ADVANCE AUTO PARTS INC

Previous wording

Second Quarter Fiscal 2025 Management Overview

Current wording

Third Quarter Fiscal 2025 Management Overview

Previous wording

The Company’s financial results from continuing operations for the second quarter of 2025 includes:

Current wording

The Company’s financial results from continuing operations for the third quarter of 2025 includes:

Previous wording

•Net sales during the second quarter of fiscal 2025 were$2.0 billion, a decrease of 7.7% compared with the second quarter of fiscal 2024. Comparable store sales increased by 0.1%.

Current wording

•Net sales during the third quarter of fiscal 2025 were$2.0 billion, a decrease of 5.2% compared with the third quarter of fiscal 2024. Comparable store sales increased by 3.0%.

Previous wording

•Selling, general and administrative expenses, exclusive of restructuring and related expenses for the second quarter of fiscal 2025 were 40.9% of net sales, an increase of 13 basis points compared with the second quarter of fiscal 2024.

Current wording

•Selling, general and administrative expenses, exclusive of restructuring and related expenses for the third quarter of fiscal 2025 were 40.6% of net sales, adecrease of(110)basis points compared with the third quarter of fiscal 2024.

Previous wording

•The Company generated diluted earnings per share of$0.25 during the second quarter of fiscal 2025, compared with diluted earnings per share of$0.51 for the comparable period of 2024.

Current wording

•The Company generated a diluted loss per share of$0.02 during the third quarter of fiscal 2025, compared with a diluted loss per share of$0.42 for the comparable period of 2024.

Previous wording

In August 2025, subsequent to the end of the second quarter of fiscal 2025, the Company completed various financing-related transactions, including in the issuance of $1.95 billion in Senior Unsecured Notes with net proceeds of approximately $1.62 billion, after the redemption of the Company’s 5.90% Senior Notes due March 9, 2026 and direct transaction and closing costs. The Company also terminated its existing 2021 Credit Agreement which has been replaced by a new asset-based loan revolving credit facility (the “ABL Facility”). For further information related to these subsequent events activities, see Note 6. Long-term Debt and Fair Value of Financial Instruments of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 and Part I, Item 2, “Liquidity and Capital Resources” of this Quarterly Report.

Current wording

In August 2025, the Company completed various financing-related transactions, including the issuance of $1.95 billion in Senior Unsecured Notes with net proceeds of $1.6 billion, after giving effect to the redemption of the Company’s 5.90% Senior Notes due March 9, 2026 with the proceeds and direct transaction and closing costs. The Company also terminated its existing 2021 Credit Agreement which has been replaced by a new asset-based loan revolving credit facility (the “ABL Facility”). For further information related to these financing-related transactions, see Note 6. Long-term Debt and Fair Value of Financial Instruments of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 and Part I, Item 2, “Liquidity and Capital Resources” of this Quarterly Report.

Previous wording

During the first and second quarters 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. Since the initial announcement in the first quarter of fiscal 2025, 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. In response to the tariffs, certain of our suppliers have increased prices. However, the impact of such increases to-date has not been material to the Company’s business, financial condition and results of operations. The ultimate impact of tariffs on the Company’s business remains uncertain. See Part II, Item 1A, “Risk Factors” of this Quarterly Report.

Current wording

During 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. Since the initial announcement in the first quarter of fiscal 2025, 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. In response to the tariffs, certain of our suppliers have increased prices. However, the impact of such increases to-date has not been material to the Company’s business, financial condition and results of operations. The ultimate impact of tariffs on the Company’s business remains uncertain. See Part II, Item 1A, “Risk Factors” of this Quarterly Report.

Previous wording

The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the twenty-eight weeks ended July 12, 2025, 18 stores were opened and 514 were closed, resulting in a total of 4,292 stores as of the end of the second fiscal quarter compared with a total of 4,788 stores as of December 28, 2024. The significant reduction in stores during fiscal 2025 relates to actions taken under the Company’s restructuring and related activities. See Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.

