Welcome to the Advance Auto Parts fourth quarter and full year 2021 conference call. Before we begin, Elisabeth Eisleben, Senior Vice President, Communications and Investor Relations, will make a brief statement concerning forward-looking statements that will be discussed on this call. Good morning, and thank you for joining us to discuss our Q4 and full year 2021 results, as well as our 2022 outlook that we highlighted in our earnings release yesterday. I'm joined by Tom Greco, our President and Chief Executive Officer, and Jeff Shepherd, our Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will turn our attention to answering your questions. Before we begin, please be advised that our remarks today may contain forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, but not limited to, statements regarding our initiatives, plans, projections, and future performance. Actual results could differ materially from those projected or implied by the forward-looking statements. Additional information about factors that could cause actual results to differ can be found under the captions "Forward-Looking Statements" and "Risk Factors" in our most recent Annual Report on Form 10-K and subsequent filings made with the commission. Now, let me turn the call over to Tom Greco. 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, Advance's 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 four 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. 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're 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 enabled 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 enabled us to build trust during a defining moment for companies. Improving organizational health has never been more important amidst a labor market where people have more choices than ever in terms of where, when, and how they work. We fundamentally believe that 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. 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're incredibly proud and thankful for the progress our team members and 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'll 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'll be measuring our performance apples to apples. In other words, Q4 2021 will be compared to the relevant 12 weeks in 2020. The 52 weeks of 2021 will be compared with the relevant 52 weeks in 2020. In Q4, we were able to once again comp the 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 while 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-day 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 oils, 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 Institute by delivering virtual courses in 2021 in an innovative format that provides technicians a live, interactive learning experience. In terms of sales growth, our strategic accounts led the way in Q4. In addition, we crossed 14,000 tech nights 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, 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're beginning to increase DieHard product offerings 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. 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 a 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 SpeedPerks. We added new SpeedPerks 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 SpeedPerks members, gas rewards. Fuel savings has been a request of SpeedPerks 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 a 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 delays due to COVID-19. As you saw in our release yesterday, we expect to open an additional 125-150 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 a new technology platform in 2020. Our new 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-stock 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'd consolidated 55% of AI locations onto 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 chains, we completed the rollout of cross-banner replenishment. Our entire Advance and Carquest network of stores are now serviced by a regional distribution center, which reduced our annual mileage 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 2021, we transitioned 44% of our distribution center network as measured by unit volume to the new WMS. As we complete WMS in the 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 DCs 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 that we'll be consolidating operations from our much older Riverside DC 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're building an enviable track record on team member safety. For the full year of 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 5 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'll share additional information about the results of this assessment in our upcoming corporate sustainability report. While we're 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 shared 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? Thanks, Tom, and good morning. I'd also like to thank our team members for their dedication this past year to care for our customers and each other and deliver record results. Before I review our financial results, I also wanted to remind you 2020 included an additional week. To provide a better year-over-year comparison, the impact of this additional week has been excluded from our discussion of previous year. Please refer to our earnings release for the full impact of the additional week in 2020. In Q4, our net sales of $2.4 billion increased 8.6% compared with Q4 of 2020. Adjusted gross profit margin expanded 145 basis points to 46.8%, driven primarily by improvements in category management, led by strategic pricing, inventory-related, and own brand expansion. This was partially offset by ongoing inflationary