10-Q

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 April 18, 2020

☐ 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.)

2635 East Millbrook Road, Raleigh, North Carolina 27604

(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 May 15, 2020, the number of shares of the registrant’s common stock outstanding was 69,101,221 shares.

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 as of April 18, 2020 and December 28, 2019	2
		Condensed Consolidated Statements of Operations for the Sixteen Week Periods Ended April 18, 2020 and April 20, 2019	3
		Condensed Consolidated Statements of Comprehensive Income for the Sixteen Week Periods Ended April 18, 2020 and April 20, 2019	3
		Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Sixteen Week Periods Ended April 18, 2020 and April 20, 2019	4
		Condensed Consolidated Statements of Cash Flows for the Sixteen Week Periods Ended April 18, 2020 and April 20, 2019	5
		Notes to the Condensed Consolidated Financial Statements	6
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
	Item 6.	Exhibits	28
SIGNATURE			29

Table of Contents

NOTE REGARDING 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,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about our strategic initiatives, operational plans and objectives, and future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect our views based on historical results, current information and assumptions related to future developments. Except as may be required by law, we undertake no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, factors related to the timing and implementation of strategic initiatives, the highly competitive nature of our industry, demand for our products and services, complexities in our inventory and supply chain, challenges with transforming and growing our business and factors related to the current global pandemic. Please refer to “Item 1A. Risk Factors.” of our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as updated by our subsequent filings with the Commission, 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.

1

Table of Contents

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)

	April 18, 2020		December 28, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,279,838	$	418,665
Receivables, net	627,405		689,469
Inventories	4,526,003		4,432,168
Other current assets	138,749		155,241
Total current assets	6,571,995		5,695,543
Property and equipment, net of accumulated depreciation of $2,081,478 and $2,037,849	1,444,478		1,433,213
Operating lease right-of-use assets	2,319,511		2,365,325
Goodwill	989,112		992,240
Intangible assets, net	698,032		709,756
Other assets	49,444		52,448
	$	12,072,572	$	11,248,525
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,304,207	$	3,421,987
Accrued expenses	528,156		535,863
Short-term borrowings on revolving credit facility	500,000		—
Other current liabilities	498,686		519,852
Total current liabilities	4,831,049		4,477,702
Long-term debt	1,241,094		747,320
Noncurrent operating lease liabilities	1,996,156		2,017,159
Deferred income taxes	333,265		334,013
Other long-term liabilities	133,979		123,250
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	749,723		735,183
Treasury stock, at cost	(960,150)		(924,389)
Accumulated other comprehensive loss	(51,535)		(34,569)
Retained earnings	3,798,983		3,772,848
Total stockholders’ equity	3,537,029		3,549,081
	$	12,072,572	$	11,248,525

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

2

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

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

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Net sales	$	2,697,882	$	2,952,036
Cost of sales, including purchasing and warehousing costs	1,525,149		1,647,424
Gross profit	1,172,733		1,304,612
Selling, general and administrative expenses	1,094,308		1,096,672
Operating income	78,425		207,940
Other, net:
Interest expense	(12,243)		(14,944)
Other expense, net	(5,989)		(2,238)
Total other, net	(18,232)		(17,182)
Income before provision for income taxes	60,193		190,758
Provision for income taxes	16,605		48,258
Net income	$	43,588	$	142,500
Basic earnings per common share	$	0.63	$	1.99
Weighted average common shares outstanding	69,181		71,787
Diluted earnings per common share	$	0.63	$	1.98
Weighted average common shares outstanding	69,392		72,103

Condensed Consolidated Statements of Comprehensive Income

(In thousands) (Unaudited)

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Net income	$	43,588	$	142,500
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement costs, net of tax of $23 and $17	66		95
Currency translation adjustments	(17,032)		4,060
Total other comprehensive (loss) income	(16,966)		4,155
Comprehensive income	$	26,622	$	146,655

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

3

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Changes in Stockholders’ Equity (In thousands, except per share data) (Unaudited)
	Sixteen Weeks Ended April 18, 2020
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance, December 28, 2019	69,232	$	8	$	735,183	$	(924,389)	$	(34,569)	$	3,772,848	$	3,549,081
Net income	—	—		—		—		—		43,588		43,588
Total other comprehensive loss	—	—		—		—		(16,966)		—		(16,966)
Restricted stock units and deferred stock units vested	137	—		—		—		—		—		—
Share-based compensation	—	—		13,809		—		—		—		13,809
Stock issued under employee stock purchase plan	9	—		735		—		—		—		735
Repurchases of common stock	(277)	—		—		(35,761)		—		—		(35,761)
Cash dividends declared ($0.25 per common share)	—	—		—		—		—		(17,453)		(17,453)
Other	—	—		(4)		—		—		—		(4)
Balance, April 18, 2020	69,101	$	8	$	749,723	$	(960,150)	$	(51,535)	$	3,798,983	$	3,537,029
	Sixteen Weeks Ended April 20, 2019
	Common Stock			Additional Paid-in Capital		Treasury Stock, at Cost		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance, December 29, 2018	72,460	$	8	$	694,797	$	(425,954)	$	(44,193)	$	3,326,155	$	3,550,813
Net income	—	—		—		—		—		142,500		142,500
Cumulative effect of accounting change from adoption of ASU 2016-02, net of tax										(23,165)		(23,165)
Total other comprehensive loss	—	—		—		—		4,155				4,155
Restricted stock units and deferred stock units vested	111	—		—		—		—		—		—
Share-based compensation	—	—		10,984		—		—		—		10,984
Stock issued under employee stock purchase plan	5	—		678		—		—		—		678
Repurchases of common stock	(840)	—		—		(134,291)		—		—		(134,291)
Cash dividends declared ($0.06 per common share)	—	—		—		—		—		(4,352)		(4,352)
Other	1	—		(99)		—		—		—		(99)
Balance, April 20, 2019	71,737	$	8	$	706,360	$	(560,245)	$	(40,038)	$	3,441,138	$	3,547,223

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

4

Table of Contents

Advance Auto Parts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Cash flows from operating activities:
Net income	$	43,588	$	142,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	78,579		69,885
Share-based compensation	13,809		10,984
Loss and impairment of long-lived assets	981		125
Provision (benefit) for deferred income taxes	146		(250)
Other	434		11,348
Net change in:
Receivables, net	59,303		(58,757)
Inventories	(104,899)		(68,742)
Accounts payable	(112,459)		102,941
Accrued expenses	(1,824)		(62,751)
Other assets and liabilities, net	33,250		57,259
Net cash provided by operating activities	10,908		204,542
Cash flows from investing activities:
Purchases of property and equipment	(82,973)		(61,312)
Purchase of an indefinite-lived intangible asset	(230)		—
Proceeds from sales of property and equipment	71		553
Net cash used in investing activities	(83,132)		(60,759)
Cash flows from financing activities:
Decrease in bank overdrafts	—		(50,578)
Proceeds from borrowings on revolving credit facility	500,000		—
Proceeds from issuance of senior unsecured notes	498,240		—
Redemption of senior unsecured notes	—		(310,047)
Dividends paid	(21,593)		(8,723)
Proceeds from the issuance of common stock	735		678
Repurchases of common stock	(35,761)		(134,291)
Other, net	(4,763)		(215)
Net cash provided by (used in) financing activities	936,858		(503,176)
Effect of exchange rate changes on cash	(3,461)		196
Net increase (decrease) in cash and cash equivalents	861,173		(359,197)
Cash and cash equivalents, beginning of period	418,665		896,527
Cash and cash equivalents, end of period	$	1,279,838	$	537,330
Non-cash transactions:
Accrued purchases of property and equipment	$	25,080	$	14,194

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

5

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Operations and Basis of Presentation:

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 have been prepared by us and 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 “Advance,” “we,” “us” or “our”).

As of April 18, 2020, we operated a total of 4,843 stores and 168 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 18, 2020, we served 1,258 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico, the Bahamas, Turks and Caicos and the British Virgin Islands.

In March 2020, the World Health Organization categorized the COVID-19 outbreak as a pandemic (“the pandemic”). As a majority of our stores and facilities have remained open, we have taken additional measures to help protect the health and safety of our Team Members and customers. Such measures, among others, include the implementation of incremental pay and other labor-related benefits for Team Members and increased sanitation practices across Advance.

Government imposed restrictions and stay at home orders related to the pandemic occurred during our first quarter of 2020. These contributed to negative impacts to demand for our products and services, primarily during the last six weeks of the sixteen weeks ended April 18, 2020. While the majority of our stores remained opened, we adjusted our store operating hours to better align our variable operating cost, such as labor-related and utility expenses, with the lower demand.

In addition to macroeconomic factors, we considered the changes in our store operations, the increased cost to service our customers and the reduced demand for our product on the carrying value of our assets, including receivables, inventories, property and equipment, goodwill and other intangible assets. Although we have experienced negative financial impacts from the pandemic, they have not significantly affected the assumptions underpinning our long-term revenue and cash flow growth rates, operating models and business strategies and there was no material impairment of our various assets during the sixteen weeks ended April 18, 2020.

The COVID-19 pandemic remains a rapidly evolving situation. If we experience prolonged periods of decreased demand, it may lead to increased asset recovery and valuation risks in the future, such as impairment of goodwill, intangible assets, stores and other assets. We will continue to assess the impact of the pandemic on our financial position. The extent to which the COVID-19 pandemic will impact our operations, liquidity, compliance with debt covenants or financial results in subsequent periods is uncertain, but such impact could be material.

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 guidance. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for 2019 as filed with the SEC on February 18, 2020.

The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our second and third quarter of 2020 consist of twelve weeks, while our fourth quarter of 2020 contains thirteen weeks due to the 53-week fiscal year in 2020.

6

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

2. Significant Accounting Policies:

Revenues

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

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Percentage of Net sales, by product group:
Parts and batteries	66	%	66	%
Accessories and chemicals	21		21
Engine maintenance	12		12
Other	1		1
Total	100	%	100	%

Recently Issued Accounting Pronouncements

In March 2020, the SEC amended Rule 3-10 of Regulation S-X (“Rule 3-10”) regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. Rule 3-10 is effective January 4, 2021 with earlier adoption permitted. We are currently evaluating the impact of Rule 3-10 on our consolidated financial statements and related disclosures.

During the sixteen weeks ended April 18, 2020, we adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which required us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements.

3. Inventories

Inventories are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 88% and 89% of inventories as of April 18, 2020 and December 28, 2019. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the sixteen weeks ended April 18, 2020 and prior years. We recorded an increase to Cost of sales of $8.8 million and $26.4 million for the sixteen weeks ended April 18, 2020 and April 20, 2019 to state inventories at LIFO.

An actual valuation of inventory under the LIFO method is performed by us at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.

Inventory balances were as follows:

(in thousands)	April 18, 2020		December 28, 2019
Inventories at first in, first out (“FIFO”)	$	4,393,236	$	4,290,565
Adjustments to state inventories at LIFO	132,767		141,603
Inventories at LIFO	$	4,526,003	$	4,432,168

7

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

4. Intangible Assets

Our definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $9.7 million for the sixteen weeks ended April 18, 2020 and April 20, 2019.

5. Receivables, net

Receivables consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Trade	$	406,616	$	422,403
Vendor	210,483		249,009
Other	25,182		32,306
Total receivables	642,281		703,718
Less: allowance for doubtful accounts	(14,876)		(14,249)
Receivables, net	$	627,405	$	689,469

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

Long-term debt consists of the following:

(in thousands)	April 18, 2020		December 28, 2019
4.50% Senior Unsecured Notes due January 15, 2022	$	299,523	$	299,441
4.50% Senior Unsecured Notes due December 1, 2023	448,019		447,879
3.90% Senior Unsecured Notes due April 15, 2030	493,552		—
Total long-term debt	$	1,241,094	$	747,320
Fair value of long-term debt	$	1,283,000	$	795,000

Fair Value of Financial Assets and Liabilities

The fair value of our senior unsecured notes was determined using Level 2 inputs based on quoted market prices. We believe the carrying value of our other long-term debt approximates fair value. The carrying amounts of our cash and cash equivalents, receivables, accounts payable, accrued expenses and borrowings under the unsecured revolving credit facility approximate their fair values due to the relatively short-term nature of these instruments.

Senior Unsecured Notes

Our 4.50% senior unsecured notes due January 15, 2022 (the “2022 Notes”) were issued in January 2012 at 99.97% of the principal amount of $300.0 million. The 2022 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on January 15 and July 15 of each year. Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on June 1 and December 1 of each year.

On April 16, 2020, we issued $500.0 million aggregate principal amount of senior unsecured notes (the “2030 Notes”). The 2030 Notes were issued at 99.65% of the principal amount of $500.0 million, are due April 15, 2030 and bear interest at 3.90% per year payable semi-annually in arrears on April 15 and October 15 of each year (collectively with the 2023 Notes and 2022 Notes, referred to as our “senior unsecured notes”). In connection with the issuance of the 2030 Notes, we incurred $4.7 million of costs.

8

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

We may redeem some or all of the 2030 Notes at any time or from time to time, at the redemption price described in the related indenture for the 2030 Notes (the “Indenture”). In addition, in the event of a Change of Control Triggering Event (as defined in the Indenture), we will be required to offer to repurchase the 2030 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. The 2030 Notes are currently fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by each of our Guarantor Subsidiaries, as defined in Note 12, Condensed Consolidating Financial Statements, of the Notes to the Condensed Consolidated Financial Statements.

Bank Debt

As of April 18, 2020, we had $500.0 million of outstanding borrowings, $500.0 million of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility (the “2017 Credit Agreement”). As of December 28, 2019, we had no outstanding borrowings, $1.0 billion of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility.

In connection with our bilateral credit facility, we had outstanding letters of credit of $111.6 million as of April 18, 2020 and December 28, 2019, which generally have a term of one year or less and primarily serve as collateral for our self-insurance policies.

We were in compliance with financial covenants required by our debt arrangements as of April 18, 2020.

Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $52.7 million and $26.4 million as of April 18, 2020 and December 28, 2019. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements is $51.7 million and $50.3 million as of April 18, 2020 and December 28, 2019. We believe that the likelihood of performance under these guarantees is remote.

7. Leases

Substantially all of our leases are for facilities and vehicles. The initial term for facilities are typically 5 years to 10 years, with renewal options at 5 year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment leases are typically 3 years to 5 years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease liabilities consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Total operating lease liabilities	$	2,440,996	$	2,495,141
Less: Current portion of operating lease liabilities	(444,840)		(477,982)
Noncurrent operating lease liabilities	$	1,996,156	$	2,017,159

The current portion of operating lease liabilities is included in Other current liabilities in the accompanying condensed consolidated balance sheet.

Total lease cost is included in Cost of sales and selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income. Total lease cost is comprised of the following:

9

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Operating lease cost	$	161,805	$	160,046
Variable lease cost	43,537		49,690
Total lease cost	$	205,342	$	209,736

The future maturity of lease liabilities are as follows:

(in thousands)	April 18, 2020
Remainder of 2020	$	402,575
2021	494,579
2022	403,251
2023	364,936
2024	286,731
Thereafter	870,831
Total lease payments	2,822,903
Less: Imputed interest	(381,907)
Total operating lease liabilities	$	2,440,996

Operating lease payments include $110.8 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $154.2 million of legally binding minimum lease payments for leases signed, but not yet commenced.

