Advance Auto touts strong liquidity thru pandemic after Q4 notes sale

By Devika Patel

Knoxville, Tenn., Feb. 16 – Advance Auto Parts, Inc. prioritized liquidity during the pandemic, resulting in an improved cash position of $834,992,000 at the end of the last quarter, compared to $418,665,000 a year prior, having completed a debt sale and notes tender last quarter to strengthen its balance sheet.

“Our team remain disciplined throughout 2020 to ensure adequate liquidity, protect the P&L during the pandemic and strengthen our balance sheet, which resulted in meaningful improvement of cash position, resulting in $835 million in cash on hand at year-end,” executive vice president and chief financial officer Jeff Shepherd said on the company’s fourth quarter and year ended Jan. 2 earnings conference call on Tuesday.

Long-term debt was $1,032,984,000 as of Jan. 2, 2021, compared to $747.32 million as of Dec. 28, 2019.

On Sept. 22, Advance Auto priced $350 million of 1.75% seven-year senior notes (Baa2/BBB-) at 99.672 to yield 1.8%, or a spread of Treasuries plus 135 basis points.

Initial guidance was in the Treasuries plus 185 bps area.

The issue was upsized from $300 million.

J.P. Morgan Securities LLC, BofA Securities Inc., Truist Securities Inc., Wells Fargo Securities LLC and U.S. Bancorp Investments Inc. were the bookrunners.

Proceeds were earmarked for a tender offer, also announced on Sept. 22, to purchase for cash all of the company’s 4.5% senior notes due Dec. 1, 2023 (Cusip: 00751YAC0).

As of Sept. 22, there were $450 million of the 2023 notes outstanding.

The tender offer consideration for each $1,000 of notes validly tendered and not validly withdrawn and accepted for purchase was $1,118.87, which was determined using a fixed spread of 25 basis points plus the yield based on the 0.125% reference security due Sept. 15, 2023 at 2 p.m. ET on Sept. 28, plus interest.

The offer expired on Sept. 28 and settled on Sept. 29.

On Sept. 29, Advance Auto reported that it took in tenders of $256,327,000, or 56.96%, of the outstanding $450 million principal amount of the 4.5% notes due 2023.

Advance Auto is a Roanoke, Va.-based specialty retailer of automotive aftermarket parts, accessories, batteries and maintenance items.

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