FORT SMITH, Ark.-When Treadco Inc.'s new president and CEO John R. Meyers talked to industry analysts and major shareholders at the end of October, the message was simple and upbeat: Treadco will continue. That's an optimistic statement for the nation's largest independent retreader, which has been rocked by a string of upsets-the non-renewal of eight Bandag Inc. franchise agreements, the sudden defection of the company president, J.J. Seiter, and two vice presidents to Bandag, and a 58.5-percent plunge in third-quarter earnings.
Analyst Jonathan Braatz summed up in one word many outsiders' reaction to the sudden exodus of three top Treadco executives: ``confused.''
Mr. Braatz, who follows Treadco for Fahnestock & Co. in Kansas City, Mo., admitted he is at a loss to predict the long-term implications of the recent events. ``I can't get a handle on the situation,'' he said.
``We acknowledge the departure of three (executives) has shaken confidence on (Wall Street),'' said Treadco's Mr. Meyers. ``But we have 700-plus employees committed to serving the customer.''
Mr. Meyers noted that he and Daniel Evans, newly named executive vice president and COO, ``are not new to Treadco.''
Prior to his Oct. 25 appointment, Mr. Meyers spent 16 years as vice president-treasurer for Arkansas Best Corp., Treadco's former parent company and still a major stockholder. He also served as Treadco's treasurer while the retreader was a wholly owned subsidiary of Arkansas Best. Mr. Evans is an 18-year veteran of Treadco.
In spite of the upheaval and shrinking earnings, Mr. Meyers has asked shareholders ``to be patient with us.''
Treadco said its third quarter, ended Sept. 30, reflected the continued slow-down in the trucking industry, competitive pricing and high raw materials costs. Net income plummeted 58.5 percent, compared with the year-earlier period, to $828,031 on a 2.6-percent rise in sales to $40.7 million.
Retreading sales edged up 1.6 percent for the quarter to $21.5 million, while new-tire sales rose 3.6 percent to $19.2 million.
For the first nine months of 1995, net earnings fell 38.9 percent to $2.81 million, though sales climbed 6.7 percent to $112.6 million.
Mr. Meyers noted the company also has absorbed start-up costs for two new-construction ventures with suppliers other than Bandag, that should begin producing income next year.
These two ventures have strained the Treadco-Bandag relationship this year, resulting in Bandag's decision not to renew franchise agreements for eight Treadco plants and putting the future of the remaining 18 plants in doubt.
Treadco has since signed Oliver Rubber Co. to supply any plants that lose their Bandag franchise.
Mr. Meyers said Treadco, which until this year has used the Bandag retreading process exclusively, will continue to explore new markets and look for opportunities to sell ``Treadco'' rather than a particular retreading process-though it will promote Bandag, if that's what it takes to serve the customer.