Wholesale Distribution

ATD parent posts net & operating losses in 1Q

Posted on May 13, 2013

American Tire Distributors Holdings Inc. posted a net loss of $16.3 million on net sales of $840 million for its first quarter ended March 30, 2013. That compares to a loss of nearly $7.1 million on sales of $794.1 million for the same period last year.

The company also posted a $5.7 million operating loss, compared to $4.9 million in operating income for 1Q 2012.

Through its network of 123 distribution centers in the United States and Canada, American Tire Distributors offers approximately 40,000 stock-keeping units to close to 70,000 customers (62,000 in the U.S. and 8,000 in Canada).

"We estimate that our share of the replacement passenger and light truck tire market in the United States is approximately 10%, up from approximately 1% in 1996, with our largest customer and top 10 customers accounting for less than 3% and 11.3%, respectively, of our net sales," says the company. "Our estimated share of the replacement passenger and light truck tire market in Canada is approximately 6%."

Outlook

"From 1955 through 2012, U.S. replacement tire unit shipments increased by an average of approximately 2.6% per year," says American Tire Distributors. "The impact of the recent recession led to negative growth during 2008 and 2009. The economic environment showed signs of stabilization during 2010 and 2011, ending the negative growth trend, although slow economic growth, persistently high fuel cost and a decrease in miles driven continued to impact the market.

"Despite an increase in miles driven during 2012, the U.S. and Canadian replacement tire markets continued the negative growth trend as replacement tire unit shipments were down 1.8% and 5.5%, respectively, as compared to 2011. Our outlook for 2013 reflects little or no market improvement; however, we expect to continue to follow our historic trend and outperform our expectations of the market."

Going forward, the company believes growth in the U.S. and Canadian replacement tire markets will continue to be driven by the following "favorable underlying dynamics."

* increases in the number and average age of passenger cars and light trucks;

* increases in the number of miles driven;

* increases in the number of licensed drivers as the U.S. population continues to grow;

* increases in the number of replacement tire SKUs;

* growth of the high performance tire segment; and

* shortening tire replacement cycles due to changes in product mix that increasingly favor high performance tires, which have shorter average lives.

"As part of our ongoing business strategy, we intend to expand in existing markets as well as enter into previously underserved markets and new geographic areas," adds the company.

Past results

For its 2012 fiscal year ended Dec. 29, 2012, American Tire Distributors Holdings recorded a net loss of $14.3 million on net sales of more than $3.4 billion. Its operating income was $56.8 million.

(ATD's fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each Dec. 31.)

American Tire Distributors Holdings, which was purchased by TPG Capital L.P. in April 2010, owns 100% of the issued and outstanding capital stock of American Tire Distributors Inc. (ATD). For more information on ATD, visit www.atd-us.com, or check out these links:

"ATD completes purchase of Regional Tire."

"ATD continues to expand in Canada."

"ATD posts 3Q loss and reflects on the future."

Related Topics: ATD financials, Canada, regional tire

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