President and Chief Executive Officer at Advance Auto Parts
Thanks, Elisabeth and good morning. We delivered a strong fourth and final quarter in what resulted in a record-breaking 2021 for Advance Auto Parts. We closed the year with record top line sales, advanced our highest annual adjusted operating income margin expansion since our first year as a public company in 2002 and record adjusted diluted earnings per share. In addition, we returned over $1 billion in cash to our shareholders, through a combination of share repurchases and our quarterly cash dividend, which is also a record. Last April, we provided a strategic update focused on our long-term plans to deliver top quartile total shareholder return or TSR, and we delivered on this objective in 2021.
In discussing our Q4 and full year performance as well as our outlook for 2022, Jeff and I will reference the same core drivers of this TSR performance we outlined in that meeting. First, build an ownership culture. Second, grow faster than the market. Third, capitalize on our unique margin expansion opportunity. And fourth, return a substantial amount of cash to shareholders.
I'd like to begin by thanking the entire Advance team and Carquest independents for helping us build an ownership culture and delivering the strong results we are about to review. As we look back on the past two years of managing through a global pandemic, nothing has been more important to us than the health, safety and well-being of our team members and customers. The investments we've made enable us to keep infection rates at AAP below the national averages. In addition, we believe the consistency of our words and actions managing through COVID-19 enable us to build trust during a defining moment for companies. Improving organizational health has never been more important amidst the labor market where people have more choices than ever in terms of where, when and how they work.
We fundamentally believe then when we take care of our team members, they in turn will take care of our customers, resulting in strong shareholder returns. Our team members are critical to our customer value proposition. They build enduring relationships with customers. They work together as a team across markets to serve customers and throughout the pandemic they fulfilled surging demand for customers. They also navigated this challenging environment to welcome new customers, grow our business with existing customers and train new AAP team members. Meanwhile, because our team members are so vitally important to our long-term sustainable growth at Advance, we continue to invest in them and in our business, despite the pandemic. This includes investments in our differentiated Fuel the Frontline stock ownership program, IT infrastructure, supply chain, stores, independent partners and in leading digital capabilities to help our team better serve customers in the future.
In summary, we are incredibly proud and thankful for the progress our team members and the independent partners made throughout the past two years to strengthen and build an ownership culture here at Advance.
Shifting to our Q4 results. And as a reminder, we were lapping a 53rd week in the previous year. In our press release, you will find detailed summaries of our 2021 results compared with 2020 on a like-for-like 12 and 52-week basis. In our remarks today, we will be measuring our performance apples-to-apples. In other words, Q4 2021 will be compared to the relevant 12 weeks in 2020 and the 52 weeks of 2021 will be compared with the relevant 52 weeks in 2020.
In Q4 we are able to once again comp-to-comp, delivering comparable store sales growth of 8.2% or 12.9% on a two-year stack. Our adjusted operating margin rate expanded 96 basis points in the quarter. And adjusted earnings per share grew by 35.4% to $2.07. For the full year, we delivered double-digit comp sales growth of 10.7% and 13.1% on a two-year stack. Adjusted operating income margin rate of 9.6% was up 159 basis points resulting in adjusted EPS of $12.02, which increased nearly 48%.
Shifting to the second TSR driver we outlined last April, grow faster than the market, we've said many times that the key to this business is to ensure we have the right part in the right place at the right time, to deliver on the benefits of availability, care and speed. To build competitive advantage, we ask ourselves how do we leverage our diversified asset base. What can advance offer that sets us apart. In terms of availability, it's about leveraging our industry leading assortment of national and OE brands. We are building powerful trusted own brands like DieHard and Carquest. When we talk about care, it's about how we provide a superior and more personalized online in- store and in-garage experience for customers. In terms of speed, it's about integrating digital and physical assets to serve our customers quickly through our Advance same date suite of services. Delivering speed now includes, opening new stores on the strength of an improved customer value proposition. We made progress in each of these areas in Q4 and our category sales growth was led by brakes, motor oil and filters. Regionally, our performance was once again led by the Southwest and West regions, which led our growth most of the year.
