Income drops despite Monro's sales increase
Monro Muffler Brake Inc. posted net income of $42.6 million on net sales of $732 million for its fiscal year ended March 30, 2013. That compares to income of $54.6 million on sales of $686.6 million for its previous fiscal year.
Despite the 22.1% decrease in net income, the company's income-to-sales ratio was 5.8%. Operating income was down 19.4%, from $91.4 million to $73.7 million.
Adjusted for days, comparable store sales decreased 5.5% for the year. On a reported basis, comparable store sales decreased 7.3%.
Monro attributed the 6.6% increase in sales to an increase in sales from new stores, including recently acquired stores.
The company anticipates fiscal 2014 sales to be between $840 and $865 million. Comparable store sales increases are expected to be in the range of 2.5% to 4.5%.
“As we look to fiscal 2014, we continue to have a positive long-term outlook for our industry and company and are more optimistic about the near-term based on the recent trends we have seen in our business," says CEO and President John Van Heel. "To-date in the first quarter of fiscal 2014, comparable store sales are up 3% with higher traffic and a rebound in key sales categories, particularly tires.
"Based on these positive trends in April and May, we are optimistic about our ability to deliver increases in comparable store sales for the first quarter and full year fiscal 2014, as customers turn to us for purchases that have been deferred.
"At the same time, we believe our significant acquisition growth in fiscal 2013 positions the company to deliver strong earnings growth over the next several years, and we continue to see attractive acquisition opportunities in the marketplace," he says. "We will continue to pursue these opportunities in a disciplined manner as we leverage our strong balance sheet and business model to drive top-line growth and operating leverage."
Monro recorded net income of $8.1 million on net sales of $195.9 million for the fourth quarter of fiscal 2013. That compares to income of $10.5 million on sales of $171.7 million for 4Q 2012, which included an extra week of sales.
The company's income-to-sales ratio for the fourth quarter was 4.1%. Operating income for the quarter decreased 11.4%, from $17.5 million to $15.5 million.
Adjusted for days, comparable store sales decreased 5.6%, broken down as follows:
* flat for maintenance services,
* down approximately 6% for tires, alignments and exhaust,
* down 7% for front end/shocks, and
* down 11% for brakes.
On a reported basis, comparable store sales decreased 11.4%.
“Our fourth-quarter performance reflects the continued impact of the challenging economic environment that has been weighing on our customers," says Van Heel. "Given the environment, our customers continued to defer purchases and trade down from higher cost automotive maintenance and repair purchases.
"Additionally, weather conditions remained less than ideal for our business, which impacted our comparable store sales results, particularly in January. Notably, however, with the return to more normalized weather after January, we saw an improvement in comparable store sales trends, and trends to-date in the first quarter
of 2014 have shown further improvement into positive territory.
"Our ability to leverage our strong business model, regardless of the economic or operating environment and to take advantage of increased acquisition opportunities, is demonstrated by the record of eight acquisitions for 139 stores that we completed in fiscal 2013," he says. "These acquisitions enabled us to deliver healthy growth in overall sales for the fourth quarter despite the decline in comparable store sales, while helping us increase our market share and achieve greater economies of scale.”
The company added 23 locations and closed four locations during the quarter, ending fiscal 2013 with 937 stores.
Increase in 1Q dividend
Monro's board of directors approved a $.11 per share dividend for the first quarter of fiscal 2014, a $.01 increase compared to the quarterly dividends paid in fiscal 2013.
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 11, 2013, to shareholders of record as of May 31, 2013.
"The increase in our quarterly cash dividend... which is the eighth increase in the last eight years, reflects the board’s continued confidence in Monro’s long-term strategic plan and commitment to increasing shareholder returns,” says Van Heel.