Advance Auto Parts, Inc.

Net sales were $2.6 billion, up 1% year over year, with comparable sales up 3.5%. Adjusted gross profit was about $1.2 billion, or 45.1% of net sales, up more than 210 basis points year over year. Adjusted SG&A was about $1.1 billion, or 41.3% of net sales, with about 200 basis points of leverage. Adjusted operating income was $99 million, or 3.8% of sales, up 410 basis points year over year, and adjusted diluted EPS was $0.77 versus a loss of $0.22 last year. Free cash outflow was $75 million versus an outflow of $198 million last year, and quarter-end cash was approximately $3 billion with net debt leverage at 2.4x. For 2026, management guided to roughly $8.5 billion in net sales, 1% to 2% comparable sales growth, adjusted operating margin of 3.8% to 4.5%, adjusted gross margin expansion of 110 to 150 basis points to approximately 45%, adjusted EPS of $2.40 to $3.10, capital expenditures of about $300 million, 40 to 45 new stores, 10 to 15 market hubs, and free cash flow of about $100 million.

Shane O'Kelly framed Q1 as evidence that the turnaround is gaining traction, citing better parts availability, improved service, and a sharper merchandising strategy as the foundation for the best comp in 5 years. He emphasized that the company is trying to stabilize share now and position for future share gains, while staying focused on three pillars: merchandising, supply chain, and store operations. His tone was confident but measured, acknowledging consumer uncertainty and higher gas prices while reiterating confidence in the long-term auto parts demand backdrop.

Ryan Grimsland walked through the quarter’s financial improvement: $2.6 billion in sales, 45.1% gross margin, 41.3% SG&A, $99 million in operating income, and $0.77 adjusted EPS. He said free cash outflow improved to $75 million from $198 million last year, helped by stronger operations, better working capital, and lower restructuring cash costs, while inventory rose about 5% versus year-end 2025 to support broader parts availability. He also highlighted a solid balance sheet with about $3 billion in cash and 2.4x net debt leverage, and he reaffirmed guidance for $8.5 billion in sales, about 45% gross margin, $300 million in capex, and $100 million in free cash flow.

Analysts focused on the cadence of the year, with management saying Q2 comps should moderate a bit from Q1, that the second half still assumes the low end of the full-year comp range, and that the key watchpoint is consumer behavior through peak driving season after Memorial Day. On the DIFM side, management said the national-account rationalization is still a headwind, but it should ease over time, while Main Street Pro is a larger, higher-margin opportunity and is outperforming overall Pro. Questions also centered on whether the business is still too tied to the aftermarket cycle; management responded that it is controlling more of its own destiny through assortment, service, NPS, market hubs, and operational improvements, but it did not give any update on tariff refund prospects beyond saying it is following the process.