# Advance Auto Parts Inc: Form 10-Q for the period ended Jul 13, 2024

- Company: [Advance Auto Parts Inc](/companies/aap.md) (CIK 1158449)
- Form: 10-Q
- Filed: 2024-08-22
- Accepted by EDGAR: Aug 22, 2024, 16:04 ET
- Period: 2024-07-13
- Accession: 0001158449-24-000195
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1158449/000115844924000195/aap-20240713.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1158449/000115844924000195/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-07-13.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-21 to 2024-07-13 | $2.68bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-12-31 to 2024-07-13 | $6.09bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-21 to 2024-07-13 | $1.57bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-12-31 to 2024-07-13 | $3.55bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-04-21 to 2024-07-13 | $1.11bn | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-12-31 to 2024-07-13 | $2.54bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-04-21 to 2024-07-13 | $1.04bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-12-31 to 2024-07-13 | $2.39bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-21 to 2024-07-13 | $71.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-12-31 to 2024-07-13 | $157.8m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-21 to 2024-07-13 | $17.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-12-31 to 2024-07-13 | $36.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-21 to 2024-07-13 | $45.0m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-12-31 to 2024-07-13 | $85.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-04-21 to 2024-07-13 | $0.75 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-12-31 to 2024-07-13 | $1.42 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-21 to 2024-07-13 | $0.75 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-12-31 to 2024-07-13 | $1.43 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-21 to 2024-07-13 | 59,905,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-12-31 to 2024-07-13 | 59,868,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-12-31 to 2024-07-13 | $87.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-12-31 to 2024-07-13 | $92.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2023-12-31 to 2024-07-13 | $29.9m | us-gaap:PaymentsOfDividends |
| Share repurchases | 6 months, 2023-12-31 to 2024-07-13 | $4.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-07-13 | $479.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-07-13 | $6.46bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-07-13 | $12.29bn | us-gaap:Assets |
| Current liabilities | at 2024-07-13 | $5.26bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-07-13 | $9.68bn | us-gaap:Liabilities |
| Long-term debt | at 2024-07-13 | $1.79bn | us-gaap:LongTermDebt |
| Current portion of debt | at 2024-07-13 | $0 | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-07-13 | $2.61bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 17,402 characters.

*The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2023 (filed with the SEC on March 12, 2024, and the amended Annual Report on Form 10-K/A filed with the SEC on May 30, 2024 (collectively the “2023 Form 10-K”)), and the Company’s condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. The Company’s first quarter of the year contains sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks.*

### Management Overview

A high-level summary of the Company’s financial results for the second quarter of 2024 includes:

- Net sales during the second quarter of 2024 were $2.68 billion, a decrease of 0.1% compared with the second quarter of 2023. Comparable store sales increased 0.4%.
- Gross profit margin for the second quarter of 2024 was 41.5% of net sales, a decrease of 93 basis points compared with the second quarter of 2023. Gross profit margin was negatively impacted by strategic pricing investments and higher product costs.
- Selling, general and administrative (“SG&A”) expenses for the second quarter of 2024 were 38.9% of net sales, an increase of 109 basis points compared with the second quarter of 2023. This was primarily due to higher labor costs.
- The Company generated diluted earnings per share (“Diluted EPS”) of $0.75 during the second quarter of 2024, compared with $1.32 for the comparable period of 2023.

### Business and Risks Update

The Company continues to make progress on the various elements of the Company’s strategic business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers. To achieve these improvements, the Company has undertaken planned strategic actions to help build a foundation for long-term success across the organization, which include:

- Entering into a definitive purchase agreement on August 22, 2024 to sell Worldpac for $1.5 billion, with customary adjustments for working capital and other items. The transaction is expected to close in the fourth quarter of 2024;
- Reducing costs to remain competitive while reinvesting in the frontline;
- Making organizational changes to position the Company for success;
- Assessing the productivity of all assets, including company-owned stores and Carquest Independents; and
- Consolidating the Company’s supply chain.

The entry into the definitive agreement for the sale of Worldpac was part of the Company’s previously announced strategic and operational review. As part of this review, the Company also previously announced that it was evaluating whether to divest the Company’s Canadian business. The Company's Canadian business predominantly serves commercial customers and operates under the Carquest banner. The Company has determined to retain its Canadian business. The strategic and operational review is ongoing.

