TBC Reports Record Third Quarter Sales and Earnings
PALM BEACH GARDENS, Fla., Oct. 31, 2005 -- TBC Corporation , one of the nation's leading marketers of automotive replacement tires, today reported sales and earnings for the third quarter ended September 30, 2005 that were in line with the Company's previous guidance.
Net sales in the third quarter increased 9.5% to $521.6 million, compared to $476.5 million in the prior-year period. Same store sales for TBC's retail segment increased 4.9% in the third quarter of 2005. TBC's total unit tire sales increased 1.2% in the third quarter of 2005, while unit shipments by tire manufacturers increased 2.4% based on preliminary reports. Net income increased 41.1% to $15.3 million, or $0.65 per diluted share, in the recent quarter, versus $10.8 million, or $0.47 per diluted share, in the third quarter of 2004. Earnings in the third quarter of 2004 included a negative impact of $0.12 per diluted share due to four major hurricanes.
Larry Day, TBC President and Chief Executive Officer, commented, "Results for the third quarter were in-line with our previously disclosed guidance for the period. Additionally, we are on track to complete the proposed sale of TBC Corporation to Sumitomo Corporation of America by the end of the year as previously announced on September 19, 2005, subject to receipt of stockholder approval and required regulatory clearance."
For the nine months ended September 30, 2005, net sales rose 7.6% to $1,470.3 million compared to $1,366.8 million last year. Total unit tire sales increased 1.2% compared to an industry increase of 3.0%, based on preliminary reports. Retail same-store sales increased 3.9% in the first nine months of 2005. Net income grew 32.3% to $33.4 million, or $1.43 per diluted share, versus $25.3 million, or $1.09 per diluted share, reported a year ago. Reported results for the first nine months of 2004 reflect the $0.12 per diluted share negative impact from the four hurricanes as well as the negative impact of EITF 02-16 of $0.08 per diluted share related to a purchase agreement with a major supplier.
At the end of the third quarter, the Company had a combined total of 1,174 stores in its retail network with 616 Company-operated locations and 558 franchised Big O stores.
The Company has made an initial assessment relative to the financial effects on the business as a result of the recent hurricane activity. There are approximately thirty-three (33) stores that are currently not operational, mostly due to power outages. The Company continues to monitor the situation on a daily basis and does not believe the impact on the fourth quarter financial results will be material.
For the full year of 2005, the Company expects earnings to be in the range of $2.00 to $2.05 per diluted share. Earnings in the fourth quarter of 2005 are forecast to be in the range of $0.57 to $0.62 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
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Restated) (Restated)
2005 2004 2005 2004
NET SALES $521,597 $476,464 $1,470,344 $1,366,795
COST OF SALES 328,884 301,503 920,920 856,587
GROSS PROFIT 192,713 174,961 549,424 510,208
EXPENSES:
Distribution expenses 20,541 17,754 58,705 52,690
Selling, administrative
and retail store
expenses 145,289 137,762 428,398 407,845
Interest expense - net 4,563 4,690 14,546 13,895
Other (income) expense -
net (1,836) (1,904) (4,854) (3,275)
Total expenses 168,557 158,302 496,795 471,155
INCOME BEFORE INCOME TAXES 24,156 16,659 52,629 39,053
Provision for income taxes 8,891 5,839 19,227 13,802
NET INCOME $15,265 $10,820 $33,402 $25,251
EARNINGS PER SHARE -
Basic $0.68 $0.49 $1.49 $1.14
Diluted $0.65 $0.47 $1.43 $1.09
Weighted Average Common
Shares Outstanding -
Basic 22,476 22,254 22,431 22,159
Diluted 23,513 23,237 23,439 23,274
TBC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS
September 30, December 31,
2005 2004
(Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents $1,685 $2,832
Accounts and notes receivable, less
allowance for doubtful accounts of
$10,961 at September 30, 2005 and
$9,307 at December 31, 2004
Related parties 26,217 32,149
Other 140,340 117,812
Total accounts and notes receivable 166,557 149,961
Inventories 300,651 291,745
Refundable federal and state income taxes 2,812 -
Deferred income taxes 27,099 24,790
Other current assets 14,549 19,270
Total current assets 513,353 488,598
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 7,444 10,400
Buildings and leasehold improvements 110,275 110,478
Furniture and equipment 111,100 105,232
228,819 226,110
Less accumulated depreciation 90,129 73,662
Total property, plant and equipment 138,690 152,448
TRADEMARKS, NET 15,824 15,824
GOODWILL, NET 173,528 168,552
OTHER ASSETS 42,069 39,331
TOTAL ASSETS $883,464 $864,753
TBC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2005 2004
(Unaudited) (Audited)
CURRENT LIABILITIES:
Outstanding checks, net $22,601 $30,368
Notes payable to banks 75,204 41,013
Current portion of long-term debt and
capital lease obligations 17,610 41,216
Accounts payable, trade 120,892 128,656
Federal and State Income Taxes Payable - 17,790
Warranty reserves 19,146 19,667
Other current liabilities 85,474 71,278
Total current liabilities 340,927 349,988
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION 155,111 167,349
NONCURRENT LIABILITIES 36,836 34,383
DEFERRED INCOME TAXES 12,514 10,366
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Common stock, $0.10 par value, shares
issued and outstanding - 22,470 at June
30, 2005 and 22,312 at December 31, 2004 2,248 2,231
Additional paid-in capital 30,667 28,882
Deferred compensation (1,028) (789)
Other comprehensive income (loss) (1,126) (1,570)
Retained earnings 307,315 273,913
Total stockholders' equity 338,076 302,667
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $883,464 $864,753
TBC CORPORATION
SUPPLEMENTARY DATA
(In thousands, except percentages and store counts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(Restated) (Restated)
2005 2004 2005 2004
RECONCILIATION OF EBITDA TO
NET INCOME:
EBITDA $35,160 $27,766 $87,570 $72,947
Less - Depreciation and
Amortization 6,441 6,417 20,395 19,999
Interest Expense - net 4,563 4,690 14,546 13,895
Provision for Income
Taxes 8,891 5,839 19,227 13,802
NET INCOME $15,265 $10,820 $33,402 $25,251
SEGMENT INFORMATION:
NET SALES -
Retail $323,502 $308,081 $931,965 $892,452
Wholesale 198,095 168,383 538,379 474,343
Consolidated $521,597 $476,464 $1,470,344 $1,366,795
EBITDA -
Retail $21,160 $18,481 $53,668 $46,389
Wholesale 14,000 9,285 33,902 26,558
Consolidated $35,160 $27,766 $87,570 $72,947
CAPITAL EXPENDITURES $3,894 $3,824 $12,964 $18,116
RETAIL SAME-STORE SALES %
CHANGE 4.9% -1.7% 3.9% 1.7%
RETAIL STORE COUNTS, at end
of period
Company Operated Stores 616 602
Franchised Big O Stores 558 569
Total 1,174 1,171