Monro Muffler Brake Inc. reported record sales and earnings for the second-quarter and six-month periods ended Sept. 28, on the strength of new business from the 34 Kimmel Automotive stores it acquired in April.
Monro, which operates 551 stores in 18 states, reported a 31.7-percent jump in net income for the quarter, to $4.9 million, on 12.4-percent better sales of $68 million.
Looking forward, Monro continues to evaluate potential acquisitions, according to Robert G. Gross, president and CEO.
``In addition to organic growth,'' Mr. Gross said, ``we also look forward to growth from our previously discussed strategy of acquiring companies with solid reputations that will strengthen our geographic presence and/or diversify our product mix. In fact, I am optimistic we will have something to announce on the acquisition front by the end of our fiscal year.''
Proving true to its word to leverage Kimmel's expertise in tires throughout its network, Monro said tire sales at its existing Monro and Speedy Auto Service locations shot up 36 percent over the second quarter 2001 level.
``As anticipated,'' Mr. Gross said, ``our acquisition of Kimmel Automotive...is already accretive to earnings. We are benefiting from margin improvements as we diversify Kimmel's product line and service offerings, and through the elimination of redundant overhead costs.''
Monro continues to operate the stores under the Kimmel Automotive name in Maryland and Tread Quarters in Virginia.
In addition to increased tire sales, Monro reported a 5-percent increase in comparable store traffic, a 10-percent increase in the number of comparable store oil changes and 31-percent more comparable store scheduled maintenance sales.
``Our record second-quarter results demonstrate the consistently growing consumer awareness that we offer a full range of high-quality services at competitive prices,'' Mr. Gross said. ``Building trust among our ever-growing customer base has allowed us to fully leverage the basic oil change to effectively sell a diverse range of products and services.''
Monro's gross profit slipped slightly during the quarter because of the inclusion of the Kimmel activities. Kimmel's more heavily tire-oriented product mix results in higher material costs, Monro said. Kimmel's gross profit for the quarter, for example, was 34.4 percent, compared with 45 percent for Monro's traditional businesses.
Sales for the six-month period increased 11.5 percent to $135.9 million, with net income up 16.3 percent to $8.8 million.
Rochester-based Monro said its stores provide a full range of services for exhaust, brake, steering and suspension systems, as well as a number of vehicle maintenance services.
Commenting in the firm's 2002 annual report on the Kimmel acquisition, Mr. Gross said the purchase equated to $112,000 per service bay, vs. the $153,000 Monro budgets to build new facilities.
Up to now tires have represented only a small portion of the company's sales. Brake service represented one-third of Monro's sales in the fiscal year ended March 31, followed by muffler/exhaust systems, 23 percent, and steering/drive train/suspension and wheel alignment, 16 percent.