ROCHESTER, N.Y. – Monro Muffler Brake has announced financial results for its fourth quarter and fiscal year ended March 31.
 
Sales for the fourth quarter of fiscal 2012 increased 13.9 percent to a record $171.7 million, as compared to $150.8 million for the fourth quarter of fiscal 2011.
 
Operating income for the quarter increased 21.2 percent to $17.5 million from $14.4 million in the fourth quarter of fiscal 2011. Interest expense was $1.6 million as compared to $1.2 million in the fourth quarter of fiscal 2011.
 
Net income for the fourth quarter increased 27.3 percent to a record $10.5 million from $8.2 million in the prior year period. Diluted earnings per share for the quarter increased 26.9 percent to $.33, including approximately 3 cents in due diligence costs related to Midas, which was sold to a higher bidder, as compared to diluted earnings per share of 26 cents in the fourth quarter of fiscal 2011. Net income for the fourth quarter reflects an effective tax rate of 34.9 percent as compared with 37.7 percent for the prior year period, Monro reported.
 
Robert Gross, chairman and CEO, stated, "Our fourth quarter performance reflects the ongoing challenges facing consumers in the current economic environment. With higher gas and food prices, high unemployment and an unseasonably warm winter, the cautious consumer continues to defer and prioritize purchases. Comparable brake sales were again solid, posting a 4 percent increase consistent with the 5 percent increase in the third quarter. At the other end of the spectrum, comparable exhaust sales were down 8 percent this quarter after being up 12 percent in the third quarter.
 
"Encouragingly, our recent acquisitions continue to outperform," Gross added. "Overall, our performance during the fourth quarter continues to demonstrate the strength and flexibility of our low-cost business model and the ability of our employees to consistently provide superior service to attract new customers and keep our loyal customers returning."
 
Net sales for fiscal 2012 increased 7.8 percent to a record $686.6 million from $636.7 million for fiscal 2011. Operating income for the year increased 16.6 percent to $91.4 million from $78.4 million in fiscal 2011. Net income for fiscal 2012 increased 19.1 percent to a record $54.6 million, or $1.69 per diluted share from $45.8 million, or $1.44 per diluted share, for fiscal 2011. This was within the company’s estimated range of $1.71 to $1.75 excluding the aforementioned approximate 3 cents in due diligence costs.
 
Monro completed the acquisition of the retail stores of Kramer Tire on April 1, consisting of 20 locations in Norfolk, Va., generating annualized sales of approximately $25 million. Additionally, the company is scheduled to complete the acquisition of 18 retail stores of Colony Tire on June 3. The Colony tire stores are located in North Carolina and generate annual sales of approximately $25 million. It is management’s intention to retain these store employees. The company said it has also signed a Letter of Intent on one more similar-sized transaction, which it anticipates closing in the second quarter of fiscal 2013.
 
Based on current visibility, business and economic trends and recent and pending acquisitions, Monro anticipates fiscal 2013 sales to be between $750 and $775 million.
 
"As we look forward, we continue to have a positive long-term outlook for our industry and company, though we are more cautious near-term as we believe that higher gas prices and the macroeconomic environment will continue to weigh on consumer sentiment and purchasing behavior," Gross said. "The first quarter has started off weaker than we anticipated and our comparable store performance in fiscal 2013 will be dampened due to these challenges. However, we have historically leveraged our strong business model to continue to expand our operations and enhance shareholder returns regardless of the economic or operating environment.
 
"As we move through fiscal 2013, we anticipate that we will have improved performance as customers turn to us for purchases that have been deferred. We are very optimistic about growing our market share further in fiscal 2013 through accelerated, disciplined and accretive acquisitions, even beyond those referred to above, that should allow us to achieve greater economies of scale while positioning the company even more strongly for the long-term. The increase in our quarterly dividend announced today, which is the seventh increase in the last seven years, reflects the Board’s continued confidence in Monro’s long-term strategic plan and commitment to increasing shareholder returns."
 
 

ROCHESTER, NY — Monro Muffler Brake has announced record financial results for its fourth quarter and full year, which ended March 25.

Sales for the year increased 9.3 percent to $368.7 million from $337.4 million in fiscal 2005, driven by a 1.7 percent increase in comparable store sales and a new stores sales increase of $26.6 million. On a comparable store basis, the maintenance service and tire categories posted the strongest results with gains of approximately 8 percent and 7 percent, respectively.

Gross profit for the year increased 8.1 percent to $147.8 million from $136.8 million last year. Gross margin was 40.1 percent compared to 40.5 percent, due to the sales mix shift to lower-margin tire and maintenance service categories and increases in the cost of oil and tires. The company’s ability to leverage its fixed cost base resulted in selling, general, and administrative expenses, as a percentage of sales, being reduced by 100 basis points to 29.3 percent compared to 30.3 percent last year. Selling, general and administrative expenses for fiscal 2006 include a one-time, non-cash stock based compensation charge of approximately $300,000, recorded in the fourth quarter, related to the accelerated vesting of stock options as previously announced in the company’s press release on March 27. Taken together, the above noted factors drove a 15.6 percent increase in operating income to a record $39.8 million and a 60 basis point improvement in operating margin to 10.8 percent.

Net income increased 15.2 percent to $22.7 million versus $19.7 million in the year-ago period. Diluted earnings per share grew 11.9 percent to $1.51, based on 15 million shares outstanding, compared to $1.35, based on 14.6 million shares outstanding, last year. Excluding the stock based compensation charge, net income would have increased by 16.6 percent to $22.9 million and diluted earnings per share would have increased by 13.3 percent to $1.53 per share.

