ITASCA, Ill. (March 3, 2005) — Midas Inc. reported net income in its fourth quarter and year-end financial results, a turnaround from net losses in 2003, and management is projecting continued earnings improvement this year.
Midas earned $4.1 million, or 26 cents per diluted share, for the fiscal year ended Jan. 1, 2005, including the effects of $5.9 million in special charges. Sales for the year of $197.5 million were 36.5 percent lower, reflecting its withdrawal from the parts distribution business and closing of a dozen regional distribution centers and 77 quick-delivery sites.
The firm expects 2005 revenues of about $200 million, as improvements in franchise royalties, real estate revenues, and company-operated shop sales will be offset largely by continued declines in exhaust sales.
“Our retail momentum is continuing with seven consecutive quarters of positive comparable shop sales in the U.S., fueled by the steady increases in brake sales,” said President and CEO Alan D. Feldman, in a prepared statement.
“In 2005, we will build on the strong momentum of brake sales with our rollout of tires, maintenance and commercial fleet services to more than 1,800 Midas shops in the U. S. and Canada,” he said.
The full-year $200 million estimate includes approximately $32 million related to its exhaust manufacturing and distribution businesses. The company said it expects to conclude its exit from the exhaust business in 2005 successfully.
Excluding losses related to manufacturing and the special charges that will result from the exit, the company expects operating income of between $24 million and $26 million in 2005.
Midas earned $2 million— or 12 cents per diluted share—in the fourth quarter compared with a net loss of $25.3 million in 2003. This was after special charges of $1.2 million for the reconciliation of actual business transformation costs incurred in 2004 compared with expected business transformation charges recorded in 2003.
The most significant component of the fourth quarter charge is $800,000 related to the final closeout of the Canadian warehouse hourly pension plan.
Fourth quarter revenues dropped 42 percent to $47.3 million.
Net income for both the fourth quarter and full year benefited from the reversal of a $1.8 million tax reserve that was no longer needed due to the favorable resolution of a 1999 foreign tax matter. Excluding the effects of both the special charges and the tax credit, net income was 6 cents per diluted share for the fourth quarter and 36 cents per diluted share for the year.
Operating income reached $2.3 million for the fourth quarter and $20 million for the full year, compared with operating losses of $35.1 million for the previous year's fourth quarter and $100.2 million for 2003.
In the first quarter of 2004, Midas recorded a special charge of $4.7 million related to the early refinancing of the company's debt.
Real estate revenues were $9.2 million for the fourth quarter and $36.5 million for the full year, virtually flat with the prior year amounts of $9.2 million and $36.2 million, respectively.