Bandag Inc. posted net earnings of $10.9 million on consolidated net sales of $253.7 million for the fourth quarter ended Dec. 31, 2006. That compares to earnings of $12 million on sales of $252.3 million for the same period the previous year.
Consolidated earnings from continuing operations totaled $11.2 million for the quarter, compared to net earnings of $12.1 million for 4Q 2005.
For fiscal year 2006, Bandag reported net earnings of $19.9 million on net sales of $973.6 million. That compares to earnings of $49.5 million on sales of $914.6 million for the fourth quarter in 2005. Consolidated earnings from continuing operations for 2006 were $36.6 million. (During 2006, Bandag recorded the previously announced deferred loss on the sale of its business in South Africa.)
"The combined effects of the buildup of new trucking equipment capacity, on-going uncertainty in energy and raw material prices, and continued slow freight volumes -- particularly early in the fourth quarter -- suppressed unit and sales volume in Bandag's traditional retread business," says Martin Carver, chairman, CEO and president. "Both Tire Distribution Systems Inc. (TDS), Bandag's tire distribution subsidiary, and our Vehicle Services business unit, which includes Speedco's on-highway truck lubrication business, delivered solid sales improvements.
"In Bandag’s traditional businesses, our 2006 business simplification efforts set the stage to contain operating costs and help counter generally slow growth in trucking freight volumes, particularly in North America."
On Dec. 5, 2006, Bandag announced that it had entered into a definitive merger agreement with Bridgestone Americas Holding Inc. The proposed merger remains subject to shareholder approval and other regulatory approvals, as well as the satisfaction of customary closing conditions. The transaction is expected to be completed in the second quarter of 2007.
Business unit highlights, 4Q
* North American business unit volume decreased 12% compared to fourth quarter 2005; net sales decreased 8%.
* European business unit volume and net sales increased 1%. Net sales were negatively impacted by lower fleet sales and an increase in sales incentive programs.
* International business unit volume decreased 7% and net sales decreased 8%. Excluding South Africa, unit volume increased 8% and net sales increased 6%.
* TDS net sales increased $6.7 million, or 15%, from the prior year period. Net sales were positively impacted by increased unit sales and higher prices.
* Vehicle Services business unit net sales increased $6.9 million, or 31%, primarily due to an increase in Speedco net sales of $4.3 million compared to the prior year period. Same-store Speedco lube sales increased $0.5 million, or 3%, but same store tire sales decreased $0.1 million, or 5%.
As of Dec. 31, 2006, same-store lube sales included 35 locations and same store tire sales included 21 locations. Overall, Speedco had 47 locations, 39 with tire service capabilities, as of Dec. 31, 2006, compared to 35 locations, 23 with tire service capabilities, at the same time last year.
Truck Lube 1, which provides light truck maintenance, was purchased in April 2006 and contributed $2.3 million to fourth-quarter net sales.