costs, lapping shrink benefits in Q4 2020, and unfavorable channel mix. Same-sku inflation in Q4 2021 increased 5%. Additionally, despite today's inflationary environment and global supply chain pressures, we're pleased that we delivered slight supply chain leverage in Q4 and for the full year. Our Q4 adjusted SG&A was $946 million or 39.5% of net sales. This compares to 39% of net sales in Q4 2020. Like Q3, this was primarily driven by inflationary headwinds within labor, as well as increased incentive compensation behind the record-setting results our team delivered. As expected, incremental costs associated with the opening of our California stores ahead of planned revenue continued to be a headwind to SG&A in the quarter. These headwinds were partially offset by a year-over-year decrease in COVID-19 related expenses. Our Q4 adjusted operating income was $177 million. It was an increase of 24.8% compared with Q4 2020. Our Q4 adjusted OI margin improved 96 basis points to 7.4%. Our adjusted diluted earnings per share of $2.07 increased 35.4% compared with Q4 2020. For the full year, our net sales were a record $11 billion, an increase 10.6% compared with 2020. Our adjusted gross profit increased 14.9% and adjusted gross profit margin expanded 175 basis points. Adjusted SG&A expenses for the full year 2021 increased 11% compared to 2020. On a rate basis, adjusted SG&A deleveraged 16 basis points to 36.4% of net sales. While we reduced our COVID-19 related expenses by $28 million in 2021, we continue to prioritize the health and safety of our team members and customers. Our full year 2021 adjusted operating income increased 32.5% to $1.1 billion. On a rate basis, our adjusted OI margin expanded 159 basis points to 9.6%. In addition, we delivered record adjusted diluted earnings per share of $12.02. Our 2021 capital expenditures were $290 million. Our free cash flow for the year increased $121 million or 17.2% year over year to $823 million, driven by improved operating performance. As Tom mentioned, we completed our finance ERP implementation in 2021. We began to see some benefits in 2021, which partially contributed to the approximately 400 basis point improvement in our AP ratio year over year. We expect to begin seeing the full run rate of savings this year. To close out our discussion on our TSR drivers, we returned a record $1 billion in 2021 to our shareholders through a combination of share repurchases and our quarterly cash dividend. In line with our capital allocation priorities and confidence in the continued robust cash generation of our business, our board recently approved a 50% increase to our quarterly cash dividend to $1.50 per share. This supports our stated objective of a 35%-45% dividend payout ratio. In addition, our board also approved an additional $1 billion authorization to our existing share repurchase program, which at the end of 2021 was $545 million. We're confident in our ability to generate meaningful cash flow and committed to a balanced return of excess cash to shareholders. In consideration of the factors Tom discussed surrounding our 2022 outlook, our guidance includes net sales of $11.2 billion-$11.5 billion, comparable store sales of 1%-3%, adjusted operating income margin of 10%-10.2%, an income tax rate of 24%-26%, adjusted diluted earnings per share of $13.20-$13.75 based on our outstanding share count as of yesterday. Capital expenditures of $300 million-$350 million, a minimum of $775 million in free cash flow, share repurchases of $500 million-$700 million, and 125-150 new store and branch openings. We're encouraged that through the first four weeks of 2022, our comp sales are running above the top end of our full year guidance. Finally, our guidance for new store openings includes the California stores that were delayed last year, primarily due to permitting challenges resulting from the pandemic. This guidance includes new locations across all banners in both the U.S. and Canada, but excludes independent locations. Once again, I'd like to thank our team members for their continued dedication as we build on the momentum of our 2021 results. With that, let's open the phone lines to questions. Operator. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of Chris Horvers from JPMorgan. Your line is open. Thanks. Good morning, everybody. Talking about your guidance, the 1%-3% comp, you know, that's bracketing the low end of your 2%-4% multiyear algo, and you're flowing through 50 basis points. You know, at the low end of that two, I felt it would have been like more like closer to 100 basis points. Is there something that's changing in the environment? Is it your competitors' pricing commentary? Is it conservatism? Is it, you know, changing in terms of your ability to pass through inflation? I wanted to get your thoughts on that. Well, hey, good morning, Chris. First of all, I'll give you some color on the sales guide, and then Jeff can chime in a little bit on the margin piece. First of all, we're continuing to target growth above the market in 2022. Our sales guide for the year reflects an estimate of lower industry growth, certainly in 2022 versus 2021. You know, we're gonna see less growth than we saw last year. As we said in our prepared remarks, on the one hand, we see tailwinds for the industry. You've got an aging vehicle population with several million vehicles entering the sweet spot. The new cars are very difficult to get. The availability lags historical trends. We do expect a gradual recovery in miles driven, which still have not reached 2019 levels. At the same time, we're cognizant of potential headwinds for the industry. You know, following last year, which was record-breaking across the board, it's difficult to predict what this 2022 growth