TBC Reports Record Fourth Quarter and Year-End Results
- Net Sales Increase 12% in Fourth Quarter - Fourth Quarter EPS Increases 42% to $0.37 per Diluted Share - EPS for Full Year Increases 28% to $1.25 per Diluted Share - Same Store Sales Grow 3.8% in Fourth Quarter
MEMPHIS, Tenn., Feb. 11 -- TBC Corporation
, one of the nation's leading marketers of automotive replacement tires, today reported record sales and earnings for the fourth quarter and year ended December 31, 2002.
Net sales in the fourth quarter increased 12% to a record $277.8 million compared to $247.7 million in the prior-year period. Same store sales for TBC's Tire Kingdom and Big O retail tire service centers increased 3.8% during the fourth quarter of 2002. Unit tire sales increased 5.9% for the period compared to an approximate 3% increase for the industry. Net income increased 43% to $8.1 million, or $0.37 per diluted share, versus $5.7 million, or $0.26 per diluted share, in the fourth quarter of 2001.
For the year ended December 31, 2002, net sales increased 10% to $1.1 billion compared to $1.0 billion in 2001. Same-store sales for the Company's retail segment increased 4.8% for the year. Unit tire sales grew 5.4% in 2002 compared to a slight decline for the industry as a whole. Net income in 2002 increased 30% to $27.4 million, or $1.25 per diluted share, versus $21.0 million, or $0.98 per diluted share, in 2001.
"The fourth quarter capped off a record year for TBC highlighted by solid growth in both our retail and wholesale operations, improved asset management, and strong cash flow generation," commented Larry Day, President and Chief Executive Officer. "Within our retail network, we exceeded our new store growth objective by 33%, exclusive of acquisitions, and ended the year with 222 Tire Kingdom locations and 536 franchised Big O stores. Sales of our proprietary branded tires at our retail locations reached record levels in 2002 and underscore the progress we have made in positioning the Company as a fully integrated tire marketer. Our wholesale business performed well in the fourth quarter and throughout the year as it benefited from new product introductions as well as from our success in differentiating our product line within the marketplace."
As part of its asset management initiatives, the Company improved its turnover of both inventory and receivables compared to prior-year levels and significantly reduced its outstanding debt. Cash provided by operations increased to $45 million in 2002, well in excess of the 2001 level.
Mr. Day concluded, "We enter 2003 in excellent financial condition and look forward to capitalizing on the solid operating momentum established in 2002. We intend to leverage the strengths of both our retail and wholesale segments and expect to continue to lead in the retail consolidation occurring in the tire industry. For the current year, we expect to generate top-line growth of approximately 8%, with full-year earnings in the range of $1.38 to $1.40 per diluted share. For the 2003 first quarter, we currently expect net sales of approximately $270 million and earnings of $0.23 to $.24 per diluted share. Also, in 2003, we expect to further our retail presence with the addition of at least 60 new stores, exclusive of acquisitions."
About TBC: 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-operated retail centers under the Tire Kingdom brand and franchised retail stores under the Big O Tires brand. TBC also markets on a wholesale basis to regional tire chains and regional distributors serving independent tire dealers throughout the United States and in Canada and Mexico.
TBC Corporation Safe Harbor Statement
This document contains "forward-looking statements," as that term is defined under the Private Securities Litigation Reform Act of 1995, regarding expectations for future financial performance, which involve uncertainty and risk. It is possible that the Company's future financial performance may differ from expectations due to a variety of factors including, but not limited to: changes in economic and business conditions in the world; increased competitive activity; consolidation within and among both competitors, suppliers and customers; unexpected changes in the replacement tire market; the Company's inability to attract as many new franchisees or open as many distribution outlets as stated in its goals; changes in the Company's ability to identify and acquire additional companies in the replacement tire industry and the failure to achieve synergies or savings anticipated in such acquisitions; fluctuations in tire prices charged by manufacturers, including fluctuations due to changes in raw material and energy prices, changes in interest and foreign exchange rates; the cyclical nature of the automotive industry and the loss of a major customer or program. It is not possible to foresee or identify all such factors. Any forward-looking statements in this report are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Prospective investors are cautioned that any such statements are not a guarantee of future performance and actual results or developments may differ materially from those projected. The Company makes no commitment to update any forward-looking statement included herein, or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement. 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
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Years Ended
December 31, December 31,
(Unaudited)
2002 2001 2002 2001
NET SALES $277,786 $247,724 $1,109,663 $1,009,278
COST OF SALES 197,444 181,562 807,820 744,301
GROSS PROFIT 80,342 66,162 301,843 264,977
EXPENSES:
Distribution expenses 13,816 12,352 53,136 50,694
Selling, administrative
and retail store
expenses 52,040 43,609 198,775 171,099
Interest expense - net 2,230 2,132 8,703 11,188
Other (income)
expense - net (458) (826) (2,411) (2,968)
Total expenses 67,628 57,267 258,203 230,013
INCOME BEFORE
INCOME TAXES 12,714 8,895 43,640 34,964
Provision for
income taxes 4,600 3,235 16,258 13,954
NET INCOME $8,114 $5,660 $27,382 $21,010
EARNINGS PER SHARE -
Basic $0.38 $0.27 $1.29 $1.00
Diluted $0.37 $0.26 $1.25 $0.98
Weighted Average
Common Shares
and Equivalents
Outstanding 21,886 21,695 21,966 21,386
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
December 31, December 31,
2002 2001
CURRENT ASSETS:
Cash and cash equivalents $2,319 $2,298
Accounts and notes receivable, less
allowance for doubtful accounts of
$8,701 in 2002 and $7,737 in 2001:
Related parties 16,507 17,173
Other 103,201 95,848
Total accounts and notes receivable 119,708 113,021
Inventories 170,867 172,431
Refundable federal and state income taxes - 2,349
Deferred income taxes 12,364 11,501
Other current assets 12,515 16,999
Total current assets 317,773 318,599
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 6,068 5,032
Buildings and leasehold improvements 28,795 22,948
Furniture and equipment 64,052 52,591
98,915 80,571
Less accumulated depreciation 42,993 33,650
Total property, plant and equipment 55,922 46,921
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 58,381 51,291
OTHER ASSETS 25,971 30,325
TOTAL ASSETS $473,871 $462,960
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2002 2001
CURRENT LIABILITIES:
Outstanding checks, net $4,209 $5,916
Notes payable to banks 35,000 34,200
Current portion of long-term debt
and capital lease obligations 18,500 16,533
Accounts payable, trade 45,200 53,227
Federal and state income taxes payable 767 -
Other current liabilities 47,481 41,516
Total current liabilities 151,157 151,392
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 79,700 101,000
NONCURRENT LIABILITIES 14,243 11,721
DEFERRED INCOME TAXES 5,651 4,528
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
shares issued and outstanding -
21,292 in 2002 and 21,003 in 2001 2,129 2,100
Additional paid-in capital 16,687 11,783
Other comprehensive income (loss) (1,281) (713)
Retained earnings 205,585 181,149
Total stockholders' equity 223,120 194,319
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $473,871 $462,960
Source: TBC Corporation
CONTACT: Thomas W. Garvey, Executive V.P. & Chief Financial Officer of
TBC Corporation, +1-901-363-8030; Investors, Betsy Brod or Jonathan Schaffer,
both of Brod Group, +1-212-750-5800, for TBC Corporation
Web site: http://www.tbccorp.com/