemnitees to indemnification under the Company’s Certificate of Incorporation or Bylaws) or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, “Independent Counsel” shall not include any law firm or person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement. For the avoidance of doubt, “Independent Counsel” also shall not include any law

firm or person who represented or advised any entity or person in connection with a Change in Control of the Company.

(g)“Losses” means all Expenses, judgments, penalties, fines, liabilities and amounts paid in settlement in connection with a Proceeding.

(h)“Proceeding” means any threatened, pending or completed action, suit, arbitration, alternative dispute resolution mechanism, investigation (including any internal investigation), inquiry, administrative hearing or other proceeding, whether brought by or in the right of the Company or otherwise, and whether civil, criminal, administrative or investigative.

(i)“Termination Date” means the date on which the Indemnitee is no longer a director or officer of the Company; provided, however, that if (i) the Indemnitee continues to serve as a director, officer, employee, agent or fiduciary of Another Enterprise after the date on which the Indemnitee is no longer a director or officer of the Company, (ii) the Indemnitee is serving in such capacity with respect to such Other Enterprise at the request of the Company and (iii) the Indemnitee served in such capacity with respect to such Other Enterprise while serving as a director or officer of the Company, then “Termination Date” shall mean such later date after the Indemnitee is no longer a director or officer of the Company on which the Indemnitee is no longer serving in such capacity with respect to such Other Enterprise.

[Signature page follows]

[Signature Page to Indemnification Agreement]

IN WITNESS WHEREOF, the Company and the Indemnitee have executed this Agreement on and as of the day and year first above written.

ADVANCE AUTO PARTS, INC.

By:

Name: Tammy M. Finley

Title: Executive Vice President, General

Counsel & Corporate Secretary

INDEMNITEE

By:

Name:

Address: [Address]

EXHIBIT A

UNDERTAKING

I, [Indemnitee Name], agree to reimburse the Company for all expenses paid to me or on my behalf by the Company in connection with my involvement in [name or description of proceeding or proceedings], in the event, and to the extent, that it shall ultimately be determined that I am not entitled to be indemnified by the Company for such expenses.

Signature

Typed Name

) ss:

Before me ______________________, on this day personally appeared ___________________, known to me to be the person whose name is subscribed to the foregoing instrument, and who, after being duly sworn, stated that the contents of said instrument is to the best of his/her knowledge and belief true and correct and who acknowledged that he/she executed the same for the purpose and consideration therein expressed.

GIVEN under my hand and official seal at _______, this _______ day of ___________, 20____.



			Notary Public

My commission expires:

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane M. O'Kelly, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 14, 2024


/s/ Shane M. O'Kelly
Shane M. O'Kelly
President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ryan P. Grimsland, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Advance Auto Parts, Inc.;

(b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 14, 2024


/s/ Ryan P. Grimsland
Ryan P. Grimsland
Executive Vice President, Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Shane M. O'Kelly, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarterly period ended October 5, 2024 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying Report.


Date: November 14, 2024						/s/ Shane M. O'Kelly
						Shane M. O'Kelly
						President and Chief Executive Officer

I, Ryan P. Grimsland, certify, pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. Section 1350, that, to my knowledge, the Quarterly Report on Form 10-Q of Advance Auto Parts, Inc. for the quarterly period ended October 5, 2024 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act and that the information contained in such Report fairly presents in all material respects the financial condition and results of operations of the Company. The foregoing certification is being furnished to the Securities and Exchange Commission as part of the accompanying Report.


Date: November 14, 2024						/s/ Ryan P. Grimsland
						Ryan P. Grimsland
						Executive Vice President, Chief Financial Officer

Cover Page - shares	9 Months Ended
Cover Page - shares	Oct. 05, 2024	Nov. 11, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Oct. 05, 2024
Document Transition Report	false
Entity File Number	001-16797
Entity Registrant Name	ADVANCE AUTO PARTS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	54-2049910
Entity Address, Address Line One	4200 Six Forks Road
Entity Address, City or Town	Raleigh
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27609
City Area Code	540
Local Phone Number	362-4911
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	AAP
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		59,734,513
Entity Central Index Key	0001158449
Current Fiscal Year End Date	--12-28
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Contingencies	9 Months Ended
Contingencies	Oct. 05, 2024
Commitments and Contingencies Disclosure [Abstract]
Legal Matters and Contingencies	14. Contingencies On October 9, 2023, and October 27, 2023, two 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. 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.

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Oct. 05, 2024	Dec. 30, 2023
Current assets:
Cash and cash equivalents	$ 464,492	$ 488,049
Receivables, net	668,937	609,528
Inventories	4,042,200	3,893,569
Other current assets	180,448	180,402
Current assets held for sale	2,137,690	1,205,473
Total current assets	7,493,767	6,377,021
Property and equipment, net of accumulated depreciation of $2,913,816 and $2,729,208	1,479,738	1,555,985
Operating lease right-of-use assets	2,399,630	2,347,073
Goodwill	600,182	601,159
Other intangible assets, net	409,501	419,161
Other assets	85,366	85,988
Noncurrent assets held for sale	0	889,939
Total assets	12,468,184	12,276,326
Current liabilities:
Accounts payable	3,498,460	3,526,079
Accrued expenses	641,914	616,067
Other current liabilities	458,343	396,408
Current liabilities held for sale	994,824	768,851
Total current liabilities	5,593,541	5,307,405
Long-term debt	1,788,513	1,786,361
Noncurrent operating lease liabilities	2,018,383	2,039,908
Deferred income taxes	380,118	355,635
Other long-term liabilities	89,949	83,538
Disposal Group, Including Discontinued Operation, Liabilities, Noncurrent	0	183,751
Total Liabilities	9,870,504	9,756,598
Commitments and contingencies
Stockholders' equity:
Preferred stock, nonvoting, $0.0001 par value	0	0
Common stock, voting, $0.0001 par value	8	8
Additional paid-in capital	987,657	946,099
Treasury stock, at cost	(2,938,887)	(2,933,286)
Accumulated other comprehensive loss	(43,514)	(52,232)
Retained earnings	4,592,416	4,559,139
Total stockholders’ equity	2,597,680	2,519,728
Liabilities and Equity	$ 12,468,184	$ 12,276,326

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Oct. 05, 2024	Dec. 30, 2023
Statement of Financial Position [Abstract]
Accumulated depreciation	$ 2,913,816	$ 2,729,208
Preferred stock par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock par value (in usd per share)	$ 0.0001	$ 0.0001

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Income Statement [Abstract]
Net sales	$ 2,147,991	$ 2,218,205	$ 7,098,302	$ 7,194,670
Cost of sales, including purchasing and warehousing costs	1,240,093	1,400,638	4,036,898	4,154,190
Gross profit	907,898	817,567	3,061,404	3,040,480
Selling, general and administrative expenses	907,495	896,145	2,954,707	2,959,238
Operating income	403	(78,578)	106,697	81,242
Other, net:
Interest expense	(18,805)	(19,375)	(62,127)	(69,948)
Other (expense) income, net	2,393	(305)	12,769	232
Total other, net	(16,412)	(19,680)	(49,358)	(69,716)
Income before provision for income taxes	(16,009)	(98,258)	57,339	11,526
Provision for income taxes	9,354	(24,072)	34,763	6,360
(Loss) income from continuing operations	(25,363)	(74,186)	22,576	5,166
Net income from discontinued operations	19,349	12,149	56,413	59,696
Net income	$ (6,014)	$ (62,037)	$ 78,989	$ 64,862
Basic (loss) earnings per common share from continuing operations (in dollars per share)	$ (0.42)	$ (1.25)	$ 0.38	$ 0.09
Basic earnings per common share from discontinued operations (in dollars per share)	0.32	0.20	0.95	1.00
Basic (loss) earnings per common share (in dollars per share)	$ (0.10)	$ (1.05)	$ 1.33	$ 1.09
Weighted-average common shares outstanding (in shares)	59,684	59,474	59,618	59,411
Diluted (loss) earnings per common share from continuing operations (in dollars per share)	$ (0.42)	$ (1.24)	$ 0.38	$ 0.09
Diluted earnings per common share from discontinued operations (in dollars per share)	0.32	0.20	0.94	1.00
Diluted (loss) earnings per common share (in dollars per share)	$ (0.10)	$ (1.04)	$ 1.32	$ 1.09
Weighted-average common shares outstanding	59,902	59,630	59,878	59,588

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Statement of Comprehensive Income [Abstract]
Net income	$ (6,014)	$ (62,037)	$ 78,989	$ 64,862
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement benefits, net of tax (benefit) expense of $(11), $(13), $(42) and $43	(31)	(38)	(119)	121
Currency translation adjustments	1,048		8,837
Total other comprehensive (loss) income	1,017	(10,318)	8,718	(2,330)
Comprehensive income	$ (4,997)	$ (72,355)	$ 87,707	$ 62,532

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Statement of Comprehensive Income [Abstract]
Changes in net unrecognized other postretirment benefits, net of tax	$ (11)	$ (13)	$ (42)	$ 43

Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock, at Cost	Accumulated Other Comprehensive Loss	Retained Earnings
Balance (in shares) at Dec. 31, 2022		59,264
Balance at Dec. 31, 2022	$ 2,599,192	$ 8	$ 897,560	$ (2,918,768)	$ (44,695)	$ 4,665,087
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	64,862					64,862
Total other comprehensive income (loss)	(2,330)				(2,330)
Restricted stock and deferred stock units vested (in shares)		294
Share-based compensation	37,435		37,435
Stock issued under employee stock purchase plan (in shares)		32
Stock issued under employee stock purchase plan	3,045		3,045
Repurchases of common stock (in shares)		(108)
Repurchases of common stock	$ (14,237)			(14,237)
Common Stock, Dividends, Per Share, Declared	$ 2.00
Cash dividends declared	$ (120,631)					(120,631)
Other	(1,000)		(1,000)
Balance (in shares) at Oct. 07, 2023		59,482
Balance at Oct. 07, 2023	2,566,336	$ 8	937,040	(2,933,005)	(47,025)	4,609,318
Balance (in shares) at Jul. 15, 2023		59,457
Balance at Jul. 15, 2023	2,642,654	$ 8	925,411	(2,932,576)	(36,707)	4,686,518
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(62,037)					(62,037)
Total other comprehensive income (loss)	(10,318)				(10,318)
Restricted stock and deferred stock units vested (in shares)		18
Share-based compensation	10,582		10,582
Stock issued under employee stock purchase plan (in shares)		14
Stock issued under employee stock purchase plan	1,047		1,047
Repurchases of common stock (in shares)		(7)
Repurchases of common stock	$ (429)			(429)
Common Stock, Dividends, Per Share, Declared	$ 0.25
Cash dividends declared	$ (15,163)					(15,163)
Balance (in shares) at Oct. 07, 2023		59,482
Balance at Oct. 07, 2023	2,566,336	$ 8	937,040	(2,933,005)	(47,025)	4,609,318
Balance (in shares) at Dec. 30, 2023		59,512
Balance at Dec. 30, 2023	2,519,728	$ 8	946,099	(2,933,286)	(52,232)	4,559,139
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	78,989					78,989
Total other comprehensive income (loss)	8,718				8,718
Restricted stock and deferred stock units vested (in shares)		238
Restricted stock units and deferred stock units vested	312		312
Share-based compensation	38,563		38,563
Stock issued under employee stock purchase plan (in shares)		69
Stock issued under employee stock purchase plan	2,683		2,683
Repurchases of common stock (in shares)		(88)
Repurchases of common stock	$ (5,601)			(5,601)
Common Stock, Dividends, Per Share, Declared	$ 0.75
Cash dividends declared	$ (45,712)					(45,712)
Balance (in shares) at Oct. 05, 2024		59,731
Balance at Oct. 05, 2024	2,597,680	$ 8	987,657	(2,938,887)	(43,514)	4,592,416
Balance (in shares) at Jul. 13, 2024		59,675
Balance at Jul. 13, 2024	2,606,752	$ 8	975,540	(2,937,903)	(44,531)	4,613,638
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	(6,014)					(6,014)
Total other comprehensive income (loss)	1,017				1,017
Restricted stock and deferred stock units vested (in shares)		51
Restricted stock units and deferred stock units vested	312		312
Share-based compensation	10,910		10,910
Stock issued under employee stock purchase plan (in shares)		26
Stock issued under employee stock purchase plan	895		895
Repurchases of common stock (in shares)		(21)
Repurchases of common stock	$ (984)			(984)
Common Stock, Dividends, Per Share, Declared	$ 0.25
Cash dividends declared	$ (15,208)					(15,208)
Balance (in shares) at Oct. 05, 2024		59,731
Balance at Oct. 05, 2024	$ 2,597,680	$ 8	$ 987,657	$ (2,938,887)	$ (43,514)	$ 4,592,416

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (per common share)	$ 0.25	$ 0.25	$ 0.75	$ 2.00

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023
Cash flows from operating activities:
Net income	$ 78,989	$ 64,862
Net income from discontinued operations	56,413	59,696
Net income from continuing operations	22,576	5,166
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	217,197	206,658
Share-based compensation	33,810	33,777
Loss and impairment of long-lived assets	(14,273)	1,886
Provision for deferred income taxes	24,289	(27,811)
Other	2,986	2,436
Net change in:
Receivables, net	(60,383)	(161,629)
Inventories	(152,229)	(110,871)
Accounts payable	(25,225)	(77,336)
Accrued expenses	30,794	171,117
Other assets and liabilities, net	1,477	(71,707)
Net cash provided by (used in) operating activities of continuing operations	81,019	(28,314)
Net cash provided by operating activities of discontinued operations	76,917	57,148
Net cash provided by operating activities	157,936	28,834
Cash flows from investing activities:
Purchases of property and equipment	(129,714)	(174,186)
Proceeds from sales of property and equipment	13,232	2,001
Net cash used in investing activities of continuing operations	(116,482)	(172,185)
Net cash used in investing activities of discontinued operations	(7,988)	(13,015)
Net cash used in investing activities	(124,470)	(185,200)
Cash flows from financing activities:
Borrowings under credit facilities	0	4,805,000
Payments on credit facilities	0	(4,990,000)
Borrowings on senior unsecured notes	0	599,571
Dividends paid	(44,882)	(194,322)
Purchase of noncontrolling interest	(9,101)	0
Proceeds from the issuance of common stock	2,995	3,045
Repurchases of common stock	(5,601)	(14,237)
Other, net	(1,143)	(5,010)
Net cash used in financing activities	(57,732)	204,047
Effect of exchange rate changes on cash	11,766	(1,932)
Net (decrease) increase in cash and cash equivalents	(12,500)	45,749
Cash and cash equivalents, beginning of period	503,471	270,805
Cash and cash equivalents, end of period	490,971	316,554
Non-cash transactions:
Accrued purchases of property and equipment	9,276	9,434
Transfers of property and equipment from (to) assets related to discontinued operations to (from) continuing operations	7,262	(105)
Cash and cash equivalents of continuing operations, end of period	464,492	308,804
Cash and cash equivalents of discontinued operations, end of period	26,479	7,750
Cash and cash equivalents, end of period	$ 490,971	$ 316,554

Nature of Operations and Basis of Presentation	9 Months Ended
Nature of Operations and Basis of Presentation	Oct. 05, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations and Basis of Presentation	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 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 “the Company”). As discussed in No te 3 . “Discontinued Operati ons,” on August 22, 2024, the Company entered into a definitive purchase agreement to sell its Worldpac, Inc. business (“Worldpac”), which reflects a strategic shift in its business. The sale was completed on November 1, 2024. As a result of the Company’s entry into the purchase agreement, Worldpac is presented as discontinued operations beginning in the third quarter of 2024. The Company has reclassified the financial results of Worldpac to discontinued operations, net of tax, in the Condensed Consolidated Statements of Operations for all periods presented. The Company also reclassified the related assets and liabilities as assets and liabilities held for sale on the accompanying Condensed Consolidated Balance Sheets as of October 5, 2024 and December 30, 2023. Cash flows from the Company’s discontinued operations are presented as such in the Condensed Consolidated Statements of Cash Flows for all periods presented. Refer to Note 15. Subsequent Events for additional information about the sale of Worldpac in November 2024. As of October 5, 2024, the Company operated a total of 4,781 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of October 5, 2024, the Company served 1,125 independently owned Carquest branded stores across the same geographic locations served by the Company’s stores in addition to Mexico and various Caribbean islands. The Company’s stores operate primarily under the trade names “Advance Auto Parts” and “Carquest”. The Company has one reportable segment and three operating segments. The operating segments are aggregated primarily due to the economic and operational similarities of each operating segment as the stores and branches have similar characteristics, including the nature of the products and services offered, customer base and the methods used to distribute products and provide services to its customers. Worldpac was one of the Company’s operating segments. As noted in Note 15 . Subsequent Events, the sale of Worldpac was completed November 1, 2024, resulting in the Company having two operating segments, “Advance Auto Parts/Carquest U.S.” and “Carquest Canada.” Basis of Presentation 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 the Company’s Annual Report on Form 10-K for 2023 as filed with the SEC on March 12, 2024, and the amended Annual Report on Form 10-K/A filed with the SEC on May 30, 2024 (collectively the “2023 Form 10-K”). 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. The Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks. Revision of Previously Issued Financial Statements for Correction of Immaterial Errors During the year ended December 30, 2023, the Company identified errors in its consolidated results impacting cost of sales, selling, general and administrative expenses (“SG&A”) and other income (expense), net, of $62.9 million, $36.6 million and $1.7 million incurred in prior years but not previously recognized. These charges primarily related to product costs and vendor credits. Management assessed the materiality of the errors, including the presentation on prior period consolidated financial statements, on a qualitative and quantitative basis in accordance with SEC Staff Accounting Bulletin No. 99, Materiality, codified in Accounting Standards Codification Topic 250, Accounting Changes and Error Corrections. The Company concluded that these errors and the related impacts did not result in a material misstatement of its previously issued consolidated financial statements as of and for the years ended December 31, 2022 and January 1, 2022 and its previously issued unaudited condensed consolidated interim financial statements as of and for the sixteen weeks ended April 22, 2023; the twelve and twenty-eight weeks ended July 15, 2023; and the twelve and forty weeks ended October 7, 2023. Correcting the cumulative effect of these errors in the fifty-two weeks ended December 30, 2023 would have had a significant effect on the results of operations for such period. The Company has corrected the relevant prior periods of its consolidated financial statements and related footnotes for these and other immaterial corrections for comparative purposes, as previously disclosed in Note 18. Immaterial Restatement of Prior Period Financial Statements of the Company’s 2023 Form 10-K. The Company will also adjust previously reported financial information for such immaterial errors in future filings, as applicable. A summary of the corrections to the impacted financial statement line items from our previously issued financial statements are presented in Note 13. Immaterial Misstatement of Prior Period Financial Statements.

