~ Second Quarter Sales of
~ Second Quarter Diluted EPS of
~ Year-to-Date Operating Cash Flow of
~ Signs Definitive Agreement to Acquire 17 Stores in
Second Quarter Results
Sales for the second quarter of the fiscal year ending
Due to reduced store traffic related to the ongoing COVID-19 pandemic and its negative impact on vehicle miles traveled, Monro has maintained store hours of operation below prior year levels. During the second quarter, the Company strategically added hours of operation at locations where demand improved. Similarly, the Company has right-sized store staffing levels since the beginning of the pandemic and strategically added staffing back to its stores as demand improved. Actively managing store operating hours and staffing levels to match demand has been instrumental to the Company’s profit and cash flow performance.
Gross margin decreased 150 basis points to 36.2% in the second quarter of fiscal 2021 from 37.7% in the prior year period. The decrease primarily resulted from lower comparable store sales in the second quarter of fiscal 2021 causing fixed distribution and occupancy costs to be higher as a percentage of sales compared to the previous year period. Variable gross margin benefited from lower technician labor costs as a percentage of sales related to the Company’s store staffing optimization and productivity efforts, as well as improved tire margins, as the Company’s tire category management and pricing tool continues to take hold. This was offset by a higher sales mix of tires compared to the prior year period. Total operating expenses decreased
Operating income for the second quarter of fiscal 2021 was
Net income for the second quarter of fiscal 2021 was
Net income for the second quarter of fiscal 2021 reflects an effective tax rate of 25.2%, as compared to 23.6% in the prior year period.
During the second quarter of fiscal 2021, the Company closed six company-operated stores, of which five are temporarily closed as a result of damage sustained during Hurricane Laura in
“While the disruption created by the COVID-19 pandemic has continued to weigh on our top-line results in the second quarter and third quarter-to-date, with comparable store sales down approximately 12% in fiscal October, our performance is tracking in-line with key industry indicators. Given the ongoing challenges in the operating environment, we continue to focus on the aspects of our business within our control. This includes driving profitability by actively managing our store operating hours and staffing levels to match demand, as well as expanding our variable margins through improved tire pricing and labor productivity. These efforts combined with targeted cost reductions and working capital management have led to a significant increase in operating cash flow in the first half of the fiscal year. Further, we remain committed to our disciplined M&A strategy as evidenced by our continued expansion in the attractive
Mellor continued, “We are firmly committed to the ongoing execution of our Monro.Forward strategy and made great progress this past quarter. Most notably, we resumed our store rebrand and reimage program and substantially completed the transformation of approximately 40 stores in the second quarter. Importantly, the changes we are implementing across our business will ensure Monro is well positioned to capitalize on the continued demand recovery. Our healthy cash flow and solid balance sheet provide us with the financial flexibility to execute these transformational initiatives and capitalize on potential acquisition opportunities to drive sustainable growth. We are confident that our clear path forward will allow us to deliver long-term value for our shareholders.”
First Six Months Results
For the current six-month period, sales decreased 16.5% to
Strong Financial Position
During the first half of fiscal 2021, the Company generated approximately
As of
Acquisition Update
The Company announced today that it has signed a definitive agreement to acquire 17 stores in
Company Outlook
Due to the ongoing uncertainty caused by COVID-19, it remains difficult to accurately predict the full impact of the pandemic on overall demand and Monro’s operations for the remainder of the year. Therefore, the Company is not providing fiscal 2021 guidance at this time.
Earnings Conference Call and Webcast
The Company will host a conference call and audio webcast on
About
Headquartered in
Cautionary Note Regarding Forward-Looking Statements
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,” “potential,” “anticipate,” “assume,” “project,” “believe,” “could,” “may,” “will,” “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 duration and scope of the COVID-19 pandemic and its impact on our customers, executive officers and employees, the effect of economic conditions, seasonality, changes in the
Non-GAAP Financial Measures
In addition to reporting diluted earnings per share (“EPS”), which is a generally accepted accounting principles (“GAAP”) measure, this press release includes adjusted diluted EPS, which is a non-GAAP financial measure. The Company has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS. Management views this non-GAAP financial measure as a way to better assess comparability between periods because management believes the non-GAAP financial measure shows the Company’s core business operations while excluding certain non-recurring items and items related to our Monro.Forward or acquisition initiatives.
This non-GAAP financial measure is not intended to represent, and should not be considered more meaningful than, or as an alternative to, its most directly comparable GAAP measure. This non-GAAP financial measure may be different from similarly titled non-GAAP financial measures used by other companies.
