Midas' Second Quarter Net Income Up 9.5%
15 July 1999
Midas' Second Quarter Net Income Up 9.5%; Earnings Per Share Up to $.72 From $.65 in 1998
CHICAGO--July 15, 1999--Midas, Inc., today announced its results for the second quarter ended June 26, 1999. Net income for the quarter was $12.3 million, up 9.5 percent from the $11.2 million reported in 1998. Diluted earnings per share were $.72, an increase of 10.8 percent from $.65 last year.On a year-over-year basis, operating income for the quarter was $21.2 million, down 2.5 percent from $21.7 million in 1998.
"Although we met our objectives for net income and earnings per share for the quarter, a larger than expected decline in the exhaust replacement market during the quarter resulted in lower than projected retail and wholesale sales and operating income," said Wendel H. Province, Midas' chairman and chief executive officer.
Sales and revenues for the quarter in 1999 were $98.5 million, a decrease of 30.5 percent from $141.8 million a year ago.
Province said that more than 91 percent of the sales decline for the quarter 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 3 percent. The remainder of the decrease was due to the combination of lower exhaust sales, product price reductions to franchisees and the elimination of unprofitable wholesale distribution programs.
"The accelerated decline in the exhaust market reinforces our strategy to grow our business by enhancing our brake, steering and suspension programs; by adding new services, such as batteries and maintenance, and by continuing to improve wholesale product sales," Province said.
"To respond to the decline in the exhaust market, we have reduced production and employment at our manufacturing plants to meet anticipated levels of demand and we are continuing to reduce overhead expenses," he said. "We also are exploring several long-term alternatives to reduce the company's vulnerability to future sharp swings in demand for exhaust products."
For the first half, net income was $18.8 million, up 22 percent from $15.4 million a year ago. Diluted earnings per share for the half were $1.09, an increase of 22.4 percent from $.89 in 1998. Sales for the first half of 1999 were $183.2 million, down 32.9 percent from $273.0 million in 1998.
During the second quarter, the company repurchased 693,000 of its common shares as part of the previously announced share repurchase program. Midas has repurchased a total of 1.225 million of its common shares in 1999.
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 quarter For the six months
ended June ended June
---------- ----------
1999 1998 1999 1998
---- ---- ---- ----
(13 Weeks) (13 Weeks) (26 Weeks) (27 Weeks)
Sales and revenues $ 98.5 $ 141.8 $ 183.2 $ 273.0
Cost of sales and revenues 53.0 67.9 97.9 130.1
Selling, general, and
administrative expenses 24.3 52.2 51.6 109.5
--------- -------- -------- --------
Operating income 21.2 21.7 33.7 33.4
--------- -------- -------- --------
Whitman charges - - - ( 1.1)
--------- -------- -------- --------
Interest expense:
Whitman - - - ( 0.5)
Other ( 2.1) ( 3.4) ( 4.3) ( 6.7)
--------- -------- -------- --------
Total interest expense ( 2.1) ( 3.4) ( 4.3) ( 7.2)
--------- -------- -------- --------
Other income (expense), net 1.4 0.4 1.9 0.8
--------- -------- -------- --------
Income before taxes 20.5 18.7 31.3 25.9
Income taxes 8.2 7.5 12.5 10.5
--------- -------- -------- --------
Net income $ 12.3 $ 11.2 $ 18.8 $ 15.4
========= ========= ========= =========
Earnings per share:
Basic $ .74 $ .66 $ 1.12 $ .91
========= ========= ========= =========
Diluted $ .72 $ .65 $ 1.09 $ .89
========= ========= ========= =========
Dividends per common share $ .02 $ .02 $ .04 $ .02
========= ========= ========= =========
Average number of shares
Common shares outstanding 16.6 16.9 16.7 16.9
Equivalent shares on
outstanding stock options .5 .3 .6 .3
--------- --------- --------- ---------
Shares applicable to
diluted earnings 17.1 17.2 17.3 17.2
========= ========= ========= =========
MIDAS, INC.
