Midas Inc. (MDS, Financial) filed Quarterly Report for the period ended 2010-04-03.
Midas Inc. has a market cap of $160.6 million; its shares were traded at around $11.27 with a P/E ratio of 26.8 and P/S ratio of 1. MDS is in the portfolios of John Keeley of Keeley Fund Management.
The Companys operating activities provided net cash of $2.6 million during the first three months of fiscal 2010 compared to $1.7 million of cash used in operations in the first three months of fiscal 2009. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash provided by operating activities decreased from $4.6 million in the first three months of fiscal 2009 to $4.0 million in the first three months of fiscal 2010, due to the decrease in net income, a gain on sale of assets in the first three months of 2010 compared to a loss on sale of assets in the first three months of 2009, and lower depreciation and amortization. Cash outlays for business transformation costs were $0.1 million in the first three months of both fiscal 2010 and fiscal 2009. Cash outlays for business transformation costs in the fiscal 2010 were for severance and outplacement costs related to a 2009 reduction-in-force. Cash outlays for business transformation costs in fiscal 2009 were related to the Companys update of its retail shop image.
Changes in assets and liabilities went from a $6.2 million use of cash in the first three months of fiscal 2009 to a $1.3 million use of cash in the first three months of fiscal 2010. The $1.3 million use of cash in fiscal 2010 was primarily driven by a reduction in accounts payable as seasonally high tire purchases in the fourth quarter of fiscal 2009 were paid. The $6.2 million use of cash in fiscal 2009 was primarily driven by the timing of advertising payments.
Investing activities used $3.6 million of cash in the first three months of fiscal 2010 compared to $1.2 million of cash in the first three months of fiscal 2009. Investing activities in the first three months of fiscal 2010 consisted of $0.5 million in capital expenditures, $3.5 million paid in conjunction with the acquisition of 22 shops and other assets from a Midas franchisee in Northern California, and $0.4 million in cash generated as a result of the sale of three company-operated shops. The $0.5 million in capital expenditures included $0.2 million in leasehold improvements, $0.2 million for systems development projects and $0.1 million for company-operated shop equipment additions. Investing activities in the first three months of fiscal 2009 consisted of $1.1 million in capital expenditures and $0.1 million paid in conjunction with the acquisition of a shop and other assets from a Midas franchisee. The $1.1 million in capital expenditures included $0.5 million in Co-Branding spending on Midas company-operated shops, $0.2 million for systems development projects, $0.4 million for company-operated shop equipment additions and other capital expenditures.
Net cash provided by financing activities was $1.4 million in the first three months of fiscal 2010, compared to net cash provided of $3.4 million in the first three months of fiscal 2009. During the first three months of fiscal 2010, MDS increased total debt by $2.1 million and decreased outstanding checks by $0.7 million. The increase in total debt included $0.1 million of capital leases assumed as a result of acquisition of 22 shops and other assets from a Midas franchisee in Northern California. During the first three months of fiscal 2009, MDS increased total debt by $4.0 million, partially offset by a decrease in outstanding checks of $0.6 million.
In November 2005, $20 million in revolving bank debt was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five-year period. In addition, in March 2007, MDS entered into an interest rate swap arrangement to convert an additional $25 million in revolving bank debt from floating rate to a fixed rate by locking-in LIBOR at 4.91% through October 2010. As a consequence, currently $45 million of the Companys $74.4 million in revolving bank debt is at fixed rates.
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Midas Inc. has a market cap of $160.6 million; its shares were traded at around $11.27 with a P/E ratio of 26.8 and P/S ratio of 1. MDS is in the portfolios of John Keeley of Keeley Fund Management.
