Midas Inc. (MDS, Financial) filed Quarterly Report for the period ended 2009-10-03.
Midas, Inc. provides services in the U.S., Canada, France and other locations in Europe, Australia, the Middle East, Latin America and the Caribbean. Midas shops offer exhaust, brake, suspension, air conditioning and maintenance services. Midas brand products are sold at wholesale to franchised Midas shops and at retail by company-operated shops. IPC brand exhaust products are sold to distributors. Midas also manufactures and sells shop equipment under the Huth trademark. Midas Realty Corp., a Midas subsidiary, selects, leases, acquires and constructs sites for Midas shops. Midas Inc. has a market cap of $108.3 million; its shares were traded at around $7.6 with a P/E ratio of 15.5 and P/S ratio of 0.6.
During the first nine months of fiscal 2009, MDS recorded business transformation charges of $0.3 million. Approximately $0.1 million is related to the changeover of the Canadian warranty program and $0.2 million is part of the Companys partial funding of the rollout of a new shop image for Canadian Midas franchisees. During the first nine months of fiscal 2008, the Company recorded business transformation charges of $1.5 million. The 2008 charges reflected $1.2 million for the Companys partial funding of the rollout of a new shop image for Midas franchisees and $0.3 million for the closure of an unprofitable company operated shop.
The Companys operating activities provided net cash of $12.6 million during the first nine months of fiscal 2009 compared to $21.1 million of cash provided by operations in the first nine months of fiscal 2008. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash provided by operating activities decreased from $21.9 million in the first nine months of fiscal 2008 to $16.3 million in the first nine months of fiscal 2009, due to the decrease in net income, lower utilization of deferred tax assets, reduced business transformation charges, a decrease in the loss on sale of assets and lower depreciation and amortization. Cash outlays for business transformation costs declined from $1.4 million in the first nine months of fiscal 2008 to $0.2 million in the first nine months of fiscal 2009. Cash outlays for business transformation costs in the first nine months of fiscal 2009 and the first nine months of fiscal 2008 were primarily related to the Companys update of its retail shop image.
Changes in assets and liabilities changed from a $0.6 million source of cash in the first nine months of fiscal 2008 to a $3.5 million use of cash in the first nine months of fiscal 2009. The $3.5 million use of cash in the first nine months of fiscal 2009 was driven by a permanent one-time decline in accrued advertising due to the timing of payments as a result of changes in the Companys marketing strategy. The $0.6 million source of cash in fiscal 2008 was primarily due to a decline in accounts receivable and prepaid expenses partially offset by a decline in accounts payable and accrued expenses due to the timing of payments.
Investing activities used $3.4 million of cash in the first nine months of fiscal 2009 compared to $25.8 million of cash used in first nine months of fiscal 2008. Fiscal 2009 investing activities consisted of $3.4 million in capital expenditures, $0.1 million paid in conjunction with the acquisition of a shop and other assets from a Midas franchisee and $0.1 million in cash generated as the result of the sale of a company-operated shop. The $3.4 million in capital expenditures included $2.0 million in Co-Branding spending on Midas company-operated shops, $0.5 million for systems development projects, $0.6 million for company-operated shop equipment additions and $0.3 million of other capital expenditures. Fiscal 2008 investing activities consisted of $21.8 million paid in conjunction with the acquisition of SpeeDee in April and the acquisition of 11 shops and other assets from certain Midas franchisees, $4.8 million in capital expenditures and $0.8 million in cash generated as the result of the sale of ten company-operated shops. The $4.8 million in capital expenditures included $0.6 million in office renovation costs, $2.1 million for real estate purchases, $0.7 million for systems development projects and $1.4 million for company-operated shop equipment additions and other capital expenditures.
Net cash used in financing activities was $8.7 million in the first nine months of fiscal 2009, compared to net cash provided of $6.1 million in first nine months of fiscal 2008. During fiscal 2009, MDS decreased total debt by $7.3 million, decreased outstanding checks by $0.7 million and paid $0.7 million to repurchase shares of the Companys common stock from employees to satisfy tax obligations upon vesting of restricted stock awards. During fiscal 2008, the Company increased total debt by $9.3 million due primarily to the purchase of the SpeeDee franchise business in April 2008, decreased outstanding checks by $3.0 million, paid $0.4 million to repurchase shares of the Companys common stock and received $0.2 million in cash from the exercise of outstanding stock options.
Read the The complete ReportMDS is in the portfolios of John Keeley of Keeley Fund Management.
