The Pep Boys - Manny, Moe & Jack (NYSE: PBY), the nation's
leading automotive aftermarket retail and service chain, announced
the following results for the thirteen weeks (first quarter) ended
May 5, 2007. Operating Results First Quarter Sales Sales for the
thirteen weeks ended May 5, 2007 were $546,013,000, as compared to
the $556,601,000 for the thirteen weeks ended April 29, 2006.
Comparable Sales decreased 2.3%, including a 3.1% comparable
merchandise sales decrease and a 1.5% comparable service revenue
increase. In accordance with GAAP, merchandise sales includes
merchandise sold through both our retail and service center lines
of business and service revenue is limited to labor sales.
Recategorizing Sales into the respective lines of business from
which they are generated, comparable Retail Sales (DIY and
Commercial) decreased 4.6% and comparable Service Center Revenue
(labor plus installed merchandise and tires) increased 1.0%.
Earnings Net Earnings (Loss) from Continuing Operations Before
Cumulative Effect of Change in Accounting Principle increased from
a Net Loss of $867,000 (($0.02) per share - basic and diluted) to
Net Earnings of $3,220,000 ($0.06 per share - basic and diluted).
Commentary President & CEO Jeffrey Rachor said, �In my first 60
days, I have visited nearly 100 of our stores, met talented and
knowledgeable store staff, engaged hundreds of customers and met
much of the store support center staff. From what I have learned, I
am more encouraged by the long term opportunity for Pep Boys and
its shareholders than when I accepted this position. �While we have
turned the corner on restoring the Company to profitability, much
work remains to realize the company�s true financial potential,
including continued margin expansion, cost management, and
profitable sales growth. These initiatives can continue to improve
operating performance, even before sales productivity increases.
�In particular, I am excited about the scale of the opportunity in
service, a business I have worked in for 25 years, that has
struggled for Pep Boys. It is encouraging that our financial
performance has started to turn, before we have begun to fully
seize upon these opportunities in service. �Before I joined Pep
Boys, the Company had already initiated programs to improve its
operational efficiency and take advantage of asset monetization
opportunities. I plan to accelerate both of these initiatives while
I develop a longer term strategic plan with our Board.� CFO Harry
Yanowitz commented, �Operating margins remain an important focus
for Pep Boys. This quarter, we improved gross margin rates in both
our retail and service center lines of business. SG&A expenses,
especially if one excludes CEO transition costs, were down
significantly, as our productivity initiatives launched last summer
start to show through to our results. �As we announced on last
quarter�s earnings call, at the end of Q4 2006, we ceased
commercial sales in certain of our stores, which while reducing our
Q1 comparable sales (2007 vs. 2006) by approximately 1%, is
consistent with our prioritization of profits over sales. �Q1
Operating Profit improved by $8.8 million from $7.2 million in 2006
to $16.0 million in 2007. Operating Profit included (i) in Q1 2006,
a $0.4 million Net Loss from Dispositions of Assets and a $2.3
million gain from the settlement of a product liability legal
reserve and (ii) in Q1 2007, a $3.7 million gain from an insurance
claim for stores impaired during Hurricane Katrina in 2005 ($2.4
million recognized in Net Gains from Dispositions of Assets and
$1.3 million in merchandise margins) and a $3.9 million charge to
SG&A for CEO transition costs. �EBITDA, a non-GAAP indicator of
levels of our financial performance that includes the gains and
charges noted above, improved in Q1 2007 by $8.6 million to $39.0
million, as compared to Q1 2006. �Our trailing four quarter
Operating (Loss) Profit has improved from a loss of $7.3 million to
a profit of $44.9 million, while our trailing four quarter EBITDA
has nearly doubled from $76.9 million to $139.4 million. �During
the quarter we repurchased $50.8 million of our common shares,
retiring 5.0% of our shares outstanding as of February 3, 2007.�
Pep Boys has 593 stores and more than 6,000 service bays in 36
states and Puerto Rico. Along with its vehicle repair and
maintenance capabilities, the Company also serves the commercial
auto parts delivery market and is one of the leading sellers of
replacement tires in the United States. Customers can find the
