AAP 2021 ESG Report
CORPORATE SUSTAINABILITY AND SOCIAL REPORT 2021
TABLE OF CONTENTS
03 LETTER FROM OUR CEO 06 ABOUT ADVANCE
FORWARD LOOKING STATEMENTS Certain statements herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are usually identifiable by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “likely,” “may,” “plan,” “position,” “possible,” “potential,” “probable,” “project,” “should,” “strategy,” “will,” or similar language. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements about the company’s strategic initiatives, operational plans and objectives, expectations for economic conditions and recovery and future business and financial performance, as well as statements regarding underlying assumptions related thereto. Forward- looking statements reflect the company’s views based on historical results, current information and assumptions related to future developments. Except as may be required by law, the company undertakes no obligation to update any forward-looking statements made herein. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements. They include, among others, factors related to the timing and implementation of strategic initiatives, including with respect to labor shortages or disruptions and the impact on our ability to complete store openings, deterioration of general macroeconomic conditions, the highly competitive nature of the company’s industry, demand for the company’s products and services, complexities in its inventory and supply chain, challenges with transforming and growing its business and factors related to the current global COVID-19 pandemic. Please refer to “Item 1A. Risk Factors.” of the company’s most recent Annual Report on Form 10-K, as updated by other filings made by the company with the Securities and Exchange Commission, for a description of these and other risks and uncertainties that could cause actual results to differ materially from those projected or implied by the forward-looking statements.
10 PEOPLE 40 PLANET
45 COMMUNITY 52 GOVERNANCE
57 MATERIALITY ASSESSMENT
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LETTER FROM OUR CEO
LETTER FROM OUR CEO TOM GRECO Many decades ago, the founder of our company, Arthur Taubman, established three timeless values for Advance. First, Inspire our team members to be the very best they can be. Second, Serve our customers better than anyone else. Third, Grow our business profitably. In a year best described as “exhausting,” our team took to heart each of these values to serve our customers better than ever. As always, in 2021, nothing was more important than the health, safety and wellbeing of our Advance team members and customers. And for their part, our team members continued to show the utmost in care for others despite extreme challenges. Every week, our approximately 68,000 team members came together as one team to deliver on our mission: Passion for Customers...Passion for Yes! As a result of this selfless dedication to keeping customers on the road, we achieved a record-setting year. This included our highest net sales growth, adjusted operating margin expansion 1 , adjusted diluted earnings per share and cash returned to shareholders since becoming a public company in 2002. Meanwhile, we achieved these record results as we elevated our focus on corporate sustainability. We believe our track record within Environmental, Social and Governance (ESG) over the past few years is inextricably linked with the significant improvement in our performance. Let me start with our commitment to our people, including how we Grow Talent, which is one of our Cultural Beliefs. Not only has our focus on growing talent led to improved performance, but it is also becoming a differentiator for Advance.
When we say Grow Talent, it means we are all inspired to learn and grow together. We accomplish this by building an “ownership culture” – the idea that when our team members feel empowered to make decisions, we will provide a superior experience for our customers. An ownership culture means we Advance Together, by giving team members a voice in the company’s culture, while encouraging them to bring their whole authentic selves to work every day. In a challenging labor market like we experienced this past year, providing a strong and distinct company culture was particularly important. We supported our commitment to building an ownership culture with substantial investments in our team, including differentiated programs like Fuel the Frontline, which provides stock awards to frontline team members who distinguish themselves with outstanding performance in their respective functions and areas. We’ve now granted over 24,000 stock awards to frontline team members, valued at over $60 million upon grant since the inception of our Fuel the Frontline program. We remain the only company in our industry making this significant investment in stock ownership for frontline team members. When we started Fuel the Frontline, we knew the investment benefits would build over time and deliver a meaningful impact across our organization. We continue to see positive improvements from this unique program, including a significant reduction in our turnover, which for key frontline roles is approximately half of what it was five years ago.
1. Adjusted results are non-GAAP financial measures. For additional information regarding these non-Gaap financial measures, please see the discussion of these key metrics included in the company's 2021 form 10-k or Q4 2021 earnings release.
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LETTER FROM OUR CEO
OUR OWNERSHIP CULTURE ALSO EXTENDS TO OTHER PARTS OF OUR SUSTAINABILITY AGENDA, INCLUDING THE WAY WE CARE FOR OUR PLANET, THE WAY WE ENSURE WORKPLACE SAFETY AND THE WAYS IN WHICH WE GIVE BACK TO THE COMMUNITIES WE SERVE.
