Discount Auto Parts Reports Fiscal 2001 Q3 and Year-to-Date Results
LAKELAND, Fla.--March 20, 2001--Discount Auto Parts, Inc. today announced results for the Company's third quarter ended February 27, 2001.Total sales for the third quarter of fiscal 2001 increased 8.2% to $159.5 million, as compared to $147.4 million a year earlier. Comparable store sales increased 2.8% for the third quarter of fiscal 2001 as compared to the third quarter of fiscal year 2000. Total sales for the first nine months of fiscal 2001 increased 12.4% to $487.5 million, from $433.6 million a year earlier. Comparable store sales increased 4.5% for the first nine months of fiscal 2001 as compared to the first nine months of fiscal 2000. Comparable store sales results also include sales from the Company's commercial delivery program. The balance of the increase in total sales for the third quarter and the first nine months of fiscal 2001 was attributable to new stores opened since the beginning of the respective periods in fiscal 2000. At February 27, 2001, the Company had 665 stores in operation as compared to 621 stores in operation at February 29, 2000.
Gross profit for the third quarter of fiscal 2001 was $61.6 million as compared to $58.7 million for the third quarter of fiscal 2000. As a percentage of sales, gross profit was 38.6% for the third quarter of fiscal 2001 as compared to 39.8% for the third quarter of fiscal 2000. Gross profit for the first nine months of fiscal 2001 was $188.9 million as compared to $175.7 million a year earlier. As a percentage of sales, gross profit was 38.7% for the first nine months of fiscal 2001 as compared to 40.5% a year earlier. Gross profit for the third quarter and first nine months of fiscal 2001 were impacted by overall lower vendor incentives, higher inventory shrinkage expense and margin pressure in commodity categories such as oil.
Selling, general and administrative ("SG&A") expenses increased as a percentage of sales from 31.2% in the third quarter of fiscal 2000 to 32.8% in the third quarter of fiscal 2001. SG&A expenses increased as a percentage of sales from 31.1% for the first nine months of fiscal 2000 to 32.6% for the first nine months of fiscal 2001. The increase is due primarily to lower than anticipated retail sales which resulted in a reduced ability to leverage certain store related expenses.
Income from operations for the third quarter of fiscal 2001 was $9.3 million as compared to $12.7 million for the third quarter of fiscal 2000. Income from operations for the first nine months of fiscal 2001 was $29.9 million as compared to $41.0 million for the first nine months of fiscal 2000.
Interest expense for the third quarter of fiscal 2001 was $5.9 million as compared to $5.1 million for the third quarter of fiscal 2000. Interest expense for the first nine months of fiscal 2001 was $17.5 million as compared to $13.0 million during the first nine months of fiscal 2000. The increase was the result of increased borrowings primarily associated with new store growth and higher interest rates on the Company's variable rate debt.
During the third quarter of fiscal 2000 the Company had $1.7 million of other income primarily resulting from one single real estate disposition. Other income for the third quarter of fiscal 2001 totaled $0.2 million.
Taking into account all of the above described factors, the Company reported net income for the third quarter of fiscal 2001 of $2.3 million or $.14 per diluted share as compared to $5.8 million or $.35 per diluted share for the third quarter of fiscal 2000. Net income for the first nine months of fiscal 2001 was $8.2 million or $.49 per diluted share as compared to $19.2 million or $1.15 per diluted share for the first nine months of fiscal 2000.
"Overall, it was a difficult quarter for us with lower than anticipated sales, which we believe is attributable in part to a colder than normal winter in the southeast, particularly Florida, weaker economic conditions and higher gasoline prices," stated Peter Fontaine, Chairman and Chief Executive Officer. " However, we are encouraged by the improving sales trends from February, as well as the impact of recently implemented expense control measures and supply chain initiatives. We are optimistic that we can improve our earnings trends as we move into the fourth quarter and fiscal 2002."
As previously announced, effective February 27, 2001 the Company completed a $62.2 million sale/leaseback financing for 101 of its retail stores. The Company continues to own 478 of its existing 665 stores. The proceeds from the financing were used to reduce outstanding debt under the Company's revolving credit agreement. The proceeds from the financing are expected to satisfy the Company's capital needs for the next two to three years.
During the third quarter of fiscal 2001, the Company added 9 new stores and closed 2 stores. Year-to-date, the Company has added 26 new stores and closed 4 stores. For fiscal year 2001, the Company expects to add a total of approximately 35 stores.
Discount Auto Parts will host a one-hour conference call beginning at 11 a.m. (EST) today to discuss the results of the quarter. The opportunity to listen to the conference call over the Internet is available by going directly to discountautoparts.net/investor.html and click on the StreetEvents link or go to streetevents.com. The call will also be available by dialing (800) 374-1487. In addition, a replay of the call will be available by dialing (800) 642-1687, reference reservation No. 894502, through Wednesday, March 28, 2001.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(In Thousands, Except Per Share Amounts)
Thirteen Thirteen Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
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February 27 February 29 February 27 February 29
2001 2000 2001 2000
-------- -------- -------- --------
Net sales $159,477 $147,374 $487,501 $433,642
Cost of sales, including
distribution costs 97,883 88,691 298,619 257,985
-------- -------- -------- --------
Gross profit 61,594 58,683 188,882 175,657
Selling, general and
administrative expenses 52,246 45,996 158,973 134,693
-------- -------- -------- --------
Income from operations 9,348 12,687 29,909 40,964
Other income, net 196 1,679 316 2,490
Interest expense (5,937) (5,143) (17,478) (12,951)
-------- -------- -------- --------
Income before income
taxes 3,607 9,223 12,747 30,503
Income taxes 1,298 3,410 4,588 11,324
-------- -------- -------- --------
Net income $ 2,309 $ 5,813 $ 8,159 $ 19,179
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Net income per share:
Basic net income per
common share $ 0.14 $ 0.35 $ 0.49 $ 1.15
======== ======== ======== ========
Dilutive net income
per common share $ 0.14 $ 0.35 $ 0.49 $ 1.15
======== ======== ======== ========
Average common
shares outstanding 16,700 16,696 16,696 16,693
Dilutive effect of
stock options -- 1 1 39
-------- -------- -------- --------
Average common shares
outstanding - assuming
dilution 16,700 16,697 16,697 16,732
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CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In Thousands) February 27 May 30
--------- ---------
2001 2000
--------- ---------
Assets
Current assets:
Cash and cash equivalents $ 6,698 $ 12,612
Inventories 242,635 253,113
Prepaid expenses and
other current assets 19,005 14,455
--------- ---------
Total current assets 268,338 280,180
Property and equipment 492,760 524,053
Less allowances for
depreciation and amortization (117,328) (104,771)
--------- ---------
375,432 419,282
Other assets 7,386 5,247
--------- ---------
Total assets $ 651,156 $ 704,709
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Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 67,808 $ 100,804
Other current liabilities 22,388 23,207
Current maturities of
long-term debt 2,400 2,400
--------- ---------
Total current liabilities 92,596 126,411
Deferred gain on sale and leaseback 8,670 --
Deferred income taxes 7,848 10,494
Long-term debt 230,632 264,600
Total stockholders' equity 311,410 303,204
--------- ---------
Total liabilities and
stockholders' equity $ 651,156 $ 704,709
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