Bandag Inc. today reported consolidated net sales for the fourth quarter of 2005 of $252.3 million, an increase of 7%, compared to consolidated net sales of $235.2 million in the fourth quarter of 2004.
Net sales in 4Q 2005 were positively impacted by approximately $3.5 million due to the effect of translating foreign currency denominated net sales into U.S. dollars, the company said.
Consolidated net earnings were $12.1 million for fourth quarter 2005, compared to fourth quarter 2004 consolidated net earnings of $30.8 million.
Net earnings for the fourth quarter of 2004 included a gain of approximately $6 million ($3.7 million after tax), due to the sale of assets. Net earnings for the fourth quarter of 2004 were also favorably impacted by $6.4 million for the resolution and reassessment of certain tax matters.
For full year 2005, Bandag reported consolidated net sales of $914.6 million compared to consolidated net sales in 2004 of $864.3 million. Consolidated net earnings for 2005 were $49.5 million, compared to 2004 consolidated net earnings of $66.9 million.
In announcing fourth quarter 2005 results, Martin Carver, Bandag's chairman of the board and CEO, said, "Bandag's tread volume increased 1% in fourth quarter compared to 2004 and was even for the year compared to 2004. Multiple price increases in the North American, European and International business units could not keep pace with unprecedented volatility in raw materials costs, which exerted pressure on margins."
"Continued strength in the transportation, mining and construction markets throughout the year was clearly evident in the robust performance at Tire Distribution Systems Inc. (TDS), Bandag's tire distribution subsidiary. And, while Speedco continued to generate strong sales, the earnings contribution was slowed by aggressive investment in new stores and the addition of tire lanes to existing stores," said Carver.
Commenting on the overall outlook for 2006, Carver said, "Unprecedented increases in energy prices and rapid globalization of the tire industry are clear evidence that the business norms we have managed to are quickly changing.
"TDS and Speedco act as bellwethers for Bandag, providing useful insight to the direction and trends in the trucking and off-the-road markets for commercial tires. Both indicate that the trucking economy remains vibrant, giving us confidence in the continued strength of Bandag, Speedco and TDS to take advantage of opportunities in the marketplace.
"Nevertheless, we are well aware of the more volatile aspects of the business, particularly raw material costs, and we are inclined to manage conservatively in order to minimize their impact on Bandag and the Bandag Strategic Alliance of Dealers."