TOM GRECO PRESIDENT & CHIEF EXECUTIVE OFFICER
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LETTER FROM OUR CEO
Like Grow Talent, Champion Inclusion is another one of our Cultural Beliefs, and in 2021, diversity, equity and inclusion (DEI) continued to be essential parts of our ownership culture. This past year, we created many initiatives to ensure we Champion Inclusion in all we do, and I believe we are leading the industry in this critical area. In addition to expanding the size and scope of our Office of DEI, we leveraged data to increase accountability, fostered inclusion through numerous cultural celebrations, delivered DEI awareness training and reimagined our seven team member networks to make them more accessible to team members at all levels and in all geographies. Importantly, we also established our first CEO inclusion council charged with oversight of the company’s DEI strategy. This diverse group of company leaders will help ensure we continue to deliver meaningful progress in this area and provide everyone at Advance the opportunity to thrive, belong and succeed. Throughout 2021, we also refined our field and distribution center (DC) training programs to pave the way for easier onboarding and swifter advancement. For added safety, we identified Safety Champions in many of our stores and DCs, which has contributed to our lowest incident rate ever. In addition, we introduced new health and wellness benefits and made progress on how we operate in a hybrid and remote environment post-pandemic. Collectively, we believe this work is helping us continue to position Advance as an employer of choice. Our sustainability agenda also extends to the way we care for our planet. From an environmental standpoint, we reduced both energy consumption and carbon emissions and continued to work to improve recycling and re-use opportunities. From a community standpoint, we set out a few years ago to become more focused on where we could have an impact. From a corporate giving standpoint, in 2021, we concentrated our efforts in two primary areas: improving community health and supporting military veterans. We were once again counted among the top corporate fundraisers for the American Heart Association thanks to the generosity of our team members and customers. Heart disease is the number one cause of death in the U.S. and affects our Advance team members in a similar fashion. Over the past four years, we raised more than $4.7 million to support the American Heart Association’s mission of building healthier lives,
free of cardiovascular disease. From a military veteran perspective, Advance is proud to be the home of thousands of veteran team members. With the help of our supplier partners, we raised approximately $1.5 million in 2021 to support Building Homes for Heroes, a nonprofit organization that gifts mortgage-free homes to military heroes. Beyond these company-wide initiatives, giving back also happened at the local level. Through the newly reinvigorated Advance Auto Parts Foundation, we gifted tens of thousands of dollars to nonprofits recommended by our team members – from food pantries to Big Brothers Big Sisters chapters to programs aimed at veteran suicide prevention and support for cancer patients. At the end of the day, we know that when we care for our team members and provide them a stake in our success, they will in turn take care of our customers and help us continue to achieve strong business results. Throughout this report, you’ll read many examples of ways our team members contributed to building an even better – and stronger – Advance. Importantly, our work in corporate sustainability continues to evolve. I’m excited to share that we recently completed our first ESG Materiality Assessment, which used input from our stakeholders to help us prioritize our sustainability agenda. At the conclusion of this report, you can read more about the results of this assessment and the five areas of ESG that we determined have high relevance to our stakeholders and the most potential to contribute value to our business and support our long-term success. Despite the uncertainty that still exists in today’s dynamic environment, there is one thing I am certain about: at Advance, our team members ARE our best part and together, we will continue to achieve great things. As the basketball legend Michael Jordan once said, “Talent wins games, but teamwork and intelligence win championships.” I think the same can be said in our business. I hope you enjoy reading about our many accomplishments, and I look forward to hearing your feedback.
Regards,
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ABOUT ADVANCE
ABOUT ADVANCE Advance is a leading automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. The company was founded in April 1932, when Arthur Taubman purchased three stores in Virginia. In 2014, Advance acquired General Parts International, Inc., a leading privately held distributor
As of January 1, 2022, we employed approximately 68,000 team members and generated $11.0 billion in net sales in 2021. At year end 2021, we operated 4,706 stores, 266 Worldpac branches primarily within the United States, Canada, Puerto Rico and the U.S. Virgin Islands. We also served 1,317 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. As a leader in the aftermarket automotive parts industry, all of us at Advance appreciate the important role we must play in finding solutions to the environmental and social challenges that our industry faces. We are committed to actively participating in leading trade organizations and working with our industry peers whenever possible to find innovative and responsible common solutions. Ultimately, we all share a common goal: leaving the world a better place for future generations.
and supplier of original equipment and aftermarket replacement products for commercial markets operating under the Carquest and Worldpac brands. Since the acquisition, we have done the important work of integrating Advance, Carquest, Autopart International and Worldpac, which includes moving our headquarters to Raleigh, NC in 2018. In 2019, we acquired the DieHard® brand and in mid-2020 we launched our #DieHardisBack marketing campaign, which helped DieHard become a billion-dollar brand for Advance Auto Parts in 2021.
