AKRON-Goodyear and Myers Industries Inc. posted record sales and earnings in the second quarter, heading a list of companies reporting favorable results. As they did in the first quarter, most publicly held companies in the tire industry reported improved quarterly performances, compared with the 1993 period.
Companies with significant involvement in retreading, such as Bandag Inc. and Treadco Inc., also posted increases.
The only companies to suffer sales decreases in the quarter-TBC Corp. and Big O Tires Inc.-both derive a significant portion of their revenues from the distribution of private label tires to independent dealers/franchisees.
And while improved margins enabled Big O to significantly improve its net earnings for the quarter, TBC saw its income tumble 35 percent.
More detailed discussions of each company's results follow. Unless otherwise indicated, the results are for the second quarter and first half of 1994, which ended June 30.
Bandag Inc., the Muscatine, Iowa-based producer of precured tread rubber and retreading equipment, increased second-quarter earnings 12.3 percent to $21.6 million, as sales climbed 6.1 percent to $158 million.
First-half earnings rose 11.8 percent to $37.1 million on a 5.1-percent improvement in sales to $289.7 million. Six-month earnings included $983,000 from the sales of securities in the first quarter, without which the percentage increase, compared with the first half of 1993, would have been 8.8 percent.
Big O Tires
Higher gross margins combined with lower selling and administrative expenses helped Big O Tires Inc. boost second-quarter income more than threefold, despite a slight decrease in sales.
For the three months, Big O's net income soared 240.3 percent to $650,000, while sales slipped 2.3 percent to $31.1 million.
President and CEO Steve Cloward said sales of higher-margin Big O brand tires and reduced warranty expense on the company's newer tire lines increased the company's second-quarter gross margin by 2.7 percentage points to 24.2 percent. Warranty expense during the period declined by more than 4.4 percent, he said.
At the same time, selling and administrative expenses fell 4.3 percent, reflecting in part the company's warehouse consolidation program, Mr. Cloward said.
Big O took a one-time charge of $604,000 against its second-quarter earnings resulting from the sale of one company-owned store and the closure of four others, all of which the company said were unprofitable.
Big O sold a company-owned store in Shawnee, Okla., and closed stores in Norman, Okla.; Pueblo and Littleton, Colo.; and Winchester, Ky.
The 1993 quarter's results included a one-time charge of $559,000, related to warehouse consolidation costs.
For the half, Big O reported a threefold increase in net income to $855,000, despite a 2.4-percent decline in sales to $57.5 million.
The Englewood, Colo.-based franchiser currently has 368 retail tire stores in 18 states, mainly in the West and Midwest.
Increases in tire unit sales in all geographic regions worldwide helped Goodyear achieve record net income of $163.2 million for the second quarter, a jump of 18.6 percent from the 1993 period.
Sales for the three months edged up 1.7 percent to $3.05 billion, though if sales of divested assets were excluded, this figure also would be a record, Goodyear said.
Operating margins improved during the quarter, while sales, administrative and general expenses fell, as did interest expense, according to Chairman and CEO Stanley Gault, with the debt:debt-plus-equity ratio dropping to 38.4 percent.
For the first half, Goodyear's net income doubled to $279.2 million, as worldwide sales grew 2.6 percent to $5.96 billion. However, the 1993 half included a charge of $86.3 million related to accounting changes, without which income growth would have been 24.3 percent.
All of Goodyear's business segments reported improved operating results for the quarter. In the largest, tires, which accounts for 85 percent of total corporate sales, worldwide unit sales rose 3 percent, as both replacement and original equipment units increased.
The oil transportation segment, comprising the All American Pipeline from California to Texas, posted operating income of $3.2 million for the quarter, vs. a loss of $2.7 million in the 1993 period.
By geographic segment, results likewise improved. In the U.S., operating income for the quarter rose 4.7 percent on a 1.6-percent increase in sales.
Other strong segments included Latin America and Asia, where operating income climbed 9.9 and 41.1 percent, respectively, on sales increases of 3 and 15.8 percent.
Even in Europe, operating income rose marginally, despite a 3.7-percent decrease in sales.
Myers Industries Inc. said its second-quarter net sales and net earnings were the highest for any quarter in its 61-year history.
The Akron-based parent of Myers Tire Supply and Patch Rubber Co. reported net sales of $68.4 million for the quarter, 7.7 percent higher than a year ago, while net income surged 17.5 percent to $5.14 million.
For the half, the company reported a 13-percent increase in net income to $8.64 million on an 8.6-percent leap in sales to $128.1 million.
Cleveland-based Sudbury Inc. concluded its fiscal year May 31 with the most profitable quarter since its emergence from Chapter 11 bankruptcy protection in September 1992.
The company, parent of Iowa Mold Tooling Co., a maker of bodies for tire service trucks, posted fourth-quarter net income of $5.17 million, almost three times greater than the $1.85 million it earned a year earlier.
Sales from continuing operations jumped 18.7 percent to $74.5 million.
For the year, Sudbury earned $6.83 million on sales of $250.3 million. Total earnings were reduced by a third-quarter charge of nearly $6 million for a bonus paid to Jacques Sardas, the company's chairman, president and CEO, for achieving certain performance objectives.
Comparative results for the year are not meaningful due to the company's Chapter 11 status for part of fiscal 1993.
TBC Corp.'s net earnings for the second quarter, ended June 30, tumbled more than one-third, as sales fell 13.9 percent to $132.9 million.
The drop in earnings, down 35.1 percent to $3.6 million, was exacerbated by a charge of $1.4 million, based on the actuarial computation on the accumulated benefits in the company's supplemental retirement program.
For the first half, earnings skidded 17.8 percent to $8.69 million on a 4.8-percent decline in sales to $266.7 million.
TBC's tire unit shipments in the second quarter dived 13.2 percent, a more-dramatic-than-expected fall-off after the 13.3-percent increase in shipments in the first quarter, according to President and CEO Louis DiPasqua.
The increase in first-quarter demand and the subsequent decline likely was influenced, he said, by the round of price hikes most major tire makers implemented between March and May, as many independent dealers chose to stock up in anticipation of the higher prices.
For the first half, TBC's tire unit shipments were down 1.4 percent, Mr. DiPasqua said. He expressed optimism that second-half shipments would be comparatively stronger and that the company would show an increase for the year.
Based in Memphis, Tenn., TBC is a large marketer and distributor of private brand tires and replacement automotive products.
Treadco Inc. saw its second-quarter earnings soar 30 percent to $1.7 million on the strength of a 35-percent increase in sales to $35.9 million.
The company said about 60 percent of its sales increase came from new stores, i.e. ones not in operation during the 1993 quarter. Chief among these are five full-service commercial outlets (including four Bandag retread plants) in Florida that Treadco acquired last August from Trans World Tire Corp.
Still, stores open a year or more experienced a 13.9-percent increase in sales during the quarter, the company said.
Sales from retreading jumped 30.4 percent to $19.8 million, while sales of new tires leapt 41.1 percent to $16.1 million.
For the first half, Treadco's earnings climbed 19.3 percent to $2.6 million, while sales soared 37.3 percent to $65.9 million, again driven by new-store sales, which accounted for 64 percent of the total increase.