Midas Reports Q3 Earnings Per Share of $.35
ITASCA, Ill.--Oct. 18, 2001--Midas, Inc. today reported its results for the third quarter ended Sept. 29, 2001.Third quarter earnings were $5.2 million, down from $7.2 million in 2000, excluding a non-recurring tax benefit of $4.8 million last year related to the sale of the company's Australian operations. Earnings per diluted share this year were $.35, compared to $.47 in 2000, excluding $.31 last year from the non-recurring tax benefit.
Sales and revenues for the quarter were $85.2 million, down from $94.3 million last year. Royalties and license fees were $17.4 million this year compared to $17.8 million in 2000.
"After two consecutive quarterly increases in comparable store sales in the first half of 2001, Midas began to feel the slowdown in retail spending as comparable store sales declined 3 percent in the third quarter, including the effect of one less selling day," said Wendel H. Province, Midas' chairman and chief executive officer. "As with retailers in all types of markets including automotive service, Midas sales were off dramatically in the aftermath of September 11."
"Early results for October are improving and, overall, we continue to be encouraged by our retail sales results because they indicate that consumers are responding favorably to the expanded range of services available at Midas," Province said.
He said that on a comparable store basis, service jobs in the first three quarters of 2001 were up 3 percent, despite continuing double-digit declines in exhaust.
"With all the negative factors affecting retail in the third quarter this year, Midas retail sales stood up well, particularly since we were comparing results to the third quarter of 2000, when we spent additional marketing funds to enhance awareness of the New Midas program," Province said.
Company-operated shop retail sales were $3.8 million for the quarter, up from $1.9 million in the previous year. Midas operated 36 shops at the end of the third quarter this year compared with 10 at the end of third quarter 2000.
Province said that the company purchased 19 Midas shops from franchisees during the third quarter, bringing the total of company-operated shops to 36 at the end of the quarter. Following the end of the quarter, Midas purchased an additional 72 shops in October for a current total of 108.
"We indicated at the end of the second quarter that Midas is expanding the company shop business by acquiring sites from franchisees," Province said. "We are taking advantage of opportunities to acquire additional sites as they become available, including the 52 shops in Florida and 20 shops in the Denver market we purchased in early October.
"Expanding the company-shop business is good for Midas because the shops provide a strong return on our investment," he said.
"The company does not expect to acquire any more shops in 2001, as we focus on integrating and building the infrastructure to support the current group of 108," Province said. "We expect to add additional company shops in 2002 and beyond, although we have not yet established a specific timeline for acquiring additional units."
Replacement parts sales were $54.0 million for the quarter compared to $64.6 million a year earlier.
Wholesale parts sales to Midas dealers and other customers through the company's distribution centers continue to decline, primarily because of lower demand for exhaust products and the shift in Midas retail mix to include services for which parts are purchased by dealers on a just-in-time basis.
"While the traditional wholesale sales were down more than 20 percent, parts sales through our quick delivery Parts Warehouse, Inc. (PWI) locations increased by more than 33 percent," Province said. "Midas dealers and other customers need just-in-time delivery of climate control products and other parts that they do not routinely stock in their in-shop inventories."
During the quarter, Midas added 12 PWI sites, including the first in southwestern United States in Texas and Arizona and the first in Canada. The company plans to add eight additional PWI sites by the end of the year to the 68 in operation at the end of the third quarter.
Operating income for the quarter was $10.6 million, down from $13.5 million in the third quarter of 2000.
For the first nine months of 2001, net earnings were $15.3 million compared to $24.5 million in 2000, excluding $7.4 million last year in special items. Earnings per diluted share were $1.02, down from $1.56 in 2000, excluding $.47 last year in special items.
For the first three quarters of 2001, sales and revenues were $250.0 million, down from $271.3 million last year. Operating income for the first three quarters this year was $31.2 million, compared to $45.1 million in 2000.
Diluted earnings per share in the third quarter and first nine months of 2001 are based on 14.9 million weighted average shares outstanding, compared to 15.4 million in the third quarter last year and 15.7 million for the first nine months of 2000.
"Because current uncertainties facing retailers make it difficult to develop accurate forecasts, we will not provide guidance at this time for the remainder of 2001 or for next year," Province said. "We will provide guidance for 2002 no later than our fourth quarter earnings release."
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, company-owned 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 nine months
Ended fiscal September ended fiscal September
---------------------- ----------------------
2001 2000 2001 2000
---- ---- ---- ----
(13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks)
Sales and revenues $ 85.2 $ 94.3 $ 250.0 $ 271.3
Cost of sales
and revenues 46.0 51.9 134.6 148.2
Selling, general, and
distribution expenses 28.6 28.9 84.2 78.0
------- ------- ------- -------
Operating income 10.6 13.5 31.2 45.1
Interest expense ( 2.1) ( 2.1) ( 6.6) ( 6.1)
Other income, net - 0.2 0.4 4.1
------- ------- ------- -------
Income before taxes 8.5 11.6 25.0 43.1
Income taxes (benefit) 3.3 ( 0.4) 9.7 11.2
------- ------- ------- -------
Net income $ 5.2 $ 12.0 $ 15.3 $ 31.9
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Earnings per share:
Basic $ .35 $ .79 $ 1.02 $ 2.06
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Diluted $ .35 $ .78 $ 1.02 $ 2.03
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Dividends per
common share $ .00 $ .02 $ .08 $ .06
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Average number of shares
Common shares
outstanding 14.9 15.3 14.9 15.5
Equivalent shares
on outstanding
stock options .0 .1 .0 .2
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Shares applicable
to diluted earnings 14.9 15.4 14.9 15.7
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MIDAS, INC.
RESULTS OF OPERATIONS
Third Quarter 2001 Compared with Third Quarter 2000 (Unaudited)
The following is a summary of the Company's sales and revenues for
the third quarter of fiscal 2001 and 2000, respectively: ($ Millions)
Percent Percent
2001 to Total 2000 To Total
---- -------- ---- --------
Replacement
parts sales $ 54.0 63.4% $ 64.6 68.5%
Company-operated
shop retail sales 3.8 4.5 1.9 2.0
Royalties and
license fees 17.4 20.4 17.8 18.9
Real estate
rental revenues 9.4 11.0 9.8 10.4
Other 0.6 0.7 0.2 0.2
------- ------- ------- -------
Sales and revenues $ 85.2 100.0% $ 94.3 100.0%
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Nine Months Ended Fiscal September 2001
Compared with the Nine Months Ended Fiscal September 2000 (Unaudited)
The following is a summary of the Company's sales and revenues for
the nine months ended fiscal September 2001 and 2000, respectively:
($ Millions)
Percent Percent
2001 To Total 2000 to Total
---- -------- ---- --------
Replacement
parts sales $ 161.5 64.6% $ 186.1 68.6%
Company-operated
shop retail sales 7.9 3.2 4.1 1.5
Royalties and
license fees 50.7 20.3 50.6 18.7
Real estate
rental revenues 28.6 11.4 29.5 10.9
Other 1.3 0.5 1.0 0.3
------- ------- ------- -------
Sales and revenues $ 250.0 100.0% $ 271.3 100.0%
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