TBC Reports Third Quarter Results -Net Income Increases 9%
Including Impact of Hurricanes- PALM BEACH GARDENS, Fla., Oct. 25
/PRNewswire-FirstCall/ -- TBC Corporation (NASDAQ:TBCC), one of the
nation's leading marketers of automotive replacement tires, today
reported sales and earnings for the third quarter and nine months
ended September 30, 2004. Net sales in the third quarter increased
31.5% to $476.5 million compared to $362.4 million in the
prior-year period. TBC continued to increase market share as
evidenced by the 9.9% total unit tire sales increase compared to
the 3.6% decrease in unit shipments by tire manufacturers in the
third quarter based on preliminary reports. Same store sales for
TBC's retail segment decreased 1.7% in the third quarter primarily
due to the effects of Hurricanes Charley, Frances, Ivan and Jeanne.
Net income increased 9.0% to $10.9 million, or $0.47 per diluted
share, during the current quarter versus $10.0 million, or $0.44
per diluted share, in the third quarter of 2003. Earnings in the
current quarter reflect a negative impact of $0.12 per diluted
share due to the four major hurricanes, which is in line with the
Company's previously issued guidance on October 4, 2004. The
results for 2003 have been restated to reflect the company-wide
adoption of the FIFO inventory costing method. The Company's
wholesale business generated improved profitability for the quarter
due to favorable pricing and sales mix, as well as aggressive cost
containment, despite a decline in unit sales. Inclement weather in
Florida and the Eastern United States affected the Company's retail
business. However, NTB performed in line with Company expectations.
"In a retail environment that remains challenging and despite
unprecedented hurricane activity, we delivered strong top- and
bottom-line growth over last year," commented Larry Day, TBC
President and Chief Executive Officer. "We see opportunities at our
retail locations for upside in both pricing and product/service
mix. Additionally, we expect a solid fourth quarter contribution
from NTB which continues to execute on plan and we are encouraged
by the foundation established. However, overall retail demand for
tires continues to be challenging due to the short-term effects of
higher gasoline prices. As a result, we have adjusted our fourth
quarter and full- year outlook to reflect these market factors."
For the nine months ended September 30, 2004, net sales rose 44.2%
to $1,366.8 million compared to $947.8 million in the prior-year
period. Total unit tire sales increased 19.1% during the nine
months ended September 30, 2004 compared to a 3.4% increase in unit
shipments by tire manufacturers based on preliminary reports. Same
store sales for TBC's retail segment increased 1.7% for the nine
months ended September 30, 2004. Net income grew 13.0% to $25.6
million, or $1.10 per diluted share, versus $22.6 million, or $1.00
per diluted share, reported a year ago. Results for the first nine
months of 2004 reflect the $0.12 per diluted share negative impact
from the four major hurricanes, the negative impact of EITF 02-16
of $0.08 per diluted share related to the Company's new purchase
agreement with a major supplier, partially offset by the
company-wide adoption of the FIFO inventory costing method which
added $0.02 per diluted share. Excluding the impact of the
hurricanes and the change in accounting treatments, TBC would have
reported $1.28 per diluted share in the first nine months of 2004.
The results for 2003 have been restated to reflect the company-wide
adoption of the FIFO inventory costing method. For the 2004 full
year, the Company expects earnings to be in the range of $1.60 to
$1.64 per diluted share which includes both the $0.12 per diluted
share impact of the hurricanes and the $0.06 per diluted share for
the impact of both EITF 02-16 and the company-wide adoption of the
FIFO inventory costing method. Earnings for the fourth quarter are
expected to be in the range of $0.50 to $0.54 per diluted share. At
September 30, 2004, the Company had a combined total of 1,171
stores in its retail network with 602 Company-operated locations
and 569 franchised Big O stores, representing a 28% increase in the
Company's store base, or 253 locations, since September 30, 2003.
Exclusive of any further acquisitions, the Company expects to add
an additional 11 retail locations in the last quarter of 2004. TBC
Corporation will host a conference call on Tuesday, October 26,
2004, at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time, to
discuss third quarter results. A live Webcast of the conference
call will be available by visiting the Company's Web site,
http://www.tbccorp.com/. The Webcast will be archived at TBC's Web
site until November 26, 2004. About TBC: TBC Corporation is one of
the nation's largest marketers of automotive replacement tires
through a multi-channel strategy. The Company's retail operations
include company-operated retail centers under the "Tire Kingdom",
"Merchant's Tire & Auto Centers" and "National Tire &
Battery" brands and franchised retail tire stores under the "Big O
Tires" brand. TBC markets on a wholesale basis to regional tire
chains and distributors serving independent tire dealers throughout
the United States and in Canada and Mexico. The Company's
proprietary brands of tires have a longstanding reputation for
quality, safety and value. TBC Corporation Safe Harbor Statement
This document contains "forward-looking statements," as that term
is defined under the Private Securities Litigation Reform Act of
1995, regarding expectations for future financial performance,
which involve uncertainty and risk. It is possible that the
Company's future financial performance may differ from expectations
due to a variety of factors including, but not limited to: changes
in economic and business conditions in the world; increased
competitive activity; consolidation within and among competitors,
