Exhibit 99
| NEWS RELEASE | CONTACT: | Warren W. Heidbreder |
| FOR IMMEDIATE RELEASE | PHONE: | 563-262-1260 |
| DATE: July 19, 2005 | URL: | www.bandag.com |
BANDAG, INCORPORATED REPORTS 2ND QUARTER EPS OF $0.65
Bandag, Inc. (NYSE: BDG and BDGA)
Flash Results
| (Numbers in Millions, Except Per Share Data) |
| Q2 2005 | | Q2 2004 | | 6 Mos. 2005 | | 6 Mos. 2004 | |
|---|
| Net sales | | | | $227.3 | | | $213.2 | | | $417.0 | | | $389.9 | |
| Net earnings | | | | $12.7 | | | $11.9 | | | $18.7 | | | $15.9 | |
| Diluted earnings per share | | | | $0.65 | | | $0.60 | | | $0.95 | | | $0.81 | |
| Shares outstanding - diluted | | | | 19.7 | | | 19.7 | | | 19.7 | | | 19.7 | |
MUSCATINE, IOWA, July 19, 2005 – Bandag, Incorporated (NYSE:BDG and BDGA) today reported consolidated net earnings of $12.7 million, or $0.65 per diluted share, for second quarter 2005. This compares to second quarter 2004 consolidated net earnings of $11.9 million, or $0.60 per diluted share. Consolidated net earnings for second quarter 2004 included favorable tax adjustments of $1.0 million, or $0.05 per diluted share, resulting primarily from the reassessment of certain tax matters. Consolidated net sales for second quarter 2005 were $227.3 million, an increase of seven percent, compared to consolidated net sales of $213.2 million in second quarter 2004. Net sales were positively impacted by approximately $4.9 million due to the effect of translating foreign currency denominated net sales into U.S. dollars.
For the first six months of 2005, Bandag reported consolidated net earnings of $18.7 million, or $0.95 per diluted share, compared to consolidated net earnings of $15.9 million, or $0.81 per diluted share, in the same period of 2004. Consolidated net sales for the first six months of 2005 were $417.0 million, an increase of seven percent from consolidated net sales of $389.9 million in the first six months of 2004.
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BANDAG, Incorporated
2905 N. Hwy. 61, Muscatine, IA 52761-5886
Tel 563.262.1400 –Url www.bandag.com
In announcing second quarter 2005 results, Martin G. Carver, Chairman of the Board and Chief Executive Officer of Bandag, said, “Reflecting the benefits of increased transportation activity, North American net sales and unit volume were up over the 2004 period. These favorable transportation business conditions also were evident in the quarter’s strong performance at Speedco and Tire Distribution Systems, Inc. (TDS).”
Financial Highlights
| | • | Factors that affected consolidated net sales for second quarter 2005 were: |
| | o | Speedco sales increased by $6.2 million compared to the prior year period, primarily due to the June 2004 acquisition of six licensed locations which were owned and operated by PM Express, Inc. Net sales were also positively impacted by an increase in volume at existing locations, the addition of three new facilities and the expansion of tire lanes at nine existing locations. |
| | o | TDS sales declined $8.0 million from the prior year period, reflecting the divestitures during 2004. The divested locations had net sales of approximately $17.0 million in the second quarter of 2004. TDS net sales were positively impacted by an increase in service revenue and new tire sales. |
| | o | North America business unit volume increased five percent and net sales increased eight percent as compared to second quarter 2004. Net sales were positively impacted by price increases in December 2004 and May 2005. |
| | o | European business unit volume decreased ten percent while net sales increased nine percent. Net sales were positively impacted by a September 2004 price increase and by approximately $1.0 million due to the effect of translating foreign currency denominated net sales into U.S. dollars. |
| | o | International business unit volume decreased two percent while net sales increased twenty-five percent. Net sales were positively impacted by price increases and by approximately $2.8 million due to the effect of translating foreign currency denominated net sales into U.S. dollars. |
| | • | Second quarter 2005 consolidated gross margin declined by one percentage point. Speedco’s gross margin declined 4.2 percentage points, primarily due to the start-up of new stores and the addition of tire lanes to existing stores. TDS’ gross margin increased 0.5 percentage points. Traditional business gross margin declined 2.1 percentage points, primarily due to lower than anticipated gross margin on fleet contract business. |
| | • | Consolidated operating and other expenses for second quarter 2005 were $0.8 million higher than the prior year period. |
| | • | Interest income increased $1.2 million, primarily due to an increase in cash and interest rates. |
| | • | The effective tax rate increased to 35.1% from 30.7% in the prior year period. The lower effective tax rate in 2004 was largely attributable to a $1.0 million favorable tax adjustment in second quarter 2004. |
| | • | Capital expenditures were $26.2 million through June 30, 2005, compared to $12.9 million for the same period last year. The increase in capital expenditures is primarily due to expenditures made by Speedco for new facilities and expansions of tire lanes at existing facilities. |
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Outlook
Commenting on the sales outlook for second half of 2005, Mr. Carver said, “Continued high equipment utilization in the trucking sector, improving fundamentals at TDS and the ongoing expansion of Speedco should bode well for Bandag. Nevertheless, we continue to carefully monitor the impact of higher oil prices on both transportation industry fuel costs and our own raw material costs for the remainder of the year.”
