Monro Muffler Brake Reports First Quarter Results
21 July 1999
Monro Muffler Brake Reports First Quarter Results
ROCHESTER, N.Y.--July 21, 1999--Monro Muffler Brake, Inc. today reported sales and earnings for the first quarter ended June 30, 1999.Sales for the fiscal 2000 first quarter increased 38.2% to $60,979,000 compared to $44,113,000 for the quarter ended June 30, 1998. Net income for the quarter was $2,693,000, or $0.30 per diluted share, compared to net income of $3,857,000, or $0.43 per diluted share, for the prior-year period.
Comparable store sales for the fiscal 2000 first quarter declined 3.7%. New stores contributed $19,100,000, including sales from the acquired Speedy stores.
Robert Gross, President and Chief Executive Officer of Monro Muffler Brake, commented, "The continued improvement in our gross and operating margins from the fiscal 1999 fourth quarter, despite top-line softness, speaks to the progress we have made in reducing overhead and shrinking our expense structure. Specifically, the reduction in cost of goods for the Speedy stores is on target, with greatly reduced materials costs. Additional upside in our gross profit margin is still attainable as Speedy margins improve and Monro margins return to historical levels. Operating expenses as a percentage of sales declined 500 basis points from the fourth quarter due to a reduction in store-direct expenses and overhead, increased vendor participation in advertising, closing underperforming Monro stores, and, in part, due to seasonality."
Mr. Gross continued, "Our emphasis remains on driving sales and continued expense reduction. While our quarterly comparable store sales performance was soft, due primarily to industry-wide weakness in exhaust system sales, we are confident that many of the programs we have already implemented will favorably impact future performance. For example, we believe that the roll out of our extensive radio spots beginning in April has increased consumer awareness and will drive sales. Through these and other marketing efforts, including direct mailings, we plan to increase traffic and sales of our expanded product and service offerings. Additionally, significant customer service initiatives are underway which we believe will begin to create a competitive advantage for Monro in the marketplace.
"During the quarter, the Company opened six of the 10 to 15 new stores planned for the year. All six stores are in existing markets where they can benefit from immediate economies in advertising, field management, and brand recognition while solidifying Monro's leadership position in these markets. The limited store openings for the year will enable Monro to focus on the integration of the acquired Speedy operations and strengthen the Company's financial condition through enhanced cash flow and reduced debt levels."
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 518 stores and has 19 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 brake systems, steering and suspension systems, exhaust 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, 1999.
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Quarter Ended June 30,
1999 1998 % Change
Sales $ 60,979 $ 44,113 38.2%
Cost of sales, including
distribution and occupancy
costs 35,391 24,320 45.5
Gross profit 25,588 19,793 29.3
Operating, selling, general and
administrative expenses 19,082 12,389 54.0
Operating income 6,506 7,404 (12.1)
Interest expense, net 1,717 905 89.7
Other expense, net 315 109
Income before provision for
income taxes 4,474 6,390 (30.0)
Provision for income taxes 1,781 2,533 (29.7)
Net income $ 2,693 $ 3,857 (30.2)
Diluted earnings per
common share $ 0.30 $ 0.43
Number of stores open
(at end of quarter) 517 351
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
Quarter Ended
June 30, March 31,
1999 1999
Assets
Current assets
Cash $ 4,781 $ 5,599
Inventories 40,648 38,656
Other current assets 6,748 9,092
Total current assets 52,177 53,347
Property, plant and equipment, net 138,393 135,787
Other noncurrent assets 13,370 13,800
Total assets $ 203,940 $ 202,934
Liabilities and Shareholders' Equity
Current liabilities $ 37,881 $ 35,179
Long-term debt 74,508 78,672
Other long-term liabilities 7,881 8,132
Total liabilities 120,270 121,983
Total shareholders' equity 83,670 80,951
Total liabilities and
shareholders' equity $ 203,940 $ 202,934