In terms of channels, professional led the way once again in Q4 with double-digit comp sales growth, with DIY omnichannel delivering mid single-digit comp growth. Throughout 2021, our professional customers continued to navigate significant COVID-19, labor and global supply chain challenges. As a result, our team stepped up to help them in a time of great need. This includes providing world-class training from our Carquest Technical Training Institute by delivering virtual courses in 2021 in an innovative format that provides technician a live interactive learning experience.
In terms of sales growth, our strategic accounts led the way in Q4. In addition we crossed 14,000 TechNets to close the year and improvements made in our MyAdvance digital platform led to the highest online B2B penetration rate ever. We expanded own brands with great customer acceptance, including a significant increase in distribution of DieHard batteries in pro-garages throughout North America. Our Carquest Independents also had a very strong year. In 2021 we welcomed a record 75 new independent locations and remain excited about the continued growth of this business. Our track record of growing sales and profitability for independents continues to attract new partners to the Carquest program.
Turning to DIY omnichannel. Our success was led by the strength of DieHard. Following the launch of DieHard in mid 2020, DieHard crossed $1 billion in annual sales in 2021. Through effective marketing and PR [Phonetic] we ensured that consumers knew that DieHard was back. Not only did they know DieHard was back, consumers recently rated DieHard as America's most trusted battery brand. Behind the success of DieHard, we've demonstrated our ability to build brands. By strengthening the DieHard Advance and Carquest brands, we not only build customer loyalty, but we also build pricing power. In addition, we are beginning to increase DieHard product offering with DieHard power tools launched in Q4 and DieHard hand tools in the front half of 2022. We're also focused on leading in product innovation. As an example, we were first to market with an enhanced flooded battery in 2021 which carries an attractive four year warranty.
And yesterday we announced the exciting news that DieHard has received formal certification from UL as the first automotive battery to achieve one of their distinguished validations. UL is a globally recognized non-profit organization dedicated to the advancement of a safer and environmentally sustainable future. DieHard AGM batteries are now the first and only global automotive battery to receive UL Validation within the circularity or closed loop or closed cycle space. This notable validation is the result of years of work between Advance and our strategic manufacturing partner Clarios. Our disciplined execution of battery core returns along with the proprietary manufacturing process allows for continual reuse of environmentally sensitive raw materials. Simply put, this means that new DieHard batteries come from recycling old DieHard batteries, which contributes to a circular economy and environmental sustainability.
DieHard is America's most trusted auto battery and not only is it reliable, durable and powerful, but it also stands for innovation. While we're pleased with our early success behind DieHard, we're just getting started on building and strengthening this powerful brand.
We also made progress driving DIY loyalty through Speed Perks. We added new Speed Perks members throughout the year, finishing at 12.6 million while increasing loyalty and share of wallet with existing customers. To further strengthen loyalty, we recently announced a new benefit for Speed Perks members, Gas Rewards. Fuel savings has been a request of Speed Perks customers and we're delivering. Partnering with Shell to help customers save at the pump while driving further brand loyalty and share of wallet.
Finally, our execution in stores continues to improve. And we remain focused on strengthening the customer experience and increasing net promoter score. Behind the strengthened customer value proposition, we opened 31 stores and eight Worldpac branches in 2021 as we began to ramp market expansion. This includes our first seven stores converted in California and after some disappointing delay due to COVID-19. As you saw in our release yesterday, we expect to open an additional 125 to 150 new stores and branches in 2022.
In terms of our third TSR driver, we believe our opportunity to further expand margins is unique within our space. Our Q4 operating income margin expansion was led by gross margin improvement, driven by category management. This incorporates strategic pricing, own brand expansion and strategic sourcing, culminating in a disciplined execution plan. Our strategic pricing capabilities have improved considerably following the implementation of the new technology platform in 2020. R&D tools enable us to eliminate unproductive discounts and react quickly to cost increases related to inflation. We incorporated Advanced Analytics, competitive intelligence, price elasticity and customer segmentation into our category plans. Increased own brand penetration also played a meaningful role in the quarter driving margin expansion. We transitioned tens of thousands of SKUs within undercar and engine management with our in-stocks improving throughout the quarter.