Significant Acounting Policies

9 Months Ended

Oct. 05, 2024

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

Revenues

The following table summarizes disaggregated revenue from contracts with customers by product group from continuing operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Percentage of Sales:
Parts and Batteries	64	%	64	%	63	%	63	%
Accessories and Chemicals	21		21		22		22
Engine Maintenance	14		14		14		14
Other	1		1		1		1
Total	100	%	100	%	100	%	100	%

Recently Issued Accounting Pronouncements - Not Yet Adopted

Disclosure Improvements

Improvements to Reportable Segment Disclosures

Income Tax Disclosure Improvements

Climate Disclosure Requirements

Disaggregation of Income Statement Expenses

Discontinued Operations

9 Months Ended

Oct. 05, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations


	October 5, 2024		December 30, 2023
Carrying amounts of the major classes of assets included in discontinued operations1:
Cash	$	26,479	$	15,422
Receivables, net	208,942		190,613
Inventories, net	987,687		964,133
Other current assets	33,403		35,305
Property and equipment, net of accumulated depreciation	82,480		92,561
Operating lease right-of-use assets	243,763		231,703
Other intangible assets, net	163,408		174,180
Goodwill	390,256		390,584
Other noncurrent assets	1,272		911
Total assets of held for sale	$	2,137,690	$	2,095,412

Carrying amounts of the major classes of liabilities included in discontinued operations1:
Accounts payable	$	686,249	$	651,895
Accrued expenses	58,020		55,170
Other current liabilities	70,935		61,786
Noncurrent operating lease liabilities	171,093		175,858
Deferred income taxes	6,618		6,907
Other noncurrent liabilities	1,909		986
Total liabilities held for sale	$	994,824	$	952,602

The following table presents the major components of discontinued operations, net of income taxes, in the Company's Condensed Consolidated Statements of Operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Major classes of line items constituting income of discontinued operations before provision for income taxes:
Net Sales	$	496,749	$	500,874	$	1,635,745	$	1,628,068
Cost of sales, including purchasing and warehousing costs	329,532		348,161		1,078,651		1,095,887

Selling, general and administrative expenses	137,779		135,088		476,177		450,479


Interest expense	(149)		(32)		(370)		(46)
Other income (expense), net	329		(911)		(2,327)		(437)

Income from discontinued operations related to major classes before provision for income taxes	29,618		16,682		78,220		81,219



Provision for income taxes	10,269		4,533		21,807		21,523
Net income from discontinued operations	$	19,349	$	12,149	$	56,413	$	59,696

Inventories

9 Months Ended

Oct. 05, 2024

Inventory Disclosure [Abstract]

Inventories

Inventories, net

Purchasing and warehousing costs included in inventories as of October 5, 2024 and December 30, 2023 were $429.7 million and $454.0 million.

Inventory balances were as follows:


	October 5, 2024		December 30, 2023
Inventories at first in, first out (“FIFO”)	$	4,076,359	$	3,996,877
Adjustments to state inventories at LIFO	(34,159)		(103,308)
Inventories at LIFO	$	4,042,200	$	3,893,569

Intangible Assets	9 Months Ended
Intangible Assets	Oct. 05, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible Assets The Company’s definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $2.6 million and $2.9 million for the twelve weeks ended October 5, 2024 and October 7, 2023, and $9.4 million and $10.2 million for the forty weeks ended October 5, 2024 and October 7, 2023.

Receivables, net

9 Months Ended

Oct. 05, 2024

Receivables [Abstract]

Receivables, net

Receivables, net, consisted of the following:


	October 5, 2024		December 30, 2023
Trade	$	466,805	$	421,293
Vendor	217,221		199,580
Other	17,593		12,271
Total receivables	701,619		633,144
Less: allowance for credit losses	(32,682)		(23,616)
Receivables, net	$	668,937	$	609,528

Long-term Debt and Fair Value of Financial Instruments

9 Months Ended

Oct. 05, 2024

Debt Disclosure [Abstract]

Long-term Debt and Fair Value of Financial Instruments

Long-term debt consisted of the following:


	October 5, 2024		December 30, 2023
5.90% Senior Unsecured Notes due March 9, 2026	$	298,939	$	298,369
1.75% Senior Unsecured Notes due October 1, 2027	347,952		347,514
5.95% Senior Unsecured Notes due March 9, 2028	298,466		298,116
3.90% Senior Unsecured Notes due April 15, 2030	496,603		496,149
3.50% Senior Unsecured Notes due March 15, 2032	346,553		346,213

Total long-term debt	1,788,513		1,786,361
Less: Current portion of long-term debt	—		—
Long-term debt, excluding the current portion	$	1,788,513	$	1,786,361
Fair value of long-term debt	$	1,643,832	$	1,641,409

Fair Value of Financial Assets and Liabilities

Bank Debt

As of October 5, 2024 and December 30, 2023, the Company had no outstanding borrowings, $1.2 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement.

Senior Unsecured Notes

Debt Guarantees

Supplier Finance Program

12. Supplier Finance Programs

Leases

9 Months Ended

Oct. 05, 2024

Leases [Abstract]

Leases


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Operating lease cost	$	121,322	$	116,082	$	396,333	$	381,326
Variable lease cost	33,888		33,666		119,237		108,896
Total lease cost	$	155,210	$	149,748	$	515,570	$	490,222

Other information relating to the Company’s lease liabilities was as follows:


	Forty Weeks Ended
	October 5, 2024		October 7, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	400,551	$	386,668
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	387,266	$	312,808

Share Repurchase Program	9 Months Ended
Share Repurchase Program	Oct. 05, 2024
Stock Repurchases: [Abstract]
Share Repurchase Program	Share Repurchase Program The Company’s Board of Directors had previously authorized $2.7 billion to its share repurchase program. The share repurchase program permits the repurchase of the Company’s common stock on the open market and in privately negotiated transactions from time to time. Amendment No. 5 to the Company’s 2021 Credit Agreement generally prohibits open market share repurchases. During the twelve and forty weeks ended October 5, 2024 and October 7, 2023, the Company did not purchase any shares of the Company’s common stock under the share repurchase program. The Company had $947.3 million remaining under the share repurchase program as of October 5, 2024.

Earnings per Share

9 Months Ended

Oct. 05, 2024

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share

The computations of basic and diluted earnings per share were as follows:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Numerator
(Loss) income from continuing operations	$	(25,363)	$	(74,186)	$	22,576	$	5,166
Income from discontinued operations	19,349		12,149		56,413		59,696
Net (loss) income applicable to common shares	$	(6,014)	$	(62,037)	$	78,989	$	64,862

Denominator
Basic weighted-average common shares	59,684		59,474		59,618		59,411
Dilutive impact of share-based awards	218		156		260		177
Diluted weighted-average common shares(1)	59,902		59,630		59,878		59,588

Basic (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.25)	$	0.38	$	0.09
Basic earnings per common share from discontinued operations	0.32		0.20		0.95		1.00
Basic (loss) earnings per common share	$	(0.10)	$	(1.05)	$	1.33	$	1.09

Diluted (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.24)	$	0.38	$	0.09
Diluted earnings per common share from discontinued operations	0.32		0.20		0.94		1.00
Diluted (loss) earnings per common share	$	(0.10)	$	(1.04)	$	1.32	$	1.09

Share-Based Compensation

9 Months Ended

Oct. 05, 2024

Share-Based Payment Arrangement [Abstract]

Share-Based Compensation

During the twelve and forty weeks ended October 5, 2024, the Company granted the following time-based and market-based RSUs:


	Twelve Weeks Ended		Forty Weeks Ended

Time-based RSUs
Number of awards	16.7		499.1
Weighted-average fair value	$	49.11	$	76.84

Market-based RSUs
Number of awards	—		143.9
Weighted-average fair value	$	—	$	113.31

During the twelve and forty weeks ended October 5, 2024, the Company granted the following stock options:


	Twelve Weeks Ended		Forty Weeks Ended
Number of awards	—		195.4
Weighted-average fair value	$	—	$	31.86

The fair value of each option was estimated on the date of grant by applying the Black-Scholes option-pricing valuation model.


	Twelve Weeks Ended		Forty Weeks Ended
Risk-free interest rate (1)	—	%	4.1	-	4.2	%
Expected term (2)	—		6 years
Expected volatility (3)	—	%	41.6	-	42.6	%
Expected dividend yield (4)	—	%	1.4	-	1.5	%

(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.

(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.

