Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive
undercar repair and tire services, today announced financial
results for its fourth quarter and fiscal year ended March 30,
2019.
Fourth Quarter ResultsSales for
the fourth quarter of the fiscal year ended March 30, 2019 (“fiscal
2019”) increased 0.6% to $287.2 million, as compared to $285.6
million for the fourth quarter of the fiscal year ended March 31,
2018 (“fiscal 2018”). The total sales increase for the fourth
quarter of $1.6 million included an increase in sales from new
stores of $17.7 million, including sales from recent acquisitions
of $14.0 million, partially offset by a comparable store sales
decrease of 5.7% on a reported basis. When adjusted for less
selling days in the current year quarter, comparable store sales
increased 0.5%. Fiscal 2019 was a 52-week year with 361 selling
days as compared to 368 selling days in fiscal 2018, which included
an extra week of sales in the fourth quarter. Adjusted for days,
comparable store sales increased approximately 8% for brakes and 1%
for alignments, were flat for maintenance services, and decreased
approximately 1% for tires and 2% for front end/shocks.
Gross margin increased 60 basis points to 38.3%
in the fourth quarter of fiscal 2019 from 37.7% in the prior year
period, primarily due to benefits from the Company's initiatives to
optimize its product and service offerings and store staffing
model, partially offset by the impact of sales mix from the Free
Service Tire acquisition. Total operating expenses increased by
$4.3 million to $81.6 million, or 28.4% of sales, as compared to
$77.3 million, or 27.1% of sales in the prior year period. The
year-over-year dollar increase includes $1.5 million in costs
related to the Company’s Monro.Forward initiatives as well as
expenses from 47 net new stores, three net new wholesale locations
and higher incentive pay related to improved financial
performance.
Operating income was $28.5 million, or 9.9% of
sales, as compared to $30.4 million, or 10.7% of sales in the prior
year period. The decrease in operating income is due primarily to
the impact of less selling days in the current year quarter
compared to the prior year period. Interest expense was $6.8
million for the fourth quarter of fiscal 2019 as compared to $6.3
million for the fourth quarter of fiscal 2018.
Net income for the fourth quarter of fiscal 2019
was $16.8 million, as compared to $17.5 million in the same period
of the prior year. Diluted earnings per share for the fourth
quarter of fiscal 2019 were $.50, including $.01 per share of
incremental costs related to increased acquisition activity in the
fourth quarter of fiscal 2019 compared to the prior year period.
This compares to diluted earnings per share of $0.52 in the fourth
quarter of fiscal 2018, which included $.02 per share in management
transition costs, $.04 per share of benefit related to the Tax Cuts
and Jobs Act and $.10 per share of contribution from the extra
week. Net income for the fourth quarter of fiscal 2019 reflects an
effective tax rate of 21.6%, as compared to 27.9% in the prior year
period primarily due to a reduction in the federal income tax rate
as a result of the Tax Cuts and Jobs Act.
During the fourth quarter of fiscal 2019, the
Company opened 15 and closed four company-operated stores, ending
the quarter with 1,197 company-operated stores and 98 franchised
locations.
“Fiscal 2019 was a transformative year for
Monro. We launched our Monro.Forward strategy, focusing on driving
operational excellence and delivering a consistent, 5-star
experience to our customers. We achieved a number of key milestones
during the year, including optimizing our Good, Better, Best
packages and store staffing model, broadening our online presence
with our collaboration with Amazon.com, launching our new
data-driven CRM marketing platform, and completing our Monro
playbook and store refresh pilot. The progress we’ve made against
our strategy is underscored by our strong financial results this
year. In addition to driving improvement across our business
through our strategic initiatives, we continued to capitalize on
attractive acquisition opportunities, diversifying our footprint by
entering Louisiana and expanding to the West Coast,” said Brett
Ponton, President and Chief Executive Officer.
Ponton continued, “Looking ahead, we believe we
are well positioned to build upon the momentum we see in our
business and deliver further growth in fiscal 2020, underscored by
our first quarter comparable store sales to date up approximately
2%. We are confident that our sharp focus on executing our
Monro.Forward initiatives combined with our disciplined acquisition
strategy will allow us to build a strong, scalable platform for
growth, and continue to create long-term value for our
shareholders.”