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are 7.1 years and 4.0% as of April 18, 2020. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Other information relating to our lease liabilities is as follows:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	167,273	$	143,450
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	85,491	$	108,881

10

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

8. Warranty Liabilities

The following table presents changes in our warranty reserves:

	Sixteen Weeks Ended		Fifty-Two Weeks Ended
(in thousands)	April 18, 2020		December 28, 2019
Warranty reserve, beginning of period	$	36,820	$	45,280
Additions to warranty reserves	4,830		34,117
Reduction and utilization of reserve	(11,368)		(42,577)
Warranty reserve, end of period	$	30,282	$	36,820

9. Share Repurchase Program

On November 8, 2019, our Board of Directors authorized a $700.0 million share repurchase program. This new authorization was in addition to the $400.0 million share repurchase program that was authorized by our Board of Directors in August 2019. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.

During the sixteen weeks ended April 18, 2020, we repurchased 0.2 million shares of our common stock at an aggregate cost of $29.0 million, or an average price of $128.36 per share, in connection with our share repurchase program. During the sixteen weeks ended April 20, 2019, we repurchased 0.8 million shares of our common stock at an aggregate cost of $127.2 million, or an average price of $159.65 per share, in connection with our share repurchase program. We had $861.7 million remaining under our share repurchase program as of April 18, 2020.

10. Earnings per Share

The computation of basic and diluted earnings per share are as follows:  

	Sixteen Weeks Ended
(in thousands, except per share data)	April 18, 2020		April 20, 2019
Numerator
Net income applicable to common shares	$	43,588	$	142,500
Denominator
Basic weighted average common shares	69,181		71,787
Dilutive impact of share-based awards	211		316
Diluted weighted average common shares (1)	69,392		72,103
Basic earnings per common share	$	0.63	$	1.99
Diluted earnings per common share	$	0.63	$	1.98

⁽¹⁾For the sixteen weeks ended April 18, 2020, 271 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the sixteen weeks ended April 20,2019, these anti-dilutive RSUs were insignificant.

11. Share-Based Compensation

During the sixteen weeks ended April 18, 2020, we granted 239 thousand time-based RSUs, 74 thousand performance-based RSUs and 37 thousand market-based RSUs. The general terms of the time-based, performance-based and market-based RSUs are similar to awards previously granted by us.

11

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The weighted average fair values of the time-based, performance-based and market-based RSUs granted during the sixteen weeks ended April 18, 2020 were $131.27, $130.03 and $145.04 per share. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our 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.

Total income tax benefit related to share-based compensation expense for the sixteen weeks ended April 18, 2020 and April 20, 2019 was $3.5 million and $2.7 million. As of April 18, 2020, there was $92.1 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.8 years.

12. Condensed Consolidating Financial Statements

Certain 100% wholly owned domestic subsidiaries of Advance, including our Material Subsidiaries (as defined in the 2017 Credit Agreement) serve as guarantors (“Guarantor Subsidiaries”) of our senior unsecured notes. The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of Advance to obtain funds from its Guarantor Subsidiaries. Certain of our wholly owned subsidiaries, including all of our foreign subsidiaries and captive insurance subsidiary, do not serve as guarantors of our senior unsecured notes (“Non-Guarantor Subsidiaries”).

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, and cash flows of (i) Advance, (ii) the Guarantor Subsidiaries, (iii) the Non-Guarantor Subsidiaries and (iv) the eliminations necessary to arrive at consolidated information for Advance. Investments in subsidiaries of Advance are presented under the equity method. The statement of operations eliminations relate primarily to the sale of inventory from a Non-Guarantor Subsidiary to a Guarantor Subsidiary. The balance sheet eliminations relate primarily to the elimination of intercompany receivables and payables and subsidiary investment accounts.

12

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

As of April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838
Receivables, net	1,527		588,236		37,642		—		627,405
Inventories	—		4,337,802		188,201		—		4,526,003
Other current assets	20,456		135,401		1,855		(18,963)		138,749
Total current assets	21,983		6,232,895		336,080		(18,963)		6,571,995
Property and equipment, net of accumulated depreciation	45		1,435,544		8,889		—		1,444,478
Operating lease right-of-use assets	—		2,282,089		37,422		—		2,319,511
Goodwill	—		943,364		45,748		—		989,112
Intangible assets, net	—		661,964		36,068		—		698,032
Other assets, net	2,176		34,293		15,151		(2,176)		49,444
Investment in subsidiaries	4,482,653		536,410		—		(5,019,063)		—
Intercompany note receivable	749,673		—		—		(749,673)		—
Due from intercompany, net	—		76,861		400,463		(477,324)		—
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,083	$	3,135,056	$	168,068	$	—	$	3,304,207
Accrued expenses	—		528,764		18,355		(18,963)		528,156
Short-term borrowings on revolving credit facility	—		500,000		—		—		500,000
Other current liabilities	—		447,236		51,450		—		498,686
Total current liabilities	1,083		4,611,056		237,873		(18,963)		4,831,049
Long-term debt	1,241,094		—		—		—		1,241,094
Noncurrent operating lease liabilities	—		1,966,690		29,466		—		1,996,156
Deferred income taxes	—		320,835		14,606		(2,176)		333,265
Other long-term liabilities	—		72,513		61,466		—		133,979
Intercompany note payable	—		749,673		—		(749,673)		—
Due to intercompany, net	477,324		—		—		(477,324)		—
Commitments and contingencies
Stockholders' equity	3,537,029		4,482,653		536,410		(5,019,063)		3,537,029
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572

13

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Balance Sheet

As of December 28, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	285,100	$	133,565	$	—	$	418,665
Receivables, net	1,529		646,686		41,254		—		689,469
Inventories	—		4,233,562		198,606		—		4,432,168
Other current assets	12,710		150,316		3,442		(11,227)		155,241
Total current assets	14,239		5,315,664		376,867		(11,227)		5,695,543
Property and equipment, net of accumulated depreciation	54		1,423,920		9,239		—		1,433,213
Operating lease right-of-use assets	—		2,325,170		40,155		—		2,365,325
Goodwill	—		943,364		48,876		—		992,240
Intangible assets, net	—		670,386		39,370		—		709,756
Other assets, net	2,358		38,311		14,137		(2,358)		52,448
Investment in subsidiaries	4,445,209		550,910		—		(4,996,119)		—
Intercompany note receivable	749,354		—		—		(749,354)		—
Due from intercompany, net	—		571,981		342,832		(914,813)		—
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	3,231,927	$	190,060	$	—	$	3,421,987
Accrued expenses	—		523,518		23,572		(11,227)		535,863
Other current liabilities	—		508,811		11,041		—		519,852
Total current liabilities	—		4,264,256		224,673		(11,227)		4,477,702
Long-term debt	747,320		—		—		—		747,320
Noncurrent operating lease liabilities	—		1,986,039		31,120		—		2,017,159
Deferred income taxes	—		320,822		15,549		(2,358)		334,013
Other long-term liabilities	—		74,026		49,224		—		123,250
Intercompany note payable	—		749,354		—		(749,354)		—
Due to intercompany, net	914,813		—		—		(914,813)		—
Commitments and contingencies
Stockholders' equity	3,549,081		4,445,209		550,910		(4,996,119)		3,549,081
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525

14

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,608,324	$	146,222	$	(56,664)	$	2,697,882
Cost of sales, including purchasing and warehousing costs	—		1,471,553		91,837		(38,241)		1,525,149
Gross profit	—		1,136,771		54,385		(18,423)		1,172,733
Selling, general and administrative expenses	8,550		1,068,803		46,065		(29,110)		1,094,308
Operating (loss) income	(8,550)		67,968		8,320		10,687		78,425
Other, net:
Interest expense	(10,871)		(1,372)		—		—		(12,243)
Other income (expense), net	19,845		(9,171)		(5,976)		(10,687)		(5,989)
Total other, net	8,974		(10,543)		(5,976)		(10,687)		(18,232)
Income before provision for income taxes	424		57,425		2,344		—		60,193
Provision for income taxes	1,615		14,962		28		—		16,605
(Loss) income before equity in earnings of subsidiaries	(1,191)		42,463		2,316		—		43,588
Equity in earnings of subsidiaries	44,779		2,316		—		(47,095)		—
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,852,700	$	147,290	$	(47,954)	$	2,952,036
Cost of sales, including purchasing and warehousing costs	—		1,598,539		96,839		(47,954)		1,647,424
Gross profit	—		1,254,161		50,451		—		1,304,612
Selling, general and administrative expenses	12,119		1,077,144		31,409		(24,000)		1,096,672
Operating (loss) income	(12,119)		177,017		19,042		24,000		207,940
Other, net:
Interest expense	(13,512)		(1,406)		(26)		—		(14,944)
Other income (expense), net	26,211		(6,891)		2,442		(24,000)		(2,238)
Total other, net	12,699		(8,297)		2,416		(24,000)		(17,182)
Income before provision for income taxes	580		168,720		21,458		—		190,758
Provision for income taxes	1,300		42,294		4,664		—		48,258
(Loss) income before equity in earnings of subsidiaries	(720)		126,426		16,794		—		142,500
Equity in earnings of subsidiaries	143,220		16,794		—		(160,014)		—
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500

15

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588
Other comprehensive loss	(16,966)		(16,966)		(17,032)		33,998		(16,966)
Comprehensive income	$	26,622	$	27,813	$	(14,716)	$	(13,097)	$	26,622

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500
Other comprehensive income	4,155		4,155		4,060		(8,215)		4,155
Comprehensive income	$	146,655	$	147,375	$	20,854	$	(168,229)	$	146,655

16

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	32,103	$	(21,195)	$	—	$	10,908
Cash flows from investing activities:
Purchases of property and equipment	—		(82,497)		(476)		—		(82,973)
Purchase of an indefinite-lived intangible asset	—		(230)		—		—		(230)
Proceeds from sales of property and equipment	—		70		1		—		71
Net cash used in investing activities	—		(82,657)		(475)		—		(83,132)
Cash flows from financing activities:
Decrease in bank overdrafts	—		(18)		(52)		70		—
Proceeds from borrowings on revolving credit facility	—		500,000		—		—		500,000
Proceeds from issuance of senior unsecured notes	—		498,240		—		—		498,240
Dividends paid	—		(21,593)		—		—		(21,593)
Proceeds from the issuance of common stock	—		735		—		—		735
Repurchases of common stock	—		(35,761)		—		—		(35,761)
Other, net	—		(4,693)		—		(70)		(4,763)
Net cash provided by (used in) financing activities	—		936,910		(52)		—		936,858
Effect of exchange rate changes on cash	—		—		(3,461)		—		(3,461)
Net increase (decrease) in cash and cash equivalents	—		886,356		(25,183)		—		861,173
Cash and cash equivalents, beginning of period	—		285,100		133,565		—		418,665
Cash and cash equivalents, end of period	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838

17

Advance Auto Parts, Inc. and Subsidiaries

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 20, 2019

(In thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	264,504	$	(59,962)	$	—	$	204,542
Cash flows from investing activities:
Purchases of property and equipment	—		(60,966)		(346)		—		(61,312)
Proceeds from sales of property and equipment	—		552		1		—		553
Net cash used in investing activities	—		(60,414)		(345)		—		(60,759)
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	—		(51,585)		1,007		—		(50,578)
Redemption of senior unsecured notes	—		(310,047)		—		—		(310,047)
Dividends paid	—		(8,723)		—		—		(8,723)
Proceeds from the issuance of common stock	—		678		—		—		678
Repurchases of common stock	—		(134,291)		—		—		(134,291)
Other, net	4		(215)		—		(4)		(215)
Net cash provided by (used in) financing activities	4		(504,183)		1,007		(4)		(503,176)
Effect of exchange rate changes on cash	—		—		196		—		196
Net increase (decrease) in cash and cash equivalents	4		(300,093)		(59,104)		(4)		(359,197)
Cash and cash equivalents, beginning of period	—		785,605		110,922		—		896,527
Cash and cash equivalents, end of period	$	4	$	485,512	$	51,818	$	(4)	$	537,330

18

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 our Annual Report on Form 10-K for the year ended December 28, 2019 (filed with the SEC on February 18, 2020), which we refer to as our 2019 Form 10-K, and our condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report.

Impact of COVID-19 on Our Business

During the COVID-19 pandemic we are prioritizing protecting the health and safety of our Team Members and customers as we continue to operate our business to help ensure that people continue to have reliable transportation; working to drive financial performance by taking action to strengthen our cash position, scrutinizing planed spending and prioritizing various initiatives; and working to help ensure that when the current period of crisis passes, our team will emerge even stronger.

In response to the COVID-19 pandemic, we have taken additional measures to help ensure the health and safety of our Team Members and customers. Such measures include the implementation of incremental pay and other labor-related benefits for Team Members, execution of social distancing practices, increased sanitation practices across Advance and the implementation of heath check screenings. In addition, we have accelerated certain business initiatives and implemented innovative solutions to better serve both our DIY and Professional customers in a manner consistent with enhanced safety practices, such as curbside delivery.

The COVID-19 pandemic has resulted in significant economic disruption and has adversely affected our business. Government imposed restrictions and stay at home orders related to the pandemic, which have contributed to a reduction in miles driven, were imposed during our first quarter of 2020. These restrictions contributed to a decrease in demand for our products and services across both DIY retail traffic and Professional customer car counts, primarily during the last six weeks of the sixteen weeks ended April 18, 2020. While a majority of our stores and facilities continue to operate, we adjusted our store operating hours to better align our variable operating cost, such as labor-related and utility expenses, with the lower demand.

Given potential factors and other uncertainties related to the impact of the COVID-19 pandemic, including those related to slowdown in economic activity, weaker demand, fewer miles driven, supply disruptions or constraints and the spread of the pandemic and related governmental actions, we have implemented specific actions to preserve short-term and long-term liquidity. As described further in “Liquidity and Capital Resources,” during the first quarter of 2020, we drew $500.0 million from our existing revolving credit facility and issued $500.0 million in aggregate principal amount of senior unsecured notes to help strengthen our liquidity position.

Additionally, both to drive financial performance and better position our team to emerge stronger on the other side of the crisis, we are reducing planned spending and prioritizing certain operational initiatives. We have evaluated, and are continuing to evaluate, and we have taken, and plan to continue taking, actions to reduce costs across our organization including reducing costs in our stores and supply chain to reflect volume declines, deferring certain marketing expenses and electing to temporarily discontinue the use of our share repurchase program. We are also prioritizing certain initiatives that we believe will develop our Team Members and enable us to better serve our customers online and through our stores, but that we also believe will have the best return. In the first quarter of 2020, we launched a new mobile application, making it even easier for our customers to order the parts they need. We also introduced a suite of services we are calling “Advance Same Day,” which includes same day in-store pick up, same day curbside and same day delivery service.

The COVID-19 pandemic remains a rapidly evolving situation. We continue to actively monitor developments that may cause us to take further actions that alter our business operations as may be required by federal, state or local authorities or that we determine are in the best interests of our Team Members, customers, suppliers and stockholders.

Management Overview

Net sales decreased 8.6% in the first quarter of 2020 as compared to the same period of prior year, primarily driven by a decrease in comparable store sales resulting from less overall demand, largely caused by the COVID-19 pandemic.

