CSK Auto Corporation Reports Fiscal 2002 First Quarter
PHOENIX, May 30 CSK Auto Corporation the parent company of CSK Auto, Inc., a specialty retailer in the automotive aftermarket, today reported its financial results for the first quarter of fiscal 2002.
Net sales for the thirteen weeks ended May 5, 2002 (the "first quarter of fiscal 2002") increased 5.5% to $375.6 million from $356.1 million for the thirteen weeks ended May 6, 2001 (the "first quarter of fiscal 2001"). Same store sales increased 7%. Sales increased during the first quarter of fiscal 2002 despite a lower total store count as the Company had 1,124 stores in operation at May 5, 2002 compared to 1,155 at May 6, 2001. During the first quarter of 2002, the Company opened 1 store and closed 7 stores, 5 of which were closed as part of the Profitability Enhancement Program.
During the first quarter of fiscal 2002, the Company took several steps to encourage former and existing customers to return to its stores and to attract new customers who may have never previously shopped in a CSK store. These initiatives included:
* an increased emphasis on promotional activities and promotional pricing
to stimulate customer awareness;
* the commencement of a new merchandising program that features garage
maintenance and organizational products, items that the Company had
never previously stocked; and
* a replenishment of inventory to return the stores to more normal levels
of product availability.
While these steps were successful in increasing customer counts, average sale amount and total sales levels, they expectedly produced lower gross profit margins. Gross profit was $165.1 million, or 44.0% of net sales, in the first quarter of fiscal 2002 as compared to $168.6 million, or 47.3% of net sales, in the first quarter of fiscal 2001.
Operating profit for the first quarter of fiscal 2002 totaled $23.2 million, or 6.2% of net sales, compared to $20.2 million, or 5.7% of net sales, for the first quarter of fiscal 2001. Operating and administrative expenses were lower in the first quarter of fiscal 2002 than in the same quarter of fiscal 2001 reflecting the impact of the Profitability Enhancement Program and the operation of fewer stores. Operating profit during the first quarter of 2001 was affected by: (1) store closing costs of $1.8 million relating to longer-than-expected vacancy periods at stores closed as a result of acquisitions; (2) a $1.2 million loss on the disposition of certain acquired fixed assets; and (3) $0.2 million of transition and integration costs relating to prior acquisitions.
Interest expense for the first quarter of fiscal 2002 totaled $17.7 million. If interest on the $50.0 million of 7% convertible subordinated debentures that were converted to common stock on May 20, 2002 is excluded, interest expense would have been consistent with the $16.7 million of the comparable period last year.
Net income for the first quarter of fiscal 2002 was $3.4 million or $0.10 per diluted common share, assuming a weighted average share base of 32.5 million shares. Net income for the first quarter of fiscal 2001 was $2.3 million or $0.08 per diluted common share, assuming a weighted average share base of 27.8 million shares. Assuming the conversion of the $50.0 million of 7% convertible subordinated debentures had occurred on February 3, 2002 (the last day of fiscal 2001), net income for the first quarter of fiscal 2002 would have been $4.4 million or $0.12 per diluted common share, on a weighted average share base of 38.2 million shares.
"We are very pleased with our first quarter fiscal 2002 financial results. Sales, which have been bolstered by our new merchandise offerings and our improved liquidity, have exceeded our plan. Net income is meeting our expectations and strong same store sales trends have continued into the second quarter," said Maynard Jenkins, Chairman and Chief Executive Officer of CSK Auto Corporation. "Our focus for the remainder of the fiscal year will be to maintain our revenue growth and continue to improve our profitability through margin expansion, expense control and debt reduction."
CSK Auto Corporation is the parent company of CSK Auto, Inc., a specialty retailer in the automotive aftermarket. As of May 5, 2002, the Company operated 1,124 stores in 19 states under the brand names Checker Auto Parts, Schuck's Auto Supply and Kragen Auto Parts.
Certain statements contained in this release are forward-looking statements. They discuss, among other things, expected growth, future store development and relocation strategy, business strategies, future revenues and future performance. The forward-looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, competitive pressures, demand for the Company's products, the state of the economy, inflation, consumer debt levels and the weather. Actual results may differ materially from anticipated results described in these forward-looking statements.
Conference Call
CSK AUTO CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in thousands, except share and per share data)
Thirteen Weeks Ended
May 5, 2002 May 6, 2001
Net sales $ 375,550 $ 356,121
Cost of sales 210,420 187,535
Gross profit 165,130 168,586
Other costs and expenses:
Operating and administrative 141,638 144,671
Store closing costs 300 2,295
Transition and integration expenses -- 250
Goodwill amortization -- 1,183
Operating profit 23,192 20,187
Interest expense, net 17,718 16,747
Income before income taxes 5,474 3,440
Income tax (2,094) (1,187)
Net income $ 3,380 $ 2,253
Basic earnings per share:
Net income $ 0.10 $ 0.08
Shares used in computing per share amounts 32,412,923 27,841,178
Diluted earnings per share:
Net income $ 0.10 $ 0.08
Shares used in computing per share amounts 32,472,337 27,841,178
Selected Financial Data:
($ in thousands)
Quarter Ended Quarter Ended
May 5, 2002 May 6, 2001
EBITDA, as adjusted $ 32,205 $ 33,716
Depreciation $ 8,117 $ 8,360
Amortization (net of deferred financing costs) $ 896 $ 2,009
FIFO inventory $544,578 $556,692
Interest expense $ 17,718 $ 16,747
Cash interest $ 15,097 $ 16,054
Capital expenditures $ 2,103 $ 4,643
Availability under revolving credit facility $ 75,572 $ 43,391
Total debt (including current maturities and
excluding convertible debt) $592,291 $613,607
Calculation of EBITDA, as adjusted:
($ in thousands)
Quarter Ended Quarter Ended
May 5, 2002 May 6, 2001
Operating profit $23,192 $20,187
Depreciation 8,117 8,360
Amortization (net of deferred financing costs) 896 2,009
EBITDA 32,205 30,556
Other adjustments -- 3,160
EBITDA, as adjusted $32,205 $33,716
EBITDA, as adjusted, has been calculated in accordance with the terms of
the Company's senior credit facility and may differ in method of
calculation from similarly titled measures used by other companies.