The quarter ended Sept. 30 proved to be a mixed bag for the eight publicly held companies involved in the tire industry that have reported results. While all but two—Bandag Inc. and Titan International Inc.—saw their sales increase, only four could say the same for their earnings. Of the four whose earnings fell, two—Titan and Standard Products Co.—finished the three months in the red.
Individual company results follow.
FORT SMITH, Ark.—A near doubling of operating income by its Treadco Inc. subsidiary helped Arkansas Best Corp. post the highest net income for any quarter in its history.
Treadco's operating income for the period ballooned 98.3 percent, compared with the 1998 quarter, to $2.79 million, on a 3.4-percent increase in revenues to $53.9 million.
Treadco, a commercial tire dealership chain with significant retreading operations, experienced strong demand in all segments of its business, according to Arkansas Best President and CEO Robert A. Young III, and ``is beginning to see the benefits of tight inventory control, employee training and a focus on adding higher-margin business.''
Net income for Arkansas Best swelled 98.6 percent in the three months to $16.1 million on 7.7-percent growth in operating revenues to $452.9 million.
For the first nine months of 1999, Treadco's operating income jumped 29.9 percent $3.03 million on a 3.5-percent increase in revenues to $141.5 million, while Arkansas Best reported a 77.8-percent leap in net income to $34 million, while operating revenues rose 5.3 percent to $1.27 billion.
MUSCATINE, Iowa—Bandag Inc. reported a 3.4-percent increase in net earnings for the quarter, to $18.1 million, despite a 3.3-percent drop in sales to $273.2 million.
Chairman and CEO Martin Carver said the period was characterized by lower sales in the company's traditional retreading business and higher-than-expected expenses in its new Tire Management Solutions Inc. venture. Those factors, plus an anticipated pre-tax charge of about $15 million in the fourth quarter will negatively impact Bandag's full-year results, Mr. Carver said.
``In our traditional business, we continued to see the effects of losing certain key distributors in our North American market,'' he said. In September, Bandag filed suit against Michelin North America Inc., accusing that company of raiding its franchise network and coercing Bandag franchisees to switch to Michelin Retread Technologies Inc.
For the nine months, Bandag's net earnings grew 8.4 percent to $44.2 million, while sales slid 4.5 percent to $749.5 million.
The company's commercial dealership subsidiary, Tire Distribution Systems Inc., saw its third-quarter operating earnings tumble 20.2 percent to $1.72 million, though sales rose 6.8 percent to $112.6 million, an increase wholly attributable to acquisitions, Mr. Carver said.
For the nine months, TDS' operating earnings plunged 79 percent to $662,000, though sales advanced 2.6 percent to $294.9 million.
FINDLAY, Ohio—As previously reported (Tire Business, Oct. 25, 1999), Cooper Tire & Rubber Co.'s third-quarter sales climbed 10.7 percent to $531.9 million, a record, yielding net income of $34.6 million, up 15.2 percent.
For the nine months, earnings swelled 16.9 percent to $103.9 million on an 8.3-percent increase in sales to $1.5 billion.
AKRON—The cost of combining Goodyear and Dunlop tire operations in North America and Europe along with what it called ``under-performance'' in its North American Tire unit and continued weak economic conditions in Latin America sent Goodyear's net income for the quarter plummeting 47.5 percent to $97.2 million.
Sales for the three months slipped 3 percent to $3.29 billion.
In the North American Tire business unit, charges of $134.7 million, primarily related to inventory write-offs, sent operating income for the quarter $108.6 million into the red. Sales edged up 1.2 percent to $1.62 billion on the strength of a 4.2-percent increase in unit sales.
The company also cited a change in product mix to lower-margin tires, as well as an inability to increase production to meet stronger-than-anticipated demand as reason for the loss. In response to the latter item, the company recently decided to resume passenger tire production at its Gadsden, Ala., plant, where tire-making had been slated to cease by year-end.
For the nine months, the North American unit's operating income plummeted 97.5 percent to $7.4 million, as sales grew 6.7 percent to $4.71 billion.
For the entire company, nine-month net income dived 66.4 percent to $188.4 million on a 1-percent slump in sales to $9.33 billion.
AKRON—Myers Industries Inc., parent of Myers Tire Supply and Patch Rubber Co., experienced a 19.3-percent drop in net income for the quarter, which it attributed to seasonal slowdowns in recently acquired businesses, as well as substantial increases in plastic resin prices.
Sales for the period leapt 51.6 percent to $139.8 million, much of it due to acquisitions. In its distribution segment, which includes the tire supply business, sales slipped 2 percent, though margins increased due to a favorable product mix.
For the nine months, net income rose 9.7 percent to $21.4 million on a 47.1-percent jump in sales to $414.2 million.
DEARBORN, Mich.—In its final full quarter as an independent company, Standard Products Co. recorded a net loss of $9.65 million, the result of a pre-tax charge of $23.5 million related to the reorganization of its European manufacturing operations. This compares with a profit of $434,000 a year ago.
Standard Products, whose acquisition by Cooper Tire & Rubber Co. closed Oct. 27, saw its sales for the three months ended Sept. 30—the first quarter of its 2000 fiscal year—rise 14.1 percent to $264.4 million.
Excluding the nonrecurring charge, Standard Products said its first-quarter results were near record levels.
Its tread rubber subsidiary, Oliver Rubber Co., increased sales by 15.1 percent in the quarter, to $43.9 million. No information was disclosed regarding Oliver's earnings.
MEMPHIS, Tenn.—Increases in unit shipments of tires helped TBC Corp. produce record sales and net income for the quarter.
The company's third-quarter net income shot up 19.1 percent to $6.56 million on an 18.5-percent surge in sales to $210.5 million.
President and CEO Larry Day said the basis of the company's success was its ability to provide superior overall service to independent tire dealers, whom he called ``the dominant marketing force in the replacement tire industry.''
TBC also is aggressively pursuing other opportunities to broaden its market penetration, Mr. Day said. ``We are continuing to expand the number of locations with our Big O Tire system by adding individual locations and have the potential to increase our direct retail presence further through joint ventures, strategic alliances and acquisitions.''
For the nine months, TBC's net income grew 2.4 percent to $12.7 million as sales climbed 16.7 percent to $560.3 million. The nine-month results include a one-time charge of $2.8 million, without which the company's net income would have risen 25 percent, compared with the 1998 period.
Unit tire shipments were up 10 percent through the nine months, Mr. Day said, due in part to TBC's acquisition of a large distributor, Carroll Tire Co., in November 1998, but also to increased business with existing customers.
Looking ahead, Mr. Day said, ``The outlook for the replacement tire industry appears very favorable based on the high level of new vehicle sales in recent years.''
QUINCY, Ill.—A significant downturn in the agricultural economy combined with ongoing labor problems at its tire plants in Des Moines, Iowa, and Natchez, Miss., sent Titan International $5.86 million into the red for the third quarter as sales sagged 8.9 percent to $136 million.
However, President and CEO Maurice Taylor Jr. pointed to the company's recent management realignment and a pending contract with Caterpillar Inc. for LSW (low-sidewall) wheel and tire assemblies for skid-steer loaders as signs Titan is positioning itself for long-term growth.
Mr. Taylor made no mention of the prospects of completing a merger agreement with Carlisle Companies Inc. An agreement announced earlier this year expired in September without the deal being consummated.
Through the first nine month of the year, Titan lost $5.47 million, compared with net income of $13.5 million in 1998, while sales skidded 12.4 percent to $453.6 million.