19

We generated diluted earnings per share (“diluted EPS”) of $0.63 during our first quarter of 2020 compared to $1.98 for the comparable period of 2019. When adjusted for the following non-operational items, our adjusted diluted earnings per share (“Adjusted EPS”) for the sixteen weeks ended April 18, 2020 and April 20, 2019 were $0.91 and $2.46.

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Transformation expenses	$	0.19	$	0.14
General Parts International, Inc. (“GPI”) amortization of acquired intangible assets	0.09		0.09
Other adjustments	—		0.25

Refer to “Reconciliation of Non-GAAP Financial Measures” for further details of our comparable adjustments and the usefulness of such measures to investors.

Summary of First Quarter Financial Results

A high-level summary of our financial results for the first quarter of 2020 includes:

•Net sales during the first quarter of 2020 were $2.7 billion, a decrease of 8.6% as compared to the first quarter of 2019, primarily driven by a decrease in comparable store sales of 9.3%, largely due to the COVID-19 pandemic.

•Gross profit margin for the first quarter of 2020 was 43.5% of Net sales, a decrease of 72 basis points as compared to the first quarter of 2019. This decrease was primarily due to supply chain deleverage, unfavorable product mix and higher tariff related costs.

•SG&A for the first quarter of 2020 were 40.6% of Net sales, an unfavorable impact of 341 basis points as compared to the first quarter of 2019, which was primarily due to less SG&A productivity achieved, as well as an increase in certain Team Member labor-related benefits and supply costs incurred in response to the COVID-19 pandemic.

Business and Risks Update

We continue to make progress on the various elements of our strategic business plan, which is focused on improving the customer experience and driving consistent execution for both Professional and “do-it-yourself” (“DIY”) customers. To achieve these improvements, we have undertaken planned strategic initiatives to help build a foundation for long-term success across the organization, which include:

•Development of a demand-based assortment, leveraging purchase and search history from our common catalog, versus our existing push-down supply approach. This technology is a first step in moving from a supply-driven to a demand-driven assortment.

•Advancement towards optimizing our footprint by market, including consolidating our Worldpac and Autopart International businesses, to drive share, repurpose our in-market store and asset base and streamline our distribution network.

•Progress in the development of a more efficient end-to-end supply chain to deliver our broad assortment.

•Enhancement of our DIY omni-channel business, including the launch of ‘Advance Same Day’ Curbside Pick Up, ‘Advance Same Day’ Home Delivery and our mobile application and our eCommerce performance.

•On track to launch the iconic DieHard brand during the summer of 2020.

•Completed initial migration phase to our new enterprise resource planning (“ERP”) cloud-based financial system, which will continue in additional phases throughout subsequent periods.

•Continued focus on driving Professional growth, including branch openings, expansion of our independent Carquest network and offering a broader product assortment.

We have also identified new risks related to the COVID-19 pandemic. Refer to the “Impact of COVID-19 on Our Business” section and Part II, Item 1A. Risk Factors, of this quarterly report for more information.

20

Industry Update

Operating within the automotive aftermarket industry, we are influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. For a complete discussion of these factors, refer to our 2019 Form 10-K and the “Impact of COVID-19 on Our Business” section included within this Form 10-Q.

Stores and Branches

Key factors in selecting sites and market locations in which we operate include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the sixteen weeks ended April 18, 2020, 2 stores and branches were opened and 28 were closed or consolidated, resulting in a total of 5,011 stores and branches as of April 18, 2020, compared to a total of 5,037 stores and branches as of December 28, 2019.

Results of Operations

	Sixteen Weeks Ended								$ Increase/(Decrease)		Basis Points
(in millions)	April 18, 2020				April 20, 2019
Net sales	$	2,697.9	100.0	%	$	2,952.0	100.0	%	$	(254.1)	—
Cost of sales	1,525.1		56.5		1,647.4		55.8		(122.3)		72
Gross profit	1,172.7		43.5		1,304.6		44.2		(131.9)		(72)
SG&A	1,094.3		40.6		1,096.7		37.2		(2.4)		(341)
Operating income	78.4		2.9		207.9		7.0		(129.5)		(414)
Interest expense	(12.2)		(0.5)		(14.9)		(0.5)		2.7		5
Other (expense) income, net	(6.0)		(0.2)		(2.2)		(0.1)		(3.8)		(15)
Provision for income taxes	16.6		0.6		48.3		1.6		(31.7)		(102)
Net income	$	43.6	1.6	%	$	142.5	4.8	%	$	(98.9)	(321)

Note: Table amounts may not foot due to rounding.

Net Sales

Net sales decreased 8.6% during the first quarter of 2020 compared to the same period of 2019, primarily driven by a decrease in comparable store sales of 9.3% primarily resulting from less overall demand caused principally by the COVID-19 pandemic, particularly in the six weeks ended April 18, 2020. We calculate comparable store sales based on the change in store or branch sales starting once a location has been open for 13 complete accounting periods (approximately one year) and by including e-commerce sales. Sales to independently owned Carquest stores are excluded from our comparable store sales. Acquired stores are included in our comparable store sales once the stores have completed 13 complete accounting periods following the acquisition date. We include sales from relocated stores in comparable store sales from the original date of opening.

Gross Profit

Gross profit for the sixteen weeks ended April 18, 2020 was $1,172.7 million, or 43.5% of Net sales, as compared to $1,304.6 million, or 44.2% of Net sales, for the sixteen weeks ended April 20, 2019. This decrease in gross profit as a percentage of Net sales was primarily due to supply chain deleverage, unfavorable product mix and higher tariff related costs, partially offset by pricing actions.

As a result of changes in our LIFO reserve, an expense of $8.8 million and $26.4 million was included in the sixteen weeks ended April 18, 2020 and April 20, 2019.

21

Selling, general and administrative expenses

SG&A for the sixteen weeks ended April 18, 2020 was $1,094.3 million, or 40.6% of Net sales, as compared to $1,096.7 million, or 37.1% of Net sales, for the sixteen weeks ended April 20, 2019. This increase in SG&A as a percentage of Net sales was primarily due to an increase in certain Team Member labor-related benefits and in supplies related to enhanced cleaning and sanitation practices in response to the COVID-19 pandemic. These increases were partially offset by a reduction professional services costs incurred as various transformation-related projects have been postponed in an effort to preserve our financial flexibility in response to the COVID-19 pandemic.

Provision for income taxes

Our Provision for income taxes for the sixteen weeks ended April 18, 2020 was $16.6 million, as compared to $48.3 million for the sixteen weeks ended April 20, 2019. This decrease in the Provision for income taxes was primarily due to a decrease in taxable income. Our effective tax rate was 27.6% and 25.3% for the sixteen weeks ended April 18, 2020 and April 20, 2019. The increase in our effective tax rate was primarily due to certain permanent items, such as non-deductible compensation, and federal and state tax credits staying flat from the sixteen weeks ended April 18, 2020 and April 20, 2019, while our taxable income decreases.

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 and Adjusted EPS, 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. We have presented these non-GAAP financial measures as we believe that the presentation of our financial results that exclude (1) transformation expenses under our strategic business plan; (2) non-cash amortization related to the acquired GPI intangible assets; and (3) other non-recurring adjustments are useful and indicative of our base operations because the expenses vary from period to period in terms of size, nature and significance and/or relate to the integration of GPI and store closure and consolidation activity in excess of historical levels. These measures assist in comparing our current operating results with past periods and with the operational performance of other companies in our industry. The disclosure of these measures allows investors to evaluate our 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 we have determined are not normal, recurring cash operating expenses necessary to operate our 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 our business plan that focuses on specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise, that we do not view to be normal cash operating expenses. These expenses will include, but not be limited to the following:

•Restructuring costs - Costs primarily relating to the early termination of lease obligations, asset impairment charges, other facility closure costs and Team Member severance in connection with our 2018 Store Rationalization plan and 2017 Store and Supply Chain and Rationalization plan.

•Third-party professional services - Costs primarily relating to services rendered by vendors for assisting us with the development of various information technology and supply chain projects in connection with our enterprise integration initiatives.

•Other significant costs - Costs primarily relating to accelerated depreciation of various legacy information technology and supply chain systems in connection with our enterprise integration initiatives and temporary off-site workspace for project teams who are primarily working on the development of specific transformative activities that relate to the integration and streamlining of our operating structure across the enterprise.

GPI Amortization of Acquired Intangible Assets — As part of our acquisition of GPI, we obtained various intangible assets, including customer relationships, non-compete contracts and favorable leases agreements, which we expect to be subject to amortization through 2025.

22

We have included a reconciliation of this information to the most comparable GAAP measures in the following table:

	Sixteen Weeks Ended
(in thousands, except per share data)	April 18, 2020		April 20, 2019
Net income (GAAP)	$	43,588	$	142,500
Cost of sales adjustments:
Transformation expenses:
Restructuring costs	—		281
Other significant costs	1,253		—
Other adjustment (1)	—		13,009
SG&A adjustments:
GPI amortization of acquired intangible assets	8,443		8,459
Transformation expenses:
Restructuring costs	4,064		5,550
Third-party professional services	2,983		6,855
Other significant costs	9,160		1,525
Other income adjustment (2)	—		10,756
Provision for income taxes on adjustments (3)	(6,476)		(11,609)
Adjusted net income (Non-GAAP)	$	63,015	$	177,326
Diluted earnings per share (GAAP)	$	0.63	$	1.98
Adjustments, net of tax	0.28		0.48
Adjusted EPS (Non-GAAP)	$	0.91	$	2.46

⁽¹⁾During the sixteen weeks ended April 20, 2019, we made an out-of-period correction, which increased Cost of sales by $13.0 million, related to received not invoiced inventory.

⁽²⁾During the sixteen weeks ended April 20, 2019, we incurred charges relating to a make-whole provision and debt issuance costs of $10.1 million and $0.7 million resulting from the early redemption of our 2020 Notes.

⁽³⁾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

Our primary cash requirements necessary to maintain our current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives under our strategic business plan and other operational priorities. Historically, we have used available funds to repay borrowings under our credit facility, to periodically repurchase shares of our common stock under our stock repurchase program, to pay our quarterly cash dividends and for acquisitions; however, given uncertainties related to the COVID-19 pandemic, our future use of cash may differ as our current focus is more heavily weighted on preservation of cash and liquidity. Typically, we have funded our cash requirements primarily through cash generated from operations, supplemented by borrowings under our credit facilities and notes offerings as needed. We believe funds generated from our expected results of operations, available cash and cash equivalents, and available borrowings under our credit facility will be sufficient to fund our obligations for the next year.

Share Repurchase Program

On November 8, 2019, our Board of Directors authorized a $700.0 million share repurchase program as an addition to the previous $400.0 million share repurchase program that was authorized by our Board of Directors in August 2019.

23

During the sixteen weeks ended April 18, 2020, we repurchased 0.2 million shares of our common stock at an aggregate cost of $29.0 million, or an average price of $128.36 and per share under the share repurchase program. During the sixteen weeks ended April 20, 2019, we repurchased 0.8 million shares of our common stock at an aggregate cost of $127.2 million, or an average price of $159.65 per share, in connection with our share repurchase program. We had $861.7 million remaining under our share repurchase program as of April 18, 2020. We are evaluating and taking actions to reduce spending across our organization and have elected to temporarily discontinue the use of our share repurchase program.

Analysis of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Cash flows provided by operating activities	$	10,908	$	204,542
Cash flows used in investing activities	(83,132)		(60,759)
Cash flows used in financing activities	936,858		(503,176)
Effect of exchange rate changes on cash	(3,461)		196
Net increase (decrease) in Cash and cash equivalents	$	861,173	$	(359,197)

Operating Activities

For the sixteen weeks ended April 18, 2020, net cash provided by operating activities decreased by $193.7 million to $10.9 million compared to the comparable period of 2019. The net decrease in operating cash flows compared to the prior year was primarily driven by a decrease in Net income, largely due to the impact of the COVID-19 pandemic, and decreases in overall working capital, including decreases in Accounts payable and Inventories, partially offset by an increase in Receivables, net.

Investing Activities

For the sixteen weeks ended April 18, 2020, net cash used in investing activities increased by $22.4 million to $83.1 million compared to the comparable period of 2019. Cash used in investing activities for the sixteen weeks ended April 18, 2020 consisted primarily of purchases of property and equipment, which was $21.7 million higher than the comparable period of 2019, primarily driven by investments made in supply chain, e-commerce and store improvements, as well as information technology as we remain focused on the complete back office integration throughout the enterprise.

Financing Activities

For the sixteen weeks ended April 18, 2020, net cash provided by financing activities was $936.9 million, an increase of $1,440.0 million as compared to the sixteen weeks ended April 20, 2019. This increase was primarily a result of issuing $500.0 million of senior unsecured notes and borrowing $500.0 million under our unsecured revolving credit facility during the sixteen weeks ended April 18, 2020.

Our Board of Directors has declared a quarterly cash dividend since 2006. Any payments of dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, cash flows, capital requirements and other factors deemed relevant by our Board of Directors. On May 15, 2020, our Board of Directors declared a quarterly cash dividend of $0.25 per share to be paid on July 3, 2020 to all common shareholders of record as of June 19, 2020.

Long-Term Debt

As of April 18, 2020, we had a credit rating from Standard & Poor’s of BBB- and from Moody’s Investor Service of Baa2. The current outlooks by Standard & Poor’s and Moody’s are both stable. The current pricing grid used to determine our borrowing rate under our revolving credit facility is based on our credit ratings. If these credit ratings decline, our interest rate on outstanding balances may increase and our access to additional financing on favorable terms may be limited. In addition, it could reduce the attractiveness of certain vendor payment programs whereby third-party institutions finance arrangements to our vendors based on our credit rating, which could result in increased working capital requirements. Conversely, if these credit ratings improve, our interest rate may decrease.

24

On April 16, 2020, we issued $500.0 million aggregate principal amount of senior unsecured notes. The 2030 Notes were issued at 99.65% of the principal amount of $500.0 million, are due April 15, 2030 and bear interest at 3.90% per year payable semi-annually in arrears on April 15 and October 15 of each year.

During the sixteen weeks ended April 18, 2020, we borrowed $500.0 million under our unsecured revolving credit facility, with a remaining borrowing availability of $500.0 million under such facility as of April 18, 2020.

Critical Accounting Policies and Estimates

Our financial statements have been prepared in accordance with GAAP. Our discussion and analysis of the financial condition and results of operations are based on these financial statements. The preparation of these financial statements requires the application of accounting policies in addition to certain estimates and judgments by our management. Our estimates and judgments are based on currently available information, historical results and other assumptions we believe are reasonable. Actual results could differ materially from these estimates.

During the sixteen weeks ended April 18, 2020, there were no changes to the critical accounting policies discussed in our 2019 Form 10-K. For a complete discussion of our critical accounting policies, refer to the 2019 Form 10-K.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our exposure to market risk since December 28, 2019. Refer to Item 7A. Quantitative and Qualitative Disclosures about Market Risk in our 2019 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 our 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 our 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 may vary over time.

Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of April 18, 2020. 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 effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our quarter ended April 18, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, during the quarter certain of our Team Members began working remotely and certain stores and distribution centers began operating with limited Team Members on-site. We have not identified any material changes in our internal control over financial reporting as a result of these changes to the working environment. We are continually monitoring and assessing the COVID-19 situation to determine any potential impacts on the design and operating effectiveness of our internal controls over financial reporting.

