AAP 10-Q report for 2025-04-19

AAP 10-Q report for 2025-04-19 aap-20250419 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 19, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________. Commission file number 001-16797 _______________________________ ADVANCE AUTO PARTS, INC. (Exact name of registrant as specified in its charter) _________________________ Delaware 54-2049910 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 4200 Six Forks Road , Raleigh , North Carolina 27609 (Address of principal executive offices) (Zip Code) ( 540 ) 362-4911 (Registrant’s telephone number, including area code) Securities Registered Pursuant to Section 12(b) of the Act: Title of each class Trading symbol Name of each exchange on which registered Common Stock, $0.0001 par value AAP New York Stock Exchange Not Applicable (Former name, former address and former fiscal year, if changed since last report). Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Registration S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of May 20, 2025, the number of shares of the registrant’s common stock outstanding was 59,925,637 shares. Table of Contents TABLE OF CONTENTS Page NOTE REGARDING FORWARD LOOKING STATEMENTS 1 PART I. FINANCIAL INFORMATION Item 1.  Condensed Consolidated Financial Statements of Advance Auto Parts, Inc. and Subsidiaries (unaudited) 2 Condensed Consolidated Balance Sheets 2 Condensed Consolidated Statements of Operations 3 Condensed Consolidated Statements of Comprehensive Income 4 Condensed Consolidated Statements of Changes in Stockholders’ Equity 5 Condensed Consolidated Statements of Cash Flows 6 Notes to the Condensed Consolidated Financial Statements  8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 27 Item 4.  Controls and Procedures  27 PART II.  OTHER INFORMATION  Item 1. Legal Proceedings 27 Item 1A. Risk Factors 28 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  28 Item 5. Other Information 29 Item 6. Exhibits  30 SIGNATURE 31 Table of Contents FORWARD-LOOKING STATEMENTS Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization, financial objectives, operational plans and objectives, statements about the benefits of the sale of the Company’s Worldpac business and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, as well as statements regarding underlying assumptions related thereto. Forward-looking statem Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 27 Item 4.  Controls and Procedures  27 PART II.  OTHER INFORMATION  Item 1. Legal Proceedings 27 Item 1A. Risk Factors 28 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  28 Item 5. Other Information 29 Item 6. Exhibits  30 SIGNATURE 31 Table of Contents FORWARD-LOOKING STATEMENTS Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization, financial objectives, operational plans and objectives, statements about the benefits of the sale of the Company’s Worldpac business and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, deterioration of general macroeconomic conditions, geopolitical factors including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please see “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. 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 millions, except par value amounts) (Unaudited) Assets April 19, 2025 December 28, 2024 Current assets: Cash and cash equivalents $ 1,672 $ 1,869 Receivables, net 494 544 Inventories, net 3,731 3,612 Other current assets 183 118 Total current assets 6,080 6,143 Property and equipment, net 1,265 1,334 Operating lease right-of-use assets 2,185 2,243 Goodwill 600 598 Other intangible assets, net 404 406 Other assets 83 74 Total assets $ 10,617 $ 10,798 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 3,425 3,408 Accrued expenses 663 784 Current portion of long-term debt 299 — Other current liabilities 406 473 Total current liabilities 4,793 4,665 Long-term debt 1,491 1,789 Operating lease liabilities 1,881 1,897 Deferred income taxes 171 193 Other long-term liabilities 84 84 Total liabilities 8,420 8,628 Commitments and contingencies (Note 13) Stockholders’ equity: Preferred stock, nonvoting, $ 0.0001 par value, 10 million shares authorized; no shares issued or outstanding — — Common stock, voting, and additional paid-in capital, $ 0.0001 par value, 200 million shares authorized; 78 million shares issued and 60 million outstanding at April 19, 2025 and 78 million shares issued and 60 million outstanding at December 28, 