Monro Muffler Brake, Inc. Announces Record Sales and Earnings for the Fourth Quarter and Year Ended March 29, 2003
ROCHESTER, N.Y.--May 22, 2003--Monro Muffler Brake, Inc. today announced record sales and unaudited earnings for the fourth quarter and year ended March 29, 2003.
Fourth quarter sales increased 21.5% to a record $61.4 million compared to $50.5 million last year. The sales increase was driven by an increase in comparable store sales of 7.3%, as well as sales of $7.5 million from new stores, which include 34 Kimmel stores acquired in April 2002 and 10 Frasier Tire Stores acquired in February 2003. The comparable store sales result was fueled by continued double-digit gains across several of the Company's product and service offerings, including a 33% increase in scheduled maintenance services, a 28% increase in commercial services and a 26% increase in tire sales. Gross profit for the quarter ended March 29, 2003 increased to $24.2 million, or 39.3% of sales, from $19.2 million, or 38.1% of sales, last year.
Net income increased 28.4% to a record $2.4 million, or $0.26 per diluted share, versus $1.9 million, or $0.21 per diluted share, last year. During the fourth quarter, the Company added 11 new stores as a result of the Frasier acquisition and closed one, for a total of 560 locations at the end of the period.
Robert G. Gross, President and Chief Executive Officer stated, "Our improved direct marketing program, dedication to customer service and expanded product and service offerings have led to increased consumer awareness of and trust in Monro, as evidenced by our 7.3% comparable store sales increase and continued same store traffic increases. These strategic initiatives have enabled us to overcome the continued sluggish consumer spending and unusually harsh winter weather conditions in the Northeast to achieve record sales and profits this quarter and year.
For the full year, sales increased 14.8% to $258.0 million, from $224.9 million in fiscal 2002. Comparable store sales increased 2.9%. Gross profit increased to $105.6 million, or 40.9% of sales from $91.8 million or 40.8% of sales in spite of a large increase in tire sales, which carry lower margins. Net income increased 21.4% to $13.6 million, or $1.45 per diluted share, which is at the mid-point of the Company's recently increased guidance, compared to $11.2 million, or $1.24 per diluted share, last year.
Mr. Gross continued, "The challenging economic and industry environment has negatively impacted many of our competitors. This provides us with attractively-priced opportunities to acquire companies with solid reputations that would strengthen our geographic presence and/or diversify our product mix, while being accretive to earnings in a timely manner. Finally, to complement our top line growth initiatives, we remain focused on driving operating efficiencies through improvements in labor productivity and store-level execution."
Potential Accounting Matters
The Company's external auditors, PricewaterhouseCoopers ("PWC"), are currently reviewing the Company's accounting, previously approved by PWC, for barter credits received when the Company sublet or sold a total of 14 closed store properties to Icon International, a barter company, in fiscal years 1998, 1999 and 2000. As a result, the financial statements incorporated in this release are unaudited. While PWC has not completed its review of this issue, the Company believes that the income statement for the fiscal year ended March 29, 2003 will not be impacted materially, if at all.
If PWC's review results in a change to their and the Company's present position on accounting for barter credits, the effect will likely be an adjustment to fiscal 2003's balance sheet to reflect a retroactive impairment charge in fiscal 1998 through 2000 for the closed stores. While the amount of the charge that could be required is currently unknown, the lease liabilities and leasehold improvements associated with these stores amounted to approximately $5 million at the time of their closing. As management is confident in the use of the barter credits, the effect of this revision will be on the timing of income and expense. The Company's earnings in fiscal years 2001 through 2007 will include income in an amount equal to the aforementioned charge in fiscal 1998 through 2000 as the Company uses the barter credits.
The Company expects to report final audited numbers for fiscal 2003 by the end of the next week.
Company Outlook
Mr. Gross concluded, "We are very encouraged by the results we achieved this last quarter and in fiscal 2003. Additionally, we have seen this positive momentum continue into the first quarter of fiscal 2004. Our comparable store sales remain strong and we are well positioned for sustained future growth. As such, we remain comfortable with our previously stated first quarter guidance for diluted earnings per share in the range of $0.58 to $0.62 and our full year EPS forecast of $1.70 to $1.80. This estimate may be revised pending the resolution of the barter credit accounting discussed above."
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 561 stores and has 18 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, tires and many vehicle maintenance services.
The statements contained in this press release that are not historical facts may contain statements of future expectations and other forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factors include, but are not necessarily limited to, product demand, 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, the effect of economic conditions, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, risks relating to integration of acquired businesses and other factors set forth elsewhere herein and in the Company's Securities and Exchange Commission filings, including the report on Form 10-K 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 March (Unaudited)
--------------------------------------
2003 2002 % Change
--------- --------- ---------
Sales $ 61,399 $ 50,540 21.5%
Cost of sales, including
distribution and occupancy
costs 37,240 31,307 18.9
--------- ---------
Gross profit 24,159 19,233 25.6
Operating, selling, general and
administrative expenses 19,706 14,925 32.0
--------- ---------
Operating income 4,453 4,308 3.3
Interest expense, net 570 778 (26.8)
Other expense, net (68) 455
--------- ---------
Income before provision for
income taxes 3,951 3,075 28.5
Provision for income taxes 1,503 1,168 28.7
--------- ---------
Net income $ 2,448 $ 1,907 28.4
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Diluted earnings per share $ 0.26 $ 0.21 23.8%
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Weighted average number of
diluted shares outstanding 9,437 9,168
Number of stores open
(at end of quarter) 560 514
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Dollars in thousands, except per share amounts)
Year Ended Fiscal March (Unaudited)
--------------------------------------
2003 2002 % Change
--------- --------- ---------
Sales $ 258,026 $ 224,853 14.8%
Cost of sales, including
distribution and occupancy
costs 152,432 133,042 14.6
--------- ---------
Gross profit 105,594 91,811 15.0
Operating, selling, general and
administrative expenses 81,186 69,718 16.4
--------- ---------
Operating income 24,408 22,093 10.5
Interest expense, net 2,601 3,731 (30.3)
Other expense, net (189) 833
--------- ---------
Income before provision for
income taxes 21,996 17,529 25.5
Provision for income taxes 8,359 6,295 32.8
--------- ---------
Net income $ 13,637 $ 11,234 21.4
========= =========
Diluted earnings per share $ 1.45 $ 1.24 16.9%
========= =========
Weighted average number of
diluted shares outstanding 9,403 9,055
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Dollars in thousands)
(Unaudited) (Unaudited)
March 29, March 30,
2003 2002
----------- -----------
Assets
Current assets
Cash $ 3 $ 442
Inventories 51,256 44,821
Other current assets 13,277 8,516
----------- -----------
Total current assets 64,536 53,779
Property, plant and equipment, net 132,282 127,211
Other noncurrent assets 14,081 8,309
----------- -----------
Total assets $ 210,899 $ 189,299
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Liabilities and Shareholders' Equity
Current liabilities $ 40,878 $ 39,643
Long-term debt 36,183 34,123
Other long term liabilities 6,297 5,749
----------- -----------
Total liabilities 83,358 79,515
Total shareholders' equity 127,541 109,784
----------- -----------
Total liabilities and shareholders'
equity $ 210,899 $ 189,299
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