TBC Reports Third Quarter Earnings
23 October 2000
TBC Reports Third Quarter Earnings; Sales Set New Quarterly Record, Up 27% From Year Ago
MEMPHIS, Tenn.--Oct. 23, 2000--TBC Corporation today reported results for the third quarter that were substantially in line with the projections that the Company publicly issued late last month.Net sales for the quarter ended September 30, 2000 increased 27.3% to a new quarterly record of $267.9 million compared with $210.5 million in the year-earlier period. Net income for the third quarter totaled $5.3 million, or $0.25 per share, compared with $6.6 million, or $0.31 per share a year ago. Net sales for the first nine months increased 16.3% to $651.7 million compared with $560.3 million in the first nine months of 1999. Net income for the first nine months was $14.3 million, or $0.67 per share, compared with $12.7 million, or $0.60 per share.
The net income for the nine months ended September 30, 1999 included a special charge of $2.8 million, or $0.13 per share after taxes, related to the write-off of a note receivable from a former distributor that had been the subject of litigation since 1989.
"We are continuing to progress in positioning TBC for future growth," said Larry Day, President and Chief Executive Officer. "We now control the retailing of more than 20% of the annualized unit volume of our proprietary brands and expect that percentage to increase significantly over the next several years. This was the first full quarter that included a contribution from Tire Kingdom, which we acquired in June. We are very pleased with the performance of that operation, which represent our initial direct ownership of a retail tire chain. Both Tire Kingdom and our Big O franchised system have experienced a significant increase in customers due in part to the Firestone tire recall that led to industry-wide shortages in certain sizes and heightened interest in motorists in the maintenance of their tires. Many consumers have actively sought dealers who could meet their needs without delay, and this has provided opportunities to broaden our customer base. Our retail sales during the third quarter at Tire Kingdom were up 14% from a year ago, and shipments through our Big O system also increased meaningfully. We recognize that some of the current fluctuations in the replacement tire market will ease over time, but we believe that there will be a lasting effect to TBC's retail operations from the chance to show more consumers the value and the quality of service that is available through independent tire dealers."
Day added, "As expected, this positive trend in our retail and franchised operations was offset during the third quarter by the results of our wholesale tire marketing operations. TBC has achieved noteworthy progress this year in enhancing service to our distributors, but industry-wide competitive pressures have affected our margins. We believe these factors are likely to continue influencing our corporate results during the fourth quarter, resulting in net earnings for the final three months approximately the same as the earnings of $0.25 per share in the fourth quarter of 1999, which included a net gain of $0.03 per share from the sale of a subsidiary distribution center.
"We continue to have the benefit of a strong financial position and have the outstanding authorization to repurchase approximately 1.9 million shares. We did repurchase 31,000 shares earlier this month and believe that any repurchases at current market prices will provide a sound return for shareholders. We are committed, however, to using our capital in the most advantageous way that will build long-term value for our investors."
TBC CORPORATION
Condensed Consolidated Financial Results
(Unaudited)
Three Months Ended
September 30,
2000 1999
--------------------------
Net sales $267,883,000 $210,469,000
Income before income taxes 8,712,000 10,712,000
Income taxes 3,410,000 4,155,000
Net earnings $ 5,302,000 $ 6,557,000
Earnings per share (basic and diluted) $ 0.25 $ 0.31
Average number of shares outstanding 21,230,000 21,194,000
Nine Months Ended
September 30,
2000 1999
--------------------------
Net sales $651,706,000 $560,335,000
Income before income taxes 23,435,000 20,955,000
Income taxes 9,179,000 8,282,000
Net earnings $ 14,256,000 $ 12,673,000(1)
Earnings per share (basic and diluted) $ 0.67 $ 0.60(1)
Average number of shares outstanding 21,216,000 21,189,000
(1) Results for the nine months ended September 30, 1999 include an
after-tax charge of $2.8 million, or $0.13 per share, related to
the write-off of a note receivable from a former distributor that
had been the subject of litigation since 1989.