Bandag, Incorporated manufactures retreading materials and equipment for its worldwide network of approximately 1,000 franchised dealers that produce and market retread tires and provide tire management services. Bandag’s traditional business serves end-users through a wide variety of products offered by dealers, ranging from tire retreading and repairing to tire management systems outsourcing for commercial truck fleets. TDS sells and services new and retread tires. In addition, Bandag has an 87.5% interest in Speedco, Inc., a provider of on-highway truck lubrication and routine tire services to commercial truck owner-operators and fleets.
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Bandag, Incorporated
Unaudited Financial Highlights
(In thousands, except per share data)
| Second Quarter
Ended June 30,
| Six Months
Ended June 30,
|
|---|
Consolidated Statements of Earnings
| 2005
| 2004
| 2005
| 2004
|
|---|
| Income | | | | | | | | | | | | | | |
| Net sales | | | $ | 227,261 | | $ | 213,180 | | $ | 417,017 | | $ | 389,861 | |
| Other | | | | 1,087 | | | 1,419 | | | 3,148 | | | 2,646 | |
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| |
| |
| |
| |
| | | | | 228,348 | | | 214,599 | | | 420,165 | | | 392,507 | |
Costs and expenses | | |
| Cost of products sold | | | | 147,558 | | | 136,128 | | | 273,304 | | | 251,284 | |
| Operating & other expenses | | | | 62,284 | | | 61,534 | | | 119,680 | | | 118,354 | |
|
| |
| |
| |
| |
| | | | | 209,842 | | | 197,662 | | | 392,984 | | | 369,638 | |
Income from operations | | | | 18,506 | | | 16,937 | | | 27,181 | | | 22,869 | |
| Interest income | | | | 2,159 | | | 992 | | | 3,972 | | | 2,042 | |
| Interest expense | | | | (629 | ) | | (557 | ) | | (1,085 | ) | | (1,119 | ) |
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| |
| |
| |
| |
| Earnings before income taxes and minority interest | | | | 20,036 | | | 17,372 | | | 30,068 | | | 23,792 | |
| Income taxes | | | | 7,029 | | | 5,341 | | | 11,222 | | | 7,684 | |
| Minority interest | | | | 268 | | | 137 | | | 145 | | | 195 | |
|
| |
| |
| |
| |
| Net earnings | | | $ | 12,739 | | $ | 11,894 | | $ | 18,701 | | $ | 15,913 | |
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| |
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Earnings per share | | |
| Basic | | | $ | 0.66 | | $ | 0.62 | | $ | 0.96 | | $ | 0.83 | |
| Diluted | | | $ | 0.65 | | $ | 0.60 | | $ | 0.95 | | $ | 0.81 | |
Weighted average shares outstanding | | |
| Basic | | | | 19,426 | | | 19,299 | | | 19,409 | | | 19,275 | |
| Diluted | | | | 19,714 | | | 19,688 | | | 19,710 | | | 19,672 | |
| Second Quarter
Ended June 30,
| Six Months
Ended June 30,
|
|---|
Segment Information
| 2005
| 2004
| 2005
| 2004
|
|---|
Net Sales | | | | | | | | | | | | | | |
North America | | | $ | 110,432 | | $ | 102,634 | | $ | 201,702 | | $ | 188,003 | |
| Europe | | | | 21,379 | | | 19,574 | | | 40,768 | | | 40,770 | |
| International | | | | 31,952 | | | 25,648 | | | 60,821 | | | 48,091 | |
| TDS | | | | 42,921 | | | 50,937 | | | 75,598 | | | 91,876 | |
| Speedco | | | | 20,577 | | | 14,387 | | | 38,128 | | | 21,121 | |
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| |
| |
| |
| |
| Total net sales | | | $ | 227,261 | | $ | 213,180 | | $ | 417,017 | | $ | 389,861 | |
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Segment Operating Profit (Loss) | | |
North America | | | $ | 14,974 | | $ | 16,176 | | $ | 23,579 | | $ | 21,630 | |
| Europe | | | | 273 | | | (1,664 | ) | | 1,194 | | | 26 | |
| International | | | | 3,445 | | | 2,874 | | | 6,884 | | | 5,913 | |
| TDS | | | | 2,670 | | | (34 | ) | | 1,573 | | | (2,875 | ) |
| Speedco | | | | 838 | | | 1,754 | | | 1,637 | | | 2,657 | |
| Corporate expenses & other | | | | (3,694 | ) | | (2,169 | ) | | (7,686 | ) | | (4,482 | ) |
| Net interest income | | | | 1,530 | | | 435 | | | 2,887 | | | 923 | |
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| |
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| Earnings before income taxes and minority interest | | | $ | 20,036 | | $ | 17,372 | | $ | 30,068 | | $ | 23,792 | |
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Note: Certain prior year amounts have been reclassified to conform with the current year presentation.