25

PART II.  OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

On February 6, 2018, a putative class action on behalf of purchasers of our securities who purchased or otherwise acquired their securities between November 14, 2016 and August 15, 2017, inclusive (the “Class Period”), was commenced against us and certain of our current and former officers in the U.S. District Court for the District of Delaware. The plaintiff alleges that the defendants failed to disclose material adverse facts about our financial well-being, business relationships, and prospects during the alleged Class Period in violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On February 7, 2020 the court granted in part and denied in part our motion to dismiss. The surviving claims will now be subject to discovery. In addition, on April 29, 2020, a derivative complaint purportedly on behalf of the Company was filed in the U.S. District Court for the District of Delaware, against us as nominal defendant and certain of our current and former officers and directors, related to similar allegations for the Class Period. We strongly dispute the allegations of the complaints and intend to defend the cases vigorously.

ITEM 1A. RISK FACTORS

This risk factor is intended to be an update to the Risk Factors found in our 2019 Form 10-K filed for the year ended December 28, 2019.

Matters related to the COVID-19 pandemic may significantly and adversely impact our business, financial position, results of operations and cash flows.

The spread of the COVID-19 pandemic has created a global public health crisis that has resulted in widespread volatility and deteriorations in household, business, economic and market conditions. We have begun experiencing negative impacts to demand for our products and services, which is adversely affecting our results of operations, and have also experienced significant disruption to our normal business operations and planned implementation of certain strategic initiatives. The extent of the impact of the COVID-19 pandemic on our capital, cash flows, liquidity and other financial positions and on our business, results of operations and prospects will depend on several evolving factors, including:

•The duration, extent and severity of the pandemic. COVID-19 has rapidly spread worldwide, and it is not yet known when the current pandemic will conclude, whether, when or to what extent additional outbreaks may arise or the extent to which various populations will be impacted, nor whether the pandemic will lead to a recession and/or reduction in consumer spending after it resolves.

•The response of governmental and nongovernmental authorities. Many governmental and nongovernmental bodies have taken action to curtail household and business activity to help slow the spread of COVID-19 or to otherwise mitigate potential adverse effects from COVID-19. These actions vary by locale, and while they have recently generally been relaxing in scope, we have not experienced widespread disruption to date, such actions may impose restrictions on our operations, such as requiring us to reduce store operating hours, change store operations or close stores, or otherwise impose restrictions on or impact whether, when and how our customers do business with us. These type of actions may also impact the operations of our suppliers, distributors or others with which we do business, causing disruption to our store operations.

•Impacts to economic and market conditions. COVID-19 has created significant disruption to and volatility in national, regional and local economies and markets. Uncertainties related to, and perceived or experienced negative effects from, COVID-19 may cause significant volatility or decline in the trading price of our securities, capital market conditions and general economic conditions. These may increase the likelihood of litigation, including derivative stockholder litigation, limit or restrict our ability to access capital on favorable terms, or at all, lead to consolidation that negatively impacts our business, weaken customer demand, increase industry competition, result in reductions in our labor force, cause us to further reduce our capital spend or otherwise disrupt our business or make it more difficult to implement our strategic plans.

•Impacts to individuals and companies that may do business with us or be involved in our business. COVID-19 may impact the health of our Team Members, directors or customers, reduce the availability of our workforce or those of companies with which we do business, create disruptions in our supply or distribution networks or otherwise cause human impacts that negatively impact our business. Additionally, while we have continued to prioritize the health and safety of our Team Members and customers as we continue to operate during the pandemic, we face an increased risk of litigation related to our operating environments.

26

Table of Contents

In addition, preparing for and responding to the continuing pandemic could divert management’s attention from our key strategic priorities, increase costs as we prioritize health and safety matters for our Team Members and customers, cause us to reduce, delay, alter or abandon initiatives that may otherwise increase our long-term value, increase vulnerability to information technology or cybersecurity related risks as more of our Team Members work remotely and otherwise continue to disrupt our business operations.

We are unable to estimate the impact of the COVID-19 pandemic on our business and operations at this time. The pandemic could cause us to experience impairment of our goodwill and other assets, further reduced demand for our products and services and other negative impacts on our financial position, results of operations and cash flows. Sustained adverse effects may also prevent us from satisfying financial covenants in our credit agreement or result in downgrades in our credit ratings.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table sets forth the information with respect to repurchases of our common stock for the quarter ended April 18, 2020: 

	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 (2)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) (in thousands)
December 29, 2019 to January 25, 2020	51	$	160.62	—	$	890,764
January 26, 2020 to February 22, 2020	3,478	136.88		—	890,764
February 23, 2020 to March 21, 2020	271,151	129.18		226,058	861,747
March 22, 2020 to April 18, 2020	2,156	116.36		—	861,747
Total	276,836	$	129.18	226,058	$	861,747

⁽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 $6.7 million, or an average price of $132.82 per share, during the sixteen weeks ended April 18, 2020.

⁽²⁾On November 8, 2019, our Board of Directors authorized a $700.0 million share repurchase program. This new authorization was in addition to the $400.0 million share repurchase program that was authorized by our Board of Directors in August 2019.

27

ITEM 6.EXHIBITS 

		Incorporated by Reference			Filed
Exhibit No.	Exhibit Description	Form	Exhibit	Filing Date	Herewith
3.1	Restated Certificate of Incorporation of Advance Auto Parts, Inc., effective May 24, 2017.	10-Q	3.1	8/14/2018
3.2	Amended and Restated Bylaws of Advance Auto Parts, Inc., effective May 24, 2017.	10-Q	3.2	5/22/2018
4.1	Indenture, dated as of April 16, 2020 by and among Advance Auto Parts, Inc., each of the subsidiary guarantors party thereto and Wells Fargo Bank, National Association, as trustee.	8-K	4.1	4/17/2020
4.2	Registration Rights Agreement, dated as of April 16, 2020, by and among Advance Auto Parts, Inc., each of the guarantors party thereto, BofA Securities, Inc., SunTrust Robinson Humphrey, Inc. and J.P. Morgan Securities LLC.	8-K	4.2	4/17/2020
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
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.				X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.				X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.				X
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document.				X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.				X

28

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: May 19, 2020	/s/ Andrew E. Page
	Andrew E. Page Senior Vice President, Controller and Chief Accounting Officer

29

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

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

I, Thomas R. Greco, 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: May 19, 2020

/s/ Thomas R. Greco

Thomas R. Greco

President and Chief Executive Officer and Director

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

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

I, Jeffrey W. Shepherd, 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: May 19, 2020

/s/ Jeffrey W. Shepherd

Jeffrey W. Shepherd

Executive Vice President, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

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

I, Thomas R. Greco, 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 April 18, 2020 (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:	May 19, 2020	By:	/s/ Thomas R. Greco
		Name:	Thomas R. Greco
		Title:	President and Chief Executive Officer and Director

I, Jeffrey W. Shepherd, 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 April 18, 2020 (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:	May 19, 2020	By:	/s/ Jeffrey W. Shepherd
		Name:	Jeffrey W. Shepherd
		Title:	Executive Vice President, Chief Financial Officer

XML

Significant Acounting Policies (Details)	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	100.00%	100.00%
Parts and Batteries [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	66.00%	66.00%
Accessories and Chemicals [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	21.00%	21.00%
Engine Maintenance [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	12.00%	12.00%
Other [Member]
Revenue from External Customer [Line Items]
Percentage Of Sales By Product Group	1.00%	1.00%

XML

Warranty Liabilities (Tables)

4 Months Ended

Apr. 18, 2020

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Liability

The following table presents changes in our warranty reserves:

	Sixteen Weeks Ended		Fifty-Two Weeks Ended
(in thousands)	April 18, 2020		December 28, 2019
Warranty reserve, beginning of period	$	36,820	$	45,280
Additions to warranty reserves	4,830		34,117
Reduction and utilization of reserve	(11,368)		(42,577)
Warranty reserve, end of period	$	30,282	$	36,820

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Net income	$ 43,588	$ 142,500
Other comprehensive (loss) income:
Changes in net unrecognized other postretirement costs, net of tax of $23 and $17	66	95
Currency translation adjustments	(17,032)	4,060
Total other comprehensive (loss) income	(16,966)	4,155
Comprehensive income	$ 26,622	$ 146,655

XML

Significant Acounting Policies

4 Months Ended

Apr. 18, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

Significant Accounting Policies:

Revenues

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

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Percentage of Net sales, by product group:
Parts and batteries	66	%	66	%
Accessories and chemicals	21		21
Engine maintenance	12		12
Other	1		1
Total	100	%	100	%

Recently Issued Accounting Pronouncements

In March 2020, the SEC amended Rule 3-10 of Regulation S-X (“Rule 3-10”) regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. Rule 3-10 is effective January 4, 2021 with earlier adoption permitted. We are currently evaluating the impact of Rule 3-10 on our consolidated financial statements and related disclosures.

During the sixteen weeks ended April 18, 2020, we adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which required us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements.

XML

Long-term Debt and Fair Value of Financial Instruments

4 Months Ended

Apr. 18, 2020

Debt Disclosure [Abstract]

Long-term Debt and Fair Value of Financial Instruments

Long-term Debt and Fair Value of Financial Instruments

Long-term debt consists of the following:

(in thousands)	April 18, 2020		December 28, 2019
4.50% Senior Unsecured Notes due January 15, 2022	$	299,523	$	299,441
4.50% Senior Unsecured Notes due December 1, 2023	448,019		447,879
3.90% Senior Unsecured Notes due April 15, 2030	493,552		—
Total long-term debt	$	1,241,094	$	747,320
Fair value of long-term debt	$	1,283,000	$	795,000

Fair Value of Financial Assets and Liabilities

The fair value of our senior unsecured notes was determined using Level 2 inputs based on quoted market prices. We believe the carrying value of our other long-term debt approximates fair value. The carrying amounts of our cash and cash equivalents, receivables, accounts payable, accrued expenses and borrowings under the unsecured revolving credit facility approximate their fair values due to the relatively short-term nature of these instruments.

Senior Unsecured Notes

Our 4.50% senior unsecured notes due January 15, 2022 (the “2022 Notes”) were issued in January 2012 at 99.97% of the principal amount of $300.0 million. The 2022 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on January 15 and July 15 of each year. Our 4.50% senior unsecured notes due December 1, 2023 (the “2023 Notes”) were issued in December 2013 at 99.69% of the principal amount of $450.0 million. The 2023 Notes bear interest at a rate of 4.50% per year payable semi-annually in arrears on June 1 and December 1 of each year.

On April 16, 2020, we issued $500.0 million aggregate principal amount of senior unsecured notes (the “2030 Notes”). The 2030 Notes were issued at 99.65% of the principal amount of $500.0 million, are due April 15, 2030 and bear interest at 3.90% per year payable semi-annually in arrears on April 15 and October 15 of each year (collectively with the 2023 Notes and 2022 Notes, referred to as our “senior unsecured notes”). In connection with the issuance of the 2030 Notes, we incurred $4.7 million of costs.

We may redeem some or all of the 2030 Notes at any time or from time to time, at the redemption price described in the related indenture for the 2030 Notes (the “Indenture”). In addition, in the event of a Change of Control Triggering Event (as defined in the Indenture), we will be required to offer to repurchase the 2030 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. The 2030 Notes are currently fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by each of our Guarantor Subsidiaries, as defined in Note 12, Condensed Consolidating Financial Statements, of the Notes to the Condensed Consolidated Financial Statements.

Bank Debt

As of April 18, 2020, we had $500.0 million of outstanding borrowings, $500.0 million of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility (the “2017 Credit Agreement”). As of December 28, 2019, we had no outstanding borrowings, $1.0 billion of borrowing availability and no letters of credit outstanding under the unsecured revolving credit facility.

In connection with our bilateral credit facility, we had outstanding letters of credit of $111.6 million as of April 18, 2020 and December 28, 2019, which generally have a term of one year or less and primarily serve as collateral for our self-insurance policies.

We were in compliance with financial covenants required by our debt arrangements as of April 18, 2020.

Debt Guarantees

We are a guarantor of loans made by banks to various independently owned Carquest-branded stores that are our customers totaling $52.7 million and $26.4 million as of April 18, 2020 and December 28, 2019. These loans are collateralized by security agreements on merchandise inventory and other assets of the borrowers. The approximate value of the inventory collateralized by these agreements is $51.7 million and $50.3 million as of April 18, 2020 and December 28, 2019. We believe that the likelihood of performance under these guarantees is remote.

XML

Document and Entity Information Document Document - shares	4 Months Ended
	Apr. 18, 2020	May 15, 2020
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Apr. 18, 2020
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	2635 East Millbrook Road
Entity Address, City or Town	Raleigh
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	27604
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		69,101,221
Entity Central Index Key	0001158449
Current Fiscal Year End Date	--01-02
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Cash flows from operating activities:
Net income	$ 43,588	$ 142,500
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	78,579	69,885
Share-based compensation	13,809	10,984
Loss and impairment of long-lived assets	981	125
Provision (benefit) for deferred income taxes	146	(250)
Other	434	11,348
Net change in:
Receivables, net	59,303	(58,757)
Inventories	(104,899)	(68,742)
Accounts payable	(112,459)	102,941
Accrued expenses	(1,824)	(62,751)
Other assets and liabilities, net	33,250	57,259
Net cash provided by operating activities	10,908	204,542
Cash flows from investing activities:
Purchases of property and equipment	(82,973)	(61,312)
Purchase of an indefinite-lived intangible asset	(230)	0
Proceeds from sales of property and equipment	71	553
Net cash used in investing activities	(83,132)	(60,759)
Cash flows from financing activities:
Decrease in bank overdrafts	0	(50,578)
Proceeds from borrowings on revolving credit facility	500,000	0
Proceeds from issuance of senior unsecured notes	498,240	0
Redemption of senior unsecured notes	0	(310,047)
Dividends paid	(21,593)	(8,723)
Proceeds from the issuance of common stock	735	678
Repurchases of common stock	(35,761)	(134,291)
Other, net	(4,763)	(215)
Net cash provided by (used in) financing activities	936,858	(503,176)
Effect of exchange rate changes on cash	(3,461)	196
Net increase (decrease) in cash and cash equivalents	861,173	(359,197)
Cash and cash equivalents, beginning of period	418,665	896,527
Cash and cash equivalents, end of period	1,279,838	537,330
Non-cash transactions:
Accrued purchases of property and equipment	$ 25,080	$ 14,194

XML

Earnings per Share

4 Months Ended

Apr. 18, 2020

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share

The computation of basic and diluted earnings per share are as follows:  

	Sixteen Weeks Ended
(in thousands, except per share data)	April 18, 2020		April 20, 2019
Numerator
Net income applicable to common shares	$	43,588	$	142,500
Denominator
Basic weighted average common shares	69,181		71,787
Dilutive impact of share-based awards	211		316
Diluted weighted average common shares (1)	69,392		72,103
Basic earnings per common share	$	0.63	$	1.99
Diluted earnings per common share	$	0.63	$	1.98

⁽¹⁾For the sixteen weeks ended April 18, 2020, 271 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the sixteen weeks ended April 20,2019, these anti-dilutive RSUs were insignificant.