Midas, Inc. provides services in the U.S., Canada, France and other locations in Europe, Australia, the Middle East, Latin America and the Caribbean. Midas shops offer exhaust, brake, suspension, air conditioning and maintenance services. Midas brand products are sold at wholesale to franchised Midas shops and at retail by company-operated shops. IPC brand exhaust products are sold to distributors. Midas also manufactures and sells shop equipment under the Huth trademark. Midas Realty Corp., a Midas subsidiary, selects, leases, acquires and constructs sites for Midas shops. Midas Inc. has a market cap of $108.3 million; its shares were traded at around $7.6 with a P/E ratio of 15.5 and P/S ratio of 0.6.
Highlight of Business Operations:
Total operating costs and expenses declined $0.7 million, or 0.6%, in the first nine months of fiscal 2009 to $124.9 million. Occupancy expenses for franchised shops were $17.1 million in the first nine months of fiscal 2009 and fiscal 2008. Company-operated shop costs and expenses rose to $51.4 million from $46.9 million in the first nine months of fiscal 2009. The increase in operating expenses was driven by higher sales, additional shops and incremental overhead required to support the higher shop count and one-time costs associated with launching the Co-Brand test concept in Chicago and San Diego. Payroll and employee benefitDuring the first nine months of fiscal 2009, MDS recorded business transformation charges of $0.3 million. Approximately $0.1 million is related to the changeover of the Canadian warranty program and $0.2 million is part of the Companys partial funding of the rollout of a new shop image for Canadian Midas franchisees. During the first nine months of fiscal 2008, the Company recorded business transformation charges of $1.5 million. The 2008 charges reflected $1.2 million for the Companys partial funding of the rollout of a new shop image for Midas franchisees and $0.3 million for the closure of an unprofitable company operated shop.
The Companys operating activities provided net cash of $12.6 million during the first nine months of fiscal 2009 compared to $21.1 million of cash provided by operations in the first nine months of fiscal 2008. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash provided by operating activities decreased from $21.9 million in the first nine months of fiscal 2008 to $16.3 million in the first nine months of fiscal 2009, due to the decrease in net income, lower utilization of deferred tax assets, reduced business transformation charges, a decrease in the loss on sale of assets and lower depreciation and amortization. Cash outlays for business transformation costs declined from $1.4 million in the first nine months of fiscal 2008 to $0.2 million in the first nine months of fiscal 2009. Cash outlays for business transformation costs in the first nine months of fiscal 2009 and the first nine months of fiscal 2008 were primarily related to the Companys update of its retail shop image.
Changes in assets and liabilities changed from a $0.6 million source of cash in the first nine months of fiscal 2008 to a $3.5 million use of cash in the first nine months of fiscal 2009. The $3.5 million use of cash in the first nine months of fiscal 2009 was driven by a permanent one-time decline in accrued advertising due to the timing of payments as a result of changes in the Companys marketing strategy. The $0.6 million source of cash in fiscal 2008 was primarily due to a decline in accounts receivable and prepaid expenses partially offset by a decline in accounts payable and accrued expenses due to the timing of payments.
Investing activities used $3.4 million of cash in the first nine months of fiscal 2009 compared to $25.8 million of cash used in first nine months of fiscal 2008. Fiscal 2009 investing activities consisted of $3.4 million in capital expenditures, $0.1 million paid in conjunction with the acquisition of a shop and other assets from a Midas franchisee and $0.1 million in cash generated as the result of the sale of a company-operated shop. The $3.4 million in capital expenditures included $2.0 million in Co-Branding spending on Midas company-operated shops, $0.5 million for systems development projects, $0.6 million for company-operated shop equipment additions and $0.3 million of other capital expenditures. Fiscal 2008 investing activities consisted of $21.8 million paid in conjunction with the acquisition of SpeeDee in April and the acquisition of 11 shops and other assets from certain Midas franchisees, $4.8 million in capital expenditures and $0.8 million in cash generated as the result of the sale of ten company-operated shops. The $4.8 million in capital expenditures included $0.6 million in office renovation costs, $2.1 million for real estate purchases, $0.7 million for systems development projects and $1.4 million for company-operated shop equipment additions and other capital expenditures.
Net cash used in financing activities was $8.7 million in the first nine months of fiscal 2009, compared to net cash provided of $6.1 million in first nine months of fiscal 2008. During fiscal 2009, MDS decreased total debt by $7.3 million, decreased outstanding checks by $0.7 million and paid $0.7 million to repurchase shares of the Companys common stock from employees to satisfy tax obligations upon vesting of restricted stock awards. During fiscal 2008, the Company increased total debt by $9.3 million due primarily to the purchase of the SpeeDee franchise business in April 2008, decreased outstanding checks by $3.0 million, paid $0.4 million to repurchase shares of the Companys common stock and received $0.2 million in cash from the exercise of outstanding stock options.
Read the The complete ReportMDS is in the portfolios of John Keeley of Keeley Fund Management.
