Midas Reports Third Quarter Earnings Per Share of $.78, Including $.31 Tax Benefit From Sale of Australian Operations
19 October 2000
Midas Reports Third Quarter Earnings Per Share of $.78, Including $.31 Tax Benefit From Sale of Australian Operations
ITASCA, Ill.--Oct. 19, 2000--Midas, Inc. , today announced its results for the third quarter ended Sept. 30, 2000.Third quarter 2000 earnings were $12.0 million, including a one-time tax benefit of $4.8 million related to the sale of the company's Australian operations finalized during the quarter. Earnings per diluted share for the quarter were $.78, which includes a $.31 tax benefit from the Australian sale. Third quarter 1999 earnings per share were $.73, including a $.02 non-recurring real estate gain.
Wendel H. Province, Midas' chairman and chief executive officer, explained that third quarter results were mixed.
"We are encouraged that our same store retail sales in North America were up about 1 percent in the third quarter, our first quarterly increase in several years," Province said. "This comparable store sales increase is evidence that our New Midas program of expanded services and upgraded shop appearance is having a positive effect, particularly in a soft automotive aftermarket."
Province said that Midas increased its spending on marketing in the third quarter to help educate consumers about expanded service offerings and to stimulate retail sales.
"The increased marketing effort helped grow our retail sales, particularly of maintenance services and climate control," he said. "We expect to continue higher marketing spending into the fourth quarter to maintain this retail sales momentum."
Province said that the company's sales and revenues for the quarter were about as expected, with wholesale parts distribution through the company's new venture Parts Warehouse, Inc. (PWI) more than offsetting declines in core product lines.
Sales and revenues for the third quarter of 2000 were $94.3 million, up 2 percent from the $92.4 million last year.
"We made considerable progress in the third quarter in building the infrastructure necessary for rapid expansion of our parts distribution business in the fourth quarter and in future years," Province said. "We are in the process of relocating seven of the original 27 PWI sites and have secured space or signed leases for an additional 19 sites."
"Net income and earnings per share were above our projections due to the larger-than-expected tax benefit from Australia and the recognition of the full benefit in the third quarter instead of over the final two quarters of the year as an adjustment to our effective tax rate as we had originally planned," Province said.
Operating income for the third quarter was $13.5 million, down from $21.5 million a year ago. The decline in operating income was due to a combination of higher marketing expenditures, lower shipments of core replacement parts and expenses associated with expansion of the PWI network.
"Although some of our current initiatives--such as increased marketing expenditures and growth of the PWI network--will have a negative effect on our short-term results, we believe they are the right actions to create long-term shareholder value," Province said.
Sales and revenues for the first three quarters of 2000 were $271.3 million compared to $275.6 million a year ago. Net income for the first three quarters was $31.9 million, up from $31.0 million in 1999, including special items in both years. Diluted earnings per share for the first three quarters were $2.03, including $.47 in special items, compared to $1.82 per share in 1999, with $.06 in special items.
Diluted earnings per share in the third quarter of 2000 are based on 15.4 million weighted average shares outstanding, compared to 16.6 million in 1999. Earnings per share for the first three quarters this year are based on 15.7 million shares, compared to 17.0 million in 1999.
Province said he estimates full-year 2000 earnings per share in the $2.25 to $2.28 range, including special items.
The company repurchased 275,000 shares of its common stock in the third quarter. Since the program began, Midas has repurchased approximately 3.0 million of its common shares under a board-authorized repurchase program covering 5.0 million shares.
Midas is one of the world's largest providers of automotive service, including exhaust, brake, steering and suspension services, as well as batteries, climate control and maintenance services at 2,700 franchised and licensed Midas shops in 19 countries, including nearly 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, is included in the company's filings with the Securities and Exchange Commission, including the company's 1999 annual report on Form 10-K.
MIDAS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In millions, except for earnings and dividends per share)
(Unaudited)
September Quarter Year to Date
----------------- ------------
2000 1999 2000 1999
---- ---- ---- ----
(13 Weeks) (13 Weeks) (39 Weeks)(39 Weeks)
Sales and revenues $94.3 $92.4 $271.3 $275.6
Cost of sales and revenues 51.9 50.0 148.2 147.9
Selling, general, and
administrative expenses 28.9 20.9 78.0 72.5
------ ------ ------ ------
Operating income 13.5 21.5 45.1 55.2
Interest expense ( 2.1) ( 2.0) ( 6.1) ( 6.3)
Other income, net 0.2 0.8 4.1 2.7
------ ------ ------ ------
Income before taxes 11.6 20.3 43.1 51.6
Income taxes (benefit) ( 1 ) ( 0.4) 8.1 11.2 20.6
------ ------ ------ ------
Net income $12.0 $12.2 $ 31.9 $ 31.0
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Earnings per share:
Basic $ .79 $ .75 $ 2.06 $ 1.87
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Diluted $ .78 $ .73 $ 2.03 $ 1.82
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Dividends per common share $ .02 $ .02 $ .06 $ .06
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Average number of shares
Common shares outstanding 15.3 16.3 15.5 16.6
Equivalent shares on
outstanding stock options .1 .3 .2 .4
------ ------ ------ ------
Shares applicable to
diluted earnings 15.4 16.6 15.7 17.0
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( 1 ) During the quarter ended September 2000, Midas recorded a
non-recurring tax benefit of $4.8 million related to the disposition
of its Australian operations.
MIDAS, INC.
RESULTS OF OPERATIONS
Third Quarter 2000 Compared with Third Quarter 1999 (Unaudited)
The following is a summary of the Company's sales and revenues for
the third quarter of fiscal 2000 and 1999, respectively: ($ Millions)
Percent Percent
2000 to Total 1999 To Total
---- -------- ---- --------
Replacement parts sales $64.6 68.5% $61.9 67.0%
Company-operated shop retail sales 1.9 2.0 1.5 1.6
Royalties and license fees 17.8 18.9 18.6 20.1
Real estate rental revenues 9.8 10.4 10.2 11.0
Other 0.2 0.2 0.2 0.3
---- -------- ---- --------
Sales and revenues $94.3 100.0% $92.4 100.0%
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Thirty-nine weeks ended
September 2000 Compared with the Thirty-nine weeks
ended September 1999 (Unaudited)
The following is a summary of the Company's sales and revenues for
the thirty-nine weeks ended September 2000 and 1999, respectively:
($ Millions)
Percent Percent
2000 to Total 1999 to Total
---- -------- ---- --------
Replacement parts sales $186.1 68.6% $182.0 66.0%
Company-operated shop retail sales 4.1 1.5 9.3 3.4
Royalties and license fees 50.6 18.7 52.6 19.1
Real estate rental revenues 29.5 10.9 30.1 10.9
Other 1.0 0.3 1.6 0.6
---- -------- ---- --------
Sales and revenues $271.3 100.0% $275.6 100.0%
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