Bandag Reports 3rd Quarter Results of Operations
23 October 2000
Bandag Reports 3rd Quarter Results of Operations
MUSCATINE, Iowa, Oct. 20 Bandag, Incorporated today announced consolidated net
earnings of $17.9 million for the quarter ended September 30, 2000, a decrease
of less than 1 percent compared to third quarter 1999 net earnings of
$18.1 million on essentially flat sales. Consolidated net sales for the third
quarter of 2000 decreased 1 percent to $269.9 million from sales of
$273.2 million in the same quarter of 1999. Third quarter 2000 earnings per
share increased 5 percent to $0.86 per diluted share on 20,793,000 average
shares outstanding, compared to $0.82 per diluted share on 21,940,000 average
shares for the quarter ended September 30, 1999. The Company's estimated
annual tax rate of 41.5 percent in the third quarter of 2000, compared to
43.2 percent in the third quarter 1999, added approximately $0.02 to Bandag's
earnings per share.
Year to date, consolidated net earnings increased to $45.6 million, or
$2.19 per diluted share, on sales of $743.3 million compared to earnings of
$44.2 million, or $2.01 per diluted share, on sales of $749.5 million in the
first nine months of 1999. Diluted average shares outstanding decreased to
20,782,000 for the nine months ended September 30, 2000 from 21,957,000 in the
prior year period. The Company's lower estimated annual tax rate of
41.5 percent in 2000, compared to 42.5 percent in the prior year nine month
period, added approximately $0.03 to Bandag's earnings per share for the first
nine months of 2000.
Commenting on the quarter's results, Martin G. Carver, Bandag Chairman and
Chief Executive Officer, said, "Despite significantly higher raw material
costs and a slight decline in sales revenues, our gross margins were
comparable to the third quarter of 1999. This was accomplished primarily as a
result of increased efficiency and price increases implemented earlier this
year." Describing the performance of Bandag's tire distribution subsidiary,
Mr. Carver said: "TDS performed well during the quarter, delivering
improvement in earnings before interest and taxes of 53 percent over the prior
year period on flat sales. TDS results benefited from continued expense
control measures. Overall, we continued to see the slowing in North American
retread truck tire sales that began in the second quarter." Mr. Carver
attributed the slowing to increased competition from an oversupply of new
truck tires: "There are two key factors intensifying market pressure -- an
influx of imported tires and reduced OEM demand for new tires, which are then
diverted into the replacement market. These market pressures are reflected in
the 5 percent decline in tread volume in our traditional retread business
during the quarter. We expect these market conditions to exist through at
least the first quarter of 2001."
Discussing the new retreading market equipment and proprietary information
technology products launched during the first quarter, Mr. Carver said:
"Installations of Bandag's new tire builder and shearographic tire inspection
machines, as well as SystemBandag(TM), are proceeding smoothly."
Bandag, Incorporated
Financial Highlights
(In thousands, except per share data)
Third Quarter Year-to-Date
Ended September 30, Ended September 30,
Consolidated Financial Highlights 2000 1999 2000 1999
Net Sales $269,905 $273,240 $743,310 $749,498
Interest Income 1,396 1,294 4,368 4,563
Other Income 2,353 1,689 6,978 3,850
Total Income 273,654 276,223 754,656 757,911
Cost of Products Sold 168,803 170,122 459,795 458,648
Operating & Other Expense 69,457 69,575 202,726 207,725
Goodwill Amortization 2,635 2,493 7,763 7,398
Interest Expense 2,137 2,239 6,476 7,238
Total Expenses 243,032 244,429 676,760 681,009
Earnings Before Income Taxes 30,622 31,794 77,896 76,902
Income Taxes 12,708 13,738 32,327 32,683
Net Earnings $17,914 $18,056 $45,569 $44,219
Earnings Per Share
Basic $0.87 $0.83 $2.20 $2.02
Diluted $0.86 $0.82 $2.19 $2.01
Weighted Average Shares Outstanding
(in thousands):
Basic 20,697 21,873 20,721 21,885
Diluted 20,793 21,940 20,782 21,957
TDS Financial Highlights Third Quarter Year-to-Date
Ended September 30, Ended September 30,
2000 1999 2000 1999
Net Sales $113,372 $112,649 $308,126 $294,862
Other Income 1,207 791 2,773 1,022
Total Income 114,579 113,440 310,899 295,884
Cost of Products Sold 86,934 86,397 234,523 225,625
Operating & Other Expense 22,515 22,878 67,275 62,330
Goodwill Amortization 2,503 2,449 7,485 7,267
Total Expenses 111,952 111,724 309,283 295,222
Earnings Before Interest and
Income Taxes $2,627 $1,716 $1,616 $662
Intercompany sales from
traditional retread business to
TDS which have been eliminated
in consolidation $15,132 $14,636 $43,578 $41,192