Discount Auto Parts, Inc. Results for the Company's 4th Quarter and Fiscal Year
12 July 2000
Discount Auto Parts, Inc. - NYSE:DAP - Today Announced Results for the Company's Fourth Quarter and Fiscal Year Ended May 30, 2000
LAKELAND, Fla. - Total sales for the fourth quarter of fiscal 2000 increased 16.9% to a record $164.6 million, as compared to $140.8 million a year earlier. Comparable store sales increased 6.5% for the fourth quarter of fiscal 2000 as compared to the fourth quarter of fiscal year 1999. Total sales for fiscal 2000 increased 17.0% to $598.3 million, from $511.5 million a year earlier. Comparable store sales increased 3.3% for fiscal 2000 as compared to fiscal 1999. Comparable store sales results include sales from the Company's commercial delivery program. The balance of the increase in total sales for the fourth quarter and for fiscal 2000 was attributable to sales from new stores opened since the beginning of the respective periods in fiscal 1999. At May 30, 2000, the Company had 643 stores in operation as compared to 558 stores at June 1, 1999."We are encouraged by the positive sales trends in both the DIY and commercial sectors that began in May and have continued into the first quarter of the new fiscal year," commented Bill Perkins, President and COO. "Our commercial business is growing nicely and becoming an increasingly important component in our revenue mix."
Gross profit for the fourth quarter of fiscal 2000 increased 14.3% to $65.8 million as compared to $57.6 million for the fourth quarter of fiscal 1999. As a percentage of sales, gross profit was 40.0% for the fourth quarter of fiscal 2000 as compared to 40.9% for the fourth quarter of fiscal 1999. Gross profit for the fourth quarter of fiscal 2000 was impacted by higher product distribution costs. Gross profit for fiscal 2000 increased 15.7% to $241.5 million as compared to $208.6 million a year earlier. As a percentage of sales, gross profit was 40.4% for fiscal 2000 as compared to 40.8% a year earlier. In addition to fiscal 2000 gross margin being impacted by higher product distribution costs, the comparison to fiscal 1999 is also impacted by the inclusion of additional vendor incentives in 1999 resulting from the September 1998 purchase of the Rose Automotive stores.
During the fourth quarter of fiscal year 2000 the Company engaged the firm of Cap Gemini Ernst & Young to assist it in a year-long comprehensive supply chain review. The project will include evaluations of ways to lower distribution costs, reduce total inventory, improve inventory turns and improve overall gross margins.
Selling, general and administrative ("SG&A") expenses increased as a percentage of sales from 29.8% in the fourth quarter of fiscal 1999 to 30.2% in the fourth quarter of fiscal 2000. SG&A expenses increased as a percentage of sales from 29.9% for fiscal 1999 to 30.8% for fiscal 2000.
The increase is primarily due to the expenses incurred related to the continued implementation and expansion of the Company's commercial delivery program for the fiscal 2000 periods as compared to the fiscal 1999 periods, as well as a loss, during December and January, of the Company's ability to leverage certain expenses during those periods as a result of lower than anticipated sales. The fourth quarter of fiscal 2000 results were also impacted by higher health and workers' compensation related costs.
Income from operations for the fourth quarter of fiscal 2000 was $16.1 million as compared to $15.7 million for the fourth quarter of fiscal 1999. Income from operations for fiscal 2000 was $57.1 million as compared to $55.9 million for fiscal 1999.
Interest expense for the fourth quarter of fiscal 2000 was $5.1 million as compared to $3.6 million for the fourth quarter of fiscal 1999. Interest expense for fiscal 2000 was $18.1 million as compared to $12.9 million during fiscal 1999. The increase was the result of increased borrowings primarily associated with new store growth and overall higher interest rates.
Taking into account all of the above described factors, the Company reported net income for the fourth quarter of fiscal 2000 of $7.1 million or $.43 per diluted share as compared to $7.8 million or $.47 per diluted share for the fourth quarter of fiscal 1999. Income before the cumulative effect of an accounting change for fiscal 2000 was $26.3 million or $1.57 per diluted share as compared to $27.1 million or $1.61 per diluted share for fiscal 1999.