Sales for the fourth quarter of fiscal 2006 increased 8.8 percent to $88.3 million from $81.1 million in the fourth quarter of fiscal 2005 despite a decrease in comparable store sales of .4 percent, versus a 4.5 percent increase last year. The increase in new stores sales of $5 million and the bulk sale of $3.5 million of slower moving inventory in the quarter more than offset the comparable store sales decrease. Gross margin decreased to 36.8 percent in the fourth quarter from 38.5 percent in the prior year quarter due to cost increases and the sales shift to lower margin categories in the quarter. The company’s ability to leverage its fixed cost base offset the gross margin pressures and resulted in a reduction of 170 basis points in selling, general, and administrative expenses, as a percentage of sales, to 30.5 percent compared to 32.2 percent last year.

Operating income for the quarter amounted to $5.6 million, up from $5.1 million in the prior year quarter. Net income increased 17.2 percent to a record $3.2 million in the quarter versus $2.8 million last year. Diluted earnings per share grew 10.5 percent, based on 15.1 million shares outstanding, to 21 cents, which includes the one-time non-cash charge associated with the accelerated vesting of all outstanding stock options. This compares to diluted earnings per share of 19 cents, based on 14.7 million shares outstanding, last year. Excluding the stock based compensation charge, net income would have increased by 27 percent to $3.5 million and diluted earnings per share would have increased by 21 percent to 23 cents per share.

During the quarter, the company opened two locations and closed two locations, ending fiscal 2006 with 625 stores.

Robert Gross, president and chief executive officer, commented, “Fiscal 2006 clearly demonstrated the strength of our operating model. Despite a challenging environment highlighted by rising gas prices, we again delivered a record year and outperformed our industry by successfully leveraging our single-digit sales increase into solid double-digit bottom line growth. To accomplish this, we continued to expand our tire and service categories, which added incremental revenue and further reduced our dependence on exhaust sales. We also capitalized on opportunities to raise prices, continued to build our reputation as a trusted service provider, and successfully leveraged our fixed cost base.”

Gross continued, “At the same time, the soft market environment provided us with opportunities to further our acquisition strategy. Specifically, we made an investment in Strauss Discount Automotive and bid for the assets of ProCare Automotive Service Solutions (“ProCare”), which we acquired in April. By continuing to seek out attractive acquisition candidates, we have been able to increase our market dominance and pricing power, diversify risk between our tire and service formats and further expand our industry-leading margins.”

As previously announced on April 28, the company completed the acquisition of 75 ProCare locations out of Chapter 11 Bankruptcy. These new stores effectively fill in Monro’s existing markets and bring Monro’s total store base to 700. The company plans to convert approximately 44 ProCare stores to the Monro Muffler Brake & Service brand and the remaining 31 locations to tire stores under the Mr. Tire brand. The company currently expects ProCare will add $33 million to $35 million of sales during fiscal 2007, representing 11 months of ownership, and will be between break even and a loss of $.05 per share, due to the weak economic environment and integration costs.

“The integration process is already well under way and, based on what we have accomplished thus far, we continue to believe ProCare will be an excellent addition to our business,” said Gross. “We view ProCare as a very opportunistic acquisition that offers significant upside potential. Given ProCare was in bankruptcy, it will take longer to ramp up to Monro’s historical margins than has been our history with prior acquisitions. However, we were able to purchase the chain at a very attractive price and are intently focused on taking advantage of the above average comparable store sales and margin growth opportunities it presents. While 2007 will be a rebuilding year for this group of stores, we expect ProCare to run double- digit comparable store sales increases and positively contribute to our earnings in fiscal 2008 and beyond.”

Gross continued, “Importantly, I am confident we have the right team in place to lead our business forward and successfully capitalize on our growing store base. In that regard, I’m pleased to announce that Joe Tomarchio, Jr. has been promoted to President, Tire Group. Based on his strong contributions to-date, we believe he is the right person to lead our ever growing tire business and further increase our presence in this important category.”

Based on current business conditions, the integration of ProCare, and fiscal 2007 being a 53-week year, the company currently anticipates fiscal 2007 sales to be in the range of $410 million to $420 million, assuming a comparable store sales increase of 1 percent to 3 percent. The company expects earnings per diluted share in the range of $1.68 to $1.76 based on weighted average shares outstanding of 15.3 million as compared to earnings per diluted share of $1.51 based on 15 million weighted average shares outstanding in fiscal 2006, representing an 11 percent to 17 percent increase in diluted earnings per share. For the first quarter of fiscal 2007, the company currently anticipates diluted earnings per diluted share to be between 45 cents and 48 cents, with comparable store sales down 2 percent to 3 percent.

Gross concluded, “We expect our full year results will be very solid and represent another strong year. However, we will not generate our typical level of year-over-year growth in the first quarter due to the integration costs and operations of ProCare and the current soft environment. Thus far, we have seen a slight decrease in store traffic, and consumers continue to defer automotive maintenance and repair purchases in response to continued increases in gasoline prices and rising interest rates. That said, we believe that many of these purchases cannot be deferred indefinitely and we expect to see our consumers return to more normalized spending levels later in the year. Importantly, the steps we are taking now to integrate recently-acquired ProCare will position us for long-term growth. As such, we are particularly excited about our prospects in fiscal 2008, when we expect to more fully benefit from our ownership of ProCare and Strauss, with a Strauss transaction still on track to close by September 30.”

For more information about Monro, go to: www.monro.com .

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