Monro Muffler Brake Achieves 32% Net Income Increase for Q2;
ROCHESTER, N.Y.--Oct. 17, 2002--Monro Muffler Brake, Inc. today announced record sales and earnings for the second quarter and six months ended September 28, 2002.Sales for the second quarter increased 12.4% to a record $68.0 million from $60.5 million in the prior year period. The strong sales results were driven by sales from the 34 Kimmel stores acquired in April 2002, a 5% increase in comparable store traffic and a 10% increase in the number of comparable store oil changes. Additionally, comparable store scheduled maintenance sales increased 31% over the prior year quarter.
Comparable store sales for the second quarter increased 1.5%. Excluding the declining exhaust business, comparable store sales increased approximately 6%. New store sales, including sales from the acquired Kimmel stores, increased approximately $6.7 million over last year's second quarter.
Monro's second quarter gross margin, without Kimmel, was 42.8% compared to 42.3% in the year-ago period. Including Kimmel, gross margin was 42.1%, reflecting Kimmel's heavier product mix of tires, which carry a lower margin.
Net income for the second quarter increased 31.7% to a record $4.9 million, or $0.52 per diluted share, compared to $3.7 million, or $0.41 per diluted share, in last year's period. The Company opened two stores during the second quarter, bringing the total store count to 550 as of September 28, 2002.
"Our record second quarter results demonstrate the consistently growing consumer awareness that we offer a full range of high quality services at competitive prices. Building trust among our ever-growing customer base has allowed us to fully leverage the basic oil change to effectively sell a diverse range of products and services. By fine-tuning our direct to consumer marketing efforts and diversifying our revenue stream, we have posted same store traffic increases for the past five quarters," said Robert G. Gross, President and Chief Executive Officer.
"As anticipated, our acquisition of Kimmel Automotive, which closed in April of this year, is already accretive to earnings. We are benefiting from margin improvements as we diversify Kimmel's product line and service offerings, and through the elimination of redundant overhead costs. In addition, the 36% increase in our comparable store tire business reflects our ability to leverage Kimmel's tire expertise to grow this area at our Monro stores. On a separate note, we experienced a 13% increase in our commercial business due to overall stronger demand. Going forward, we view both our tire and commercial businesses as important opportunities for growth."
Sales for the six-month period ended September 28, 2002 increased 11.5% to $135.9 million from $121.9 million in the prior six-month period. Net income for the six months was $8.8 million, or $0.93 per diluted share, which includes an $0.11 non-cash charge for Mr. Gross's performance-based stock options, compared to $7.5 million, or $0.84 per diluted share in the year-ago period.
Mr. Gross continued, "In addition to organic growth, we also look forward to growth from our previously discussed strategy of acquiring companies with solid reputations that will strengthen our geographic presence and/or diversify our product mix. In fact, I am optimistic we will have something to announce on the acquisition front by the end of our fiscal year."
Mr. Gross concluded, "The strategy we implemented four years ago to leverage the basic oil change to diversify our product offering is paying dividends and we anticipate increases in comparable store sales and traffic in our third quarter. We expect to continue our strong performance going forward and see earnings in the third quarter in the range of $0.26 to $0.28 per diluted share versus $0.20 last year, and earnings in the fourth quarter in the range of $0.21 to $0.23 per diluted share. As previously mentioned, earnings for the second half of the year will be weighted toward our third quarter due to our heavier mix of tires, which experience a seasonally slow fourth quarter, the shift in the high sales Good Friday holiday from the fourth quarter of this year to the first quarter of next year, as well as the potential impact of acquisition costs in the fourth quarter. Finally, I would like to reiterate our previously increased full year EPS forecast of $1.40 to $1.44."
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 551 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 September
2002 2001 % Change
--------------- -------------- -----------
Sales $ 68,003 $ 60,477 12.4%
Cost of sales, including
distribution and
occupancy costs 39,392 34,908 12.8
--------------- --------------
Gross profit 28,611 25,569 11.9
Operating, selling,
general and
administrative
expenses 20,090 18,546 8.3
--------------- --------------
Operating income 8,521 7,023 21.3
Interest expense, net 642 960 (33.1)
Other expense, net 32 110
--------------- --------------
Income before provision
for income taxes 7,847 5,953 31.8
Provision for income
taxes 2,982 2,260 32.0
--------------- --------------
Net income $ 4,865 $ 3,693 31.7
=============== ==============
Diluted earnings per
common share $ 0.52 $ 0.41 26.8
=============== ==============
Weighted average
number of diluted
shares outstanding 9,375 9,040
Number of stores open
(at end of quarter) 550 513
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended Fiscal September
2002 2001 % Change
-------------- --------------- -----------
Sales $ 135,912 $ 121,870 11.5%
Cost of sales,
including
distribution and
occupancy costs 77,406 69,146 11.9
-------------- ---------------
Gross profit 58,506 52,724 11.0
Operating, selling,
general and
administrative
expenses 43,061 38,725 11.2
-------------- ---------------
Operating income 15,445 13,999 10.3
Interest expense, net 1,409 2,118 (33.5)
Other (income) expense,
net (120) 300
--------------- ---------------
Income before provision
for income taxes 14,156 11,581 22.2
Provision for income
taxes 5,380 4,035 33.3
-------------- ---------------
Net income $ 8,776 $ 7,546 16.3
============== ===============
Diluted earnings
per share $ 0.93 $ 0.84 10.7
============= ===============
Weighted average number
of diluted shares
outstanding 9,393 9,010
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
September 28, March 30,
2002 2002
---- ----
Assets
Current assets
Cash $ 0 $ 442
Inventories 50,788 44,821
Other current assets 11,493 8,516
---------- ----------
Total current assets 62,281 53,779
Property, plant and equipment, net 127,830 127,211
Other noncurrent assets 12,872 8,309
---------- ----------
Total assets $ 202,983 $ 189,299
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Liabilities and Shareholders' Equity
Current liabilities $ 52,714 $ 39,643
Long-term debt 22,687 34,123
Other long-term liabilities 6,007 5,749
---------- ----------
Total liabilities 81,408 79,515
Total shareholders' equity 121,575 109,784
---------- ----------
Total liabilities and shareholders' equity $ 202,983 $ 189,299
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