TBCC Tbc Corp (MM)

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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