Monro Muffler Brake, Inc. Announces Record Third Quarter Results
~ Sales Increase 25% ~
~ Net Income Improves 21% ~
ROCHESTER, N.Y., Jan. 18 -- Monro Muffler Brake, Inc. announced today record financial results for the third quarter ended December 25, 2004.
Third quarter sales increased 24.7% to $80.5 million compared to $64.5 million last year. Comparable store sales were up 2.4% due in large part to an approximate 15% increase in the comparable store maintenance service category, including a 15% increase in comparable store oil changes, and a 5% increase in comparable store tire sales. New stores contributed $14.8 million during the quarter.
Gross margin was 39.6% versus 39.1% in the year-ago period. Gross margin improved, despite the sales mix shift toward lower margin oil changes and tires, largely due to the Company's leveraging of its fixed costs. Selling, general, and administrative expenses, as a percentage of sales, increased slightly to 31.5% from 31.0% last year, due in large part to higher than anticipated costs associated with Sarbanes-Oxley requirements. Net income increased 20.5% to a record $3.7 million, or $0.25 per diluted share, compared to $3.0 million, or $0.21 per diluted share, in the comparable period last year. The Company added 14 stores, including five stores acquired from Rice Tire and seven BJ's locations, and closed two stores during the quarter.
Sales for the nine-month period increased 20.7% to a record $256.3 million from $212.3 million in the comparable period last year. Net income increased 16.5% to a record $17.3 million, or $1.19 per diluted share, compared to $14.8 million, or $1.02 per diluted share, in the year ago period.
Robert G. Gross, President and Chief Executive Officer, commented, "During the third quarter, we generated positive same store sales, as well as net income growth in excess of 20%, despite the fact that consumers continued to defer purchases of substantial items such as brakes, struts, and exhaust. Our same store traffic, up approximately 6% in the quarter, continues to increase and customer loyalty is strong. We believe this means we are well positioned to benefit when consumers find they can no longer defer essential higher ticket purchases."
Looking to the balance of the year, while pleased with overall trends in the business such as a December comparable store sales increase of 5% and a January month-to-date increase of approximately 5.5%, the Company remains cautious with respect to macroeconomic factors and their impact on consumers. Based on year-to-date results and the expectation for an approximate 3% to 5% comparable store sales increase in the fourth quarter, the Company currently expects diluted earnings per share for the full year to be near the low to midpoint of its previously announced range of $1.36 to $1.40, compared to $1.18 per diluted share last year.
Mr. Gross concluded, "Despite continued challenges, we have achieved double digit growth in both the top and bottom line year-to-date, and we are very pleased with our overall results. Further, we are encouraged by our solid position in the marketplace and believe we are rising above the competition thanks to our dedicated employees, strict operating discipline, a sharp focus on customer service, a targeted marketing strategy, and the competitive pricing of oil changes, which has proven to be a key traffic driver."
"In addition, as we look to enhance on our industry leading position, we continue to view our acquisition strategy as an important component of our store expansion and growth objectives. This strategy remains on track, as evidenced by our recent agreement to acquire ten Mr. Tire stores in southern Maryland. These stores generate approximately $12.5 million in annual sales and the purchase price of $7.5 million will be paid with $1 million in cash and $6.5 million in Monro common stock. We remain very focused on finding similar opportunities that will allow us to grow our store base at compelling prices, further build our market share in key geographic areas and increase profitability over the short and long term."
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, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 612 stores and has 16 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, Maine 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.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Amounts in thousands, except per share amounts)
Quarter Ended Fiscal December
2004 2003 % Change
Sales $80,522 $64,549 24.7%
Cost of sales, including
distribution and
occupancy costs 48,659 39,291 23.8
Gross profit 31,863 25,258 26.2
Operating, selling, general
and administrative expenses 25,371 19,981 27.0
Operating income 6,492 5,277 23.0
Interest expense, net 638 515 23.8
Other income, net (37) (123)
Income before provision
for income taxes 5,891 4,885 20.6
Provision for income taxes 2,239 1,854 20.8
Net income $3,652 $3,031 20.5
Diluted earnings per
common share $0.25 $0.21 19.0%
Weighted average number of
diluted shares outstanding 14,554 14,612
Number of stores open
(at end of quarter) 611 565
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Amounts in thousands, except per share amounts)
Nine Months Ended Fiscal December
2004 2003 % Change
Sales $256,290 $212,298 20.7%
Cost of sales, including
distribution and
occupancy costs 150,048 123,351 21.6
Gross profit 106,242 88,947 19.4
Operating, selling, general
and administrative expenses 76,226 63,127 20.8
Operating income 30,016 25,820 16.3
Interest expense, net 1,812 1,997 (9.3)
Other expense (income), net 303 (123)
Income before provision
for income taxes 27,901 23,946 16.5
Provision for income taxes 10,603 9,099 16.5
Net income $17,298 $14,847 16.5
Diluted earnings per share $1.19 $1.02 16.7%
Weighted average number of
diluted shares outstanding 14,530 14,537
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
December 25, March 27,
2004 2004
Assets
Current assets
Cash $879 $1,533
Inventories 60,233 54,050
Other current assets 14,922 15,159
Total current assets 76,034 70,742
Property, plant and equipment, net 162,399 159,716
Other noncurrent assets 35,625 32,332
Total assets $274,058 $262,790
Liabilities and Shareholders' Equity
Current liabilities $50,233 $42,578
Long-term debt 51,844 68,763
Other long-term liabilities 9,023 7,650
Total liabilities 111,100 118,991
Total shareholders' equity 162,958 143,799
Total liabilities and
shareholders' equity $274,058 $262,790