CONTACT: | |
Executive Assistant | |
(585) 784-3324 | |
Investors and Media: Melanie Dambre / | |
FTI Consulting | |
(212) 850-5600 |
Financial Highlights
(Unaudited)
(Dollars and share counts in thousands)
Quarter Ended Fiscal September | |||||||||
2020 | 2019 | % Change | |||||||
Sales | $ | 288,587 | $ | 324,113 | (11.0 | %) | |||
Cost of sales, including distribution and occupancy costs | 184,061 | 202,040 | (8.9 | %) | |||||
Gross profit | 104,526 | 122,073 | (14.4 | %) | |||||
Operating, selling, general and administrative expenses | 80,101 | 88,716 | (9.7 | %) | |||||
Operating income | 24,425 | 33,357 | (26.8 | %) | |||||
Interest expense, net | 7,322 | 6,961 | 5.2 | % | |||||
Other income, net | (77 | ) | (207 | ) | (62.8 | %) | |||
Income before provision for income taxes | 17,180 | 26,603 | (35.4 | %) | |||||
Provision for income taxes | 4,334 | 6,289 | (31.1 | %) | |||||
Net income | $ | 12,846 | $ | 20,314 | (36.8 | %) | |||
Diluted earnings per share | $ | .38 | $ | .60 | (36.7 | %) | |||
Weighted average number of diluted shares outstanding | 33,849 | 33,979 | |||||||
Number of stores open (at end of quarter) | 1,242 | 1,262 |
Financial Highlights
(Unaudited)
(Dollars and share counts in thousands)
Six Months Ended Fiscal September | |||||||||
2020 | 2019 | % Change | |||||||
Sales | $ | 535,646 | $ | 641,177 | (16.5 | %) | |||
Cost of sales, including distribution and occupancy costs | 343,666 | 390,957 | (12.1 | %) | |||||
Gross profit | 191,980 | 250,220 | (23.3 | %) | |||||
Operating, selling, general and administrative expenses | 156,154 | 180,493 | (13.5 | %) | |||||
Operating income | 35,826 | 69,727 | (48.6 | %) | |||||
Interest expense, net | 14,707 | 14,117 | 4.2 | % | |||||
Other income, net | (68 | ) | (382 | ) | (82.2 | %) | |||
Income before provision for income taxes | 21,187 | 55,992 | (62.2 | %) | |||||
Provision for income taxes | 5,354 | 13,072 | (59.0 | %) | |||||
Net income | $ | 15,833 | $ | 42,920 | (63.1 | %) | |||
Diluted earnings per share | $ | .47 | $ | 1.26 | (62.7 | %) | |||
Weighted average number of diluted shares outstanding | 33,851 | 33,971 |
Financial Highlights
(Unaudited)
(Dollars in thousands)
2020 | 2020 | ||||||
Assets | |||||||
Cash | $ | 81,453 | $ | 345,476 | |||
Inventories | 167,739 | 187,441 | |||||
Other current assets | 66,342 | 63,103 | |||||
Total current assets | 315,534 | 596,020 | |||||
Property, plant and equipment, net | 328,262 | 328,637 | |||||
Finance lease and financing obligation assets, net | 272,179 | 196,575 | |||||
Operating lease assets, net | 202,866 | 199,729 | |||||
Other non-current assets | 724,641 | 728,496 | |||||
Total assets | $ | 1,843,482 | $ | 2,049,457 | |||
Liabilities and Shareholders' Equity | |||||||
Current liabilities | $ | 298,315 | $ | 254,936 | |||
Long-term debt | 231,300 | 566,400 | |||||
Long-term finance leases and financing obligations | 364,598 | 298,373 | |||||
Long-term operating lease liabilities | 178,368 | 170,954 | |||||
Other long-term liabilities | 34,534 | 24,354 | |||||
Total liabilities | 1,107,115 | 1,315,017 | |||||
Total shareholders' equity | 736,367 | 734,440 | |||||
Total liabilities and shareholders' equity | $ | 1,843,482 | $ | 2,049,457 |
Reconciliation of Adjusted Diluted Earnings Per Share (EPS)
(Unaudited)
Quarter Ended Fiscal | |||||||
September | |||||||
2020 | 2019 | ||||||
Diluted EPS | $ | 0.38 | $ | 0.60 | |||
Store impairment charge | - | - | |||||
Store closing costs | - | - | |||||
Monro.Forward initiative costs | 0.01 | 0.02 | |||||
Acquisition due diligence and integration costs | - | 0.01 | |||||
Management transition costs | 0.01 | - | |||||
Adjusted Diluted EPS | $ | 0.39 | $ | 0.62 |
Note: The calculation of the impact of non-GAAP adjustments on diluted earnings per share is performed on each line independently. The table may not add down by +/-
Supplemental Reconciliation of Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Quarter Ended Fiscal | |||||||
September | |||||||
2020 | 2019 | ||||||
Net Income | $ | 12,846 | $ | 20,314 | |||
Store impairment charge | 99 | - | |||||
Store closing costs | (17 | ) | - | ||||
Monro.Forward initiative costs | 248 | 769 | |||||
Acquisition due diligence and integration costs | 22 | 287 | |||||
Management transition costs | 257 | - | |||||
Provision for income taxes | (141 | ) | (263 | ) | |||
Adjusted Net Income | $ | 13,314 | $ | 21,107 |
Reconciliation of Adjusted Diluted Earnings Per Share (EPS)
(Unaudited)
Six Months Ended Fiscal | |||||||
September | |||||||
2020 | 2019 | ||||||
Diluted EPS | $ | 0.47 | $ | 1.26 | |||
Store impairment charge | - | - | |||||
Store closing costs | 0.06 | - | |||||
Monro.Forward initiative costs | 0.01 | 0.03 | |||||
Acquisition due diligence and integration costs | - | 0.02 | |||||
Management transition costs | 0.01 | - | |||||
Adjusted Diluted EPS | $ | 0.54 | $ | 1.31 |
Note: The calculation of the impact of non-GAAP adjustments on diluted earnings per share is performed on each line independently. The table may not add down by +/-
Supplemental Reconciliation of Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Six Months Ended Fiscal | |||||||
September | |||||||
2020 | 2019 | ||||||
Net Income | $ | 15,833 | $ | 42,920 | |||
Store impairment charge | 99 | - | |||||
Store closing costs | 2,510 | - | |||||
Monro.Forward initiative costs | 430 | 1,307 | |||||
Acquisition due diligence and integration costs | 39 | 769 | |||||
Management transition costs | 257 | - | |||||
Provision for income taxes | (782 | ) | (518 | ) | |||
Adjusted Net Income | $ | 18,386 | $ | 44,478 |
Source:
2020 GlobeNewswire, Inc., source