nearest location by calling 1-800-PEP-BOYS or by visiting
pepboys.com. Certain statements contained herein constitute
"forward-looking statements" within the meaning of The Private
Securities Litigation Reform Act of 1995. The word "guidance,"
"expect," "anticipate," "estimates," "forecasts" and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements include management's
expectations regarding future financial performance, automotive
aftermarket trends, levels of competition, business development
activities, future capital expenditures, financing sources and
availability and the effects of regulation and litigation. Although
the Company believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be achieved. The
Company's actual results may differ materially from the results
discussed in the forward-looking statements due to factors beyond
the control of the Company, including the strength of the national
and regional economies, retail and commercial consumers' ability to
spend, the health of the various sectors of the automotive
aftermarket, the weather in geographical regions with a high
concentration of the Company's stores, competitive pricing, the
location and number of competitors' stores, product and labor costs
and the additional factors described in the Company's filings with
the SEC. The Company assumes no obligation to update or supplement
forward-looking statements that become untrue because of subsequent
events. Investors have an opportunity to listen to the Company�s
quarterly conference calls discussing its results and related
matters. The call for the first quarter will be broadcast live on
Wednesday, May 23rd at 8:30 a.m. ET over the Internet at Broadcast
Networks' Vcall website, located at
http://www.investorcalendar.com. To listen to the call live, please
go to the website at least 15 minutes early to register, download
and install any necessary audio software. For those who cannot
listen to the live broadcast, a replay will be available shortly
after the call. Supplemental financial information will be
available the morning of May 23rd on Pep Boys' website at
www.pepboys.com. Pep Boys Financial Highlights � Thirteen weeks
ended May 5, 2007 April 29, 2006 � Total Revenues $ 546,013,000� $
556,601,000� � Net Earnings (Loss) From Continuing Operations
Before Cumulative Effect of Change in Accounting Principle $
3,220,000� $ (867,000) � Basic Earnings (Loss) Per Share: Average
Shares 53,122,000� 54,224,000� � Net Earnings (Loss) From
Continuing Operations Before Cumulative Effect of Change in
Accounting Principle $ 0.06� $ (0.02) � Diluted Earnings (Loss) Per
Share: Average Shares 53,634,000� 54,224,000� � Net Earnings (Loss)
From Continuing Operations Before Cumulative Effect of Change in
Accounting Principle $ 0.06� $ (0.02) EBITDA Reconciliation �
EBITDA is defined as Net Earnings (Loss) plus Interest Expense,
minus Income Tax Benefit, plus Income Tax Expense, plus
Depreciation and Amortization. EBITDA is not a measurement of
financial performance under generally accepted accounting
principles and may not be compared to similarly captioned
information reported by other companies. In addition, it does not
replace net income or cash flow from operations as an indicator of
financial performance or liquidity. We believe EBITDA provides a
useful indicator of levels of our financial performance and is
frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry.
A reconciliation of EBITDA for the thirteen and fifty-three weeks
ended May 5, 2007, and the thirteen and fifty-two weeks ended April
29, 2006, respectively, to the most directly comparable GAAP
measure (Operating Profit) in accordance with SEC Regulation G
follows: � � Thirteen weeks endedMay 5, 2007 Thirteen weeks
endedApril 29, 2006 � Operating Profit $ 16,079,000� $ 7,242,000� �
Non-operating Income 1,905,000� 2,259,000� � Discontinued
Operations, pre tax (64,000) (105,000) � Cumulative Effect of
Change in Accounting Principle, pre tax -� 268,000� � Depreciation
and Amortization 21,111,000� 20,723,000� � � EBITDA $ 39,031,000� $
30,387,000� � � Trailing Four QuartersFifty-three weeks ended
Trailing Four QuartersFifty-two weeks ended May 5, 2007 April 29,
2006 � Operating Profit $ 44,859,000� $ (7,342,000) � Non-operating
Income 6,669,000� 4,418,000� � Discontinued Operations, pre tax
(1,004,000) 918,000� � Cumulative Effect of Change in Accounting
Principle, pre tax -� (2,914,000) � Depreciation and Amortization
88,864,000� 81,825,000� � � EBITDA $ 139,388,000� $ 76,905,000�
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