CHIEF AUTO PARTS INC. Interim Financial Results for The Six Months Ended June 29, 1997
12 August 1997
CHIEF AUTO PARTS INC. Interim Financial Results for The Six Months Ended June 29, 1997
DALLAS, Aug. 12 --
Three Months Ended
June 29, June 30,
1997 1996
% %
Net sales $120,322 100.0 $113,506 100.0
Cost of goods
sold, warehousing
and distribution 70,186 58.3 65,775 57.9
Gross profit 50,136 41.7 47,731 42.1
Selling, general and
administrative 42,379 35.2 41,860 36.9
Depreciation and
amortization 3,410 2.8 2,804 2.5
Operating income 4,347 3.7 3,067 2.7
Interest expense, net 3,745 3.2 1,402 1.2
Other expense, net 45 --- 5 ---
Income before income taxes 557 0.5 1,660 1.5
Income tax expense 109 0.1 902 0.8
Net income $448 0.4 $758 0.7
EBITDA $7,712 6.4 $5,866 5.2
Six Months Ended
June 29, June 30,
1997 1996
% %
Net sales $230,176 100.0 $215,766 100.0
Cost of goods
sold, warehousing
and distribution 133,467 58.0 124,354 57.6
Gross profit 96,709 42.0 91,412 42.4
Selling, general
and administrative 83,396 36.2 78,345 36.3
Depreciation and
amortization 6,661 2.9 5,470 2.6
Operating income 6,652 2.9 7,597 3.5
Interest expense, net 5,529 2.4 2,842 1.3
Other expense, net 55 --- 70 ---
Income before income taxes1,068 0.5 4,685 2.2
Income tax expense 450 0.2 2,255 1.0
Net income $618 0.3 $2,430 1.2
EBITDA $13,258 5.8 $12,997 6.0
Three Months Ended June 29, 1997 vs. Three Months Ended June 30, 1996
Net sales increased by $6.8 million, or 6.0%, to $120.3 million in the
second quarter of 1997 from $113.5 million in the second quarter of 1996. The
increase was due primarily to growth in the Company's store base, as well as a
0.6% increase in comparable store sales. There were 550 stores open at June
29, 1997 compared to 538 at June 30, 1996. During the second quarter of 1997,
the Company opened 11 new stores (including the relocation of 3 stores) and
closed 8 stores (including the relocations). Gross profit increased by
$2.4 million, or 5.0%, to $50.1 million in the second quarter of 1997 from
$47.7 million in the second quarter of 1996, primarily as a result of sales
volume increases. Gross profit margin decreased slightly due to higher
markdowns and sales discounts in the second quarter of 1997 compared to the
second quarter of 1996.
Selling, general and administrative ("SG&A") expenses increased by
$519,000, or 1.2%, to $42.4 million in the second quarter of 1997 from
$41.9 million in the second quarter of 1996. The increase was due primarily
to an increase in sales volume and a corresponding increase in related
expenses such as store labor and occupancy costs. The increase was
disproportionate in relation to the increase in net sales due to a decrease in
net advertising expense of approximately $1.6 million, which largely offset
the increased store labor end occupancy costs. Net advertising expense
decreased primarily as the result of "The All New Chief" program, which was
launched in the Los Angeles, California market during the first quarter of
1997. In conjunction with this program, the timing of advertising
expenditures was affected, as the Company shifted funding that would otherwise
have been utilized during the second quarter of 1997 to the first quarter of
1997. On a year-to-date basis, net advertising expense was essentially
unchanged from the prior year. As a percentage of net sales, SG&A expenses
improved from 36.9% for the second quarter of 1996 to 35.2% for the second
quarter of 1997, due principally to the increase in sales volume and the
decrease in net advertising expense.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
increased by $1.8 million, or 31.5%, to $7.7 million in the second quarter of
1997 from $5.9 million in the second quarter of 1996. EBITDA is used by the
Company for the purpose of analyzing operating performance, leverage and
liquidity.
Depreciation and amortization expense increased by $606,000, or 21.6%, to
$3.4 million in the second quarter of 1997 from $2.8 million in the second
quarter of 1996. This increase was primarily due to an increase in the
depreciable asset base, including leasehold improvements and furniture and
equipment, resulting from extensive store remodeling throughout fiscal 1996,
as well as to an increase in the number of stores open. Interest expense
increased by $2.3 million, or 167.1%, to $3.7 million in the second quarter of
1997 from $1.4 million in the second quarter of 1996. This increase was due
primarily to the sale of $130 million of 10.5% Senior Notes in May 1997, in
conjunction with a recapitalization of the Company, which resulted in an
increase to long-term debt. Total debt was $165.3 million at June 29, 1997
(including $18.3 million of capitalized lease obligations).
Net income decreased by $310,000, or 40.9%, to $448,000 in the second
quarter of 1997 from $758,000 in the second quarter of 1996, due to the
factors discussed above.
Six Months Ended June 29, 1997 vs. Six Months Ended June 30, 1996
Net sales increased by $14.4 million, or 6.7%, to $230.2 million in 1997
from $215.8 million in 1996. The increase was due primarily to growth in the
Company's store base, as well as a 1.5% increase in comparable store sales.
During 1997, the Company opened 18 new stores (including the relocation of
5 stores) and closed 12 stores (including the relocations). Gross profit
increased by $5.3 million, or 5.8%, to $96.7 million in 1997 from
$91.4 million in 1996, primarily as a result of sales volume increases. Gross
profit margin decreased slightly due to higher markdowns and sales discounts
in 1997 compared to 1996.
SG&A expenses increased by $5.1 million, or 6.4%, to $83.4 million in 1997
from $78.3 million in 1996. The increase was due primarily to an increase in
sales volume and a corresponding increase in related expenses such as store
labor and occupancy costs. As a percentage of net sales, SG&A expenses
improved from 36.3% for 1996 to 36.2% for 1997, due principally to
administrative expense controls.
EBITDA increased by $261,000 or 2.0%, to $13.3 million in 1997 from
$13.0 million in 1996.
Depreciation and amortization expense increased by $1.2 million, or 21.8%,
to $6.7 million in 1997 from $5.5 million in 1996. This increase was
primarily due to an increase in the depreciable asset base, including
leasehold improvements and furniture and equipment, resulting from extensive
store remodeling throughout fiscal 1996, as well as to an increase in the
number of stores open. Interest expense increased by $2.7 million, or 94.5%,
to $5.5 million in 1997 from $2.8 million in 1996. This increase was due
primarily to the sale of $130 million of 10.5% Senior Notes in May 1997, in
conjunction with a recapitalization of the Company, which resulted in an
increase to long-term debt.
Net income decreased by $1.8 million, or 74.6%, to $618,000 in 1997 from
$2.4 million in 1996, due to the factors discussed above.
Chief Auto Parts Inc. is engaged in the sale and distribution of
automotive parts to the retail and wholesale aftermarket through a chain of
550 stores (located primarily in California and Texas) at June 29, 1997.
SOURCE Chief Auto Parts Inc.