Current wording

The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the forty weeks ended October 4, 2025, 26 stores were opened and 517 were closed, resulting in a total of 4,297 stores as of the end of the third fiscal quarter compared with a total of 4,788 stores as of December 28, 2024. The significant reduction in stores during fiscal 2025 relates to actions taken under the Company’s restructuring and related activities. See Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.

Previous wording

For the twelve weeks ended July 12, 2025, net sales decreased 7.7% and comparable store sales increased 0.1% compared with the twelve weeks ended July 13, 2024. For the twenty-eight weeks ended July 12, 2025, net sales declined 7.2% compared with the same period in 2024. Comparable store sales decreased 0.3% for the twenty-eight weeks ended July 12, 2025, compared with the twenty-eight weeks ended July 13, 2024. The decline for both the second quarter and twenty-eight week prior comparative periods was driven by lower sales as a result of store closures executed under the 2024 Restructuring Plan during the first quarter of fiscal 2025.

Current wording

For the twelve weeks ended October 4, 2025, net sales decreased 5.2% and comparable store sales increased 3.0% compared with the twelve weeks ended October 5, 2024. For the forty weeks ended October 4, 2025, net sales declined 6.6% and comparable store sales increased 0.7% compared with the same period in 2024. The decline in net sales for both the twelve and forty weeks ended October 4, 2025 as compared to the prior periods, was due to lower sales as a result of store closures executed under the 2024 Restructuring Plan.

Previous wording

For the twelve weeks ended July 12, 2025, gross profit was $874 million, or 43.5% of net sales, compared with $950 million, or 43.6% of net sales, for the twelve weeks ended July 13, 2024. For the twenty-eight weeks ended July 12, 2025 and July 13, 2024, gross profit was $1,984 million, or 43.2% of net sales, and $2,153 million, or 43.5% of net sales. The decrease in gross profit margin compared to both the second quarter and twenty-eight week prior comparative periods was due to the amount of lower-margin liquidation sales associated with the 2024 Restructuring Plan. Total gross profit also decreased as a result of lower net sales stemming from store closures executed under the 2024 Restructuring Plan.

Current wording

For the twelve weeks ended October 4, 2025, gross profit was $881 million, or 43.3% of net sales, compared with $908 million, or 42.3% of net sales, for the twelve weeks ended October 5, 2024. For the forty weeks ended October 4, 2025 and October 5, 2024, gross profit was $2,864 million, or 43.2% of net sales, and $3,061 million, or 43.1% of net sales, respectively. The increase in gross profit as a percentage of net sales compared to both the twelve week and forty week prior comparative periods was due to more favorable product margins, driven by strategic sourcing initiatives and pricing and lower supply chain and other related costs, offset by the $28 million non-cash charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025. Gross profit as a percentage of net sales for the forty weeks ended October 4, 2025 was also adversely impacted by lower-margin liquidation sales associated with the 2024 Restructuring Plan. Total gross profit dollars decreased as a result of lower net sales stemming from store closures executed under the 2024 Restructuring Plan.

Previous wording

For the twelve weeks ended July 12, 2025, selling, general and administrative (SG&A) expenses, exclusive of restructuring and related expenses, were $823 million, or 40.9% of net sales, compared with $889 million, or 40.8% of net sales, for the twelve weeks ended July 13, 2024. For the twenty-eight weeks ended July 12, 2025, SG&A expenses, exclusive of restructuring and related expenses, were $1,945 million, or 42.3% of net sales, compared with $2,039 million, or 41.2% of net sales, for the twenty-eight weeks ended July 13, 2024. Overall SG&A expenses decreased in both the twelve week and twenty-eight week periods ended July 12, 2025, as compared to prior comparative periods, as a result of store closures executed under the 2024 Restructuring Plan reducing overhead and operating costs. SG&A expenses as a percentage of net sales for the twenty-eight weeks ended July 13, 2024, benefited from a net gain on asset sales, see Note 7. Leases, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item1.