Subsequent Events	9 Months Ended
Subsequent Events	Oct. 05, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Sale of Worldpac On November 1, 2024, the Company completed the sale of Worldpac for a cash consideration of $1.5 billion, with customary adjustments for working capital and other items. The Company received net proceeds of approximately $1.2 billion from the transaction after paying transaction fees and taxes. The Company intends to use net proceeds from the transaction for general corporate purposes, which may include the provision of additional working capital, funding internal operational improvement initiatives and repayment or refinancing of outstanding indebtedness. Credit Agreement Amendment No. 5 On November 13, 2024, the Company entered into Amendment No. 5 to the 2021 Credit Agreement. Amendment No. 5 (i) permits up to $575 million of certain restructuring charges to be added back to Consolidated EBITDAR (as defined therein), (ii) permits up to $800 million of unrestricted cash to be netted out of debt in the calculation of the Leverage Ratio (as defined therein), and (iii) reduces the minimum Consolidated Coverage Ratio (as defined therein) to 1.50 to 1.00 through July 12, 2025 and 1.75 to 1.00 thereafter. Amendment No. 5 also reduced the unsecured revolving credit facility under the 2021 Credit Agreement from $1.2 billion to $1.0 billion and amended the pricing on the loans thereunder in connection with changes in the Company’s credit ratings, as described below. 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 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 0.795% to 1.525% for Term SOFR (with margins of 1.325% or greater applying when credit ratings are below BBB/Baa2) and from 0.00% to 0.525% for alternate base rate (with margins of 0.325% 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 0.08% to 0.35% (with rates of 0.250% or greater applying when credit ratings are below BB+/Ba1) per annum based on the assigned debt ratings of the Company. 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 $750 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 91 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. Restructuring Plan On November 13, 2024, the Company’s Board of Directors approved a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. This plan anticipates closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions. The costs that will be incurred as a result of the Company’s plan include severance and employee benefit costs, voluntary termination benefits, and other exit costs that qualify as exit and disposal costs. Additionally, the Company expects to incur costs related to the closure of stores, independent locations and distribution centers, including asset-related charges, lease termination fees and other incremental costs to exit facilities. The Company currently estimates that it will incur approximately $45 million of involuntary and voluntary severance costs and benefits, a range of approximately $100 - $250 million of net costs associated with lease terminations, a range of approximately $130 - $150 million of other closure-related costs, including closure costs for stores and distribution centers and related consultant fees, and a range of approximately $75 - $350 million of asset-related charges and other non-cash costs.

Supplier Finance Programs	9 Months Ended
Supplier Finance Programs	Oct. 05, 2024
Payables and Accruals [Abstract]
Supplier Finance Program	12. Supplier Finance Programs The Company maintains supply chain financing agreements with third-party financial institutions to provide the Company’s suppliers with enhanced receivables options. Through these agreements, the Company’s suppliers, at their sole discretion, may elect to sell their receivables due from the Company to the third-party financial institution at terms negotiated between the supplier and the third-party financial institution. The Company does not provide any guarantees to any third party in connection with these financing arrangements. The Company’s obligations to 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 and represent obligations outstanding under these supplier finance programs for invoices that were confirmed as valid and owed to the third-party financial institutions in the Company’s Condensed Consolidated Balance Sheets. As of October 5, 2024, and December 30, 2023, $3.26 billion and $3.36 billion of the Company’s accounts payable were to suppliers participating in these financing arrangements.

Subsequent Events	9 Months Ended
Subsequent Events	Oct. 05, 2024
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events Sale of Worldpac On November 1, 2024, the Company completed the sale of Worldpac for a cash consideration of $1.5 billion, with customary adjustments for working capital and other items. The Company received net proceeds of approximately $1.2 billion from the transaction after paying transaction fees and taxes. The Company intends to use net proceeds from the transaction for general corporate purposes, which may include the provision of additional working capital, funding internal operational improvement initiatives and repayment or refinancing of outstanding indebtedness. Credit Agreement Amendment No. 5 On November 13, 2024, the Company entered into Amendment No. 5 to the 2021 Credit Agreement. Amendment No. 5 (i) permits up to $575 million of certain restructuring charges to be added back to Consolidated EBITDAR (as defined therein), (ii) permits up to $800 million of unrestricted cash to be netted out of debt in the calculation of the Leverage Ratio (as defined therein), and (iii) reduces the minimum Consolidated Coverage Ratio (as defined therein) to 1.50 to 1.00 through July 12, 2025 and 1.75 to 1.00 thereafter. Amendment No. 5 also reduced the unsecured revolving credit facility under the 2021 Credit Agreement from $1.2 billion to $1.0 billion and amended the pricing on the loans thereunder in connection with changes in the Company’s credit ratings, as described below. 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 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 0.795% to 1.525% for Term SOFR (with margins of 1.325% or greater applying when credit ratings are below BBB/Baa2) and from 0.00% to 0.525% for alternate base rate (with margins of 0.325% 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 0.08% to 0.35% (with rates of 0.250% or greater applying when credit ratings are below BB+/Ba1) per annum based on the assigned debt ratings of the Company. 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 $750 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 91 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. Restructuring Plan On November 13, 2024, the Company’s Board of Directors approved a restructuring and asset optimization plan designed to improve the Company’s profitability and growth potential and streamline its operations. This plan anticipates closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions. The costs that will be incurred as a result of the Company’s plan include severance and employee benefit costs, voluntary termination benefits, and other exit costs that qualify as exit and disposal costs. Additionally, the Company expects to incur costs related to the closure of stores, independent locations and distribution centers, including asset-related charges, lease termination fees and other incremental costs to exit facilities. The Company currently estimates that it will incur approximately $45 million of involuntary and voluntary severance costs and benefits, a range of approximately $100 - $250 million of net costs associated with lease terminations, a range of approximately $130 - $150 million of other closure-related costs, including closure costs for stores and distribution centers and related consultant fees, and a range of approximately $75 - $350 million of asset-related charges and other non-cash costs.

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ (6,014)	$ (62,037)	$ 78,989	$ 64,862

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Oct. 05, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false

Significant Acounting Policies (Policies)	9 Months Ended
Significant Acounting Policies (Policies)	Oct. 05, 2024
Accounting Policies [Abstract]
Recently Issued Accounting Pronouncements - Adopted	Disclosure Improvements In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements (“ASU 2023-06”), which defines when companies will be required to improve and clarify disclosure and presentation requirements. This ASU should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure. If the applicable requirements have not been removed by the SEC by June 30, 2027, this ASU will not become effective. Early adoption is prohibited. The Company is currently evaluating the impact of adopting ASU 2023-06 on the consolidated financial statements and related disclosures, and does not believe it will have a material impact on the consolidated financial statements. Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires a company to disclose additional, more detailed information about a reportable segment’s significant expenses, even if there is one reportable segment, and is intended to improve the disclosures about a public entity’s reportable segments. The ASU is effective for fiscal years beginning after December 15, 2023, and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2023-07 and believes that the adoption will result in additional disclosures, but will not have any other impact on its consolidated financial statements and segment reporting. Income Tax Disclosure Improvements In December 2023, the FASB issued ASU 2023-09, Income Taxes (“ASU 2023-09”), which requires a company to enhance its income tax disclosures. In each annual reporting period, the company should disclose the specific categories used in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold, including disaggregation of taxes paid by jurisdiction. The related disclosures are effective for the fiscal year beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09 on our consolidated financial statements and related disclosures and believes that the adoption will result in additional disclosures, but will not have any other impact on its consolidated financial statements. Climate Disclosure Requirements In March 2024, the SEC issued its final climate disclosure rules, which require the disclosure of climate-related information in annual reports and registration statements. The rules require disclosure in the audited financial statements of certain effects of severe weather events and other natural conditions and greenhouse gas emissions above certain financial thresholds, as well as amounts related to carbon offsets and renewable energy credits or certificates, if material. Additionally, the rule established disclosure requirements regarding material climate-related risks, descriptions of board oversight and risk management activities, the material impacts of these risks on a registrants' strategy, business model and outlook and any material climate-related targets or goals. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. Prior to the stay in the new rules, disclosures would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosure which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of the new rules on the consolidated financial statements and related disclosures. Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation (“ASU 2024-03”), which requires public entities to disclose more detailed information about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses and depreciation. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on the consolidated financial statements and related disclosures.
Leases	Total lease cost is included in cost of sales and SG&A in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income.
Fair Value Measurement	For time-based RSUs, the fair value of each award was determined based on the market price of the Company’s stock on the date of grant adjusted for expected dividends during the vesting period, as applicable.

Significant Acounting Policies (Tables)

9 Months Ended

Oct. 05, 2024

Accounting Policies [Abstract]

Revenue from External Customers by Products and Services

The following table summarizes disaggregated revenue from contracts with customers by product group from continuing operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Percentage of Sales:
Parts and Batteries	64	%	64	%	63	%	63	%
Accessories and Chemicals	21		21		22		22
Engine Maintenance	14		14		14		14
Other	1		1		1		1
Total	100	%	100	%	100	%	100	%

Discontinued Operations (Tables)

9 Months Ended

Oct. 05, 2024

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations


	October 5, 2024		December 30, 2023
Carrying amounts of the major classes of assets included in discontinued operations1:
Cash	$	26,479	$	15,422
Receivables, net	208,942		190,613
Inventories, net	987,687		964,133
Other current assets	33,403		35,305
Property and equipment, net of accumulated depreciation	82,480		92,561
Operating lease right-of-use assets	243,763		231,703
Other intangible assets, net	163,408		174,180
Goodwill	390,256		390,584
Other noncurrent assets	1,272		911
Total assets of held for sale	$	2,137,690	$	2,095,412

Carrying amounts of the major classes of liabilities included in discontinued operations1:
Accounts payable	$	686,249	$	651,895
Accrued expenses	58,020		55,170
Other current liabilities	70,935		61,786
Noncurrent operating lease liabilities	171,093		175,858
Deferred income taxes	6,618		6,907
Other noncurrent liabilities	1,909		986
Total liabilities held for sale	$	994,824	$	952,602

The following table presents the major components of discontinued operations, net of income taxes, in the Company's Condensed Consolidated Statements of Operations:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Major classes of line items constituting income of discontinued operations before provision for income taxes:
Net Sales	$	496,749	$	500,874	$	1,635,745	$	1,628,068
Cost of sales, including purchasing and warehousing costs	329,532		348,161		1,078,651		1,095,887

Selling, general and administrative expenses	137,779		135,088		476,177		450,479


Interest expense	(149)		(32)		(370)		(46)
Other income (expense), net	329		(911)		(2,327)		(437)

Income from discontinued operations related to major classes before provision for income taxes	29,618		16,682		78,220		81,219



