American Tire Distributors Holdings Inc. (ATD) posted net income of $117,000 on consolidated net sales of more than $3 billion for its fiscal year ended Dec. 31, 2011.
However, an apples-to-apples comparsion with the previous fiscal year cannot be made, because following the purchase of ATD by private equity investment firm TPG Capital and certain co-investors in 2010, a new entity was created for accounting purposes.
For the seven months beginning May 28, 2010, when the merger went into effect, and ending Jan. 1, 2011, ATD recorded a net loss of $36.3 million on net sales of $1.5 billion. For the full fiscal 2010 under both ownerships, ATD recorded income of $5 million on sales of nearly $2.2 billion.
As listed in its SEC (Securities and Exchange Comission) filing, the company's objective is "to be the largest distributor of replacement tires to local, regional and national independent U.S. tire retailers, as well as various national and corporate accounts, while providing our customers a critical range of services such as frequent and timely delivery of inventory as well as business support services."
To accomplish this objective, plus drive above-market growth and further enhance profitability and cash flow, ATD plans to execute the following key operational strategies:
1. Leverage our infrastructure in existing markets. "Through infrastructure expansions over the past several years, we have developed a scalable platform with available incremental distribution capacity. 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.
"We believe our relative penetration in existing markets is largely a function of the services we offer and the length of time we have operated locally. Specifically, in new markets, we have experienced growth in market share over time, and in states we have served the longest, we generally have market share well in excess of our national average."
2. Maintain a comprehensive and deep tire portfolio to meet our customers’ needs. "We provide a broad range of products covering all price points from entry-level to faster growing high and ultra-high performance tires, through a full suite of flag, associate and proprietary brand tires. 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.
"Our comprehensive tire portfolio is designed to satisfy all of our customers’ needs and allow us to become the supplier of choice, thereby increasing customer penetration and retention."
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.
"We continue to evaluate and incorporate technical solutions including our current roll out of handheld scanning for receiving, picking and delivery of products to our customers. We believe these increased efficiencies will continue to enhance our reputation with our customers for providing a high level of prompt customer service, while also reducing costs."
4. Continue to expand in existing and new geographic markets. "While we have the largest distribution footprint in the U.S. replacement tire market, we have limited or no market presence in many geographic areas of the contiguous United States. We intend to enter into previously underserved geographic markets as well as expand in our existing markets by opening new distribution centers and/or through opportunistic acquisitions.
"Our 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 the United States, combined with our access to capital and our scalable platform, allows us to make acquisitions at attractive post-synergy valuations."
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. During 2010, we began to train and deploy sales personnel to help build our sales at these accounts. In addition, we continue to strengthen and expand our relationships with the automobile manufacturers to further grow our share of tire sales to their dealerships."
6. Grow TireBuyer.com into a premier Internet tire provider. "TireBuyer.com is an Internet site that enables our local independent tire retailer customers to connect with consumers and sell to them over the Internet. TireBuyer.com allows our broad base of independent tire retailer customers to participate in a greater share of the growing Internet tire market.
"We believe that TireBuyer.com complements and services our participating local independent tire retailers by providing them access to a sales and marketing channel previously unavailable to them. Since launching TireBuyer.com in late 2009, we have continued to enhance the online consumer experience and have seen increased consumer traffic on the site."