Current wording

For the twelve weeks ended October 4, 2025, selling, general and administrative (SG&A) expenses, exclusive of restructuring and related expenses, were $826 million, or 40.6% of net sales, compared with $895 million, or 41.7% of net sales, for the twelve weeks ended October 5, 2024. For the forty weeks ended October 4, 2025, SG&A expenses, exclusive of restructuring and related expenses, were $2,771 million, or 41.8% of net sales, compared with $2,933 million, or 41.3% of net sales, for the forty weeks ended October 5, 2024. Overall SG&A expenses decreased in both the twelve week and forty weeks ended October 4, 2025, as compared to prior comparative periods, as a result of store closures executed under the 2024 Restructuring Plan reducing overhead and operating costs. SG&A expenses as a percentage of net sales for the forty weeks ended October 5, 2024, benefited from a net gain on asset sales, see Note 7. Leases, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item1.

Previous wording

For the twelve weeks ended July 12, 2025, restructuring and related expenses were $29 million, or 1.4% of net sales, compared to $7 million, or 0.3% of net sales, in the prior year comparable period. For the twenty-eight weeks ended July 12, 2025, restructuring and related expenses were $148 million, or 3.2% of net sales, compared to $8 million, or 0.2% of net sales, in the prior year comparable period. The increase in expenses as compared to the same period in fiscal 2024, relates to the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024. The Company estimates that it will incur additional expenses of approximately $35 million to $50 million through the remainder of fiscal 2025 related to the active restructuring plans. The expenses for both the twelve weeks ended and twenty-eight weeks ended July 12, 2025, relate to lease terminations, professional services, severance and termination costs and other exit costs. We expect that the Company’s 2024 Restructuring Plan will be substantially completed by the end of fiscal 2025. See Note 3. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

Current wording

For the twelve weeks ended October 4, 2025, restructuring and related expenses were $33 million, or 1.6% of net sales, compared to $13 million, or 0.6% of net sales, in the prior year comparable period. For the forty weeks ended October 4, 2025, restructuring and related expenses were $180 million, or 2.7% of net sales, compared to $21 million, or 0.3% of net sales, in the prior year comparable period. The increase in expenses as compared to the same period in fiscal 2024, relates to the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024. The Company estimates that it will incur additional expenses of approximately $20 million to $30 million through the remainder of fiscal 2025 related to the active restructuring plans. The expenses for both the twelve and forty weeks ended October 4, 2025, relate to lease terminations, professional services, severance and termination costs and other exit costs. We expect that the Company’s 2024 Restructuring Plan will be substantially completed by the end of fiscal 2025 with certain expenses, primarily related to closed store and distribution center leases, expected to continue into fiscal year 2026. See Note 3. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1.

Previous wording

For the twelve weeks and the twenty-eight weeks ended July 12, 2025, other income, net increased as compared to the same periods in fiscal 2024, due to higher interest income earned from higher cash and cash equivalent balances held, driven by the proceeds received from the sale of the Worldpac business in the fourth quarter of fiscal 2024. Other income, net also includes income recognized from the transition services (“TSA Services”) agreement with Worldpac that commenced in the fourth quarter of fiscal 2024.

Current wording

For the twelve weeks and the forty weeks ended October 4, 2025, other income, net increased as compared to the same periods in fiscal 2024, due to higher interest income earned from higher cash and cash equivalent balances held, driven by the proceeds received from the sale of the Worldpac business in the fourth quarter of fiscal 2024 and the issuance of $1.95 billion in Senior Unsecured Notes with net proceeds of $1.6 billion,, after the redemption of the Company’s 5.90% Senior Notes due March 2026 with the proceeds and direct transaction and closing costs in the third quarter of fiscal 2025. Other income, net also includes income recognized from the transition services (“TSA Services”) agreement with Worldpac that commenced in the fourth quarter of fiscal 2024.