Fiscal Year ResultsSales for
fiscal 2019 increased 6.4% to a record $1.200 billion as compared
to $1.128 billion for fiscal 2018. The total sales increase of
$72.4 million for the fiscal year was due to an increase in sales
from new stores of $71.7 million, including sales from recent
acquisitions of $53.6 million, and a comparable store sales
increase of 0.4% on a reported basis. Adjusted for days, comparable
store sales increased 2.3% in fiscal 2019, as compared to a 0.1%
decrease in the prior year. Comparable store sales, adjusted for
days, increased approximately 10% for brakes and 2% for tires, were
flat for maintenance services and alignments, and decreased
approximately 1% for front end/shocks.
Gross margin increased 20 basis points to 38.8%
for fiscal 2019 from 38.6% in the prior fiscal year, largely due to
benefits from the Company's initiatives to optimize its product and
service offerings with the introduction of Good-Better-Best service
packages in the first quarter of fiscal 2019, optimization of its
store staffing model and from leverage as a result of higher
comparable store sales, partially offset by the impact of sales mix
from the Free Service Tire acquisition.
Total operating expenses for fiscal 2019 were
$338.5 million, or 28.2% of sales, as compared to $308.3 million,
or 27.3% of sales, for the prior fiscal year. The dollar increase
primarily represents costs related to the Company’s Monro.Forward
initiatives as well as expenses related to 47 net new stores, three
net new wholesale locations and higher incentive pay related to
improved financial performance. Operating income for fiscal 2019
was $126.7 million, or 10.6% of sales, as compared to $127.3
million, or 11.3% of sales in fiscal 2018. Operating income was
negatively impacted by less selling days in fiscal 2019 as a result
of the 53rd week in fiscal 2018. Interest expense was $27.0 million
in fiscal 2019 as compared to $24.3 million in fiscal 2018.
Net income for fiscal 2019 was $79.8 million or
$2.37 per diluted share, as compared to net income of $63.9
million, or $1.92 per diluted share in fiscal 2018. Diluted
earnings per share for fiscal 2019 were at the high end of the
Company's estimated range of $2.30 to $2.40 and included $.05 per
share in one-time costs related to Monro-Forward investments, and a
net $.04 per share benefit from other one-time items. Diluted
earnings per share for fiscal 2018 included $.16 per share of
one-time expense items and $.10 per share of contribution from the
53rd week.
Acquisitions UpdateThe Company
completed the previously announced acquisition of California-based
Certified Tire & Service Centers, Inc. The acquisition includes
Certified Tire’s 40 retail stores located in San Francisco, San
Diego and Los Angeles, California and one distribution center
located in Riverside, California. The acquisition represents entry
into a new state for Monro and expands the Company’s geographic
footprint to the West Coast. The acquisition closed in the first
quarter of the fiscal year ending March 28, 2020 (“fiscal 2020”)
and is expected to add approximately $45 million in annualized
sales, representing a sales mix of 70% service and 30% tires, and
to be breakeven to diluted earnings per share in fiscal 2020.
In the first quarter of fiscal 2020, the Company
also completed the previously announced acquisition of 12 retail
locations in Louisiana, a new state for Monro, further expanding
the Company’s geographic footprint into southern markets. These
locations are expected to add approximately $15 million in
annualized sales, representing a sales mix of 35% service and 65%
tires.
On a combined basis, acquisitions completed and
announced in fiscal 2019 represent an expected total of $132
million in annualized sales.
Expanded Collaboration with
Amazon.comThe Company announced today it has expanded its
collaboration with Amazon.com to provide tire installation services
at over 400 additional Monro retail tire and automotive service
locations in nine additional states across the Central and Western
regions of the United States, more than doubling the amount of
service locations to over 800 stores.
Cash Dividend Increased 10%The
Company also announced today that its Board of Directors has
approved a $.02 per share increase in the Company’s cash dividend
for the first quarter of fiscal year 2020 to $.22 per share, which
translates to an annual rate of $.88 per share, representing an
increase of $.08 per share or 10% as compared to the total
dividends paid in fiscal 2019. The Company has increased its cash
dividend 14 times during the 14 years since a cash dividend was
first issued. The cash dividend is payable quarterly to
shareholders of record on the Company’s 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. The dividend of $.22 per share for the first quarter of
fiscal 2020 will be payable on June 17, 2019 to shareholders of
record as of June 3, 2019.
Extended Revolving Credit
FacilityIn April 2019, the Company entered into an
agreement to amend and extend its existing $600 million, five-year
revolving credit facility. The agreement permits the Company to
request up to $250 million of additional availability, an increase
of $150 million from the prior financing agreement. The
expanded facility bears interest at 75 to 200 basis points over
LIBOR and includes standard leverage and coverage covenants
consistent with the prior facility. The Company believes that
the amended facility reflects its financial strength and strong
growth in sales and profitability.