During the fourth quarter of fiscal 1999, the Company implemented a change in its method of accounting for store inventories from the first-in, first-out method calculated using a form of the retail inventory method to the weighted average cost method. The Company made this change in connection with new store-level perpetual inventory systems installed throughout fiscal 1999. As a result of the change in accounting method, the Company reported a non-cash, fiscal 1999 after tax charge of $8.2 million, or $.49 per diluted share which was reflected as of the beginning of the year and which represented the beginning of the 1999 fiscal year impact of the change in accounting method.
Net income for fiscal 2000 was $26.3 million or $1.57 per diluted share as compared to $18.8 million or $1.12 per diluted share for fiscal 1999.
During the fourth quarter of fiscal 2000, the Company added 22 mini-depot stores bringing the total new stores for fiscal 2000 to 85 new stores. As of May 30, 2000, the Company had 643 stores in operation. For fiscal year 2001, the Company expects to add a total of approximately 60 to 65 stores.
Discount Auto Parts, Inc. is one of the Southeast's leading specialty retailers and suppliers of automotive replacement parts, maintenance items and accessories to both DIY consumers and professional mechanics and service technicians. The Company currently operates stores located throughout Florida, Georgia, Mississippi, Alabama, Louisiana and South Carolina.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Thirteen Thirteen Fifty-Two Fifty-Two
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
---------- ---------- ---------- ----------
May 30 June 1 May 30 June 1
2000 1999 2000 1999
---------- ---------- ---------- ----------
Net sales $ 164,616 $ 140,774 $ 598,258 $ 511,483
Cost of sales,
including distribution
costs 98,798 83,207 356,783 302,843
---------- ---------- ---------- ----------
Gross profit 65,818 57,567 241,475 208,640
Selling, general and
administrative expenses 49,678 41,915 184,371 152,777
---------- ---------- ---------- ----------
Income from
operations 16,140 15,652 57,104 55,863
Other income, net 280 406 2,770 817
Interest expense (5,128) (3,577) (18,079) (12,856)
---------- ---------- ---------- ----------
Income before income
taxes and cumulative
effect of change in
accounting principle 11,292 12,481 41,795 43,824
Income taxes 4,182 4,667 15,506 16,766
---------- ---------- ---------- ----------
Income before cumulative
effect of change in
accounting principle 7,110 7,814 26,289 27,058
Cumulative effect of
change in accounting
principle, net of
income tax benefit - - - (8,245)
---------- ---------- ---------- -----------
Net income $ 7,110 $ 7,814 $ 26,289 $ 18,813
========== ========== ========== ===========
Net income per basic
share from:
Income before
cumulative effect of
change in accounting
principle $ 0.43 $ 0.47 $ 1.57 $ 1.63
Cumulative effect
of change in
accounting principle - - - $ (0.50)
---------- ---------- ---------- -----------
Net income $ 0.43 $ 0.47 $ 1.57 $ 1.13
========== ========== ========== ===========
Net income per diluted
share from:
Income before
cumulative effect
of change in
accounting principle $ 0.43 $ 0.47 $ 1.57 $ 1.61
Cumulative effect
of change in
accounting principle - - - $ (0.49)
---------- ---------- --------- -----------
Net income $ 0.43 $ 0.47 $ 1.57 $ 1.12
========== ========== ========= ===========
Average common shares
outstanding 16,699 16,667 16,695 16,650
Dilutive effect of
stock options - 134 30 153
---------- ---------- --------- -----------
Average common shares
outstanding -
assuming dilution 16,699 16,801 16,725 16,803
========== ========== ========= ===========
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
May 30 June 1
2000 1999
---------- ----------
Assets
Current assets:
Cash and cash equivalents $ 12,612 $ 8,795
Inventories 253,113 209,028
Prepaid expenses and
other current assets 14,455 22,773
---------- ----------
Total current assets 280,180 240,596
Property and equipment 524,053 457,994
Less allowances for
depreciation and
amortization (104,771) (83,417)
---------- ----------
419,282 374,577
Other assets 5,247 5,141
---------- ----------
Total assets $ 704,709 $ 620,314
========== ==========
Liabilities and stockholders'
equity Current liabilities:
Trade accounts payable $ 100,804 $ 87,867
Other current liabilities 23,207 21,390
Current maturities of
long-term debt 2,400 2,400
---------- ----------
Total current liabilities 126,411 111,657
Deferred income taxes 10,494 7,091
Long-term debt 264,600 224,800
Total stockholders' equity 303,204 276,766
---------- ----------
Total liabilities and
stockholders' equity $ 704,709 $ 620,314
========== ==========