Separately, we continue to transform our enterprise-wide supply chain infrastructure. First we made further progress on integrating the assortment, supply chain and technology platforms within Worldpac and Autopart International during Q4. By year-end, we've consolidated 55% of AI locations on to the Worldpac tech stack, getting to a single supply chain and tech stack for our pure play professional business improves customer service, drives incremental sales and increases margins. We expect this transition to be completed by mid-year.
In terms of the integration of our Advance and Carquest supply chain, we completed the rollout of cross banner replenishment. Our entire Advance and Carquest network of stores are now serviced by our freight logical distribution center which reduced our annual miles driven from DC to store by approximately 14% in 2021.
Our next big step is to get to a single warehouse management system or WMS. As of December '21, we transitioned 44% of our distribution center network as measured by unit volume to the new WMS. As we complete WMS in DC, we followed up with the implementation of our Labor Management System, which drives further savings through enhanced performance pay. The full run rate benefits of WMS and LMS remain on track to be realized by the end of 2023.
Finally, we continue to look for ways within our supply chain to optimize and modernize our network. We're excited about the transition to our new San Bernardino and Toronto DC that we announced last quarter. Once fully operational, San Bernardino will be the central location for supplier shipments and help facilitate rapid store and e-commerce delivery in the Western United States. As we ramp the opening of this new DC, we recently announced to our team members, it will be consolidating operations from our much older Riverside BC to this new facility. Similarly, our Toronto DC enables the consolidation of two distribution centers. One Carquest and one Worldpac to a single and much larger facility. This will significantly improve our availability in the very large Ontario market.
Shifting to SG&A. We're pleased to report that we exceeded our previously stated goal of $1.8 million in sales per store in 2021. As we move into 2022, we plan to build on this achievement behind continued improvement in sales per store along with the disciplined execution of profit per store productivity initiatives. This includes automating tasks in stores to enable more customer-facing time and leveraging technology that integrates internal driver availability with the gig economy. In addition to improving sales and profit per store, we completed our finance ERP integration. The health of our balance sheet has improved and we expect to realize the full run rate of savings in 2022. We'll continue to build on this integrated platform to deliver further improvements in the customer experience and reduce cost.
Finally, we are building an enviable track record on team member safety. For the full year 2021, we saw a 10% reduction in our total recordable injury rate versus 2020 and our lost-time injury rate reduced by 20%. Our frequency rate on both metrics is now close to one-half of what it was five years ago.
In summary, Advance is a very different company than we were several years ago. We've strengthened our core customer value proposition, integrated many parts of the company, enhanced our diversified asset base and significantly improved execution. During 2021, we also conducted our first materiality assessment to sharpen our focus and prioritize our ESG agenda. We will share additional information about the results of this assessment in our upcoming Corporate Sustainability Report. While we are proud of our 2021 performance, we see plenty of runway in 2022 to further drive total shareholder return.
As you saw in our press release yesterday, we introduced our 2022 guidance. This contemplates the continuation of our top line growth and margin expansion initiatives as well as the following external tailwinds. An aging vehicle population with several million vehicles entering the sweet spot as availability of new cars continues to lag historical trends. An ongoing and gradual recovery in miles driven which has still not reached 2019 levels and the outperformance of our professional business compared to DIY for reasons we've discussed in the past. Our guide also takes into consideration certain factors that have changed since we initially share our three-year strategic plan. This includes the acceleration of broad-based inflation across the economy and the lapping of significant stimulus dollars, both of which could negatively impact our core customer.
Within our industry, inflationary pressures across commodities, wages and transportation. Overall, we're very encouraged by the resiliency of our industry in 2021 and the momentum we're building behind the disciplined execution of our strategic plan.
Jeff will now go deeper on our financials, provide an update on our fourth TSR driver, the substantial return of cash to shareholders and discuss our 2022 guidance. Jeff?