Midas Reports Second Quarter Earnings Per Share of $.78
20 July 2000
Including $.11 Gain From Sale of Australian Operations
ITASCA, Ill. - Midas, Inc. , today announced its results for the second quarter ended July 1, 2000.Second quarter 2000 earnings were $12.4 million, including a non-recurring gain of $1.8 million from the sale of the company's Australian operations. Earnings per diluted share for the quarter were $.78, which includes an $.11 gain from the sale of the Australian operation. Second quarter 1999 earnings per share were $.72, including a $.04 non-recurring gain related to the sale of Midas Europe.
Sales and revenues for the second quarter of 2000 were $98.4 million, virtually even with the $98.5 million reported last year, which represents the first time since early 1996 there has not been a decline in sales and revenues.
Wendel H. Province, Midas' chairman and chief executive officer, explained that sales and revenues have declined in earlier quarters over the past four years because Midas' retail and wholesale sales have been affected by a combination of the industry-wide decline in the exhaust replacement market, the strategic decisions to sell company-operated shops and Midas Europe, and the lowering of wholesale prices to franchisees.
"The fact that our sales and revenues for the quarter were even with last year demonstrates that our strategic initiatives to grow retail and wholesale sales in new categories -- such as climate control -- are moving in a positive direction to offset the technology-driven decline in the exhaust market," Province said.
Year-over-year comparison of wholesale parts shipments in the second quarter increased approximately 4 percent, due primarily to recently acquired climate control distribution locations. Province said that in conjunction with the company's introduction of climate control repair services through the Midas system and its strategic alliance with Visteon Corporation, Midas has acquired 27 small distribution locations to serve Midas dealers and other customers.
"In the remainder of this year and in the future, we will be acquiring or developing additional distribution locations to enable us to provide parts for climate control and other services on a timely basis to our franchisees and to other customers," Province said.
Operating income for the current quarter was $19.1 million, which was down approximately 10 percent from the second quarter in 1999. The decrease was due primarily to declines in wholesale sales related to Midas' core services, as well as increased operating expenses associated with new wholesale distribution.
For the first half of 2000, net earnings were $19.9 million, up from $18.8 million in 1999. Earnings per diluted share for the first half of this year were $1.25 including special items which contributed $.16 per share, compared to $1.09 including special items of $.04 in 1999.
For the first half, sales and revenues in 2000 were $177.0 million, down from $183.2 million in 1999. First half operating income was $31.6 million, or 6 percent below that reported one year ago.
"The first half of 2000 has been difficult for Midas," Province said. "Our retail sales to date have not met expectations due to a delay in the roll-out of the New Midas program and the lack of a sustained upturn since the roll-out began."
The New Midas program includes upgraded shop appearance and expanded services.
With respect to the outlook for the remainder of the year, Province said that over the past several weeks a number of automotive aftermarket parts retailers, distributors and manufacturers have disclosed a weakness in market demand and that this trend is affecting their current earnings and could also be expected to negatively impact future periods in 2000. This trend towards reduced demand for repair services and parts, he noted, is also adversely affecting Midas' operations.
"Based on current industry and Midas trends, continued competitive pressure on our private brand exhaust business and the accelerated expansion of the company's wholesale parts distribution network, we have revised our outlook for full year 2000 diluted earnings per share, excluding special items, to $2.00 per share," Province said.
"Although Midas management is clearly not satisfied with the estimate of 2000 results, we believe the initiatives in place at both retail and wholesale levels will make Midas less susceptible to adverse industry trends and will place Midas in a position to increase shareholder value," Province said.
Diluted earnings per share in the second quarter of 2000 are based on 15.8 million weighted average shares outstanding, compared to 17.1 million in 1999. First half earnings per share are based on 15.8 million this year, compared to 17.3 in 1999.
The company repurchased 286,000 shares of its common stock in the second quarter. Since the program began Midas has repurchased approximately 2.8 million shares of its common shares under a board-authorized repurchase program of 5.0 million shares.
Midas is one of the world's largest providers of automotive service, including exhaust, brake, steering and suspension services, as well as batteries, climate control and maintenance services at 2,700 franchised and licensed Midas shops in 19 countries, including nearly 2,100 in the United States and Canada.
Midas, Inc. Condensed Statements of Operations (In millions, except
for earnings and dividends per share) (Unaudited)
For the quarter For the six months
ended fiscal June ended fiscal June
2000 1999 2000 1999
---- ---- ---- ----
(13 Weeks) (13 Weeks) (26 Weeks) (26 Weeks)
Sales and revenues $ 98.4 $ 98.5 $ 177.0 $ 183.2
Cost of sales and
revenues 54.4 53.0 96.3 97.9
Selling, general, and
administrative
expenses 24.9 24.3 49.1 51.6
---------- --------- --------- ----------
Operating income 19.1 21.2 31.6 33.7
Interest expense ( 1.9) ( 2.1) ( 4.0) ( 4.3)
Other income, net 2.0 1.4 3.9 1.9
------------ --------- ----------- -----------
Income before taxes 19.2 20.5 31.5 31.3
Income taxes 6.8 8.2 11.6 12.5
----------- --------- --------- ----------
Net income $ 12.4 $ 12.3 $ 19.9 $ 18.8
========= ========= ========= =========
Earnings per share:
Basic $ .79 $ .74 $ 1.27 $ 1.12
========== ========= ========= ==========
Diluted $ .78 $ .72 $ 1.25 $ 1.09
========== ========= ========= =========
Dividends per common
share $ .02 $ .02 $ .04 $ .04
========== ========= ========= =========
Average number of shares
Common shares
outstanding 15.6 16.6 15.6 16.7
Equivalent shares on
outstanding stock
options .2 .5 .2 .6
----------- --------- -------- ---------
Shares applicable to
diluted earnings 15.8 17.1 15.8 17.3
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Midas, Inc. Results of Operations
Second Quarter 2000 Compared with Second Quarter 1999 (Unaudited).
The following is a summary of the Company's sales and revenues for
the second quarter of fiscal 2000 and 1999, respectively: ($ Millions)
Percent Percent
2000 to Total 1999 to Total
Replacement parts
sales $ 69.0 70.1% $ 66.5 67.5%
Company-operated shop
retail sales 1.8 1.8 3.0 3.0
Royalties and license
fees 17.3 17.6 18.3 18.6
Real estate rental
revenues 9.8 10.0 10.0 10.2
Other 0.5 0.5 0.7 0.7
------------ -------- ------- ---------
Sales and
revenues $ 98.4 100.0% $ 98.5 100.0%
========== ====== ========= =======
Six months ended Fiscal June 2000 Compared with the Six months
ended Fiscal June 1999 (Unaudited)
The following is a summary of the Company's sales and revenues for
the six months ended fiscal June 2000 and 1999, respectively: ($
Millions)
Percent Percent
2000 to Total 1999 to Total
Replacement parts
sales $ 121.5 68.6% $ 120.1 65.6%
Company-operated shop
retail sales 2.2 1.2 7.8 4.2
Royalties and license
fees 32.8 18.6 34.0 18.6
Real estate rental
revenues 19.7 11.1 19.9 10.9
Other 0.8 0.5 1.4 0.7
------------ -------- -------- ---------
Sales and
revenues $ 177.0 100.0% $ 183.2 100.0%
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