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Monro posts record Q4 results, to expand into Michigan

Rochester Business Journal
May 22, 2014

Monro Muffler Brake Inc. on Thursday reported record net income and sales in the fourth quarter. The company also said it is increasing its cash dividend and is making an acquisition outside of its existing footprint.

Net income increased nearly 47 percent in the quarter to $11.9 million from $8.1 million in the previous year. Diluted earnings per share for the fourth quarter increased 44 percent to 36 cents, compared with 25 cents in the fourth quarter 2013.

Sales for the quarter ended March 29 increased nearly 4 percent to $203.2 million, compared with $195.9 million in the fourth quarter 2013. The company attributed the increase primarily to sales increases in newly acquired stores.

Analysts had expected diluted earnings per share of 35 cents on revenues of $206.7 million.

Comparable store sales—or sales at stores open at least one year—for the fourth quarter fell 1.3 percent, primarily in the front end/shocks and tires, brakes and alignments categories.

“We are very pleased with our team’s ability to deliver earnings results ahead of expectations for the fourth quarter due to 1 percent higher comparable store tire units, improved margins, our ongoing focus on cost control and continued outperformance of our recent acquisitions,” President and CEO John Van Heel said.

Monro has signed definitive agreements to acquire 21 stores in Michigan that will generate some $16 million in sales annually. Nineteen stores will operate under the Monro brand, while the remaining stores will fill in an existing market. The deal moves the company into a new state.

Financial and other details of the acquisition—expected to close this quarter—were not disclosed. Monro has more than 950 stores in 22 states.

For the full year, Monro reported a net sales increase of nearly 14 percent to $831.4 million from $732 million in 2013. Net income grew nearly 28 percent to $54.5 million, or $1.67 a diluted share, compared with $42.6 million, or $1.32 a dilute share, last year.

“While we were hopeful that consumer spending would have been stronger, we were encouraged that we ended fiscal 2014 with positive traffic driven by an increase of 1 percent in comparable store oil change and tire units for the year,” Van Heel said, adding the company experienced weather-related disruption to its business during the fourth quarter.

For the first quarter Monro is forecasting a comparable-store sales increase of 2 percent to 3 percent, with diluted earnings per share of 52 cents to 55 cents.

For the full year, the company expects sales of $875 million to $905 million. Comparable-store sales increases are expected to be 1 to 4 percent.

“Our long-term outlook for the industry and company remains positive,” Van Heel said. “We are pleased that severe winter weather experienced across our markets and our strong customer relationships are driving increased traffic and required repairs early this fiscal year.”

Shares of Monro stock (Nasdaq: MNRO) were up nearly 7 percent to $54.11 in midafternoon trading.

Monro also announced a 2-cent increase in the company’s cash dividend to 13 cents for the first quarter 2015. The dividend is payable on June 12 to shareholders of record as of June 2.

(c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.


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