Midas Reports 1999 Earnings Increase 10% and Eps Up 13%
17 February 2000
Midas Reports 1999 Earnings Increase 10% and Eps Up 13%, Excluding Special Items
ITASCA, Ill.--Feb. 17, 2000--Midas, Inc. , today announced its results for the fourth quarter and fiscal year ended Jan. 1, 2000.The 1999 full-year earnings were $38.4 million, an increase of 36 percent from $28.2 million reported the previous year. Earnings per diluted share in 1999 were $2.28, up 40 percent from $1.63 per diluted share in 1998.
Fourth quarter earnings in 1999 were $7.4 million or $0.46 per diluted share, up from a loss of $0.3 million or $0.02 per share in 1998.
Both 1999 and 1998 results included special items. The 1998 results included after-tax business transformation costs of $34.8 million ($1.99 per share) and an after-tax gain from the sale of European operations of $28.1 million ($1.61 per share). In 1999, results included a favorable after-tax adjustment of $0.1 million ($0.0l per share) to previously recorded business transformation charges.
Excluding special items from both years, full-year 1999 earnings were up 10 percent and earnings per diluted share increased 13 percent. Fourth quarter 1999 earnings were up 14 percent and earnings per diluted share were up 25 percent.
"During 1999, Midas continued the transition process to position the company and our franchisees to compete effectively in the challenging automotive parts distribution and service market," said Wendel H. Province, Midas' chairman and chief executive officer.
Among the programs launched in 1999 were operational enhancements and exterior and interior image upgrades at 2,100 franchised Midas shops in North America; introduction of a new Midas logo; expanded retail and wholesale product lines, and improvements in the company's distribution and information systems.
"Increases in wholesale and retail sales of non-exhaust products and services helped in part to offset the significant decline in the replacement exhaust market in 1999," Province said.
To reduce the effects of fluctuations in exhaust market demand, Midas closed its exhaust pipe and tube manufacturing plant in Bedford Park, Ill., on Oct. 1. The company formed a strategic alliance with Arvin Industries and split the Bedford Park production between Arvin and Midas' plant in Hartford, Wisc.
In November, Midas entered into a new alliance with Visteon Automotive Systems, calling for Visteon to supply climate control products as Midas begins offering climate control services at the company's North American shops.
"The climate control market exceeds $4 billion annually with no dominant service provider," Province said. "Midas is beginning a phased roll-out of air conditioning, heating and radiator services with the objective of becoming a major force in this market."
Midas' sales and revenues for 1999 were $355.5 million, down 30 percent from $513.8 million in 1998. Province explained that a major portion of the decline in sales and revenues was the direct result of strategic decisions to franchise more than 150 former company-owned shops, to sell Midas Europe and to lower selling prices for wholesale products.
In 1999, wholesale sales of replacement parts were $234.4 million--or 66 percent of overall sales and revenues--compared to 49 percent of sales and revenues the previous year. Conversely, revenues from retail sales at company shops were 3 percent in 1999, down from 28 percent in 1998.
"The share of our sales and revenues from shipments of replacement parts will continue to increase as we broaden the product offering and implement programs to improve distribution of wholesale products to Midas franchisees and other customers," Province said.
"Midas management is moving into 2000 with confidence generated by dealer and customer reaction to enhancements in our retail programs, recent trends suggesting that the rate of exhaust declines has slowed and opportunities for significant increases in replacement part sales to Midas shops and other customers," Province said.
Diluted earnings per share in 1999 are based on 16.8 million weighted average shares outstanding, compared to 17.3 million in 1998. Midas has repurchased 2.3 million shares of a board-authorized repurchase program of 5.0 million shares.
Midas is one of the world's largest providers of automotive service, providing exhaust, brake, steering and suspension services, as well as batteries and maintenance services at 2,700 franchised and licensed Midas shops in 19 countries, including more than 2,100 in the United States and Canada.
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. 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.
