Monro Muffler Brake, Inc. Announces First Quarter Results
~ Sales Up 4.0%; Achieves Record Sales ~
ROCHESTER, N.Y., July 18 -- Monro Muffler Brake, Inc. , a leading provider of automotive undercar repair and tire services, today announced financial results for the first quarter ended June 24, 2006.
Financial Results
Sales increased 4.0% to a record $98.4 million from $94.6 million last year. Comparable store sales declined 2.9% versus a 1.7% gain in the first quarter of fiscal 2006. New store sales increased $7.4 million, including $5.5 million related to the 75 ProCare Automotive locations that were acquired on April 29, 2006. On a comparable store basis, the tire and maintenance service categories posted the strongest results with gains of approximately 9% and 3%, respectively. In addition to the ProCare acquisition, the Company opened three locations and closed two during the first quarter.
Gross profit rose to $41.0 million from $40.7 million last year. Gross margin was 41.7% compared to 43.0%, primarily due to a sales mix shift to the lower-margin tire and maintenance service categories and the impact of negative comparable store sales on the fixed cost base. Selling, general, and administrative expenses were $29.6 million, or 30.1% of sales, versus $26.9 million, or 28.4% of sales, in the year ago period as a result of the negative comparable store sales, an increase in advertising spending, and the addition of the less profitable ProCare business.
The Company's provision for income taxes reflects a $0.4 million one-time income tax benefit primarily related to the favorable resolution of state income tax issues. Net income declined 2.4% to $7.6 million compared to $7.7 million last year. Diluted earnings per share decreased to $.50, based on 15.2 million shares outstanding, from $.52, based on 14.9 million shares outstanding, in the year ago period. Excluding the one-time income tax benefit, earnings per diluted share for the first quarter of fiscal 2007 would have been $.47, at the high end of the Company's previously stated range.
Robert G. Gross, President and Chief Executive Officer, commented, "As anticipated, the first quarter proved to be challenging as macro economic factors continued to cause consumers to defer automotive maintenance and repair purchases. That said, our reputation as a trusted service provider helped us drive gains in our core tire and maintenance service businesses, increasing our market share in these important categories. Further, by successfully retaining our customer base, we are well positioned to benefit when consumers can no longer defer such expenditures.
"In addition, we are pleased with our progress towards integrating the ProCare locations into our proven business model. During the quarter, we made significant progress in reducing ProCare's cost base and have nearly completed the re-branding process. For the quarter, ProCare was dilutive by $.01 to our bottom line, slightly better than we initially expected. While fiscal 2007 will be a rebuilding year for this group of stores, the improvements we have achieved thus far are encouraging."
Company Outlook
For the full year, the Company continues to anticipate earnings per diluted share in the range of $1.68 to $1.76. The Company currently expects second quarter diluted earnings per share to be between $.48 and $.52, with a comparable store sales increase between 0% and 2%.
Mr. Gross concluded, "While we were not pleased with our results in the first quarter, our past experience tells us that consumers cannot defer automotive maintenance and repair purchases indefinitely and we expect to see a return to more normalized spending levels as we move through fiscal 2007. With July comparable store sales improving to -1%, we are hopeful this is the beginning of the recovery. At the same time, we continue to look for ways to drive sales, manage expenses, and position ourselves for long-term growth. While we are currently operating in a soft environment, our long-term prospects remain unchanged. We are very confident with the strength of our business model and our ability to capitalize on the many opportunities that lie ahead of us, including completing a transaction with Strauss in the second quarter."
About Monro Muffler Brake, Inc.
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, ProCare, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 702 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 June
2006 2005 % Change
Sales $98,445 $94,625 4.0
Cost of sales, including distribution
and occupancy costs 57,409 53,922 6.5
Gross profit 41,036 40,703 0.8
Operating, selling, general and
administrative expenses 29,612 26,901 10.1
Operating income 11,424 13,802 (17.2)
Interest expense, net 636 882 (27.9)
Other (income) expense, net (627) 425
Income before provision for taxes 11,415 12,495 (8.6)
Provision for income taxes 3,853 4,748 (18.9)
Net income $7,562 $7,747 (2.4)
Diluted earnings per common share $.50 $.52 (3.8)
Number of stores open
(at end of quarter) 701 625
Weighted average number of
diluted shares outstanding 15,215 14,866
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
June 24, 2006 March 25, 2006
Assets
Current assets
Cash $2,504 $3,780
Inventories 61,095 60,378
Other current assets 19,119 19,647
Total current assets 82,718 83,805
Property, plant and equipment, net 166,397 163,625
Other noncurrent assets 66,686 55,662
Total assets $315,801 $303,092
Liabilities and Shareholders' Equity
Current liabilities $56,044 $53,413
Long-term debt 47,645 46,327
Other long-term liabilities 10,252 10,362
Total liabilities 113,941 110,102
Total shareholders' equity 201,860 192,990
Total liabilities and shareholders' equity $315,801 $303,092