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May 19, 2014

ATD posts loss despite a 28% sales increase

American Tire Distributors Holdings Inc. posted a net loss of $34 million on net sales of nearly $1.1 billion for the first quarter ended April 5, 2014. That compare to a loss of $16.3 million on sales of $840 million for the first quarter of 2013.

The company's operating loss also increased, from $5.7 million in 2013 to $24.4 million in 1Q 2014.

As part of its first-quarter financial report, ATD looked at both the market and its market strategy in the United States and Canada going forward.

"Substantially all of the industry's unit growth in 2013 was driven by an increased level of shipments of lower priced import product, predominately from China, as most domestic tire manufacturers reported continued replacement tire unit shipment reductions in 2013 as compared to 2012," said the company.

"Our market outlook for 2014 reflects nominal market improvement, particularly in the value tire segment of the replacement market for which we believe we are well positioned to gain market share, and we expect to continue to follow our historic trend and outperform market expectations."

ATD believes growth in the replacement tire market will be driven by increases in the following:

* the number and averge age of passenger cars and light trucks;

* the number of miles driven;

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

* the number of replacement tire SKUS.

The company also said the growth of the high performance tire segement and "shortening tire replacement cycles due to changes in product mix that increasingly favor high performance tires, which have shorter average lives," will affect the market favorably.

"We have a solid infrastructure, an extensive and efficient distribution network and a broad product offering. Our growth strategy, coupled with our access to capital and our scalable platform, enables us to continue to expand in existing markets as well as in new geographic areas.

"In addition, we are investing in technology and new sales channels which we expect will help fuel our future growth. As a result, we believe that we are well positioned to continue to achieve above market results in both contracting and expanding market demand cycles."

ATD added that as part of its ongoing business strategy, it intends "to expand in existing markets as well as enter into previously underserved markets and new geographic areas."

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