XML

Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands	Apr. 18, 2020	Dec. 28, 2019	Apr. 20, 2019	Dec. 29, 2018
Current assets:
Cash and cash equivalents	$ 1,279,838	$ 418,665	$ 537,330	$ 896,527
Receivables, net	627,405	689,469
Inventories	4,526,003	4,432,168
Other current assets	138,749	155,241
Total current assets	6,571,995	5,695,543
Property and equipment, net of accumulated depreciation	1,444,478	1,433,213
Operating Lease, Right-of-Use Asset	2,319,511	2,365,325
Goodwill	989,112	992,240
Intangible assets, net	698,032	709,756
Other assets, net	49,444	52,448
Investment in subsidiaries	0	0
Intercompany note receivable	0	0
Due from intercompany, net	0	0
Assets, Total	12,072,572	11,248,525
Current liabilities:
Accounts payable	3,304,207	3,421,987
Accrued expenses	528,156	535,863
Short-term borrowings on revolving credit facility	500,000	0
Other current liabilities	498,686	519,852
Total current liabilities	4,831,049	4,477,702
Long-term debt	1,241,094	747,320
Noncurrent operating lease liabilities	1,996,156	2,017,159
Deferred income taxes	333,265	334,013
Other long-term liabilities	133,979	123,250
Intercompany note payable	0	0
Due to intercompany, net	0	0
Commitments and contingencies
Stockholders' equity	3,537,029	3,549,081	3,547,223	3,550,813
Liabilities and Stockholders' Equity, Total	12,072,572	11,248,525
Advance Auto Parts, Inc. [Member]
Current assets:
Cash and cash equivalents	0	0	4	0
Receivables, net	1,527	1,529
Inventories	0	0
Other current assets	20,456	12,710
Total current assets	21,983	14,239
Property and equipment, net of accumulated depreciation	45	54
Operating Lease, Right-of-Use Asset	0	0
Goodwill	0	0
Intangible assets, net	0	0
Other assets, net	2,176	2,358
Investment in subsidiaries	4,482,653	4,445,209
Intercompany note receivable	749,673	749,354
Due from intercompany, net	0	0
Assets, Total	5,256,530	5,211,214
Current liabilities:
Accounts payable	1,083	0
Accrued expenses	0	0
Short-term borrowings on revolving credit facility	0
Other current liabilities	0	0
Total current liabilities	1,083	0
Long-term debt	1,241,094	747,320
Noncurrent operating lease liabilities	0	0
Deferred income taxes	0	0
Other long-term liabilities	0	0
Intercompany note payable	0	0
Due to intercompany, net	477,324	914,813
Commitments and contingencies
Stockholders' equity	3,537,029	3,549,081
Liabilities and Stockholders' Equity, Total	5,256,530	5,211,214
Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	1,171,456	285,100	485,512	785,605
Receivables, net	588,236	646,686
Inventories	4,337,802	4,233,562
Other current assets	135,401	150,316
Total current assets	6,232,895	5,315,664
Property and equipment, net of accumulated depreciation	1,435,544	1,423,920
Operating Lease, Right-of-Use Asset	2,282,089	2,325,170
Goodwill	943,364	943,364
Intangible assets, net	661,964	670,386
Other assets, net	34,293	38,311
Investment in subsidiaries	536,410	550,910
Intercompany note receivable	0	0
Due from intercompany, net	76,861	571,981
Assets, Total	12,203,420	11,839,706
Current liabilities:
Accounts payable	3,135,056	3,231,927
Accrued expenses	528,764	523,518
Short-term borrowings on revolving credit facility	500,000
Other current liabilities	447,236	508,811
Total current liabilities	4,611,056	4,264,256
Long-term debt	0	0
Noncurrent operating lease liabilities	1,966,690	1,986,039
Deferred income taxes	320,835	320,822
Other long-term liabilities	72,513	74,026
Intercompany note payable	749,673	749,354
Due to intercompany, net	0	0
Commitments and contingencies
Stockholders' equity	4,482,653	4,445,209
Liabilities and Stockholders' Equity, Total	12,203,420	11,839,706
Non-Guarantor Subsidiaries [Member]
Current assets:
Cash and cash equivalents	108,382	133,565	51,818	110,922
Receivables, net	37,642	41,254
Inventories	188,201	198,606
Other current assets	1,855	3,442
Total current assets	336,080	376,867
Property and equipment, net of accumulated depreciation	8,889	9,239
Operating Lease, Right-of-Use Asset	37,422	40,155
Goodwill	45,748	48,876
Intangible assets, net	36,068	39,370
Other assets, net	15,151	14,137
Investment in subsidiaries	0	0
Intercompany note receivable	0	0
Due from intercompany, net	400,463	342,832
Assets, Total	879,821	871,476
Current liabilities:
Accounts payable	168,068	190,060
Accrued expenses	18,355	23,572
Short-term borrowings on revolving credit facility	0
Other current liabilities	51,450	11,041
Total current liabilities	237,873	224,673
Long-term debt	0	0
Noncurrent operating lease liabilities	29,466	31,120
Deferred income taxes	14,606	15,549
Other long-term liabilities	61,466	49,224
Intercompany note payable	0	0
Due to intercompany, net	0	0
Commitments and contingencies
Stockholders' equity	536,410	550,910
Liabilities and Stockholders' Equity, Total	879,821	871,476
Consolidation, Eliminations [Member]
Current assets:
Cash and cash equivalents	0	0	$ (4)	$ 0
Receivables, net	0	0
Inventories	0	0
Other current assets	(18,963)	(11,227)
Total current assets	(18,963)	(11,227)
Property and equipment, net of accumulated depreciation	0	0
Operating Lease, Right-of-Use Asset	0	0
Goodwill	0	0
Intangible assets, net	0	0
Other assets, net	(2,176)	(2,358)
Investment in subsidiaries	(5,019,063)	(4,996,119)
Intercompany note receivable	(749,673)	(749,354)
Due from intercompany, net	(477,324)	(914,813)
Assets, Total	(6,267,199)	(6,673,871)
Current liabilities:
Accounts payable	0	0
Accrued expenses	(18,963)	(11,227)
Short-term borrowings on revolving credit facility	0
Other current liabilities	0	0
Total current liabilities	(18,963)	(11,227)
Long-term debt	0	0
Noncurrent operating lease liabilities	0	0
Deferred income taxes	(2,176)	(2,358)
Other long-term liabilities	0	0
Intercompany note payable	(749,673)	(749,354)
Due to intercompany, net	(477,324)	(914,813)
Commitments and contingencies
Stockholders' equity	(5,019,063)	(4,996,119)
Liabilities and Stockholders' Equity, Total	$ (6,267,199)	$ (6,673,871)

XML

Warranty Liabilities (Details) - USD ($) $ in Thousands	4 Months Ended	12 Months Ended
	Apr. 18, 2020	Dec. 28, 2019
Movement in Standard Product Warranty Accrual [Roll Forward]
Warranty reserve, beginning of period	$ 36,820	$ 45,280
Additions to warranty reserves	4,830	34,117
Reduction and utilization of reserve	(11,368)	(42,577)
Warranty reserve, end of period	$ 30,282	$ 36,820

XML

Inventories (Policies)	4 Months Ended
	Apr. 18, 2020
Accounting Policies [Abstract]
Inventory, Policy	Inventories are stated at the lower of cost or market.

XML

Significant Acounting Policies (Tables)

4 Months Ended

Apr. 18, 2020

Accounting Policies [Abstract]

Revenue from External Customers by Products and Services

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

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Percentage of Net sales, by product group:
Parts and batteries	66	%	66	%
Accessories and chemicals	21		21
Engine maintenance	12		12
Other	1		1
Total	100	%	100	%

XML

Condensed Consolidated Income Statement (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Condensed Income Statements, Captions [Line Items]
Net sales	$ 2,697,882	$ 2,952,036
Cost of sales, including purchasing and warehousing costs	1,525,149	1,647,424
Gross profit	1,172,733	1,304,612
Selling, general and administrative expenses	1,094,308	1,096,672
Operating income (loss)	78,425	207,940
Other, net:
Interest expense	(12,243)	(14,944)
Other income (expense), net	(5,989)	(2,238)
Total other, net	(18,232)	(17,182)
Income before provision for income taxes	60,193	190,758
Provision for income taxes	16,605	48,258
Income (loss) before equity in earnings of subsidiaries	43,588	142,500
Equity in earnings of subsidiaries	0	0
Net income	43,588	142,500
Advance Auto Parts, Inc. [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	0	0
Cost of sales, including purchasing and warehousing costs	0	0
Gross profit	0	0
Selling, general and administrative expenses	8,550	12,119
Operating income (loss)	(8,550)	(12,119)
Other, net:
Interest expense	(10,871)	(13,512)
Other income (expense), net	19,845	26,211
Total other, net	8,974	12,699
Income before provision for income taxes	424	580
Provision for income taxes	1,615	1,300
Income (loss) before equity in earnings of subsidiaries	(1,191)	(720)
Equity in earnings of subsidiaries	44,779	143,220
Net income	43,588	142,500
Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	2,608,324	2,852,700
Cost of sales, including purchasing and warehousing costs	1,471,553	1,598,539
Gross profit	1,136,771	1,254,161
Selling, general and administrative expenses	1,068,803	1,077,144
Operating income (loss)	67,968	177,017
Other, net:
Interest expense	(1,372)	(1,406)
Other income (expense), net	(9,171)	(6,891)
Total other, net	(10,543)	(8,297)
Income before provision for income taxes	57,425	168,720
Provision for income taxes	14,962	42,294
Income (loss) before equity in earnings of subsidiaries	42,463	126,426
Equity in earnings of subsidiaries	2,316	16,794
Net income	44,779	143,220
Non-Guarantor Subsidiaries [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	146,222	147,290
Cost of sales, including purchasing and warehousing costs	91,837	96,839
Gross profit	54,385	50,451
Selling, general and administrative expenses	46,065	31,409
Operating income (loss)	8,320	19,042
Other, net:
Interest expense	0	(26)
Other income (expense), net	(5,976)	2,442
Total other, net	(5,976)	2,416
Income before provision for income taxes	2,344	21,458
Provision for income taxes	28	4,664
Income (loss) before equity in earnings of subsidiaries	2,316	16,794
Equity in earnings of subsidiaries	0	0
Net income	2,316	16,794
Consolidation, Eliminations [Member]
Condensed Income Statements, Captions [Line Items]
Net sales	(56,664)	(47,954)
Cost of sales, including purchasing and warehousing costs	(38,241)	(47,954)
Gross profit	(18,423)	0
Selling, general and administrative expenses	(29,110)	(24,000)
Operating income (loss)	10,687	24,000
Other, net:
Interest expense	0	0
Other income (expense), net	(10,687)	(24,000)
Total other, net	(10,687)	(24,000)
Income before provision for income taxes	0	0
Provision for income taxes	0	0
Income (loss) before equity in earnings of subsidiaries	0	0
Equity in earnings of subsidiaries	(47,095)	(160,014)
Net income	$ (47,095)	$ (160,014)

XML

Share Repurchase Program (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019	Nov. 08, 2019	Aug. 07, 2019
Class of Stock [Line Items]
Treasury Stock, Shares, Acquired as Part of Authorized Plan	200	800
Payments for Repurchase of Common Stock	$ 29.0	$ 127.2
Acquired, Average Cost Per Share, Acquired as Part of Plan	$ 128.36	$ 159.65
Share Repurchase Program, Remaining Authorized Repurchase Amount	$ 861.7
August 2018 Share Repurchase Program [Member]
Class of Stock [Line Items]
Stock Repurchase Program, Authorized Amount				$ 400.0
August 2019 Share Repurchase Program [Member]
Class of Stock [Line Items]
Stock Repurchase Program, Authorized Amount			$ 700.0

XML

Significant Acounting Policies (Policies)

4 Months Ended

Apr. 18, 2020

Accounting Policies [Abstract]

Revenues

Revenues

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

	Sixteen Weeks Ended
	April 18, 2020		April 20, 2019
Percentage of Net sales, by product group:
Parts and batteries	66	%	66	%
Accessories and chemicals	21		21
Engine maintenance	12		12
Other	1		1
Total	100	%	100	%

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In March 2020, the SEC amended Rule 3-10 of Regulation S-X (“Rule 3-10”) regarding financial disclosure requirements for registered debt offerings involving subsidiaries as either issuers or guarantors and affiliates whose securities are pledged as collateral. This new guidance narrows the circumstances that require separate financial statements of subsidiary issuers and guarantors and streamlines the alternative disclosures required in lieu of those statements. Rule 3-10 is effective January 4, 2021 with earlier adoption permitted. We are currently evaluating the impact of Rule 3-10 on our consolidated financial statements and related disclosures.

During the sixteen weeks ended April 18, 2020, we adopted Financial Accounting Standard Board (“FASB”) Accounting Standards Update 2016-13 (“ASU 2016-13”), Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which required us to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaced the existing incurred loss model and is applicable to the measurement of credit losses on financial assets, including trade receivables. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements.

XML

Share-Based Compensation (Policies)	4 Months Ended
	Apr. 18, 2020
Accounting Policies [Abstract]
Fair Value Measurement, Policy	For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our 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.

XML

Inventories (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019	Dec. 28, 2019
Inventory [Line Items]
Percentage of LIFO Inventory	88.00%		89.00%
Inventory, LIFO Reserve, Effect on Income, Net	$ (8,800)	$ (26,400)
Inventories at first in, first out (“FIFO”)	4,393,236		$ 4,290,565
Adjustments to state inventories at LIFO	132,767		141,603
Inventories at LIFO	$ 4,526,003		$ 4,432,168

XML

Earnings per Share (Tables)

4 Months Ended

Apr. 18, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computation of basic and diluted earnings per share are as follows:  

	Sixteen Weeks Ended
(in thousands, except per share data)	April 18, 2020		April 20, 2019
Numerator
Net income applicable to common shares	$	43,588	$	142,500
Denominator
Basic weighted average common shares	69,181		71,787
Dilutive impact of share-based awards	211		316
Diluted weighted average common shares (1)	69,392		72,103
Basic earnings per common share	$	0.63	$	1.99
Diluted earnings per common share	$	0.63	$	1.98

⁽¹⁾For the sixteen weeks ended April 18, 2020, 271 thousand restricted stock units (“RSUs”) were excluded from the diluted calculation as their inclusion would have been anti-dilutive. For the sixteen weeks ended April 20,2019, these anti-dilutive RSUs were insignificant.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDES' EQUITY (Parenthetical) - $ / shares	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Statement of Stockholders' Equity (Parenthetical) [Abstract]
Cash dividends declared (per common share)	$ 0.25	$ 0.06

XML

Share Repurchase Program

4 Months Ended

Apr. 18, 2020

Stock Repurchases: [Abstract]

Share Repurchase Program

Share Repurchase Program

On November 8, 2019, our Board of Directors authorized a $700.0 million share repurchase program. This new authorization was in addition to the $400.0 million share repurchase program that was authorized by our Board of Directors in August 2019. Our share repurchase program permits the repurchase of our common stock on the open market and in privately negotiated transactions from time to time.

