TBC Reports Record Third Quarter Results
-- Net Income Increases 38% to $10.5 Million, or $0.46 per Diluted Share -- Tenth Consecutive Quarter of Earnings Gains -- Company Increases Full-Year Earnings Guidance
MEMPHIS, Tenn., Oct. 21 -- TBC Corporation , one of the nation's leading marketers of automotive replacement tires, today reported record sales and earnings for the third quarter and nine months ended September 30, 2003. It marks the tenth consecutive quarter that the Company has posted a year-over-year gain in earnings per share.
Net sales in the third quarter increased 22.7% to $362.4 million, compared to $295.5 million in the year-earlier period. Same store sales for TBC's retail segment increased 1.7% in the third quarter. TBC's total unit tire sales increased 12.1% in the third quarter, compared to a 7.5% increase in unit shipments by tire manufacturers based on preliminary reports. Net income increased 38% to $10.5 million, or $0.46 per diluted share, in the current quarter, versus $7.6 million, or $0.35 per diluted share, in the third quarter of 2002.
Larry Day, TBC President and Chief Executive Officer, commented, "Our record third quarter results were driven by the successful execution of our retail strategy as well as the expected rebound in wholesale demand. Within the retail segment, our Big O franchised store network and our Tire Kingdom company-operated retail locations again turned in solid quarters, with both contributing to the positive comparable store sales results. The 112 Merchant's Tire & Auto locations acquired earlier this year also performed well, despite the hurricane-related impact on September sales."
Mr. Day continued, "With the Merchant's stores fully integrated into our Tire Kingdom network, we look forward to completing the acquisition of National Tire & Battery (NTB) and its 226 tire and automotive centers in December. We also plan to continue the internal growth initiatives that helped push our combined store count to 918 locations at the end of September. We added a total of 12 locations to our retail store systems during the third quarter and plan to add 20 to 25 more outlets during the fourth quarter. With the addition of the NTB locations, we should end the year with approximately 590 company-operated locations and 580 franchised Big O stores, which would represent a 54% increase in the Company's combined store base compared to the beginning of the year."
For the nine months ended September 30, 2003, net sales rose 13.9% to $947.8 million compared to $831.9 million in the prior-year period. Retail same-store sales increased 1.1%, and total unit tire sales increased 2.5%, compared to a 1.2% increase in unit shipments by tire manufacturers based on preliminary numbers. Net income increased 24% to $23.9 million, or $1.06 per diluted share, versus $19.3 million, or $0.88 per diluted share, in the first nine months of 2002.
The Company now expects full-year 2003 earnings in the range of $1.43 to $1.47 per diluted share. The Company had previously forecasted annual earnings of $1.40 to $1.45 per diluted share. With the Company's acquisition of NTB expected to close in December, any financial impact to the current year is not anticipated to be material.
Mr. Day concluded, "We are very positive about our near-term prospects and believe that 2004 will be another record year, with strong top- and bottom- line growth for the Company. With the dramatic growth of our retail business in 2003, we see tremendous opportunity to drive future retail sales and increase profitability. On the wholesale side of our business, we had a strong third quarter. While it may level off somewhat in the coming months, the overall trend for the wholesale business should remain improved from the first half of this year."
TBC Corporation will host a conference call on Wednesday, October 22, 2003, at 10:00 a.m. Eastern time / 9:00 a.m. Central time, to discuss third quarter results. A live Webcast of the conference call will be available by visiting the Company's Web site, www.tbccorp.com. The Webcast will be archived at TBC's Web site until November 22, 2003.
About TBC: TBC Corporation is one of the nation's largest marketers of automotive replacement tires through a multi-channel strategy. The Company's retail operations include company-operated retail centers under the "Tire Kingdom" and "Merchant's Tire & Auto Centers" brands and franchised retail tire stores under the "Big O Tires" brand. TBC markets on a wholesale basis to regional tire chains and distributors serving independent tire dealers throughout the United States and in Canada and Mexico. The Company's proprietary brands of tires have a longstanding reputation for quality, safety and value.
TBC Corporation Safe Harbor Statement
TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
NET SALES $362,401 $295,455 $947,789 $831,877
COST OF SALES 248,195 216,106 648,530 610,376
GROSS PROFIT 114,206 79,349 299,259 221,501
EXPENSES:
Distribution
expenses 15,811 13,881 44,591 39,320
Selling,
administrative
and retail store
expenses 79,883 51,960 212,547 146,735
Interest expense
- net 2,786 2,139 7,046 6,473
Other (income)
expense - net (869) (912) (2,288) (1,953)
Total expenses 97,611 67,068 261,896 190,575
INCOME BEFORE
INCOME TAXES 16,595 12,281 37,363 30,926
Provision for
income taxes 6,064 4,635 13,503 11,658
NET INCOME $ 10,531 $7,646 $23,860 $ 19,268
EARNINGS PER SHARE -
Basic $0.48 $0.36 $1.11 $0.91
Diluted $0.46 $0.35 $1.06 $0.88
Weighted Average
Common Shares and
Equivalents
Outstanding 22,970 21,925 22,568 21,993
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
September 30, December 31,
2003 2002
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 4,552 $ 2,319
Accounts and notes receivable, less
allowance for doubtful accounts of
$7,920 at September 30, 2003
and $8,701 at December 31, 2002:
Related parties 15,640 16,507
Other 124,534 103,201
Total accounts and notes receivable 140,174 119,708
Inventories 233,038 170,867
Deferred income taxes 11,749 12,364
Other current assets 17,640 12,515
Total current assets 407,153 317,773
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 9,881 6,068
Buildings and leasehold improvements 41,632 28,795
Furniture and equipment 81,220 64,052
132,733 98,915
Less accumulated depreciation 54,845 42,993
Total property, plant and equipment 77,888 55,922
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 110,481 58,381
OTHER ASSETS 29,478 25,971
TOTAL ASSETS $640,824 $473,871
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2003 2002
(Unaudited)
CURRENT LIABILITIES:
Outstanding checks, net $ 9,956 $ 4,209
Notes payable to banks 9,900 35,000
Current portion of long-term debt
and capital lease obligations 20,599 18,500
Accounts payable, trade 106,597 45,200
Federal and state income taxes payable 1,616 767
Other current liabilities 71,998 47,481
Total current liabilities 220,666 151,157
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 143,438 79,700
NONCURRENT LIABILITIES 15,395 14,243
DEFERRED INCOME TAXES 8,283 5,651
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value, shares issued
and outstanding - 21,808 at September 30, 2003
and 21,292 at December 31, 2002 2,181 2,129
Additional paid-in capital 22,505 16,687
Other comprehensive income (loss) (1,089) (1,281)
Retained earnings 229,445 205,585
Total stockholders' equity 253,042 223,120
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $640,824 $473,871