2024 1,007 994 Treasury stock, at cost ( 2,942 ) ( 2,940 ) Accumulated other comprehensive loss ( 40 ) ( 47 ) Retained earnings 4,172 4,163 Total stockholders’ equity 2,197 2,170 Total liabilities and stockholders’ equity $ 10,617 $ 10,798 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 millions, except per share data) (Unaudited) Sixteen Weeks Ended April 19, 2025 April 20, 2024 Net sales $ 2,583 $ 2,772 Cost of sales 1,474 1,568 Gross profit 1,109 1,204 Selling, general and administrative expenses, exclusive of restructuring and related expenses 1,122 1,151 Restructuring and related expenses 118 — Selling, general and administrative expenses 1,240 1,151 Operating (loss) income ( 131 ) 53 Other, net: Interest expense ( 27 ) ( 25 ) Other income, net 27 1 Total other, net — ( 24 ) (Loss) income before income taxes ( 131 ) 29 Income tax (benefit) expense ( 155 ) 12 Net income from continuing operations 24 17 Net income from discontinued operations — 23 Net income $ 24 $ 40 Basic earnings per common share from continuing operations $ 0.40 $ 0.29 Basic earnings per common share from discontinued operations — 0.38 Basic earnings per common share $ 0.40 $ 0.67 Basic weighted-average common shares outstanding 59.8 59.6 Diluted earnings per common share from continuing operations $ 0.40 $ 0.29 Diluted earnings per common share from discontinued operations — 0.38 Diluted earnings per common share $ 0.40 $ 0.67 Diluted weighted-average common shares outstanding 60.2 59.8 The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. 3 Table of Contents Condensed Consolidated Statements of Comprehensive Income (in millions) (Unaudited) Sixteen Weeks Ended April 19, 2025 April 20, 2024 Net income $ 24 40 Other comprehensive income: Currency translation adjustments 7 6 Total other comprehensive income 7 6 Comprehensive income $ 31 $ 46 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 Changes in Stockholders’ Equity (in millions, except per share data) (Unaudited) Sixteen Weeks Ended April 19, 2025 Common Stock and Additional Paid-In Capital Treasury Stock, at Cost Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 28, 2024 60 $ 994 $ ( 2,940 ) $ ( 47 ) $ 4,163 $ 2,170 Net income —  —  —  —  24 24 Total other comprehensive income —  —  —  7 —  7 Share-based compensation —  11 —  —  —  11 Common stock issued under employee benefit plans —  2 —  —  —  2 Repurchases of common stock —  —  ( 2 ) —  —  ( 2 ) Cash dividends declared ($ 0.25 per common share) —  —  —  —  ( 15 ) ( 15 ) Balance at April 19, 2025 60 1,007 $ ( 2,942 ) $ ( 40 ) $ 4,172 $ 2,197 Sixteen Weeks Ended April 20, 2024 Common Stock and Additional Paid-In Capital Treasury Stock, at Cost Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 30, 2023 60 $ 946 $ ( 2,933 ) $ ( 52 ) $ 4,559 $ 2,520 Net income —  —  —  —  40 40 Total other comprehensive income —  —  —  6 —  6 Share-based compensation —  17 —  —  —  17 Common stock issued under employee benefit plans —  1 —  —  —  1 Repurchases of common stock —  —  ( 4 ) —  —  ( 4 ) Cash dividends declared ($ 0.25 per common share) —  —  —  —  ( 15 ) ( 15 ) Balance at April 20, 2024 60 964 $ ( 2,937 ) $ ( 46 ) $ 4,584 $ 2,565 The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. 5 Table of Contents Advance Auto Parts, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (in millions) (Unaudited) Sixteen Weeks Ended April 19, 2025 April 20, 2024 Cash flows from operating activities: Net income $ 24 $ 40 Net income from discontinued operations — 23 Net income from continuing operations 24 17 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 89 83 Share-based compensation 11 15 Loss (Gain) on sale and impairment of long-lived assets, net 10 ( 18 ) Provision for deferred income taxes ( 22 ) 3 Other, net 3 1 Net change in: Receivables, net 51 3 Inventories, net ( 114 ) 1 Operating lease right of use assets 50 ( 1 ) Other assets ( 69 ) ( 15 ) Accounts payable 14 ( 134 ) Accrued expenses ( 119 ) 16 Operating lease liabilities ( 81 ) 30 Other liabilities ( 3 ) ( 4 ) Net cash used in operating activities of continuing operations ( 156 ) ( 3 ) Net cash provided by operating activities of discontinued operations — 6 Net cash (used in) provided by operating activities ( 156 ) 3 Cash flows from investing activities: Purchases of property and equipment ( 42 ) ( 46 ) Proceeds from sales of property and equipment 15 10 Net cash used in investing activities of continuing operations ( 27 ) ( 36 ) Net