~ Second Quarter Sales Up 16.3% to $205.3 Million ~
~ Second Quarter Net Income Up 18.2% to $13.6 Million; EPS of $.42 In Line With Guidance ~
~ Signs Definitive Agreements to Acquire 10 Stores Representing Annual Sales of Approximately $15 Million ~
~ Narrows Estimated Fiscal 2014 EPS Range to $1.58 to $1.65 ~
ROCHESTER, N.Y., Oct. 24, 2013 (GLOBE NEWSWIRE) -- Monro Muffler Brake, Inc. (Nasdaq:MNRO) ("Monro" or the "Company"), a leading provider of automotive undercar repair and tire services, today announced financial results for its second quarter ended September 28, 2013.
Second Quarter Results
Sales for the second quarter of fiscal 2014 increased 16.3% to $205.3 million as compared to $176.5 million for the second quarter of fiscal 2013. The total sales increase for the second quarter of $28.8 million was due to an increase in sales from new stores, including recently acquired stores of $33.9 million, partially offset by a decrease in comparable store sales of 2.1%. Comparable store sales increased approximately 5% for exhaust and 4% for brakes, and were flat for front end/shocks, while comparable store sales decreased approximately 2% for maintenance, 4% for alignments, and 6% for tires.
Gross margin increased to 39.8% in the second quarter from 39.6% in the prior year quarter due to lower material costs and payroll control in comparable stores. These factors and leverage of fixed costs from higher overall sales more than offset the sales mix shift to the lower margin tire category related to recently acquired stores. Total operating expenses were $57.8 million, or 28.2% of sales, as compared with $50.1 million, or 28.4% of sales, for the same period of the prior year.
Operating income for the quarter increased 21.2% to $23.9 million from $19.7 million in the second quarter of fiscal 2013. Interest expense was $2.0 million as compared to $1.4 million in the second quarter of fiscal 2013.
Net income for the second quarter increased 18.2% to $13.6 million from $11.5 million in the prior year period. Diluted earnings per share for the quarter increased 16.7% to $.42, as compared to diluted earnings per share of $.36 in the second quarter of fiscal 2013, and were within the Company's estimated range of $.41 to $.45. Net income for the second quarter reflects an effective tax rate of 38.1% as compared with 37.6% for the prior year period.
The Company added 12 locations and closed six locations during the quarter, ending the quarter with 940 stores.
John Van Heel, President and Chief Executive Officer stated, "Our results in the second quarter indicate that customers remain conservative in their spending. However, they continue to turn to Monro for purchases that can no longer be delayed as well as to perform basic maintenance on their vehicles. While we were disappointed that our tire sales remained weak during the second quarter, we were encouraged by a recovery in our service business, with comparable store sales in exhaust and brakes both up more than 4% year-over-year. We were also pleased to see continuing strength in comparable store oil changes, up approximately 2% year-over-year. Driven by improvement in our margins and the continued outperformance of our recent acquisitions, we were able to deliver bottom line results within our expected range. We remain confident in our ability to further increase our market share and deliver strong overall sales and earnings growth regardless of the economic or operating environment, by leveraging our strong business model and pursuing our disciplined acquisition strategy."
First Six Month Results
For the six-month period, sales increased 19.0% to $411.5 million from $345.7 million in the same period of the prior year. Comparable store sales decreased .5%. Net income for the first six months of fiscal 2014 increased 17.4% to $27.2 million, or $.84 per diluted share, as compared with $23.2 million, or $.72 per diluted share in the comparable period of fiscal 2013.
Completed Acquisition and Definitive Acquisition Agreements
On August 18, 2013, Monro Muffler Brake completed the acquisition of 10 Curry's Auto Service stores located in the Washington D.C. metropolitan area, enabling the Company to fill in an existing market. Annual sales for these stores are approximately $18 million, comprised of approximately 80% auto service and 20% tires. In addition, the Company announced today that it has signed definitive agreements to acquire 10 stores in Delaware, Maryland, and Kentucky. Annual sales for these 10 stores are approximately $15 million and are approximately 55% tires and 45% service. These locations will enable the Company to fill in existing markets and leverage the Company's existing Mr. Tire and Towery's Tire brands, in these respective markets. The Company plans to retain store-level employees and the closings are expected to occur in late November 2013.
Based on current visibility, business and economic trends, and the recent and pending acquisitions, the Company anticipates the change in fiscal 2014 comparable store sales to be in the range of minus 1% to 0% and is narrowing its estimated fiscal 2014 diluted earnings per share to a range of $1.58 to $1.65, from the prior range of $1.58 to $1.70. This compares to $1.32 diluted earnings per share in fiscal 2013. The estimate is based on 32.6 million weighted average diluted shares outstanding. The Company now expects its sales for the year to be in the range of $830 to $845 million.
For the third quarter of fiscal 2014, the Company anticipates a decline in comparable store sales in the range of 1% to 3%. The Company expects diluted earnings per share for the third quarter to be between $.41 and $.46, as compared to $.35 for the third quarter of fiscal 2013.
Mr. Van Heel concluded, "Our near- and long-term outlook remain the same as we noted earlier in the year. Our long-term view of the industry and our business remains positive, although trends-to-date in the third quarter have been challenging, with month-to-date comparable store sales through October 22nd down 2.8%, due primarily to weak tire sales. We expect that near-term trends will remain somewhat volatile as the economic environment continues to influence consumer purchasing behavior. Our outlook for the remainder of the year reflects our year-to-date sales run rate, benefits from our improving margins and cost control, and the contribution from our recent acquisitions. However, we continue to believe that sales, particularly of tires, should benefit in the second half of the year with more normalized weather patterns throughout our markets following two consecutive years of warm winters and associated customer deferrals, although we have not incorporated this potential upside into our outlook. As we have previously noted, we will actively manage our business in the current environment, with a focus on driving top-line growth, while controlling costs and gaining greater economies of scale through acquisitions. On a combined basis, the acquisitions we have completed and announced to date in fiscal 2014 represent nearly 5% annualized sales growth, and we are encouraged by the opportunities for additional attractive acquisitions by our fiscal year-end. We will continue to leverage our strong business model, and we are confident that our long-term strategic plan will enable us to continue expanding market share and deliver shareholder value regardless of the economic or operating environment."
