Midas Reports 2Q Down
ITASCA, Ill.--July 19, 2001--Midas, Inc. today announced its results for the second quarter ended June 30, 2001.Second quarter 2001 earnings were $6.9 million, down from $12.4 million last year, which included a non-recurring gain of $1.8 million from the sale of the company's Australian operations. Earnings per diluted share this year were $.46, compared to $.78 in 2000, including $.11 from the non-recurring gain.
Sales and revenues for the quarter were $87.3 million, down from $98.4 million in 2000. Royalties and license fees were $17.5 million, compared to $17.3 million in 2000 and company-operated shops retail sales were $2.4 million, up from $1.8 million last year. Replacement parts sales for the quarter were $57.5 million, down 16.7 percent from $69.0 million last year.
"The shifts in sales and earnings are the direct result of dramatic changes in the Midas business model over the last two years," said Wendel H. Province, Midas' chairman and chief executive officer. "We fully expected lower sales and earnings in the near-term while we undergo the transition to position the company for the long-term."
"Importantly, our new initiatives of expanding services at Midas shops, establishing a network of quick-delivery parts sites and adding company-operated shops are working," Province said.
"For the second quarter, we had an increase in Midas system comparable store sales of two percent, even though we were going against an aggressive advertising campaign last year as we launched the New Midas," he said.
"The second quarter improvement followed a three percent increase in the first quarter," Province said. "The combined comparable store improvement of more than two percent in the first half is evidence of the positive consumer response to the expanded services available at Midas," Province said.
He said that on a comparable store basis, service jobs in the first half were up six percent, despite a double-digit decline in exhaust jobs.
"We also are encouraged by strong parts sales through Parts Warehouse, Inc. (PWI) quick-delivery sites to Midas shops and other customers," Province said.
During the quarter, Midas opened six additional PWI sites and closed one, bringing the total in operation to 56.
"These new PWI sites are performing above our profitability model, with new sites in the aggregate achieving profitability in June, ahead of our own expectations and, to my knowledge, well ahead of aftermarket industry expectations for new operations," Province said.
He said that Midas expects to open as many as 40 additional PWI locations in the second half of this year. He said Midas also added seven company-operated Midas shops in the first half, bringing that total to 17.
"The company-operated shops are performing well and they provide us with an effective model to develop operational and merchandising programs for use throughout the Midas system," Province said. "Just as important, we have been able to dramatically increase retail sales at company-operated shops resulting in an attractive return on investment.
"We currently are in discussions with certain Midas dealers about acquiring more than 50 additional shops," Province said. "Because of the process involved in negotiations, we do not know when these potential acquisitions may occur."
Parts sales to Midas dealers and other customers through the company's traditional network of distribution centers continue to be affected by the transformation of Midas shops to new services and declines in demand for exhaust products. Also, sales this year are compared to a strong quarter last year when Midas dealers were building inventories for the launch of the New Midas program of expanded services.
"The continuing decline in traditional wholesale part sales emphasizes the strategic importance of our investment in PWI and company-operated Midas shops," Province said.
"Despite the disappointment with wholesale sales in the second quarter, we were able to achieve our earnings target through aggressive management of expenses," Province said.
Operating income for the current quarter was $13.3 million, down 30 percent from the second quarter of 2000.
For the first half of 2001, net earnings were $10.1 million, compared to $19.9 million last year. Earnings per diluted share for the first half of this year were $.67, down from $1.25 in 2000, which included $.16 per share in special items.
For the first half of 2001, sales and revenues were $164.8 million, down from $177.0 million last year. Operating income for the first half was $20.6 million, down 35 percent from $31.6 million last year.
Diluted earnings per share in the second quarter and first half of 2001 are based on 14.9 million weighted average shares outstanding, compared to 15.8 million in 2000.
Province said that Midas estimates third quarter earnings of $.35 to $.45 per diluted share.
"Because it is not yet possible to determine the specific timetable for opening additional PWI sites and for completing negotiations to acquire additional Midas shops from dealers, we will not provide specific earnings guidance for the fourth quarter and the full-year at this time," Province said.
