AKRON-It was a good summer for most publicly held companies in the tire industry, as witnessed by recently released reports for the July-August-September quarter. Of 10 companies reporting, nine posted sales increases, while seven improved their earnings, compared with the year-earlier period.
Four companies-Carlisle Companies Inc., Cooper Tire & Rubber Co., Goodyear and Myers Industries Inc.-reported record results for the period, while a fourth, Bandag Inc., said it probably set sales and earnings records as well.
Sudbury Inc. showed the greatest improvement: Its earnings more than doubled on a 23.7-percent increase in sales.
But for sheer volume, Goodyear's results dwarfed the others. The tire-making giant posted earnings of $151.3 million on record sales of $3.1 billion.
The picture was not without its darker side, however. Of the three companies whose quarterly earnings fell, two-Big O Tires Inc. and TBC Corp.-are primarily involved in distributing tires to independent retailers (franchisees, in Big O's case).
Still, Big O's sales rose, and the franchiser said it would have finished well in the black, had it not been for a couple of significant one-time charges.
Discussions of each company's results follow. Unless otherwise specified, result are for the three and nine months ended Sept. 30. Comparisons are with the comparable period of the previous year.
Bandag Inc.'s net earnings leaped 30.2 percent for the quarter to $29.4 million on a 14.9-percent jump in sales to $177.2 million.
In a published report, Chief Financial Officer Thomas Dvorchak said he had checked back through company records and could not find a quarterly report where Bandag had higher sales volume and earnings.
``I think this is a record. I haven't gone out and published it anywhere, but I think it is,'' he said.
For the first nine months of the year, the Muscatine, Iowa-based maker of retreading materials and equipment reported net earnings of $66.4 million, 19.2 percent higher than a year ago, as sales grew 8.6 percent to $466.9 million.
Big O Tires Inc. posted its first quarterly sales increase this year-up 4 percent to $36.7 million-but net income fell 16.2 percent to $599,000.
Management attributed the earnings drop to the cost of implementing a shareholder proposal that required the hiring of an investment banker to help the dealership franchiser evaluate alternatives for enhancing the value of its stock. That cost was put at $246,000.
However, the company also took a one-time charge of $209,000 during the quarter associated with the sale or closure of three retail locations.
Without those non-recurring charges, Big O's pre-tax income for the quarter climbed 20.5 percent.
The company said the sales increase was due, at least in part, to the success of its new ``Cost U Less'' marketing program, implemented during the quarter, which has gotten ``a tremendous response from the customer,'' according to President and CEO Steven P. Cloward.
Big O's replacement passenger and light truck tire sales, in units, are running ``well ahead'' of industry levels, Mr. Cloward said.
For the nine months, Big O's earnings soared 47.3 percent to $1.45 million, though sales were flat at $94.1 million.
Record sales and earnings in its specialty tires and wheel operations during the third quarter helped Carlisle Companies Inc. post records at the corporate level as well.
The company said strong demand from original equipment manufacturers in the lawn and garden, golf cart and trailer tire markets boosted specialty tire/wheel sales 20 percent, for a 30-percent jump in earnings. Sales and earnings figures for this segment were not reported.
Overall, Carlisle's net earnings for the quarter swelled 25.9 percent to $10.2 million, on a 14.6-percent increase in sales to $184.1 million.
For the nine months, earnings grew 26.6 percent to $27.1 million, as sales rose 13.7 percent to $522.6 million.
Third-quarter shipments of replacement tires-especially winter designs-were ``excellent,'' according to Cooper Tire & Rubber Co. officials, and contributed to the company's record results for the period.
Cooper's net income shot up 40.9 percent to a record $35.5 million, on the strength of a 17.5-percent surge in sales to a record $383.5 million.
For the nine months, earnings advanced 20.2 percent to $89.4 million, as sales grew 15.9 percent to $1.04 billion.
Looking ahead, Cooper said rising raw material costs, coupled with a very competitive pricing environment, could squeeze operating margins.
