Midas, Inc. reported net earnings of $0.8 million — or $0.06 per diluted share — for the second quarter ended July 3, 2010, compared to $0.4 million — or $0.03 per diluted share — in the second quarter of 2009.
Second quarter 2010 results were negatively affected by $0.8 million of incremental legal and other expenses incurred in preparation for the July 2010 arbitration with the company’s master licensee in Europe. These arbitration costs had an after-tax impact of $0.03 per diluted share.
The current year also was negatively affected by the emergency acquisition of 22 Midas shops in Northern California from a troubled franchisee in January. In the second quarter, lost royalties and rents and operating losses from these shops had a negative $0.02 per share impact on a year-over-year basis.
The second quarter 2009 results included $0.09 per share of non-cash special items, primarily related to the vesting of restricted stock issued in 2005 and 2006.
“Midas shops in the United States reported their third consecutive quarter of positive comparable shop retail sales, with an increase of 1.7 percent—following a 2.8 percent increase during the first quarter and a 1.4 percent increase in the fourth quarter of 2009,” says Alan D. Feldman, Midas’ chairman and chief executive officer.
Feldman said that the sales increase resulted primarily from driving a higher volume of shop traffic with value-priced oil changes, which include a courtesy check on all cars coming into the bays. Car count increased by nine percent in U.S. Midas shops in the second quarter.