Midas Updates Outlook for 2000 and 2001
22 December 2000
Midas Updates Outlook for 2000 and 2001
ITASCA, Ill.--Dec. 21, 2000--Midas, Inc., today announced two actions which will have a negative effect on fourth quarter earnings. The company will implement a non-recurring program to reduce ongoing employee-related operating expenses and will substantially increase its allowance for bad debts.The program to reduce employment-related operating costs is expected to result in an annual savings of $2 million in operating expense. The company is increasing its provision for bad debts because, during the second half of 2000, two multi-shop Midas franchisees have entered Chapter 11 bankruptcy allowing them to reorganize their businesses.
"While current market conditions continue to be challenging, there are always a number of factors involved in any bankruptcy, such as too much leverage or high operating costs," Wendel H. Province, Midas' chairman and chief executive officer, said.
The company said the combined after-tax cost of these two actions is estimated to be $4.8 million, or $.32 per diluted share for the quarter.
"We estimate fourth quarter earnings--before these special items--will come in at the low end of our previously estimated earnings range of $.22 to $.25 per diluted share, despite lower than projected retail and wholesale sales in the fourth quarter, " Province said.
For the full-year 2000, Midas estimates per share earnings--including special items--of $1.95 per share. Full-year earnings--excluding the $.32 charge in the fourth quarter and $.47 in special income items in the first three quarters--are expected to be $1.80 per diluted share.
"We made considerable progress in 2000 in expanding our service offering to include climate control and maintenance services, to launch the Parts Warehouse, Inc. (PWI) network of quick delivery wholesale parts distribution sites and to upgrade corporate and franchisee information systems," Province said.
"During 2001, we will continue these initiatives that Midas has begun implementing over the past two years, which we believe are fundamental to the long-term growth of the company and of the Midas system," Province said.
Midas estimates sales and revenues in 2001 of approximately $400.0 million, EBITDA of $63.0 million, operating income of $44.0 million and earnings of $1.45 per diluted share.
Province explained that the company's 2001 estimate assumes a continuing softness in the overall automotive service aftermarket, as well as a high single digit decline in exhaust replacement.
Midas will release its full-year 2000 results on Feb. 15, 2001. During the fourth quarter, Midas has repurchased about 227,500 shares and there currently are 14.9 million Midas shares outstanding.