Previous wording

For the twelve weeks ended July 12, 2025, the Company’s effective tax rate was 28.6% as compared to 29.5% for the same period in 2024. The Company’s provision for income taxes for the twenty-eight weeks ended July 12, 2025, was a benefit of $149 million compared with an expense of $25 million for the same period in 2024. The decrease in tax expense for the twelve weeks ended July 12, 2025, as compared to the prior comparative period, was a result of lower income before taxes. The decrease in tax expense for the twenty-eight weeks ended July 12, 2025 was a result of lower income before taxes and a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million related to certain tax benefits associated with capital loss deductions.

Current wording

For the twelve weeks ended October 4, 2025 the Company’s provision for income taxes was negligible. The Company’s provision for income taxes for the twelve weeks ended October 5, 2024 was an expense of $8 million, largely attributable to a $10 million tax expense related to a book to tax difference in the stock basis of Worldpac Canada as a result of the sale of Worldpac. The Company’s provision for income taxes for the forty weeks ended October 4, 2025, was a benefit of $150 million compared with an expense of $34 million for the same period in 2024. The decrease in tax expense for the forty weeks ended October 4, 2025 was a result of a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million related to certain tax benefits associated with capital loss deductions and lower income before taxes.

Previous wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The Company has determined the OBBBA has an immaterial impact to Company’s provision for income taxes and deferred tax balances.

Current wording

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The Company has determined the OBBBA has an immaterial impact to the Company’s provision for income taxes and deferred tax balances.

Previous wording

The Company uses certain non-GAAP financial measures described below to supplement the Company’s unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company’s core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such non-GAAP financial measures provide useful information about the Company’s financial performance, enhance the overall understanding of the Company’s past performance and future prospects, and allow for greater transparency with respect to important metrics used by the Company’s management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by the Company’s management to evaluate its business and financial performance. The Company believes that these measures provide investors increased comparability of the Company’s core financial performance over multiple periods with other companies in the same industry. The Company may make reference tocertain financial measures not derived in accordance with GAAP within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report. The Company’s Non-GAAP financial measures reflect results from continuing operations, including Adjusted Net Income (loss), Adjusted Diluted Earnings (loss) Per Share (“Adjusted Diluted EPS”), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Sales, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating Income (loss) and Adjusted Operating Income (loss) Margin, and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing the Company’s operating performance, financial position or cash flows.

Current wording

The Company uses certain non-GAAP financial measures described below to supplement the Company’s unaudited condensed consolidated financial statements prepared and presented in accordance with GAAP and to understand and evaluate the Company’s core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented as the Company believes that such non-GAAP financial measures provide useful information about the Company’s financial performance, enhance the overall understanding of the Company’s past performance and future prospects, and allow for greater transparency with respect to important metrics used by the Company’s management for financial and operational decision-making. The Company is presenting these non-GAAP metrics to provide investors insight to the information used by the Company’s management to evaluate its business and financial performance. The Company believes that these measures provide investors increased comparability of the Company’s core financial performance over multiple periods and with other companies in the same industry. The Company may make reference tocertain financial measures not derived in accordance with GAAP within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report. The Company’s Non-GAAP financial measures reflect results from continuing operations, including Adjusted Net Income (loss), Adjusted Diluted Earnings (loss) Per Share (“Adjusted Diluted EPS”), Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted Sales, General and Administrative expense (“Adjusted SG&A”), Adjusted SG&A Margin, Adjusted Operating Income (loss) and Adjusted Operating Income (loss) Margin, and should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing the Company’s operating performance, financial position or cash flows.

Previous wording

(1) Restructuring and other related expenses for thetwelve weeks ended July 12, 2025 includes $5 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan and $2 million of other related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the twenty-eight weeks ended July 12, 2025 includes $35 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan, $15 million of severance and other labor related costs, $7 million for reserves on independent loans and $14 million of other related expenses associated with location closures, including the transfer of assets.