rate's gonna be this early in the year. As you know, we've seen an acceleration of broad-based inflation across the economy, which recently reached a 40-year high last week, basically. We're also gonna have less stimulus dollars in 2022 versus 2021. I'll flip it over to Jeff to talk a little bit about how that translates through to margin. Jeff? Yeah. Just taking that, you know, top line sales guide. In terms of our margin expansion, Chris, first of all, our margin expansion initiatives remain on track. You know, as we talked about in our prepared remarks, the inflation that we're seeing right now is substantially higher than when we developed that strategic plan. At this early stage of the year, we're mindful of the impact that this will have, not only on the industry demand, as Tom said, but also our cost base, so the cost within the P&L and the impact that inflation could have on all of those various line items in 2022. Right now, our plan is to execute our margin expansion initiatives in a disciplined manner. As we get further into the year, we'll have a better handle on the impact of the inflation on both industry demand, our consumers, as well as our cost base. As a follow-up, as you think about that 10.5%-12.5% operating margin in 2023, is your commentary on inflation, you know, more saying, "Hey, guys, you know, more likely to be at the low end of that range?" Or is your commentary more like, "It's just too early in the year. Let's not, you know, get ahead of ourself given, you know, the uncertainty that lies ahead"? Yeah. It's really the latter. You know, we remain confident in delivering the long-term targets we provided last April. You know, we talked about what the 2022 guide, you know, background was. Long-term, you know, industry fundamentals are attractive. We're innovating and positioning AP for long-term success, and we still have a significant TSR opportunity for us, so it's really the latter. Thanks very much. Best of luck. Thank you. Your next question comes from the line of Michael Lasser from UBS. Your line is open. Good morning. Thanks a lot for taking my question. With two of your large competitors making price investments to gain market share in the commercial sector and your comps trailing behind this peer set, how much do you need to invest in price above and beyond what you originally expected in order to sustain your market share? Hey, good morning, Michael. We've been talking about our category management initiatives for a couple of years now, and strategic pricing, along with increasing own brand penetration and strategic sourcing, are key elements of this plan. Let me provide some color on how we're thinking about our pricing strategy in the professional channel. Three things. First of all, we've been conducting a survey among our professional customers for many years. Just to give you a data point from last year's survey, the top three variables were availability, ease of doing business, and speed of delivery. They were all ranked ahead of price. At the same time, we know competitive pricing is important, and our strategy is rooted in how the pro customer makes decisions. We incorporate an extensive assessment of competitive pricing for each of the pro channels we compete in by category. The reason we expanded our lower price point, higher margin own brand portfolio was to provide more value price options for our customers. Secondly, during our Investor Day, we highlighted our approach to meeting the unique needs of different pro customers by leveraging our diversified go-to-market asset base. This includes Advance stores, Carquest independents, and Worldpac, which, as you know, is an entirely professional or pure play WD. It's important to note that Worldpac has competed with WDs for many years and already has very competitive pricing, which informs our enterprise pro pricing strategy. Worldpac has a different pro model than conventional retail parts stores, and we're keenly aware of the competitive landscape within pro, which is usually very different by category and in some cases, even by part type. Finally, we've been investing in improving the customer experience through a single parts lookup, technical training, and digital assets to improve speed and visibility of delivery. We also provide customized service models where relevant. In summary, Michael, our comprehensive approach is tailored to the unique needs of what's most important to each customer, and our strategy is working. We grew double digits within pro last year, and we continue to believe our differentiated strategy will deliver profitable growth and margin expansion. Okay. My follow-up question is on the inflation discussion. Jeff mentioned that part of the reason why you guided like you did for this year was because of cost inflation. Your SG&A dollars grew 9% in 2021. Advance had already been experiencing significant operating expense inflation and now You're suggesting you're mindful of that continuing into 2022. Shouldn't this be more than covered by price increases as the industry historically has typically priced to a full margin? Why would you not be able to recover the cost increases now, whereas the industry's been able to do that in the past? Yeah, sure. Well, I think, Michael, you're right. You know, the industry's been incredibly rational over periods of inflation. You know, we have been able to cover cost inflation as it relates to maintaining gross margin rate. As we talked about in our prepared remarks and as I mentioned earlier, you know, we're seeing record inflation across the P&L. It, it's not just product cost inflation, it's not just commodities. Just to give you a couple of data points, you know, our two largest items on our cost base are product cost and wage inflation. As we sit