Discount Auto Parts, Inc. Reports Fiscal 2001 Year End and Fourth Quarter Results
LAKELAND, Fla.--July 20, 2001--Discount Auto Parts, Inc. today announced results for the Company's fourth quarter and fiscal year ended May 29, 2001.Total sales for the fourth quarter of fiscal 2001 increased 5.8% to $174.2 million, as compared to $164.6 million a year earlier. Comparable store sales increased 2.4% for the fourth quarter of fiscal 2001 as compared to the fourth quarter of fiscal year 2000. Total sales for fiscal 2001 increased 10.6% to $661.7 million, from $598.3 million a year earlier. Comparable store sales increased 3.9% for fiscal 2001 as compared to 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 fourth quarter and for fiscal 2001 was attributable to sales from new stores opened since the beginning of the respective periods in fiscal 2000. At May 29, 2001, the Company had 666 stores in operation as compared to 643 stores at May 30, 2000.
Gross profit for the fourth quarter of fiscal 2001 increased 4.3% to $68.6 million as compared to $65.8 million for the fourth quarter of fiscal 2000. As a percentage of sales, gross profit was 39.4% for the fourth quarter of fiscal 2001 as compared to 40.0% for the fourth quarter of fiscal 2000. Gross profit for the fourth quarter of fiscal 2001 was impacted by overall lower vendor incentives and higher distribution costs stemming from the Company's fourth quarter opening of its second distribution center in Gallman, Mississippi. Gross profit for fiscal 2001 increased 6.6% to $257.5 million as compared to $241.5 million a year earlier. As a percentage of sales, gross profit was 38.9% for fiscal 2001 as compared to 40.4% a year earlier. Gross profit for fiscal 2001 was impacted by overall lower vendor incentives, higher inventory shrinkage expense, expenses associated with the opening of the second distribution center and margin pressure in commodity categories such as oil. On a sequential quarter basis, as a result of the Company's supply chain initiatives, gross margins and profit have begun to rebound, increasing from $61.6 million (38.6%) in the third quarter, to $68.6 million (39.4%) in the fourth quarter.
Selling, general and administrative ("SG&A") expenses increased as a percentage of sales from 30.2% in the fourth quarter of fiscal 2000 to 32.4% in the fourth quarter of fiscal 2001. The increase in SG&A expenses for the fourth quarter is primarily due to the net rent resulting from the February 2001 sale/leaseback of 101 properties and increases in health and workers' compensation insurance costs. SG&A expenses for all of fiscal 2001 increased as a percentage of sales from 30.8% for fiscal 2000 to 32.5%. The increase is primarily due to lower than anticipated retail sales which resulted in a reduced ability to leverage certain store-related expenses, the slower sales ramp up of stores opened in newer markets, and the net additional rent resulting from the sale/leaseback.
Income from operations for the fourth quarter of fiscal 2001 was $12.3 million as compared to $16.1 million for the fourth quarter of fiscal 2000. Income from operations for fiscal 2001 was $42.2 million as compared to $57.1 million for fiscal 2000.
"We are encouraged by the earnings trends during the fourth quarter of fiscal 2001, as compared to the earlier quarters of fiscal 2001" commented Peter Fontaine, Chairman and CEO. "Although margin was down on a comparative full year basis, we have begun to see improvements in profitability and margin when compared to the first three quarters of the year. We believe that our supply chain initiatives are beginning to show results and that the ground work has been laid for a resumption in year over year increases in margin and profitability." Fontaine also commented that "We are very pleased to report the first quarterly period of profitability for our commercial operations. We believe this is a very significant milestone in the development of that aspect of our business."
During May 2001, the Company settled a claim related to recovery of amounts previously paid out by the Company in connection with a separate litigation matter that was concluded in August 1997. The 1997 litigation stemmed from the sale and distribution of freon. The net gain resulting from the recovery achieved in the May 2001 settlement has been included in other income and represents substantially all of the other income amount.
Interest expense for the fourth quarter of fiscal 2001 was $4.2 million as compared to $5.1 million for the fourth quarter of fiscal 2000. The decrease was due to overall lower borrowings for the fourth quarter of fiscal 2001, which resulted primarily from the paydown in debt stemming from the February 2001 sale/leaseback closing, and overall lower average interest rates. Interest expense for fiscal 2001 was $21.6 million as compared to $18.1 million during fiscal 2000. The increase was the result of increased borrowings in the first half of the fiscal year primarily associated with new store growth and overall higher interest rates on the Company's variable rate debt.