cash used in investing activities of discontinued operations — ( 3 ) Net cash used in investing activities ( 27 ) ( 39 ) Cash flows from financing activities: Dividends paid ( 15 ) ( 15 ) Purchase of noncontrolling interest — ( 7 ) Proceeds from the issuance of common stock 2 1 Repurchases of common stock ( 2 ) ( 3 ) Other, net ( 2 ) ( 1 ) Net cash used in financing activities ( 17 ) ( 25 ) Effect of exchange rate changes on cash 3 9 Net decrease in cash and cash equivalents ( 197 ) ( 52 ) Cash and cash equivalents , beginning of period 1,869 503 Cash and cash equivalents , end of period $ 1,672 $ 451 6 Table of Contents Sixteen Weeks Ended April 19, 2025 April 20, 2024 Non-cash transactions of continuing operations: Accrued purchases of property and equipment $ 12 $ 9 Summary of cash and cash equivalents: Cash and cash equivalents of continuing operations , end of period 1,672 437 Cash and cash equivalents of discontinued operations , end of period — 14 Cash and cash equivalents , end of period $ 1,672 $ 451 The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. 7 Table of Contents Advance Auto Parts, Inc. and Subsidiaries Notes to the Condensed Consolidated Financial Statements (Amounts presented in millions, except per share data, unless otherwise stated) (Unaudited) 1.     Nature of Operations and Basis of Presentation Description of Business Advance Auto Parts, Inc. and subsidiaries is a leading automotive aftermarket parts provider in North America, serving both professional installers (“professional”) and “do-it-yourself” (“DIY”) customers. The accompanying unaudited condensed consolidated financial statements include the accounts of Advance Auto Parts, Inc., its wholly owned subsidiaries, Advance Stores Company, Incorporated (“Advance Stores”) and Neuse River Insurance Company, Inc., and their subsidiaries (collectively referred to as “the Company”). As of April 19, 2025, the Company operated a total of 4,285 stores primarily within the United States, with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. In addition, as of April 19, 2025, the Company served 881 independently owned Carquest branded stores across the same geographic locations served by the Company’s stores in addition to Mexico and various Caribbean islands. The Company’s stores operate primarily under the trade names “Advance Auto Parts” and “Carquest”. The Company has one reportable segment. As of December 28, 2024, the Company had two operating segments, which were aggregated as a single reportable segment; however, following the stabilization of the Company’s new organizational structure in the first quarter of fiscal 2025, due to significant restructuring activities, the Company now operates under the single operating segment of “Advance Auto Parts/Carquest”. See Note 11. Segment Reporting and Note 3. Restructuring, of the notes to the condensed consolidated financial statements included herein for additional information on the Company’s segments and restructuring activities. Basis of Presentation The accompanying unaudited condensed consolidated financial statements and unaudited notes to the condensed consolidated financial statements are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). 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 SEC interim reporting principles. The accompanying condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. The accounting policies followed in the presentation of these condensed consolidated financial statements are consistent with those followed on an annual basis. These condensed consolidated financial statements should be read in conjunction with the financial statements a Item 1A. Risk Factors 28 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  28 Item 5. Other Information 29 Item 6. Exhibits  30 SIGNATURE 31 Table of Contents FORWARD-LOOKING STATEMENTS Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast, “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “target,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the Company’s strategic initiatives, restructuring and asset optimization, financial objectives, operational plans and objectives, statements about the benefits of the sale of the Company’s Worldpac business and use of proceeds therefrom, statements regarding expectations for economic conditions, future business and financial performance, including with respect to tariffs, as well as statements regarding underlying assumptions