here and look at that today, we're expecting those to both be in that mid-single digit range for 2022 on top of what we've already seen in 2021. You know, product cost is on a same SKU basis, as you know. That's fairly significant. Right now we don't have a model that says our pricing will cover inflation to cover the entire P&L. We're confident that pricing, along with our other category management initiatives, will more than offset a gross margin, and then our SG&A initiatives will offset that inflation down at SG&A. Jeff, just to clarify, what does your model suggest that Advance will be a contribution from same SKU inflation in 2022? Mid-single digits. Okay. All right. Thank you very much. Your next question comes from the line of Liz Suzuki from Bank of America. Your line is open. Great. Thank you. Just a question on the DieHard brand. You know, you're expanding into new categories. What do you think is the ultimate total addressable market for DieHard? How many categories can you expand into, and what percentage of your sales do you think that could represent? Well, first of all, we're thrilled we crossed $1 billion. I mean, it's not every day that you know build a billion-dollar brand in a single year. I mean, the brand had really languished, Liz, as you probably know. We're getting new customers, we're engaging younger consumers. We're seeing really improved awareness among all demographics with DieHard, and we've been gaining share within batteries. Had a terrific two years, and we've got a lot of runway yet. How we look at DieHard is, you know, obviously, the core equity, the bull's-eye, if you will, is an automotive battery. As you extend out into the concentric circles around it, there are ancillary categories where we can extend the brand. We talked about power tools and hand tools. More to come there. You know, we believe the DieHard brand is one that we can build out and be a very strong differentiator for us. Our pro customers love the stocking program that we've put in place for DieHard batteries. You know, we're continuing to build that out. Lots of room to run with DieHard and more to come on where else we can extend. Great. Just one quick follow-up on you know what percentage of your sales do you estimate are for break, fix, or general maintenance purposes versus more discretionary categories? You know the reason I ask is as we look at 2020 and 2021 and just the strength in DIY you know a lot of which was you know people spending more time at home people having stimulus dollars. How much do you think that DIY strength was bolstered by discretionary categories like accessories? Well, first of all, there's no question when people have time on their hands, you know, they were doing more with their cars than when they were at home. You know, they basically couldn't sit at home and watch their computer screen and Netflix all day. So we did see a surge there. But I can tell you the resiliency of what we saw at the height of the pandemic within DIY right up until the fourth quarter has been very encouraging for us. You know, we're continuing to be pleased with our DIY omnichannel business, and we're gonna continue to drive and grow that business. Obviously, to your earlier question, DieHard plays a key role there, you know. If we can draw people into our stores with a differentiated brand such as DieHard, we can grow the DIY business. The first part of your question, we look at the customer journey as it pertains to DIY, and they really do vary. I mean, you know, "My car won't start" is the journey for batteries. "My brakes are squeaking" is the journey for brakes. You know, all of them have various degrees of urgency. We're very focused on the specific drivers of choice within each one of those journeys, and that's how we build out our business. Great. Thank you. Your next question comes from the line of Seth Basham from Wedbush. Your line is open. Thanks a lot, and good morning. My question is also on the inflation environment and the impact on potential demand destruction. Are you seeing any of that occur now, and what have you built into your plan for 2022? Well, in terms of demand specifically, Seth? Yes, exactly. Yeah. We haven't seen it yet, and to be clear, I mean, we are not seeing trade down, we're not seeing deferred maintenance. It's just a question of, you know, we've got ten and a half months of the year left, and, you know, the inflation is pretty significant across all categories. Fuel prices, et cetera. You know, that's what we're mindful of. You know, as the year unfolds, we'll be in a better position to see the full impact of it. It's really a case of making sure that we're looking at all potential outcomes for the industry for the year. Understood. What have you built into your comp sales plan for 2022 from that effect? Well, our guide is 2 at the midpoint. Understood. Does that include some demand destruction assumptions for the balance of the year? I'm sorry, can you repeat that? Does that include some pressure from demand destruction associated with the inflation that the core customer is experiencing for the balance of the year? Yeah. Yes, it does. I mean, what we're assuming coming off a year when the ACA would say the industry grew high single digits in 2021, right? I mean, that's the latest information we have from Auto Care Association. You know, we're assuming, you know, low single even, you know, one to two, you know, for the industry overall. Now, given all the tailwinds, you know, that could be a very low estimate. We acknowledge that, but it's just, it's an unusual time. We've got an unprecedented level of inflation. We've got 10.5 months to go. That's really the thinking. Understood. Thank you so much. Your next question comes from a line of Greg Melich from