November Investment Conferences
Monro Muffler Brake also announced today that the Company's management will be presenting at several investor conferences in November. John Van Heel, President and Chief Executive Officer, will present at the Gabelli Conference in Las Vegas on Tuesday, November 5, 2013 at 6:15 p.m. ET. Robert Gross, Executive Chairman, will present at Goldman Sachs' SMID Cap Growth Conference in New York on Thursday, November 14, 2013 at 12:40 p.m. ET and the IDEAS Conference in Dallas on Thursday, November 21, 2013 at 10:20 a.m. ET. Live webcasts of the presentations will be available via the Investor Relations section of the Company's website (www.monro.com) and each will be archived for two weeks.
Earnings Conference Call and Webcast
The Company will host a conference call and audio webcast on Thursday, October 24, 2013 at 11:00 a.m. Eastern Time. The conference call may be accessed by dialing 1-888-500-6950 and using the required pass code 7816091. A replay will be available approximately one hour after the recording through Thursday, November 7, 2013 and can be accessed by dialing 1-877-870-5176. The live conference call and replay can also be accessed via audio webcast at the Investor Info section of the Company's website, located at www.monro.com. An archive will be available at this website through November 7, 2013.
About Monro Muffler Brake
Monro Muffler Brake 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, Tread Quarters Discount Tires, Autotire, Tire Warehouse, Tire Barn and Towery's Tire and Auto Care. The Company currently operates 941 stores in New York, Pennsylvania, Ohio, Connecticut, Massachusetts, West Virginia, District of Columbia, Virginia, Maryland, Vermont, New Hampshire, New Jersey, North Carolina, South Carolina, Indiana, Rhode Island, Delaware, Maine, Illinois, Missouri, Tennessee, Kentucky and Wisconsin. Monro's stores provide a full range of services for brake systems, steering and suspension systems, tires, exhaust systems and many vehicle maintenance services.
The statements contained in this press release that are not historical facts may contain statements of future expectations and other forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factors include, but are not necessarily limited to, product demand, 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, the effect of economic conditions, seasonality, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates),continued availability of capital resources and financing, risks relating to integration of acquired businesses and other factors set forth elsewhere herein and in the Company's Securities and Exchange Commission filings, including the Company's annual report on Form 10-K for the fiscal year ended March 30, 2013.
|MONRO MUFFLER BRAKE, INC.|
|(Dollars and share counts in thousands)|
| Quarter Ended Fiscal |
|Sales||$ 205,321||$ 176,475||16.3%|
|Cost of sales, including distribution and occupancy costs||123,573||106,624||15.9%|
|Operating, selling, general and administrative expenses||57,837||50,126||15.4%|
|Interest expense, net||2,048||1,370||49.5%|
|Other income, net||(179)||(139)||28.7%|
|Income before provision for income taxes||22,042||18,494||19.2%|
|Provision for income taxes||8,392||6,946||20.8%|
|Net income||$ 13,650||$ 11,548||18.2%|
|Diluted earnings per share:||$ .42||$ .36||16.7%|
|Weighted average number of diluted shares outstanding||32,553||32,206|
|Number of stores open (at end of quarter)||940||853|
|MONRO MUFFLER BRAKE, INC.|
|(Dollars and share counts in thousands)|
| Six Months Ended Fiscal |
|Sales||$ 411,492||$ 345,650||19.0%|
|Cost of sales, including distribution and occupancy costs||250,866||207,687||20.8%|
|Operating, selling, general and administrative expenses||113,607||98,550||15.3%|
|Interest expense, net||3,858||2,668||44.6%|
|Other income, net||(231)||(192)||20.6%|
|Income before provision for income taxes||43,392||36,937||17.5%|
|Provision for income taxes||16,171||13,752||17.6%|
|Net income||$ 27,221||$ 23,185||17.4%|
|Diluted earnings per share||$ .84||$ .72||16.7%|
|Weighted average number of diluted shares outstanding||32,523||32,215|
|MONRO MUFFLER BRAKE, INC.|
|(Dollars in thousands)|
|September 28,||March 30,|
|Cash||$ 2,067||$ 1,463|
|Other current assets||46,967||46,737|
|Total current assets||169,861||166,410|
|Property, plant and equipment, net||274,201||270,858|
|Other non-current assets||290,300||274,264|
|Total assets||$ 734,362||$ 711,532|
|Liabilities and Shareholders' Equity|
|Current liabilities||$ 139,179||$ 136,399|
|Capital leases and financing obligations||59,887||58,899|
|Other long-term debt||119,368||127,847|
|Other long-term liabilities||24,747||23,345|
|Total shareholders' equity||391,181||365,042|
|Total liabilities and shareholders' equity||$ 734,362||$ 711,532|
CONTACT: John Van Heel Chief Executive Officer (585) 647-6400 Robert Gross Executive Chairman (585) 647-6400 Catherine D'Amico Executive Vice President - Finance Chief Financial Officer (585) 647-6400 Investors: Jennifer Milan Media: Kelly Whitten FTI Consulting (212) 850-5600Source:Monro Muffler Brake, Inc.