Monro Muffler Brake has provided its financial results for its fourth quarter and fiscal year ended March 25, 2017, as well as details pertaining to its fiscal 2018 guidance.
Fourth Quarter Results
Sales for the fourth quarter of fiscal 2017 increased 10 percent to $252 million, as compared to $229 million for the fourth quarter of fiscal 2016. The company said the total sales increase for the fourth quarter of $23 million was due to sales from new stores, totaling $40.8 million, including sales from recent acquisitions of $35.1 million, partially offset by a comparable store sales decrease of 8 percent, versus an increase of 0.5 percent in the prior year period. There was one less selling day in the current year quarter.
During the fourth quarter of fiscal 2017, the company opened 24 company-operated locations and closed four locations, ending the quarter with 1,118 company-operated stores. In fiscal 2017, the company opened 105 company-operated locations, of which 30 were greenfield locations.
Fiscal Year Results
Net sales for fiscal 2017 increased 8.3 percent to $1.022 billion as compared to $943.7 million for fiscal 2016. The total sales increase of $77.9 million for the fiscal year was due to an increase in sales from new stores of $124.3 million, including sales from recent acquisitions of $102.5 million, partially offset by a 4.3 percent comparable store sales decline versus flat comparable store sales in the prior fiscal year.
Net income for fiscal 2017 was $61.5 million or $1.85 per diluted share, as compared to net income of $66.8 million, or $2 per diluted share in fiscal 2016.
John Van Heel, president and CEO, stated, “The combination of unseasonable weather and a difficult consumer spending environment resulted in a decline in our comparable store sales, which reduced our profits for the fourth quarter and the full fiscal year. As we enter the first quarter of fiscal 2018, our comparable store sales have improved and are up quarter-to-date, led by higher average ticket. Comparable store sales for fiscal April increased approximately 3 percent and are up approximately 2 percent month-to-date in fiscal May. Thus far in the first quarter, on a comparable store basis, we are also realizing higher margins in both our tire and service categories.”
Acquisitions Update
In March 2017, the company completed the previously announced acquisition of 16 stores from a Car-X franchisee, including 13 locations in Illinois and three in Iowa. These stores are expected to add approximately $15 million in annualized sales, representing an expected sales mix of 75 percent service and 25 percent tires, and will continue to operate under the Car-X brand.
The company’s acquisitions completed in fiscal 2017 are expected to add $150 million in annualized sales and represent 16 percent in annualized sales growth over fiscal 2016. Additionally, fiscal 2017 acquisitions are expected to increase the company’s tire purchases by approximately 25 percent over fiscal 2016, expanding both the company’s tire assortment and cost competitiveness.
Company Outlook
Based on current visibility, business and economic trends, and recently completed acquisitions, the company anticipates fiscal 2018 sales to be in the range of $1.125 billion to $1.155 billion, an increase of 10 percent to 13 percent over fiscal 2017 sales. Fiscal 2018 sales guidance assumes a comparable store sales increase of 2 percent to 4 percent on a 52-week basis (4 percent to 6 percent including an extra week in the fourth quarter).
Fiscal 2018 diluted earnings per share are expected to be in the range of $2.10 to $2.30, which represents an increase of 14 percent to 24 percent over fiscal 2017. This estimate is based on 33.4 million diluted weighted average shares outstanding. At the midpoint, this guidance represents an increase in operating margin of 70 basis points. The guidance includes approximately 10 cents of contribution from the 53rd week and 15 to 19 cents in accretion from recent acquisitions. This guidance also reflects the estimated impact of higher tire selling prices related to expected tire cost increases.
For the first quarter of fiscal 2018, the company anticipates sales to be in the range of $270 million to $275 million and comparable store sales to increase 2 to 3 percent, as compared to a 6.9 percent decline in the prior fiscal year period. The company expects diluted earnings per share for the first quarter to be in the range of 52 to 56 cents, as compared to 50 cents in the first quarter of fiscal 2017.
Van Heel concluded, “Following a year of significant acquisitions, we are entering fiscal 2018 well-positioned to benefit from these recent transactions and improving sales trends, which we expect to be driven in part by higher tire average ticket. Looking ahead, we are optimistic about the opportunities we see to complete additional acquisitions, continue our greenfield expansion and benefit over the next several years from the growth in the number of vehicles six years old and older, which represent our core customer. The increase in our cash dividend announced today, the 12th increase in 12 years, reflects the board’s continued confidence in Monro’s long-term strategic plan and commitment to increasing shareholder returns.”
