Advance Auto Parts (AAP) 49th Annual Gabelli Automotive Symposium summary

Key business updates and turnaround progress

• Achieved strongest quarter in over two years with 3% comp growth and 4.4% operating income, driven by both DIY and Pro segments.

• Accelerated DMA strategy and market hub expansion, targeting 33 hubs by year-end and 60 by mid-2027.

• Consolidated distribution centers from 50 to 16, improving supply chain efficiency and replenishment.

• Strategic sourcing and vendor partnerships validated, with $3.2 billion cash supporting supply chain finance.

• Maintains a positive cash flow trajectory, with restructuring charges included in guidance.

Strategic pillars and operational focus

• Three pillars: merchandising excellence, supply chain productivity, and store operations.

• Merchandising excellence expected to drive the largest portion of margin expansion, focusing on assortment, pricing, and vendor relations.

• Supply chain consolidation and productivity improvements are ongoing, with further gains targeted for next year.

• Store operating model aligns resources to market demand, with phased rollout after extended testing.

• Investments in frontline wages and store improvements to enhance customer and employee experience.

Leadership approach and cultural change

• Leadership emphasizes an inverted pyramid model, prioritizing frontline support and decisive action.

• Focus on functional competence and industry experience in key roles, moving away from past practices.

• Willingness to mimic successful industry practices and apply rigorous metrics.

• Decisive actions include selling Worldpac, reducing headcount, closing stores, and exiting states.

• Leadership views the turnaround as a professional opportunity, fostering collaboration from diverse backgrounds.