Monro Muffler Brake: Q1 Record Net Income
ROCHESTER, N.Y.--July 25, 2002--Monro Muffler Brake, Inc. today announced results for its first quarter ended June 29, 2002.Sales for the first quarter of fiscal 2003 were $67.9 million, compared to $61.4 million in the prior year period. Comparable store sales were essentially flat during the quarter, declining 0.1%. New store sales (including the recently acquired Kimmel stores) increased approximately $6.7 million as compared to the same quarter of last year. Monro's comparable first quarter gross margin improved 80 basis points to 45.0% versus 44.2% last year, primarily driven by workforce productivity improvements, slightly lower material costs, and an oil change price increase. Including Kimmel, gross margin was 44.0%, due to Kimmel's heavier product mix of tires, which carry a lower margin.
Net income for the first quarter of fiscal 2003 was $3.9 million, or $0.42 per diluted share, compared to $3.9 million, or $0.43 per diluted share, in the year-ago period. Included in net income in the quarter ended June 29, 2002 is a charge related to performance-based executive stock options of $1.6 million, or $0.11 per diluted share. Excluding this charge, earnings per share were $0.53 for the quarter. Total shares outstanding increased to 9.4 million from 9.0 million at the end of last year's first quarter. The Company also disclosed that it adopted the provision of FAS 141 and 142 in the quarter.
Robert G. Gross, President and Chief Executive Officer said, "We experienced an excellent quarter in terms of expense control, fueled by continued improvements in technician productivity and tight controls on discretionary spending. In addition, store traffic increased by 5.3%, oil changes increased by 14%, and we had a 31% increase in scheduled maintenance services. More importantly, we saw business steadily improve as the quarter progressed and through July, with the last ten weeks' comparable store sales up over 4%."
"In addition to strong results delivered by Monro, the recently-acquired Kimmel Automotive has exceeded our expectations," commented Mr. Gross. "We anticipated Kimmel would be slightly dilutive in the first quarter. However, due to the effort and teamwork put forth by our new Kimmel associates and existing members of our organization, we are proud to announce Kimmel retail stores posted a 5.3% comparable store sales increase. Additionally, the acquisition was accretive to earnings this quarter. We expect to see Kimmel's margins continue to improve as they benefit further from Monro's purchasing power. In addition, during the quarter we divested Kimmel's Truck Tire division and the retread plant, and bought out the preferred shareholders at a discount, which effectively reduced the acquisition price of the retained retail store operation. Given the success to date of our Kimmel Automotive acquisition, we anticipate that we will continue to drive growth not only internally, but through cost-effective acquisitions which will strengthen our geographic presence and/or diversify our product mix."
Mr. Gross concluded, "Finally, in light of our greater than expected synergies with Kimmel and the positive comparable store sales trend that has been developing over the past ten weeks, we are raising our full year EPS guidance to $1.40 to $1.44 from $1.35 to $1.40. We expect our second quarter's earnings per share to be in the range of $0.51 to $0.53. For the second half of the year, we are anticipating EPS to be in the range of $0.45 to $0.49 with weighting toward the third quarter, given Kimmel's seasonally slower tire business in the fourth quarter of the year."
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, Kimmel Tires - Auto Service and Tread Quarters Discount Tires. The Company currently operates 548 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; risks relating to integration of the acquired business; 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 30, 2002.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended Fiscal June
-------------------------
2002 2001 % Change
---------------- --------------- ------------
Sales $ 67,908 $ 61,393 10.6 %
Cost of sales,
including
distribution and
occupancy costs 38,013 34,238 11.0
---------------- ---------------
Gross profit 29,895 27,155 10.1
Operating, selling,
general and
administrative
expenses 22,972 20,179 13.8
---------------- ---------------
Operating income 6,923 6,976 (0.8)
Interest expense,
net 766 1,158 (33.8)
Other (income)
expense, net (151) 190
----------------- ---------------
Income before
provision for
income taxes 6,308 5,628 12.1
Provision for
income taxes 2,397 1,775 35.0
---------------- ---------------
Net income $ 3,911 $ 3,853 1.5
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Diluted earnings
per common share $ 0.42 $ 0.43 (2.3)
================ ===============
Number of stores
open (at end of
quarter) 548 512
Weighted average
number of diluted
shares outstanding 9,389 8,985
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
June 29, March 30,
2002 2002
------------------ ------------------
Assets
Current assets
Cash $ 407 $ 442
Inventories 48,495 44,821
Other current assets 10,402 8,516
------------------ ------------------
Total current assets 59,304 53,779
Property, plant and
equipment, net 128,199 127,211
Other noncurrent assets 12,266 8,309
------------------ ------------------
Total assets $ 199,769 $ 189,299
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Liabilities and Shareholders'
Equity
Current liabilities $ 47,286 $ 39,643
Long-term debt 30,225 34,123
Other long-term
liabilities 5,647 5,749
------------------ ------------------
Total liabilities 83,158 79,515
Total shareholders'
equity 116,611 109,784
------------------ ------------------
Total liabilities and
shareholders' equity $ 199,769 $ 189,299
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