Taking into account all of the above described factors, the Company reported net income for the fourth quarter of fiscal 2001 of $9.4 million or $.57 per diluted share as compared to $7.1 million or $.43 per diluted share for the fourth quarter of fiscal 2000. Net income for fiscal 2001 was $17.6 million or $1.05 per diluted share as compared to $26.3 million or $1.57 per diluted share for fiscal 2000.
During the fourth quarter of fiscal 2001, the Company added 5 new stores and closed 4 stores. For fiscal 2001, the Company added a total of 31 new stores and closed 8 stores. As of May 29, 2001, the Company had 666 stores in operation. For fiscal year 2002, the Company expects to add a total of approximately 20 to 40 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, reference reservation No. 1408526. In addition, a replay of the call will be available by dialing (800) 642-1687, reference reservation No. 1408526, through Friday, July 27, 2001.
Discount Auto Parts, Inc. is one of the Southeast's leading specialty retailers and suppliers of automotive replacement parts, maintenance items and accessories to both DIY consumers and professional mechanics and service technicians. The Company currently operates stores located throughout Florida, Georgia, Mississippi, Alabama, Louisiana and South Carolina.
Forward Looking Statements
This release may contain forward-looking statements, which reflect the current views of the Company with respect to certain events that could have an effect on the Company's future financial performance. These statements include the word "expects", "believe" and similar expressions. Any such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from historical results or those currently anticipated.
These risks and uncertainties include, but are not limited to, increased competition, extent of market demand for auto parts, availability of inventory supply, inventory shrinkage, propriety of inventory mix, adequacy and perception of customer service, product quality and defect experience, availability of and ability to take advantage of vendor pricing programs and incentives, sourcing availability, rate of new store openings, cannibalization of store sites, mix of types of merchandise sold, governmental regulation of products, weather, new store development, performance of information systems, effectiveness of deliveries from the distribution center, ability to hire, train and retain qualified team members, availability of quality store sites, ability to successfully implement the commercial delivery service, credit risk associated with the commercial delivery service, environmental risks, availability of expanded and extended credit facilities, ability to successfully and efficiently establish and coordinate operations at the second distribution center and other risks.
CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)
(In Thousands, Except Per Share Amounts)
Thirteen Thirteen Fifty-Two Fifty-Two
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
-------- -------- --------- ---------
May 29 May 30 May 29 May 30
2001 2000 2001 2000
-------- -------- --------- ---------
Net sales $ 174,216 $ 164,616 $ 661,717 $ 598,258
Cost of sales, including
distribution costs 105,580 98,798 404,199 356,783
-------- -------- -------- --------
Gross profit 68,636 65,818 257,518 241,475
Selling, general and
administrative expenses 56,380 49,678 215,353 184,371
-------- -------- -------- --------
Income from operations 12,256 16,140 42,165 57,104
Other income, net 6,641 280 6,957 2,770
Interest expense (4,156) (5,128) (21,634) (18,079)
-------- -------- -------- --------
Income before income taxes 14,741 11,292 27,488 41,795
Income taxes 5,292 4,182 9,880 15,506
-------- -------- -------- --------
Net income $ 9,449 $ 7,110 $ 17,608 $ 26,289
======== ======== ======== ========
Net income per share:
Basic net income per
common share $ 0.57 $ 0.43 $ 1.05 $ 1.57
======== ======== ======== ========
Dilutive net income
per common share $ 0.57 $ 0.43 $ 1.05 $ 1.57
======== ======== ======== ========
Average common shares
outstanding 16,706 16,699 16,703 16,695
Dilutive effect of
stock options 14 -- 4 30
-------- -------- -------- --------
Average common shares
outstanding - assuming
dilution 16,720 16,699 16,707 16,725
======== ======== ======== ========
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands) May 29 May 30
2001 2000
------ ------
Assets
Current assets:
Cash and cash equivalents $ 9,669 $ 12,612
Inventories 242,718 253,113
Prepaid expenses and other
current assets 14,391 14,455
-------- --------
Total current assets 266,778 280,180
Property and equipment 507,255 524,053
Less allowances for depreciation
and amortization (122,742) (104,771)
-------- --------
384,513 419,282
Other assets 4,638 5,247
-------- --------
Total assets $ 655,929 $ 704,709
======== ========
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 96,442 $ 100,804
Other current liabilities 25,809 23,207
Current maturities of long-term debt 1,200 2,400
-------- --------
Total current liabilities 123,451 126,411
Deferred gain on sale/leaseback 5,443 --
Deferred income taxes 13,273 10,494
Long-term debt 192,900 264,600
Total stockholders' equity 320,862 303,204
-------- --------
Total liabilities and
stockholders' equity $ 655,929 $ 704,709
======== ========