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March 13, 2014

ATD outlines its business strategies in 2014

American Tire Distributors Holdings Inc. posted a net loss of $6.3 million on net sales of $3.8 billion for its fiscal year ended Dec. 28, 2013. That compares to a loss of $14.3 million on sales of more than $3.4 billion for fiscal 2012.

The company's operating income was up 21.7%, from $56.8 million in 2012 to $69.1 million last year.

In its latest 10-K filing, American Tire Distributors (ATD) said its objective is to be the largest distributor of replacement tires to 1) local, regional and national independent tire retailers in both the United States and Canada, and 2) various national and corporate accounts. It also wants to provide its customers with "a critical range of services such as frequent and timely delivery of inventory as well as business support services."

How does ATD plan to accomplish these objectives, while at the same time driving above-market growth and enhancing profitability and cash flow? Here are the company's operating strategies.

1. Leverage its infrastructure in existing markets. "Our distribution infrastructure enables us to efficiently add new customers and service growing channels, such as automotive dealerships, thereby increasing profitability by leveraging the utilization of our existing assets."

2. Maintain a comprehensive and deep tire portfolio to meet customers needs. "We will continue to focus on high and ultra-high performance tires, given the growth in demand for such tires, while maintaining our emphasis on providing broad market and entry level tire offerings."

3. Utilize technology platform to continue to increase distribution efficiency. "We intend to continue to invest in our inventory and warehouse management systems and logistics technology in order to further increase our efficiency and profit margins and improve customer service."

4. Continue to expand in existing and new geographic markets. "We intend to enter into previously underserved geographic markets as well as expand in our existing markets in the United States and Canada by opening new distribution centers and/or through opportunistic acquisitions.

5. Expand penetration of the emerging automotive dealership channel. "Automotive dealerships are focused on growing their service business in an effort to expand profitability, and we believe they view having replacement tire capabilities as an important service element."

6. Grow TireBuyer.com into a premier Internet tire provider. "We believe that TireBuyer.com complements and services our participating U.S. independent tire retailers by providing them access to a sales and marketing channel previously unavailable to them. (TireBuyer.com was created in 2008 and re-launched in 2012 "on a faster and more flexible platform.")

ATD adds that its acquisition strategy "allows us to increase our share in existing markets and add distribution in new markets, utilizing our scale to realize cost savings. We believe our position as the leading replacement tire distributor in North America, combined with our access to capital and our scalable platform, allows us to make acquisitions at attractive post-synergy valuations."

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