Midas' First Quarter Net Income Up 55%
15 April 1999
Midas' First Quarter Net Income Up 55%; Earnings Per Share Up to $.37 From $.24 in 1998
CHICAGO--April 15, 1999--Midas, Inc., today announced its results for the first quarter ended March 28, 1999. Net income for the quarter was $6.5 million, up 55 percent from the $4.2 million reported in 1998. Diluted earnings per share were $.37, an increase of 54 percent from $.24 last year.On a year-over-year basis, operating income for the quarter increased 6.9 percent to $12.5 million, up from $11.7 million in 1998.
"The strategic initiatives undertaken during the past year, which included the divestiture of company-operated shops, the sale of European operations, reduction of on-going operating expenses and the pay-down of long-term debt, combined to produce the improved results," said Wendel H. Province, Midas' chairman and chief executive officer.
Sales and revenues for the quarter in 1999 were $84.7 million, a decrease of 35 percent from $131.2 million a year ago.
Province explained that more than 87 percent of the sales decline was the result of the company's divestiture of company-operated shops in North America and the sale of Midas Europe. The change in the structure of income from Midas Europe from five percent to 2.5 percent royalties reduced revenues by $1.5 million. The remainder of the decrease was due to the combination of 13 weeks of operations in North America in the current quarter compared to 14 weeks in 1998 and the elimination of unprofitable wholesale distribution programs.
"Overall, we are pleased with the company's progress to date in improving operating margins and investment returns and in reducing the seasonality of quarterly earnings. However, there remains work to be done," Province said. "Over the next year, management must focus on refining marketing programs, restructuring of the wholesale parts distribution system and enhancing the company's management information systems."
During the quarter, the company repurchased 532,000 of its common shares as part of the previously announced share repurchase program. There currently are 17.5 million diluted shares outstanding.
Midas is one of the world's largest providers of automotive service, including exhaust, brakes, steering and suspension services, as well as batteries and maintenance services. There are more than 2,700 franchised and licensed Midas locations in 20 countries, including more than 2,100 in North America.
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 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 1998 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(In millions, except for earnings and dividends per share)
For the three months
ended March
-----------
1999 1998
---- ----
Sales and revenues (1) $ 84.7 $ 131.2
Cost of sales and revenues 44.9 62.2
Selling, general, and administrative
expenses 27.3 57.3
---------- ----------
Operating income 12.5 11.7
---------- ----------
Whitman charges - (1.1)
----------- ----------
Interest expense:
Whitman - (0.5)
Other (2.2) (3.3)
----------- ----------
Total interest expense (2.2) (3.8)
----------- ----------
Other income (expense), net 0.5 0.4
----------- ----------
Income before taxes 10.8 7.2
Income taxes 4.3 3.0
----------- ----------
Net income $ 6.5 $ 4.2
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Earnings per share:
Basic $ .39 $ .25
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Diluted $ .37 $ .24
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Dividends per common share $ .02
============
Average number of shares
Common shares outstanding 16.9 17.0
Equivalent shares on outstanding
stock options .6 .2
------------ -----------
Shares applicable to
diluted earnings 17.5 17.2
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(1) Components of Sales and Revenues
1999 Percent 1998 Percent
-------- -------- -------- --------
Replacement parts sales $ 53.6 63.3% $ 60.6 46.2%
Company-operated shop
retail sales 4.8 5.7 43.4 33.1
Royalties and license fees 15.7 18.5 16.8 12.8
Real estate rental revenues 9.9 11.7 8.9 6.8
Other 0.7 0.8 1.5 1.1
-------- -------- -------- --------
Sales and revenues $ 84.7 100.0% $ 131.2 100.0%
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MIDAS, INC.
SUMMARY OF SALES AND REVENUES
AND OPERATING INCOME
FOR THE QUARTERS ENDED MARCH 1999 AND 1998 (Unaudited)
(In millions)
Sales and revenues Operating income
------------------ ------------------
1999 1998 1999 1998
---- ---- ---- ----
North American Operations:
United States
Franchise activities $ 69.7 $ 74.6 $ 13.7 $ 15.1
Company-operated shops 3.3 17.7 (0.4) (0.9)
-------- -------- -------- --------
Total United States 73.0 92.3 13.3 14.2
-------- -------- -------- --------
Canada
Franchise activities 8.1 8.7 (0.1) -
Company-operated
shops 0.6 3.1 (0.2) (0.1)
-------- -------- -------- --------
Total Canada 8.7 11.8 (0.3) (0.1)
-------- -------- -------- --------
Total North American
Operations 81.7 104.1 13.0 14.1
-------- -------- -------- --------
International Operations:
Europe 1.4 25.2 1.4 (0.6)
Other 1.6 1.9 - -
-------- -------- -------- --------
Total International
Operations 3.0 27.1 1.4 (0.6)
-------- -------- -------- --------
Total before corporate
and other expenses $ 84.7 $ 131.2 14.4 13.5
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Midas, Inc. corporate
administrative expenses (1.9) (1.8)
-------- --------
Total operating income 12.5 11.7
Whitman charges -- (1.1)
-------- --------
Interest expense (2.2) (3.8)
-------- --------
Other income (expense), net 0.5 0.4
Income before taxes $ 10.8 $ 7.2
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