Highlight of Business Operations:
Total operating costs and expenses increased $3.6 million, or 8.9%, in the first three months of fiscal 2010 to $44.2 million. Occupancy expenses for franchised shops declined $0.2 million to $5.5 million in the first three months of fiscal 2010 due to fewer shops under lease. Company-operated shop costs and expenses rose to $20.0 million in the first three months of fiscal 2010 from $16.2 million in the first three months of fiscal 2009. The increase in operating expenses was driven by the higher shop count and higher comparable shop sales, as well as the incremental overhead required to support the higher shop count. Payroll and employee benefit costs decreased to 40.9% of company-operated shop sales in fiscal 2010 compared to 42.3% in the same period of the prior year. Company-operated shop occupancy and other expenses as a percentage of company-operated shop sales were 32.3% for the first three months of fiscal 2010 compared to 34.0% for the same period in the prior year. Company-operated shop cost of sales increased slightly from 27.6% of company-operated shop sales in the first three months of fiscal 2009 to 27.8% in the first three months of fiscal 2010, primarily as a result of an increase in the proportion of sales of oil and tires and higher discounts that helped to drive customer traffic.The Companys operating activities provided net cash of $2.6 million during the first three months of fiscal 2010 compared to $1.7 million of cash used in operations in the first three months of fiscal 2009. Excluding cash outlays for business transformation costs and changes in assets and liabilities, cash provided by operating activities decreased from $4.6 million in the first three months of fiscal 2009 to $4.0 million in the first three months of fiscal 2010, due to the decrease in net income, a gain on sale of assets in the first three months of 2010 compared to a loss on sale of assets in the first three months of 2009, and lower depreciation and amortization. Cash outlays for business transformation costs were $0.1 million in the first three months of both fiscal 2010 and fiscal 2009. Cash outlays for business transformation costs in the fiscal 2010 were for severance and outplacement costs related to a 2009 reduction-in-force. Cash outlays for business transformation costs in fiscal 2009 were related to the Companys update of its retail shop image.
Changes in assets and liabilities went from a $6.2 million use of cash in the first three months of fiscal 2009 to a $1.3 million use of cash in the first three months of fiscal 2010. The $1.3 million use of cash in fiscal 2010 was primarily driven by a reduction in accounts payable as seasonally high tire purchases in the fourth quarter of fiscal 2009 were paid. The $6.2 million use of cash in fiscal 2009 was primarily driven by the timing of advertising payments.
Investing activities used $3.6 million of cash in the first three months of fiscal 2010 compared to $1.2 million of cash in the first three months of fiscal 2009. Investing activities in the first three months of fiscal 2010 consisted of $0.5 million in capital expenditures, $3.5 million paid in conjunction with the acquisition of 22 shops and other assets from a Midas franchisee in Northern California, and $0.4 million in cash generated as a result of the sale of three company-operated shops. The $0.5 million in capital expenditures included $0.2 million in leasehold improvements, $0.2 million for systems development projects and $0.1 million for company-operated shop equipment additions. Investing activities in the first three months of fiscal 2009 consisted of $1.1 million in capital expenditures and $0.1 million paid in conjunction with the acquisition of a shop and other assets from a Midas franchisee. The $1.1 million in capital expenditures included $0.5 million in Co-Branding spending on Midas company-operated shops, $0.2 million for systems development projects, $0.4 million for company-operated shop equipment additions and other capital expenditures.
Net cash provided by financing activities was $1.4 million in the first three months of fiscal 2010, compared to net cash provided of $3.4 million in the first three months of fiscal 2009. During the first three months of fiscal 2010, MDS increased total debt by $2.1 million and decreased outstanding checks by $0.7 million. The increase in total debt included $0.1 million of capital leases assumed as a result of acquisition of 22 shops and other assets from a Midas franchisee in Northern California. During the first three months of fiscal 2009, MDS increased total debt by $4.0 million, partially offset by a decrease in outstanding checks of $0.6 million.
In November 2005, $20 million in revolving bank debt was converted from floating rate to fixed rate by locking-in LIBOR at 4.89% for a five-year period. In addition, in March 2007, MDS entered into an interest rate swap arrangement to convert an additional $25 million in revolving bank debt from floating rate to a fixed rate by locking-in LIBOR at 4.91% through October 2010. As a consequence, currently $45 million of the Companys $74.4 million in revolving bank debt is at fixed rates.
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