Midas is one of the world's largest providers of automotive service, offering exhaust, brake, steering and suspension services, as well as batteries, climate control and maintenance services at 2,700 franchised and licensed Midas shops in 20 countries, including nearly 2,000 in the United States and Canada.
NOTE: This news release contains certain forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available to management. Such statements are subject to risks and uncertainties, both known and unknown, that could cause actual results, performance or achievement to vary materially from those expressed or implied in the forward-looking statements. The company may experience significant fluctuations in future results, performance or achievements due to a number of economic, competitive, governmental, technological or other factors. Additional information with respect to these and other factors, which could materially affect the company and its operations, is included in the company's filings with the Securities and Exchange Commission, including the company's 2000 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings and dividends per share)
(Unaudited)
For the quarter For the six months
ended fiscal June ended fiscal June
----------------- -----------------
2001 2000 2001 2000
---- ---- ---- ----
(13 Weeks) (13 Weeks) (26 Weeks) (26 Weeks)
Sales and revenues $ 87.3 $ 98.4 $164.8 $177.0
Cost of sales
and revenues 47.9 54.4 88.6 96.3
Selling, general,
and distribution
expenses 26.1 24.9 55.6 49.1
------ ------ ------ ------
Operating income 13.3 19.1 20.6 31.6
Interest expense ( 2.2) ( 1.9) ( 4.5) ( 4.0)
Other income, net 0.2 2.0 0.4 3.9
------ ------ ------ ------
Income before
taxes 11.3 19.2 16.5 31.5
Income taxes 4.4 6.8 6.4 11.6
------ ------ ------ ------
Net income $ 6.9 $ 12.4 $ 10.1 $ 19.9
====== ====== ====== ======
Earnings per share:
Basic $ .46 $ .79 $ .67 $ 1.27
====== ====== ====== ======
Diluted $ .46 $ .78 $ .67 $ 1.25
====== ====== ====== ======
Dividends per
common share $ .00 $ .02 $ .08 $ .04
====== ====== ====== ======
Average number of shares
Common shares
outstanding 14.9 15.6 14.9 15.6
Equivalent shares
on outstanding
stock options .0 .2 .0 .2
------ ------ ------ ------
Shares applicable
to diluted
earnings 14.9 15.8 14.9 15.8
====== ====== ====== ======
MIDAS, INC.
RESULTS OF OPERATIONS
Second Quarter 2001 Compared with Second Quarter 2000 (Unaudited)
The following is a summary of the Company's sales and revenues
for the second quarter of fiscal 2001 and 2000, respectively:
($ Millions)
Percent Percent
2001 to Total 2000 To Total
------ -------- ------ --------
Replacement parts sales $ 57.5 65.9% $ 69.0 70.1%
Company-operated shop
retail sales 2.4 2.8 1.8 1.8
Royalties and license fees 17.5 20.0 17.3 17.6
Real estate rental revenues 9.6 11.0 9.8 10.0
Other 0.3 0.3 0.5 0.5
------ -------- ------ --------
Sales and revenues $ 87.3 100.0% $ 98.4 100.0%
====== ======== ====== ========
Six Months Ended Fiscal June 2001
Compared with the Six Months Ended Fiscal June 2000 (Unaudited)
The following is a summary of the Company's sales and revenues
for the six months ended fiscal June 2001 and 2000, respectively:
($ Millions)
Percent Percent
2001 To Total 2000 to Total
------ -------- ------ --------
Replacement parts sales $107.5 65.2% $121.5 68.6%
Company-operated shop
retail sales 4.1 2.5 2.2 1.2
Royalties and license fees 33.3 20.2 32.8 18.5
Real estate rental revenues 19.2 11.7 19.7 11.2
Other 0.7 0.4 0.8 0.5
------ -------- ------ --------
Sales and revenues $164.8 100.0% $177.0 100.0%
====== ======== ====== ========