### Industry Update

Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry, and include but are not limited to:

- Inflationary pressures, including logistics and labor
- Global supply chain disruptions
- Cost of fuel
- Miles driven
- Unemployment rates
- Interest rates
- Consumer confidence and purchasing power
- Competition
- Changes in new car sales
- Economic and geopolitical uncertainty
- Increased foreign currency exchange volatility

### Stores and Branches

Key factors in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, competitive landscape, and the cost of real estate. During the twenty-eight weeks ended July 13, 2024, 16 stores and branches were opened and 26 were closed, resulting in a total of 5,097 stores and branches as of the end of the second fiscal quarter compared with a total of 5,107 stores and branches as of December 30, 2023.

### Results of Operations

*($ in millions)*

|  | Twelve Weeks Ended July 13, 2024 |  | July 15, 2023 |  | $ Favorable/ (Unfavorable) | Basis Points |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $2,683.1 | 100.0% | $2,686.1 | 100.0% | $(3.0) | — |
| Cost of sales | 1,568.7 | 58.5 | 1,545.6 | 57.5 | (23.1) | (93) |
| Gross profit | 1,114.4 | 41.5 | 1,140.5 | 42.5 | (26.1) | (93) |
| SG&A | 1,042.6 | 38.9 | 1,014.5 | 37.8 | (28.1) | (109) |
| Operating income | 71.8 | 2.7 | 126.0 | 4.7 | (54.2) | (202) |
| Interest expense | (18.7) | (0.7) | (20.9) | (0.8) | 2.2 | 8 |
| Other income, net | 9.0 | 0.3 | 1.7 | 0.1 | 7.3 | 27 |
| Provision for income taxes | 17.1 | 0.6 | 28.2 | 1.0 | 11.1 | 41 |
| Net income | $45.0 | 1.7% | $78.6 | 2.9% | $(33.6) | (126) |

*($ in millions)*

|  | Twenty-Eight Weeks Ended July 13, 2024 |  | July 15, 2023 |  | $ Favorable/ (Unfavorable) | Basis Points |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | $6,089.3 | 100.0% | $6,103.7 | 100.0% | $(14.4) | — |
| Cost of sales | 3,545.9 | 58.2 | 3,501.3 | 57.4 | (44.6) | 87 |
| Gross profit | 2,543.4 | 41.8 | 2,602.4 | 42.6 | (59.0) | (87) |
| SG&A | 2,385.6 | 39.2 | 2,378.5 | 39.0 | (7.1) | (21) |
| Operating income | 157.8 | 2.6 | 223.9 | 3.7 | (66.1) | (108) |
| Interest expense | (43.5) | (0.7) | (50.6) | (0.8) | 7.1 | 11 |
| Other income, net | 7.7 | 0.1 | 1.0 | — | 6.7 | 11 |
| Provision for income taxes | 36.9 | 0.6 | 47.4 | 0.8 | 10.5 | 17 |
| Net income | $85.0 | 1.4% | $126.9 | 2.1% | $(41.8) | (69) |

#### Note: Table amounts may not foot due to rounding.

### Net Sales

For the second quarter of 2024, net sales decreased 0.1% and comparable store sales increased 0.4% compared with the second quarter of 2023. Category growth was led by heating and cooling, fluids and chemicals and engine management.

Net sales for the twenty-eight weeks ended July 13, 2024, decreased 0.2% compared with the same period in 2023. Comparable store sales increased 0.03% for the twenty-eight weeks ended July 13, 2024, compared with the twenty-eight weeks ended July 15, 2023. Category growth was led by batteries, filters and engine management.

The Company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. Acquired stores are included in the Company’s comparable store sales one year after acquisition. The Company includes sales from relocated stores in comparable store sales from the original date of opening.

### Gross Profit

Gross profit for the second quarter of 2024 was $1.11 billion, or 41.5% of net sales, compared with $1.14 billion, or 42.5% of net sales, for the second quarter of 2023.

Gross profit for the twenty-eight weeks ended July 13, 2024 and July 15, 2023 was $2.54 billion, or 41.8% of Net sales, and $2.60 billion, or 42.6% of Net sales.