During the sixteen weeks ended April 18, 2020, we repurchased 0.2 million shares of our common stock at an aggregate cost of $29.0 million, or an average price of $128.36 per share, in connection with our share repurchase program. During the sixteen weeks ended April 20, 2019, we repurchased 0.8 million shares of our common stock at an aggregate cost of $127.2 million, or an average price of $159.65 per share, in connection with our share repurchase program. We had $861.7 million remaining under our share repurchase program as of April 18, 2020.

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Income Statement [Abstract]
Net sales	$ 2,697,882	$ 2,952,036
Cost of sales, including purchasing and warehousing costs	1,525,149	1,647,424
Gross profit	1,172,733	1,304,612
Selling, general and administrative expenses	1,094,308	1,096,672
Operating income	78,425	207,940
Other, net:
Interest expense	(12,243)	(14,944)
Other expense, net	(5,989)	(2,238)
Total other, net	(18,232)	(17,182)
Income before provision for income taxes	60,193	190,758
Provision for income taxes	16,605	48,258
Net income	$ 43,588	$ 142,500
Basic earnings per common share	$ 0.63	$ 1.99
Weighted average common shares outstanding	69,181	71,787
Diluted earnings per common share	$ 0.63	$ 1.98
Weighted average common shares outstanding	69,392	72,103

XML

Nature of Operations and Basis of Presentation

4 Months Ended

Apr. 18, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Operations and Basis of Presentation

Nature of Operations and Basis of Presentation:

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 have been prepared by us and 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 “Advance,” “we,” “us” or “our”).

As of April 18, 2020, we operated a total of 4,843 stores and 168 branches primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 18, 2020, we served 1,258 independently owned Carquest branded stores across the same geographic locations served by our stores and branches in addition to Mexico, the Bahamas, Turks and Caicos and the British Virgin Islands.

In March 2020, the World Health Organization categorized the COVID-19 outbreak as a pandemic (“the pandemic”). As a majority of our stores and facilities have remained open, we have taken additional measures to help protect the health and safety of our Team Members and customers. Such measures, among others, include the implementation of incremental pay and other labor-related benefits for Team Members and increased sanitation practices across Advance.

Government imposed restrictions and stay at home orders related to the pandemic occurred during our first quarter of 2020. These contributed to negative impacts to demand for our products and services, primarily during the last six weeks of the sixteen weeks ended April 18, 2020. While the majority of our stores remained opened, we adjusted our store operating hours to better align our variable operating cost, such as labor-related and utility expenses, with the lower demand.

In addition to macroeconomic factors, we considered the changes in our store operations, the increased cost to service our customers and the reduced demand for our product on the carrying value of our assets, including receivables, inventories, property and equipment, goodwill and other intangible assets. Although we have experienced negative financial impacts from the pandemic, they have not significantly affected the assumptions underpinning our long-term revenue and cash flow growth rates, operating models and business strategies and there was no material impairment of our various assets during the sixteen weeks ended April 18, 2020.

The COVID-19 pandemic remains a rapidly evolving situation. If we experience prolonged periods of decreased demand, it may lead to increased asset recovery and valuation risks in the future, such as impairment of goodwill, intangible assets, stores and other assets. We will continue to assess the impact of the pandemic on our financial position. The extent to which the COVID-19 pandemic will impact our operations, liquidity, compliance with debt covenants or financial results in subsequent periods is uncertain, but such impact could be material.

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 guidance. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for 2019 as filed with the SEC on February 18, 2020.

The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Our first quarter of the year contains sixteen weeks. Our second and third quarter of 2020 consist of twelve weeks, while our fourth quarter of 2020 contains thirteen weeks due to the 53-week fiscal year in 2020.

XML

Receivables, net

4 Months Ended

Apr. 18, 2020

Receivables [Abstract]

Receivables, net

Receivables, net

Receivables consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Trade	$	406,616	$	422,403
Vendor	210,483		249,009
Other	25,182		32,306
Total receivables	642,281		703,718
Less: allowance for doubtful accounts	(14,876)		(14,249)
Receivables, net	$	627,405	$	689,469

XML

Condensed Consolidating Statement of Cash Flows (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by (used in) operating activities	$ 10,908	$ 204,542
Net cash used in investing activities
Purchases of property and equipment	(82,973)	(61,312)
Purchase of an indefinite-lived intangible asset	(230)	0
Proceeds from sales of property and equipment	71	553
Net cash used in investing activities	(83,132)	(60,759)
Net cash provided by (used in) financing activities
Increase (decrease) in bank overdrafts	0	(50,578)
Proceeds from borrowings on revolving credit facility	500,000	0
Proceeds from issuance of senior unsecured notes	498,240	0
Redemption of senior unsecured notes	0	(310,047)
Dividends paid	(21,593)	(8,723)
Proceeds from the issuance of common stock	735	678
Repurchase of common stock	(35,761)	(134,291)
Other, net	(4,763)	(215)
Net cash provided by (used in) financing activities	936,858	(503,176)
Effect of exchange rate changes on cash	(3,461)	196
Net increase (decrease) in cash and cash equivalents	861,173	(359,197)
Cash and cash equivalents, beginning of period	418,665	896,527
Cash and cash equivalents, end of period	1,279,838	537,330
Advance Auto Parts, Inc. [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by (used in) operating activities	0	0
Net cash used in investing activities
Purchases of property and equipment	0	0
Purchase of an indefinite-lived intangible asset	0
Proceeds from sales of property and equipment	0	0
Net cash used in investing activities	0	0
Net cash provided by (used in) financing activities
Increase (decrease) in bank overdrafts	0	0
Proceeds from borrowings on revolving credit facility	0
Proceeds from issuance of senior unsecured notes	0
Redemption of senior unsecured notes		0
Dividends paid	0	0
Proceeds from the issuance of common stock	0	0
Repurchase of common stock	0	0
Other, net	0	4
Net cash provided by (used in) financing activities	0	4
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	0	4
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	0	4
Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by (used in) operating activities	32,103	264,504
Net cash used in investing activities
Purchases of property and equipment	(82,497)	(60,966)
Purchase of an indefinite-lived intangible asset	(230)
Proceeds from sales of property and equipment	70	552
Net cash used in investing activities	(82,657)	(60,414)
Net cash provided by (used in) financing activities
Increase (decrease) in bank overdrafts	(18)	(51,585)
Proceeds from borrowings on revolving credit facility	500,000
Proceeds from issuance of senior unsecured notes	498,240
Redemption of senior unsecured notes		310,047
Dividends paid	(21,593)	(8,723)
Proceeds from the issuance of common stock	735	678
Repurchase of common stock	(35,761)	(134,291)
Other, net	(4,693)	(215)
Net cash provided by (used in) financing activities	936,910	(504,183)
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	886,356	(300,093)
Cash and cash equivalents, beginning of period	285,100	785,605
Cash and cash equivalents, end of period	1,171,456	485,512
Non-Guarantor Subsidiaries [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by (used in) operating activities	(21,195)	(59,962)
Net cash used in investing activities
Purchases of property and equipment	(476)	(346)
Purchase of an indefinite-lived intangible asset	0
Proceeds from sales of property and equipment	1	1
Net cash used in investing activities	(475)	(345)
Net cash provided by (used in) financing activities
Increase (decrease) in bank overdrafts	(52)	1,007
Proceeds from borrowings on revolving credit facility	0
Proceeds from issuance of senior unsecured notes	0
Redemption of senior unsecured notes		0
Dividends paid	0	0
Proceeds from the issuance of common stock	0	0
Repurchase of common stock	0	0
Other, net	0	0
Net cash provided by (used in) financing activities	(52)	1,007
Effect of exchange rate changes on cash	(3,461)	196
Net increase (decrease) in cash and cash equivalents	(25,183)	(59,104)
Cash and cash equivalents, beginning of period	133,565	110,922
Cash and cash equivalents, end of period	108,382	51,818
Consolidation, Eliminations [Member]
Condensed Cash Flow Statements, Captions [Line Items]
Net cash provided by (used in) operating activities	0	0
Net cash used in investing activities
Purchases of property and equipment	0	0
Purchase of an indefinite-lived intangible asset	0
Proceeds from sales of property and equipment	0	0
Net cash used in investing activities	0	0
Net cash provided by (used in) financing activities
Increase (decrease) in bank overdrafts	70	0
Proceeds from borrowings on revolving credit facility	0
Proceeds from issuance of senior unsecured notes	0
Redemption of senior unsecured notes		0
Dividends paid	0	0
Proceeds from the issuance of common stock	0	0
Repurchase of common stock	0	0
Other, net	(70)	(4)
Net cash provided by (used in) financing activities	0	(4)
Effect of exchange rate changes on cash	0	0
Net increase (decrease) in cash and cash equivalents	0	(4)
Cash and cash equivalents, beginning of period	0	0
Cash and cash equivalents, end of period	$ 0	$ (4)

XML

Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation, Tax Benefit from Compensation Expense	$ 3.5	$ 2.7
Share-based Compensation, Cost Not yet Recognized	$ 92.1
Share-based Compensation, Cost Not yet Recognized, Period for Recognition	1 year 9 months 18 days
Performance-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in Period	74
Weighted Average Grant Date Fair Value	$ 130.03
Market-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in Period	37
Weighted Average Grant Date Fair Value	$ 145.04
Time-based RSUs [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in Period	239
Weighted Average Grant Date Fair Value	$ 131.27

XML

Leases (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019	Dec. 28, 2019
Lessee, Lease, Description [Line Items]
Total operating lease liabilities	$ 2,440,996		$ 2,495,141
Less: Current portion of operating lease liabilities	444,840		477,982
Noncurrent operating lease liabilities	1,996,156		$ 2,017,159
Operating lease cost	161,805	$ 160,046
Variable lease cost	43,537	49,690
Total lease cost	205,342	209,736
Remainder of 2020	402,575
2021	494,579
2022	403,251
2023	364,936
2024	286,731
Thereafter	870,831
Total lease payments	2,822,903
Less: Imputed interest	(381,907)
Lessee option to extend reasonably certain of being exercised	110,800
Operating lease legally binding minimum payments for lease that have not yet commenced	$ 154,200
Operating Lease, Weighted Average Remaining Lease Term	7 years 1 month 6 days
Operating Lease, Weighted Average Discount Rate, Percent	4.00%
Cash paid for amounts included in the measurement of lease liabilities:	$ 167,273	143,450
Right-of-use assets obtained in exchange for lease obligations:	$ 85,491	$ 108,881
Real Estate [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Renewal Term	5 years
Real Estate [Member] | Minimum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	5 years
Real Estate [Member] | Maximum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	10 years
Equipment [Member] | Minimum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	3 years
Equipment [Member] | Maximum [Member]
Lessee, Lease, Description [Line Items]
Lessee, Operating Lease, Term of Contract	5 years

XML

Share-Based Compensation

4 Months Ended

Apr. 18, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-Based CompensationDuring the sixteen weeks ended April 18, 2020, we granted 239 thousand time-based RSUs, 74 thousand performance-based RSUs and 37 thousand market-based RSUs. The general terms of the time-based, performance-based and market-based RSUs are similar to awards previously granted by us.

The weighted average fair values of the time-based, performance-based and market-based RSUs granted during the sixteen weeks ended April 18, 2020 were $131.27, $130.03 and $145.04 per share. For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our 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.

Total income tax benefit related to share-based compensation expense for the sixteen weeks ended April 18, 2020 and April 20, 2019 was $3.5 million and $2.7 million. As of April 18, 2020, there was $92.1 million of unrecognized compensation expense related to all share-based awards that is expected to be recognized over a weighted average period of 1.8 years.

XML

Long-term Debt and Fair Value of Financial Instruments (Policies)	4 Months Ended
	Apr. 18, 2020
Accounting Policies [Abstract]
Fair Value Measurement, Policy	For time-based and performance-based RSUs, the fair value of each award was determined based on the market price of our 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.

XML

Inventories (Tables)

4 Months Ended

Apr. 18, 2020

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory balances were as follows:

(in thousands)	April 18, 2020		December 28, 2019
Inventories at first in, first out (“FIFO”)	$	4,393,236	$	4,290,565
Adjustments to state inventories at LIFO	132,767		141,603
Inventories at LIFO	$	4,526,003	$	4,432,168

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) [Abstract]
Changes in net unrecognized other postretirement costs, net of tax of $23 and $17	$ 23	$ 17

XML

Inventories

4 Months Ended

Apr. 18, 2020

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories are stated at the lower of cost or market. We used the last in, first out (“LIFO”) method of accounting for approximately 88% and 89% of inventories as of April 18, 2020 and December 28, 2019. Under the LIFO method, our Cost of sales reflects the costs of the most recently purchased inventories, while the inventory carrying balance represents the costs for inventories purchased in the sixteen weeks ended April 18, 2020 and prior years. We recorded an increase to Cost of sales of $8.8 million and $26.4 million for the sixteen weeks ended April 18, 2020 and April 20, 2019 to state inventories at LIFO.

An actual valuation of inventory under the LIFO method is performed by us at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on our estimates of expected inventory levels and costs at the end of the year.

Inventory balances were as follows:

(in thousands)	April 18, 2020		December 28, 2019
Inventories at first in, first out (“FIFO”)	$	4,393,236	$	4,290,565
Adjustments to state inventories at LIFO	132,767		141,603
Inventories at LIFO	$	4,526,003	$	4,432,168

XML

Leases

4 Months Ended

Apr. 18, 2020

Leases [Abstract]

Leases

Leases

Substantially all of our leases are for facilities and vehicles. The initial term for facilities are typically 5 years to 10 years, with renewal options at 5 year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment leases are typically 3 years to 5 years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease liabilities consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Total operating lease liabilities	$	2,440,996	$	2,495,141
Less: Current portion of operating lease liabilities	(444,840)		(477,982)
Noncurrent operating lease liabilities	$	1,996,156	$	2,017,159

The current portion of operating lease liabilities is included in Other current liabilities in the accompanying condensed consolidated balance sheet.

Total lease cost is included in Cost of sales and selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income. Total lease cost is comprised of the following:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Operating lease cost	$	161,805	$	160,046
Variable lease cost	43,537		49,690
Total lease cost	$	205,342	$	209,736

The future maturity of lease liabilities are as follows:

(in thousands)	April 18, 2020
Remainder of 2020	$	402,575
2021	494,579
2022	403,251
2023	364,936
2024	286,731
Thereafter	870,831
Total lease payments	2,822,903
Less: Imputed interest	(381,907)
Total operating lease liabilities	$	2,440,996

Operating lease payments include $110.8 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $154.2 million of legally binding minimum lease payments for leases signed, but not yet commenced.

