Monro Muffler Brake, Inc. Announces Record First Quarter Results
~ Operating Income Increases 18% ~
~ Net Income Increases 13% ~
ROCHESTER, N.Y., July 14 -- Monro Muffler Brake, Inc. a leading provider of automotive undercar repair and tire services, today announced record financial results for the first quarter ended June 25, 2005.
Sales increased 8.3% to a record $94.6 million from $87.3 million last year. Comparable store sales increased 1.7% and new stores contributed $7.0 million. The sales gain was led by an approximate 7% increase in the comparable store maintenance service category, including oil changes, and 6% growth in comparable store tire sales. The Company opened two new stores during the quarter and closed three stores, ending the quarter with 625 stores.
Gross margin expanded 60 basis points to 43.0% from 42.4%, reflecting improved purchasing power and the Company's ability to sustain recently implemented price increases. Selling, general, and administrative expenses, as a percentage of sales, declined to 28.4% compared to 28.9% last year primarily due to fixed cost leverage. Taken together, the above factors contributed to a 17.5% increase in operating income and a 110 basis point improvement in operating margin compared to last year. Net income increased 13.2% to a record $7.7 million compared to $6.8 million last year. Earnings per diluted share grew 10.6% to $0.52, in line with the Company's previous estimate, versus $0.47 last year. This increase was achieved in spite of diluted shares outstanding increasing by approximately 350,000 due to the timing of the Henderson Holdings acquisition and the recent effect of the stock price appreciation on outstanding options.
Robert G. Gross, President and Chief Executive Officer, commented, "We completed a very solid quarter during which we again produced record top and bottom line results, despite a decrease in comparable store sales in May. Importantly, we were able to significantly improve our operating margin even with an increase of the lower margin maintenance service and tire categories in our overall sales mix. Our record results and margin improvements were driven by excellent execution from our entire team, which has successfully integrated our recent tire store acquisitions, continued to execute our strategy to drive store traffic and maintained our industry leading customer service.
"While May proved to be a challenging month for us and most retailers, our business rebounded in June and the positive sales trend has accelerated into July. As such, we remain comfortable with our previously stated expectations for annual sales to be between $375 million and $385 million and earnings per diluted share to be in the range of $1.52 to $1.60, which does not include the impact of anticipated future acquisitions. For the second quarter, we currently anticipate earnings per diluted share will be between $0.51 and $0.55 compared to $0.45 last year."
Mr. Gross concluded, "We remain committed to growing our business through attractively-priced acquisitions that expand our store base, fill in our existing markets, and increase our profitability. We continue to see good opportunities in the marketplace to complete such acquisitions, and we are better positioned to complete these transactions under the highly favorable terms of the new revolving credit facility that we announced today."
Monro Muffler Brake operates a chain of stores providing automotive undercar repair and tire services in the United States, operating under the brand names of Monro Muffler Brake and Service, Speedy Auto Service by Monro, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 626 stores and has 16 dealer locations in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine and Michigan. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems, tires and many vehicle maintenance services.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended Fiscal June
2005 2004 % Change
Restated
Sales $94,625 $87,347 8.3%
Cost of sales, including
distribution and occupancy
costs 53,922 50,322 7.2
Gross profit 40,703 37,025 9.9
Operating, selling, general
and administrative expenses 26,901 25,283 6.4
Operating income 13,802 11,742 17.5
Interest expense, net 882 585 50.7
Other expense, net 425 121
Income before provision for
income taxes 12,495 11,036 13.2
Provision for income taxes 4,748 4,194 13.2
Net income $7,747 $6,842 13.2
Diluted earnings per common share $.52 $.47 10.6%
Number of stores open
(at end of quarter) 625 597
Weighted average number of
diluted shares outstanding 14,866 14,520
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
June 25, March 26,
2005 2005
Assets
Current assets
Cash $3,557 $888
Inventories 62,285 59,753
Other current assets 16,848 16,878
Total current assets 82,690 77,519
Property, plant and equipment, net 164,449 164,309
Other noncurrent assets 43,002 43,157
Total assets $290,141 $284,985
Liabilities and Shareholders' Equity
Current liabilities $55,694 $50,361
Long-term debt 47,321 55,438
Other long-term liabilities 11,368 11,697
Total liabilities 114,383 117,496
Total shareholders' equity 175,758 167,489
Total liabilities and shareholders' equity $290,141 $284,985