ADVANCE AUTO PARTS OVER THE YEARS
Advance, which operates more than 1,700 stores in 38 states, announces it is buying Discount Auto Parts, a publicly traded operator of 667 stores. The merger puts Advance on the New York Stock Exchange (NYSE: AAP) in early 2002.
Advance acquires Autopart International, Inc., a commercial wholesaler of automotive parts, increasing the company’s focus on both retail and professional customer sales.
Advance designates Raleigh, NC as its corporate headquarters, noting its increased focus on technology and omnichannel sales.
The company changes its name to Advance Auto Parts focusing on the sale of automotive aftermarket parts and accessories.
DieHard ® becomes a billion-dollar brand.
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Arthur Taubman buys three retail stores, named Advance Stores, in Virgina.
Advance Auto Parts buys 550 Western Auto Supply Company/Parts America stores from Sears, Roebuck & Co., almost doubling the company’s size.
Advance debuts at No. 466 on the Fortune 500.
Advance acquires General Parts International, Inc., a leading privately held commercial supplier of automotive parts.
Advance acquires the iconic DieHard ® brand.
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ABOUT ADVANCE
ADVANCING A WORLD IN MOTION
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We put people first by giving our team members a voice in the company’s inclusive culture, enabling everyone to bring their whole authentic selves to work every day. • Delivered a safety program that has reduced injury rates by nearly 60% since 2016 • Introduced a financial wellness program that provides wage advances, loans and coaching to help team members reach their financial goals • Granted over 24K stock awards to frontline team members, valued at over $60M upon grant since the inception of our Fuel the Frontline program • Delivered best-in-class training and onboarding programs, improved the hiring process and adapted how we work in a post-pandemic world • Designed programs so team members can develop the skills they need to advance in their careers and to evolve our diversity, equity and inclusion agenda
We care for the environment because doing so makes us more efficient, helps bring down costs and contributes to the long-term health of our planet. •Joined the science-based target initiative and committed to setting a science-based emissions reduction target by early 2023 • Conserved energy through our use of renewable energy, the continued optimization of our fleet and the installation of updated HVAC equipment in our stores • Continued oil, batteries, cardboard, stretch wrap and scrap metal recycling programs
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Our passion for helping others drives our community involvement through both corporate and foundation giving. • Gifted hundreds of thousands of dollars through the Advance Auto Parts Foundation to nonprofits supporting military veterans, community health and education and job readiness • Introduced a first-ever team member-led gifting program that provided grants totaling $1.5K to $7.5K each to 30 local nonprofits
Our strong corporate governance practices enhance our ability to create long-term value and support our performance & growth in an ethical and sustainable manner.
• Assembled the most diverse board in our history to help move the business forward and advise on many parts of our business • Continued to drive improvement in cyber security and data privacy management in support of our business initiatives • Conducted our first ESG materiality assessment to identify those areas of ESG that matter most to our stakeholders annd are most likely to impact our long-term success
• Raised $1.7M for the American Heart Association, placing Advance among the organization’s top corporate fundraiser, bringing our total to approximately $4.6 million since 2018 • In partnership with our suppliers, raised $1.5M for Building Homes for Heroes, bringing our total contribution to approximately $16M since 2011
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ABOUT ADVANCE
CULTURAL BELIEFS
SPEAK UP
I own challenges and overcome obstacles to achieve team and personal goals. BE ACCOUNTABLE
I act with urgency because speed matters. TAKE ACTION
I listen to seek and provide candid, informed feedback to improve performance.
GROW TALENT
I build trust and collaborate as one team with one voice to the customer. MOVE FORWARD
CHAMPION INCLUSION
I own my development and the success of those around me. I hire and develop the best talent and commit to my teams’ continuous development.
I embrace diversity of people, thoughts, skills and styles to deliver results.
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At Advance, we are approximately 68,000 team members strong. We have often said “our people are our best part,” and throughout 2021, they showed the utmost in care for others despite significant challenges resulting from the COVID-19 pandemic. During the year, we went to great lengths to ensure their voices were heard and their feedback acted upon to help perform at the highest level possible and ensure our team members could take pride in the company where they work.