Provision for income taxes	10,269		4,533		21,807		21,523
Net income from discontinued operations	$	19,349	$	12,149	$	56,413	$	59,696

Inventories (Tables)

9 Months Ended

Oct. 05, 2024

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory balances were as follows:


	October 5, 2024		December 30, 2023
Inventories at first in, first out (“FIFO”)	$	4,076,359	$	3,996,877
Adjustments to state inventories at LIFO	(34,159)		(103,308)
Inventories at LIFO	$	4,042,200	$	3,893,569

Receivables, net (Tables)

9 Months Ended

Oct. 05, 2024

Receivables [Abstract]

Schedule of Accounts Receivable

Receivables, net, consisted of the following:


	October 5, 2024		December 30, 2023
Trade	$	466,805	$	421,293
Vendor	217,221		199,580
Other	17,593		12,271
Total receivables	701,619		633,144
Less: allowance for credit losses	(32,682)		(23,616)
Receivables, net	$	668,937	$	609,528

Long-term Debt and Fair Value of Financial Instruments (Tables)

9 Months Ended

Oct. 05, 2024

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt consisted of the following:


	October 5, 2024		December 30, 2023
5.90% Senior Unsecured Notes due March 9, 2026	$	298,939	$	298,369
1.75% Senior Unsecured Notes due October 1, 2027	347,952		347,514
5.95% Senior Unsecured Notes due March 9, 2028	298,466		298,116
3.90% Senior Unsecured Notes due April 15, 2030	496,603		496,149
3.50% Senior Unsecured Notes due March 15, 2032	346,553		346,213

Total long-term debt	1,788,513		1,786,361
Less: Current portion of long-term debt	—		—
Long-term debt, excluding the current portion	$	1,788,513	$	1,786,361
Fair value of long-term debt	$	1,643,832	$	1,641,409

Leases (Tables)

9 Months Ended

Oct. 05, 2024

Leases [Abstract]

Lease, Cost

Total lease costs comprised of the following:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Operating lease cost	$	121,322	$	116,082	$	396,333	$	381,326
Variable lease cost	33,888		33,666		119,237		108,896
Total lease cost	$	155,210	$	149,748	$	515,570	$	490,222

Schedule of Other Information Relating to Lease Liabilities

Other information relating to the Company’s lease liabilities was as follows:


	Forty Weeks Ended
	October 5, 2024		October 7, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	400,551	$	386,668
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	387,266	$	312,808

Earnings per Share (Tables)

9 Months Ended

Oct. 05, 2024

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computations of basic and diluted earnings per share were as follows:


	Twelve Weeks Ended				Forty Weeks Ended
	October 5, 2024		October 7, 2023		October 5, 2024		October 7, 2023
Numerator
(Loss) income from continuing operations	$	(25,363)	$	(74,186)	$	22,576	$	5,166
Income from discontinued operations	19,349		12,149		56,413		59,696
Net (loss) income applicable to common shares	$	(6,014)	$	(62,037)	$	78,989	$	64,862

Denominator
Basic weighted-average common shares	59,684		59,474		59,618		59,411
Dilutive impact of share-based awards	218		156		260		177
Diluted weighted-average common shares(1)	59,902		59,630		59,878		59,588

Basic (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.25)	$	0.38	$	0.09
Basic earnings per common share from discontinued operations	0.32		0.20		0.95		1.00
Basic (loss) earnings per common share	$	(0.10)	$	(1.05)	$	1.33	$	1.09

Diluted (loss) earnings per common share from continuing operations	$	(0.42)	$	(1.24)	$	0.38	$	0.09
Diluted earnings per common share from discontinued operations	0.32		0.20		0.94		1.00
Diluted (loss) earnings per common share	$	(0.10)	$	(1.04)	$	1.32	$	1.09

Share-Based Compensation (Tables)

9 Months Ended

Oct. 05, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Unvested Restricted Stock Units Roll Forward

During the twelve and forty weeks ended October 5, 2024, the Company granted the following time-based and market-based RSUs:


	Twelve Weeks Ended		Forty Weeks Ended

Time-based RSUs
Number of awards	16.7		499.1
Weighted-average fair value	$	49.11	$	76.84

Market-based RSUs
Number of awards	—		143.9
Weighted-average fair value	$	—	$	113.31

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

During the twelve and forty weeks ended October 5, 2024, the Company granted the following stock options:


	Twelve Weeks Ended		Forty Weeks Ended
Number of awards	—		195.4
Weighted-average fair value	$	—	$	31.86

The fair value of each option was estimated on the date of grant by applying the Black-Scholes option-pricing valuation model.


	Twelve Weeks Ended		Forty Weeks Ended
Risk-free interest rate (1)	—	%	4.1	-	4.2	%
Expected term (2)	—		6 years
Expected volatility (3)	—	%	41.6	-	42.6	%
Expected dividend yield (4)	—	%	1.4	-	1.5	%

(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.

(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.

Immaterial Restatement of Prior Period Financial Statements (Tables)

9 Months Ended

Oct. 05, 2024

Accounting Changes and Error Corrections [Abstract]

Schedule of Error Corrections and Prior Period Adjustments

13. Immaterial Restatement of Prior Period Financial Statements


Condensed Consolidated Statement of Operations
October 7, 2023
	Twelve Weeks Ended
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Cost of sales	$	1,732,420	$	16,379	$	1,748,799	$	348,161	$	1,400,638
Gross profit	986,659		(16,379)		970,280		152,713		817,567
Selling, general and administrative expenses	1,030,355		878		1,031,233		135,088		896,145
Operating (loss) income	(43,696)		(17,257)		(60,953)		17,625		(78,578)





(Loss) Income before provision for income taxes	(64,319)		(17,257)		(81,576)		16,682		(98,258)
Provision for income taxes	(15,686)		(3,853)		(19,539)		4,533		(24,072)
Net (loss) income	$	(48,633)	$	(13,404)	$	(62,037)	$	12,149	$	(74,186)

Basic (loss) earnings per share	$	(0.82)	$	(0.23)	$	(1.05)	$	0.20	$	(1.25)


Diluted (loss) earnings per common share	$	(0.82)	$	(0.22)	$	(1.04)	$	0.20	$	(1.24)


Condensed Consolidated Statement of Operations
October 7, 2023
	Forty Weeks Ended
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Cost of sales	$	5,220,200	$	29,877	$	5,250,077	$	1,095,887	$	4,154,190
Gross profit	3,602,538		(29,877)		3,572,661		532,181		3,040,480
Selling, general and administrative expenses	3,407,445		2,272		3,409,717		450,479		2,959,238
Operating income (loss)	195,093		(32,149)		162,944		81,702		81,242





Income (loss) before provision for income taxes	124,894		(32,149)		92,745		81,219		11,526
Provision for income taxes	34,649		(6,766)		27,883		21,523		6,360
Net income (loss)	$	90,245	$	(25,383)	$	64,862	$	59,696	$	5,166

Basic earnings (loss) per share	$	1.52	$	(0.43)	$	1.09	$	1.00	$	0.09


Diluted earnings (loss) per common share	$	1.51	$	(0.42)	$	1.09	$	1.00	$	0.09


Condensed Consolidated Statement of Comprehensive Income
October 7, 2023
	Twelve Weeks Ended
	As Previously Reported		Adjustments		As Corrected
Net (loss) income	$	(48,633)	$	(13,404)	$	(62,037)
Currency translation adjustments	(10,737)		457		(10,280)
Total other comprehensive loss	(10,775)		457		(10,318)
Comprehensive (loss) income	$	(59,408)	$	(12,947)	$	(72,355)


Condensed Consolidated Statement of Comprehensive Income
October 7, 2023
	Forty Weeks Ended
	As Previously Reported		Adjustments		As Corrected
Net income	$	90,245	$	(25,383)	$	64,862
Currency translation adjustments	(2,577)		126		(2,451)
Total other comprehensive loss	(2,456)		126		(2,330)
Comprehensive income	$	87,789	$	(25,257)	$	62,532


Condensed Consolidated Statements of Changes in Stockholders’ Equity
Twelve Weeks Ended October 7, 2023
	Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Twelve Weeks Ended As Previously Reported
Balance at July 15, 2023	$	(36,824)	$	4,767,168	$	2,723,187
Net loss	—		(48,633)		(48,633)
Total other comprehensive loss	(10,775)		—		(10,775)
Balance at October 7, 2023	$	(47,599)	$	4,690,424	$	2,646,868
Adjustments
Balance at July 15, 2023	$	117	$	(80,650)	$	(80,533)
Net loss(1)	—		(13,404)		(13,404)
Total other comprehensive income	457		—		457
Balance at October 7, 2023	$	574	$	(81,106)	$	(80,532)
As Corrected
Balance at July 15, 2023	$	(36,707)	$	4,686,518	$	2,642,654
Net loss	—		(62,037)		(62,037)
Total other comprehensive loss	(10,318)		—		(10,318)
Balance at October 7, 2023	$	(47,025)	$	4,609,318	$	2,566,336

(1) Adjustments to retained earnings does not foot due to the previous adjustments made in third quarter 2023.


