American Tire Distributors Holdings Inc. posted a net loss of $10.6 million on net sales of $915.3 million for its third quarter ended Sept. 29, 2012. That compares to net income of nearly $1.5 million on sales of $831 million for the same period last year.
(ATD's fiscal year is based on either a 52- or 53-week period ending on the Saturday closest to each Dec. 31.)
The company's operating income was down slightly, from $20.2 million in 3Q 2011 to $19.6 million in 3Q 2012.
For the first three quarters of fiscal 2012, ATD recorded a net loss of $12.5 million on net sales of close to $2.6 billion, with operating income of $36.9 million.
On May 24, 2012, the company acquired 100% of the outstanding capital stock of Consolidated Tire & Oil Inc., which had three distribution centers. ATD has 102 distribution centers throughout the U.S.
Company overview
ATD carries Bridgestone, Continental, Goodyear, Michelin, Hankook, Kumho, Nexen, Nitto and Pirelli brand tires. "We also sell lower price point associate and proprietary brands of these and many other tire manufacturers," says the company.
Passenger and light truck tires represented 80.3% of the company's 3Q net sales. ATD also sells custom wheels and accessories; related tire supplies and tools; and "other" tire sales.
Here, excerpted, is what ATD has to say about itself.
"Through our network of 102 distribution centers, we offer access to an extensive breadth and depth of inventory, representing approximately 40,000 stock-keeping units, to approximately 60,000 customers. The critical range of services we provide includes frequent and timely delivery of inventory as well as business support services such as credit, training, access to consumer market data and the administration of tire manufacturer affiliate programs.
"In addition, our customers have access to a leading online ordering and reporting system as well as a website that enables our tire retailer customers to participate in the Internet marketing of tires to consumers.
"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 1.9% and 8.7%, respectively, of our net sales in fiscal 2011."
What the future holds
ATD says 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."
Its outlook for 2012 reflects little or no market improvement. "However, we expect to continue to follow our historical trend and outperform our expectations of the market."
The company says that the U.S. replacement tire market will continue to be driven by favorable underlying dynamics, including:
* 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;
* increase 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.
"Despite the current market environment, we have a solid infrastructure, an extensive and efficient distribution network, and a broad product offering," says the company.
"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 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."
American Tire Distributors Holdings Inc., 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. For more information on ATD, visit www.atd-us.com.