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are 7.1 years and 4.0% as of April 18, 2020. We calculated the weighted-average discount rates using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Other information relating to our lease liabilities is as follows:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	167,273	$	143,450
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	85,491	$	108,881

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Apr. 18, 2020	Dec. 28, 2019
Current assets:
Cash and cash equivalents	$ 1,279,838	$ 418,665
Receivables, net	627,405	689,469
Inventories	4,526,003	4,432,168
Other current assets	138,749	155,241
Total current assets	6,571,995	5,695,543
Property and equipment, net of accumulated depreciation of $2,081,478 and $2,037,849	1,444,478	1,433,213
Operating lease right-of-use assets	2,319,511	2,365,325
Goodwill	989,112	992,240
Intangible assets, net	698,032	709,756
Other assets	49,444	52,448
Assets, Total	12,072,572	11,248,525
Current liabilities:
Accounts payable	3,304,207	3,421,987
Accrued expenses	528,156	535,863
Short-term borrowings on revolving credit facility	500,000	0
Other current liabilities	498,686	519,852
Total current liabilities	4,831,049	4,477,702
Long-term debt	1,241,094	747,320
Noncurrent operating lease liabilities	1,996,156	2,017,159
Deferred income taxes	333,265	334,013
Other long-term liabilities	133,979	123,250
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	749,723	735,183
Treasury stock, at cost	(960,150)	(924,389)
Accumulated other comprehensive loss	(51,535)	(34,569)
Retained earnings	3,798,983	3,772,848
Total stockholders’ equity	3,537,029	3,549,081
Liabilities and Stockholders' Equity, Total	$ 12,072,572	$ 11,248,525

XML

Receivables, net (Details) - USD ($) $ in Thousands	Apr. 18, 2020	Dec. 28, 2019
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	$ 642,281	$ 703,718
Less: Allowance for doubtful accounts	(14,876)	(14,249)
Receivables, net	627,405	689,469
Trade Accounts Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	406,616	422,403
Accounts Receivable, Vendor [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	210,483	249,009
Accounts Receivable, Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total receivables	$ 25,182	$ 32,306

XML

Nature of Operations and Basis of Presentation (Details)	Apr. 18, 2020 store
Stores [Member]
Basis of Presentation [Line Items]
Number of Stores	4,843
Branches [Member]
Basis of Presentation [Line Items]
Number of Stores	168
Independently owned Carquest store locations [Member]
Basis of Presentation [Line Items]
Number of Stores	1,258

XML

Leases (Tables)

4 Months Ended

Apr. 18, 2020

Leases [Abstract]

Schedule of Operating Lease Liabilities

Operating lease liabilities consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Total operating lease liabilities	$	2,440,996	$	2,495,141
Less: Current portion of operating lease liabilities	(444,840)		(477,982)
Noncurrent operating lease liabilities	$	1,996,156	$	2,017,159

Lease, Cost

Total lease cost is comprised of the following:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Operating lease cost	$	161,805	$	160,046
Variable lease cost	43,537		49,690
Total lease cost	$	205,342	$	209,736

Lessee, Operating Lease, Liability, Maturity

The future maturity of lease liabilities are as follows:

(in thousands)	April 18, 2020
Remainder of 2020	$	402,575
2021	494,579
2022	403,251
2023	364,936
2024	286,731
Thereafter	870,831
Total lease payments	2,822,903
Less: Imputed interest	(381,907)
Total operating lease liabilities	$	2,440,996

Schedule of Other Information Relating to Lease Liabilities

Other information relating to our lease liabilities is as follows:

	Sixteen Weeks Ended
(in thousands)	April 18, 2020		April 20, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	167,273	$	143,450
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	85,491	$	108,881

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDES' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Treasury Stock, at Cost	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Balance at Dec. 29, 2018	$ 3,550,813	$ 8	$ 694,797	$ (425,954)	$ (44,193)	$ 3,326,155
Balance (in shares) at Dec. 29, 2018		72,460
Net income	142,500					142,500
Cumulative effect of accounting change from adoption of ASU 2016-02, net of tax	(23,165)					(23,165)
Total other comprehensive income (loss)	4,155				4,155
Restricted stock units and deferred stock units vested	0	$ 111
Share-based compensation	10,984		10,984
Stock issued under employee stock purchase plan	678		678
Stock issued under employee stock purchase plan (in shares)		5
Repurchases of common stock (in shares)		(840)
Repurchases of common stock	(134,291)			(134,291)
Cash dividends declared	(4,352)					(4,352)
Stock Issued During Period, Shares, Other		1
Other	(99)		(99)
Balance at Apr. 20, 2019	3,547,223	$ 8	706,360	(560,245)	(40,038)	3,441,138
Balance (in shares) at Apr. 20, 2019		71,737
Balance at Dec. 28, 2019	3,549,081	$ 8	735,183	(924,389)	(34,569)	3,772,848
Balance (in shares) at Dec. 28, 2019		69,232
Net income	43,588					43,588
Total other comprehensive income (loss)	(16,966)				(16,966)
Restricted stock units and deferred stock units vested	0	$ 137
Share-based compensation	13,809		13,809
Stock issued under employee stock purchase plan	735		735
Stock issued under employee stock purchase plan (in shares)		9
Repurchases of common stock (in shares)		(277)
Repurchases of common stock	(35,761)			(35,761)
Cash dividends declared	(17,453)					(17,453)
Other	(4)		(4)
Balance at Apr. 18, 2020	$ 3,537,029	$ 8	$ 749,723	$ (960,150)	$ (51,535)	$ 3,798,983
Balance (in shares) at Apr. 18, 2020		69,101

XML

Intangible Assets	4 Months Ended
	Apr. 18, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets	Intangible AssetsOur definite-lived intangible assets include customer relationships and non-compete agreements. Amortization expense was $9.7 million for the sixteen weeks ended April 18, 2020 and April 20, 2019.

XML

Warranty Liabilities

4 Months Ended

Apr. 18, 2020

Product Warranties Disclosures [Abstract]

Warranty Liabilities

Warranty Liabilities

The following table presents changes in our warranty reserves:

	Sixteen Weeks Ended		Fifty-Two Weeks Ended
(in thousands)	April 18, 2020		December 28, 2019
Warranty reserve, beginning of period	$	36,820	$	45,280
Additions to warranty reserves	4,830		34,117
Reduction and utilization of reserve	(11,368)		(42,577)
Warranty reserve, end of period	$	30,282	$	36,820

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Apr. 18, 2020	Dec. 28, 2019
Statement of Financial Position [Abstract]
Property and equipment, net of accumulated depreciation of $2,081,478 and $2,037,849	$ 2,081,478	$ 2,037,849
Preferred stock, nonvoting, $0.0001 par value	$ 0.0001	$ 0.0001
Common stock, voting, $0.0001 par value	$ 0.0001	$ 0.0001

XML

Condensed Consolidating Financial Statements (Tables)

4 Months Ended

Apr. 18, 2020

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet

As of April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838
Receivables, net	1,527		588,236		37,642		—		627,405
Inventories	—		4,337,802		188,201		—		4,526,003
Other current assets	20,456		135,401		1,855		(18,963)		138,749
Total current assets	21,983		6,232,895		336,080		(18,963)		6,571,995
Property and equipment, net of accumulated depreciation	45		1,435,544		8,889		—		1,444,478
Operating lease right-of-use assets	—		2,282,089		37,422		—		2,319,511
Goodwill	—		943,364		45,748		—		989,112
Intangible assets, net	—		661,964		36,068		—		698,032
Other assets, net	2,176		34,293		15,151		(2,176)		49,444
Investment in subsidiaries	4,482,653		536,410		—		(5,019,063)		—
Intercompany note receivable	749,673		—		—		(749,673)		—
Due from intercompany, net	—		76,861		400,463		(477,324)		—
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,083	$	3,135,056	$	168,068	$	—	$	3,304,207
Accrued expenses	—		528,764		18,355		(18,963)		528,156
Short-term borrowings on revolving credit facility	—		500,000		—		—		500,000
Other current liabilities	—		447,236		51,450		—		498,686
Total current liabilities	1,083		4,611,056		237,873		(18,963)		4,831,049
Long-term debt	1,241,094		—		—		—		1,241,094
Noncurrent operating lease liabilities	—		1,966,690		29,466		—		1,996,156
Deferred income taxes	—		320,835		14,606		(2,176)		333,265
Other long-term liabilities	—		72,513		61,466		—		133,979
Intercompany note payable	—		749,673		—		(749,673)		—
Due to intercompany, net	477,324		—		—		(477,324)		—
Commitments and contingencies
Stockholders' equity	3,537,029		4,482,653		536,410		(5,019,063)		3,537,029
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572

Condensed Consolidating Balance Sheet

As of December 28, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	285,100	$	133,565	$	—	$	418,665
Receivables, net	1,529		646,686		41,254		—		689,469
Inventories	—		4,233,562		198,606		—		4,432,168
Other current assets	12,710		150,316		3,442		(11,227)		155,241
Total current assets	14,239		5,315,664		376,867		(11,227)		5,695,543
Property and equipment, net of accumulated depreciation	54		1,423,920		9,239		—		1,433,213
Operating lease right-of-use assets	—		2,325,170		40,155		—		2,365,325
Goodwill	—		943,364		48,876		—		992,240
Intangible assets, net	—		670,386		39,370		—		709,756
Other assets, net	2,358		38,311		14,137		(2,358)		52,448
Investment in subsidiaries	4,445,209		550,910		—		(4,996,119)		—
Intercompany note receivable	749,354		—		—		(749,354)		—
Due from intercompany, net	—		571,981		342,832		(914,813)		—
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	3,231,927	$	190,060	$	—	$	3,421,987
Accrued expenses	—		523,518		23,572		(11,227)		535,863
Other current liabilities	—		508,811		11,041		—		519,852
Total current liabilities	—		4,264,256		224,673		(11,227)		4,477,702
Long-term debt	747,320		—		—		—		747,320
Noncurrent operating lease liabilities	—		1,986,039		31,120		—		2,017,159
Deferred income taxes	—		320,822		15,549		(2,358)		334,013
Other long-term liabilities	—		74,026		49,224		—		123,250
Intercompany note payable	—		749,354		—		(749,354)		—
Due to intercompany, net	914,813		—		—		(914,813)		—
Commitments and contingencies
Stockholders' equity	3,549,081		4,445,209		550,910		(4,996,119)		3,549,081
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525

Condensed Consolidating Statement of Operations

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,608,324	$	146,222	$	(56,664)	$	2,697,882
Cost of sales, including purchasing and warehousing costs	—		1,471,553		91,837		(38,241)		1,525,149
Gross profit	—		1,136,771		54,385		(18,423)		1,172,733
Selling, general and administrative expenses	8,550		1,068,803		46,065		(29,110)		1,094,308
Operating (loss) income	(8,550)		67,968		8,320		10,687		78,425
Other, net:
Interest expense	(10,871)		(1,372)		—		—		(12,243)
Other income (expense), net	19,845		(9,171)		(5,976)		(10,687)		(5,989)
Total other, net	8,974		(10,543)		(5,976)		(10,687)		(18,232)
Income before provision for income taxes	424		57,425		2,344		—		60,193
Provision for income taxes	1,615		14,962		28		—		16,605
(Loss) income before equity in earnings of subsidiaries	(1,191)		42,463		2,316		—		43,588
Equity in earnings of subsidiaries	44,779		2,316		—		(47,095)		—
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,852,700	$	147,290	$	(47,954)	$	2,952,036
Cost of sales, including purchasing and warehousing costs	—		1,598,539		96,839		(47,954)		1,647,424
Gross profit	—		1,254,161		50,451		—		1,304,612
Selling, general and administrative expenses	12,119		1,077,144		31,409		(24,000)		1,096,672
Operating (loss) income	(12,119)		177,017		19,042		24,000		207,940
Other, net:
Interest expense	(13,512)		(1,406)		(26)		—		(14,944)
Other income (expense), net	26,211		(6,891)		2,442		(24,000)		(2,238)
Total other, net	12,699		(8,297)		2,416		(24,000)		(17,182)
Income before provision for income taxes	580		168,720		21,458		—		190,758
Provision for income taxes	1,300		42,294		4,664		—		48,258
(Loss) income before equity in earnings of subsidiaries	(720)		126,426		16,794		—		142,500
Equity in earnings of subsidiaries	143,220		16,794		—		(160,014)		—
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500

Condensed Consolidating Statement of Comprehensive Income

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588
Other comprehensive loss	(16,966)		(16,966)		(17,032)		33,998		(16,966)
Comprehensive income	$	26,622	$	27,813	$	(14,716)	$	(13,097)	$	26,622

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500
Other comprehensive income	4,155		4,155		4,060		(8,215)		4,155
Comprehensive income	$	146,655	$	147,375	$	20,854	$	(168,229)	$	146,655

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	32,103	$	(21,195)	$	—	$	10,908
Cash flows from investing activities:
Purchases of property and equipment	—		(82,497)		(476)		—		(82,973)
Purchase of an indefinite-lived intangible asset	—		(230)		—		—		(230)
Proceeds from sales of property and equipment	—		70		1		—		71
Net cash used in investing activities	—		(82,657)		(475)		—		(83,132)
Cash flows from financing activities:
Decrease in bank overdrafts	—		(18)		(52)		70		—
Proceeds from borrowings on revolving credit facility	—		500,000		—		—		500,000
Proceeds from issuance of senior unsecured notes	—		498,240		—		—		498,240
Dividends paid	—		(21,593)		—		—		(21,593)
Proceeds from the issuance of common stock	—		735		—		—		735
Repurchases of common stock	—		(35,761)		—		—		(35,761)
Other, net	—		(4,693)		—		(70)		(4,763)
Net cash provided by (used in) financing activities	—		936,910		(52)		—		936,858
Effect of exchange rate changes on cash	—		—		(3,461)		—		(3,461)
Net increase (decrease) in cash and cash equivalents	—		886,356		(25,183)		—		861,173
Cash and cash equivalents, beginning of period	—		285,100		133,565		—		418,665
Cash and cash equivalents, end of period	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 20, 2019

(In thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	264,504	$	(59,962)	$	—	$	204,542
Cash flows from investing activities:
Purchases of property and equipment	—		(60,966)		(346)		—		(61,312)
Proceeds from sales of property and equipment	—		552		1		—		553
Net cash used in investing activities	—		(60,414)		(345)		—		(60,759)
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	—		(51,585)		1,007		—		(50,578)
Redemption of senior unsecured notes	—		(310,047)		—		—		(310,047)
Dividends paid	—		(8,723)		—		—		(8,723)
Proceeds from the issuance of common stock	—		678		—		—		678
Repurchases of common stock	—		(134,291)		—		—		(134,291)
Other, net	4		(215)		—		(4)		(215)
Net cash provided by (used in) financing activities	4		(504,183)		1,007		(4)		(503,176)
Effect of exchange rate changes on cash	—		—		196		—		196
Net increase (decrease) in cash and cash equivalents	4		(300,093)		(59,104)		(4)		(359,197)
Cash and cash equivalents, beginning of period	—		785,605		110,922		—		896,527
Cash and cash equivalents, end of period	$	4	$	485,512	$	51,818	$	(4)	$	537,330

XML

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

4 Months Ended

Apr. 18, 2020

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt consists of the following:

(in thousands)	April 18, 2020		December 28, 2019
4.50% Senior Unsecured Notes due January 15, 2022	$	299,523	$	299,441
4.50% Senior Unsecured Notes due December 1, 2023	448,019		447,879
3.90% Senior Unsecured Notes due April 15, 2030	493,552		—
Total long-term debt	$	1,241,094	$	747,320
Fair value of long-term debt	$	1,283,000	$	795,000

XML

Intangible Asset (Details) - USD ($) $ in Millions	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization Expense	$ 9.7	$ 9.7

XML

Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net income applicable to common shares	$ 43,588	$ 142,500
Basic weighted average shares	69,181	71,787
Dilutive impact of share-based awards	211	316
Diluted weighted average shares	69,392	72,103
Basic earnings per common share	$ 0.63	$ 1.99
Diluted earnings per common share	$ 0.63	$ 1.98
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	271