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ONGOING COVID-19 RESPONSE
CONTINUING EMERGENCY PAY GUIDELINES Like any chronic situation, Advance stayed close to the needs of our team members by providing hazard and emergency pay. This significant investment enabled impacted team members to stay home and reduced the potential for community spread. Additionally, we continued to make available Team Member Assistance Fund grants to help team members with basic living expenses, including childcare costs. We also continued to offer our expanded Employee Assistance Program at no cost to team members 24 hours a day, seven days a week by phone or on the web and included services to address the mental health and wellbeing of our team members. SUPPORTING OUR TEAM IN INDIA DURING THE DELTA SURGE In spring of 2021, India recorded an exponential jump in COVID-19 cases and deaths. In response, Advance stood up a task force to support the team members working for the company in the country. The task force arranged for the delivery of care kits and packed food for team members and their families, including COVID-related items like hand sanitizer, face masks, thermometers, steamers to help with congestion, garbage bags for safe disposal of contaminated items, N95 masks to limit household spread and more. In addition, the company purchased oxygen concentrators for use by impacted team members or their families. These portable machines, which were difficult to source in India and expensive, would provide extra oxygen in the event a person’s oxygen level fell below a critical point. The task force also provided virtual training programs to support health and wellness, including sessions on mental health, change management and updates in government mandates. In addition, the company increased flexibility for anyone personally impacted or who had an impacted family member, including paid sick leave, the availability of Team Member Assistance Fund support and salary advances to help offset medical costs.
Throughout 2021, COVID-19 remained front and center in all our lives. We experienced moments of relative calm and periods when cases surged. Through it all, we continued to prioritize the health, safety and wellbeing of our team members and customers. Our COVID-19 Leadership Team, along with our COVID-19 Project Management Office, continued to closely monitor the guidance of the Centers for Disease Control (CDC) and other relevant regulatory authorities to ensure we could quickly respond to changes. From enhanced cleaning processes and other safety protocols to COVID- 19-related trainings and the use of case coordinators for contact tracing and incident investigation, we worked hard to ensure we maintained a safe working environment. As
a result, our case count remained well below the national average. PROMOTING THE AVAILABILITY OF VACCINATIONS
As the first COVID-19 vaccines rolled out in early 2021, a massive push to promote their availability ensued. We collaborated with CVS Caremark to produce powerful videos to share information with team members on the topic and hosted vaccination drives at certain Advance locations. We also created a lottery system where DC and store team members were randomly incentivized for receiving vaccinations. These efforts helped to increase the number of vaccinated Advance team members.
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SUPPORTING OUR PROFESSIONAL CUSTOMERS Many of our professional customers are small businesses that benefitted from extra support in dealing with COVID-19. We took the initiative to contact them via phone, text, social media, in-store contacts and any other means. Through these connections, we significantly boosted feedback and learned what kind of, and how much, information they needed. For example, we created videos that targeted COVID-19-related issues and best practices. We also followed guidance from the CDC and other regulatory agencies and invited customers to webinars and training sessions to help ensure their businesses could remain compliant. PREPARING FOR A POST-PANDEMIC WORLD COVID-19 accelerated a range of talent management dynamics, including the shift to increasing flexibility in the workplace and a compressed labor market, both of which impacted frontline retail and distribution center hiring. In addition, there was an increased push to prioritize diversity, equity and inclusion in response to an amplified call for action across the country. At Advance, we responded to these changes by further sharpening our focus and attention on building a strong and differentiated company culture. We thoughtfully reviewed feedback from our annual organizational health survey and other team member engagement throughout the year, through which team members asked us to continue to simplify processes, prioritize and act on their input. Cross-functional teams, led by our HR leadership and augmented by extensive team member feedback data, worked tirelessly to advance the team member experience and prioritized programs that could help strengthen the organization in a post-pandemic world. These programs were organized under the pillars of CARE , SPEED and PURPOSE .
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CARE At Advance, we are people-first in what we do and how we do it. From health and safety initiatives to team member wellness to recognizing those who do great work, we prioritize care for our team members in all we do. We also realize that providing ways for team members to “Speak Up” and shape our culture ranks very high in keeping people satisfied. For these reasons, we spend a lot of time assessing our organizational health, including the ways we solicit input from our team members.
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CARE | TEAM MEMBER HEALTH & SAFETY INITIATIVES
ENVIRONMENTAL HEALTH & SAFETY
5-YR REDUCTION 2-YR REDUCTION YEAR OVER YEAR REDUCTION TOTAL RECORDABLE INCIDENT RATE 1 51% 35% 18%
In 2021, Advance delivered a double-digit reduction in team member safety incidents. In fact, Advance’s 2020 and 2021 injury rates are down approximately 50 percent since 2016, the year our latest safety program was formally introduced. Our growing team of environmental health and safety (EHS) professionals work daily to help ensure the safety of our team members and customers by regularly inspecting and evaluating the safety of our stores and DCs, including the equipment we use and the processes we have in place to ensure compliance with government regulations and industry standards. Our EHS team recognizes that the only way to get customers back on the road safely is by caring for our team members, and they continue to go above and beyond in that regard. IDENTIFYING SAFETY CHAMPIONS We continued tracking each store’s safety performance against a detailed scorecard and put comprehensive action plans in place to drive meaningful improvements. We expanded our Safety Captain program in every market to help ensure continued compliance with safety measures. Safety Champions are high-performing field leaders who have expressed an interest in developing new skills. Their responsibilities include reinforcing compliance, leading training programs and tracking safety data.