Condensed Consolidated Statements of Changes in Stockholders’ Equity
Forty Weeks Ended October 7, 2023
	Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders' Equity
Forty Weeks Ended As Previously Reported
Balance at December 31, 2022	$	(45,143)	$	4,744,624	$	2,678,281
Net income	—		90,245		90,245
Total other comprehensive loss	(2,456)		—		(2,456)
Balance at October 7, 2023	$	(47,599)	$	4,690,424	$	2,646,868
Adjustments
Balance at December 31, 2022	$	448	$	(79,537)	$	(79,089)
Net loss(1)	—		(25,383)		(25,383)
Total other comprehensive income	126		—		126
Balance at October 7, 2023	$	574	$	(81,106)	$	(80,532)
As Corrected
Balance at December 31, 2022	$	(44,695)	$	4,665,087	$	2,599,192
Net income	—		64,862		64,862
Total other comprehensive loss	(2,330)		—		(2,330)
Balance at October 7, 2023	$	(47,025)	$	4,609,318	$	2,566,336

(1) Adjustments to retained earnings does not foot due to the previous adjustments made in third quarter 2023.


Condensed Consolidated Statement of Cash Flows
Forty Weeks Ended October 7, 2023
	As Previously Reported		Adjustments		As Corrected		Discontinued Operations		As Corrected, after Discontinued Operations
Net income	$	90,245	$	(25,383)	$	64,862	$	59,696	$	5,166
Provision for deferred income taxes	(33,059)		5,248		(27,811)		—		(27,811)
Other, net	1,499		937		2,436		—		2,436
Net change in:
Receivables, net	(170,371)		(9,519)		(179,890)		(18,261)		(161,629)
Inventories, net	(41,025)		15,442		(25,583)		85,288		(110,871)
Accounts payable	(191,871)		28,500		(163,371)		(86,035)		(77,336)
Accrued expenses	145,704		21,521		167,225		(3,892)		171,117
Other assets and liabilities, net	(45,015)		(38,316)		(83,331)		(11,624)		(71,707)
Net cash provided by (used in) operating activities	30,404		(1,570)		28,834		57,148		(28,314)
Other, net (1)	(4,073)		(937)		(5,010)		—		(5,010)
Net cash provided by financing activities	204,984		(937)		204,047
Effect of exchange rate changes on cash	(1,942)		10		(1,932)
Net increase (decrease) in cash and cash equivalents	48,246		(2,497)		45,749
Cash and cash equivalents, beginning of period	269,282		1,523		270,805		50,670		220,135
Cash and cash equivalents, end of period	$	317,528	$	(974)	$	316,554	$	7,750	$	308,804

Nature of Operations and Basis of Presentation (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 05, 2024 USD ($) store	Oct. 07, 2023 USD ($)	Oct. 05, 2024 USD ($) store segment	Oct. 07, 2023 USD ($)	Dec. 30, 2023 USD ($)
Basis of Presentation [Line Items]
Number of reportable segments \| segment			1
Number of operating segments \| segment			3
Number of operating segments after sale of discontinued operation \| segment			2
Cost of sales	$ 1,240,093	$ 1,400,638	$ 4,036,898	$ 4,154,190
Selling, general and administrative expenses	907,495	896,145	2,954,707	2,959,238
Other income (expense), net	$ 2,393	(305)	$ 12,769	232
Discontinued Operations
Basis of Presentation [Line Items]
Cost of sales		348,161		1,095,887
Selling, general and administrative expenses		$ 135,088		$ 450,479
Revision of Prior Period, Error Correction, Adjustment
Basis of Presentation [Line Items]
Cost of sales					$ 62,900
Selling, general and administrative expenses					36,600
Other income (expense), net					$ 1,700
Stores [Member]
Basis of Presentation [Line Items]
Number of Stores \| store	4,781		4,781
Independently owned Carquest store locations [Member]
Basis of Presentation [Line Items]
Number of Stores \| store	1,125		1,125

Significant Acounting Policies (Details) - segment	3 Months Ended		9 Months Ended
Significant Acounting Policies (Details) - segment	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	100.00%	100.00%	100.00%	100.00%
Document Period End Date			Oct. 05, 2024
Number of reportable segments			1
Parts and Batteries [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	64.00%	64.00%	63.00%	63.00%
Accessories and Chemicals [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	21.00%	21.00%	22.00%	22.00%
Engine Maintenance [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	14.00%	14.00%	14.00%	14.00%
Other [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	1.00%	1.00%	1.00%	1.00%

Discontinued Operations - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 22, 2024	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income from discontinued operations		$ 19,349	$ 12,149	$ 56,413	$ 59,696
Revolving Credit Facility \| Line of Credit
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Maximum borrowing capacity	$ 200,000
Term	12 months
Worldpac \| Discontinued Operations, Held-for-Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration from discontinued operation	$ 1,500,000
Net income from discontinued operations		$ 19,349	$ 12,149	$ 56,413	$ 59,696

Discontinued Operations - Assets and Liabilities (Details) - Worldpac - Discontinued Operations, Held-for-Sale - USD ($) $ in Thousands	Oct. 05, 2024	Dec. 30, 2023
Carrying amounts of the major classes of assets included in discontinued operations1:
Cash	$ 26,479	$ 15,422
Receivables, net	208,942	190,613
Inventories, net	987,687	964,133
Other current assets	33,403	35,305
Property and equipment, net of accumulated depreciation	82,480	92,561
Operating lease right-of-use assets	243,763	231,703
Other intangible assets, net	163,408	174,180
Goodwill	390,256	390,584
Other noncurrent assets	1,272	911
Total assets of held for sale	2,137,690	2,095,412
Carrying amounts of the major classes of liabilities included in discontinued operations1:
Accounts payable	686,249	651,895
Accrued expenses	58,020	55,170
Other current liabilities	70,935	61,786
Noncurrent operating lease liabilities	171,093	175,858
Deferred income taxes	6,618	6,907
Other noncurrent liabilities	1,909	986
Total liabilities held for sale	$ 994,824	$ 952,602

Discontinued Operations - Financial Results within Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Other, net:
Net income from discontinued operations	$ 19,349	$ 12,149	$ 56,413	$ 59,696
Worldpac \| Discontinued Operations, Held-for-Sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net Sales	496,749	500,874	1,635,745	1,628,068
Cost of sales, including purchasing and warehousing costs	329,532	348,161	1,078,651	1,095,887
Selling, general and administrative expenses	137,779	135,088	476,177	450,479
Other, net:
Interest expense	(149)	(32)	(370)	(46)
Other income (expense), net	329	(911)	(2,327)	(437)
Income from discontinued operations related to major classes before provision for income taxes	29,618	16,682	78,220	81,219
Provision for income taxes	10,269	4,533	21,807	21,523
Net income from discontinued operations	$ 19,349	$ 12,149	$ 56,413	$ 59,696

Inventories (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Inventories (Details) - USD ($) $ in Thousands	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023	Dec. 30, 2023
Inventory Disclosure [Abstract]
Percentage of LIFO Inventory	92.30%		92.30%		92.80%
Inventory, LIFO Reserve, Effect on Income, Net	$ (34,700)	$ (51,300)	$ (69,100)	$ (106,500)
Inventories at first in, first out (“FIFO”)	4,076,359		4,076,359		$ 3,996,877
Adjustments to state inventories at LIFO	(34,159)		(34,159)		(103,308)
Inventories at LIFO	4,042,200		4,042,200		3,893,569
Purchasing and Warehousing Costs included in Inventory at FIFO	$ 429,700		$ 429,700		$ 454,000

Intangible Assets (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Intangible Assets (Details) - USD ($) $ in Millions	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 2.6	$ 2.9	$ 9.4	$ 10.2

Receivables, net (Details) - USD ($) $ in Thousands	Oct. 05, 2024	Dec. 30, 2023
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	$ 701,619	$ 633,144
Less: Allowance for doubtful accounts	(32,682)	(23,616)
Receivables, net	668,937	609,528
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	466,805	421,293
Accounts Receivable, Vendor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	217,221	199,580
Accounts Receivable, Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	$ 17,593	$ 12,271

Long-term Debt and Fair Value of Financial Instruments (Details) - USD ($)

3 Months Ended

9 Months Ended

Oct. 05, 2024

Dec. 30, 2023

Mar. 09, 2023

Mar. 04, 2022

Sep. 29, 2020

Apr. 16, 2020

Debt Instrument [Line Items]

Fair value of long-term debt

$ 1,643,832,000

$ 1,641,409,000

Guarantor Obligations, Maximum Exposure

102,400,000

106,900,000

Guarantor Obligation, Collateral Amount

183,600,000

221,200,000

Long-term debt

1,788,513,000

1,786,361,000

Debt, Long-term and Short-term, Combined Amount

1,788,513,000

1,786,361,000

Long-term Debt, Current Maturities

$ 0

Document Period End Date

Oct. 05, 2024

Long-term Debt and Fair Value of Financial Instruments

Long-term debt consisted of the following:


	October 5, 2024		December 30, 2023
5.90% Senior Unsecured Notes due March 9, 2026	$	298,939	$	298,369
1.75% Senior Unsecured Notes due October 1, 2027	347,952		347,514
5.95% Senior Unsecured Notes due March 9, 2028	298,466		298,116
3.90% Senior Unsecured Notes due April 15, 2030	496,603		496,149
3.50% Senior Unsecured Notes due March 15, 2032	346,553		346,213

Total long-term debt	1,788,513		1,786,361
Less: Current portion of long-term debt	—		—
Long-term debt, excluding the current portion	$	1,788,513	$	1,786,361
Fair value of long-term debt	$	1,643,832	$	1,641,409

Fair Value of Financial Assets and Liabilities

Bank Debt

As of October 5, 2024 and December 30, 2023, the Company had no outstanding borrowings, $1.2 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement.