XML

Long-term Debt and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 16, 2020	Dec. 28, 2019	Dec. 03, 2013	Jan. 11, 2012
Debt Instrument [Line Items]
Fair value of long-term debt	$ 1,283,000		$ 795,000
Guarantor Obligations, Maximum Exposure	52,700		26,400
Guarantor Obligation, Collateral Amount	51,700		50,300
Long-term debt	1,241,094		747,320
Short-term borrowings on revolving credit facility	500,000		0
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Letters of Credit Outstanding, Amount	0		0
Line of Credit Facility, Remaining Borrowing Capacity	500,000		1,000,000
Short-term borrowings on revolving credit facility	$ 500,000		0
4.50% senior unsecured notes (2023 Notes) [Member] [Member]
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage				4.50%
Debt Issuance, Percentage Of Principal				99.69%
Debt Instrument, Face Amount				$ 450,000
4.50% senior unsecured notes (2022 Notes)
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage					4.50%
Debt Issuance, Percentage Of Principal					99.97%
Debt Instrument, Face Amount					$ 300,000
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 Issuance Costs, Gross		$ 4,700
Debt Instrument, Face Amount		$ 500,000
Debt Instrument, Redemption, Description	We may redeem some or all of the 2030 Notes at any time or from time to time, at the redemption price described in the related indenture for the 2030 Notes (the “Indenture”). In addition, in the event of a Change of Control Triggering Event (as defined in the Indenture), we will be required to offer to repurchase the 2030 Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase date. The 2030 Notes are currently fully and unconditionally guaranteed, jointly and severally, on an unsubordinated unsecured basis by each of our Guarantor Subsidiaries, as defined in Note 12, Condensed Consolidating Financial Statements, of the Notes to the Condensed Consolidated Financial Statements.
Bilateral Letter of Credit Facility [Member]
Debt Instrument [Line Items]
Letters of Credit Outstanding, Amount	$ 111,600		111,600
Senior Notes [Member] | 4.50% senior unsecured notes (2023 Notes) [Member] [Member]
Debt Instrument [Line Items]
Long-term debt	448,019		447,879
Senior Notes [Member] | 4.50% senior unsecured notes (2022 Notes)
Debt Instrument [Line Items]
Long-term debt	299,523		299,441
Senior Notes [Member] | 3.90% senior unsecured notes (2030 Notes)
Debt Instrument [Line Items]
Long-term debt	$ 493,552		$ 0

XML

Condensed Consolidating Comprehensive Income Statement (Details) - USD ($) $ in Thousands	4 Months Ended
	Apr. 18, 2020	Apr. 20, 2019
Condensed Consolidating Comprehensive Income Statement [Line Items]
Net income	$ 43,588	$ 142,500
Other Comprehensive Income (Loss)	(16,966)	4,155
Comprehensive income	26,622	146,655
Advance Auto Parts, Inc. [Member]
Condensed Consolidating Comprehensive Income Statement [Line Items]
Net income	43,588	142,500
Other Comprehensive Income (Loss)	(16,966)	4,155
Comprehensive income	26,622	146,655
Guarantor Subsidiaries [Member]
Condensed Consolidating Comprehensive Income Statement [Line Items]
Net income	44,779	143,220
Other Comprehensive Income (Loss)	(16,966)	4,155
Comprehensive income	27,813	147,375
Non-Guarantor Subsidiaries [Member]
Condensed Consolidating Comprehensive Income Statement [Line Items]
Net income	2,316	16,794
Other Comprehensive Income (Loss)	(17,032)	4,060
Comprehensive income	(14,716)	20,854
Consolidation, Eliminations [Member]
Condensed Consolidating Comprehensive Income Statement [Line Items]
Net income	(47,095)	(160,014)
Other Comprehensive Income (Loss)	33,998	(8,215)
Comprehensive income	$ (13,097)	$ (168,229)

XML

Receivables, net (Tables)

4 Months Ended

Apr. 18, 2020

Receivables [Abstract]

Schedule of Accounts Receivable

Receivables consist of the following:

(in thousands)	April 18, 2020		December 28, 2019
Trade	$	406,616	$	422,403
Vendor	210,483		249,009
Other	25,182		32,306
Total receivables	642,281		703,718
Less: allowance for doubtful accounts	(14,876)		(14,249)
Receivables, net	$	627,405	$	689,469

XML

Condensed Consolidating Financial Statements

4 Months Ended

Apr. 18, 2020

Condensed Consolidating Financial Statements [Abstract]

Condensed Consolidating Financial Statements

Condensed Consolidating Financial Statements

Certain 100% wholly owned domestic subsidiaries of Advance, including our Material Subsidiaries (as defined in the 2017 Credit Agreement) serve as guarantors (“Guarantor Subsidiaries”) of our senior unsecured notes. The subsidiary guarantees related to our senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of Advance to obtain funds from its Guarantor Subsidiaries. Certain of our wholly owned subsidiaries, including all of our foreign subsidiaries and captive insurance subsidiary, do not serve as guarantors of our senior unsecured notes (“Non-Guarantor Subsidiaries”).

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, and cash flows of (i) Advance, (ii) the Guarantor Subsidiaries, (iii) the Non-Guarantor Subsidiaries and (iv) the eliminations necessary to arrive at consolidated information for Advance. Investments in subsidiaries of Advance are presented under the equity method. The statement of operations eliminations relate primarily to the sale of inventory from a Non-Guarantor Subsidiary to a Guarantor Subsidiary. The balance sheet eliminations relate primarily to the elimination of intercompany receivables and payables and subsidiary investment accounts.

Condensed Consolidating Balance Sheet

As of April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838
Receivables, net	1,527		588,236		37,642		—		627,405
Inventories	—		4,337,802		188,201		—		4,526,003
Other current assets	20,456		135,401		1,855		(18,963)		138,749
Total current assets	21,983		6,232,895		336,080		(18,963)		6,571,995
Property and equipment, net of accumulated depreciation	45		1,435,544		8,889		—		1,444,478
Operating lease right-of-use assets	—		2,282,089		37,422		—		2,319,511
Goodwill	—		943,364		45,748		—		989,112
Intangible assets, net	—		661,964		36,068		—		698,032
Other assets, net	2,176		34,293		15,151		(2,176)		49,444
Investment in subsidiaries	4,482,653		536,410		—		(5,019,063)		—
Intercompany note receivable	749,673		—		—		(749,673)		—
Due from intercompany, net	—		76,861		400,463		(477,324)		—
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,083	$	3,135,056	$	168,068	$	—	$	3,304,207
Accrued expenses	—		528,764		18,355		(18,963)		528,156
Short-term borrowings on revolving credit facility	—		500,000		—		—		500,000
Other current liabilities	—		447,236		51,450		—		498,686
Total current liabilities	1,083		4,611,056		237,873		(18,963)		4,831,049
Long-term debt	1,241,094		—		—		—		1,241,094
Noncurrent operating lease liabilities	—		1,966,690		29,466		—		1,996,156
Deferred income taxes	—		320,835		14,606		(2,176)		333,265
Other long-term liabilities	—		72,513		61,466		—		133,979
Intercompany note payable	—		749,673		—		(749,673)		—
Due to intercompany, net	477,324		—		—		(477,324)		—
Commitments and contingencies
Stockholders' equity	3,537,029		4,482,653		536,410		(5,019,063)		3,537,029
	$	5,256,530	$	12,203,420	$	879,821	$	(6,267,199)	$	12,072,572

Condensed Consolidating Balance Sheet

As of December 28, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—	$	285,100	$	133,565	$	—	$	418,665
Receivables, net	1,529		646,686		41,254		—		689,469
Inventories	—		4,233,562		198,606		—		4,432,168
Other current assets	12,710		150,316		3,442		(11,227)		155,241
Total current assets	14,239		5,315,664		376,867		(11,227)		5,695,543
Property and equipment, net of accumulated depreciation	54		1,423,920		9,239		—		1,433,213
Operating lease right-of-use assets	—		2,325,170		40,155		—		2,365,325
Goodwill	—		943,364		48,876		—		992,240
Intangible assets, net	—		670,386		39,370		—		709,756
Other assets, net	2,358		38,311		14,137		(2,358)		52,448
Investment in subsidiaries	4,445,209		550,910		—		(4,996,119)		—
Intercompany note receivable	749,354		—		—		(749,354)		—
Due from intercompany, net	—		571,981		342,832		(914,813)		—
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	—	$	3,231,927	$	190,060	$	—	$	3,421,987
Accrued expenses	—		523,518		23,572		(11,227)		535,863
Other current liabilities	—		508,811		11,041		—		519,852
Total current liabilities	—		4,264,256		224,673		(11,227)		4,477,702
Long-term debt	747,320		—		—		—		747,320
Noncurrent operating lease liabilities	—		1,986,039		31,120		—		2,017,159
Deferred income taxes	—		320,822		15,549		(2,358)		334,013
Other long-term liabilities	—		74,026		49,224		—		123,250
Intercompany note payable	—		749,354		—		(749,354)		—
Due to intercompany, net	914,813		—		—		(914,813)		—
Commitments and contingencies
Stockholders' equity	3,549,081		4,445,209		550,910		(4,996,119)		3,549,081
	$	5,211,214	$	11,839,706	$	871,476	$	(6,673,871)	$	11,248,525

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,608,324	$	146,222	$	(56,664)	$	2,697,882
Cost of sales, including purchasing and warehousing costs	—		1,471,553		91,837		(38,241)		1,525,149
Gross profit	—		1,136,771		54,385		(18,423)		1,172,733
Selling, general and administrative expenses	8,550		1,068,803		46,065		(29,110)		1,094,308
Operating (loss) income	(8,550)		67,968		8,320		10,687		78,425
Other, net:
Interest expense	(10,871)		(1,372)		—		—		(12,243)
Other income (expense), net	19,845		(9,171)		(5,976)		(10,687)		(5,989)
Total other, net	8,974		(10,543)		(5,976)		(10,687)		(18,232)
Income before provision for income taxes	424		57,425		2,344		—		60,193
Provision for income taxes	1,615		14,962		28		—		16,605
(Loss) income before equity in earnings of subsidiaries	(1,191)		42,463		2,316		—		43,588
Equity in earnings of subsidiaries	44,779		2,316		—		(47,095)		—
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588

Condensed Consolidating Statement of Operations

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net sales	$	—	$	2,852,700	$	147,290	$	(47,954)	$	2,952,036
Cost of sales, including purchasing and warehousing costs	—		1,598,539		96,839		(47,954)		1,647,424
Gross profit	—		1,254,161		50,451		—		1,304,612
Selling, general and administrative expenses	12,119		1,077,144		31,409		(24,000)		1,096,672
Operating (loss) income	(12,119)		177,017		19,042		24,000		207,940
Other, net:
Interest expense	(13,512)		(1,406)		(26)		—		(14,944)
Other income (expense), net	26,211		(6,891)		2,442		(24,000)		(2,238)
Total other, net	12,699		(8,297)		2,416		(24,000)		(17,182)
Income before provision for income taxes	580		168,720		21,458		—		190,758
Provision for income taxes	1,300		42,294		4,664		—		48,258
(Loss) income before equity in earnings of subsidiaries	(720)		126,426		16,794		—		142,500
Equity in earnings of subsidiaries	143,220		16,794		—		(160,014)		—
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	43,588	$	44,779	$	2,316	$	(47,095)	$	43,588
Other comprehensive loss	(16,966)		(16,966)		(17,032)		33,998		(16,966)
Comprehensive income	$	26,622	$	27,813	$	(14,716)	$	(13,097)	$	26,622

Condensed Consolidating Statement of Comprehensive Income

For the Sixteen Weeks Ended April 20, 2019

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net income	$	142,500	$	143,220	$	16,794	$	(160,014)	$	142,500
Other comprehensive income	4,155		4,155		4,060		(8,215)		4,155
Comprehensive income	$	146,655	$	147,375	$	20,854	$	(168,229)	$	146,655

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 18, 2020

(in thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	32,103	$	(21,195)	$	—	$	10,908
Cash flows from investing activities:
Purchases of property and equipment	—		(82,497)		(476)		—		(82,973)
Purchase of an indefinite-lived intangible asset	—		(230)		—		—		(230)
Proceeds from sales of property and equipment	—		70		1		—		71
Net cash used in investing activities	—		(82,657)		(475)		—		(83,132)
Cash flows from financing activities:
Decrease in bank overdrafts	—		(18)		(52)		70		—
Proceeds from borrowings on revolving credit facility	—		500,000		—		—		500,000
Proceeds from issuance of senior unsecured notes	—		498,240		—		—		498,240
Dividends paid	—		(21,593)		—		—		(21,593)
Proceeds from the issuance of common stock	—		735		—		—		735
Repurchases of common stock	—		(35,761)		—		—		(35,761)
Other, net	—		(4,693)		—		(70)		(4,763)
Net cash provided by (used in) financing activities	—		936,910		(52)		—		936,858
Effect of exchange rate changes on cash	—		—		(3,461)		—		(3,461)
Net increase (decrease) in cash and cash equivalents	—		886,356		(25,183)		—		861,173
Cash and cash equivalents, beginning of period	—		285,100		133,565		—		418,665
Cash and cash equivalents, end of period	$	—	$	1,171,456	$	108,382	$	—	$	1,279,838

Condensed Consolidating Statement of Cash Flows

For the Sixteen Weeks Ended April 20, 2019

(In thousands)	Advance Auto Parts, Inc.		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	—	$	264,504	$	(59,962)	$	—	$	204,542
Cash flows from investing activities:
Purchases of property and equipment	—		(60,966)		(346)		—		(61,312)
Proceeds from sales of property and equipment	—		552		1		—		553
Net cash used in investing activities	—		(60,414)		(345)		—		(60,759)
Cash flows from financing activities:
(Decrease) increase in bank overdrafts	—		(51,585)		1,007		—		(50,578)
Redemption of senior unsecured notes	—		(310,047)		—		—		(310,047)
Dividends paid	—		(8,723)		—		—		(8,723)
Proceeds from the issuance of common stock	—		678		—		—		678
Repurchases of common stock	—		(134,291)		—		—		(134,291)
Other, net	4		(215)		—		(4)		(215)
Net cash provided by (used in) financing activities	4		(504,183)		1,007		(4)		(503,176)
Effect of exchange rate changes on cash	—		—		196		—		196
Net increase (decrease) in cash and cash equivalents	4		(300,093)		(59,104)		(4)		(359,197)
Cash and cash equivalents, beginning of period	—		785,605		110,922		—		896,527
Cash and cash equivalents, end of period	$	4	$	485,512	$	51,818	$	(4)	$	537,330

XML

Leases (Policies)	4 Months Ended
	Apr. 18, 2020
Lessee, Leases [Abstract]
Lessee, Leases	Substantially all of our leases are for facilities and vehicles. The initial term for facilities are typically 5 years to 10 years, with renewal options at 5 year intervals, with the exercise of lease renewal options at our sole discretion. Our vehicle and equipment leases are typically 3 years to 5 years. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.The current portion of operating lease liabilities is included in Other current liabilities in the accompanying condensed consolidated balance sheet.Total lease cost is included in Cost of sales and selling, general and administrative expenses (“SG&A”) in the accompanying condensed consolidated statements of operations and is recorded net of immaterial sublease income.