HUNTERSVILLE, N.C.American Tire Distributors Holdings Inc. (ATD) suffered a $14.7 million net loss for the quarter ended Oct. 4 as transaction expenses related to a number of acquisitions ate into earnings.
Sales for the quarter jumped 34.1 percent to $1.32 billion, but operating income fell 39.5 percent to $13.9 million as ATD registered $20.1 million in transaction expenses, according to the firm's third-quarter 10Q filing with the Securities and Exchange Commission.
The net loss contrasts with net income of $1.23 million a year ago.
The transaction expenses were related primarily to costs associated with the acquisition and integration of Trail Tire, Extreme, Kirks Tire, RTD Edmonton, RTD Calgary, Hercules Tire & Rubber Co. and Terry's Tire Town, ATD said, as well as with expenses related to potential future acquisitions and other corporate initiatives.
During the quarter, ATD generated $265.6 million in sales attributable to new acquistions, along with $90.2 million in incremental sales growth due to higher unit sales. These increases were offset partially by lower net tire pricing of $20.3 million, driven primarily by competitive pricing positions in certain U.S. markets, as well as a shift in product mix in lower price-point offerings.
For the nine months ended Oct. 4, ATD's net loss more than quadrupled to $98.2 million from $20.9 million a year ago. Transaction fees and interest expense contributed $40.3 million and $88.8 million, respectively, to the loss, according to ATD's figures.
Sales for the nine months jumped 31.8 percent to $3.67 billion, driven primarily by the combined results of new distribution centers as well as the aforementioned acquisitions. These growth initiatives added $729.9 million of incremental sales during the nine-month period of 2014.
In addition, ATD's sales grew $224.5 million on an increase in comparable tire unit sales and the inclusion of five additional selling days in the first quarter.
These increases were offset partially by lower net tire pricing of $67.4 million, driven by manufacturer marketing specials, competitive pricing positions in certain U.S. markets and a shift in the firm's lower-priced point offerings.