Advance Auto Parts, Inc. AAP recently announced that it is implementing a number of actions to boost the firm’s cash position in the face of the rising uncertainty due to the coronavirus crisis.
Advance Auto has withdrawn its 2020 guidance and suspended the company’s share-buyback program until further notice amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainties. It has also slashed its capital spending for 2020 by 50% to minimize costs during a period of reduced business with many drivers subject to stay-at-home orders to curb the spread of the virus.
Further, the company is offering emergency pay, which includes additional paid sick time of 80 hours for full-time employees and 44 hours for part-time workers. In addition, it is providing a grant of up to $300 for employees to assist with basic living expenses amid coronavirus pandemic.
Moreover, Advance Auto has expanded its delivery options in response to the changing customer needs. It is offering customers curbside pickup and same-day delivery via its mobile application to serve both DIY and professional customers.
Meanwhile, the company drew down $500 million from an undrawn $1-billion revolving credit facility in March, which might be increased to $1.25 billion. As of Apr 4, the company had around $744 million available in cash, to tackle the downturns caused by production shutdowns and revenue declines.
Advance Auto currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The coronavirus pandemic has become a concern for other global auto biggies as well, including Tesla TSLA, Honda Motor HMC, Toyota Motor TM, Volkswagen AG, Goodyear Tire, Nissan, Harley-Davidson and Hyundai Motor. Several automakers have closed their factories and suspended production, while the others plan to change manufacturing processes and cut production levels in their plants, in line with the nationwide campaign addressing the crisis. The pandemic has not only dented consumer sentiment and thwarted vehicle demand but also distorted the supply-chain balance globally.
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