--TABLES FOLLOW--
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings and dividends per share)
For the quarter ended For the year
December ended December
--------------------- --------------
1999 1998 1999 1998
---- ---- ---- ----
(14 Weeks) (13 Weeks) (53 Weeks)(53 Weeks)
(Unaudited)
Sales and revenues $ 79.9 $ 106.3 $ 355.5 $ 513.8
Cost of sales and revenues 43.3 52.3 191.2 239.9
Selling, general, and
administrative expenses 23.6 42.2 96.1 204.3
Business transformation costs ( 0.2) 55.7 ( 0.2) 55.7
------- -------- -------- --------
Operating income (loss) 13.2 ( 43.9) 68.4 13.9
------- -------- -------- --------
Gain on sale of
European operations - 38.0 - 38.0
------- -------- -------- --------
Whitman charges - - - ( 1.1)
------- -------- -------- --------
Interest expense:
Whitman - - - ( 0.5)
Other ( 2.3) ( 2.5) ( 8.6) (12.2)
------- -------- -------- --------
Total interest expense ( 2.3) ( 2.5) ( 8.6) (12.7)
------- -------- -------- --------
Other income (expense), net 0.4 0.5 3.1 1.9
------- -------- -------- --------
Income (loss)
before taxes 11.3 ( 7.9) 62.9 40.0
Income taxes (benefit) 3.9 ( 7.6) 24.5 11.8
------- -------- -------- --------
Net income (loss) $ 7.4 $ ( 0.3) $ 38.4 $ 28.2
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Earnings (loss) per share:
Basic $ .46 $ ( .01) $ 2.33 $ 1.67
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Diluted $ .46 $ ( .02) $ 2.28 $ 1.63
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Dividends per common share $ .02 $ .02 $ .08 $ .06
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Average number of shares
Common shares outstanding 16.0 16.9 16.4 16.9
Equivalent shares on
outstanding stock options .2 .6 .4 .4
------- -------- -------- --------
Shares applicable to
diluted earnings 16.2 17.5 16.8 17.3
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Certain reclassifications have been made to the previously reported
1998 financial statements in order to provide consistency with the
1999 results. These reclassifications did not affect previously
reported operating income, net income or earnings per share.
MIDAS, INC.
RESULTS OF OPERATIONS
1999 Fourth Quarter Compared with 1998 Fourth Quarter (Unaudited)
The following is a summary of the Company's sales and revenues
for the three months ended December 1999 and December 1998,
respectively: ($ Millions)
Percent Percent
1999 to Total 1998 to Total
----- -------- ---- --------
Replacement parts sales $52.4 65.6% $54.5 51.3%
Company-operated shop retail sales 1.2 1.5 24.3 22.9
Royalties and license fees 15.5 19.4 17.7 16.6
Real estate rental revenues 10.1 12.6 9.6 9.0
Other 0.7 0.9 0.2 0.2
------ ------ ------- -------
Sales and revenues $79.9 100.0% $106.3 100.0%
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Year ended December 1999
Compared with the Year ended December 1998
The following is a summary of the Company's sales and
revenues for the years ended December 1999 and December 1998,
respectively: ($ Millions)
Percent Percent
1999 to Total 1998 to Total
------ -------- ----- --------
Replacement parts sales............ $234.4 65.9% $249.1 48.5%
Company-operated shop retail sales. 10.5 3.0 147.1 28.6
Royalties and license fees......... 68.1 9.2 73.7 14.3
Real estate rental revenues........ 40.2 11.3 37.4 7.3
Other 2.3 0.6 6.5 1.3
------ ----- ------ -------
Sales and revenues................. $355.5 100.0% $513.8 100.0%
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MIDAS, INC.
CONDENSED BALANCE SHEETS
(In millions)
December
1999 1998
---- ----
Assets:
Current assets:
Cash and cash equivalents $ 13.1 $ 36.9
Receivables, net 43.5 39.4
Inventories 63.5 63.2
Other current assets 20.7 24.8
-------- --------
Total current assets 140.8 164.3
Property and equipment, net 140.5 142.8
Other assets 24.6 18.2
-------- --------
Total assets $ 305.9 $ 325.3
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Liabilities And Equity:
Current liabilities:
Short-term debt $ 1.8 $ 1.6
Accounts and dividends payable 26.4 19.5
Income taxes payable 1.6 -
Accrued expenses 26.4 42.2
-------- --------
Total current liabilities 56.2 63.3
Long-term debt 101.0 102.2
Obligations under capital leases 9.3 10.8
Deferred income taxes and other
liabilities 24.8 25.6
-------- --------
Total liabilities 191.3 201.9
-------- --------
Shareholders' equity:
Common stock
($.001 par value, 100 million
shares authorized, 17.3 million
shares issued - December 1999 and
17.0 million shares issued -
December 1998) and paid-in capital 26.8 27.1
Treasury stock
(1.6 million shares - December 1999
and .2 million shares - December
1998, at cost) (44.9) ( 4.2)
Notes receivable from common stock
sold to officers (6.1) -
Retained income 144.0 106.9
Accumulated other
comprehensive income (loss) ( 5.2) (6.4)
-------- --------
Total shareholders' equity 114.6 123.4
-------- --------
Total liabilities and equity $ 305.9 $ 325.3
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