Evercore ISI. Your line is open. Hi. Thanks. Just wanna make sure I got the guidance right. The mid-single digit inflation implies that basically units would be down this year. Did you expect the pro and DIY split to be similar to last year or to narrow or widen? Yeah, good question, Greg. Obviously, given you know, the guide, we are assuming DIY transactions, which is you know well over half of our transactions. Obviously, the dollars per transaction is lower on DIY. We expect DIY transactions to be down. That is embedded in our guide. We do expect growth in pro transactions. Overall, positive growth on transactions and average ticket in pro, transactions down in DIY. We're assuming you know some level of growth in DIY, however, and pro outpacing DIY for the year, as really has been the case for the last couple of quarters. Great. Secondly, could you update us on where you are in the own brand strategy? You gave $1 billion for DieHard. When you add in Advance and Carquest, are we 40%-50% of the mix now? Yeah. What we've said in the past, Greg, is we started out this journey in the high 30s in terms of our percentage of own brand penetration, and we've moved that up nicely. We're well into the 40s now, you know, in the most recent quarter into the higher 40s, and we still believe we have, you know, room to grow there. We're very pleased with the strength of our own brand. As we said many times, it carries, in general, a lower price per unit, certainly in the high hard part segment than the national branded competitors. The quality is very good. Our return rates are much lower than they've been in the past, and our in-stocks improved on all of the categories in the fourth quarter. Pleased with own brand penetration and relative to, you know, others. You know, we still got opportunities there. Last, if we look at the guidance for the adjusted margin expansion to just over 10%, should that be equally between gross margin and SG&A leverage, or how should we think about that margin expansion? Yeah. We think we're gonna grow our margins in 2022 coming both from gross margin improvement as well as SG&A improvement. You know, the gross margin improvement is gonna benefit from the things we've been talking about, our category management as well as our supply chain initiatives. SG&A is gonna benefit from the strategic initiatives we outlined last April, which is to reduce SG&A costs and improve our sales and profit per store. That's great. Good luck, guys. Great. Thanks, Greg. Your next question comes from a line of Scot Ciccarelli from Truist. Your line is open. Good morning, guys. Scot Ciccarelli. Given the lower price points on your own brands, can you guys quantify for us the impact of the headwind to both comp and gross profit dollars from that mix shift? Yeah, we don't break that out, Scott, but I mean, it obviously varies by product and category. It absolutely has a lower price point. It is a comp sales headwind if you know sell an equivalent amount of units. Obviously, our goal is to accelerate the units because as we said, you know, we're providing a more value priced option for our customers, and that gives us a lower absolute price point for our professional customers. As we ramp it up, you know, the unit growth should offset that. But I can also tell you, in many cases, the gross profit dollars are higher. So, you know, we're very pleased with the own brand performance. It was a significant driver of our margin expansion in 2021, and it will be for the next couple of years. Okay. Understood. Yeah. Scott, just a reminder, the sort of rate is significantly better. The margin rate is significantly better on those categories. Yeah. I guess I've been under the impression that, you know, the branded products still typically generate more gross profit dollars, which is what hence the question. Yeah. Not necessarily. Got it. Okay. Switching gears for a second. The last time you guys enhanced your SpeedPerks benefits, we had some pretty notable gross margin headwinds. With the new gas rewards, like, is there anything we should be wary of as, you know, people start to utilize that in what, you know, appears to be a very high gas price environment? Yeah. We're gonna get back on our front foot on SpeedPerks, Scot. I mean, we did through the pandemic, just the level of demand that was coming into our stores was substantial, and we wanted to make sure we took care of the customers. You know, obviously having conversations with our customers about a loyalty program, you know, takes time, and we subjugated that. There's no financial consequences at all for gas rewards. You know, we've engineered it in such a way that it'll be a real positive, candidly, for us. We think it drives share of wallet in a time of rising gas prices. I was just out in California. It's almost $6 a gallon. You know, you've got a situation where consumers are gonna be really mindful of what they're paying at the pump. We're enthusiastic about how our team is engaged with this gas rewards program. We're gonna be working it really hard in the stores, signing up new members and graduating members. This will be a nice little boost for us on DIY in 2022. Got it. Thanks a lot, guys. Thank you. Your next question comes from the line of Simeon Gutman from Morgan Stanley. Your line is open. Hey. Good morning, everyone. You mentioned that you achieved supply chain leverage this quarter. Can you talk about the puts and the takes? I think I'm sure some of your initiatives are helping it and versus labor and transport, which would've been a headwind. Can you maybe tell us, I guess, what the headwind was so we can quantify how good you're doing underlying with? Yeah. If we were just to strip out the inflation, and we'd be talking about the supply chain