Current wording

(2) Restructuring and other related expenses for thetwelve weeks ended October 4, 2025 includes $2 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan and $5 million of other related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the forty weeks ended October 4, 2025 includes $37 million of nonrecurring services rendered by third-party vendors assisting with the 2024 Restructuring Plan, $15 million of severance and other labor related costs, $7 million for reserves on independent loans and $19 million of other related expenses associated with location closures, including the transfer of assets.

Previous wording

(2) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $13 million for thetwelve weeks ended July 12, 2025. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $49 million and impairment charges for ROU assets and property and equipment of $9 million, net of gains on sale, for the twenty-eight weeks ended July 12, 2025.

Current wording

(3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $7 million and impairment charges for ROU assets and property and equipment of $11 million, net of gains on sales, for thetwelve weeks ended October 4, 2025. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $55 million and impairment charges for ROU assets and property and equipment of $21 million, net of gains on sale, for the forty weeks ended October 4, 2025.

Previous wording

The decrease in cash and cash equivalents was primarily due to net cash used in operating activities of $106 million, primarily as a result of a decrease in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan, $75 million used for purchases of property and equipment, net of proceeds from sales, and the payment of $30 million in dividends.

Current wording

The increase in cash and cash equivalents was primarily due to the issuance of $1.95 billion in Senior Unsecured Notes with net proceeds of $1.6 billion, after giving effect to the redemption of the Company’s 5.90% Senior Notes due 2026 with the proceeds and direct transaction and closing costs in the third quarter of fiscal 2025, offset by net cash used in operating activities of $118 million, primarily as a result of changes in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan, $137 million used for purchases of property and equipment, net of proceeds from sales, and the payment of $45 million in dividends.

Previous wording

In addition to cash and cash equivalents presented above, as of July 12, 2025, the Company also maintained access to $817 million in undrawn capacity through the Company’s revolving credit facility (the “2021 Credit Agreement”) as further described below. The 2021 Credit Agreement was terminated on August 12, 2025 and replaced by a new $1.0 billion asset-based revolving credit facility (the “ABL Facility”). The Company expects to designate a significant amount of cash and cash equivalents as Qualified Cash as defined in ABL Facility, that will count towards the initial borrowing base for the ABL Facility as further discussed within the section “Credit Facilities” below.

Current wording

In addition to cash and cash equivalents presented above, as of October 4, 2025, the Company also maintained access to $741 million in undrawn capacity through the Company’s $1.0 billion asset-based revolving credit facility (the “ABL Facility”). As of October 4, 2025 approximately $2.3 billion was designated as Qualified Cash as defined in the ABL Facility.

Previous wording

The financing-related transactions completed in the third quarter of fiscal 2025, are intended to strengthen the Company’s financial condition and provide additional cash and cash equivalents and sources of liquidity. The Company believes that its cash and cash equivalents and sources of liquidity will satisfy its working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future.

Current wording

The Company believes that its cash and cash equivalents and sources of liquidity will satisfy its working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future.

Previous wording

For the twenty-eight weeks ended July 12, 2025, cash used in operating activities changed unfavorably by $145 million compared with the same period of prior year. The decrease as compared to the comparative period was due to a decrease in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan.

Current wording

For the forty weeks ended October 4, 2025, cash used in operating activities changed unfavorably by $199 million compared with the same period of prior year. The decrease as compared to the comparative period was due to changes in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan.

Previous wording

For the twenty-eight weeks ended July 12, 2025, cash flows used in investing activities remained relatively flat as compared with the twenty-eight weeks ended July 13, 2024, with higher spend on property and equipment in the current period, offset by higher proceeds from the sale of property and equipment.

Current wording

For the forty weeks ended October 4, 2025, cash flows used in investing activities increased by $21 million compared with the forty weeks ended October 5, 2024, with higher spend on property and equipment in the current period, partially offset by higher proceeds from the sale of property and equipment.