LOST TIME INJURY RATE 1 51% 40% 12%
5-YR REDUCTION 2-YR REDUCTION YEAR OVER YEAR REDUCTION
5-YR REDUCTION 2-YR REDUCTION YEAR OVER YEAR INCREASE COLLISION FREQUENCY RATE 1,2 N/A 0% 13% 5-YR REDUCTION 2-YR REDUCTION YEAR OVER YEAR REDUCTION DAYS AWAY/RESTRICTED CASES RATE 1 52% 22% 13%
1. Comparisons as of year end 2021 2. With the addition of video telematics, our ability to report collisions improved. This led to a year-over-year increase in our collision frequency rate.
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CARE | TEAM MEMBER HEALTH & SAFETY INITIATIVES
SAFETY SPOTLIGHT
Ralph was doing quite well as a general manager for a major computer retailer, but when a friend told him about opportunities at Advance, he decided to apply. “I never thought I’d work in the automotive industry, but my friend told me it was a great company and that I’d do well there.” He was hired as an Assistant Manager and soon became a General Manager. Next, he was promoted to Commercial Accounts Manager, and seven years ago to District Manager. “I love Advance for three reasons, and the first is the customer. They come into our stores because they need something, so I make sure my team takes better care of them than anyone else. The second reason is my team because I love helping team members grow and improve. The third is the company, and one example is how they managed COVID. They were there for my family and me, which gave me real peace of mind.” Earlier this year, Ralph was asked to become a Safety Captain. “I was super excited because team member safety is close to my heart. I want to be sure they get back home in the same shape they left that morning.” Since he assumed the mantle of Safety Captain, Ralph is always looking for ways to improve safety in all work areas.
RALPH TEJADA FLORIDA DISTRICT MANAGER AND SAFETY CAPTAIN YEARS AT ADVANCE : 11 LOCATION: GREATER ORLANDO, FLORIDA
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CARE | TEAM MEMBER HEALTH & SAFETY INITIATIVES
ENSURING DRIVER SAFETY With one of the largest delivery fleets in the country, employing the best drivers is important and we go to great lengths to train and develop our drivers to help ensure they comply with all safety standards. Expanding our SmartDrive™ video-based telematic coaching and feedback system to the majority of our stores was a key accomplishment in 2021. SmartDrive records any distraction occurring inside or outside of a vehicle. Any event that registers as a safety risk is logged and sent to an intelligence portal that allows general managers to review the incident and provide coaching to the team member. In addition, we completed the deployment of our in-house Advance Driver Program to provide additional training. We also instituted regular motor vehicle records checks on all our drivers. Collectively, these driver safety practices contributed to reduced collision.
50 TH ANNIVERSARY OF SALINA DC In 2021, the Advance distribution center in Salina, Kansas, celebrated its 50th anniversary. Several members of the Advance leadership team traveled to Salina to personally congratulate and thank the team and to remember long-time General Manager Devin Kurtz, who unfortunately passed away earlier in the year. “It was wonderful to celebrate with the DC team members and see the progress that has been made over the last half century since the DC’s inception. As leaders, nothing is more gratifying than to hear first-hand about the success of our team members and how we can better support them in servicing our customers,” said Reuben Slone, executive vice president, supply chain. The Salina facility was built in 1971 as a Western Auto Distribution Center, and in 1988, was acquired by Advance. It encompasses about 437,000 square feet, employs around 200 team members, and serves hundreds of Advance and Carquest locations. In 2018, the Salina DC earned recognition as the Advance DC of the year. Key to its success is strong leadership and exceptional team members. Not only has 13% of the staff been with the company for 20 years or longer, but 7% of the staff have been with the company 30 years or more. Now that’s worthy of a celebration!
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CARE | WELLNESS & BENEFITS
TEAM MEMBER TOTAL REWARDS
These days, competitive pay and health insurance are table stakes for most companies. At Advance, we offer a comprehensive health and wellness benefits program that goes above and beyond the basics to improve the way of life for our team members and those who mean the most to them: their families. This includes paid maternity leave, 401(k) retirement saving plans with a company match, company-provided basic life insurance and more. For example, we now provide virtual health coaching for those impacted by conditions such as hypertension and type 2 diabetes. In addition, we recently introduced a program that contributes to the financial wellbeing of our team members. We regularly assess our benefits package and add other meaningful options that support total team member wellbeing. PROMOTING FINANCIAL WELLNESS In 2021, Advance introduced a financial wellness program that provides wage advances, loans and coaching to help team members reach their financial goals. Thus far, the service has been widely utilized by our team members, particularly those working on the frontline in our stores and DCs. Beyond this program, we expanded the financial education offerings through our 401(k) provider.
