Monro reports it has seen record sales, earnings
Monro Muffler Brake announces record sales, earnings Monro Muffler Brake, Inc. says it documented record financial results for its first quarter ended June 30. Sales for the first quarter of fiscal 2008 increased 9.3 percent to a record $107.6 million from $98.4 million in the first quarter of fiscal 2007. Comparable store sales increased 6.2 percent, exceeding the company's estimated range of 4 percent to 6 percent. The comparable store sales increase for the quarter was largely the result of increased sales in the tires, brakes and alignments categories, which increased by approximately 10 percent, 5 percent and 26 percent respectively. The total sales increase for the quarter of $9.2 million included an increase in sales from new stores of $5.4 million, of which $4.2 million came from the former ProCare stores acquired in April 2006. For the quarter, comparable sales in the ProCare stores increased approximately 10 percent over the same period of the prior year, according to the company. Gross margin improved to 43.4 percent in the first quarter from 41.7 percent in the prior year quarter due, in large part, to the increase in comparable store sales along with strong sales of higher-margin products. The increase in gross margin was also partially due to the recording of certain ProCare leases as capital leases, causing a shift in expense from rent to interest expense. Additionally, Monro says there were more vendor rebates received, as well as a shift in vendor rebates from SG&A to cost of sales in the current year quarter as compared to the prior year. SG&A expenses, as a percentage of sales, were 30.3 percent compared with 30.1 percent for the same period of the prior year, primarily due to the aforementioned shift in vendor rebates. Operating income for the quarter was a record $14.0 million, up 22.9 percent from $11.4 million in the prior year's first quarter, and benefiting largely from the growth in sales and gross margin. Interest expense increased to $1.2 million from $.6 million in the prior year's first quarter, largely due to the aforementioned recording of ProCare capital leases. Net income for the quarter increased to a record $8.2 million compared to $7.6 million for the prior year period. Diluted earnings per share were $.54 compared to $.50 in the first quarter of the prior fiscal year, which included a one-time $.03 income tax benefit. Excluding the benefit, earnings per diluted share would have increased 14.9 percent from $.47 in the prior year's first quarter. During the quarter, Monro opened one location and closed three locations, ending first quarter fiscal 2008 with 696 stores.
"We are pleased with our top line performance for the quarter, which maintained the strong trends we experienced in the second half of last year, particularly in higher-margin categories such as brakes and alignments," says Robert G. Gross, president and CEO. "We believe we are continuing to gain market share. While our ProCare stores generated a 10 percent increase in comparable store sales, we had planned on 15 percent. As a result, the ProCare stores broke even for the quarter compared with the expected profit of approximately $.03 per share. However, we still achieved 15 percent pre-tax growth in a tough environment. Further, our overall results as well as our success across product and service categories demonstrate the strength of our two- store format approach and low-cost operating model." Company outlook For the full fiscal year, the company notes it has increased its expected sales range to between $445 million to $455 million and maintains its expectations for comparable store sales growth of 3 percent to 5 percent. Monro has tightened its anticipated earnings range for fiscal 2008 and now expects fiscal 2008 earnings per diluted share to be $1.85 to $1.90. The revised expectations include the effects of the two recently announced acquisitions, as well as an expected 5 cents earnings per share full year contribution from ProCare. The earnings estimates are based upon 15.3 million weighted average shares outstanding. "For the remainder of the year, we will focus on integrating our Craven and Valley Forge acquisitions, achieving further improvements in ProCare, and continuing the strong sales momentum that we are experiencing across many of our product and service categories," Gross concludes. "As we have previously stated, challenging business conditions create opportunities for us to grow through attractively priced acquisitions. Given the current environment, we see several opportunities in our pipeline and expect to announce at least one additional acquisition by the end of the third quarter. Further, we remain confident in our market position and look forward to solid sales and earnings growth through the remainder of the year." Capital structure update Separately, as previously announced in May, Monro’s Board of Directors intends to declare a three-for-two stock split of the company's common stock to be effected in the form of a 50 percent stock dividend and subject to shareholder approval of an increase in the number of authorized common shares to 45 million. The shareholders will vote on the increase on Aug. 21 at Monro's regularly scheduled annual shareholders' meeting. Monro operates a chain of stores providing automotive undercar repair and tire services in the United States, operating under the brand names of Monro Muffler Brake and Service, Mr. Tire and Tread Quarters Discount Tires. The Company currently operates 705 stores and has 14 dealer locations. |