During the second quarter of 2024 and the twenty-eight weeks ended July 13, 2024, gross profit margin was negatively impacted by strategic pricing investments and higher product costs.

### Selling, General and Administrative Expenses

SG&A expenses for the second quarter of 2024 were $1.04 billion, or 38.9% of net sales, compared with $1.01 billion, or 37.8% of net sales, for the second quarter of 2023. The increase of SG&A as a percentage of net sales was due to wage investments in frontline team members as well as an increase in professional fees, including costs associated with the implementation of the Company’s strategic plan and the remediation of the previously disclosed material weaknesses. This was partially offset by a reduction in marketing program expenses.

SG&A expenses for the twenty-eight weeks ended July 13, 2024 were $2.39 billion, or 39.2% of Net sales, compared with $2.38 billion, or 39.0% of Net sales, for the twenty-eight weeks ended July 15, 2023.

### Provision for Income Taxes

The Company’s provision for income taxes for the second quarter of 2024 was $17.1 million compared with $28.2 million for the same period in 2023. The Company’s provision for income taxes for the twenty-eight weeks ended July 13, 2024 and July 15, 2023 was $36.9 million and $47.4 million. The decrease in tax expense for the second quarter of 2024 and the twenty-eight weeks ended July 13, 2024 resulted from lower income before provision for income taxes compared with prior year.

The Company’s effective tax rate was 30.3% and 27.2% for the twenty-eight weeks ended July 13, 2024 and July 15, 2023.

### Liquidity and Capital Resources

### Overview

The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, including payment of interest on the Company’s long-term debt. Historically, the Company has also used available funds to repay borrowings under the Company’s credit facility, to periodically repurchase shares of the Company’s common stock under the share repurchase program, to pay the Company’s quarterly cash dividend and for acquisitions. However, the Company’s future uses of cash may differ, including with respect to the weight the Company places on the preservation of cash and liquidity, degree of investment in the Company’s business and other capital allocation priorities.

Typically, the Company has funded its cash requirements primarily through cash generated from operations, supplemented by borrowings under the Company’s credit facilities and note offerings as needed. On August 22, 2024, the Company entered into a definitive purchase agreement to sell its Worldpac business for $1.5 billion, with customary adjustments for working capital and other items, as well as provision of a $200 million letter of credit for up to 12 months following the closing of the transaction, which letter of credit will reduce to zero no later than 24 months after the closing, to support supply chain financing for the buyer. The transaction is expected to close in the fourth quarter of 2024. The Company expects net proceeds from the transaction after paying expenses and taxes to be approximately $1.2 billion. The Company intends to use net proceeds from the transaction for general corporate purposes, which may include the provision of additional working capital, funding internal operational improvement initiatives and repayment or refinancing of outstanding indebtedness. The Company believes funds generated from its expected results of operations, available cash and cash equivalents, net proceeds from the Worldpac sale and available borrowings under credit facilities and note offerings as needed will be sufficient to fund its obligations for the next year and beyond.

The Company’s supplier finance programs did not have a material impact on its liquidity or capital resources in the periods presented nor does the Company expect such arrangements to have a material impact on its liquidity for the foreseeable future. However, as further described below, a future decline in our credit ratings would be expected to result in a significant impact to bank participation in the Company’s supplier finance programs. While the Company does not expect such an impact to have a material impact on our overall liquidity, the Company does expect that it would have a material impact on its capital resources and capital allocation. See *Note 11. Supplier Finance Programs* of the Company’s condensed consolidated financial statements for further discussion.

### Share Repurchase Program

The Company’s share repurchase program permits the repurchase of the Company’s common stock on the open market and in privately negotiated transactions from time to time. The Company expects to continue its temporary pause on repurchases under the existing share repurchase program and to continue to evaluate current and expected business conditions with respect to resumption of share repurchase activity.

During the second quarter and twenty-eight weeks ended July 13, 2024 and July 15, 2023, the Company did not purchase any shares of its common stock under the share repurchase program. The Company had $947.3 million remaining under the share repurchase program as of July 13, 2024.

