Monro Muffler Brake Reports 12% Increase in Net Income
ROCHESTER, N.Y.--July 19, 2001--Monro Muffler Brake, Inc. , today announced record results for the first quarter ended June 30, 2001, reporting a 1.2% increase in revenue and a 12% increase in net income over the prior year period.Sales for the fiscal 2002 first quarter were $61.4 million, compared to $60.7 million for the corresponding quarter ended June 30, 2000. The increase is due to a comparable store sales increase of 0.6% and a gain of $0.8 million of sales from new stores, partially offset by a decrease in sales from stores closed in fiscal 2001 and 2002 of approximately $0.4 million. At June 30, 2001 and 2000, the Company had 512 company-operated stores. The Company opened two stores and closed one store during the quarter ended June 30, 2001.
Net income for the first quarter of fiscal 2002 rose 12% to $3.9 million, or $0.43 per diluted share, as compared to $3.4 million, or $0.39 per diluted share, in the prior-year period. Net income for the first quarter of 2002 includes a special, after tax charge of $451,000, or $0.05 per diluted share, related to performance-based executive compensation, which was partially offset by a one-time tax benefit of $363,000, or $0.04 per diluted share. Excluding these one-time factors, net income for the first quarter would have been $0.44 per diluted share.
"In the first quarter, we achieved our primary goal of positive same-store sales growth, leading to record top- and bottom-line performance," commented Robert G. Gross, President and Chief Executive Officer. "While overall consumer spending trends limited our upside performance, we are excited by the success of our sales initiatives and believe that these efforts will gain further momentum as we move forward.
"Over the past several quarters, we have aggressively implemented a top-line growth strategy based on the diversification of product and service offerings, new employee incentives, co-branding programs, targeted marketing, and technology initiatives, including the new point-of-sale (POS) system used by all Monro and Speedy stores. These programs are clearly starting to translate into higher sales. Scheduled maintenance increased 22%, oil changes increased 4%, and commercial fleet sales increased 35%, which puts us on track for 25-30% year-over-year growth in fiscal 2002 from this new revenue source. Repeat business, which in large part is fueled by scheduled maintenance, is evidence that Monro's loyal customer-base is expanding as we continue to capture market share.
"We also strengthened our profitability in the period as demonstrated by the 160-basis point improvement in our gross margin performance," continued Mr. Gross. "Overall margin expansion was driven by the effective leveraging of fixed costs on a higher revenue base, control of payroll costs, greater purchasing economies and higher pricing."
Mr. Gross concluded, "During the first quarter, we generated positive comparable store sales even as some customers chose to defer discretionary car expenditures. While it is prudent to anticipate that the economy will remain a factor in the quarters ahead, we also believe that we can build on the sales momentum established in the first quarter.
"Looking ahead, we remain comfortable with our previously announced earnings expectations for the year of $1.20 to $1.25 per diluted share. This range assumes a same-store sales increase of 0 to 3%. For the second quarter, which has one less selling day in the period this year, we expect diluted earnings per share of $0.40 to $0.42. July sales to date are slightly positive."
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 512 stores and has 19 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 and Michigan. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems and many vehicle maintenance services.
Certain statements made above may be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve uncertainties which may cause the Company's actual results in future periods to differ materially from those expressed. These uncertainties include, but are not necessarily limited to, uncertainties affecting retail generally (such as consumer confidence and demand for auto repair); risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates); dependence on, and competition within, the primary markets in which the Company's stores are located; the need for, and costs associated with, store renovations and other capital expenditures; and the risks described from time to time in the Company's SEC reports which include the report on Form 10K for the fiscal year ended March 31, 2001.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended June 30,
------------------------
2001 2000 % Change
----------- ---------- ----------
Sales $ 61,393 $ 60,693 1.2 %
Cost of sales,
including distribution
and occupancy costs 34,238 34,826 (1.7)
----------- ----------
Gross profit 27,155 25,867 5.0
Operating, selling,
general and
administrative
expenses 20,179 18,437 9.4
----------- ----------
Operating income 6,976 7,430 (6.1)
Interest expense, net 1,158 1,600 (27.6)
Other expense, net 190 105 80.9
----------- ----------
Income before provision
for income taxes 5,628 5,725 (1.7)
Provision for income
taxes 1,775 2,278 (22.1)
----------- ----------
Net income $ 3,853 $ 3,447 11.8
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Diluted earnings per
common share $ 0.43 $ 0.39 10.3
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Number of stores open
(at end of quarter) 512 512
Weighted average number
of diluted shares
outstanding 8,985 8,882
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
Quarter Ended
-------------
June 30, March 31,
2001 2001
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Assets
Current assets
Cash $ 1,022 $ 751
Inventories 41,074 41,071
Other current assets 7,990 7,945
------------------ ------------------
Total current assets 50,086 49,767
Property, plant and
equipment, net 131,073 131,486
Other noncurrent assets 12,373 12,586
------------------ ------------------
Total assets $ 193,532 $ 193,839
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Liabilities and Shareholders' Equity
Current liabilities $ 39,928 $ 36,569
Long-term debt 42,869 50,857
Other long-term
liabilities 8,788 8,603
------------------ ------------------
Total liabilities 91,585 96,029
Total shareholders'
equity 101,947 97,810
------------------ ------------------
Total liabilities
and shareholders'
equity $ 193,532 $ 193,839
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