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May 22, 2014

Monro's earnings and sales are up

Monro Muffler Brake Inc. reported net income of $54.5 million on net sales of $831.4 million for its fiscal year ended March 29, 2014. That compares to income of $42.6 million on sales of $732.0 million for its previous fiscal year.  

Monro announced it will acquire 21 stores in the first quarter. Nineteen of them are in Michigan, a new geographic market.

The company’s income-to-sales ratio for the year was 6.5%. Fiscal 2014 sales were a record for the company and were up 14% over 2013 sales. Net income for the year was up 27.9%. Operating income for the year increased 29.4% to $95.3 million from $73.7 million in fiscal 2013.

“We are very pleased with our team’s ability to deliver earnings results ahead of expectations for the fourth quarter due to 1% higher comparable store tire units, improved margins, our ongoing focus on cost control and continued outperformance of our recent acquisitions,” says CEO and President John Van Heel.

“Notably, customer acceptance of our expanded tire offerings, and our execution on our recent acquisitions, were better than planned and drove our significant increase in operating margin for the quarter and the year.

"Overall, we ended fiscal 2014 strongly positioned to continue leveraging our flexible business model and pursuing our disciplined acquisition strategy. We remain confident in our ability to further increase our market share and deliver strong sales and earnings growth in both strong and weak environments.”

The company anticipates fiscal 2015 sales to be between $875 and $905 million. Comparable store sales in fiscal 2015, which now include the acquisitions made in fiscal 2013, are anticipated to increase in the range of 1% to 4%.

Fourth-quarter results

Monro Muffler Brake Inc. posted net income of $11.9 million on net sales of $203.2 million for its fourth quarter ended March 29, 2014. That compares to net income of $8.1 million on sales of $195.9 million for the same period last year. Both earnings and sales for the fourth quarter are company records.

The company’s income-to-sales ratio for the fourth quarter was 5.8%. Operating income for the quarter increased 38.4% to $21.4 million from $15.5 million in the fourth quarter of fiscal 2013.

Comparable store sales decreased 1.3%, broken down as follows:

*flat for maintenance and exhaust categories;

*down approximately 2% for tires, brakes and alignments; and

*down 3% for front end/shocks.

The company says sales for the fourth quarter of fiscal 2014 increased 3.7% to a record of $203.2 million. The sales increase for the fourth quarter was due primarily to an increase in sales from newly acquired stores.

Monro opened four locations and closed two locations during the fourth quarter, ending fiscal 2014 with 953 stores.

“While we were hopeful that consumer spending would have been stronger, we were encouraged that we ended fiscal 2014 with positive traffic driven by an increase of 1% in comparable store oil change and tire units for the year, demonstrating that customers are continuing to service their vehicles at our stores,” says Van Heel.

“At the same time, we experienced some weather-related disruption to our business in the fourth quarter, while throughout the fiscal year, we saw customers continue to delay purchases and trade down from higher cost tires and automotive maintenance and repair purchases."

Expansion into Michigan

The company announced it plans to acquire 21 stores that are expected to generate approximately $16 million in annualized sales.The acquisition allows Monro to expand into Michigan for the first time with 19 stores. The stores will operate under the Monro Brake & Tire brand.

The company says the two remaining acquired stores fill in an existing market.

These acquisitions are expected to add approximately 2% annualized sales growth on top of the Company’s over 30% acquisition sales growth achieved in the 11 deals closed in fiscal 2013 and 2014. The transactions are expected to close this quarter.

Increase in dividend

Monro’s board of directors has approved a $.02 increase in the Company’s cash dividend for the first quarter of fiscal year 2015 to $.13, which translates to an annual rate of $.52

per share and represents an increase of $.08 per share from the dividends paid in fiscal 2014.

The cash dividend is payable on outstanding shares of common stock, including the shares of common stock to which the holders of the Company’s Class C Convertible Preferred Stock are entitled, on June 12, 2014, to shareholders of record as of June 2, 2014.

 

 

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