TBC Reports Record Third Quarter Sales and 12% EPS Growth
MEMPHIS, Tenn.--Oct. 24, 2001--TBC Corporation today reported a record high in net sales and a 12% gain in earnings per share for the three months ended September 30, 2001.Net sales for the third quarter increased 4.1% to $278.9 million, compared with $267.9 million in the year-earlier period. Net income for the third quarter totaled $6.0 million, or $0.28 per diluted share, up from $5.3 million, or $0.25 per diluted share. Net sales for the first nine months increased 16.9% to $761.6 million, compared with $651.7 million in the first nine months of 2000. Net income for the first nine months was $15.4 million, or $0.72 per diluted share, compared with $14.3 million, or $0.67 per diluted share a year ago.
"Our outstanding performance for the third quarter further validates the strategic actions we have taken to revitalize TBC's growth," remarked Larry Day, President and Chief Executive Officer. "The success of our multi-channel marketing approach has enabled us to outpace the replacement tire industry as a whole as evidenced by the 4.1% year-to-year gain in tire shipments for the nine months. We are particularly pleased with our retail operations, which are contributing an increasing proportion of our sales and income. Tire Kingdom has added 30 retail service centers during the last 12 months through acquisitions and new openings, a rate of expansion higher than in any previous 12-month period. Big O's network of franchised retail stores now totals 491 locations, compared to 458 a year ago. The ongoing progress of both Tire Kingdom and Big O not only is providing us with more control over the distribution of our proprietary brands of tires but also is strengthening TBC's position at the retail level where demand for automotive replacement products has historically not been significantly affected by changing economic conditions.
"Although it is still early in the fourth quarter, indications are that sales are continuing to recover from the sudden downturn experienced by our entire industry as a result of the events on September 11. Pricing has remained firm, and this is helping us achieve meaningful improvement in margins. The earnings of $0.25 per diluted share (before special items) we reported in the 2000 fourth quarter included especially strong unit shipments by our wholesaling operations in advance of an announced industry price increase. The difficulty in comparing with those year-earlier shipments and the overall uncertainty about the economy argue against a specific forecast at this time, but we have the potential to match or exceed the year-earlier results. Attaining that objective would represent a solid gain in earnings for 2001 as a whole and provide positive momentum leading into 2002."
Day added, "TBC continues to have the benefit of a strong balance sheet. Our EBITDA (earnings before interest, taxes, depreciation and amortization) for the full year 2001 should total a new record of over $60 million, providing us considerable flexibility for funding our internal capital expenditures as well as additional strategic acquisitions."
TBC Corporation is one of the nation's largest marketers of automotive replacement tires through a multi-channel marketing strategy. The Company's retail operations include company-owned retail centers under the Tire Kingdom brand and franchised retail stores under the Big O Tires brand. TBC also markets wholesale to customers who operate more than 200 regional distribution centers serving independent tire dealers throughout the United States and in Canada and Mexico.
This release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially, including but not limited to, the degree of competition in the replacement tire industry, changes in consumer spending on automobiles and replacement automotive products and the Company's ability to continue to obtain products in sufficient quantity and at competitive prices. Additional information on factors that could potentially affect the Company or its financial results may be found in the Company's filings with the Securities and Exchange Commission.
TBC CORPORATION
Condensed Consolidated Financial Results
(Unaudited)
Three Months Ended
September 30,
2001 2000
------------ ------------
Net sales $278,875,000 $267,883,000
Income before income taxes 10,124,000 8,712,000
Income taxes 4,129,000 3,410,000
Net earnings $ 5,995,000 $ 5,302,000
Earnings per share
Basic $ 0.29 $ 0.25
Diluted 0.28 0.25
Average number of shares
and equivalents outstanding 21,641,000 21,230,000
Nine Months Ended
September 30,
2001 2000
------------ ------------
Net sales $761,554,000 $651,706,000
Income before income taxes 26,069,000(a) 23,435,000
Income taxes 10,719,000(a) 9,179,000
Net earnings $ 15,350,000(a) $ 14,256,000
Earnings per share
Basic $ 0.73(a) $ 0.67
Diluted 0.72(a) 0.67
Average number of shares
and equivalents outstanding 21,283,000 21,216,000
(a) Earnings for the nine months ended September 30, 2001 include
a restatement for the quarter ended March 31, 2001, due to the
Company's decision to recognize a gain from a sale/leaseback
transaction over the life of the lease. An after-tax net gain
of $428,000, or $0.02 per share, was previously included in
results for the first quarter of 2001 and disclosed as a
special item.
