MUSCATINE, Iowa (April 25, 2002)—Bandag Inc., feeling the effects of a sluggish global economy, suffered a 51.5-percent drop in operating earnings and a 6-percent decline in sales in the first quarter.
The company faces an uncertain near-term future, Bandag Chairman and CEO Martin G. Carver said, because of rising energy prices, which impact both Bandag's raw material prices and the operating costs of its trucking customers.
Its net income before required accounting changes fell 47 percent to $1.22 million. Including the accounting change—which relates to impairment of goodwill—the net result fell $46 million into the red. Sales fell to $192.5 million, and the pre-tax operating profit was $1.94 million.
Bandag's Tire Distribution Systems Inc. subsidiary reported a $5.97 million loss on 2-percent lower sales of 80.9 million.
One bright note: Bandag generated $40.7 million in cash from operations, mostly as a result of prudent management of working capital, Mr. Carver said.
“We are confident that the initiatives we have in place will enable us to capitalize on both the eventual industry recovery and the new opportunities that emerge as the trucking industry moves forward,'' Mr. Carver said of the firm's prospects for the rest of the year.