related thereto. Forward-looking statements reflect the Company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the Company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, the Company’s ability to hire, train and retain qualified employees, the timing and implementation of strategic initiatives, risks associated with the Company’s restructuring and asset optimization plans, deterioration of general macroeconomic conditions, geopolitical factors including increased tariffs and trade restrictions, the highly competitive nature of the industry, demand for the Company’s products and services, risks relating to the impairment of assets, including intangible assets such as goodwill, access to financing on favorable terms, complexities in the Company’s inventory and supply chain and challenges with transforming and growing its business. Please see “Item 1A. Risk Factors” of the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”), as updated by the Company’s subsequent filings with the SEC, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. 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 millions, except par value amounts) (Unaudited) Assets April 19, 2025 December 28, 2024 Current assets: Cash and cash equivalents $ 1,672 $ 1,869 Receivables, net 494 544 Inventories, net 3,731 3,612 Other current assets 183 118 Total current assets 6,080 6,143 Property and equipment, net 1,265 1,334 Operating lease right-of-use assets 2,185 2,243 Goodwill 600 598 Other intangible assets, net 404 406 Other assets 83 74 Total assets $ 10,617 $ 10,798 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 3,425 3,408 Accrued expenses 663 784 Current portion of long-term debt 299 — Other current liabilities 406 473 Total current liabilities 4,793 4,665 Long-term debt 1,491 1,789 Operating lease liabilities 1,881 1,897 Deferred income taxes 171 193 Other long-term liabilities 84 84 Total liabilities 8,420 8,628 Commitments and contingencies (Note 13) Stockholders’ equity: Preferred stock, nonvoting, $ 0.0001 par value, 10 million shares authorized; no shares issued or outstanding — — Common stock, voting, and additional paid-in capital, $ 0.0001 par value, 200 million shares authorized; 78 million shares issued and 60 million outstanding at April 19, 2025 and 78 million shares issued and 60 million outstanding at December 28, 2024 1,007 994 Treasury stock, at cost ( 2,942 ) ( 2,940 ) Accumulated other comprehensive loss ( 40 ) ( 47 ) Retained earnings 4,172 4,163 Total stockholders’ equity 2,197 2,170 Total liabilities and stockholders’ equity $ 10,617 $ 10,798 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 millions, except per share data) (Unaudited) Sixteen Weeks Ended April 19, 2025 April 20, 2024 Net sales $ 2,583 $ 2,772 Cost of sales 1,474 1,568 Gross profit 1,109 1,204 Selling, general and administrative expenses, exclusive of restructuring and related expenses 1,122 1,151 Restructuring and related expenses 118 — Selling, general and administrative expenses 1,240 1,151 Operating (loss) income ( 131 ) 53 Other, net: Interest expense ( 27 ) ( 25 ) Other income, net 27 1 Total other, net — ( 24 ) (Loss) income before income taxes ( 131 ) 29 Income tax (benefit) expense ( 155 ) 12 Net income from continuing operations 24 17 Net income from discontinued operations — 23 Net income $ 24 $ 40 Basic earnings per common share from continuing operations $ 0.40 $ 0.29 Basic earnings per common share from discontinued operations — 0.38 Basic earnings per common share $ 0.40 $ 0.67 Basic weighted-average common shares outstanding 59.8 59.6 Diluted earnings per common share from continuing operations $ 0.40 $ 0.29 Diluted earnings per common share from discontinued operations — 0.38 Diluted earnings per common share $ 0.40 $ 0.67 Diluted weighted-average common shares outstanding 60.2 59.8 The accompanying notes to the condensed consolidated financial statements are an integral part of these statements. 