ROCHESTER, N.Y. (May 19, 2016) — Monro Muffler Brake Inc. reported a 9.8-percent improvement in operating income for the fiscal year ended March 26 on 5.5-percent higher sales.
All of Monro's growth in the past year came from additional revenue attributable to acquisitions, a trend company management acknowledges will continue into fiscal 2017.
Based on “current visibility, business and economic trends, and recently completed acquisitions,” the company anticipates fiscal 2017 sales to be in the range of $980 million to $1.01 billion, up from the $943.7 million in the recently completed fiscal year. However, Monro sees comparable store sales falling 5 to 8 percent in the first quarter in what President and CEO John Van Heel termed the “ongoing choppiness in the market.”
Mr. Van Heel noted Monro has completed its acquisition of 29 McGee Auto Service & Tires retail and commercial stores in Florida — a deal that's expected to generate approximately $50 million in annualized sales — and continues to “aggressively” pursue further acquisitions.
Monro's fiscal 2016 operating income was $120.6 million, resulting in half-point improvement in the operating ratio to 12.8 percent. Net income was up 8.1 percent to $66.8 million.
Fourth quarter operating income rose 12.6 percent to $26.5 million on 4.5-percent better sales of $229 million. Comparable store sales in the quarter increased approximately 5 percent for both alignments and brakes and 2 percent for tires. This was partially offset by decreases of approximately 2 percent for maintenance services, 4 percent for front end/shocks and 8 percent for exhaust.
During the quarter Monro opened six and closed eight company-operated stores. It also announced one franchised Car-X location opening and four closings, resulting in 1,029 company-operated stores and 134 franchised Car-X locations at year-end.
Acquisitions completed in fiscal 2016 represent $36 million in annualized sales, and include the addition of 35 stores in New York, Pennsylvania, Massachusetts and Wisconsin, Monro said.
The McGee Auto acquisition pushes Monro's presence in Florida to 83 stores, representing about $115 million in annualized sales, the company said. The McGee stores boost Monro's presence in the greater Tampa Bay and Fort Myers areas, while also expanding into Daytona and Tallahassee.
The acquisition is expected to be breakeven in fiscal 2017.
Commenting on the results, Mr. Van Heel said, “Our top-line results for the fourth quarter came in lower than initially anticipated due to the impact of a weak consumer and continued unseasonable warm weather in our northern markets.
“However, we delivered positive overall traffic for both the fourth quarter and the fiscal year. We believe this demonstrates that consumers continue to turn to Monro for repairs and maintenance they can no longer defer.
“Despite the ongoing choppiness in the market, our continued focus on margin improvement and diligent cost control, combined with the outperformance of our recent acquisitions, drove 5-percent higher sales, as well as 70 basis points of operating margin expansion and 10-percent net income growth in fiscal 2016 when adjusting for higher due diligence expense this year.”
The board of directors has approved a 2-cent increase in the company's cash dividend for the first quarter of fiscal year 2017 to 17 cents, Monro said, which translates to an annual rate of 68 cents per share and represents an increase of 8 cents per share, or 13 percent, as compared to the dividends paid in fiscal 2016.