ROCHESTER, N.Y. — Monro Muffler Brake has announced financial results for its fourth quarter and fiscal year ended March 28.
Sales for the fourth quarter of fiscal 2009 increased 9.3 percent to a record $117.1 million compared to $107.2 million for the fourth quarter of fiscal 2008. The company said sales growth was driven by strong in-store sales execution across all product and service categories as well as continued highly effective promotional activities and advertising campaigns. Comparable store sales increased 11.2 percent, exceeding the company’s previous estimate of approximately 10 percent. Comparable store sales increased approximately 6 percent for brakes, 16 percent for maintenance services, 13 percent for alignments, and 14 percent for tires. For the former ProCare stores, comparable store sales increased 16.6 percent for the fourth quarter.
Gross margin increased to 38.4 percent in the fourth quarter from 37.3 percent in the prior year quarter due to price increases that were implemented in response to increased material costs, improved labor productivity, and leveraging of fixed occupancy costs. The expansion in gross margin was partially offset by the shift in sales mix towards the lower-margin tire and maintenance services categories. Total operating expenses were $38.9 million, or 33.2 percent of sales, compared with $35.8 million, or 33.4 percent of sales, for the same period of the prior year.
Operating income for the quarter increased 45.7 percent to $6 million from $4.1 million in the fourth quarter of fiscal 2008. Interest expense was $1.3 million, a decrease of 26.1 percent from the fourth quarter of fiscal 2008, due primarily to the company’s reduction in total long-term debt.
Net income for the fourth quarter increased 57.2 percent to $3 million compared to $1.9 million for the prior year period. Diluted earnings per share for the quarter increased 50 percent to 15 cents, compared to diluted earnings per share of 10 cents in the fourth quarter of fiscal 2008, and came in at the high end of the company’s recently increased range of 12 cents to 15 cents. Net income for the fourth quarter reflects an effective tax rate of 36 percent compared with 21 percent for the prior year period.
The company did not open any locations and closed one during the quarter, ending fiscal 2009 with 710 stores.
Robert Gross, chairman and chief executive officer stated, "We are extraordinarily pleased with our strong performance for the fourth quarter and fiscal year 2009, as we continued to demonstrate that our business model is well-positioned to deliver solid results in both favorable and challenging economic times. We are delighted with our comparable store sales increase of 6.7 percent for the year, which was consistently strong for each quarter and especially high at 11.2 percent for the fourth quarter, as we continued to expand our market share through effective advertising and quality service. Further, store traffic trends improved as we benefited from consumers keeping their older cars longer given the difficult economic environment and from reduced competition as a result of dealership closures. As a result, we experienced a significant 5.5 percent increase in comparable store traffic for the fourth quarter. Overall, we remain very pleased with the superior performance of our company-operated store base and the ability of our employees to execute well and provide excellent service to our loyal customers."
Fiscal Year Results
Net sales for fiscal 2009 increased 8.4 percent to a record $476.1 million from $439.4 million for fiscal 2008. Comparable store sales increased 6.7 percent for the year, marking the eighth consecutive year of comparable store sales increases for the company. For the former ProCare stores, comparable store sales increased 10.1 percent for the year.
Gross margin increased to 40.2 percent for fiscal 2009 from 39.7 percent in the prior year. Total operating expenses were $147.8 million, or 31 percent of sales, for fiscal 2009, compared with $136.2 million, or 31 percent of sales, for the prior fiscal year.
Net income for fiscal 2009 increased to a record $24.1 million, or $1.20 per diluted share, from $21.9 million, or $1 per diluted share, for fiscal 2008, at the high end of the company’s recently increased range.
Definitive Agreement to Acquire Autotire Car Care Centers
Monro today announced that it has signed a definitive asset purchase agreement to acquire 26 Autotire Car Care Center locations from Am-Pac Tire Distributors Inc., a wholly-owned subsidiary of American Tire Distributors. The transaction is expected to close by the end of June 2009. The 26 Autotire locations purchased in Missouri and Illinois will expand Monro’s footprint into St. Louis and the surrounding area. The purchase price for the chain is approximately $10 million and will be funded primarily through the company’s existing line of credit. Autotire generated annual net sales of approximately $31 million in 2008. It is management’s intention to retain Autotire’s store employees.
Based on current visibility and business and economic trends, the company continues to anticipate fiscal 2010 comparable store sales growth in the range of 4 percent to 7 percent and fiscal 2010 diluted earnings per share in the range of $1.30 to $1.45, as previously announced on March 24, 2009. The estimate is based on 20.4 million weighted average shares outstanding and includes the impact of the Autotire acquisition. The company’s expected sales range for the year is $515 million to $530 million, including Autotire but not any other acquisitions.
For the first quarter of fiscal 2010, the company anticipates comparable store sales growth in the range of 4 percent to 7 percent. The company expects diluted earnings per share for the first quarter to be between 42 cents and 47 cents, compared to 39 cents for the first quarter of fiscal 2009. These estimates include the impact of the Autotire acquisition.
Gross concluded, "We continue to experience very positive trends in our business as we enter our new fiscal year. To date in the first quarter, we achieved comparable store sales growth of 5.5 percent in April and approximately 8 percent thus far in May. We are encouraged by this continuing momentum and are optimistic about the future prospects of our business, particularly as macro trends in the automotive sector work to our advantage and consumer confidence begins to improve slightly. We are excited about the opportunities for further market share expansion in fiscal 2010 as we integrate Autotire into our model and look forward to becoming the trusted auto service provider for a broader base of loyal customers."
