Monro Muffler Brake Provides 1st Quarter Fiscal 2018 Financial Results

Monro Muffler Brake Provides 1st Quarter Fiscal 2018 Financial Results

Net income for the first quarter of fiscal 2018 was $17.6 million, as compared to $16.8 million in the same period of the prior year.

 

Monro Muffler Brake has provided financial results for its first quarter ended June 24, 2017.

First Quarter Results

Sales for the first quarter of fiscal 2018 increased 18.4 percent to $278.5 million, as compared to $235.3 million for the first quarter of fiscal 2017.

Monro said the total sales increase for the first quarter of $43.2 million was due to sales from new stores of $41.5 million, including sales from recent acquisitions of $34.8 million and a comparable store sales increase of 1.4 percent, as compared to a decrease of 6.9 percent in the prior year period.

Net income for the first quarter of fiscal 2018 was $17.6 million, as compared to $16.8 million in the same period of the prior year. Diluted earnings per share for the quarter were 53 cents, or 55 cents when adjusting for 2 cents per share in management transition costs, achieving the higher end of the company’s guidance range of 52 cents to 56 cents. This compares to diluted earnings per share of 50 cents in the first quarter of fiscal 2017 and represents a 10 percent increase in earnings per share year-over-year. Net income for the first quarter of fiscal 2018 reflects an effective tax rate of 37.2 percent, as compared to 37.9 percent in the prior year period.

During the first quarter of fiscal 2018, the company opened seven and closed six company-operated locations, ending the quarter with 1,119 company-operated stores.

John Van Heel, president and CEO, said, “We are pleased to report that the outperformance of our recent acquisitions and positive comparable store sales in the first quarter, combined with our continued focus on margin improvement, enabled us to deliver earnings per share at the high end of our guidance range, when adjusting for management transition costs. These positive trends have continued into July with an increase in comparable store sales of approximately 1.5 percent quarter-to-date and higher margins in both our tire and service categories.”

Acquisitions Update

The company also announced today that it has signed definitive agreements to acquire 20 stores, including eight from an existing Car-X franchisee. These stores fill-in the existing markets of Michigan, Illinois and Indiana and are expected to add approximately $13 million in annualized sales, representing a sales mix of 95 percent service and 5 percent tires. Twelve of these stores will operate under the Monro name and the remaining eight will continue to operate under the Car-X brand. The acquisitions are expected to close in the second quarter of fiscal 2018 and be breakeven to diluted earnings per share in fiscal 2018.

Leadership Transition

As previously announced on June 28, the company’s board of directors elected Brett Ponton as Monro’s next president and CEO. Ponton will join Monro as president on Aug. 1 and will assume the role of CEO on Oct. 2. He will succeed John Van Heel, who will serve as an adviser to Monro until March 31, 2018. Lead director Robert Mellor also was elected as independent chairman of the board of directors, as Robert Gross, prior executive chairman, will retire from the board and the company at the conclusion of the annual shareholder meeting on Aug. 15.

Company Outlook

Based on current visibility, business and economic trends and recently completed and announced acquisitions, the company anticipates fiscal 2018 sales to be in the range of $1.135 billion to $1.155 billion, an increase of 11 percent to 13 percent as compared to fiscal 2017 sales. In light of comparable store sales trends fiscal year-to-date, guidance for fiscal 2018 comparable store sales has been revised to an increase in the range of 1.5 percent to 2.5 percent on a 52-week basis (3.5 percent to 4.5 percent including an extra week in the fourth quarter), as compared to prior guidance of an 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).

The company also has  updated its fiscal 2018 diluted earnings per share guidance to be in the range of $2.05 to $2.20, to reflect 6 cents per share in incremental costs related to the management transition and the revised comparable store sales guidance. This compares to previous guidance of $2.10 to $2.30. The diluted earnings per share guidance continues to include approximately 10 cents of contribution from the 53rd week, 15 to 19 cents in accretion from recent acquisitions and is based on 33.4 million diluted weighted average shares outstanding. At the midpoint of the range, the revised guidance represents a 15 percent increase in diluted earnings per share, as compared to $1.85 in fiscal 2017.

For the second quarter of fiscal 2018, the company anticipates sales to be in the range of $278 million to $285 million, representing an increase of 13 percent to 16 percent, over sales of $246 million in the second quarter of fiscal 2017. Fiscal 2018 second quarter sales guidance is based on a comparable store sales increase of 1 percent to 2.5 percent, as compared to a 4.3 percent decline in the prior year period. The company expects diluted earnings per share for the second quarter to be in the range of 52 cents to 56 cents, which includes 2 cents per share of management transition costs and assumes slight accretion from recent acquisitions. This compares to diluted earnings per share of 53 cents in the second quarter of fiscal 2017.

Van Heel concluded, “I am confident that our team will be able to effectively leverage Monro’s unique business model and capitalize on the significant opportunities for profitable growth both organically and through accretive acquisitions and greenfield expansion. The outlook for the industry remains positive, with the total vehicles in operation, particularly those six years old and older, set to grow significantly over the next several years. Going forward, the company is well-positioned to build on this strong foundation and deliver value to our customers, associates and shareholders.”

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