Bandag Announces First Quarter 2000 Results
26 April 2000
Bandag Announces First Quarter 2000 Results
MUSCATINE, Iowa, April 25 Bandag, Incorporated (NYSE: BDG and BDGA) today announced consolidated net
earnings of $10.0 million for the quarter ended March 31, 2000, which was flat
in comparison to first quarter 1999. Earnings per diluted share for the first
quarter 2000 were $.48, which compared to first quarter 1999 earnings of $.46
per diluted share. The increase in earnings per share was due to fewer shares
outstanding this year compared to last. Consolidated net sales for the first
quarter 2000 were $224.3 million, flat in comparison to sales of
$224.1 million in the same quarter of 1999.
Commenting on first quarter results, Martin G. Carver, Bandag Chairman and
Chief Executive, said, "Overall, we achieved solid progress during the
quarter. The North American picture becomes clearer when you consider that
1999's first quarter tread sales included shipments to some dealers who
eventually exited the Bandag business later in 1999. However, the slower
North American tread sales were offset by revenue increases from Tire
Distribution Systems, Inc. (TDS) acquisitions, and from our pilot program at
Tire Management Solutions, Inc. (TMS) -- our proprietary tire management
business."
On a pre-tax basis, Bandag's consolidated earnings improved approximately
2 percent, but a higher tax rate reduced the gains, leaving the company's net
earnings approximately even with last year. As anticipated, Bandag's global
tread volume was down 4 percent in the first quarter, primarily due to lower
sales in the North American market. Lower operating expenses were realized in
Bandag's European and North American operations due to benefits from
prior-year restructurings. Higher crude oil prices increased the costs of raw
materials for tread rubber in North America. However, these higher costs were
offset by savings from the closing of a manufacturing facility late last year.
Tread rubber prices in the U.S. and Canada were raised, effective April 1,
2000, to cover anticipated cost increases for the remainder of the year.
Commenting on results from TDS, the company's distribution subsidiary, Mr.
Carver said, "TDS revenues, exclusive of acquisitions, remained steady
throughout the quarter, despite continued consolidation in tire industry
distribution channels. TDS sales increased by 6 percent, primarily from new
acquisitions, but the benefit was offset by increased operating expenses.
During the first quarter, TDS management initiated actions to reduce operating
expenses, thus we expect to see more favorable performance for the remainder
of the year."
Looking forward, Mr. Carver said, "Bandag's progress during the quarter,
particularly at TMS and overseas, strengthened our business base.
Additionally, we launched three major pieces of retreading equipment, plus our
proprietary tire information management technology, SystemBandag(TM), all of
which were enthusiastically received by our North American franchisees. No
doubt, continued industry consolidation will present on-going challenges as
the year progresses. Fortunately, we have been preparing for these
challenges. We are confident that our vision for serving fleet customers
through a Strategic Alliance with our Bandag dealers is well-suited to the
opportunities emerging from our rapidly changing industry."
Bandag, Incorporated manufactures retreading materials and equipment for
its worldwide network of nearly 1,300 franchised dealerships that produce and
market retread tires and provide tire management services. Bandag's pilot
operation, TMS, provides tire management systems outsourcing for commercial
truck fleets. TDS, a wholly owned subsidiary, sells and services new and
retread tires.
This press release contains certain "forward-looking" statements that are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, which are based on
certain assumptions, describe future plans, strategies and expectations of
Bandag, and are identifiable in this press release by the use of the words
"expect," and "will present." They involve known and unknown risks, which may
cause the actual results in the future to differ materially from expected
results. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Factors which could
affect the "forward-looking" statements include: (i) the degree to which TDS
management can reduce operating expenses, and (ii) the degree to which
industry consolidation will continue.
Bandag Incorporated
Financial Highlights
(In thousands, except per share data)
First Quarter
Ended March 31,
Consolidated Financial Highlights 2000 1999
Net Sales $224,289 $224,138
Interest Income 1,579 1,524
Other Income 2,289 1,173
Total Income 228,157 226,835
Cost of Products Sold 136,841 135,198
Operating & Other Expense 69,103 69,639
Goodwill Amortization 2,510 2,422
Interest Expense 2,289 2,564
Total Expenses 210,743 209,823
Earnings Before Income Taxes 17,414 17,012
Income Taxes 7,401 6,975
Net Earnings $10,013 $10,037
Earnings Per Share
Basic $0.48 $0.46
Diluted $0.48 $0.46
Weighted Average Shares Outstanding
(in thousands):
Basic 20,734 21,903
Diluted 20,781 21,990
TDS Financial Highlights First Quarter
Ended March 31,
2000 1999
Net Sales $89,776 $84,613
Other Income 595 15
Total Income 90,371 84,628
Cost of Products Sold 67,933 64,845
Operating & Other Expense 22,861 19,301
Goodwill Amortization 2,466 2,378
Total Expenses 93,260 86,524
Loss before Interest and Income Taxes ($2,889) ($1,896)
Intercompany sales from Traditional Business
to TDS which have been eliminated
in consolidation $13,954 $12,621