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Bandag, Incorporated
Unaudited Financial Highlights
(In thousands)
Condensed Consolidated Balance Sheets
| June 30,
2005
| Dec. 31,
2004
|
|---|
Assets: | | | | | | | | |
| Cash and cash equivalents | | | $ | 65,875 | | $ | 66,646 | |
| Investments | | | | 123,165 | | | 136,115 | |
| Accounts receivable - net | | | | 156,373 | | | 157,809 | |
| Inventories | | | | 79,708 | | | 69,892 | |
| Other current assets | | | | 55,102 | | | 55,793 | |
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| |
| |
| Total current assets | | | | 480,223 | | | 486,255 | |
Property, plant, and equipment - net | | | | 184,935 | | | 170,018 | |
| Other assets | | | | 74,359 | | | 74,454 | |
|
| |
| |
| Total assets | | | $ | 739,517 | | $ | 730,727 | |
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| |
Liabilities & shareholders' equity: | | |
| Accounts payable | | | $ | 43,528 | | $ | 33,138 | |
| Income taxes payable | | | | 3,883 | | | 2,995 | |
| Accrued liabilities | | | | 89,613 | | | 104,580 | |
| Short-term notes payable and current portion of other obligations | | | | 17,856 | | | 17,845 | |
|
| |
| |
| Total current liabilities | | | | 154,880 | | | 158,558 | |
Long-term debt and other obligations | | | | 31,943 | | | 29,963 | |
| Deferred income tax liabilities | | | | 8,174 | | | 7,502 | |
| Minority interest | | | | 2,429 | | | 2,417 | |
| Shareholders' equity | | |
| Common stock | | | | 19,555 | | | 19,452 | |
| Additional paid-in capital | | | | 34,095 | | | 28,839 | |
| Retained earnings | | | | 516,846 | | | 513,152 | |
| Accumulated other comprehensive loss | | | | (28,405 | ) | | (29,156 | ) |
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| |
| |
| Total shareholders' equity | | | | 542,091 | | | 532,287 | |
|
| |
| |
| Total liabilities & shareholders' equity | | | $ | 739,517 | | $ | 730,727 | |
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| Six Months
Ended June 30,
|
|---|
Condensed Consolidated Statements of Cash Flows
| 2005
| 2004
|
|---|
Operating Activities | | | | | | | | |
| Net earnings | | | $ | 18,701 | | $ | 15,913 | |
| Provision for depreciation | | | | 12,737 | | | 11,238 | |
| (Increase) decrease in operating assets and liabilities - net | | | | (6,577 | ) | | 9,506 | |
|
| |
| |
| Net cash provided by operating activities | | | | 24,861 | | | 36,657 | |
| Investing Activities | | |
| Additions to property, plant and equipment | | | | (26,243 | ) | | (12,857 | ) |
| Sales of investments - net | | | | 12,950 | | | 31,670 | |
| Payments for acquisitions of businesses | | | | -- | | | (71,868 | ) |
| Proceeds from divestiture of businesses | | | | 2,251 | | | 882 | |
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| |
| |
| Net cash used in investing activities | | | | (11,042 | ) | | (52,173 | ) |
| Financing Activities | | |
| Principal payments on short-term notes payable and other long-term liabilities | | | | (1,886 | ) | | (760 | ) |
| Cash dividends | | | | (12,873 | ) | | (12,567 | ) |
| Purchases of common stock | | | | (2,281 | ) | | (2,348 | ) |
| Stock options exercised | | | | 1,387 | | | 1,891 | |
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| |
| |
| Net cash used in financing activities | | | | (15,653 | ) | | (13,784 | ) |
| Effect of exchange rate changes on cash and cash equivalents | | | | 1,063 | | | (1,234 | ) |
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| |
| |
| Decrease in cash and cash equivalents | | | | (771 | ) | | (30,534 | ) |
| Cash and cash equivalents at beginning of year | | | | 66,646 | | | 100,326 | |
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| |
| Cash and cash equivalents at end of period | | | $ | 65,875 | | $ | 69,792 | |
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Note: Certain prior year amounts have been reclassified to conform with the current year presentation.
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