Pep Boys Third Quarter Earnings Up 42%; Company Reports $.28 vs. $.21 Per Share
PHILADELPHIA--Nov. 14, 2002--The Pep Boys - Manny, Moe & Jack , the nation's leading full-service automotive aftermarket chain, announced a 42% increase in earnings before extraordinary items for the thirteen weeks ended November 2, 2002.Operating Results
Third Quarter
Sales
Sales for the quarter ended November 2, 2002, were $544,944,000, 1.2% less than the $551,501,000 recorded last year. Comparable store sales, which declined 1.3%, were negatively impacted by a 7% decline in tire sales. Service labor revenue, which improved over the course of the quarter, increased 1%.
Earnings
Higher merchandise and service center margins and lower selling, general and administrative expenses enabled the Company to achieve net earnings before extraordinary items of $15,625,000 ($.30 per share - basic and $.28 per share - diluted), which included $596,000 ($.01 per share) of expense due to an increase in the "Profit Enhancement Plan" reserve, 42% higher than the $11,016,000 ($.21 per share - basic and diluted) recorded last year, which included $358,000 ($.01 per share) of net income due to the reduction in the "Profit Enhancement Plan" reserve and excluded a $994,000 ($.02 per share) net loss on the early retirement of debt.
Nine Months
Sales
Sales for the nine months ended November 2, 2002, were $1,689,702,000, 0.8% more than the $1,676,152,000 recorded last year. Comparable store sales increased 0.7% while comparable service labor revenue and comparable tire sales decreased 1.3% and 1.4%, respectively.
Earnings
Increased sales, higher gross profit margins, excellent operating expense control and lower interest expense enabled the Company to achieve net earnings before extraordinary items of $45,873,000 ($.89 per share - basic and $.84 per share - diluted), which included $1,636,000 ($.03 per share) of expense due to an increase in the "Profit Enhancement Plan" reserve, 42% higher than the $32,408,000 ($.63 per share - basic and diluted) recorded last year, which included a $1,396,000 ($.03 per share) of expense due to increases in the "Profit Enhancement Plan" reserve and excluded a $758,000 ($.02 per share) net loss on the early retirement of debt.
Pep Boys Financial Highlights
Thirteen Thirteen
Weeks Ended Weeks Ended
November 2, 2002 November 3, 2001
---------------- ----------------
Total Revenues $544,944,000 $551,501,000
Net Earnings
Before Extraordinary Items $ 15,625,000 (a) $ 11,016,000 (e)
Net Earnings $ 15,515,000 (a,b) $ 10,022,000 (e,f)
Average Shares-Basic 51,534,000 51,375,000
Average Shares-Diluted 59,084,000 52,254,000
Basic Earnings Per Share
Before Extraordinary Items $ .30 (a) $ .21 (e)
Diluted Earnings Per Share
Before Extraordinary Items $ .28 (a) $ .21 (e)
Basic Earnings Per Share $ .30 (a,b) $ .19 (e,f)
Diluted Earnings Per Share $ .28 (a,b) $ .19 (e,f)
Thirty-Nine Thirty-Nine
Weeks Ended Weeks Ended
November 2, 2002 November 3, 2001
---------------- ----------------
Total Revenues $1,689,702,000 $1,676,152,000
Net Earnings
Before Extraordinary Items $ 45,873,000 (c) $ 32,408,000 (g)
Net Earnings $ 45,634,000 (c,d) $ 31,650,000 (g,h)
Average Shares-Basic 51,490,000 51,328,000
Average Shares-Diluted 56,587,000 51,851,000
Basic Earnings Per Share
Before Extraordinary Items $ .89 (c) $ .63 (g)
Diluted Earnings Per Share
Before Extraordinary Items $ .84 (c) $ .63 (g)
Basic Earnings Per Share $ .89 (c,d) $ .61 (g,h)
Diluted Earnings Per Share $ .84 (c,d) $ .61 (g,h)
(a) Includes $596,000 ($.01 per share) of expense due to an increase
in the "Profit Enhancement Plan" reserve
(b) Includes $110,000 extraordinary loss on the early retirement of
debt
(c) Includes $1,636,000 ($.03 per share) of expense due to an increase
in the "Profit Enhancement Plan" reserve
(d) Includes $239,000 extraordinary loss on the early retirement of
debt
(e) Includes $358,000 ($.01 per share) of income due to a reduction in
the "Profit Enhancement Plan" reserve
(f) Includes $994,000 ($.02 per share) extraordinary loss on the early
retirement of debt
(g) Includes $1,396,000 ($.03 per share) of expense due to an increase
in the "Profit Enhancement Plan" reserve
(h) Includes $758,000 ($.02 per share) extraordinary loss on the early
retirement of debt
Commentary
Pep Boys' Chief Executive Officer, Mitchell G. Leibovitz, made the following comments:
"We are pleased to report a 42% increase in third quarter earnings
despite industry-wide weakness in the sale of replacement tires
and a nine-year low in consumer confidence. This marks the eighth
consecutive quarter in which earnings increased at least 30%."
"Although our results were negatively impacted by a sharp decline
in tire demand that began in July and continued in the third
quarter, we are encouraged by the improving trend in service
center demand."
"Despite an uncertain replacement tire market, we remain
optimistic about our prospects for the fourth quarter. In
addition, we are hopeful that the recent and projected decline in
new car sales will stimulate an increased level of spending on
repairs, maintenance and tires."
Pep Boys has 629 stores and more than 6,500 service bays in 36 states and Puerto Rico. Along with its vehicle repair and maintenance capabilities, the Company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States. Customers can find the nearest location by calling 1-800-PEP-BOYS or by visiting pepboys.com.
Notes: Certain statements made herein, including those discussing management's expectations for future periods, are forward-looking and involve risks and uncertainties. The Company's actual results may differ materially from the results discussed in the forward-looking statements due to factors beyond the control of the Company, including the strength of the national and regional economies and retail and commercial consumers' ability to spend, the health of the various sectors of the market that the Company serves, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, location and number of competitors' stores and product and labor costs. Further factors that might cause such a difference include, but are not limited to, the factors described in the Company's filings with the Securities and Exchange Commission.
In accordance with the SEC's Regulation FD (fair disclosure), investors will now have an opportunity to listen to the Company's quarterly conference calls discussing its results and related matters. The calls will be broadcast live over the Internet at Broadcast Networks' Vcall web site, located at http://www.vcall.com. The call for the third quarter will be broadcast live on Thursday, November 14, at 8:30 AM EST. To listen to the call live, please go to the web site at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Supplemental financial information is available on Pep Boys web site at www.pepboys.com.