tailwind being a much more meaningful number. Said another way, Simeon, you know, our initiatives in supply chain are on track. I think we talked about this in the third quarter, but you know, we completed the cross-banner replenishment. We're on track with our WMS and LMS to be done by 2023, and those are providing the benefits we had anticipated. It's just once you factor in the inflation, although you know, we did leverage, it was just small because of the inflation. You know, the labor inflation has been acute, specifically in that supply chain kind of warehouse employee. The battle for that talent is just intense. You also see it in the areas that you pointed out, transportation, fuel, what have you, those all built in there as well. Thanks. Tom, can you clarify the industry is expected to grow this year. Do you have a range or a sense that you can tell us? Do you expect to take market share this year? Absolutely. We do expect to take market share. We have modeled a low number, Simeon, as we explained earlier, for overall industry growth to make sure we're expansive and, you know, we don't get surprised, you know, by something as the year unfolds given the unprecedented levels of inflation. What we showed back in April was for, as an estimate for 2022, 2023 was 2%-4%, if you recall. We believe it's gonna be at the lower end of that for all the reasons we explained. If something ends up being something different and the industry proves to be as resilient as it's been in the past, 2009, 2011 most notably, where it was performing extremely well in a recessionary time, you know, that'll be good news. Okay. Thank you. Good luck. Thank you. Your next question comes from the line of Michael Baker from D.A. Davidson. Your line is open. Hi. Thanks, guys. Couple of follow-ups. One. First let me ask about the hiring and the labor situation. Is that as bad as it was? Is it getting worse? Is it getting any better now that some, you know, employment benefits have rolled off? Any sort of, you know, end in sight in terms of that pressure point? Yeah. Good question, Michael. I mean, we are really happy that we're starting to go the other way. In both the distribution centers and the stores, we measure turnover very, very closely. You know, the stores did not jump up as much. I mean, our unique stock ownership program, where we've invested over $60 million in our frontline team members over the past couple of years has helped us there. You know, we've been able to retain our general managers, our commercial parts pros, et cetera. In the supply chain, in the DCs, you know, it peaked really around the third quarter of last year in the summer and started to come back down. It's still not back to where it was pre-pandemic, I can tell you that, in the DCs, but we are coming back down. As you said, you know, the applicant pool is starting to open up. People have fewer options, and we've obviously had to, you know, invest in compensation in our supply chain, but that's much of that is behind us at this stage. You know, we've got plans this year to see that turnover continue to come down, you know, in both the stores and in the DCs. Okay. Thanks. That's good news. Also wanted to follow up on the pricing question and really to Mike Lasser's question earlier. The way I interpret your comments is, you know, some of your competitors, including O'Reilly last week, had a pretty interesting announcement. You're saying no change in your strategy. You're happy with where your pricing is because you compete with the private label that sort of, you know, is your answer to them in AutoZone reducing price. Is that the right way to think about it? Absolutely. You know, we're incredibly focused on the pro customer and the competitive environment within the pro customer. We look at it every week. You know, we look at our price comparison across the market. I'm sure our peers do the very same thing. So we're very familiar with the broader competitive landscape. I mean, the wholesale distributors, the specialty players, and they're a big factor in large urban markets. You know, Worldpac has competed with them for 20 years plus, so you know, we know that there are pure plays out there that have lower prices on very specific products, and you know, we organize our enterprise pricing strategy around that. So, no change in our pricing strategy going forward. One more quick one if I could, sorry. Can you talk about the private label penetration within the pro business versus the DIY business? I know in the past, you know, maybe pros didn't like private label as much, but it sounds like, you know, DieHard is being well accepted by the pro customer. Can you sort of flesh that out a little bit? Sure. I mean, well, DieHard and Carquest. I mean, Carquest is a powerful brand in the professional sales channel. Carquest Brakes is a leader in the professional channel. They're high quality. You know, our customers request them, and as we extend, Michael, into engine management, undercar, some of these other categories, Carquest is being very well received. You know, in part because, you know, it doesn't have that brand name on the front door of a retail store, so that's part of the reason why. You know, it's equally powerful there. If you've got a high quality own brand product that carries, that's good value for our customer and you can get it to them quickly, you know they're gonna be very supportive. Just to reinforce, national brands play a key role in our portfolio also, and we're partnering very closely with our national brand suppliers, to make sure that we're lifting up their brands at the same time. Makes perfect sense. Thank you for the color. Your next question comes from the line of Kate McShane from Goldman Sachs. Your line is open. Hi, it's