Company OutlookBased on current visibility,
business and economic trends, and recently completed acquisitions,
the Company anticipates fiscal 2020 sales to be in the range of
$1.295 billion to $1.325 billion, an increase of 7.9% to 10.4% as
compared to fiscal 2019 sales. Fiscal 2020 sales guidance assumes a
comparable store sales increase of 2% to 4%.
Fiscal 2020 diluted earnings per share are
expected to be in the range of $2.55 to $2.75. This guidance
compares to diluted earnings per share of $2.37 in fiscal 2019. The
diluted earnings per share guidance is based on 33.9 million
diluted weighted average shares outstanding.
Earnings Conference Call and WebcastThe Company
will host a conference call and audio webcast on Tuesday, May 21,
2019 at 8:30 a.m. Eastern Time. The conference call may be accessed
by dialing 1-877-425-9470 and using the required passcode 13690739.
A replay will be available approximately two hours after the
recording through Tuesday, June 4, 2019 and can be accessed by
dialing 1-844-512-2921 and using the required pass code of
13690739. The live conference call and replay can also be accessed
via audio webcast at the Investors section of the Company’s
website, located at corporate.monro.com. An archive will be
available at this website through June 4, 2019.
About Monro, Inc.Headquartered in Rochester,
New York, Monro is a chain of 1,248 Company-operated stores, 98
franchised locations, eight wholesale locations and three retread
facilities providing automotive undercar repair and tire sales and
services. The Company operates in 30 states, serving the
Mid-Atlantic and New England regions and portions of the Great
Lakes, Midwest, Southeast and West Coast. The predecessor to the
Company was founded by Charles J. August in 1957 as a Midas Muffler
franchise. In 1966, Monro began to diversify into a full line of
undercar repair services. The Company has experienced significant
growth in recent years through acquisitions and, to a lesser
extent, the opening of newly constructed stores. The Company went
public in 1991 and trades on The Nasdaq Stock Market under the
symbol MNRO.
The statements contained in this press release that are not
historical facts may contain statements of future expectations and
other forward-looking statements made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by such words and
phrases as “expected,” “estimate,” “guidance,” “outlook,”
“anticipate,” “project,” “believe,” “could,” “may,” “intend,”
“plan” and other similar words or phrases. Forward-looking
statements are subject to risks, uncertainties and other important
factors that could cause actual results to differ materially from
those expressed. These factors include, but are not necessarily
limited to, product demand, dependence on and competition within
the primary markets in which the Company's stores are located, the
need for and costs associated with store renovations and other
capital expenditures, the effect of economic conditions, changes in
the U.S. trade environment, including the impact of tariffs on
products imported from China, seasonality, the impact of
competitive services and pricing, product development, parts supply
restraints or difficulties, the impact of weather trends and
natural disasters, industry regulation, risks relating to leverage
and debt service (including sensitivity to fluctuations in interest
rates),continued availability of capital resources and financing,
risks relating to protection of customer and employee personal
data, risks relating to litigation, risks relating to integration
of acquired businesses and other factors set forth elsewhere herein
and in the Company’s Securities and Exchange Commission filings,
including the Company’s annual report on Form 10-K for the fiscal
year ended March 31, 2018 and Form 10-K for the fiscal year ended
