Midas' Second Quarter Net Income Up
16 July 1998
Midas' Second Quarter Net Income Up 19% Over Pro Forma 1997 Results; Diluted EPS Up 18% to $0.65; Company Declares Dividend of $0.02 Per Share
CHICAGO--July 15, 1998--Midas, Inc., today announced its results for the second quarter ended June 27, 1998. Net income for the quarter was $11.2 million, a 19% increase from the pro forma net income of $9.4 million reported last year. Diluted earnings per share were $.65 for the quarter, up from $.55 on a pro forma basis last year.
Operating income was $21.7 for the second quarter, within 1 percent of the $22.0 million reported last year. Sales and revenues for the second quarter were $141.8 million, down 12% from $160.3 million a year earlier.
The second quarter sales decline was primarily in three areas: 70% from closing 12 stores and franchising 70 company-operated stores; 13.5% from foreign currency exchange rates, and the remainder from lower wholesale sales, primarily attributable to lower selling prices on product to franchisee-partners.
"During the second quarter, we made substantial improvement in our expense control, reducing our operating expenses by $12.1 million or 19%, which improved our operating margin by 160 basis points to 15.3%," said Wendel H. Province, Midas' chairman and chief executive officer.
"The company's focus on improving cash flow enabled us to reduce long-term debt by $45.0 million during the second quarter to $172.0 million," he said.
"I am confident that we will see improved results in the second half and into 1999 due to our continuing focus on operating expenses and cash flow, coupled with improvements in our marketing efforts, more competitive product pricing and the introduction of Midas-brand batteries," Province said.
Midas' net income for the first half was $15.4 million or $.89 per diluted share, an increase of 17% from $13.2 million or $.78 per diluted share on a pro forma basis in 1997.
Operating income for the first half of 1998 was $33.4 million, down 2% from $34.0 million last year. First half sales and revenues this year were $273.0 million, compared to $302.3 million in the first half of 1997.
Midas' board of directors has declared a quarterly dividend of $0.02 per share, payable Oct. 1, 1998, to shareholders of record on Sept. 15.
Midas is one of the world's largest providers of automotive service, including exhaust, brakes, steering and suspension, as well as maintenance services. There are more than 2,700 Midas locations in 19 countries, including 1,900 in the United States.
NOTE: This news release contains certain forward-looking statements that are based on management's beliefs as well as assumptions made by and information currently available to management. Such statements are subject to risks and uncertainties, both known and unknown, that could cause actual results, performance or achievement to vary materially from those expressed or implied in the forward-looking statements. Readers are cautioned not to put undue reliance on such forward-looking statements. The company may experience significant fluctuations in future results, performance or achievements due to a number of economic, competitive, governmental, technological or other factors. Additional information with respect to these and other factors which could materially affect the company and its operations are included in the company's filings with the Securities and Exchange Commission, including the company's 1997 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except for earnings per share)
For the Quarter For the Six Months
Ended June Ended June
1998 1997 1998 1997
Sales and revenues $ 141.8 $ 160.3 $ 273.0 $ 302.3
Cost of goods sold 67.9 74.0 130.1 140.6
Selling, general, and
administrative
expenses 52.2 64.3 109.5 127.7
--------- ---------- --------- ---------
Operating income 21.7 22.0 33.4 34.0
--------- ---------- --------- ---------
Whitman charges
- (4.5) (1.1) (9.0)
--------- ---------- --------- ---------
Interest expense:
Whitman - (1.8) (0.5) (3.9)
Other (3.4) (0.6) (6.7) (1.1)
---------- ---------- --------- ---------
Total interest
expense (3.4) (2.4) (7.2) (5.0)
---------- ---------- --------- ---------
Other income
(expense), net 0.4 0.2 0.8 0.5
---------- ---------- --------- ---------
Income
before taxes 18.7 15.3 25.9 20.5
Income tax provisions 7.5 6.7 10.5 8.8
---------- ---------- --------- ---------
Net income
(as reported) $ 11.2 8.6 $ 15.4 11.7
========= ----------- ========= ---------
Pro forma adjustment
to net income .8(1) 1.5(1)
---------- ----------
Pro forma net income $ 9.4(1) $ 13.2(1)
========== ==========
EARNINGS PER SHARE:
Basic $ .66 $ .91
========= ========
Diluted $ .65 $ .89
========= ========
Pro forma basic
and diluted $ .55(1) $ .78(1)
========= ==========
AVERAGE NUMBER OF SHARES:
Common shares
outstanding 16.9 16.9
Equivalent shares on
outstanding stock
options .3 .3
Shares applicable to
diluted earnings 17.2 17.2
Pro forma common
shares outstanding 17.0(1) 17.0(1)
(1)Midas, Inc., was spun off from Whitman Corporation on Jan. 30, 1998. Pro forma adjustments have been made to 1997 results to give effect to increases and decreases in costs that would have been incurred by Midas as an independent, publicly held company, rather than a subsidiary of Whitman. The pro forma adjustments, (a) cover incremental interest and administrative costs of an independent company, (b) eliminate interest and corporate charges paid to Whitman; (c) cover incremental income tax expense. The number of shares was assumed to be the number of shares distributed in the spin-off from Whitman.
MIDAS, INC.
SUMMARY OF SALES AND OPERATING INCOME
FOR THE QUARTER AND SIX MONTHS ENDED JUNE, 1998
COMPARED WITH THE SAME PERIOD OF 1997
(In millions)
(Unaudited)
For the Quarter For the Six Months
Ended June Ended June
--------------- ------------------
1998 1997 1998 1997
---- ---- ---- ----
Sales and revenues:
U.S. Operations:
Franchise
activities $ 85.7 $ 88.3 $ 160.3 $ 168.4
Company-operated
stores 12.3 24.2 30.0 45.0
---- ---- ---- ----
Total U.S. 98.0 112.5 190.3 213.4
---- ----- ----- -----
Non-U.S. Operations
Europe 27.7 29.0 52.9 54.8
Canada 14.3 16.3 26.1 28.8
Other 1.8 2.5 3.7 5.3
---- ---- ---- ----
Total Non-U.S 43.8 47.8 82.7 88.9
---- ---- ---- ----
$ 141.8 $ 160.3 $ 273.0 $ 302.3
Total ==== ===== ===== =====
For the Quarter For the Six Months
Ended June Ended June
__________ __________
1998 1997 1998 1997
Operating Income:
U.S. Operations:
Franchise
activities $ 21.6 $ 19.9 $ 36.7 $ 36.1
Company-operated
stores 0.0 0.2 (0.9) (1.1)
------- -------- ------ -------
Total U.S 21.6 20.1 35.8 35.0
-------- -------- ------ --------
Non-U.S. Operations
Europe
0.8 1.9 0.2 1.0
Canada
1.1 1.5 1.0 1.2
Other
(0.1) (0.1) (0.1) (0.4)
---- ---- ----- ----
Total Non-U.S 1.8 3.3 1.1 1.8
--- --- --- ---
Total segment
operating
income 23.4 23.4 36.9 36.8
Corporate
administration
expenses (1.7) (1.4) (3.5) (2.8)
---- ---- ---- ----
Total $ 21.7 $ 22.0 $ 33.4 $ 34.0
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