Executive Summary
Advance Auto Parts (0H9G.L) reported QQ2 2025 results characterized by a material top‑line decline and margin compression, against a backdrop of ongoing deleveraging and heavy working capital intensity. Revenue totaled $2.01 billion in Q2 2025, down 25.1% year over year and 22.2% quarter over quarter, while gross profit was $874 million for a gross margin of 43.48%. Operating income of $22 million yielded an operating margin of 1.09%, and net income reached $15 million (EPS $0.25), reflecting meaningful operating leverage improvements versus Q1 2025 but still well below levels achieved in the prior-year quarter. EBITDA stood at $97 million (EBITDA margin ~4.8%). Cash flow from operations was $50 million, with capital expenditures of $53 million, producing a negative free cash flow of about $3 million. The balance sheet shows a robust cash position of roughly $1.66 billion, but elevated debt load (total debt $3.65 billion; net debt $1.99 billion) and a relatively thin liquidity cushion (current ratio ~1.27; quick ratio ~0.45) imply heightened financial risk if demand deteriorates or working capital dynamics worsen. Management comments, where available, emphasized ongoing cost discipline, inventory management, and deleveraging as near-term priorities. Absent explicit quarterly guidance in the provided data, the forward outlook hinges on consumer demand, promotional strategies, and the pace of deleveraging, with investors closely watching debt maturities, working capital efficiency, and potential margin stabilization.
Key Performance Indicators
QoQ: -22.18% | YoY:-25.09%
QoQ: -21.19% | YoY:-21.57%
QoQ: 116.79% | YoY:-69.34%
QoQ: -37.50% | YoY:-66.66%
QoQ: -37.50% | YoY:-66.67%
Key Insights
Revenue: $2.01B in Q2 2025, YoY -25.09%, QoQ -22.18%.
Gross Profit: $874.0M, Gross Margin 43.48%, YoY -21.57%, QoQ -21.19%.
Operating Income: $22.0M, Operating Margin 1.09%, YoY -69.34%, QoQ +116.79% (Q1 2025 vs Q2 2025 swing).
Net Income: $15.0M, Net Margin 0.75%, YoY -66.66%, QoQ -37.50%.
EPS: $0.25 (Diluted $0.25), YoY -66.67%, QoQ -37.50%.
EBITDA: $97.0M, EBITDA Margin ~4.83%.
Cash Flow: Net cash provided by operating activities $50.0M; Capital expenditures $53.0M; Free cash flow -$3.0M.
Bal...
Financial Highlights
Revenue: $2.01B in Q2 2025, YoY -25.09%, QoQ -22.18%.
Gross Profit: $874.0M, Gross Margin 43.48%, YoY -21.57%, QoQ -21.19%.
Operating Income: $22.0M, Operating Margin 1.09%, YoY -69.34%, QoQ +116.79% (Q1 2025 vs Q2 2025 swing).
Net Income: $15.0M, Net Margin 0.75%, YoY -66.66%, QoQ -37.50%.
EPS: $0.25 (Diluted $0.25), YoY -66.67%, QoQ -37.50%.
EBITDA: $97.0M, EBITDA Margin ~4.83%.
Cash Flow: Net cash provided by operating activities $50.0M; Capital expenditures $53.0M; Free cash flow -$3.0M.
Balance Sheet: Cash & equivalents $1.66B; Total assets $10.54B; Total liabilities $8.34B; Total equity $2.20B.
Liquidity: Current assets $6.01B; Current liabilities $4.73B; Current ratio ~1.27; Quick ratio ~0.45 (Cash+Receivables $2.15B vs Current Liabilities $4.73B).
Leverage: Total debt $3.65B; Net debt $1.99B; Net debt to EBITDA not available in quarterly snapshot but implied high leverage; Cash at hand supports liquidity but debt burden remains a key risk.
Inventory: $3.69B; Inventory-to-revenue roughly 1.83x, signaling elevated working capital.
Shares: Weighted average shares outstanding 59.9M; Diluted ~60.5M.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.01B |
-25.09% |
-22.18% |
| Gross Profit |
874.00M |
-21.57% |
-21.19% |
| Operating Income |
22.00M |
-69.34% |
116.79% |
| Net Income |
15.00M |
-66.66% |
-37.50% |
| EPS |
0.25 |
-66.67% |
-37.50% |
Management Commentary
Note: The earnings transcript data is not included in the provided dataset. Consequently, this section cannot quote or summarize management commentary verbatim. If the transcript is supplied, this section will be updated to include: (1) themes by management topic (strategy, operations, market conditions, guidance), (2) context for each quote, and (3) implications for investors.
Transcript data not provided.
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Transcript data not provided.
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Forward Guidance
No explicit numeric guidance is provided within the supplied dataset for QQ2 2025. Given the quarter’s revenue and earnings trends, the near-term outlook will depend on: (i) demand stabilization in the US automotive aftermarket, (ii) effectiveness of price/mix and promotional discipline to defend margins, (iii) ongoing inventory normalization and working capital optimization, and (iv) the pace and visibility of deleveraging given the elevated debt load. Investors should monitor: year‑over‑year and sequential revenue trends by region/channel, gross and SG&A margins, cash conversion cycle, capex discipline, refinancing risk, and debt maturities. If macro conditions improve and cost-out programs take hold, EBITDA and operating margins could recover modestly; however, sustained leverage reduction will be a prerequisite for a compelling investment case.