Strong tire unit sales worldwide, both original equipment and replacement, contributed to Goodyear's record third-quarter sales of $3.1 billion, an increase of 6.9 percent.
The company's net income rose 11.1 percent to $151.3 million, reflecting lower interest expenses, reduced foreign exchange expenses-particularly in Brazil-and improved earnings at the company's All American Pipeline subsidiary, now operating in the black.
A 9.3-percent jump in worldwide tire unit sales propelled tire sales 8 percent to $2.7 billion-accounting for 87.1 percent of total corporate sales.
However, operating income for the tires segment slipped 4.4 percent to $249.8 million, the victim of competitive pricing and the increased cost of raw materials, Goodyear said.
Goodyear's total sales in the U.S. and Canada rose about 6 percent in the quarter to $1.97 billion, or 63.5 percent of the worldwide total.
For the nine months, Goodyear's consolidated net earnings soared 56.8 percent to $430.5 million on record sales of $9.1 billion, an increase of 4.6 percent.
According to Chairman and CEO Stanley C. Gault, ``...income from continuing operations for the nine-month period was the highest in company history.''
Akron-based Myers Industries Inc., parent of Myers Tire Supply and Patch Rubber Co., posted record sales and earnings for the third quarter.
Net income jumped 23.4 percent to $3.87 million, as sales rose 8.2 percent to $66.2 million.
For the nine months, earnings rose 16 percent to $12.5 million on an 8.5-percent increase in sales to $194.3 million.
Higher manufacturing costs and more sales of lower-margin products led to a decrease in operating income for tread rubber maker Oliver Rubber Co., a subsidiary of Cleveland-based Standard Products Co., despite a 12-percent increase in sales. For Standard Products, the three months ended Sept. 30 constitute the first quarter of its 1995 fiscal year.
Oliver also has decided to withdraw from the European market, Standard Products said, but the cost of closing its European subsidiary was offset by tax benefits.
Standard Products does not break out Oliver's sales and earnings. Corporate earnings for the quarter, ended Sept. 30, plunged 40.3 percent to $2.90 million, despite a 9.5-percent increase in sales to $220.9 million.
``(P)articularly improved results'' from its Iowa Mold Tooling subsidiary, a maker of tire service truck bodies, helped Cleveland-based Sudbury Inc. more than double its net income in the three months ended Aug. 31-the first quarter of its 1995 fiscal year.
Earnings for the period soared 105.1 percent to $2.22 million, as sales leaped 23.7 percent to $67.7 million. Sudbury does not break out the results of individual subsidiaries.
Memphis, Tenn.-based TBC Corp., a marketer and distributor of private label tires and automotive products, reported slightly lower results for the third quarter, despite having essentially the same level of tire unit shipments.
Net earnings slid 4 percent to $5.66 million, as net sales slipped 0.9 percent to $157.5 million.
For the nine months, net earnings fell 12.9 percent to $14.4 million, on a 3.4-percent decrease in sales to $424.2 million.
During the quarter, TBC's board authorized the repurchase of 2.5 million shares of TBC stock, and 1.65 million shares were bought back during the period. Those actions will enhance the value of the remaining outstanding shares, according to President and CEO Louis S. DiPasqua.
TBC experienced a positive trend in demand in September, which Mr. DiPasqua called ``an encouraging sign.''
Sales from ``new stores'' (those acquired during or since last year's third quarter) accounted for nearly two-thirds of Treadco Inc.'s 20-percent jump in total third-quarter sales, to $39.7 million.
Retreading sales accounted for about 53 percent of the total; sales of new tires, for about 47 percent, the company said.
Net income for the three months climbed 15.1 percent to $1.99 million.
For the nine months, the Fort Smith, Ark.-based company's earnings grew 17.4 percent to $4.59 million, while sales leapt 28.9 percent to $105.6 million.
Said President J.J. Seiter: ``Last year, Treadco surpassed $100 million in sales for the first time. This year, we reached the $100 million mark during the third quarter, while increasing net income for the nine months by 17 percent.''