Treadco, Inc. Announces 1998 Q3 Operating Results
20 October 1998
Treadco, Inc. Announces 1998 Third Quarter Operating Results
FORT SMITH, Ark., Oct. 20 -- Treadco, Inc.
announced today net income for the 1998 third quarter of $655,000, or
$0.13 per common share (basic and diluted), on sales of $52.1 million.
Treadco had a 97.3% operating ratio for the 1998 third quarter compared to
98.0% for the 1997 third quarter.
"During the quarter, Treadco continued its double-digit sales growth while
improving operating margins over 1997," said John R. Meyers, President and
Chief Executive Officer. "For the year, sales have increased 13%, but more
importantly operating income improved by 2.7% of sales or $3.6 million."
"These positive results were achieved despite some unfavorable business
conditions in the quarter," said Meyers. "There were some definite signals
from our customers that they were taking a cautious approach to tire
purchasing. In addition, in most of our operating territory, we experienced
near-record heat. As a result, labor productivity was less than normal.
Also, though demand for new and retread tires remains firm, pricing is very
competitive."
For the 1998 third quarter, same store sales increased 9.3% and new store
sales accounted for 2.2% of the increase from the 1997 third quarter. Same
store retread units sold increased 4.4% and new tire units sold increased
12.9% from the 1997 third quarter. Same store sales include locations that
have been in operation for the entire periods compared.
The foregoing release contains forward-looking statements that are based
on current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from current
expectations due to a number of factors, including general economic
conditions; competitive initiatives and pricing pressures; availability and
cost of capital; shifts in market demand; weather conditions; government
regulations; the performance and needs of industries served by Treadco; actual
future costs of operating expenses such as the price of oil; self-insurance
claims and employee wages and benefits; and the timing and amount of capital
expenditures.
The following table provides a breakdown of sales by category:
Three Months Ended
September 30
%
1998 1997 Increase
SALES
Retread $19,714,287 $18,536,942 6.4%
New tires 26,942,107 23,817,732 13.1%
Service 5,480,157 4,414,364 24.1%
$52,136,551 $46,769,038 11.5%
Nine Months Ended
September 30
%
1998 1997 Increase
SALES
Retread $53,644,963 $49,029,943 9.4%
New tires 68,899,449 60,881,139 13.2%
Service 14,190,682 11,205,317 26.6%
$136,735,094 $121,116,399 12.9%
TREADCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
SALES
Non-affiliates $51,520,937 $46,151,726 $135,109,267 $119,276,915
Affiliates 615,614 617,312 1,625,827 1,839,484
52,136,551 46,769,038 136,735,094 121,116,399
COSTS AND EXPENSES
Materials and
cost of new
tires 34,536,670 31,368,557 89,736,037 82,423,691
Salaries and
wages 8,421,010 7,313,915 23,272,610 20,140,152
Depreciation and
amortization 1,638,399 1,447,887 4,613,297 4,146,063
Administrative
and general 6,133,943 5,700,950 16,782,116 15,668,126
50,730,022 45,831,309 134,404,060 122,378,032
OPERATING INCOME
(LOSS) 1,406,529 937,729 2,331,034 (1,261,633)
OTHER INCOME
Interest income 8,254 12,179 30,142 31,406
Gain on asset
sales 61,298 243,148 430,096 245,754
Other 79,555 31,246 130,694 156,907
149,107 286,573 590,932 434,067
OTHER EXPENSES
Interest 298,648 328,430 839,519 974,022
Amortization of
goodwill 115,498 115,498 346,492 346,492
Amortization of
noncompete
agreements 43,542 65,312 174,167 195,937
457,688 509,240 1,360,178 1,516,451
INCOME (LOSS) BEFORE
INCOME TAXES 1,097,948 715,062 1,561,788 (2,344,017)
FEDERAL AND STATE INCOME
TAXES (CREDIT)
Current 464,475 413,426 1,029,250 (1,087,079)
Deferred (21,894) (119,179) (361,231) 264,719
442,581 294,247 668,019 (822,360)
NET INCOME (LOSS) $655,367 $420,815 $893,769 $(1,521,657)
BASIC AND DILUTED INCOME (LOSS)
PER COMMON SHARE $0.13 $0.08 $0.18 $(0.30)
CASH DIVIDENDS PAID
PER COMMON SHARE $0.00 $0.04 $0.00 $0.12
See notes to consolidated financial statements
TREADCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30 December 31
1998 1997
ASSETS
Current assets $ 63,548,802 $ 55,644,791
Property, plant and equipment (net) 32,965,546 31,329,068
Deferred income taxes 83,528 ---
Other assets 1,240,588 790,170
Goodwill (less amortization) 12,347,662 12,694,153
$ 110,186,126 $ 100,458,182
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 35,399,301 $ 28,372,288
Long-term debt (less current portion) 14,958,063 12,883,763
Other liabilities 100,425 89,860
Deferred income taxes --- 277,703
Stockholders' equity 59,728,337 58,834,568
$ 110,186,126 $ 100,458,182
TREADCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended
September 30
1998 1997
OPERATING ACTIVITIES:
Net cash provided by operating activities $ 4,299,363 $ 8,483,171
INVESTING ACTIVITIES:
Purchases of property, plant and equipment
less capitalized leases (7,517,184) (1,677,354)
Proceeds from asset sales 579,250 799,876
Acquisition (1,275,759) ---
Net cash used in investing activities (8,213,693) (877,478)
FINANCING ACTIVITIES:
Borrowings under revolving credit facility 44,075,000 23,235,000
Payments under revolving credit facilities (38,975,000) (29,135,000)
Payments on long-term debt (1,705,622) (1,530,497)
Dividends paid --- (608,671)
Net increase in cash overdrafts 519,952 417,671
Net cash provided (used) in
financing activities 3,914,330 (7,621,497)
NET DECREASE IN CASH AND CASH EQUIVALENTS --- (15,804)
Cash and cash equivalents at
beginning of period --- 15,804
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ --- $ ---