Monro Muffler Brake, Inc. Reports Q2 Results
22 October 1998
Monro Muffler Brake, Inc. Reports Second Quarter Results
ROCHESTER, N.Y.--October 22, 1998--Monro Muffler Brake, Inc. , today reported sales and earnings for its second quarter and six months ended September 30, 1998.
Sales for the fiscal 1999 second quarter were $46,385,000, compared to $41,540,000 for the corresponding quarter ended September 30, 1997. Monro attributed the sales growth of 11.7% to the contribution of approximately $5,667,000 from stores opened since April 1, 1997. Comparable store sales declined 1.4% from the prior-year period.
Net income for the fiscal 1999 second quarter was $2,411,000, or $.27 per diluted share. Net income for the fiscal 1998 second quarter was $3,352,000, or $.37 per diluted share after giving retroactive effect to the 5% stock dividend paid June 18, 1998.
Sales for the six months ended September 30, 1998 were $90,498,000, an increase of $8,185,000, or 9.9%, over the first half of fiscal 1998.
Net income for the first half of fiscal 1999 was $6,268,000, or $.70 per diluted share. Net income for the corresponding period of fiscal 1998 was $6,769,000, or $.75 per diluted share, after giving retroactive effect to the aforementioned 5% stock dividend.
Jack M. Gallagher, President and Chief Executive Officer, commented, "Our second quarter results continued to reflect the impact of soft market conditions on our top line. Margins were further affected by increased outside purchases and costs associated with the acquired Speedy U.S.A. locations. Where possible, we continue to focus on reducing our outside purchases and controlling other variable costs in this difficult market environment. While sales trends were less than favorable during the quarter, we are encouraged by the strong performance of our scheduled maintenance program which continues to add incremental sales and is well in line with our expectations."
Mr. Gallagher continued, "The integration of our Speedy U.S.A. locations is proceeding very well, and we are already in the process of converting the fourth of our ten markets. This process involves the training of employees, installation of effective point-of-sale systems, signage and the improvement of inventory in terms of level, quality and mix. Our new employees and vendors have been extremely cooperative. Their efforts have expedited the transition process which represents the first important step in improving the gross margins at the acquired locations."
The Company is moving ahead with its regular store expansion program with plans to open approximately 30 stores in the current fiscal year, nine of which are now open and ten of which are currently under construction. Monro s present strategy is to expand its presence within the 17 states in which it currently operates to leverage marketing and distribution costs, as well as consumer awareness.
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 532 stores and has 14 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 and Michigan. Monro's stores provide a full range of services for exhaust systems, brake systems, steering and suspension systems and many vehicle maintenance services.
Certain statements made above may be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve uncertainties which may cause the Company's actual results in future periods to differ materially from those expressed. These uncertainties include, but are not necessarily limited to, uncertainties affecting retail generally (such as consumer confidence and demand for auto repair); risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates); dependence on, and competition within, the primary markets in which the Company's stores are located; the need for, and costs associated with, store renovations and other capital expenditures; and the risks described from time to time in the Company's SEC reports which include the report on Form 10K for the fiscal year ended March 31, 1998.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended September 30,
1998 1997 % Change
Sales $ 46,385 $ 41,540 11.7%
Cost of sales, including
distribution and
occupancy costs 26,770 23,231 15.2
Gross profit 19,615 18,309 7.1
Operating, selling, general
and administrative expenses 14,330 11,735 22.1
Operating income 5,285 6,574 (19.6)
Interest expense, net 1,077 903 19.3
Other expense, net 194 86
Income before provision for
income taxes 4,014 5,585 (28.1)
Provision for income taxes 1,603 2,233 (28.2)
Net income $ 2,411 $ 3,352 (28.1)
Diluted earnings
per share (a) $ 0.27 $ 0.37 (27.0%)
Number of stores open
(at end of quarter) 532 332
(a) All share data has been restated to reflect the 5% stock
dividend paid to shareholders on June 18, 1998.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended September 30,
1998 1997 % Change
Sales $ 90,498 $ 82,313 9.9%
Cost of sales,
including distribution
and occupancy costs 51,090 45,862 11.4
Gross profit 39,408 36,451 8.1
Operating, selling, general
and administrative expenses 26,720 23,227 15.0
Operating income 12,688 13,224 (4.1)
Interest expense, net 1,982 1,771 11.9
Other expense, net 302 171
Income before provision for
income taxes 10,404 11,282 (7.8)
Provision for income taxes 4,136 4,513 (8.4)
Net income $ 6,268 $ 6,769 (7.4)
Diluted earnings
per share (a) $ 0.70 $ 0.75 (6.7%)
(a) All share data has been restated to reflect the 5% stock
dividend paid to shareholders on June 18, 1998.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
Quarter Ended
September 30, March 31,
1998 1998
Assets
Current assets:
Cash $ 4,454 $ 5,315
Inventories, at LIFO cost 39,199 27,492
Other current assets 9,670 6,681
Total current assets 53,323 39,488
Property, plant and equipment 136,256 116,410
Other noncurrent assets 10,263 3,190
Total assets $ 199,842 $ 159,088
Liabilities and Shareholders Equity
Current liabilities:
Current portion of
long-term debt 3,582 3,582
Other current liabilities 32,853 22,389
Total current liabilities 36,435 25,971
Long-term debt 75,147 54,102
Other long-term liabilities 3,093 576
Deferred income tax liability 1,881 1,881
Total liabilities 116,556 82,530
Commitments
Total shareholders equity 83,286 76,558
Total liabilities and
shareholders equity $ 199,842 $ 159,088