Monro Muffler Brake, Inc. Announces Record Third Quarter Sales and Earnings
~ Sales Increase 12% ~
~ Operating Income Increases 19%~
ROCHESTER, N.Y., Jan. 17 -- Monro Muffler Brake, Inc. a leading provider of automotive undercar repair and tire services, today announced record financial results for the third quarter ended December 24, 2005.
Third quarter sales increased 12.0% to a record $90.2 million from $80.5 million last year. Comparable store sales increased 4.7%, led by growth of approximately 15% and 9% in the comparable store tire and maintenance service categories, respectively. In addition, sales from new stores added $6.7 million during the quarter.
Gross profit for the third quarter increased 10.3% to $34.9 million versus $31.6 million reported in the third quarter of fiscal 2005. Gross margin was 38.7% compared to 39.3% in the year ago period, which can be attributed to a shift in sales mix to the lower margin tire and maintenance service categories and an increase in the cost of oil. Selling, general, and administrative expenses, as a percentage of sales, improved to 30.5% versus 31.5% in the third quarter last year due largely to the Company's ability to leverage fixed costs, as well as a decrease in Sarbanes-Oxley compliance costs. Together, these factors contributed to an 18.7% increase in operating income and a 40 basis point improvement in operating margin compared to the same period last year.
Net income increased 15.4% to a record $4.1 million versus $3.5 million reported in the same quarter last year. Earnings per diluted share for the quarter grew 12.5% to $0.27, at the high end of the Company's previous estimate, from $0.24 in the year ago period. The Company opened three new stores during the quarter and closed three stores, resulting in 625 stores at the end of the quarter.
For the nine month period, net sales increased 9.4% to $280.5 million versus $256.3 million last year. Net income for the same period was $19.4 million, 14.9% above the $16.9 million reported last year. Earnings per diluted share for the nine months increased 12.1% to $1.30 compared to $1.16 last year.
Robert G. Gross, President and Chief Executive Officer, commented, "We are excited that we were able to deliver another quarter of record results, even as our customers remain cautious. Our tire and maintenance service categories, which are increasingly important to our business, contributed to the double-digit top line gains in the quarter. Further, our ability to increase sales off of our existing cost base helped improve our industry leading operating margin and drive an impressive 18.7% increase in operating income."
Based on current trends and year-to-date results, the Company continues to expect comparable store sales growth for the full fiscal year to be in the range of 2% to 3%, and diluted earnings per share to be between $1.52 and $1.55 compared to $1.35 per share last year.
Mr. Gross concluded, "Our year-to-date performance highlights the strength of our business model. In particular, we believe that our commitment to customer service, coupled with our efficient operating structure and proven growth strategy, will help continue these positive trends for the balance of the year and beyond. Our business model has also helped us successfully acquire and profitably integrate target companies, and this will continue to be a key aspect of our growth strategy. In addition, we are pleased with our initial investment in Strauss Discount Auto and our current expectation is to close by March 31 on the 87% we do not currently own."
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 626 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
2005 2004 % Change
Restated
Sales $90,188 $80,522 12.0%
Cost of sales, including
distribution and occupancy costs 55,300 48,897 13.1
Gross profit 34,888 31,625 10.3
Operating, selling, general and
administrative expenses 27,463 25,372 8.2
Operating income 7,425 6,253 18.7
Interest expense, net 845 638 32.4
Other expense (income), net 30 (61)
Income before provision for
income taxes 6,550 5,676 15.4
Provision for income taxes 2,489 2,157 15.4
Net income $4,061 $3,519 15.4
Diluted earnings per common share $.27 $.24 12.5%
Weighted average number of
diluted shares outstanding 15,038 14,554
Number of stores open
(at end of quarter) 625 611
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Amounts in thousands, except per share amounts)
Nine Months Ended Fiscal December
2005 2004 % Change
Restated
Sales $280,454 $256,290 9.4%
Cost of sales, including
distribution and occupancy costs 165,119 150,764 9.5
Gross profit 115,335 105,526 9.3
Operating, selling, general and
administrative expenses 81,142 76,226 6.4
Operating income 34,193 29,300 16.7
Interest expense, net 2,537 1,811 40.1
Other expense, net 333 231
Income before provision for
income taxes 31,323 27,258 14.9
Provision for income taxes 11,903 10,359 14.9
Net income $19,420 $16,899 14.9
Diluted earnings per share $1.30 $1.16 12.1%
Weighted average number of
diluted shares outstanding 14,970 14,530
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
December 24, March 26,
2005 2005
Assets
Current assets
Cash $- $888
Inventories 63,438 59,753
Other current assets 16,825 16,878
Total current assets 80,263 77,519
Property, plant and equipment, net 163,132 164,309
Other noncurrent assets 51,450 43,157
Total assets $294,845 $284,985
Liabilities and Shareholders' Equity
Current liabilities $47,498 $50,361
Long-term debt 47,178 55,438
Other long-term liabilities 10,640 11,697
Total liabilities 105,316 117,496
Total shareholders' equity 189,529 167,489
Total liabilities and shareholders' equity $294,845 $284,985