Monro Muffler Brake Inc. posted net income of $4 million on record sales of $90.2 million for the third quarter ended Dec. 24, 2005. That compares to income of $3.5 million on sales of $80.5 million for the same period in 2004.
Overall, Monro recorded a 12% increase in sales and 15.4% increase in net income.
Monro Muffler's comparable store sales increased 4.7%, led by growth of approximately 15% and 9%, respectively, in the comparable store tire and maintenance service categories. In addition, sales from new stores added $6.7 million during the quarter. (The company opened three new stores during the quarter and closed three stores, resulting in 625 stores at the end of the quarter.)
Gross profit for the third quarter increased 10.3% to $34.9 million versus $31.6 million reported in 3Q of fiscal 2005. Gross margin was 38.7% compared to 39.3% in the year-ago period, which the company attributed to a shift in sales mix to the lower margin tire and maintenance service categories and an increase in the cost of oil.
Selling, general, and administrative expenses, as a percentage of sales, improved to 30.5% versus 31.5% in the third quarter last year due largely to the company's ability to leverage fixed costs, as well as a decrease in Sarbanes-Oxley compliance costs.
Together, these factors contributed to an 18.7% increase in operating income.
"We are excited that we were able to deliver another quarter of record results, even as our customers remain cautious," says CEO and president Robert Gross. "Our tire and maintenance service categories, which are increasingly important to our business, contributed to the double-digit, top-line gains in the quarter."
For the nine month period, net sales increased 9.4% to $280.5 million versus $256.3 million in fiscal 2004. Net income for the same period was $19.4 million, 14.9% above the $16.9 million reported a year earlier.
"Our year-to-date performance highlights the strength of our business model," says Gross. "In particular, we believe that our commitment to customer service, coupled with our efficient operating structure and proven growth strategy, will help continue these positive trends for the balance of the year and beyond.
"Our business model has also helped us successfully acquire and profitably integrate target companies, and this will continue to be a key aspect of our growth strategy. In addition, we are pleased with
our initial investment in Strauss Discount Auto and our current expectation is to close by March 31 on the 87% we do not currently own."
Based on current trends and year-to-date results, the company says it continues to expect comparable store sales growth for the full fiscal year to be in the range of 2% to 3%.
Monro Muffler Brake's stock was selling for $31.93 a share at the close of NASDAQ on Tuesday, Jan. 17. That compares to a 52-week high and low of $32.63 and $23.31, respectively.
