Pennzoil-Quaker State Company Reports First Quarter 2001
Results
HOUSTON, May 1 Pennzoil-Quaker State Company
today announced first quarter net income from continuing operations of
$8.7 million or 11 cents per share, versus a loss of two cents per share a
year ago. Prior year first quarter results from continuing operations
included $13.9 million in non-recurring charges. Revenue from continuing
operations in the quarter decreased three percent versus a year ago, to
$568.9 million, due primarily to the sale of non-strategic assets and
continued softness in the automotive sector.
"Strong cost performance in the seasonally weak first quarter was achieved
through a series of initiatives across the company and kept us on pace to
realize our 2001 expectations," said Jim Postl, president and chief executive
officer. "Coming out of a difficult fourth quarter 2000, our Lubricants,
International and Excel Paralubes recorded improved performance in the first
quarter. Year-over-year, we had particularly strong performance from Jiffy
Lube and Excel Paralubes. We also have essentially completed our program to
sell non-strategic businesses during the quarter, which allows us to be fully
focused on our core automotive consumer product business going forward."
Effective in the first quarter of 2001, Pennzoil-Quaker State Company has
changed its segment reporting to better correspond with the company's five
major divisions.
Lubricants: Operating income for the Lubricant's division decreased
9.6 percent to $31.3 million in the first quarter versus $34.6 million last
year. Prior year results included $1.4 million in non-recurring charges.
Year-over-year total revenue for Lubricants declined 8.3 percent from
$350.2 million to $321.1 million, largely due to the sale of assets.
Pennzoil(R) motor oil is America's number one selling motor oil with an
average 3-month market share of 22.1 percent compared to 22.0 percent for the
same period last year. Quaker State(R) motor oil is the number two selling
motor oil in the United States with an average 3-month market share of
14.7 percent compared to 14.5 for the same period last year.
Consumer Products: Operating income for the company's Consumer Products
segment was $4.9 million versus $12.0 million in the first quarter last year.
The lower results were due primarily to residual softness in aftermarket
consumer product categories. First quarter revenue increased one percent
year-over-year to $84.9 million.
Pennzoil-Quaker State Company's Consumer Products segment is being
reported separately for the first time this quarter. This segment includes
four business divisions: the Medo division manufactures and markets air
fresheners; the Axius division designs and markets automotive window sun
protection products and automotive accessories; the Blue Coral/Slick 50
division markets engine treatments, performance and appearance products; and
the company's automotive chemicals division manufactures and markets tire
inflators, fuel additives and other automotive performance chemicals.
International: Also being reported separately for the first time,
Pennzoil-Quaker State Company's International segment had operating income of
$1.2 million versus $5.0 million in the first quarter 2000. First quarter
revenue increased eight percent year-over-year to $63.3 million, primarily due
to acquisitions and higher lubricant prices.
Jiffy Lube International: Operating income for Jiffy Lube in the first
quarter was $5.0 million, a 53 percent increase from $3.2 million last year.
Prior year results included $0.5 million in non-recurring charges. Comparable
store sales were up 7.1 percent system wide in the quarter. First quarter
revenue was unchanged from a year ago at $83.8 million. Since the
reconfiguration of Jiffy Lube's system, including approximately 500 company-
owned stores that were sold to franchisees or closed, the company has recorded
strong quarterly improvements. The increase in first quarter 2001 operating
income is due primarily to higher comparable store sales and strong cost
performance.
Supply Chain Investments: Operating income for the Supply Chain
Investment segment, which includes Pennzoil-Quaker State Company's equity
investment in the Excel Paralubes base oil processing facility, was
$10.4 million in the first quarter compared to $5.5 million in 2000. Total
revenue was $82.7 million, a 22 percent increase from $67.9 million for the
first quarter of 2000, due primarily to higher base oil prices.
The following are the unaudited results of operations for the quarter
ended March 31, 2001 compared with the same period in 2000.
Three Months Ended
March 31
2001 2000
(Expressed in thousands
except per share amounts)
REVENUES
Lubricants $321,131 $350,202
Consumer Products 84,939 84,087
International 63,272 58,691
Jiffy Lube 83,764 83,831
Supply Chain Investments 82,708 67,865
Other (1,595) 2,738
Intersegment sales (65,275) (61,827)
Total revenues $568,944 $585,587
OPERATING INCOME (LOSS)
Lubricants $31,268 $34,585
Consumer Products 4,889 12,018
International 1,158 4,951
Jiffy Lube 4,973 3,249
Supply Chain Investments (A) 10,414 5,500
Other 2,265 (1,323)
Total operating income 54,967 58,980
Corporate administrative expenses 14,455 46,834
Interest charges, net 24,712 21,641
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAX 15,800 (9,495)
Income tax provision (benefit) 7,095 (8,329)
INCOME (LOSS) FROM CONTINUING
OPERATIONS 8,705 (1,166)
Discontinued Operations --- (6,634)
NET INCOME (LOSS) $8,705 $(7,800)
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Continuing Operations $0.11 $(0.02)
Discontinued Operations --- (0.08)
TOTAL $0.11 $(0.10)
AVERAGE SHARES OUTSTANDING
BASIC 78,836 78,216
DILUTED 80,279 78,216
END OF PERIOD SHARES OUTSTANDING 78,970 78,318
(A) Operating income for Supply Chain Investments includes partnership
income accounted for using the equity method.
PENNZOIL - QUAKER STATE COMPANY
OPERATING HIGHLIGHTS
(UNAUDITED)
Three Months Ended %
March 31 Change
2001 2000
LUBRICANTS
Recurring revenues (in thousands): $321,131 $350,202 -8.3%
Recurring operating income (in
thousands): $31,268 $35,954 -13.0%
CONSUMER PRODUCTS
Recurring revenues (in thousands): $84,939 $84,087 1.0%
Recurring operating income (in
thousands): $4,889 $12,018 -59.3%
INTERNATIONAL
Recurring revenues (in thousands): $63,272 $58,691 7.8%
Recurring operating income (in
thousands): $1,158 $4,951 -76.6%
JIFFY LUBE
Domestic systemwide sales (in
thousands) $302,603 $279,459 8.3%
Same center sales Jiffy Lube (in
thousands) $293,732 $274,360 7.1%
Systemwide centers open 2,138 2,161 -1.1%
SUPPLY CHAIN INVESTMENTS
Base oil production (bbls per day) 8,818 9,877 -10.7%
Average base oil margin ($ per bbl) $24.99 $15.46 61.6%