actually Kate McShane from Goldman Sachs. I just wondered if we could just go back to your comment on the quarter to date running above the 3% or the high end of your full year guidance. Can you talk a little bit about what's the primary driver of your outperformance and what kind of comp we're facing quarter to date versus last year? Sure. Good morning, Kate. Well, first of all, you know, it's always interesting the way the, you know, the big seasons kind of straddle quarters, right? The spring selling season straddles Q1 and Q2. The middle of the winter straddles Q4. The Northeast, I think, obviously you know that, it was a pretty mild December in the Northeast. It got cold, you know, in the first period of the year. You know, that swings business out of the fourth quarter and into the first quarter for us. The West was really cold in December. We had very strong growth in the West and the Southwest in December, not so much in the Northeast. I mean, what we've seen so far, we're very pleased. You know? We like the fact that we've had a pretty harsh winter so far across the country. That should be good for us in the second quarter also. We've had a lot of snow. We love those big, heavy machines tearing up the roads up in New York and Detroit and up in those markets where we're in. Hopefully that creates a strong tailwind for us in the second quarter. It really is, you know, there's been favorable weather in the first quarter, and the three-year stack looks good on a year-to-date basis. Thank you. Thank you. Your next question comes from a line of Zachary Fadem from Wells Fargo. Your line is open. Hey, good morning. Tom, do you think elasticity in the industry has changed at all for the do-it-for-me customer? You know, given the importance of service and availability, why do you think peers are having or seeing success lowering price? To what extent do you even view pricing a needle mover when you go head to head with peers and WDs? Well, I mean, as we said earlier, Zach, there are other variables that are more important to our pro customers, you know, and I speak to them all the time, you know, whether that's the CEOs of the company or in the garages themselves. When you have the part and you're able to get it to the customer quickly, that's by far the most important variable. Now, there are certain categories where, you know, the time to repair is longer. You know, there are pure play operators in markets who specialize in something like AC as an example or radiators. When you have those types of jobs, you know, price becomes more of a factor, and we're very aware of that. You know. Those are not new dynamics. Those dynamics have existed for a long time, and we obviously compete in that environment. You know, it's really a question of in our case, we're focused on what's important to the customer and improving our fundamental value proposition, and we're gonna drive top line growth. It's also vitally important for us to ensure that that growth is profitable. That results in big earnings growth. We put up 48% earnings per share growth last year. We want that to translate into, you know, cash generation that we can return that money back to our shareholders. Our focus is to make sure that we are driving profitable growth, and that's what you're gonna see us do. The competitive environment is clearly something we pay attention to, but we're very thoughtful about how we approach it. Got it. For Jeff, what are you assuming for LIFO this year? As we bridge the gap from your big picture 2022 outlook to your 2023 margin guide of 10.5%-12.5%, do you still expect equal parts expansion in both 2022 and 2023 in each year, or should we contemplate a step up in 2023 as we move past some of the 2022 headwinds like inflation? Yeah. Starting with the LIFO question, we certainly think it's gonna be sizable this year. You know, the early estimates could be. I think we finished last year at $122 million. This year, as much as $100 million. What's important to know on that is, you know, the LIFO costs that we experienced last year are beginning to manifest themselves in the P&L this year. We're starting to see that, and that's already built into our model for 2022. You know, as we move into 2023, we know some of that will move into that year. Having said that, we're, you know, very confident in our margin expansion initiatives, and we think we can continue to grow both in gross margin and in SG&A in 2023 as we get into that 10.5%-12.5%. Got it. Thanks for the time today. Thanks. Your next question comes from the line of Daniel Imbro from Stephens. Your line is open. Yeah. Hey, good morning, guys. I wanted to follow up on private label fill rates. Tom, I think you mentioned in your prepared remarks that the undercar category has improved through the quarter. Where are those fill rates maybe relative to your desired levels? If there are any, where are the bottlenecks today in the supply chain as you move more of those categories kind of in-house and away from other brands? Sure. Well, first of all, you know, our fill rates overall, I mean, we still have pockets of difficulty there, Daniel, full disclosure. You know, whether that's a result of a supplier's inability to get people in to work, whether that's related to the global supply chain, which is still not back to where it once was. In terms of the transition to own brands, it's improved materially from where it was last summer. We're still, I would say, a couple hundred basis points off where we want to be, but we're much better off than we were last summer. That's, you know. It was almost 40,000 SKUs. It was a huge undertaking, but we're thrilled that we've got the changeover of those SKUs largely behind us, and we see lots of upside going forward as a result of it. Got