TBC´s Day on NTB integration: ´I give us a B+´

July 27, 2004

"The traditional National Tire & Battery (NTB) inventory was just replaced with our product screen," TBC Corp. CEO and President Larry Day told investors this morning. "As we move forward, we´ll see a higher penetration of TBC (private brand) tires" at NTB locations.

Private brand tires comprise 27% to 28% of NTB´s product line-up at the moment, but Day believes 50% penetration "is reasonable."

Consumer spending at the retail level during the second quarter was "conservative," according to Day.

However, he believes this will benefit TBC´s private brand sales throughout the third and fourth quarters.

"Consumers are delaying the purchase of new tires. Fortunately, they can´t defer tire purchases indefinitely. We expect private label sales to be strong."

TBC fully integrated its 225 NTB stores in late March, says Day.

He reports that "we´ve reversed a three- to four-year comparative store sales slide" at NTB.

This has allowed TBC to enter its second phase of NTB development, which includes product screen development, sales service training and other initiatives.

"Cost control is an area where we have opportunity."

TBC declined to reveal NTB´s sales for the second quarter.

The Memphis, Tenn.-based company reported Q2 2004 net income of $9.1 million on net sales of $456.5 million vs. net income of $8 million on sales of $328.8 million for the same period last year.

TBC´s total unit tire sales increased 18.4% during the second quarter. Same store sales for its retail segment -- which also includes Tire Kingdom Inc. outlets and Big O Tires Inc. franchise locations -- grew 1.1%.

TBC has 598 company-owned Tire Kingdom stores and 570 Big O franchises.