AKRON (Feb. 11, 2000) — As year-end and fourth-quarter financial results began to filter in for tire industry-related companies, TBC Corp. and Cooper Tire & Rubber Co. reported record sales and earnings, while Bandag Inc.´s financials were off the mark due to a number of factors.
A 9.3 percent increase in unit shipments of tires, coupled with continued growth in its Big O Tires Inc. franchising operation, helped TBC Corp. achieve record net sales and earnings for 1999.
The Memphis, Tenn.-based company´s 1999 income rose 6.2 percent to $17.9 million, which includes a special $2.8 million after-tax charge in the second quarter and a net gain from the sale of certain assets in the fourth quarter. The previous year´s net income was $16.9 million.
Net sales for the year jumped 15 percent to $743.1 million vs. $646.1 million in 1998.
For the three-month period ended Dec. 31, TBC saw net earnings grow 16.5 percent to $5.27 million compared with $4.52 million for the year-earlier period. Net sales for the same time frame were up 10.2 percent to $182.7 million.
President and CEO Larry Day said TBC´s "core emphasis during 1999 continued to be on serving independent tire dealers, who remain the dominant force in the replacement tire market."
TBC said its Big O chain closed the year with 454 stores—up from 436 the previous year.
Despite falling short of analysts´ estimates for its fourth-quarter results, for the year Cooper Tire & Rubber Co. reported record sales and earnings.
Net income for 1999 was $135.5 million, an increase of 6.7 percent over 1998, while net sales in 1999 shot up 17.1 percent to $2.2 billion, compared to the previous year´s sales figures.
Although Cooper´s net sales for the fourth quarter soared 41.3 percent to $701.2 million, its net income slid 17.2 percent to $31.53 million vs. the same 1998 period.
Broken down into segments, the Findlay, Ohio-based company rang up tire sales of $1.56 billion for the year vs. $1.44 billion in 1998—an increase of 7.7 percent.
Its automotive sector had sales of $643.6 million compared with $431.8 million for the previous year.
For the quarter, Cooper netted $412.3 million in tire sales—a rise of 8.5 percent—while its automotive net sales leaped 59.4 percent over the same 1998 period to hit $293.3 million.
Cooper Chairman and CEO Patrick W. Rooney, who announced his impending retirement in June, called 1999 a "landmark year."
He cited Cooper´s acquisition of Dean Tire, thus adding a seventh brand to its proprietary lines, the strategic alliance Cooper entered with Pirelli Tire North America, its acquisition of the Standard Products Co. and its announced purchase of Siebe Automotive.
Costs of restructuring, combined with lower sales of tread rubber and higher operating costs at a major subsidiary, sent Muscatine, Iowa-based Bandag Inc.´s net earnings plummeting 56.3 percent for the fourth quarter of 1999.
For the three months ended Dec. 31, Bandag´s net earnings plunged to $8.11 million from $18.5 million in the year-earlier quarter, while net sales slipped 4.3 percent to $263.2 million.
The fourth-quarter results included a one-time charge of $13.5 million for restructuring costs, primarily in North America in the company´s traditional tread rubber and retreading equipment business. After tax benefits, this charge took approximately $7.7 million off the company´s bottom line. Without it, Bandag´s net earnings would have slid only about 14.7 percent.
For the full year, net earnings skidded 11.8 percent to $52.3 million on a 4.4-percent drop in sales to $1.01 billion. Again, without the one-time charge in the fourth quarter, the company´s net earnings for the year would have risen by slightly more than 1 percent.
While costly in the short run, the restructuring program has left Bandag with a streamlined organization focused on "key initiatives," said Chairman and CEO Martin G. Carver.
Globally, the company´s sales of tread rubber dropped 6 percent for both the fourth quarter and full year, Mr. Carver said.
Within the company´s Tire Distribution Systems Inc. (TDS) subsidiary, a 20.5-percent increase in operating expenses combined with the costs of acquisitions to increase the unit´s fourth-quarter operating loss nearly fivefold to $3.17 million.
Sales for the quarter rose 3.7 percent to $98.3 million, but the increase was entirely attributable to acquisitions, Mr. Carver said. Without them, TDS´ sales were off 2 percent—primarily the result of discontinuing the sales of certain off-the-road tires.
For the year, TDS posted an operating loss of $2.51 million, compared with operating earnings of $2.52 million in 1998, as sales rose 4.4 percent to $393.1 million.
Mr. Carver said the unit´s operating expense levels "reflect the cost of consolidation of certain operations and implementation on common systems across the organization, which should provide the basis for future profitability improvements."