3 Table of Contents Condensed Consolidated Statements of Comprehensive Income (in millions) (Unaudited) Sixteen Weeks Ended April 19, 2025 April 20, 2024 Net income $ 24 40 Other comprehensive income: Currency translation adjustments 7 6 Total other comprehensive income 7 6 Comprehensive income $ 31 $ 46 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 Changes in Stockholders’ Equity (in millions, except per share data) (Unaudited) Sixteen Weeks Ended April 19, 2025 Common Stock and Additional Paid-In Capital Treasury Stock, at Cost Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 28, 2024 60 $ 994 $ ( 2,940 ) $ ( 47 ) $ 4,163 $ 2,170 Net income —  —  —  —  24 24 Total other comprehensive income —  —  —  7 —  7 Share-based compensation —  11 —  —  —  11 Common stock issued under employee benefit plans —  2 —  —  —  2 Repurchases of common stock —  —  ( 2 ) —  —  ( 2 ) Cash dividends declared ($ 0.25 per common share) —  —  —  —  ( 15 ) ( 15 ) Balance at April 19, 2025 60 1,007 $ ( 2,942 ) $ ( 40 ) $ 4,172 $ 2,197 Sixteen Weeks Ended April 20, 2024 Common Stock and Additional Paid-In Capital Treasury Stock, at Cost Accumulated Other Comprehensive Loss Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 30, 2023 60 $ 946 $ ( 2,933 ) $ ( 52 ) $ 4,559 $ 2,520 Net income —  —  —  —  40 40 Total other comprehensive income —  —  —  6 —  6 Share-based compensation —  17 —  —  —  17 Common stock issued under employee benefit plans —  1 —  —  —  1 Repurchases of common stock —  —  ( 4 ) —  —  ( 4 ) Cash dividends declared ($ 0.25 per common Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” As of April 19, 2025 , other than for the changes disclosed in the “Notes to Condensed Consolidated Financial Statements”, and “Liquidity and Capital Resources” in this Quarterly Report, there have been no other material changes to the Company’s expected working and other capital requirements described in the Company’s 2024 Annual Report on Form 10-K. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no significant changes in the Company’s exposure to market risk since December 28, 2024. See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in the Company’s 2024 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 Exchange Act) are management’s controls and other procedures that are designed to ensure that information required to be disclosed by management in the Company’s reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s 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. Management evaluated, with the participation of the Company’s principal executive officer and principal financial officer, the effectiveness of the Company’s disclosure controls and procedures as of April 19, 2025. Based on this evaluation, the principal executive officer and the principal financial officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level. Changes in Internal Control Over Financial Reporting There has been no change in the Company’s internal control over financial reporting during the first quarter ended April 19, 2025, that has materially affected or is reasonably likely to materially affect its internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. PART II.     OTHER INFORMATION None. 27 Table of Contents ITEM 1.     LEGAL PROCEEDINGS Information regarding certain legal proceedings is provided in this Quarterly Report. See Note 10. Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1. ITEM 1A. RISK FACTORS The Company’s future business, operations and financial results are subject to various risks and uncertainties, including those described in Part I, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024, which could adversely affect the Company’s business, financial condition, results of operations, cash flows and future prospects, which could in turn materially affect the price of the Company’s common stock. Except for the risk factor set forth below, there have been no material changes to the Company’s risk factors since the 2024 Form 10-K. An unstable global economic and geopolitical landscape increases uncertainty about key areas of doing business internationally and may have a negative impact on our business. During the first quarter of fiscal 2025, new global trade tariffs were announced on imports to the U.S., including additional tariffs on various countries from which the Company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others. In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S. and other measures. Various modifications and delays to the U.S. tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. Additionally, the current administration has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, enforcement priorities, sanctions, treaties and tariffs. Significant uncertainty continues to exist about the future economic and political relationship between the U.S. and other countries. The ultimate impact

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