### Analysis of Cash Flows

The following table summarizes the Company’s cash flows from operating, investing and financing activities:

*(in thousands)*

|  | Twenty-Eight Weeks Ended July 13, 2024 | July 15, 2023 |
| --- | ---: | ---: |
| Cash flows provided by (used in) operating activities | $87,814 | $(167,131) |
| Cash flows used in investing activities | (79,625) | (143,342) |
| Cash flows (used in) provided by financing activities | (42,993) | 313,945 |
| Effect of exchange rate changes on cash | 10,751 | 949 |
| Net (decrease) increase in cash and cash equivalents | $(24,053) | $4,421 |

#### Operating Activities

For the twenty-eight weeks ended July 13, 2024, cash flows provided by operating activities increased by $254.9 million to $87.8 million compared with the same period of prior year. The net increase in cash flows provided by operating activities was primarily attributable to a decrease in cash utilized for working capital mainly due to accounts payable payments and inventory purchases.

#### Investing Activities

For the twenty-eight weeks ended July 13, 2024, cash flows used in investing activities decreased by $63.7 million to $79.6 million compared with the same period of prior year. The decrease in cash used in investing activities was attributable to lower capital spend due to fewer store openings and projects in the current year coupled with higher proceeds on asset sales (see *Note 7. Leases* for additional information).

#### Financing Activities

For the twenty-eight weeks ended July 13, 2024, cash flows used in financing activities was $43.0 million, a decrease of $356.9 million compared with the same period of prior year. The decrease in cash provided by financing activities was due to the issuances of senior unsecured notes in the prior year and a decrease in dividends paid during the twenty-eight weeks ended July 13, 2024 compared with the same period of prior year.

The Company’s Board of Directors has declared a cash dividend every quarter since 2006. Any payments of dividends in the future will be at the discretion of the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Board of Directors.

### Long-Term Debt

With respect to all senior unsecured notes for which Advance Auto Parts, Inc. (“Issuer”) is an issuer or provides full and unconditional guarantee, Advance Stores, a wholly owned subsidiary of the Issuer, serves as the guarantor (“Guarantor Subsidiary”). The subsidiary guarantees related to the Issuer’s senior unsecured notes are full and unconditional and joint and several, and there are no restrictions on the ability of the Issuer to obtain funds from its Guarantor Subsidiary. The Company’s captive insurance subsidiary, an insignificant wholly owned subsidiary of the Issuer, does not serve as guarantor of its senior unsecured notes.

For additional information, refer to *Note 6. Long-term Debt and Fair Value of Financial Instruments* of the Notes to the Condensed Consolidated Financial Statements included herein.

As of July 13, 2024, the Company had a credit rating from Standard & Poor’s of BB+ and from Moody’s Investor Service of Baa3. As of July 13, 2024, the outlooks by Standard & Poor’s and Moody’s on the Company’s credit rating were stable and negative. The current pricing grid used to determine the Company’s borrowing rate under the Credit Agreement is based on the Company’s credit ratings. The Company anticipates that it may receive a future downgrade in its credit ratings dependent on the strengthening of its balance sheet and the success and timing of its efforts to improve business operations. If the Company’s credit ratings decline, the interest rate on outstanding balances may increase and the Company’s access to additional financing on favorable terms may be limited. In addition, declines could reduce the attractiveness of certain supplier finance programs whereby third-party institutions finance arrangements to the Company’s vendors based on the Company’s credit rating, which could result in increased working capital requirements. The Company expects that a future decline in its credit ratings would have a significant impact on bank participation in its supplier finance programs, resulting in increased working capital requirements. The Company believes that its sources of cash, together with its ability to generate cash through existing or new credit facilities and notes offerings as needed, will be sufficient to fund any increases in working capital requirements.

## Market risk

As filed, 218 characters.

There have been no significant changes in the Company’s exposure to market risk since December 30, 2023. Refer to “*Item 7A. Quantitative and Qualitative Disclosures about Market Risk”* in the Company’s 2023 Form 10-K.

## Controls and procedures

As filed, 7,344 characters.

### Disclosure Controls and Procedures

Disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in our reports that we file or submit 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 our management, including our 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 of our internal controls may vary over time.