suppliers and customers; unexpected changes in the replacement tire
market; the Company's inability to attract as many new franchisees
or open as many distribution outlets as stated in its goals;
changes in the Company's ability to identify and acquire additional
companies in the replacement tire industry and successfully
integrate acquisitions and achieve anticipated synergies or
savings; fluctuations in tire prices charged by manufacturers,
including fluctuations due to changes in raw material and energy
prices, changes in interest and foreign exchange rates; the
cyclical nature of the automotive industry and the loss of a major
customer or program. It is not possible to foresee or identify all
such factors. Any forward-looking statements in this release are
based on certain assumptions and analyses made by the Company in
light of its experience and perception of historical trends,
current conditions, expected future developments and other factors
it believes are appropriate in the circumstances. Prospective
investors are cautioned that any such statements are not a
guarantee of future performance and actual results or developments
may differ materially from those projected. The Company makes no
commitment to update any forward-looking statement included herein,
or to disclose any facts, events or circumstances that may affect
the accuracy of any forward-looking statement. Additional
information on factors that could potentially affect the Company or
its financial results may be found in the Company's filings with
the Securities and Exchange Commission. TBC CORPORATION RESTATED
CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share
amounts) (Unaudited) Three Months Ended Nine Months Ended September
30, September 30, RESTATED RESTATED 2004 2003 2004 2003 NET SALES
$476,464 $362,401 $1,366,795 $947,789 COST OF SALES 301,213 247,748
854,477 649,288 GROSS PROFIT 175,251 114,653 512,318 298,501
EXPENSES: Distribution expenses 18,044 15,811 54,800 44,591
Selling, administrative and retail store expenses 137,606 81,154
407,379 213,818 Interest expense - net 4,690 2,786 13,895 7,046
Other (income) expense - net (1,904) (869) (3,275) (2,288) Total
expenses 158,436 98,882 472,799 263,167 INCOME BEFORE INCOME TAXES
16,815 15,771 39,519 35,334 Provision for income taxes 5,893 5,751
13,967 12,727 NET INCOME $10,922 $10,020 $25,552 $22,607 EARNINGS
PER SHARE - Basic $0.49 $0.46 $1.15 $1.05 Diluted $0.47 $0.44 $1.10
$1.00 Weighted Average Common Shares Outstanding - Basic 22,254
21,759 22,159 21,576 Diluted 23,237 22,970 23,274 22,568 TBC
CORPORATION RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited) ASSETS RESTATED September 30, December 31,
2004 2003 (Unaudited) (Unaudited) CURRENT ASSETS: Cash and cash
equivalents $3,204 $2,645 Accounts and notes receivable, less
allowance for doubtful accounts of $9,700 at September 30, 2004 and
$8,260 at December 31, 2003 Related parties 27,335 12,535 Other
128,130 109,962 Total accounts and notes receivable 155,465 122,497
Inventories 284,870 264,810 Refundable federal and state income
taxes - 296 Deferred income taxes 15,233 11,359 Other current
assets 12,611 10,346 Total current assets 471,383 411,953 PROPERTY,
PLANT AND EQUIPMENT, AT COST: Land and improvements 11,284 12,100
Buildings and leasehold improvements 110,595 103,669 Furniture and
equipment 106,266 93,710 228,145 209,479 Less accumulated
depreciation 73,878 56,618 Total property, plant and equipment
154,267 152,861 TRADEMARKS, NET 15,824 15,824 GOODWILL, NET 169,532
169,184 OTHER ASSETS 39,490 34,368 TOTAL ASSETS $850,496 $784,190
TBC CORPORATION RESTATED CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY
RESTATED September 30, December 31, 2004 2003 (Unaudited)
(Unaudited) CURRENT LIABILITIES: Outstanding checks, net $12,979
$11,411 Notes payable to banks 72,100 29,100 Current portion of
long-term debt and capital lease obligations 39,195 28,723 Accounts
payable, trade 103,129 114,708 Other current liabilities 107,158
91,730 Total current liabilities 334,561 275,672 LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 176,289 208,620
NONCURRENT LIABILITIES 34,810 28,900 DEFERRED INCOME TAXES 11,190
7,890 STOCKHOLDERS' EQUITY: Common stock, $0.10 par value, shares
issued and outstanding - 22,266 at September 30, 2004 and 21,905 at
December 31, 2003 2,227 2,190 Additional paid-in capital 28,491
23,898 Other comprehensive income (loss) (1,281) (1,637) Retained
earnings 264,209 238,657 Total stockholders' equity 293,646 263,108
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $850,496 $784,190 TBC
CORPORATION SUPPLEMENTARY DATA (In thousands, except percentages
and store counts) (Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, RESTATED RESTATED 2004 2003 2004 2003
RECONCILIATION OF EBITDA TO NET INCOME: EBITDA $27,917 $23,632
$73,393 $56,083 Less- Depreciation and Amortization 6,412 5,075
19,979 13,703 Interest Expense - net 4,690 2,786 13,895 7,046
Provision for Income Taxes 5,893 5,751 13,967 12,727 NET INCOME
$10,922 $10,020 $25,552 $22,607 SEGMENT INFORMATION: NET SALES -
Retail $304,000 $191,444 $881,532 $503,367 Wholesale $172,464
$170,957 $485,263 $444,422 Consolidated $476,464 $362,401
$1,366,795 $947,789 EBITDA - Retail $18,618 $14,996 $46,949 $35,131
Wholesale $9,299 $8,636 $26,444 $20,952 Consolidated $27,917
$23,632 $73,393 $56,083 CAPITAL EXPENDITURES $3,824 $4,488 $18,116
$14,585 RETAIL SAME-STORE SALES % CHANGE -1.7% 1.7% 1.7% 1.1%
RETAIL STORE COUNTS, at end of period Company Operated Stores 602
357 Franchised Big O Stores 569 561 Total 1,171 918 DATASOURCE: TBC
Corporation CONTACT: Thomas W. Garvey, Executive V.P. & Chief
Financial Officer of TBC Corporation, +1-561-227-0955; or
Investors: Betsy Brod and Jonathan Schaffer, both of Brod &
Schaffer, LLC, +1-212-750-5800, for TBC Corporation Web site:
http://www.tbccorp.com/
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