Previous wording

On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan, which was designed to improve the Company’s profitability and growth potential and streamline its operations. In fiscal 2023, the Company also announced a strategic and operational plan to streamline the Company’s supply chain by configuring a multi-echelon supply chain by leveraging current asset and operating fewer, more productive distribution centers that focus on replenishment and move more parts closer to the customer. The Company estimates that it will incur additional expenses of approximately $20 million to $30 million of cash expenses related to the active restructuring plans, primarily composed of lease terminations and other exit expenses and professional services, by the end of fiscal year 2025. For further information, see Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.

Current wording

On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan, which was designed to improve the Company’s profitability and growth potential and streamline its operations. In fiscal 2023, the Company also announced a strategic and operational plan to streamline the Company’s supply chain by configuring a multi-echelon supply chain by leveraging current asset and operating fewer, more productive distribution centers that focus on replenishment and move more parts closer to the customer. The Company estimates that it will incur additional expenses of approximately $20 million to $30 million through the remainder of fiscal 2025, of which approximately $10 million to $20 million is expected to be cash expenses, primarily composed of lease terminations and other exit expenses and professional services, by the end of fiscal year 2025 with certain expenses, primarily related to closed store and distribution center leases, expected to continue into fiscal year 2026. For further information, see Note 3. Restructuring, of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1.

Previous wording

On August 4, 2025, the Company issued (i) $975 million in aggregate principal amount of 7.000% Senior Notes due 2030 (the “2030 Notes”) and (ii) $975 million in aggregate principal amount of 7.375% Senior Notes due 2033 (collectively, the “Senior Unsecured Notes”) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”). Interest on the Senior Unsecured Notes is payable in cash on February 1 and August 1 of each year, commencing on February 1, 2026. The 2030 Notes will mature on August 1, 2030, and the 2033 Notes will mature on August 1, 2033. Net proceeds from the issuance of the Senior Unsecured Noted were approximately $1,920 million, net of direct transaction and closing costs. The Senior Unsecured Notes are guaranteed by each of the Company’s wholly-owned domestic subsidiaries that also guarantee the ABL Facility.

Current wording

On August 4, 2025, the Company issued (i) $975 million in aggregate principal amount of 7.000% Senior Notes due 2030 (the “2030 Notes”) and (ii) $975 million in aggregate principal amount of 7.375% Senior Notes due 2033 (collectively, the “Senior Unsecured Notes”) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”). Interest on the Senior Unsecured Notes is payable in cash on February 1 and August 1 of each year, commencing on February 1, 2026. The 2030 Notes will mature on August 1, 2030, and the 2033 Notes will mature on August 1, 2033. Net proceeds from the issuance of the Senior Unsecured Noted were approximately $1.9 billion, net of direct transaction and closing costs. The Senior Unsecured Notes are guaranteed by each of the Company’s wholly-owned domestic subsidiaries that also guarantee the ABL Facility.

Previous wording

Following the closing of the issuance of the Senior Unsecured Notes, the Company utilized a portion of the net proceeds to redeem in full its outstanding $300 million in aggregate principal amount of 2026 Notes and the Company expects to record an immaterial loss on redemption in the third quarter of fiscal 2025 associated with this extinguishment. The remaining proceeds from the issuance are available for general corporate purposes, and, upon closing of the ABL Facility, as further discussed under “Credit Facilities” below, approximately $2.3 billion of cash and cash equivalents, was designated as qualified cash, subject to customary “springing” control agreements, to the initial borrowing base for the ABL Facility.

Current wording

Following the closing of the issuance of the Senior Unsecured Notes, the Company utilized a portion of the net proceeds to redeem in full its outstanding $300 million in aggregate principal amount of 5.90% Senior Notes due 2026 and recorded a loss of $3 million on redemption in the third quarter of fiscal 2025 associated with this extinguishment. The remaining proceeds from the issuance are available for general corporate purposes, and, as of October 4, 2025, approximately $2.3 billion of cash and cash equivalents, was designated as qualified cash and are subject to customary “springing” control agreements, as described in the ABL Facility Agreement.

