ROCHESTER, N.Y. — Monro Inc. completed the acquisition of Rick Johnson Auto & Tire, with 13 retail locations in Florida, in early January, shortly after closing its fiscal third quarter with record sales.
The Rick Johnson Auto acquisition is expected to add about $12 million in annualized sales, representing a sales mix of 65 percent service and 35 percent tires. These acquisitions fill in existing markets, Monro said, and have been converted to TireChoice Auto Service Centers.
The locations are in southern Florida, including Fort Myers, North Fort Myers, Estero, Bonita Springs, Naples, Golden Gate and Cape Coral.
Monro also has signed a definitive agreement to acquire a dealership with 12 retail locations in Louisiana, a new state for the dealership. These locations are expected to add about $15 million in annualized sales, representing a sales mix of 35 percent service and 65 percent tires. Monro said it would not disclose the name of the dealership until the sale is finalized in the fourth quarter of fiscal 2019.
During Monro's fiscal third-quarter, ended Dec. 29, net income surged 77 percent to $20.5 million on an 8.5-percent increase in sales to a record $310.1 million, compared with the year-ago period.
The third-quarter sales increase was driven by revenues from new stores of $19.8 million, including sales from recent acquisitions of $14.3 million, and a comparable store sales increase of 2.2 percent.
In all, the company completed acquisitions of 18 stores during the period. Monro also opened nine company-operated locations and closed one, ending the quarter with 1,186 company-operated stores, 99 franchised locations, eight wholesale locations and three retread facilities.
Operating income rose 4.8 percent to $30.7 million, compared with the year-ago period.
Net income reflected an effective tax rate of 15.3 percent, compared with 50.1 percent in the prior year period, due primarily to a reduction in the federal income tax rate under the Tax Cuts and Jobs Act.
When adjusted for one less selling day in the current-year quarter, due to a shift in the timing of the Christmas holiday from the fourth quarter in fiscal 2018 to the third quarter in fiscal 2019, comparable store sales increased 3.3 percent. Comparable store sales, adjusted for days, increased approximately 12 percent for brakes, 3 percent for tires, 1 percent for alignments, flat for maintenance services and down about 4 percent for front end/shocks.
"We delivered our fourth consecutive quarter of positive comparable store sales growth and achieved a third-quarter record earnings per share, reflecting sustained demand in our tire and brake categories and solid execution across our business," Monro President and CEO Brett Ponton said.
"Our Monro.Forward initiatives continue to gain traction, and I am pleased to report that we successfully implemented our standardized in-store operating procedures and store refresh program at our 31 pilot locations in Rochester, N.Y. We are encouraged by the outperformance of these stores and look forward to expanding this initiative across our store base. Additionally, we continue to capitalize on accretive acquisitions and plan to enter a new state in the fourth quarter with a 12-store acquisition in Louisiana, further expanding and diversifying our geographical footprint."
For the nine-month period, net income jumped 35.5 percent to $62.9 million on an 8.4-percent increase in sales to a record $913.0 million, compared with the year-ago period.
Comparable store sales increased 2.4 percent on a reported basis, and 2.8 percent when adjusted for one less selling day due to the Christmas holiday shift.
In the third quarter, Monro completed the acquisition of Jeff Pohlman Tire & Auto Service Inc. with five stores in Ohio that were converted to Car-X and Mr. Tire locations. These locations are expected to add approximately $5 million in annualized sales, representing a sales mix of 70 percent service and 30 percent tires.
On a combined basis, acquisitions completed and announced to date in fiscal 2019 represent an expected total of $87 million in annualized sales, the company said.
Based on current sales, business and economic trends, and recently announced and completed acquisitions, Monro said it expects fiscal 2019 sales to be in the range of $1.18 billion to $1.21 billion, an increase of 5.1 to 7.7 percent, compared with fiscal 2018 sales.