Research Desk Line-up: Allison Transmission Post Earnings Coverage
LONDON, UK / ACCESSWIRE / November 10, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Monro, Inc. (NASDAQ: MNRO), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=MNRO, following the Company's release of its second quarter fiscal 2018 operating results on October 24, 2017. The automotive repair chain topped earnings estimates and also revised its guidance for fiscal 2018. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Monro's sales for Q2 FY18 jumped 13.0% to $278.0 million compared to $245.9 million for Q2 FY17. The Company's revenue numbers fell short of analysts' estimates of $278.3 million.
Monro noted that the total sales increase for the reported quarter of $32.1 million was attributed to sales from new stores of $34.4 million, including sales from recent acquisitions of $29.1 million, partially offset by a comparable store sales decrease of 0.4%. When adjusting for lost selling days as a result of Hurricane Irma, the Company estimates comparable store sales in Q2 FY18 would have been flat, and sales from new stores would have been higher by approximately $0.5 million.
During Q2 FY18, Monro's gross margin decreased 190 basis points to 38.8% from 40.7% in Q2 FY17, primarily due to the impact of sales mix from recent acquisitions. On a comparable store basis, gross margin increased approximately 40 basis points compared to the prior year's same period. Monro's total operating expenses increased by $6.0 million to $74.1 million, or 26.7% of sales, versus $68.1 million, or 27.7% of sales, in the prior year's comparable period. The y-o-y dollar increase represented expenses from 39 net new stores and $0.5 million in management transition costs.
For Q2 FY18, Monro reported operating income of $33.8 million, or 12.2% of sales, compared to $31.9 million, or 13.0% of sales, in Q2 FY17. The Company's interest expense for the reported quarter was $6.1 million compared to $4.5 million for the prior year's corresponding quarter.
Monro's net income was $17.3 million for Q2 FY18 compared to $17.5 million in Q2 FY17. The Company's diluted earnings per share for the reported quarter were $0.52, or $0.55 when excluding the estimated net impact from Hurricane Irma of $0.02 per share and $0.01 per share in management transition costs, compared to diluted earnings per share of $0.53 in Q2 FY18. Monro's earnings beat Wall Street's estimates of $0.54 per share.
During Q2 FY18, Monro opened 23 and closed 6 Company-operated locations, ending the quarter with 1,136 Company-operated stores and 107 franchised locations.
During the reported quarter, Monro opened 3 Greenfield locations, bringing its total Greenfield store openings to 10 year-to-date. The Company is expecting to open another 7 locations in Q3 FY18 with 24 total Greenfield store openings expected for fiscal 2018.
In Q2 FY18, Monro completed the previously announced acquisitions of 20 stores, including eight from an existing Car-X franchisee. The acquisitions are expected to add approximately $13 million in annualized sale, and are expected to be breakeven to diluted earnings per share in FY18.
During H1 FY18, Monro generated approximately $75 million of cash flow from operating activities and reduced its debt under revolver by approximately $29 million. At the end of the reported quarter, the Company's debt consisted of $153 million of outstanding revolver debt and $239 million of capital leases and financing obligations. As a result of the fiscal 2018 pay down, Monro's debt-to-capital ratio, including capital leases, decreased slightly to 39% at September 2017 from 41% at March 2017. The Company spent approximately $18.9 million on CapEx and $14.5 million on acquisitions, including 1 to 4 store acquisitions completed as part of its Greenfield expansion strategy.
For FY18, Monro is forecasting sales to be in the range of $1.115 billion to $1.145 billion, an increase of 9% to 12% compared to FY17 sales. The Company revised guidance for FY18 comparable store sales to a range of down 1.0% to an increase of 1.0% on a 52-week basis compared to prior guidance of an increase of 1.5% to 2.5% on a 52-week basis.
Monro also updated its FY18 diluted earnings per share guidance to be in the range of $1.95 to $2.10 compared to previous guidance of $2.05 to $2.20. At the midpoint of the range, the revised guidance represents a 9.5% increase in diluted earnings per share compared to $1.85 in FY17.
At the closing bell, on Thursday, November 09, 2017, Monro's stock marginally fell 0.05%, ending the trading session at $48.25. A total volume of 219.86 thousand shares have exchanged hands. The Company's stock price advanced 3.76% in the last three months. The stock is trading at a PE ratio of 26.00 and has a dividend yield of 1.49%. The stock currently has a market cap of $1.60 billion.
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