Monro Muffler Brake Reports 33% Increase in Q2 Net Income
22 October 1999
Monro Muffler Brake Reports 33% Increase in Second Quarter Net Income On 30% Revenue Growth - Introduces Commercial Sales Division and "Monro Auto Glass" Service -
ROCHESTER, N.Y.--Oct. 21, 1999--Monro Muffler Brake, Inc. today reported sales and earnings for the second quarter and six months ended September 30, 1999.Sales for the fiscal 2000 second quarter increased 30% to $60.5 million compared to $46.4 million for the corresponding quarter ended September 30, 1998. Monro attributed the sales growth to the contribution of approximately $19.6 million from stores opened since April 1, 1998, including sales from the acquired Speedy stores. Comparable store sales declined 2.8% from the prior-year period.
Net income increased 33% to $3.2 million, or $0.36 per diluted share, compared to $2.4 million, or $0.27 per diluted share, in the prior-year period. Operating income increased 41% to $7.4 million as operating, selling, general and administrative expenses were reduced 160 basis points as a percentage of sales.
Sales for the six months ended September 30, 1999 increased 34% to $121.5 million from $90.5 million in the prior-year period. Net income for the first half of fiscal 2000 was $5.9 million, or $0.66 per diluted share, compared to $6.3 million, or $0.70 per diluted share, in the corresponding period of fiscal 1999.
Robert Gross, President and Chief Executive Officer of Monro Muffler Brake, commented, "In the second quarter, we began to realize the benefits of the Speedy acquisition as the two companies' combined results surpassed Monro's stand-alone performance for the same period last year. We are ahead of plan in achieving cost savings and will continue to realize additional reductions in distribution, direct store expenses, and corporate and field overhead expenses. We also expect additional synergies in advertising and purchasing from the acquisition."
Mr. Gross continued, "We have also aggressively pursued opportunities to improve our sales performance. Speedy's comparable store sales, which were double-digit negative at the time of acquisition through the first quarter of this year, significantly improved in the second quarter and were essentially flat for the month of September. We have improved performance at these stores primarily through training, the upgrading of personnel, and expanded products and services. The Monro stores also experienced similar trends in this quarter.
"In an effort to further drive sales, we established a commercial sales division in September to pursue this high-volume, solid-margin, predictable source of revenue. Commercial service and fleet work currently represent only approximately 2.5% of our revenue mix. With a sales team now dedicated exclusively to developing this business, along with our competitive cost structure and the conveniences available to our customers, we believe that commercial sales will make a meaningful contribution to comparable store sales in the next fiscal year.
"We are also testing windshield repair and replacement services through a joint venture operating as `Monro Auto Glass' beginning in November. This service will be a customer convenience offered initially at approximately 60 locations in conjunction with a major automotive glass repair and replacement company. The arrangement should add incrementally to Monro's profitability through referral fees and should further build brand equity and enhance our service offerings. With over two million cars visiting Monro annually, we have a great resource in our captive customer base, as well as the potential to drive new customers into our network of conveniently located stores. We will continue to focus on our core business while we look for other related opportunities to leverage our fixed store costs and better serve our customers."
During the quarter, the Company opened two new stores and sold or subleased four existing locations.
Monro Muffler Brake operates a chain of stores providing automotive undercar repair services in the United States. The Company currently operates 517 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 September 30,
1999 1998 % Change
Sales $ 60,513 $ 46,385 30.5
Cost of sales, including
distribution and occupancy costs 35,356 26,770 32.1
Gross profit 25,157 19,615 28.3
Operating, selling, general and
administrative expenses 17,727 14,330 23.7
Operating income 7,430 5,285 40.6
Interest expense, net 1,689 1,077 56.8
Other expense, net 400 194
Income before provision for
income taxes 5,341 4,014 33.1
Provision for income taxes 2,128 1,603 32.8
Net income $ 3,213 $ 2,411 33.2
Diluted earnings per common share $ 0.36 $ 0.27 33.3
Number of stores open
(at end of quarter) 515 530
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands, except per share amounts)
Six Months Ended September 30,
1999 1998 % Change
Sales $ 121,492 $ 90,498 34.2
Cost of sales, including
distribution and occupancy costs 70,747 51,090 38.5
Gross profit 50,745 39,408 28.8
Operating, selling, general and
administrative expenses 36,809 26,720 37.8
Operating income 13,936 12,688 9.8
Interest expense, net 3,406 1,982 71.8
Other expense, net 715 302
Income before provision for
income taxes 9,815 10,404 (5.7)
Provision for income taxes 3,909 4,136 (5.5)
Net income $ 5,906 $ 6,268 (5.8)
Diluted earnings per share $ 0.66 $ 0.70 (5.7)
MONRO MUFFLER BRAKE, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
September 30, March 31,
1999 1999
Assets
Current assets
Cash $ 3,068 $ 5,599
Inventories 42,301 38,656
Other current assets 7,190 9,092
Total current assets 52,559 53,347
Property, plant and equipment, net 138,327 135,787
Other noncurrent assets 13,046 13,800
Total assets $ 203,932 $ 202,934
Liabilities and Shareholders' Equity
Current liabilities $ 38,757 $ 35,179
Long-term debt 71,494 78,672
Other long-term liabilities 6,773 8,132
Total liabilities 117,024 121,983
Total shareholders' equity 86,908 80,951
Total liabilities and
shareholders' equity $ 203,932 $ 202,934