Monro Muffler Brake Record Second Quarter 2005
~ Second Quarter Net Income Increases 16% ~
~ Second Quarter Sales Increase 8% ~
ROCHESTER, N.Y., Oct. 18 -- Monro Muffler Brake, Inc. a leading provider of automotive undercar repair and tire services, today announced record financial results for the second quarter and six months ended September 24, 2005.
Second quarter sales increased 8.2% to a record $95.6 million, compared to $88.4 million last year, due to a .9% comparable store sales increase and a $7.9 million contribution from new stores. Comparable store sales were driven by an approximate 12% increase in comparable store tire sales and approximately 6% growth in the comparable store maintenance service category. These gains were partially offset by softer comparable store sales in higher ticket services such as brakes and exhaust.
Gross profit in the second quarter increased 7.8% to $39.7 million versus $36.9 million last year. Gross margin remained relatively stable at 41.6% compared to 41.7% in the year ago period despite vendor price increases on oil and tires and a shift in sales mix to lower margin service and tire categories. The Company's ability to sustain recently implemented price increases helped to offset these pressures on gross margin. Selling, general, and administrative expenses, as a percentage of sales, improved to 28.0% compared to 28.9% last year partially due to fixed cost leverage, as well as a decrease in health insurance and Sarbanes-Oxley compliance costs compared to the prior year. Taken together, the above factors contributed to a 14.7% increase in operating income and an 80 basis point improvement in operating margin compared to last year.
Net income increased 16.4% to a record $7.6 million compared to $6.5 million last year. Earnings per diluted share grew 13.3% to $.51, in line with the Company's previous estimate, versus $.45 last year. The Company opened three new stores during the quarter and closed three stores, ending the quarter with 625 stores.
For the six month period, net sales increased 8.2% to $190.3 million versus $175.8 million last year. Net income for the six months gained 14.8% to $15.4 million while earnings per diluted share increased 12.0% to $1.03 compared to $.92 last year.
Robert G. Gross, President and Chief Executive Officer, commented, "Continued strong results from our tire and maintenance service categories allowed us to deliver another record quarter. Importantly, we maintained our gross margin despite an increase of these lower margin categories in our overall sales mix. Both tires and maintenance services have been consistently important contributors to our business. We are particularly pleased with our progress in the tire category where our expertise and ability to serve our customers have been greatly enhanced by the learning gained from our most recent acquisitions, and we continue to seek similar acquisition candidates to expand and further improve our existing business."
Based upon year to date results and current trends, the Company now anticipates comparable store sales growth for the full fiscal year to be in the range of 2% to 3% versus the Company's original 3% to 5% estimate. This translates into earnings per diluted share at the low end of the $1.52 to $1.60 range that was outlined at the beginning of the fiscal year and compares to $1.35 per share last year. For the third quarter, the Company currently expects earnings per diluted share to range from $.25 to $.27 versus $0.24 last year.
"Declining consumer confidence and higher energy prices have caused customers to defer certain major maintenance purchases, and this was particularly apparent in the month of September. However, based on the past two weeks' sales and our past experience, we are confident that these sales have been only deferred and not lost. As such, we expect to see the benefit in the future either when consumer confidence improves or these purchases can no longer be delayed. We believe our dedicated customer service, efficient operating model, and proven growth strategy will allow us to continue to gain market share and outperform our industry regardless of external market conditions," Mr. Gross concluded.
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 624 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)
(Dollars in thousands, except per share amounts)
Quarter Ended Fiscal September
2005 2004 % Change
Restated
Sales $95,641 $88,421 8.2%
Cost of sales, including
distribution and occupancy costs 55,897 51,545 8.4
Gross profit 39,744 36,876 7.8
Operating, selling, general and
administrative expenses 26,777 25,571 4.7
Operating income 12,967 11,305 14.7
Interest expense, net 810 588 37.7
Other (income) expense, net (122) 171
Income before provision for
income taxes 12,279 10,546 16.4
Provision for income taxes 4,666 4,008 16.4
Net income $7,613 $6,538 16.4
Diluted earnings per common share $.51 $.45 13.3%
Weighted average number of
diluted shares outstanding 14,986 14,515
Number of stores open,
(at end of quarter) 625 606
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended Fiscal September
2005 2004 % Change
Restated
Sales $190,266 $175,768 8.2%
Cost of sales, including
distribution and occupancy costs 109,819 101,867 7.8
Gross profit 80,447 73,901 8.9
Operating, selling, general and
administrative expenses 53,678 50,854 5.6
Operating income 26,769 23,047 16.1
Interest expense, net 1,692 1,174 44.2
Other expense, net 303 292
Income before provision for
income taxes 24,774 21,581 14.8
Provision for income taxes 9,414 8,201 14.8
Net income $15,360 $13,380 14.8
Diluted earnings per common share $1.03 $.92 12.0%
Weighted average number of
diluted shares outstanding 14,926 14,518
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
September 24, March 26,
2005 2005
Assets
Current assets
Cash $3,765 $888
Inventories 62,420 59,753
Other current assets 18,194 16,878
Total current assets 84,379 77,519
Property, plant and equipment, net 163,345 164,309
Other noncurrent assets 43,567 43,157
Total assets $291,291 $284,985
Liabilities and Shareholders' Equity
Current liabilities $52,292 $50,361
Long-term debt 43,490 55,438
Other long-term liabilities 10,799 11,697
Total liabilities 106,581 117,496
Total shareholders' equity 184,710 167,489
Total liabilities and shareholders' equity $291,291 $284,985