Senior Unsecured Notes

Debt Guarantees

Debt Instrument, Restrictive Covenants

400 million

Debt Instrument, Restrictive Covenants, Eliminated

250 million

Revolving Credit Facility

Debt Instrument [Line Items]

Letters of Credit Outstanding, Amount

$ 0

Remaining borrowing capacity

1,200,000,000

Line of Credit Facility, Fair Value of Amount Outstanding

1.75% senior unsecured notes (2027 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

1.75%

Debt Issuance, Percentage Of Principal

99.67%

Debt Issuance Costs, Gross

$ 2,900,000

Debt Instrument, Face Amount

$ 350,000,000

3.90% senior unsecured notes (2030 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

3.90%

Debt Issuance, Percentage Of Principal

99.65%

Debt Instrument, Face Amount

$ 500,000,000

3.50% senior unsecured notes (2032 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

3.50%

Debt Issuance, Percentage Of Principal

99.61%

Debt Issuance Costs, Gross

$ 3,200,000

Debt Instrument, Face Amount

$ 350,000,000

5.90% senior unsecured notes (2026 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

5.90%

Debt Issuance, Percentage Of Principal

99.94%

Debt Issuance Costs, Gross

$ 1,600,000

Debt Instrument, Face Amount

$ 300,000,000

5.95% senior unsecured notes (2028 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

5.95%

Debt Issuance, Percentage Of Principal

99.92%

Debt Issuance Costs, Gross

$ 1,900,000

Debt Instrument, Face Amount

$ 300,000,000

Bilateral Letter of Credit Facility

Debt Instrument [Line Items]

Letters of Credit Outstanding, Amount

90,800,000

91,200,000

Amount outstanding

$ 0

Term

1 year

Senior Notes [Member]

Debt Instrument [Line Items]

Debt Instrument, Redemption Price, Percentage

101.00%

Senior Notes [Member] | 1.75% senior unsecured notes (2027 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

1.75%

Long-term debt

$ 347,952,000

347,514,000

Senior Notes [Member] | 3.90% senior unsecured notes (2030 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

3.90%

Long-term debt

$ 496,603,000

496,149,000

Senior Notes [Member] | 3.50% senior unsecured notes (2032 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

3.50%

Long-term debt

$ 346,553,000

346,213,000

Senior Notes [Member] | 5.90% senior unsecured notes (2026 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

5.90%

Long-term debt

$ 298,939,000

298,369,000

Senior Notes [Member] | 5.95% senior unsecured notes (2028 Notes)

Debt Instrument [Line Items]

Debt Instrument, Interest Rate, Stated Percentage

5.95%

Long-term debt

$ 298,466,000

$ 298,116,000

Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Leases (Details) - USD ($) $ in Thousands	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Lessee, Lease, Description [Line Items]
Operating lease cost	$ 121,322	$ 116,082	$ 396,333	$ 381,326
Variable lease cost	33,888	33,666	119,237	108,896
Total lease cost	$ 155,210	$ 149,748	515,570	490,222
Cash paid for amounts included in the measurement of lease liabilities:			400,551	386,668
Right-of-use assets obtained in exchange for lease obligations:			387,266	$ 312,808
Sale and Leaseback Transaction, Gain (Loss), Net			$ 22,300
Real Estate [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Renewal Term	5 years		5 years
Real Estate [Member] \| Minimum
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	5 years		5 years
Real Estate [Member] \| Maximum
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	10 years		10 years
Equipment [Member] \| Minimum
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	3 years		3 years
Equipment [Member] \| Maximum
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	6 years		6 years

Share Repurchase Program (Details) $ in Millions	9 Months Ended
Share Repurchase Program (Details) $ in Millions	Oct. 05, 2024 USD ($)
Stock Repurchases: [Abstract]
Stock Repurchase Program, Authorized Amount	$ 2,700.0
Treasury Stock, Shares, Acquired as Part of Authorized Plan	any
Share Repurchase Program, Remaining Authorized Repurchase Amount	$ 947.3

Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023
Earnings Per Share [Abstract]
(Loss) income from continuing operations	$ (25,363)	$ (74,186)	$ 22,576	$ 5,166
Net income from discontinued operations	19,349	12,149	56,413	59,696
Net income	$ (6,014)	$ (62,037)	$ 78,989	$ 64,862
Weighted-average common shares outstanding (in shares)	59,684	59,474	59,618	59,411
Dilutive impact of share-based awards (in shares)	218	156	260	177
Diluted weighted-average common shares (in shares)	59,902	59,630	59,878	59,588
Basic (loss) earnings per common share from continuing operations (in dollars per share)	$ (0.42)	$ (1.25)	$ 0.38	$ 0.09
Basic earnings per common share from discontinued operations (in dollars per share)	0.32	0.20	0.95	1.00
Basic (loss) earnings per common share (in dollars per share)	(0.10)	(1.05)	1.33	1.09
Diluted (loss) earnings per common share from continuing operations (in dollars per share)	(0.42)	(1.24)	0.38	0.09
Diluted earnings per common share from discontinued operations (in dollars per share)	0.32	0.20	0.94	1.00
Diluted (loss) earnings per common share (in dollars per share)	(0.10)	(1.04)	1.32	1.09
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Basic (loss) earnings per common share from continuing operations (in dollars per share)	$ (0.42)	$ (1.25)	$ 0.38	$ 0.09
RSUs
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	570	515	536	299

Share-Based Compensation - Schedule of RSUs (Details) - $ / shares	3 Months Ended	9 Months Ended
	Oct. 05, 2024	Oct. 05, 2024
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)	16,700	499,100
Weighted average grant date fair value (in dollars per share)	$ 49.11	$ 76.84
Market-based RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period (in shares)	0	143,900
Weighted average grant date fair value (in dollars per share)	$ 0	$ 113.31

Share-Based Compensation - Schedule of Options (Details) - $ / shares	3 Months Ended	9 Months Ended
	Oct. 05, 2024	Oct. 05, 2024
Share-Based Payment Arrangement [Abstract]
Stock options granted (in shares)	0	195,400
Weighted-average fair value of stock options granted	$ 0	$ 31.86

Share-Based Compensation - Stock Options, Valuation Assumptions (Details)	3 Months Ended	9 Months Ended
	Oct. 05, 2024	Oct. 05, 2024
Share-Based Payment Arrangement [Abstract]
Risk-free interest rate	0.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Minimum		4.10%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate, Maximum		4.20%
Expected term		6 years
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Maximum		42.60%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate, Minimum		41.60%
Expected volatility	0.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Dividend Rate, Maximum		1.50%
Expected dividend yield	0.00%	1.40%

Share-Based Compensation - Narrative (Details) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 05, 2024 USD ($)	Oct. 05, 2024 USD ($)
Share-Based Payment Arrangement [Abstract]
Tax benefit from compensation expense	$ 2.4	$ 8.4
Unrecognized compensation expense	$ 85.4	$ 85.4
Unrecognized compensation expense, period for recognition		1 year 7 months 6 days

Supplier Finance Programs (Details) - USD ($) $ in Millions	Oct. 05, 2024	Dec. 30, 2023
Payables and Accruals [Abstract]
Supplier finance program, obligation	$ 3,260	$ 3,360

