TBC Corp. reported net income of $12.1 million on net sales of $482.4 million for the second quarter ended June 30, 2005. That compares to earnings of $9 million on sales of $456.5 million for the same period a year ago.
Comparatively, the company's earnings and income were up 33.6% and 5.7%, respectively. TBC's net income represented 2.5% of net sales.
Other financial results include the following:
* 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.
Second-quarter results reflect a 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, according to the company.
TBC'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.
"Our wholesale business remained strong during the period and price increases instituted at the beginning of July are holding," says CEO and President Larry Day. "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 first six months of 2005, net income grew 25.7% to $18.1 million versus $14.4 million in the first half of 2004. 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% through the first six months. TBC has a combined total of 1,175 stores in its retail network; 613 are company-operated, while 562 are 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.
"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," says Day.
"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, Aug. 16, at 9 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 Sept. 15, 2005.
TBC's stock was selling for $27.64 a share at the close of NASDAQ on Friday, Aug. 12. That compares to a 52-week high of $30.44 and low of $18.80.
