MEMPHIS, Tenn. (March 11, 2005) — American Tire Distributors Inc. (ATD)'s net income last year surged 56.3-percent ahead of 2003 to $25 million on the benefits of improved product mix, purchasing efficiencies and 15-percent higher sales.
ATD—which is being bought by global investment group Investcorp Bank BSC—said $24 million of the increase in net sales, to $1.28 billion, is from the acquisition of Big State Tire Supply in Lubbock, Texas, in July, and another $19 million came from an additional week of sales in fiscal 2004,
ATD could not determine what impact the acquisition of Target Tire in September had on sales because ATD has closed 10 of the 11 Target Tire distribution centers and integrated the operations into its own, the firm said in its 10K filing with the Securities and Exchange Commission.
ATD also cited increased volume in its own distribution centers as a result of this consolidation plus higher selling prices from manufacturer-imposed price increases as other factors affecting sales.
Gross profit also increased 17.1 percent to $238.3 million, with Big State and Target Tire contributing $7.9 million to gross profit before the Target Tire centers were closed. ATD paid $59.3 million for the two regional wholesalers.
ATD operates 71 distribution centers in 38 states, serving 35,000 customers, including 11,000 independent tire dealer outlets.
Bahrain-based Investcorp Bank's $710 million acquisition of ATD from Charlesbank Capital Partners L.L.C. is still pending.