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CARE | FEEDBACK & SURVEYS
ORGANIZATIONAL HEALTH
At Advance, one important way we’ve gathered input from our team members over the last several years is through our Organizational Health Survey, which we typically conduct once per year in the September-October timeframe. While our most recent (2020) survey netted the greatest response to date, we realized we needed to do more to ensure team member feedback is gathered more frequently and then acted upon. In 2021, we conducted more frequent, informal surveys to gather input on everything from internal Town Hall meetings to how we are returning to in-office work
arrangements for some team members. In addition, we put the final touches on a new organizational health model that will be introduced in 2022. This new approach will provide a “real-time” view of team member feedback and allow us to respond more quickly to the dynamic, changing circumstances around us. Included will be a model that provides continuous feedback to enable us to respond quickly to meet the needs of our customers and team members while also increasing the capability of each team member to help reach their full potential.
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CARE | RECOGNITION
RECOGNITION At Advance, our team members are committed to providing outstanding service to our customers, communities and each other every day. Whether they work on our frontline, in our DCs or our corporate support centers (CSCs), the knowledge and experience they bring to their jobs is what sets Advance apart. We know that recognizing team members who go above and beyond is one of the most important things we can do to build a winning culture and drive strong business results. It’s why we have instituted so many meaningful recognition programs. INVESTING IN OUR FRONTLINE TEAM MEMBERS Fuel the Frontline is geared toward frontline team members who exceed their business targets and awards top performers Advance stock grants. We have granted over 24,000 stock awards to frontline team members, valued at over $60 million upon grant since the 2016 inception of our Fuel the Frontline program. We are the only company in our industry making such a significant investment in stock ownership for frontline team members.
VALUE GRANTED
AWARDS GRANTED
TRADITIONAL FTFL 62.5M $ $ 4.8M SPECIAL FTFL TOTAL FTFL 67.2M $
UNIQUE WINNERS 13,300+ REPEAT WINNERS 6,000+ WINNERS 3X OR MORE 2,500+
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CARE | RECOGNITION
FUEL THE FRONTLINE WINNER
After Joan graduated Magna Cum Laude from Cayey University in Puerto Rico, she had every intention of becoming a Spanish teacher. However, that changed in 2006 when her part-time job at Advance turned into a real profession. Fifteen years later, Joan is Advance’s General Manager for Puerto Rico and the recipient of 11 Fuel the Frontline awards. “I was a part-time salesperson at the Ponce store because I needed the money for my university,” she said. “That was right after Advance bought it from Western Auto. In a short time, I was promoted to Retail Parts Pro and then to Assistant Manager. Seven years ago, I became General Manager.” Joan said she loved working in customer service so much that her transition to full time was easy. “I worked in every part of the company, and I love helping my team members grow. So, I credit them for these accomplishments.” Joan also uses Fuel the Frontline as an example to motivate her team. “Being recognized with company stock shows the team that we work for an organization that not only values our efforts, but rewards us by providing an ownership stake in our company. It’s a powerful message that helps inspire us all to continue working hard.”
JOAN ACEVEDO GENERAL MANAGER, CAGUAS, PUERTO RICO YEARS AT ADVANCE : 18 LOCATION: ADVANCE AUTOMOTIVE HUB STORE IN CAGUAS
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CARE | RECOGNITION
IMPROVING “BE AN OWNER” STOCK AWARD PROGRAM Be An Owner recognizes top-performing supply chain and CSC team members who work cross-functionally and achieve excellence on key company initiatives, contribute to the overall success of the company and demonstrate the behaviors of one or more of Advance’s Cultural Beliefs. Each quarter, below-vice president- level team members are nominated by Executive Committee members and receive Advance stock awards for their exceptional performance. INTRODUCING NEW MILLION DOLLAR INDUCTEES The Million Dollar Club rewards team members who achieve individual sales totaling $1 million or more in a single calendar year. In 2021, more than 250 Million Dollar producers were inducted into this prestigious club, each receiving an Advance stock award and special uniform. RECOGNIZING CEO AWARD RECIPIENTS The Passion for Customers…Passion for Yes! CEO Award recipients are personally selected by Advance CEO, Tom Greco, for their contributions toward: • Living our Cultural Beliefs • Helping Advance execute our Roadmap for Growth • Bringing our Mission - Passion for Customers…Passion for Yes! - to life Winners receive a specially designed pewter 1967 Mustang – the same classic car that we use as a background for our Roadmap for Growth. In 2021, 11 team
AWARDS GRANTED
UNIQUE WINNERS 300+ REPEAT WINNERS 40+
WINNERS 3X OR MORE 3
MILLION DOLLAR CLUB
52 IN 2017
150 IN 2019 191 IN 2020 89 IN 2018 IN 2021 260
members or stores were recognized with this prestigious award. GROWING OUR SPARK PROGRAM
CEO AWARD
Spark is an online recognition program providing team members with the ability to give “Shout Outs” to colleagues who live our Cultural Beliefs and deliver great work. Through the program, team members can earn Spark points, which can be redeemed through an online catalog for a wide variety of merchandise and gift cards or be donated to charitable organizations.