Previous wording

On August 12, 2025, the 2021 Credit Agreement was terminated and replaced by the ABL Facility. The Company expects to record an immaterial loss on extinguishment of the 2021 Credit Agreement during the third quarter of fiscal 2025. The ABL Facility provides for a five-year senior secured first lien asset-based revolving credit facility of up to $1 billion with an uncommitted accordion feature, subject to a borrowing base thereunder. Outstanding amounts under the ABL Facility will accrue interest at a floating rate, which, at the Company’s election, can be either (i) SOFR plus an applicable margin or (ii) an alternative base rate plus an applicable margin. The applicable rate varies based on Average Historical Excess Availability (as defined in the ABL Facility) from (i) with respect to base rate loans, 0.25% to 0.75% and (b) with respect to SOFR loans, 1.25% to 1.75% and resets quarterly on a prospective basis and is, in part, derived based-upon the utilization of the facility. Interest is payable on a quarterly basis. Unused commitments under the ABL Facility will accrue an unused commitment fee of either 0.30% or 0.25% per annum, depending on average utilization.

Current wording

On August 12, 2025, the Company’s $1 billion revolving credit facility (the “2021 Credit Agreement”) was terminated and replaced by the ABL Facility. The Company recorded a $6 million loss on extinguishment of the 2021 Credit Agreement during the third quarter of fiscal 2025. The ABL Facility provides for a five-year senior secured first lien asset-based revolving credit facility of up to $1 billion with an uncommitted accordion feature that provides for additional credit extensions up to $500 million. Our ability to draw upon the ABL Facility is subject to the available borrowing base. Outstanding amounts under the ABL Facility will accrue interest at a floating rate, which, at the Company’s election, can be either (i) SOFR plus an applicable margin or (ii) an alternative base rate plus an applicable margin. The applicable rate varies based on Average Historical Excess Availability (as defined in the ABL Facility Agreement) from (i) with respect to base rate loans, 0.25% to 0.75% and (b) with respect to SOFR loans, 1.25% to 1.75% and resets quarterly on a prospective basis and is, in part, derived based-upon the utilization of the facility. Interest is payable on a quarterly basis. Unused commitments under the ABL Facility will accrue an unused commitment fee of either 0.30% or 0.25% per annum, depending on average utilization.

Previous wording

As of July 12, 2025 and December 28, 2024, the Company had nooutstanding borrowings under the 2021 Credit Agreement. As of July 12, 2025 the Company had $817 million of borrowing availability and $183 million letters of credit outstanding under the 2021 Credit Agreement. As of December 28, 2024, the Company had $1 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement. The Company is required to maintain certain financial covenants related to the 2021 Credit Agreement and as of July 12, 2025, the Company was in compliance with such financial covenants. On February 25, 2025, the Company entered into Amendment No. 6 (“Amendment No. 6”) to the 2021 Credit Agreement.

Current wording

As of October 4, 2025, the Company had nooutstanding borrowings, $741 million of borrowing availability and $259 million letters of credit outstanding under the ABL Facility. As of December 28, 2024, the Company had nooutstanding borrowings,$1 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement. The Company was in compliance with its covenants related to the ABL Facility as of October 4, 2025.

Previous wording

As of July 12, 2025 and December 28, 2024, the Company also had $89 million and $91 million, respectively, of bilateral letters of credit issued separately from the 2021 Credit Agreement, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and primarily serve as collateral for the Company’s self-insurance policies.

Current wording

As of October 4, 2025 and December 28, 2024, the Company also had $89 million and $91 million, respectively, of bilateral letters of credit issued separately from the ABL Facility and 2021 Credit Agreement, respectively, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and primarily serve as collateral for the Company’s self-insurance policies.