Monro Muffler Brake announced financial results for its fourth quarter and fiscal year ended March 28, 2015. Sales for Q4 increased 7.8% to a record $219.1 million as compared to $203.2 million for Q4 fiscal 2014.
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The sales increase for the fourth quarter was due primarily to an increase in sales from newly acquired stores, offset by a comparable store sales decrease of 2.6%. Comparable store sales increased approximately 5% for alignments, and decreased approximately 1% for tires, 3% for brakes, 4% for maintenance services, and 5% for exhaust and front end/shocks.
Gross margin increased to 38.2% in the fourth quarter from 37.9% in the prior year period, primarily due to effective management of labor costs. Total operating expenses were $60.2 million, or 27.5% of sales, as compared to $55.6 million, or 27.4% of sales, for the same period of the prior year.
The slight increase in operating expenses as a percent of sales is primarily due to higher due diligence costs related to potential transactions, partially offset by focused cost control.
Operating income for the quarter increased 9.8% to $23.5 million from $21.4 million in the fourth quarter of fiscal 2014. Interest expense was $3.5 million as compared to $2.4 million in the fourth quarter of fiscal 2014. Net income for the fourth quarter increased 5.4% to a record $12.6 million from $11.9 million in the prior year period.
Diluted earnings per share for the quarter increased 5.6% to $.38, at the midpoint of the Company’s estimated range of $.36 to $.40. This compares to diluted earnings per share of $.36 in the fourth quarter of fiscal 2014.
Net income for the fourth quarter reflects an effective tax rate of 37.5% as compared to 37.6% in the prior year period. Diluted earnings per share for the fourth quarter of 2015 includes the negative impact of $.01 related to higher due diligence costs.
The Company opened 10 and closed 28 locations during the fourth quarter, ending the quarter with 999 stores. Twenty-six of the locations closed during the fourth quarter were previously announced closures of Monro stores in BJ’s Wholesale Club locations.
Fiscal Year Results
Net sales for fiscal 2015 increased 7.6% to $894.5 million from $831.4 million for fiscal 2014. The total sales increase of $63.1 million for the fiscal year was due to an increase in sales from recently acquired stores, partially offset by a 1.4% decrease in comparable store sales.
Comparable store sales increased approximately 7% for alignments and 3% for brakes; were slightly positive for front end/shocks; and decreased approximately 2% for maintenance services and 3% for tires and exhaust. Gross margin improved 100 basis points to 39.5% for fiscal 2015 as compared to 38.5% in the prior year, largely due to reduced material costs, primarily tires, as well as labor costs.
Total operating expenses were $243.6 million, or 27.2% of sales, for fiscal 2015, as compared to $224.6 million, or 27.0% of sales, for the prior fiscal year. The year-over-year increase in operating expenses, as a percentage of sales, is due primarily to higher due diligence costs.
Operating income for the year increased 15.1% to $109.8 million from $95.3 million in fiscal 2014. Interest expense was $11.3 million in fiscal 2015 as compared to $9.5 million in fiscal 2014.
Net income for fiscal 2015 increased 13.5% to $61.8 million, or $1.88 per diluted share. This compares to net income of $54.5 million, or $1.67 per diluted share, for fiscal 2014 ■