79 TEAM MEMBERS HAVE BEEN RECOGNIZED SINCE 2 0 17
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CARE | RECOGNITION
INNOVATION GARAGE WINNER
Advance has always encouraged team members across the board to submit creative ideas. So, when Shaun responded with a blockbuster proposal for our DieHard business, he earned an Innovation Garage Award. Being “fluent in cars,” he loves everything about them including the technical side. His eclectic career at Advance began fifteen years ago at a call center, and in short order he became a Team Leader for customer calls and then moved into Advance’s payment section focusing on fraud mitigation. Shaun points out that his automotive background helps him to identify transactions that could potentially be fraudulent. “I don’t know where else I would be if not in the automotive industry,” he said. Some time ago, he received an email from corporate asking for ideas about how to “win the winter” with DieHard batteries. “I thought about all those snowplows that need good batteries after the first snow and imagined how it would be if their batteries didn’t work. He pitched a compelling idea to the Innovation Garage executive review committee, and they helped him pass all the hurdles until he presented it to Advance President and CEO, Tom Greco. “I was pretty nervous because it was the first time I submitted anything to Innovation Garage, much less to the top guy.” It worked. Shaun’s idea became a marketing reality for the company and a real boost for his career. “I encourage everyone to get their ideas out of their head and into reality because this company makes it possible.”
SHAUN STEWART OPERATIONS PAYMENT & RISK PROJECT MANAGER YEARS AT ADVANCE : 15 LOCATION: RICHMOND, VIRGINIA
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SPEED At Advance, we have a bold and relentless drive to stay ahead of the curve in all we do. We take pride in being resilient and adapting quickly in a rapidly changing environment. Delivering best-in-class training and onboarding programs, improving the hiring process and adapting how we work in a post-pandemic world is all part of setting up a workforce positioned to win now and in the future. It’s this focus on efficiency and agility that helps us attract and retain great talent and deliver a people-first culture.
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SPEED | TRAINING & ONBOARDING
TRAINING & ONBOARDING At Advance, our training and onboarding programs ensure our team members have the specific skills needed to complete their responsibilities and grow in their careers. In 2021, we took steps to further refine our field and DC training and onboarding programs to support our hiring and retention goals and better serve our customers. DELIVERING BEST-IN-CLASS FRONTLINE TRAINING Our store team members are the face of Advance with our customers and ensuring they are properly trained is critical to their individual success and that of the company. It’s especially important where competition to hire is fierce and store team members are juggling many priorities at once. In 2021, we streamlined training modules for many roles. The result is quicker response times and more time to focus on what matters most – serving our customers. In automotive systems training, we plan to flip the old version of online tutoring on its head with lifelike, under-the-hood type video experiences with diagnostic tools being used by professional technicians as if the viewer was looking over their shoulder. We did something similar with customer service- oriented trainings to ensure they included more lifelike examples and were easier to understand. In addition, across the training curriculum, we looked for opportunities to replace older, often lengthy training modules with new “microlearning” sessions that last no more than 10 minutes. We also more clearly identified store roles and responsibilities to ensure training is targeted to specific skills and can help team members advance in their careers.
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SPEED | TRAINING & ONBOARDING
INSTITUTING A TRAINING SCORECARD AND TRACKING AGAINST THE CUSTOMER EXPERIENCE A first for our company, we rolled out a new Field Training Scorecard that includes key metrics such as our Net Promoter Score, which is a measurement of how our customers feel about the way they’re served in our stores, on-time training completion rates and team member turnover, among other sales- related factors. The scorecard is another way of helping us measure the effectiveness of our training programs. ENHANCING THE ONBOARDING PROCESS IN OUR DISTRIBUTION CENTERS One of the most important pieces to successful onboarding is training. Ensuring new hires feel prepared to tackle the responsibilities of their new positions helps ensure a positive start and a likelihood to stay long term. In 2021, we launched a training curriculum called “Start Your Engines,” which allows new DC hires to gradually acclimate physically and mentally to their new positions in a safe and intentional way. Over several weeks, the program provides dedicated hours for job shadowing, hands-on coaching and safety training.