RESULTS OF OPERATIONS BY SEGMENT
SALES AND REVENUES (Unaudited)
(In millions)
For the quarter For the six months
ended June ended June
---------- ----------
1999 1998 1999 1998
---- ---- ---- ----
North American Operations:
U.S. Operations:
Franchise activities $ 81.5 $ 85.7 $ 151.2 $ 160.3
Company-operated shops 2.1 12.3 5.4 30.0
-------- -------- -------- --------
Total U.S. 83.6 98.0 156.6 190.3
-------- -------- -------- --------
Canadian Operations:
Franchise activities 11.4 10.9 19.5 19.6
Company-operated shops - 3.4 0.6 6.5
-------- -------- --------- --------
Total Canada 11.4 14.3 20.1 26.1
-------- -------- --------- --------
Total North American
Operations 95.0 112.3 176.7 216.4
-------- -------- --------- --------
International Operations:
Europe 2.0 27.7 3.4 52.9
Other 1.5 1.8 3.1 3.7
-------- -------- --------- --------
Total International
Operations 3.5 29.5 6.5 56.6
-------- -------- --------- --------
Total $ 98.5 $ 141.8 $ 183.2 $ 273.0
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OPERATING INCOME (Unaudited)
(In millions)
For the quarter For the six months
ended June ended June
---------- ----------
1999 1998 1999 1998
---- ---- ---- ----
North American Operations:
U.S. Operations:
Franchise activities $ 19.4 $ 21.6 $ 33.1 $ 36.7
Company-operated shops 0.2 - ( 0.2) ( 0.9)
-------- -------- --------- --------
Total U.S. 19.6 21.6 32.9 35.8
-------- -------- --------- --------
Canadian Operations:
Franchise activities 1.0 0.9 0.9 0.9
Company-operated shops - 0.2 (0.2) 0.1
-------- -------- --------- --------
Total Canada.......... 1.0 1.1 0.7 1.0
-------- -------- --------- --------
Total North
American Operations 20.6 22.7 33.6 36.8
-------- -------- --------- --------
International Operations:
Europe 2.0 0.8 3.4 0.2
Other - ( 0.1) - ( 0.1)
-------- -------- --------- --------
Total International
Operations 2.0 0.7 3.4 0.1
-------- -------- --------- --------
Total before corporate
administrative expenses 22.6 23.4 37.0 36.9
Corporate administrative
expenses ( 1.4) ( 1.7) ( 3.3) ( 3.5)
-------- -------- --------- --------
Total operating income $ 21.2 $ 21.7 $ 33.7 $ 33.4
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MIDAS, INC.
RESULTS OF OPERATIONS
1999 Second Quarter Compared with 1998 Second Quarter (Unaudited)
The following is a summary of the Company's sales and revenues
for the three months ended June 1999 and June 1998, respectively:
($ Millions)
Percent Percent
1999 To Total 1998 To Total
---- -------- ---- --------
Replacement parts sales $ 66.5 67.5% $ 70.3 49.6%
Company-operated shop retail sales 3.0 3.0 40.3 28.4
Royalties and license fees 18.3 18.6 19.4 13.7
Real estate rental revenues 10.0 10.2 9.4 6.6
Other 0.7 0.7 2.4 1.7
------- ------- ------- ------
Sales and revenues $ 98.5 100.0% $ 141.8 100.0%
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Six months ended June 1999 Compared with the Six months ended
June 1998 (Unaudited)
The following is a summary of the Company's sales and revenues
for the six months ended June 1999 and June 1998, respectively:
($ Millions)
Percent Percent
1999 To Total 1998 To Total
---- -------- ---- --------
Replacement parts sales $ 120.1 65.6% $ 130.9 47.9%
Company-operated shop retail sales 7.8 4.2 83.7 30.7
Royalties and license fees 34.0 18.6 36.2 13.3
Real estate rental revenues 19.9 10.9 18.3 6.7
Other 1.4 0.7 3.9 1.4
------- ------- ------- -------
Sales and revenues $ 183.2 100.0% $ 273.0 100.0%
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