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
September 30, December 31,
2001 2000
------------- ------------
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents $ 1,375 $ 1,681
Accounts and notes receivable,
less allowance for doubtful
accounts of $8,447 on September 30,
2001 and $7,831 on December 31, 2000:
Related parties 23,576 16,942
Other 116,433 94,836
------------- ------------
Total accounts and
notes receivable 140,009 111,778
Inventories 190,730 168,141
Refundable federal and state
income taxes -- 3,099
Deferred income taxes 12,150 12,506
Other current assets 15,745 10,594
------------- ------------
Total current assets 360,009 307,799
------------- ------------
PROPERTY, PLANT AND EQUIPMENT,
AT COST:
Land and improvements 6,209 6,697
Buildings and leasehold
improvements 23,826 26,491
Furniture and equipment 51,038 48,132
------------- ------------
81,073 81,320
Less accumulated
depreciation 34,196 27,772
------------- ------------
Total property,
plant and
equipment 46,877 53,548
------------- ------------
TRADEMARKS, NET 15,942 15,987
------------- ------------
GOODWILL, NET 51,908 50,760
------------- ------------
OTHER ASSETS 32,406 22,539
------------- ------------
TOTAL ASSETS $507,142 $450,633
============= ============
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2001 2000
------------- ------------
CURRENT LIABILITIES: (Unaudited)
Outstanding checks, net $ 10,968 $ 10,037
Notes payable to banks 50,000 11,993
Current portion of long-term debt
and capital lease obligations 16,425 13,948
Accounts payable, trade 82,056 75,407
Federal and state income taxes
payable 1,080 --
Other current liabilities 41,959 39,770
------------- ------------
Total current liabilities 202,488 151,155
------------- ------------
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 103,500 113,531
------------- ------------
NONCURRENT LIABILITIES 6,485 5,111
------------- ------------
DEFERRED INCOME TAXES 6,774 6,784
------------- ------------
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
shares issued and outstanding-
20,977 on September 30, 2001
and 20,939 on December 31,
2000 2,098 2,094
Additional paid-in capital 10,662 9,760
Other comprehensive income (1,544) --
Retained earnings 176,679 162,198
------------- ------------
Total stockholders' equity 187,895 174,052
------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $507,142 $450,633
============= ============
TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
------------------ -----------------
NET SALES(b) $278,875 $267,883 $761,554 $651,706
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 208,712 205,608 562,739 515,855
Distribution expenses 13,600 13,422 38,342 36,370
Selling, administrative and
retail store expenses 44,552 37,371 127,490 69,430
Interest expense - net 2,798 3,440 9,056 8,327
Other (income) expense - net (911) (670) (2,142) (1,711)
-------- -------- -------- --------
Total costs and expenses 268,751 259,171 735,485 628,271
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 10,124 8,712 26,069 23,435
PROVISION FOR INCOME TAXES 4,129 3,410 10,719 9,179
-------- -------- -------- --------
NET INCOME $ 5,995 $ 5,302 $ 15,350 $ 14,256
======== ======== ======== ========
EARNINGS PER SHARE -
Basic $ .29 $ .25 $ .73 $ .67
======== ======== ======== ========
Diluted $ .28 $ .25 $ .72 $ .67
======== ======== ======== ========
(b) Including sales to related parties of $26,657 and $23,707 in
the three months ended September 30, 2001 and 2000,
respectively and $69,993 and $65,164 in the nine months ended
September 30, 2001 and 2000, respectively.