MUSCATINE, Iowa (Oct. 17, 2003) — Lower sales due to closures in its Tire Distribution Systems Inc. subsidiary and lower unit volume in North America pushed Bandag Inc.'s third quarter sales down 14 percent, leaving net income with a gain of only 1.9 percent from the year-ago period.
Consolidated net sales for the quarter were $211.4 million, down from $245.9 million in 2002, Bandag said. A 4-percent fall in North America business unit volume also contributed to a decrease in the unit's operating profit by 10 percent, or $3.1 million. The volume decrease is primarily from flat freight traffic that adversely affected replacement tire purchases, Bandag said. European volume fell 2 percent, and volume in the International unit fell 14 percent.
The company said TDS sales fell 42 percent to $60.1 million primarily from the 2002 and 2003 divestitures and closures of many TDS locations. But the closures also helped reduce operating expenses, which overall fell 14 percent to $53.0 million in the third quarter. For the quarter, TDS reported a profit of $1.9 million, compared with an operating loss of $1.0 million in 2002.
“TDS's results were gratifying, with improvement in both sales and operating margins after eliminating sales affected by divestitures and closures,” said Martin Carver, Bandag's chairman and CEO. “We are pleased that our independent dealers who acquired TDS locations are having success in integrating those operations into their businesses.”
Consolidated net income for the third quarter was $20.0 million, up from $19.6 million last year. For the first nine months of the year, Bandag reported net income of $31.1 million, compared with a consolidated net loss of $14.7 million in 2002. Net sales for the period were $590.7 million, down 12 percent from $669.5 million in 2002.
“Overall, third quarter net income showed improvement compared to the first six months of the year,” Mr. Carver said in a statement. “Although the North America business unit volume was 4 percent below the previous year, the U.S. economy appears to be improving, and we are cautiously optimistic we will begin to see sustainable sales improvement at the business unit level in the months ahead.”