March 30, 2019, which the Company expects to file with the
Securities and Exchange Commission this month. Except as
required by law, the Company does not undertake and specifically
disclaims any obligation to update any forward-looking statement to
reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
MONRO, INC.Financial
Highlights(Unaudited)(Dollars and share counts in thousands)
|
Quarter Ended Fiscal March |
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
287,203 |
|
|
$ |
285,578 |
|
|
0.6 |
% |
|
|
|
|
Cost of sales, including
distribution and occupancy costs |
|
177,126 |
|
|
|
177,815 |
|
|
(0.4 |
)% |
|
|
|
|
Gross profit |
|
110,077 |
|
|
|
107,763 |
|
|
2.1 |
% |
|
|
|
|
Operating, selling, general
and administrative expenses |
|
81,623 |
|
|
|
77,334 |
|
|
5.5 |
% |
|
|
|
|
Operating income |
|
28,454 |
|
|
|
30,429 |
|
|
(6.5 |
)% |
|
|
|
|
Interest expense, net |
|
6,834 |
|
|
|
6,299 |
|
|
8.5 |
% |
|
|
|
|
Other (income) expense,
net |
|
179 |
|
|
|
(117 |
) |
|
(253.1 |
)% |
|
|
|
|
Income before provision for
income taxes |
|
21,441 |
|
|
|
24,247 |
|
|
(11.6 |
)% |
|
|
|
|
Provision for income
taxes |
|
4,625 |
|
|
|
6,765 |
|
|
(31.6 |
)% |
|
|
|
|
Net income |
$ |
16,816 |
|
|
$ |
17,482 |
|
|
(3.8 |
)% |
|
|
|
|
Diluted earnings per
share |
$ |
.50 |
|
|
$ |
.52 |
|
|
(3.8 |
)% |
|
|
|
|
Weighted average number of
diluted shares outstanding |
|
33,866 |
|
|
|
33,417 |
|
|
|
|
|
|
Number of stores open (at end
of quarter) |
|
1,197 |
|
|
|
1,150 |
|
|
|
|
|
|
|
|
|
|
|
MONRO, INC.Financial
Highlights(Unaudited)(Dollars and share counts in thousands)
|
Year Ended Fiscal March |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
% Change |
|
|
|
|
Sales |
$ |
1,200,230 |
|
|
$ |
1,127,815 |
|
|
6.4 |
% |
|
|
|
|
Cost of sales, including
distribution and occupancy costs |
|
735,002 |
|
|
|
692,241 |
|
|
6.2 |
% |
|
|
|
|
Gross profit |
|
465,228 |
|
|
|
435,574 |
|
|
6.8 |
% |
|
|
|
|
Operating, selling, general
and administrative expenses |
|
338,485 |
|
|
|
308,278 |
|
|
9.8 |
% |
|
|
|
|
Operating income |
|
126,743 |
|
|
|
127,296 |
|
|
(0.4 |
)% |
|
|
|
|
Interest expense,
net |
|
27,013 |
|
|
|
24,296 |
|
|
11.2 |
% |
|
|
|
|
Other income, net |
|
(630 |
) |
|
|
(454 |
) |
|
38.8 |
% |
|
|
|
|
Income before provision for
income taxes |
|
100,360 |
|
|
|
103,454 |
|
|
(3.0 |
)% |
|
|
|
|
Provision for income
taxes |
|
20,608 |
|
|
|
39,519 |
|
|
(47.9 |
)% |
|
|
|
|
Net income |
$ |
79,752 |
|
|
$ |
63,935 |
|
|
24.7 |
% |
|
|
|
|
Diluted earnings per common
share |
$ |
2.37 |
|
|
$ |
1.92 |
|
|
23.4 |
% |
|
|
|
|
Weighted average number of
diluted shares outstanding |
|
33,675 |
|
|
|
33,341 |
|
|
|
|
|
|
|
|
|
|
|
MONRO, INC.Financial
Highlights(Unaudited)(Dollars in thousands)
|
March 30, |
|
March 31, |
|
2019 |
|
2018 |
Assets |
|
|
|
|
|
Cash |
$ |
6,214 |
|
$ |
1,909 |
|
|
|
Inventories |
|
171,038 |
|
|
152,367 |
|
|
|
Other current
assets |
|
62,655 |
|
|
52,980 |
|
|
|
Total current assets |
|
239,907 |
|
|
207,256 |
|
|
|
Property, plant and equipment,
net |
|
440,581 |
|
|
416,669 |
|
|
|
Other non-current
assets |
|
631,800 |
|
|
594,507 |
|
|
|
Total assets |
$ |
1,312,288 |
|
$ |
1,218,432 |
|
|
|
Liabilities and
Shareholders’ Equity |
|
|
|
|
|
Current liabilities |
$ |
218,447 |
|
$ |
194,005 |
|
|
|
Capital leases and financing
obligations |
|
238,089 |
|
|
227,220 |
|
|
|
Other long-term debt |
|
137,682 |
|
|
148,068 |
|
|
|
Other long-term
liabilities |
|
18,560 |
|
|
20,663 |
|
|
|
Total liabilities |
|
612,778 |
|
|
589,956 |
|
|
|
Total shareholders’
equity |
|
699,510 |
|
|
628,476 |
|
|
|
Total liabilities and shareholders’ equity |
$ |
1,312,288 |
|
$ |
1,218,432 |
CONTACT:Kim RuddExecutive Assistant(585) 784-3324
Investors and Media: Melanie DambreFTI Consulting(212)
850-5600
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