Immaterial Restatement of Prior Period Financial Statements (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 05, 2024	Oct. 07, 2023	Oct. 05, 2024	Oct. 07, 2023	Jul. 13, 2024	Dec. 30, 2023	Jul. 15, 2023	Dec. 31, 2022
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Receivables, net	$ 668,937		$ 668,937			$ 609,528
Inventories	4,042,200		4,042,200			3,893,569
Other current assets	180,448		180,448			180,402
Assets, Current	7,493,767		7,493,767			6,377,021
Assets	12,468,184		12,468,184			12,276,326
Accounts payable	3,498,460		3,498,460			3,526,079
Accrued expenses	641,914		641,914			616,067
Liabilities, Current	5,593,541		5,593,541			5,307,405
Liabilities	9,870,504		9,870,504			9,756,598
Accumulated other comprehensive loss	(43,514)		(43,514)			(52,232)
Retained earnings	4,592,416		4,592,416			4,559,139
Stockholders' Equity Attributable to Parent	2,597,680	$ 2,566,336	2,597,680	$ 2,566,336	$ 2,606,752	2,519,728	$ 2,642,654	$ 2,599,192
Liabilities and Equity	12,468,184		12,468,184			12,276,326
Cost of sales, including purchasing and warehousing costs	1,240,093	1,400,638	4,036,898	4,154,190
Gross Profit	907,898	817,567	3,061,404	3,040,480
Selling, general and administrative expenses	907,495	896,145	2,954,707	2,959,238
Operating Income (Loss)	403	(78,578)	106,697	81,242
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest	(16,009)	(98,258)	57,339	11,526
Provision for income taxes	9,354	(24,072)	34,763	6,360
Net Income (Loss) Attributable to Parent	(6,014)	(62,037)	78,989	64,862
Provision for deferred income taxes			24,289	(27,811)
Other			2,986	2,436
Receivables, net			(60,383)	(161,629)
Inventories			(152,229)	(110,871)
Accounts payable			(25,225)	(77,336)
Accrued expenses			30,794	171,117
Other assets and liabilities, net			1,477	(71,707)
Net Cash Provided by (Used in) Operating Activities			157,936	28,834
Other, net			(1,143)	(5,010)
Net Cash Provided by (Used in) Financing Activities			(57,732)	204,047
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect			(12,500)	45,749
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	1,048		8,837
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		(10,318)		(2,330)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest	$ (4,997)	$ (72,355)	$ 87,707	$ 62,532
Basic (loss) earnings per common share (in dollars per share)	$ (0.10)	$ (1.05)	$ 1.33	$ 1.09
Earnings Per Share, Diluted	$ (0.10)	$ (1.04)	$ 1.32	$ 1.09
Proceeds from the issuance of common stock			$ 2,995	$ 3,045
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations	$ 490,971	$ 316,554	490,971	316,554		503,471		270,805
Continued And Discontinued Operations
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of sales, including purchasing and warehousing costs		1,748,799		5,250,077
Gross Profit		970,280		3,572,661
Selling, general and administrative expenses		1,031,233		3,409,717
Operating Income (Loss)		(60,953)		162,944
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest		(81,576)		92,745
Provision for income taxes		(19,539)		27,883
Net Income (Loss) Attributable to Parent		(62,037)		64,862
Provision for deferred income taxes				(27,811)
Other				2,436
Receivables, net				(179,890)
Inventories				(25,583)
Accounts payable				(163,371)
Accrued expenses				167,225
Other assets and liabilities, net				(83,331)
Net Cash Provided by (Used in) Operating Activities				28,834
Other, net				(5,010)
Net Cash Provided by (Used in) Financing Activities				204,047
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Continuing Operations				(1,932)
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				45,749
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax		(10,280)		(2,451)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		(10,318)		(2,330)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		$ (72,355)		$ 62,532
Basic (loss) earnings per common share (in dollars per share)		$ (1.05)		$ 1.09
Earnings Per Share, Diluted		$ (1.04)		$ 1.09
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations		$ 316,554		$ 316,554				270,805
Discontinued Operations
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of sales, including purchasing and warehousing costs		348,161		1,095,887
Gross Profit		152,713		532,181
Selling, general and administrative expenses		135,088		450,479
Operating Income (Loss)		17,625		81,702
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest		16,682		81,219
Provision for income taxes		4,533		21,523
Net Income (Loss) Attributable to Parent		$ 12,149		59,696
Provision for deferred income taxes				0
Other				0
Receivables, net				(18,261)
Inventories				85,288
Accounts payable				(86,035)
Accrued expenses				(3,892)
Other assets and liabilities, net				(11,624)
Net Cash Provided by (Used in) Operating Activities				57,148
Other, net				$ 0
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations, Net								50,670
Basic (loss) earnings per common share (in dollars per share)		$ 0.20		$ 1.00
Earnings Per Share, Diluted		$ 0.20		$ 1.00
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations		$ 7,750		$ 7,750
Continuing Operations
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Cost of sales, including purchasing and warehousing costs		1,400,638		4,154,190
Gross Profit		817,567		3,040,480
Selling, general and administrative expenses		896,145		2,959,238
Operating Income (Loss)		(78,578)		81,242
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest		(98,258)		11,526
Provision for income taxes		(24,072)		6,360
Net Income (Loss) Attributable to Parent		$ (74,186)		5,166
Provision for deferred income taxes				(27,811)
Other				2,436
Receivables, net				(161,629)
Inventories				(110,871)
Accounts payable				(77,336)
Accrued expenses				171,117
Other assets and liabilities, net				(71,707)
Net Cash Provided by (Used in) Operating Activities				(28,314)
Other, net				$ (5,010)
Basic (loss) earnings per common share (in dollars per share)		$ (1.25)		$ 0.09
Earnings Per Share, Diluted		$ (1.24)		$ 0.09
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations		$ 308,804		$ 308,804				220,135
Retained Earnings
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent	4,592,416	4,609,318	4,592,416	4,609,318	4,613,638	4,559,139	4,686,518	4,665,087
Net Income (Loss) Attributable to Parent	(6,014)	(62,037)	78,989	64,862
Accumulated Other Comprehensive Loss
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent	$ (43,514)	(47,025)	$ (43,514)	(47,025)	$ (44,531)	$ (52,232)	(36,707)	(44,695)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		(10,318)		(2,330)
Previously Reported
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		2,646,868		2,646,868			2,723,187	2,678,281
Cost of sales, including purchasing and warehousing costs		1,732,420		5,220,200
Gross Profit		986,659		3,602,538
Selling, general and administrative expenses		1,030,355		3,407,445
Operating Income (Loss)		(43,696)		195,093
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest		(64,319)		124,894
Provision for income taxes		(15,686)		34,649
Net Income (Loss) Attributable to Parent		(48,633)		90,245
Provision for deferred income taxes				(33,059)
Other				(1,499)
Receivables, net				170,371
Inventories				41,025
Accounts payable				(191,871)
Accrued expenses				145,704
Other assets and liabilities, net				45,015
Net Cash Provided by (Used in) Operating Activities				30,404
Other, net				(4,073)
Net Cash Provided by (Used in) Financing Activities				204,984
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Continuing Operations				(1,942)
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				48,246
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax		(10,737)		(2,577)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		(10,775)		(2,456)
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		$ (59,408)		$ 87,789
Basic (loss) earnings per common share (in dollars per share)		$ (0.82)		$ 1.52
Earnings Per Share, Diluted		$ (0.82)		$ 1.51
Proceeds from the issuance of common stock				$ 3,000
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations		$ 317,528		317,528				269,282
Previously Reported \| Retained Earnings
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		4,690,424		4,690,424			4,767,168	4,744,624
Previously Reported \| Accumulated Other Comprehensive Loss
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		(47,599)		(47,599)			(36,824)	(45,143)
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		(10,775)		(2,456)
Revision of Prior Period, Adjustment
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		(80,532)		(80,532)			(80,533)	(79,089)
Cost of sales, including purchasing and warehousing costs		16,379		29,877
Gross Profit		(16,379)		(29,877)
Selling, general and administrative expenses		878		2,272
Operating Income (Loss)		(17,257)		(32,149)
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest		(17,257)		(32,149)
Provision for income taxes		(3,853)		(6,766)
Net Income (Loss) Attributable to Parent		(13,404)		(25,383)
Provision for deferred income taxes				5,248
Other				(937)
Receivables, net				9,519
Inventories				(15,442)
Accounts payable				28,500
Accrued expenses				21,521
Other assets and liabilities, net				38,316
Net Cash Provided by (Used in) Operating Activities				(1,570)
Other, net				(937)
Net Cash Provided by (Used in) Financing Activities				(937)
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Continuing Operations				10
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect				(2,497)
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax		457		126
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		457		126
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest		$ (12,947)		$ (25,257)
Basic (loss) earnings per common share (in dollars per share)		$ (0.23)		$ (0.43)
Earnings Per Share, Diluted		$ (0.22)		$ (0.42)
Proceeds from the issuance of common stock				$ 0
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations		$ (974)		(974)				1,523
Revision of Prior Period, Adjustment \| Retained Earnings
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		(81,106)		(81,106)			(80,650)	(79,537)
Net Income (Loss) Attributable to Parent		(13,404)		(25,383)
Revision of Prior Period, Adjustment \| Accumulated Other Comprehensive Loss
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Stockholders' Equity Attributable to Parent		574		574			$ 117	$ 448
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Noncontrolling Interest		$ 457		$ 126

Subsequent Events (Details) - Subsequent Event $ in Millions			12 Months Ended
	Nov. 13, 2024 USD ($) location store center	Nov. 01, 2024 USD ($)	Jan. 03, 2026 USD ($)	Jul. 13, 2025	Nov. 12, 2024 USD ($)
Subsequent Event [Line Items]
Number of stores expected to close \| store	500
Number of independent locations expected to close \| location	200
Number of distribution centers expected to close \| center	4
Forecast
Subsequent Event [Line Items]
Involuntary and voluntary severance costs and benefits			$ 45
Minimum \| Forecast
Subsequent Event [Line Items]
Net costs related to lease terminations			100
Other closure-related costs			130
Asset-related charges and other non-cash costs			75
Maximum \| Forecast
Subsequent Event [Line Items]
Net costs related to lease terminations			250
Other closure-related costs			150
Asset-related charges and other non-cash costs			$ 350
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement
Subsequent Event [Line Items]
Maximum borrowing capacity	$ 1,000				$ 1,200
Maximum amount of restructuring charges added back to consolidated EBITDAR	575
Maximum amount of unrestricted cash netted out of leverage ratio calculation	$ 800
Automatic spring forward, term	91 days
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Minimum
Subsequent Event [Line Items]
Leverage ratio	1.50
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Minimum \| Forecast
Subsequent Event [Line Items]
Leverage ratio				1.75
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Term SOFR \| Minimum
Subsequent Event [Line Items]
Interest rate	0.795%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Term SOFR \| Maximum
Subsequent Event [Line Items]
Interest rate	1.525%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Term SOFR \| Below BBB/Baa2
Subsequent Event [Line Items]
Interest rate	1.325%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Alternate Base Rate \| Minimum
Subsequent Event [Line Items]
Interest rate	0.00%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Alternate Base Rate \| Maximum
Subsequent Event [Line Items]
Interest rate	0.525%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Alternate Base Rate \| Below BBB/Baa2
Subsequent Event [Line Items]
Interest rate	0.325%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Facility Fee \| Minimum
Subsequent Event [Line Items]
Interest rate	0.08%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Facility Fee \| Maximum
Subsequent Event [Line Items]
Interest rate	0.35%
Revolving Credit Facility \| Unsecured Debt \| 2021 Credit Agreement \| Facility Fee \| Below BB+/Ba1
Subsequent Event [Line Items]
Interest rate	0.25%
Disposal Group, Disposed of by Sale, Not Discontinued Operations \| Worldpac
Subsequent Event [Line Items]
Proceeds from divestiture of businesses		$ 1,200
Consideration from discontinued operation		$ 1,500

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