TBC reports 13.7% increase in second-quarter income
TBC Corp. reported net income of $9.1 million on net sales of $456.5 million for the second quarter ended June 30, 2004. That compares to net income of $8 million on sales of $328.8 million for the same period a year ago.
TBC´s total unit tire sales increased 18.4% in the second quarter compared to 6.9% for the industry (based on preliminary reports for domestic unit shipments). Same store sales for the company´s retail segment increased 1.1%.
Strong wholesale business was highlighted by the performance of the private brands division, which benefited from new account activity, favorable pricing and solid cost controls.
The retail business posted positive comparable store sales and experienced increased demand for its services offerings. The introduction of private brand tires at the 225 NTB stores acquired by TBC last December continued on plan.
"We achieved our financial goals for the period and are pleased with the company´s performance, particularly in light of a challenging retail environment," says Larry Day, TBC CEO and president. "While we expect these market conditions to continue in the near term, we are confident of our ability to realize our 2004 performance objectives through the contribution from our newly acquired retail locations, favorable product and service mix, and rigorous cost controls.
"As we move ahead, we look forward to benefiting from improved operating leverage in our retail operations while we remain active in growing our store base."
For the six months ended June 30, 2004, net income grew 16.2% to $14.6 million vs. $12.6 million in the prior-year period. Net sales rose 52.1% to $890.3 million compared to $585.4 million for the first-half of last year. Total unit tire sales increased 24.8% compared to an industry increase of approximately 7.3%.
Retail same-store sales increased 3.5% through the first six months.
Results for the second quarter and first six months of 2004 reflect the negative impact of EITF 02-16 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.
As of June 30, TBC had a combined total of 1,168 stores in its retail network -- 598 company-operated Tire Kingdom locations and 570 franchised Big O stores. That´s an increase of 29%, or 262 locations, since June 30, 2003.
Exclusive of any further acquisitions, the company says it expects to add an additional 25 to 30 retail locations in the second half of 2004.
TBC´s stock price closed at $21.92 on the NASDAQ stock exchange on Tuesday. That compares to a 52-week high and low of $30.90 and $18.20, respectively.