Advance Auto Parts Inc. (AAP) announced its new $750 million unsecured revolving credit facility that will mature in May 2016 replacing the already existing $750 million revolver, which will mature in October 2011.
The new credit facility will strengthen Advance Auto’s balance sheet thereby, providing the wherewithal to support its growth plans. The interest rate on borrowings under the facility will be based on an adjusted LIBOR rate plus a margin based on the company's credit ratings.
At the end of the first quarter of fiscal 2011, Advance Auto had cash and cash equivalents of $53.7 million, a decrease from $133.3 million in the corresponding period a year ago. Long-term debt amounted to $431.8 million as of April 23, 2011 compared with $279.0 million as of April 24, 2010. The long-term debt-to-capitalization ratio stood at 32.8%, significantly up from 20.1% as of April 24, 2010.
Advance Auto used $270 million of the cash in repurchasing 4.2 million shares during the quarter at an average price of $63.72. At the end of the first quarter, the company still had $351.6 million remaining under the $500.0 million share repurchase authorization approved by the board of directors in February 2011.
In addition, a considerable amount of the cash is used in stores opening, which is a crucial business expansion strategy undertaken by the company. During the quarter, Advance Auto Parts opened 37 stores. As of April 23, 2011, the company’s total store count was 3,600, including 203 Autopart International stores.
Headquartered in Roanoke, Virginia, Advance Auto operates in the U.S. automotive aftermarket industry and is primarily engaged in selling replacement parts (excluding tires), accessories, maintenance items, batteries and automotive fluids for cars and light trucks.
The company is the second leading retailer catering to the DIY and DIFM (or Commercial) customers. The company primarily targets the DIY market, which accounts for 75% of the revenue. The remaining 25% is generated from the DIFM segment under the commercial delivery program.
The company has partnered with PartsAmerica.com to provide online shopping facilities. The company has grown by acquiring several retail chains such as Western Auto Supply, Missouri; Discount Auto Parts, New Jersey; Carport Auto parts, Alabama & Mississippi; Trak Auto Corp, Maryland; and Autopart International, Massachusetts. The company’s key competitors include AutoZone Inc. (AZO) and O’Reilly Automotive Inc. (ORLY).
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