it. That's helpful. Then I do wanna follow up on Zach's question, just on LIFO benefits, so we can be clear, Jeff. If you saw $122 million of benefits in 2021, and I think you just said you're guiding to $100 million of a LIFO benefit in 2022, if prices plateau into 2023, does that create a gross margin headwind? You know, it seems like just numbers-wise, that would be sizable. Can you walk through the puts and takes, or are you guys thinking pricing doesn't plateau? Just trying to understand how if we have that big of a cumulative LIFO benefit, how or when that unwinds through the P&L and weighs on gross margins. Yeah. First of all, it's unwinding now. We're already starting to see it, and we're gonna see it throughout 2022. That's embedded in the model or the guidance that we're providing yesterday. You know, we turn about, you know, 1.35 times a year. That translates into about 10 months. Rough math tells you that's when it starts to come back to you on the P&L. Again, we've planned that for 2022. We're gonna be planning that as we move into 2023. If everything else were to remain completely static, you're right. In absolute terms, it would be a headwind, and that's something we're contemplating, and that's why we're really excited we have the margin expansion initiatives that we have, because we're confident we can overcome that. Got it. Thanks so much for the color, and best of luck. Yeah. Daniel, I just wanna clarify one thing. On undercar, we're pretty close to our in-stock goal. On engine management, that's the one that I was referencing, and I think you asked undercar. Just to clarify, we're pretty much where we wanna be on undercar. Thanks, Tom. Your final question comes from the line of Brian Nagel from Oppenheimer. Your line is open. Hi, good morning. Thanks for slipping me in here. I know there's already been a couple questions or a few questions maybe on the whole pricing dynamic, so I apologize, but the question I wanna ask is, you know, Tom, from your vantage point, you know, recognizing you're very close to your commercial customers and you're watching competition, are you seeing some of the, you know, lesser-known competitors maybe in the WD space actually move price at this point or maybe not take price amid broader-based inflation? Is there some change in dynamic there within that cohort? You know what? We really haven't. I think that you know, from our vantage point, you know, they operate very rationally, right? I mean, these are in many cases private companies. You know, they don't have retail stores. They're in a warehouse that doesn't pay the same rent. They don't have some of the cost base within SG&A that you have with a traditional retail parts store. I mean, it's just that simple, so their prices tend to be lower, their gross margins tend to be lower, and their SG&A tends to be lower. You know, they operate on a very rational basis. They price typically below what the retail parts companies do, and that's why Worldpac and our diversified asset base helps us because we already have that arrow in our quiver and Worldpac has expanded parts, you know, significantly over the past several years. And we are very thoughtful about how we price in accordance with that. We're growing the Worldpac business substantially. It's integrating with Autopart International, and we're growing margins at Worldpac. So it's a very good story for us in that regard, and we obviously wanna maintain our competitiveness. But we've got some things in our tool bag that helps us there. Got it. No, that's very helpful. My follow-up question, just with respect to demand, you know, clearly you ended the year very strong and given your commentary, it seems like the strength has persisted here into the new year. You know, as the economy potentially once again begins to pull away from the COVID crisis, are you seeing greater variability market to market, depending on where each market is relative to the pandemic? Well, that's a good question. I mean, we'll use miles driven as the proxy here. You know, we just need everybody to do what Microsoft did in the last 24 hours is everybody go back to their offices. I'm joking obviously, but the reality is, the number of people going back to offices in particular in large urban markets is still below where we want. If you look at the miles driven, it has recovered in parts of the country almost to 2019 levels. If you look at the Southwest or the Southeast, you've seen that miles driven recover. The Northeast is still almost 10% below where it was two years ago, if you look through the tail end of last year on the miles driven. Now it's coming up, but it's still below. You know, I think you will continue to see that miles driven improve. The information we have says it's down still versus 2019. We expect that to continue to improve. Okay, very helpful. Thank you. There are no further questions at this time. Mr. Tom Greco, I turn the call back over to you for some closing remarks. Well, thanks for joining us this morning. As you've heard throughout the call, we remain confident in the strategic plan we're executing and in our ability to deliver top quartile total shareholder return through the four TSR drivers we discussed today. We plan to build on our 2021 results and leverage strong industry fundamentals and continue to strengthen our customer value proposition, deliver against our margin expansion initiatives, and return substantial cash back to our shareholders. We remain committed to the execution of our strategic initiatives while driving innovation to position Advance for long-term profitable growth. We look forward to sharing more of our progress throughout the year. This concludes today's conference call. Thank you for your participation. You may now disconnect.