TBC Reports Record Fourth Quarter and Year-End Results
- Same Store Sales Increase 4.5% During 4th Quarter -
- Full Year Earnings Increase 18% to $1.47 per Diluted Share -
- NTB Integration Proceeding Ahead of Schedule -
- 45 to 50 Retail Tire Stores Expected to be Added in 2004 -
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, 2003. It marks the eleventh consecutive quarter that the Company has posted a year-over-year gain in earnings per share.
Net sales in the fourth quarter increased 33.5% to $370.7 million, compared to $277.8 million in the prior-year period. Same store sales for TBC's retail segment increased 4.5% in the fourth quarter. TBC's total unit tire sales increased 10.7% in the fourth quarter, compared to a 2.2% increase in unit shipments by tire manufacturers based on preliminary reports. Net income increased 17.1% to $9.5 million, or $0.41 per diluted share, in the current quarter, versus $8.1 million, or $0.37 per diluted share, in the fourth quarter of 2002.
Larry Day, TBC President and Chief Executive Officer, commented, "During the fourth quarter, we completed the acquisition of the 225 National Tire & Battery (NTB) retail stores and in January 2004 began the process of converting and integrating them into our existing retail store network. We are currently ahead of schedule with the conversion effort and are delighted by the progress we have made. We are dedicating significant management resources to ensure the success of this endeavor and are confident that the conversion process will be completed before the middle of the year. NTB's contribution to TBC's 2003 results for the one month after the acquisition was approximately $0.01 per diluted share and helped to partially offset the impact of a fourth quarter charge of $0.02 per diluted share associated with the Company's exit from a joint venture."
For the year ended December 31, 2003, net sales rose 18.8% to $1.3 billion compared to $1.1 billion in the prior year. Retail same-store sales increased 2.1%, and total unit tire sales increased 4.5%, compared to a 1.7% increase in unit shipments by tire manufacturers. Net income in 2003 increased 21.8% to $33.4 million, or $1.47 per diluted share, versus $27.4 million, or $1.25 per diluted share, in 2002.
In addition to the acquired NTB stores, the Company added 24 new locations to its combined retail store networks during the fourth quarter and ended 2003 with 591 Company-operated locations and 576 Big O franchised stores. The total of 1,167 retail locations represented a 54% increase compared to 758 which the Company had at the end of 2002. Included in the Company-operated store system at the end of 2003 were 253 Tire Kingdom stores, 113 Merchant's Tire locations, and 225 NTB stores. In 2004, the Company expects to add approximately 20 stores to its Company-operated retail system and another 25 to 30 locations to its Big O franchised network.
For 2004, the Company reiterates its previous earnings guidance for the full year of $1.80 to $1.90 per diluted share, with first quarter earnings expected in the range of $0.25 to $0.27 per diluted share. The Company expects to continue generating solid cash flow in 2004, which will be used primarily to reduce indebtedness.
Mr. Day concluded, "In the second half of 2004, we expect a solid earnings contribution from the NTB stores upon completion of the integration and conversion process and the introduction of new products and services at all the NTB locations. Many of the duplicate costs that we are now incurring will be eliminated at that point and potential disruptions to Tire Kingdom's existing operations will no longer be a factor. While we are still very early in the store conversion and integration process, we believe that we should be able to meet or possibly exceed our previously estimated 2004 earnings contribution from the NTB stores of $0.15 per diluted share."
TBC Corporation will host a conference call on Thursday, February 12, 2004, at 10:00 a.m. Eastern time / 9:00 a.m. Central time, to discuss fourth quarter and year-end 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 March 12, 2004.
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", "Merchant's Tire & Auto Centers" and "National Tire & Battery" 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
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 successfully integrate acquisitions and achieve anticipated synergies or savings; 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 release 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)
2003 2002 2003 2002
NET SALES $370,742 $277,786 $1,318,531 $1,109,663
COST OF SALES 235,870 197,444 884,400 807,820
GROSS PROFIT 134,872 80,342 434,131 301,843
EXPENSES:
Distribution
expenses 16,765 13,816 61,356 53,136
Selling,
administrative
and retail store
expenses 100,562 52,040 313,109 198,775
Interest expense
- net 3,363 2,230 10,409 8,703
Other (income)
expense - net (259) (458) (2,547) (2,411)
Total expenses 120,431 67,628 382,327 258,203
INCOME BEFORE
INCOME TAXES 14,441 12,714 51,804 43,640
Provision for
income taxes 4,942 4,600 18,445 16,258
NET INCOME $9,499 $8,114 $33,359 $27,382
EARNINGS PER SHARE -
Basic $0.43 $0.38 $1.54 $1.29
Diluted $0.41 $0.37 $1.47 $1.25
Weighted Average
Common Shares
and Equivalents
Outstanding 23,270 21,886 22,743 21,966
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
December 31, December 31,
2003 2002
CURRENT ASSETS:
Cash and cash equivalents $2,645 $2,319
Accounts and notes receivable, less
allowance for doubtful accounts of
$8,260 in 2003 and $8,701 in 2002:
Related parties 12,535 16,507
Other 109,962 103,201
Total accounts and notes receivable 122,497 119,708
Inventories 265,317 170,867
Refundable income taxes 76 -
Deferred income taxes 11,359 12,364
Other current assets 11,136 12,515
Total current assets 413,030 317,773
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 12,100 6,068
Buildings and leasehold improvements 100,379 28,795
Furniture and equipment 93,710 64,052
206,189 98,915
Less accumulated depreciation 56,618 42,993
Total property, plant and equipment 149,571 55,922
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 169,184 58,381
OTHER ASSETS 34,368 25,971
TOTAL ASSETS $781,977 $473,871
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, December 31,
2003 2002
CURRENT LIABILITIES:
Outstanding checks, net $11,411 $4,209
Notes payable to banks 29,100 35,000
Current portion of long-term debt
and capital lease obligations 28,723 18,500
Accounts payable, trade 114,708 45,200
Income taxes payable - 767
Other current liabilities 91,730 47,481
Total current liabilities 275,672 151,157
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 208,620 79,700
NONCURRENT LIABILITIES 26,400 14,243
DEFERRED INCOME TAXES 7,890 5,651
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
shares issued and
outstanding - 21,905 in 2003
and 21,292 in 2002 2,190 2,129
Additional paid-in capital 23,898 16,687
Other comprehensive income (loss) (1,637) (1,281)
Retained earnings 238,944 205,585
Total stockholders' equity 263,395 223,120
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $781,977 $473,871