Bandag sales are up, earnings are down in 3Q
Bandag Inc. reported consolidated net earnings of $9.2 million on consolidated net sales of $260.2 million for the third quarter ended Sept. 30. That compares to earnings of $18.7 million on sales of $245.3 million in third quarter of 2005.
During third quarter 2006, Bandag incurred pre-tax expenses of $13.3 million associated with the following:
* the previously-announced closing of its manufacturing plant in Shawinigan, Quebec;
* employment reduction programs in North America; and
* an employee reduction program in International.
Consolidated net sales for the first nine months of 2006 were $719.8 million, an increase of 9% over the same period in 2005. Consolidated earnings from continuing operations were $25.4 million, compared to $37.4 million last year.
(During the first quarter of 2006, Bandag recorded the deferred loss on the sale of its business in South Africa. As a result, the company's net earnings were $9 million.)
"Though North American volume in our traditional business was down due to the loss of distribution and ongoing competition from imported new tires, both TDS and Speedco delivered strong revenues and continue to benefit from the relatively strong commercial trucking activity," says Martin Carver, Bandag's chairman and CEO.
"While it's too soon to see any benefits from lower crude oil prices on either our raw material or operating costs, Bandag has better aligned its operating costs with market needs."
Carver says benefits are beginning to emerge from the company's voluntary and involuntary reductions-in-force and the closing of a Canadian manufacturing facility. They are "on track to contribute to fourth quarter results."
"Outside of North America, similar efforts are underway to identify excess costs, though we don't anticipate seeing the benefits of most of the reductions until 2007," he says. "In North America, as we've sharpened our focus on the basics of our business, Bandag Strategic Alliance dealers in both the U.S. and Canada have been supportive."