PDF《2017》

2017 2016 Total Net Sales (in billions) $9.37 $9.57 Diluted EPS $6.42 $6.20 Adjusted EPS $5.37 $7.15 Free Cash Flow (in millions) $411 $264 faster and more frictionless experience while increasing the number of SKUs available for online shoppers. Third-party reviews of industry websites have noted our improved online capabilities. We'

ve also improved the in-store customer experience from the moment DIYers come through the doors. Independent mystery shoppers have reported progress throughout the year resulting from our diligent efforts to improve the store experience in conjunction with the rollout of our new website. Our Team Members leveraged enhanced training, enabling better execution. In 2017, we began the roll-out of Cross Banner Visibility which enables all Professional Customers, as well as all Advance, Carquest, and WorldPac Team Members, to see our entire catalog, regardless of banner. This capability benefits both DIY and Professional Customers and was completed in the first quarter of 2018. Further, we introduced AdvancePro, our e-commerce engine for Professional Customers. This digital platform provides full access to our common catalog across all four banners, extending our enterprise-wide assortment to all Customers. These are major steps forward that reinforce the importance of our outstanding assortment of brands, fast and consistent delivery and the best parts people in the industry. Most importantly, these initiatives enable us to say YES more often! DRIVING CASH FLOW... ACTING LIKE OWNERS Given the substantial margin gap we have with industry peers, we'

ve embraced frugality as a tenet of our corporate culture. In 2017, we made progress in productivity improvements, reducing material costs and implementing zero based budgeting. We expect this agenda to continue to advance into

2018 and beyond. We'

re strengthening, optimizing and streamlining our supply chain from end to end. Our supply chain strategy is about differentiation, improving the customer experience and structural cost reduction. In order to improve cash flow, we implemented dramatic enhancements to our working capital processes, focused on receivables, payables, and inventory. This is already yielding significant benefits, driving both free cash flow and return on invested capital. We'

re confident about the progress we'

ll make in each of these areas in

2018 and into the future. Without question, our productivity and cash agenda is well underway and critical to long- term growth. HIRING AND DEVELOPING THE BEST...THROUGHOUT ADVANCE Our Team Members are critical to our success both in the field and in our Customer Support Center. We need the best parts people in the business in our stores and are excited about the substantial reductions in turnover we achieved in 2017. In corporate roles, we are hiring terrific new leaders while promoting and empowering others from within to strengthen our entire organization. People are at the core of all our initiatives, and ultimately, our Team Members'

knowledge, dedication, and focus will set Advance apart from both retail and online competitors. As a result, we have invested, and will continue to invest, in our Team Members. In 2016, we launched Fuel the Frontline, which rewards high-performing store and field Team Members with shares of Advance stock for meeting or exceeding their goals. In 2017, we continued to grow Fuel the Frontline with literally thousands of Team Members earning shares of Advance stock throughout the year. We also launched Be An Owner in

2017 to recognize top performers in our Customer Support Center ― continued and Supply Chain teams. Similar to Fuel the Frontline, Be An Owner enables Team Members to earn Advance stock based on outstanding, differentiated performance. Over time, this important initiative drives ownership and will help reduce turnover. Building on the evolution of our Cultural Beliefs that began in 2016, we continued to focus on Inclusion and Diversity throughout 2017. In line with this emphasis across Advance, I am honored to be a part of the CEO Action collective. With more than