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04/17/2020

Taking Important Steps to Safeguard the Business in these Challenging Times

By Tom Greco

The impact of COVID-19 is challenging the world in ways we simply could not have imagined just weeks ago. While there is no playbook on navigating a crisis of this magnitude, I know business leaders across the globe are doing all they can to adjust to this changing environment and taking actions to preserve the financial strength of the companies they lead. This is critical because our Team Members, customers and shareholders depend on us, and we have a responsibility to ensure we not only get beyond the crisis, but are well positioned to win in the future.

At Advance, we are fortunate to be deemed an essential business by the U.S. government. Although shelter-in-place orders are temporarily reducing miles driven, particularly in hard hit geographies, people still need their vehicles to access food, supplies and medical care. We play an important role in ensuring those vehicles are in good working condition.

Over the last several years, we have worked very hard to strengthen our balance sheet and improve cash flow, and because of those efforts, we are in a great starting position to manage our way through this crisis. Still, we are taking important steps to further solidify our cash position and liquidity to not only weather the storm but to create an environment to positively recover. Here are just a few.

  1. We are prioritizing initiatives that have the highest return in the near term and deliver significant long-term value and growth. For example, with many customers needing automotive products urgently in the current environment, we are rapidly increasing the roll-out of our “Advance Same Day” service. This includes Advance Same Day Pickup, Advance Same Day Curbside and Advance Same Day Home Delivery. In addition, we are also on track with our exciting launch of DieHard this summer! DieHard has the highest awareness and regard of any battery brand on the market and customers are already asking for DieHard in our stores today. This summer they will be able to purchase this great brand either online or in our Advance and Carquest stores.
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  3. We are delaying less urgent initiatives to reduce capital spending. This not only provides us with financial flexibility in an uncertain environment, it helps us focus Team Members on the initiatives that provide the highest value.
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  5. We have increased our cash on hand. Out of an abundance of caution to immediately increase our cash on hand and financial flexibility, a few weeks ago, we borrowed $500 million from our fully available $1 billion revolving credit facility. In addition, this week we issued a new 10-year Note in the amount of $500 million at 3.9%. This is a strategic offering providing us with additional liquidity at a lower rate than our existing two outstanding Notes due in 2022 and 2023. These two proactive steps help to bolster our cash position, and they provide significant financial flexibility in the event we need it.
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Across the company, Team Members are doing all they can to support our customers and our business. Because of their hard work and relentless focus on the customer, I know we will get through this incredibly difficult time. In addition, I’m very confident we are not only taking the right steps to get us through this period, we are positioning Advance to be even stronger once this crisis is behind us.


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