Monro Muffler Brake, Inc. Reports Third Quarter Results
21 January 1999
Monro Muffler Brake, Inc. Reports Third Quarter Results
ROCHESTER, N.Y.--Jan. 21, 1999--Monro Muffler Brake, Inc. , today reported sales and operating results for its third quarter and nine months ended December 31, 1998.
Sales for the fiscal 1999 third quarter were $53,672,000, compared to $36,336,000 for the corresponding quarter ended December 31, 1997. Monro attributed the sales growth of 47.7% to $2,388,000 from stores opened since April 1, 1997, as well as to $15,673,000 from the 175 stores acquired in the Speedy U.S.A. acquisition.
The net loss for the quarter was $923,000 or $0.10 per diluted share as compared to net income of $1,700,000, or $0.19 per diluted share, adjusted for a 5% stock dividend paid June 18, 1998. For the fiscal 1999 third quarter, comparable store sales for locations opened before April 1, 1997 declined 0.8%.
As previously announced, the Company attributed the results in the quarter to a continuation in the weakness of Speedy's sales which was most pronounced prior to the acquisition in September 1998. The conversion of systems and inventory at all Speedy stores also impacted the performance of these locations. To a lesser extent, the results were also affected by a modest decline in comparable store sales at the Company's Monro stores due to softness in demand during November that was slightly offset by improved comparable store sales results in December.
Sales for the nine months ended December 31, 1998 were $144,170,000, versus $118,649,000, for the comparable period in 1997. Net income for the first nine months of fiscal 1999 was $5,346,000, or $0.59 per diluted share. Net income for the corresponding period of fiscal 1998 was $8,469,000, or $0.94 per diluted share, after giving retroactive effect to the aforementioned 5% stock dividend.
"We continue to make progress on the integration of the acquired Speedy locations and expect the performance of these locations to improve substantially in fiscal year 2000," commented Robert Gross, President and Chief Executive Officer. "As I begin my first year with Monro, the Company will focus on effectively integrating these locations, as well as on growing sales through increased traffic and a higher ticket average, and improving margins through an emphasis on operating efficiencies and processes.
"I see tremendous opportunity for Monro to realize these goals within our existing store base," continued Mr. Gross. "Through the Speedy transaction, we have acquired the number of stores equivalent to six years' growth at our historical pace; therefore, in the coming year, our emphasis will be on improving the performance of current operations. This focus on our current store base will enable us to reduce debt and improve cash flow. In fiscal year 2000, we expect to open 10 to 15 new locations. Also, we have provided for approximately 20 additional underperforming locations which are likely to be closed in the fiscal 1999 fourth quarter. In the future, we see ramping up new store growth to take advantage of the real estate fill-in strategy that Speedy presents."
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 535 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 December 31,
1998 1997 %Change
Sales $53,672 $36,336 47.7%
Cost of sales, including
distribution and occupancy costs 33,844 20,996 61.2
Gross profit 19,828 15,340 29.3
Operating, selling, general and
administrative expenses 19,449 11,409 70.5
Operating income 379 3,931 (90.4)
Interest expense, net 1,597 1,005 58.9
Other expense, net 323 95
(Loss) income before provision for
income taxes (1,541) 2,831 (154.4)
(Recovery of) provision
for income taxes (618) 1,131 (154.6)
Net (loss) income $(923) $1,700 (154.3)
Diluted (loss) earnings per share(a) $(0.10) $0.19
Number of stores open
(at end of quarter) 532 341
(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)
Nine Months Ended December 31,
1998 1997 % Change
Sales $144,170 $118,649 21.5%
Cost of sales, including
distribution and
occupancy costs 84,934 66,858 27.0
Gross profit 59,236 51,791 14.4
Operating, selling, general
and administrative
expenses 46,168 34,636 33.3
Operating income 13,068 17,155 (23.8)
Interest expense, net 3,579 2,775 29.0
Other expense, net 625 267
Income before provision for
income taxes 8,864 14,113 (37.2)
Provision for income taxes 3,518 5,644 (37.7)
Net income $5,346 $8,469 (36.9)
Diluted earnings per
share (a) $0.59 $0.94
(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)
December 31, March 31,
1998 1998
Assets
Current assets:
Cash $ 0 $5,315
Inventories, at LIFO cost 41,601 27,492
Other current assets 11,973 6,681
Total current assets 53,574 39,488
Property, plant and equipment 146,275 116,410
Other noncurrent assets 9,327 3,190
Total assets $209,176 $159,088
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt 4,832 3,582
Other current liabilities 31,052 22,389
Total current liabilities 35,884 25,971
Long-term debt 82,862 54,102
Other long-term liabilities 6,469 576
Deferred income tax liability 1,768 1,881
Total liabilities 126,983 82,530
Commitments
Total shareholders' equity 82,193 76,558
Total liabilities and
shareholders' equity $209,176 $159,088