Discount Auto Parts, Inc. Reports Fiscal 2001 First Quarter Results
2 October 2000
Discount Auto Parts, Inc. Reports Fiscal 2001 First Quarter Results
LAKELAND, Fla.--Sept. 29, 2000--Discount Auto Parts, Inc. today announced results for the Company's first quarter ended August 29, 2000.Total sales for the first quarter of fiscal 2001 increased 16.3% to a record $167.1 million, as compared to $143.6 million a year earlier. Comparable store sales increased 6.5% for the first quarter of fiscal 2001 as compared to the first quarter of fiscal year 2000. Comparable store sales results include sales from the Company's commercial delivery program. The balance of the increase in total sales for the first quarter was attributable to sales from new stores opened since the beginning of the respective periods in fiscal 2000. At August 29, 2000, the Company had 653 stores in operation as compared to 580 stores at August 31, 1999.
Gross profit for the first quarter of fiscal 2001 increased 9.4% to $63.9 million as compared to $58.4 million for the first quarter of fiscal 2000. As a percentage of sales, gross profit was 38.3% for the first quarter of fiscal 2001 as compared to 40.7% for the first quarter of fiscal 2000. Gross profit for the first quarter of fiscal 2001 was negatively impacted by continued margin pressure in commodity categories such as oil and freon, higher than anticipated inventory shrinkage expense and higher product distribution costs.
"We are disappointed with our overall earnings results for the first quarter and, particularly our gross margin results," commented Peter Fontaine, Chairman and CEO. "We have taken and are continuing to take aggressive actions to address these matters, including the continuation of our extensive review of all our supply chain processes. We are already seeing an improving trend in our product distribution costs and continue to investigate and address, to the extent possible, the factors leading to increases in inventory shrinkage. Based on the work performed to date, we are optimistic we will begin to see meaningful improvements in gross margins in the second half of the year."
Selling, general and administrative ("SG&A") expenses increased as a percentage of sales from 30.4% in the first quarter of fiscal 2000 to 31.6% in the first quarter of fiscal 2001. The increase is due in part to increases in salaries and wages at our retail stores that are primarily being driven by the continuing strong economy and resulting lower levels of unemployment.
Income from operations for the first quarter of fiscal 2001 was $11.1 million as compared to $14.7 million for the first quarter of fiscal 2000.
Interest expense for the first quarter of fiscal 2001 increased 52.9% to $5.6 million as compared to $3.7 million for the first quarter of fiscal 2000. 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 first quarter of fiscal 2001 of $3.6 million or $.21 per diluted share as compared to $7.3 million or $.44 per diluted share for the first quarter of fiscal 2000.
During the first quarter of fiscal 2001, the Company added 12 new mini-depot stores and closed two stores. As of August 29, 2000, the Company had 653 stores in operation. For fiscal year 2001, the Company expects to add a total of approximately 40 stores.
"For fiscal 2001, the company has determined it will reduce its pace of opening new stores," commented Bill Perkins, President and COO. "We believe by slowing growth for some period of time it will allow us to better focus on improving the profitability of our commercial operations and our overall inventory performance, as well as improving our overall utilization of our available capital resources".
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Amounts)
Thirteen Thirteen
Weeks Ended Weeks Ended
August 29, 2000 August 31, 1999
Net sales $ 167,074 $ 143,625
Cost of sales, including
distribution costs 103,150 85,198
Gross profit 63,924 58,427
Selling, general and
administrative expenses 52,850 43,694
Income from operations 11,074 14,733
Other income, net 85 638
Interest expense (5,583) (3,651)
Income before income taxes 5,576 11,720
Income taxes 2,007 4,374
Net income $ 3,569 $ 7,346
Net income per share:
Basic net income per common share $ 0.21 $ 0.44
Diluted net income per common share $ 0.21 $ 0.44
Average common shares outstanding 16,695 16,690
Dilutive effect of stock options - 117
Average common shares
outstanding - assuming dilution 16,695 16,807
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
August 29, 2000 May 30, 2000
Assets
Current assets:
Cash and cash equivalents $ 5,938 $ 12,612
Inventories 248,789 253,113
Prepaid expenses and
other current assets 15,428 14,455
Total current assets 270,155 280,180
Property and equipment 534,390 524,053
Less allowances for
depreciation and amortization (110,669) (104,771)
423,721 419,282
Other assets 5,439 5,247
Total assets $ 699,315 $ 704,709
Liabilities and stockholders'
equity Current liabilities:
Trade accounts payable $ 65,368 $ 100,804
Other current liabilities 18,567 23,207
Current maturities of
long-term debt 2,400 2,400
Total current liabilities 86,335 126,411
Deferred income taxes 10,494 10,494
Long-term debt 295,713 264,600
Total stockholders' equity 306,773 303,204
Total liabilities and
stockholders' equity $ 699,315 $ 704,709