TBC Reports Record First Quarter Sales and Earnings
PALM BEACH GARDENS, Fla., April 25 -- 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, 2005.
Net sales in the first quarter increased 7.5% to $466.4 million, compared to $433.8 million in the prior-year period. Same store sales for TBC's retail segment increased 2.7% in the first quarter of 2005. TBC's total unit tire sales increased 3.1% in the first quarter of 2005, while unit shipments by tire manufacturers were up 1.7% based on preliminary reports. Net income increased 12.9% to $6.2 million, or $0.27 per diluted share, in the current quarter, versus $5.5 million, or $0.24 per diluted share, in the first quarter of 2004.
Larry Day, TBC President and Chief Executive Officer, commented, "During the quarter, our retail operations benefited from growth in mechanical services and stronger private brand penetration. However, retail performance was impacted by increased spending, primarily for additional advertising, which did not produce the level of sales we had anticipated in this seasonally slower time. We have since adjusted this spending accordingly."
"Our wholesale business performed well in the first quarter and exceeded our expectations. Stronger sales of specialty products sourced in China, as well as robust buying activity driven by anticipated price increases, contributed to wholesale's exceptional results," concluded Mr. Day.
At March 31, 2005, the Company had a combined total of 1,172 stores in its retail network with 609 Company-operated locations and 563 franchised Big O stores. In fiscal 2005, the Company expects to add 20 to 30 stores to its Company-operated retail network and 15 to 20 new Big O franchise locations.
For the full year of 2005, the Company reiterates earnings guidance to be in the range of $2.08 to $2.15 per diluted share. Earnings in the second quarter are forecast to be in the range of $0.49 to $0.53 per diluted share.
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
RESTATED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
RESTATED
2005 2004
NET SALES $466,372 $433,841
COST OF SALES 292,268 271,975
GROSS PROFIT 174,104 161,866
EXPENSES:
Distribution expenses 18,890 17,966
Selling, administrative and
retail store expenses 141,983 131,949
Interest expense - net 4,951 4,102
Other (income) expense - net (1,433) (718)
Total expenses 164,391 153,299
INCOME BEFORE INCOME TAXES 9,713 8,567
Provision for income taxes 3,506 3,068
NET INCOME $6,207 $5,499
EARNINGS PER SHARE -
Basic $0.28 $0.25
Diluted $0.27 $0.24
Weighted Average Common Shares
Outstanding -
Basic 22,419 22,021
Diluted 23,386 23,256
TBC CORPORATION
RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS
March 31, December 31,
2005 2004
(Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents $1,433 $2,832
Accounts and notes receivable,
less allowance for doubtful
accounts of $8,823 at March 31, 2005
and $9,307 at December 31, 2004
Related parties 37,260 32,149
Other 127,818 117,812
Total accounts and notes
receivable 165,078 149,961
Inventories 298,087 291,745
Refundable federal and state
income taxes - -
Deferred income taxes 24,929 24,790
Other current assets 17,014 19,270
Total current assets 506,541 488,598
PROPERTY, PLANT AND EQUIPMENT, AT
COST:
Land and improvements 8,003 10,400
Buildings and leasehold
improvements 108,982 109,959
Furniture and equipment 107,483 105,232
224,468 225,591
Less accumulated depreciation 79,376 73,418
Total property, plant and
equipment 145,092 152,173
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 180,442 180,353
OTHER ASSETS 40,523 39,331
TOTAL ASSETS $888,422 $876,279
TBC CORPORATION
RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2005 2004
(Unaudited) (Audited)
CURRENT LIABILITIES:
Outstanding checks, net $13,440 $30,368
Notes payable to banks 55,408 41,013
Current portion of long-term debt
and capital lease obligations 41,243 41,216
Accounts payable, trade 162,452 128,656
Federal and State Income Taxes Payable 1,773 17,790
Warranty reserves 19,516 19,667
Other current liabilities 73,245 71,278
Total current liabilities 367,077 349,988
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 155,653 167,349
NONCURRENT LIABILITIES 43,016 43,320
DEFERRED INCOME TAXES 10,193 10,613
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Common stock, $0.10 par value,
shares issued and outstanding -
22,445 at March 31, 2005
and 22,312 at December 31, 2004 2,244 2,231
Additional paid-in capital 30,260 28,882
Deferred compensation (1,205) (789)
Other comprehensive income (loss) (1,278) (1,570)
Retained earnings 282,462 276,255
Total stockholders' equity 312,483 305,009
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $888,422 $876,279
TBC CORPORATION
SUPPLEMENTARY DATA
(In thousands, except percentages and store counts)
(Unaudited)
Three Months Ended
March 31,
2005 2004
RECONCILIATION OF EBITDA TO NET INCOME:
EBITDA $21,664 $19,415
Less - Depreciation and
Amortization 7,000 6,746
Interest Expense - net 4,951 4,102
Provision for Income Taxes 3,506 3,068
NET INCOME $6,207 $5,499
SEGMENT INFORMATION:
NET SALES -
Retail $293,160 $283,141
Wholesale $173,212 $150,700
Consolidated $466,372 $433,841
EBITDA -
Retail $13,069 $12,673
Wholesale $8,595 $6,742
Consolidated $21,664 $19,415
CAPITAL EXPENDITURES $3,941 $6,846
RETAIL SAME-STORE SALES % CHANGE 2.7% 6.2%
RETAIL STORE COUNTS, at end of period
Company Operated Stores 609 596
Franchised Big O Stores 563 571
Total 1,172 1,167