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SPEED | TALENT ACQUISITION
IMPROVING TALENT ACQUISITION Despite a challenging labor market and the continued impact of COVID-19, 2021 saw substantial increases in Advance’s hiring and retention rates for certain populations. To remain competitive, we either improved upon, or introduced new, innovative programs to attract or retain team members. Through our enhanced programs we have documented increased hiring and retention rates in certain categories that not only encouraged team members to stay but attracted a substantial number of qualified candidates. FOCUSING ON NATIONAL HIRING In June, Advance created its first-ever national hiring event for field team members across the country. In fact, Advance hired over 2,200 team members in the enterprise-wide “come-work-for-us” event. It not only resulted in new hires, but it also produced a substantial uplift in brand awareness. Events were up close and personal with large banners displayed on storefronts, announcements on Advance’s e-commerce website, emails to Speed Perks loyalty members and promotion through LinkedIn and many other social media channels. Prospects never had to go inside the store because team members met them outside beneath tents where they also gave away Advance gifts and memorabilia. Hiring managers spoke with candidates and, if qualified, extended offers to them on the spot.
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SPEED | TALENT ACQUISITION
EXPANDING DRIVE-THROUGH HIRING Our drive-through hiring program that began in 2020 at the height of COVID-19, increased this year to include all our DCs. The program offered a great way for hiring managers to connect with candidates while practicing social distancing and other recommended COVID-19 precautions. The face-to-face nature of the events enabled hiring to be done on the spot, creating greater efficiencies by reducing the required time for follow-up interviews. In some markets where local candidates wanted in-person interviews, they were welcome to enter the DC so long as safety measures were followed. The program continued through the year, and culminated with a year-end event in Gastonia, North Carolina. GROWING OUR INTERNSHIP PROGRAM This year’s program attracted 42 participants and resulted in a whopping 70 percent conversion rate of interns who accepted offers to work at Advance. Like last year, Advance targeted rising college seniors with the potential of being hired full time after graduation. The program is also an accelerator for our leadership development program in the supply chain network. We supported interns in our DCs, our field sales and leadership programs and our CSC. Interns tended to participate at the analyst level in our CSC while in our DCs they joined as operation supervisors managing a team of approximately 15. Although COVID-19 continued, we experienced a combination of virtual and in-person interns with a mixture of both in our CSC and the majority of interns in person within the field and supply chain. This was highlighted by a significant representation of people of color and females in support of our DEI agenda. Based on the program’s current trajectory, we anticipate upwards of 85 interns in 2022. INCREASING VETERAN HIRING At Advance, we make veteran hiring a priority because veteran team members bring so much to our company every day. Skills like teamwork, leadership, flexibility, problem-solving and discipline have been developed throughout their years of service and translate so well to the culture we are building. In 2021,
we enhanced our veteran hiring program through dedicated events at Fort Bragg, North Carolina, in partnership with the Whole Vet, a nonprofit that helps veterans and transitioning service members. We also sourced veteran applicant prospects through the Military.com and RecruitMilitary.com sites. HIRING PEOPLE WITH DIFFERENT ABILITIES Throughout 2021, we continued to make meaningful progress with our “People with Different Abilities Hiring Program” through which we identify, hire and train motivated and qualified job seekers with disabilities. This year, we expanded the program to include not only our distribution centers, but retail stores in certain markets. In partnership with our extensive network of community-based partners with whom we work, the program continued to have a meaningful impact with more than 400 team members with disabilities having joined our ranks since 2019. Supporting our program, Advance provided hands-on Disability Awareness Training to thousands of team members across all parts of the company. IMPROVING THE DISTRIBUTION CENTER HIRING EXPERIENCE Like many retailers, we faced a challenging labor market in 2021, particularly in our DCs. In addition to refining our DC pay structure when the pandemic began, we took steps to streamline the hiring process for prospective team members in 2021. This included the use of technology to help prospective team members progress through different interview stages in an accelerated time frame – from initial online screenings, virtual job tryouts and realistic job previews to support the candidate’s decision making. In addition, we provided regular communication via SMS text messages to ensure candidates were informed about their hiring status. The use of technology not only improved the process for the candidate, but it also gave much-needed time back to recruiters and hiring managers, which supported increased productivity across the team.
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