ROCHESTER, N.Y.Monro Muffler Brake Inc. has acquired Gold Coast Tire & Auto Centers in Palm Beach, Fla., and is rebadging the dealership's outlets with the Tire Choice & Total Car Care brand.
Monro disclosed in its third quarter earnings results that it had bought nine stores in the Palm Beach/Fort Lauderdale area in two separate transactions that represent approximately $19 million in annualized sales, but didn't disclose the identity of the dealerships acquired.
During the quarter, Monro added 21 locations and closed seven, ending the period with 1,017 stores.
Separately a Tire Business search of tire dealer sites in those areas led to an announcement on Gold Coast's website that Monro had bought the dealership. That notice, signed by owner Josh Oretsky, assures customers that Tire Choice will honor all Gold Coast guarantees and will continue to offer Gold Coast's menu of automotive services.
Gold Coast's Facebook page shows the dealership has seven locations and has been in business for more than 30 years.
Monro did not disclose a purchase price at this time. Traditionally its acquisitions have averaged about $1 million in purchase cost for every $1 million in sales.
The company also did not provide the identity of its second acquisition.
Monro bought Tire Choice & Total Car Care in July 2014 and subsequently said it sees the potential for 150 or more retail stores in Florida. With these newly acquired stores, Monro will have 44 Tire Choice locations in Florida.
During a conference call with stock analysts, Monro also said it has 10 non-disclosure agreements signed with dealerships ranging in size from five to 40 stores and that it expects to close on at least one of these during its fourth quarter, which ends in late March.
In the first nine months of fiscal 2015, Monro added a net of 72 locationsincluding 14 in the third quarterto end the period with 1,017 stores. The acquired stores represent $84 million in annualized sales, the company said.
For the quarter ended Dec. 27, Monro reported higher operating income and record net earnings on 9.2-percent higher sales. Monro President and CEO John Van Heel attributed the earnings improvements to the firm's strong business model and disciplined acquisition strategy, noting the sales increase was due to additional revenue from businesses acquired during the current fiscal year.
Operating income for Monro's third quarter increased 3.8 percent to $28 million, while net earnings rose 4.3 percent to $16 million, the company said. Sales rose to a record $236.6. million, with sales from new stores accounting for all of the roughly $20 million in additional sales.
For the nine-month period, operating income rose 16.7 percent to 86.3 million while net income jumped 15.7 percent to $49.2 million. Sales increased 7.5 percent to a record $675.4 million, based in part on the addition of 72 locations acquired, representing annualized sales of $84 million.
Mr. Van Heel noted that Monro was encouraged by gains in service business as reflected in positive comparable year-to-date sales in key service categories, including oil changes, brakes, front end/shocks and alignments.
Rochester-based Monro noted that comparable store sales increased approximately 10 percent for alignments and 2 percent for brakes but fell roughly 1 percent for exhaust, 2 percent for front end/shocks and 3 percent for tires and maintenance services.
Based on the nine-month results, Monro anticipates fiscal 2015 comparable store sales to be flat to slightly down, but overall sales to be in the range of $900 million to $905 million. This will reflect the impact of the closing of 29 Monro satellite locations at BJ's Wholesale Club stores.
Dilute earnings per share should be up 11 to 14 percent to $1.86 to $1.95. Earnings will reflect costs related to incremental warehousing and logistics costs related to the increase in the company's tire inventory in advance of the U.S. duties on imported tires, higher healthcare costs, higher due diligence costs in the fourth quarter and slight dilution from the fiscal 2015 acquisitions.
Mr. Van Heel added that Monro's long-term outlook for the industry and company remains positive, although we expect trends will continue to be choppy in the near term.
Nevertheless, he said Monro is well positioned to manage our business in this environment and will continue to pursue attractive acquisition opportunities created by the challenging operating environment.