TBC Reports Record First Quarter Sales and Earnings
- Integration of All 225 NTB Stores Completed in Early April -
- Same Store Sales Increase 6.2% -
- Company Favorably Adjusts Full-Year EPS Outlook -
MEMPHIS, Tenn., April 26 -- TBC Corporation , one of the nation's leading marketers of automotive replacement tires, today reported record sales and earnings for the first quarter ended March 31, 2004. It marks the twelfth consecutive quarter that the Company has posted a year-over-year gain in earnings per share.
Net sales in the first quarter increased 69.1% to $433.8 million, compared to $256.5 million in the prior-year period. Same store sales for TBC's retail segment increased 6.2% in the first quarter. TBC's total unit tire sales increased 32% in the first quarter, while unit shipments by tire manufacturers were up 7.7% based on preliminary reports. Net income increased 9.3% to $6.0 million, or $0.26 per diluted share, in the current quarter, versus $5.5 million, or $0.25 per diluted share, in the first quarter of 2003.
Larry Day, TBC President and Chief Executive Officer, commented, "During the quarter, we carried out an aggressive conversion and integration plan for the 225 National Tire & Battery (NTB) stores acquired from Sears late last year. I am delighted to announce that our Tire Kingdom management team completed the entire conversion effort on April 7, 2004, more than two and a half months ahead of our announced June 30th goal. We decided to step up our integration efforts so we could more quickly begin to realize the benefits of selling our private brand tires and offering a greater number of mechanical services at these locations. Although we incurred greater costs during the first quarter as a result of this strategy, we believe those costs should be more than offset during the second quarter by improved operating results in the converted stores.
"We were pleased with the results throughout our company-operated retail store system, which incurred only minimal business disruptions despite the fact that many of our most experienced store personnel were involved in the NTB conversion effort. Operating results in these company-operated stores were impacted by a new seasonality pattern brought on by the acquisitions of the Merchant's and NTB retail stores, since many of the acquired stores operate in geographic areas that have different sales trends than we have experienced in the past. Our Big O franchised retail network also continued to perform well, spurred by some new sales initiatives that began during the quarter. Finally, our wholesale business was strong in the quarter as we benefited from successful new product launches and improved overall demand for replacement tires. With strong trends in both our retail and wholesale segments, we remain confident in the outlook for the full year and have raised the low end of our earnings guidance range," concluded Mr. Day.
For the full year of 2004, the Company now expects earnings to be in the range of $1.84 to $1.90 per diluted share. Earnings in the second quarter are forecast to be in the range of $0.40 to $0.43 per diluted share.
TBC Corporation will host a conference call on Tuesday, April 27, 2004, at 10:00 a.m. Eastern time / 9:00 a.m. Central time, to discuss first 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 May 27, 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 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)
(Unaudited)
Three Months Ended
March 31,
2004 2003
NET SALES $433,841 $256,545
COST OF SALES 271,913 180,150
GROSS PROFIT 161,928 76,395
EXPENSES:
Distribution expenses 17,966 13,419
Selling, administrative
and retail store expenses 131,233 53,125
Interest expense - net 4,102 1,812
Other (income) expense - net (718) (512)
Total expenses 152,583 67,844
INCOME BEFORE INCOME TAXES 9,345 8,551
Provision for income taxes 3,368 3,081
NET INCOME $5,977 $5,470
EARNINGS PER SHARE -
Basic $0.27 $0.26
Diluted $0.26 $0.25
Weighted Average Common Shares Outstanding -
Basic 22,021 21,378
Diluted 23,256 22,130
TBC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
March 31, December 31,
2004 2003
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $5,705 $2,645
Accounts and notes receivable, less allowance
for doubtful accounts of $8,944 at
March 31, 2004 and $8,260 at
December 31, 2003:
Related parties 19,971 12,535
Other 133,022 109,962
Total accounts and notes receivable 152,993 122,497
Inventories 282,617 265,317
Refundable federal and state income taxes 1,271 76
Deferred income taxes 10,476 11,359
Other current assets 11,962 11,136
Total current assets 465,024 413,030
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 12,100 12,100
Buildings and leasehold improvements 99,407 100,379
Furniture and equipment 102,857 93,710
214,364 206,189
Less accumulated depreciation 63,265 56,618
Total property, plant and equipment 151,099 149,571
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 168,206 169,184
OTHER ASSETS 35,498 34,368
TOTAL ASSETS $835,651 $781,977
TBC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2004 2003
(Unaudited)
CURRENT LIABILITIES:
Outstanding checks, net $11,712 $11,411
Notes payable to banks 44,400 29,100
Current portion of long-term debt
and capital lease obligations 35,127 28,723
Accounts payable, trade 158,150 114,708
Other current liabilities 82,526 91,730
Total current liabilities 331,915 275,672
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 197,121 208,620
NONCURRENT LIABILITIES 26,177 26,400
DEFERRED INCOME TAXES 7,811 7,890
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value, shares issued
and outstanding - 22,130 at March 31, 2004
and 21,905 at December 31, 2003 2,213 2,190
Additional paid-in capital 26,809 23,898
Other comprehensive income (loss) (1,316) (1,637)
Retained earnings 244,921 238,944
Total stockholders' equity 272,627 263,395
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $835,651 $781,977
TBC CORPORATION
SUPPLEMENTARY DATA
(In thousands, except for percentages and store counts)
(Unaudited)
Three Months Ended
March 31,
2004 2003
RECONCILIATION OF EBITDA TO NET INCOME:
EBITDA $20,193 $13,911
Less - Depreciation and Amortization 6,746 3,548
Interest Expense - net 4,102 1,812
Provision for Income Taxes 3,368 3,081
NET INCOME $5,977 $5,470
SEGMENT INFORMATION:
NET SALES -
Retail $283,141 $126,502
Wholesale 150,700 130,043
Total $433,841 $256,545
EBITDA -
Retail $12,673 $7,733
Wholesale 7,520 6,178
Total $20,193 $13,911
CAPITAL EXPENDITURES $6,846 $2,434
RETAIL SAME-STORE SALES % CHANGE +6.2% +1.6%
RETAIL STORE COUNTS, at end of period:
Company Operated Stores 596 228
Franchised Big O Stores 571 547
Total 1,167 775