Monro Muffler Brake, Inc. Posts 35% Net Income Increase in Q3; Comp Store Sales Increase 3.8% in Q3; Q3 Sales Increase 16% to a Record $60.7 million
ROCHESTER, N.Y.--Jan. 16, 2003--Monro Muffler Brake, Inc. today announced record sales and earnings for the third quarter and nine months ended December 28, 2002.
Sales increased 15.8% to $60.7 million compared to $52.4 million last year, driven by a comparable store sales increase of 3.8%, as well as a sales contribution of $6.0 million from 34 Kimmel stores acquired in April 2002. The comparable store sales increase resulted largely from a 29% increase in scheduled maintenance services, a 5% increase in store traffic and a 33% increase in comparable store tire sales. For the third quarter, gross margin remained relatively flat with the prior year quarter at 37.8%.
Net income increased 35.5% over the prior year quarter to $2.4 million, from $1.8 million. Diluted earnings per share increased 30% to $0.26 from $0.20 quarter over quarter. Store count remained at 550 as the Company did not open or close any stores during the third quarter.
"Our successful quarter was driven by our ongoing strategy to attract customers into our stores with discount oil changes, and to transform those oil change customers into loyal, repeat customers by offering outstanding customer service and an ever-increasing range of quality products and services. Our direct-to-consumer marketing system reinforces the positive in-store experience with targeted at-home coupons and service reminders. These efforts and investments have driven six consecutive quarters of traffic increases, resulting in increased market share and growing top and bottom line results for our company," said Robert G. Gross, President and Chief Executive Officer.
Sales for the nine-month period ended December 28, 2002 increased 12.8% to $196.6 million from $174.3 million last year. Net income for the nine months was $11.2 million, or $1.19 per diluted share, compared to $9.3 million, or $1.03 per diluted share in the year-ago period.
Mr. Gross continued, "An important aspect of our growth strategy continues to be identifying acquisition targets that are both accretive in a timely manner and geographically complementary to our existing business. As we mentioned last quarter, we look forward to announcing at least one such acquisition by the end of our fiscal year."
Mr. Gross concluded, "Our entire organization has worked extremely hard the past few years to build a solid foundation for future growth. As evidenced by our positive comparable store sales in a difficult economic environment, we are gaining traction in the marketplace. This will allow us to continue to diversify our revenue stream and generate strong cash flows to fund our acquisition strategy. We are also pleased that the positive comparable store sales trend that began in September is continuing into our fourth quarter. As such, we remain comfortable with our previously stated fourth quarter guidance for diluted earnings per share in the range of $0.21 to $0.23 and our full year EPS forecast of $1.41 to $1.43."
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 550 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 December
---------------------
2002 2001 % Change
---------- ---------- ---------
Sales $ 60,716 $ 52,443 15.8%
Cost of sales, including
distribution and occupancy costs 37,787 32,589 16.0
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Gross profit 22,929 19,854 15.5
Operating, selling, general and
administrative expenses 18,418 16,068 14.6
---------- ----------
Operating income 4,511 3,786 19.1
Interest expense, net 623 835 (25.4)
Other (income) expense, net (2) 78
---------- ----------
Income before provision for
income taxes 3,890 2,873 35.4
Provision for income taxes 1,477 1,092 35.3
---------- ----------
Net income $ 2,413 $ 1,781 35.5
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Diluted earnings per common share $ 0. 26 $ 0.20 30.0%
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Weighted average number of
diluted shares outstanding 9,358 9,043
Number of stores open
(at end of quarter) 550 513
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Nine Months Ended
Fiscal December
-----------------------
2002 2001 % Change
----------- ----------- ---------
Sales $ 196,628 $ 174,313 12.8%
Cost of sales, including
distribution and occupancy costs 115,192 101,735 13.2
----------- -----------
Gross profit 81,436 72,578 12.2
Operating, selling, general and
administrative expenses 61,480 54,793 12.2
----------- -----------
Operating income 19,956 17,785 12.2
Interest expense, net 2,032 2,953 (31.2)
Other (income) expense, net (122) 378
----------- -----------
Income before provision for
income taxes 18,046 14,454 24.8
Provision for income taxes 6,857 5,127 33.7
----------- -----------
Net income $ 11,189 $ 9,327 20.0
=========== ===========
Diluted earnings per share $ 1.19 $ 1.03 15.5%
=========== ===========
Weighted average number of
diluted shares outstanding 9,387 9,020
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
December 28, March 30,
2002 2002
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Assets
Current assets
Cash $ 0 $ 442
Inventories 49,735 44,821
Other current assets 9,770 8,516
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Total current assets 59,505 53,779
Property, plant and equipment, net 126,916 127,211
Other noncurrent assets 13,176 8,309
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Total assets $ 199,597 $ 189,299
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Liabilities and Shareholders' Equity
Current liabilities $ 39,781 $ 39,643
Long-term debt 30,563 34,123
Other long-term liabilities 5,031 5,749
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Total liabilities 75,375 79,515
Total shareholders' equity 124,222 109,784
------------- -------------
Total liabilities and shareholders'
equity $ 199,597 $ 189,299
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