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Monro Muffler Brake Reports Record Second Quarter 2012 Results

Second quarter net income up 14 percent, company says.

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ROCHESTER, N.Y. – Monro Muffler Brake has announced record financial results for its second quarter ended Sept 24.
 
Sales for the second quarter of fiscal 2012 increased 6.9 percent to a record $173.3 million compared to $162.1 million for the second quarter of fiscal 2011. Comparable store sales decreased .8 percent, as compared to a 6.4 percent increase last year. Comparable store sales increased approximately 3 percent for exhaust and 1 percent for brakes, were flat for tires and front end/shocks, and were down approximately 3 percent for maintenance services and 6 percent for alignments. New stores added sales of $10.7 million.
 
Operating income for the quarter increased 11 percent to $25.2 million, from $22.7 million in the second quarter of fiscal 2011.
 
Net income for the second quarter increased 13.5 percent to a record $15.1 million from $13.3 million in the prior year period. Diluted earnings per share for the quarter increased 11.9 percent to 47 cents, as compared to diluted earnings per share of 42 cents in the second quarter of fiscal 2011, within the company’s estimated range of 46 cents to 50 cents. Net income for the second quarter reflects an effective tax rate of 37 percent as compared with 38.2 percent for the prior year period.
 
The company added two locations and closed two locations during the quarter, ending the period with 802 stores.
 
For the six-month period, sales increased 5.5 percent to a record $338.1 million from $320.3 million in the same period of the prior year. Comparable store sales increased .7 percent. Net income for the first six months of fiscal 2012 increased 15.2 percent to a record $30.6 million, or $.95 per diluted share, compared with $26.5 million, or $.84 per diluted share in the comparable period of fiscal 2011.
 
Robert Gross, chairman and CEO, stated, "The 14 percent earnings growth we achieved in the second quarter is a testament to Monro’s strong value proposition and reputation as a trusted service provider. The flexibility provided by our strong business model has allowed us to achieve solid profitability in what has continued to be a tough economic climate. Additionally, the ongoing outperformance of our recent acquisitions, as well as our ability to leverage our cost structure on increased sales, enabled us to further expand our operating margin during the quarter. Overall, we are pleased with the strength that we have exhibited in the first half of the year, which we believe reflects the ability of our employees to consistently provide excellent service, turning new customers into loyal customers and keeping loyal customers returning."
 
Terry’s Tire Town Retail Store Acquisition
Additionally, on Oct. 9, Monro completed the acquisition of the retail stores of Terry’s Tire Town, consisting of six locations in Ohio and one location in Pittsburgh. The transaction will allow Monro to implement its Black Gold program, which is designed to increase sales in Monro’s service stores, particularly of tires and related services, in 13 additional stores.
 
Monro expects the former Terry’s Tire Town stores to be slightly accretive in the first 12 months of ownership. With the $9 million in sales from the Terry’s Tire Town stores, plus the $36 million in sales from the Vespia acquisition in June 2011, Monro has added $45 million in annualized sales or 6 percent acquisition growth thus far this year.
 
The company now anticipates fiscal 2012 comparable store sales growth in the range of 3 percent to 4 percent (1 percent to 2 percent adjusted for days) and is narrowing its estimated fiscal 2012 diluted earnings per share to a range of $1.68 to $1.74, from the prior range of $1.65 to $1.77. The estimate is based on 32.3 million weighted average shares outstanding. The company’s expected sales range for the year remains at $690 to $705 million.
 
For the third quarter of fiscal 2012, the company anticipates comparable store sales growth in the range of 1 percent to 3 percent. The company expects diluted earnings per share for the third quarter to be between 38 cents and 42 cents, as compared to 35 cents for the third quarter of fiscal 2011. Given the company’s expectations for the fiscal year, management projects fourth quarter diluted earnings per share of between 35 cents and 37 cents, compared to 26 cents for the fourth quarter of fiscal 2011.
 
Gross concluded, "We continue to have a positive outlook for the business for 2012 and the long-term, although we anticipate continued moderate organic sales growth throughout the remainder of the year as a result of the macroeconomic environment, continued high unemployment, increased tire and gas prices and low consumer confidence. As we move through fiscal 2012, we anticipate that November will provide improved visibility as customers who have deferred purchasing tires and maintenance during the summer months turn to us to prepare for the upcoming winter. As evidenced by our recent acquisitions, we believe that the current macroeconomic environment puts us in an ideal position to take advantage of additional acquisition opportunities. These transactions, in turn, will allow us to expand our market share and position the company for continued profitable growth."
 

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