TBCC Tbc Corp (MM)

PALM BEACH GARDENS, Fla., Aug. 15 /PRNewswire-FirstCall/ -- TBC Corporation (NASDAQ:TBCC), one of the nation's leading marketers of automotive replacement tires, today reported sales and earnings for the second quarter ended June 30, 2005 that were in line with the Company's previous expectations. Net sales in the second quarter increased 5.7% to $482.4 million, compared to $456.5 million in the prior-year period. Same store sales for TBC's retail segment increased 4.1% in the second quarter of 2005. TBC's total unit tire sales were flat in the second quarter of 2005, while unit shipments by tire manufacturers increased 2.7% based on preliminary reports. Management believes that the increase in unit shipments by tire manufacturers was attributed to buying in anticipation of manufacturer price increases. Net income increased 33.6% to $12.1 million, or $0.52 per diluted share, in the recent quarter, versus $9.0 million, or $0.39 per diluted share, in the second quarter of 2004. Reported earnings in the 2004 second quarter reflect the negative impact of Emerging Issues Task Force ("EITF") 02-16, of $0.08 per diluted share related to the Company's purchase agreement with a major supplier. Excluding this charge, TBC would have reported $0.47 per diluted share in the 2004 second quarter. Second quarter results reflect strong wholesale performance driven by price increases, gains in the specialty tire business, and a solid contribution from Carroll Tire, TBC's regional wholesale distributor. The Company's retail business benefited from a favorable mix of higher priced performance tires as well as increased mechanical services revenue. These benefits helped to offset the continued competitive pressures in certain markets that are making it difficult to pass on all of the supplier cost increases. Larry Day, TBC President and Chief Executive Officer, commented, "Our wholesale business remained strong during the period and price increases instituted at the beginning of July are holding. We are particularly pleased with Carroll Tire's performance, which reflects their ongoing commitment to improvement in execution and training." "After a slow start to the quarter, our retail operations turned in a much improved performance in June. Operating profitability within retail benefited from our return to normalized levels of advertising spending this quarter along with the increased contribution of higher margin performance tire sales and mechanical services revenue." For the six months ended June 30, 2005, net sales rose 6.6% to $948.7 million compared to $890.3 million last year. Total unit tire sales increased 1.2% compared to an industry increase of approximately 3.1 % based on preliminary results. Retail same-store sales increased 3.4% in 2005. Net income grew 25.7% to $18.1 million, or $0.78 per diluted share, versus $14.4 million, or $0.62 per diluted share, reported a year ago. Reported results for the first six months of 2004 reflect the negative impact of EITF 02-16 of $0.08 per diluted share related to the Company's purchase agreement with a major supplier. Excluding this charge, TBC would have reported $0.70 per diluted share in the first half of 2004. At June 30, 2005, the Company had a combined total of 1,175 stores in its retail network with 613 Company-operated locations and 562 franchised Big O stores. For the full year of 2005, the Company expects earnings at the lower end of its previously forecasted range of $2.08 to $2.15 per diluted share. Earnings in the third quarter of 2005 are forecast to be in the range of $0.65 to $0.68 per diluted share. Mr. Day concluded, "We have narrowed our full year guidance to reflect anticipated challenges to price increases at our retail locations in certain markets due to competitive pressures. In terms of store count, we still expect to grow our Company-operated base according to plan for 2005. However, we are now forecasting a net reduction in Big O's store count similar in size to last year's decline as our new franchise development team ramps up its efforts and we continue to evaluate relationships with underperforming franchisees." TBC Corporation will host a conference call on Tuesday, August 16, 2005, at 9:00 a.m. Eastern time, to discuss second quarter 2005 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 September 15, 2005. 