Advance Auto Parts Inc (0H9G.L) Q1 2025 Earnings Report

Advance Auto Parts (0H9G.L) delivered a mixed Q1 2025, with revenue of $2.583 billion, down 3.73% year-over-year but up 29.41% sequentially versus Q4 2024. The quarter showed a sharp swing in margins and a rare tax-driven net income result. Gross profit reached $1.109 billion, translating to a strong gross margin of 42.93%, yet operating income remained negative at -$131 million, and EBITDA registered a small loss of $15 million. The reported net income of $24 million reflects a substantial tax benefit of approximately $155 million, underscoring the importance of non-cash and one-off items in the period rather than a sustainable profit driver. Cash flow remained negative in Q1, with operating cash flow at -$156 million and free cash flow at -$198 million, despite a cash balance of $1.672 billion at period end. From a balance sheet perspective, Advance Auto Parts exhibits a sizable debt stack and modest liquidity headroom. Total assets of $10.62 billion and total liabilities of $8.42 billion leave a reported stockholders’ equity of $2.20 billion. The company reports a current ratio of 1.27, a quick ratio of 0.49, and a cash ratio of 0.35, suggesting adequate short-term liquidity but limited cushion for adverse working capital swings. Net debt of approximately $2.0 billion against a market backdrop of competitive intensity in the U.S. auto parts ecosystem highlights ongoing leverage risk and potential constraints on strategic flexibility. Management commentary (where available) has not been captured in the provided transcripts; as such, the analysis relies on the disclosed quarterly data and standard industry interpretation. The near-term investment thesis hinges on whether the company can translate revenue stability into meaningful EBITDA expansion, accelerate working capital efficiency, and stabilize or reduce debt to improve cash flow generation. Absent explicit forward guidance in the supplied data, the key watchpoints are margin progression, operating expense discipline, inventory and receivables management, and debt maturities.