Our management evaluated, with the participation of our principal executive officer and principal financial officer, the effectiveness of our disclosure controls and procedures as of July 13, 2024. Based on this evaluation, our principal executive officer and our principal financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective to accomplish their objectives at the reasonable assurance level solely due to the material weaknesses described below.

### Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

#### Details on Accounting Resources Material Weakness

In our Form 10-Q for the period ended April 22, 2023, management identified a material weakness in our internal control over financial reporting that existed due to turnover of key accounting positions during the first quarter of 2023. The Company was unable to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter 2023.

#### Details on Account Reconciliation Material Weakness

In addition, as disclosed in our Form 10-Q for the period ended April 20, 2024, in connection with the preparation of the financial statements for the first quarter of 2024, management identified certain cash account reconciliations whereby a former employee in the Company’s India-based shared services center circumvented a cash reconciliation controls policy and concealed unreconciled items. This individual did not follow the Company’s policy to display all reconciling items in the reconciliation process. The Company believes the cash reconciliation policy noncompliance primarily related to inadequately trained and supervised personnel and is closely linked to the material weakness disclosed in the Form 10-Q for the period ended April 22, 2023.

#### Remediation Efforts to Address the Material Weaknesses

The Company has devoted significant time and resources to complete its remediation of the material weaknesses described above and has made significant progress towards the remediation during the second quarter of 2024. The following components of the remediation plan, among others, have been executed:

- Backfilled open roles and hired approximately 40 experienced personnel, an increase of 37% from the first quarter of 2024, (both permanent employees and contract labor) with the requisite accounting and internal controls knowledge and experience to sufficiently complement the existing global controllership organization;
- Completed the review of the organizational structure of the global controllership function by a third-party consultant and implemented recommended changes;
- Assessed our methodologies, policies, and procedures to ensure adequate design and effectiveness of processes supporting internal control over financial reporting;
- Added redundant and compensating internal controls to enhance our internal control structure;
- Assessed the specific training needs for newly hired and existing personnel and developed and delivered training programs designed to uphold our internal controls standards. Monthly trainings have been held with account reconciliation preparers and reviewers along with target trainings for individual control owners;
- Implemented a new quality control function within management in the second quarter of 2024 to perform quality reviews of account reconciliations prior to independent control testing;
- Following the departure of the Company’s Chief Financial Officer during the third fiscal quarter of 2023, hired a new Chief Financial Officer who began employment with the Company on November 27, 2023;
- Following the departure of the Company’s Chief Accounting Officer during the fourth fiscal quarter of 2023, hired a new Chief Accounting Officer who began employment with the Company on January 9, 2024; and
- Reperformed cash reconciliations for 2023 year end and during the period ended July 13, 2024, and will continue to execute the same comprehensive testing until this matter is considered fully remediated.

The Company considers that the actions described above are comprehensive and have strengthened the Company’s internal control over financial reporting. The significant progress observed to date provides evidence that the remediation efforts are effective in improving the control environment. Given the time that the open roles have been filled and the expanded control activities have been in place, the Company believes that additional time will be beneficial to demonstrate that personnel have the ability to consistently perform their responsibilities to ensure that the material weaknesses have been fully remediated. Therefore, the Company has concluded that these material weaknesses will not be considered fully remediated until the remediation actions, including those above, have operated effectively for a sufficient period of time. Consistent with prior quarter, the Company is targeting completion of the remediation and testing of these material weaknesses in the second half of fiscal 2024.

Management believes that the Condensed Consolidated Financial Statements and related financial information included in this Form 10-Q present fairly, in all material respects, our balance sheets, statements of operations, comprehensive income and cash flows as of and for the periods presented.

### Changes in Internal Control Over Financial Reporting

Except for the changes described above, there has been no change in the Company’s internal control over financial reporting during the second quarter ended July 13, 2024, 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.

## Risk factors

As filed, 365 characters.

Please refer to “*Item 1A. Risk Factors”* found in the 2023 Form 10-K filed for the year ended December 30, 2023 for risks that, if they were to occur, could materially 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.

Filed Aug 22, 2024.
Source: SEC EDGAR, the filing index for accession 0001158449-24-000195. Last ingested by Listed: Nov 5, 2026, 16:27 ET. No prices; not investment advice.