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 CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (Restated) (Restated) 2005 2004 2005 2004 NET SALES $482,375 $456,490 $948,747 $890,331 COST OF SALES 299,768 282,260 592,036 555,084 GROSS PROFIT 182,607 174,230 356,711 335,247 EXPENSES: Distribution expenses 19,274 17,819 38,164 34,936 Selling, administrative and retail store expenses 140,917 137,979 283,109 270,083 Interest expense - net 5,032 5,103 9,983 9,205 Other (income) expense - net (1,585) (653) (3,018) (1,371) Total expenses 163,638 160,248 328,238 312,853 INCOME BEFORE INCOME TAXES 18,969 13,982 28,473 22,394 Provision for income taxes 6,905 4,951 10,336 7,963 NET INCOME $12,064 $9,031 $18,137 $14,431 EARNINGS PER SHARE - Basic $0.54 $0.41 $0.81 $0.65 Diluted $0.52 $0.39 $0.78 $0.62 Weighted Average Common Shares Outstanding - Basic 22,461 22,204 22,408 22,112 Diluted 23,418 23,329 23,402 23,292 TBC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) ASSETS June 30, December 31, 2005 2004 (Unaudited) (Unaudited) (Restated) CURRENT ASSETS: Cash and cash equivalents $1,435 $2,832 Accounts and notes receivable, less allowance for doubtful accounts of $9,948 at June 30, 2005 and $9,307 at December 31, 2004 Related parties 22,965 32,149 Other 129,806 117,812 Total accounts and notes receivable 152,771 149,961 Inventories 299,420 291,745 Refundable federal and state income taxes 697 - Deferred income taxes 26,705 24,790 Other current assets 14,134 19,270 Total current assets 495,162 488,598 PROPERTY, PLANT AND EQUIPMENT, AT COST: Land and improvements 7,794 10,400 Buildings and leasehold improvements 109,864 110,478 Furniture and equipment 109,512 105,232 227,170 226,110 Less accumulated depreciation 85,236 73,662 Total property, plant and equipment 141,934 152,448 TRADEMARKS, NET 15,824 15,824 GOODWILL, NET 168,641 168,552 OTHER ASSETS 43,219 39,331 TOTAL ASSETS $864,780 $864,753 TBC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31, 2005 2004 (Unaudited) (Unaudited) (Restated) CURRENT LIABILITIES: Outstanding checks, net $10,851 $30,368 Notes payable to banks 80,705 41,013 Current portion of long-term debt and capital lease obligations 16,330 41,216 Accounts payable, trade 122,164 128,656 Federal and State Income Taxes Payable - 17,790 Warranty reserves 19,501 19,667 Other current liabilities 81,311 71,278 Total current liabilities 330,862 349,988 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 164,338 167,349 NONCURRENT LIABILITIES 36,056 34,383 DEFERRED INCOME TAXES 10,931 10,366 COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY: Common stock, $0.10 par value, shares issued and outstanding - 22,470 at June 30, 2005 and 22,312 at December 31, 2004 2,247 2,231 Additional paid-in capital 30,561 28,882 Deferred compensation (1,116) (789) Other comprehensive income (loss) (1,149) (1,570) Retained earnings 292,050 273,913 Total stockholders' equity 322,593 302,667 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $864,780 $864,753 TBC CORPORATION SUPPLEMENTARY DATA (In thousands, except percentages and store counts) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (Restated) (Restated) 2005 2004 2005 2004 RECONCILIATION OF EBITDA TO NET INCOME: EBITDA $30,946 $25,914 $52,410 $45,181 Less - Depreciation and Amortization 6,945 6,829 13,954 13,582 Interest Expense - net 5,032 5,103 9,983 9,205 Provision for Income Taxes 6,905 4,951 10,336 7,963 NET INCOME $12,064 $9,031 $18,137 $14,431 SEGMENT INFORMATION: NET SALES - Retail $315,303 $298,755 $608,463 $584,371 Wholesale $167,072 157,735 $340,284 305,960 Consolidated $482,375 $456,490 $948,747 $890,331 EBITDA - Retail $19,642 $15,330 $32,510 $27,908 Wholesale 11,304 10,584 19,900 17,273 Consolidated $30,946 $25,914 $52,410 $45,181 CAPITAL EXPENDITURES $5,129 $7,446 $9,070 $14,292 RETAIL SAME-STORE SALES % CHANGE 4.1% 1.1% 3.4% 3.5% RETAIL STORE COUNTS, at end of period Company Operated Stores 613 598 Franchised Big O Stores 562 570 Total 1,175 1,168 DATASOURCE: TBC Corporation CONTACT: Thomas W. Garvey, Executive V.P. & Chief Financial Officer of TBC Corporation, +1-561-227-0955; or Investors: Betsy Brod or Jonathan Schaffer, both of Brod & Schaffer, LLC, +1-212-750-5800 Web site: http://www.tbccorp.com/

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