PEP BOYS - MANNY MOE & JACK Sales for the thirteen weeks ended August 1, 2015 increased by $0.8 million, or 0.1%, to
$526.5 million from $525.8 million for the thirteen weeks ended August 2, 2014. Comparable sales increased 0.3%, consisting of an increase of 0.5% in comparable merchandise sales and a decrease of 0.4% in comparable service revenue. In accordance with GAAP, service revenue is limited to labor sales, while merchandise sales include merchandise sold through both our service center and retail lines of business. Re- categorizing sales into the respective lines of business from which they are generated, comparable service center revenue increased 0.6%, while comparable retail sales remained flat.
EarningsNet earnings for the second quarter of fiscal 2015 were $4.8 million ($0.09 per share) as
compared to net loss of $0.3 million ($0.00 per share) recorded in the second quarter of fiscal 2014. The 2015 results included, on a pre-tax basis, a $1.7 million asset impairment charge, $1.1 million in expenses related to our annual meeting and strategic alternatives review and a $0.3 million severance charge. The 2014 results included, on a pre-tax basis, a $2.7 million asset impairment charge and a $0.8 million severance charge. In addition, the 2014 results included a $0.9 million tax charge related to state valuation allowances.
Six Months SalesSales for the twenty-six weeks ended August 1, 2015 increased by $4.2 million, or 0.4%,
to $1,068.8 million from $1,064.6 million for the twenty-six weeks ended August 2, 2014. Comparable sales increased 0.6%, consisting of a 0.5% comparable service revenue increase and a 0.6% comparable merchandise sales increase. Re-categorizing sales (see above), comparable service center revenue increased 1.2%, while comparable retail sales decreased 0.2%.
EarningsNet earnings for the first six months of 2015 were $16.7 million ($0.31 per share) as
compared to $1.3 million ($0.03 per share) for the first six months of fiscal 2014. The 2015 results included on a pre-tax basis, a $10.0 million sale of a leasehold interest offset by a
$2.5 million asset impairment charge, $2.5 million in expenses related to our annual meeting and strategic alternatives review and a $0.8 million severance charge. The 2014 results included, on a pre-tax basis, a $4.0 million charge for litigation, a $3.8 million asset impairment charge and a $1.1 million severance charge. In addition, the 2014 results included a $0.9 million tax expense related to valuation allowances.
Commentary"We continue to improve our operating profit by increasing gross profit margins and
controlling costs," said CEO Scott Sider. "And while we are pleased to report the fourth consecutive quarter of positive comparable store sales, I believe our biggest opportunity is to grow top-line revenue."
Scott continued, "We are laying the groundwork to create a sales and service culture focused on maximizing the value of each transaction and building customer loyalty. We expect service including tires, commercial and digital sales to lead the way."
About Pep Boys
Since 1921, Pep Boys has been the nation's leading automotive aftermarket chain. With over 7,500 service bays in over
800 locations in 35 states and Puerto Rico, Pep Boys offers name-brand tires; automotive maintenance and repair; parts and expert advice for the Do-It-Yourselfer; commercial auto parts delivery; and fleet maintenance and repair. Customers can find the nearest location by calling 1-800-PEP-BOYS (1-800-737-2697) or by visiting www.pepboys.com.
Certain statements contained herein constitute "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. The words "guidance," "expect," "anticipate," "estimates," "targets," "forecasts" and similar expressions are intended to identify such forward-looking statements. Forward-looking statements include, but are not limited to, management's expectations regarding implementation of its long-term strategic plan and actions taken or contemplated to enhance shareholder value, future financial performance, automotive aftermarket trends, levels of competition, business development activities, future capital expenditures, financing sources and availability and the
effects of regulation and litigation. Although the Company believes that the expectations reflected in such forward- looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be achieved. The Company's actual results may differ materially from the results discussed in the forward-looking statements due to
factors beyond the control of the Company, including the strength of the national and regional economies, retail and commercial consumers' ability to spend, the health of the various sectors of the automotive aftermarket, the weather in geographical regions with a high concentration of the Company's stores, competitive pricing, the location and number of competitors' stores, product and labor costs and the additional factors described in the Company's filings with the
Securities and Exchange Commission. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.
Investors have an opportunity to listen to the Company's quarterly conference calls discussing its results and related matters. The call for the second quarter will be broadcast live on Wednesday, September 9 at 8:30 a.m. EDT over the Internet at the Vcall website, located at www.investorcalendar.com. To listen to the call live, please go to the website at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available shortly after the call. Supplemental financial information will be available the morning of Wednesday, September 9 on Pep Boys' website at www.pepboys.com. In addition, Pep Boys' investor presentation, also available at www.pepboys.com, will be updated to reflect the Company's year-to-date results.
###
Investor Contact: Joseph Buscaglia (215) 430-9975Email: investorrelations@pepboys.com
Pep Boys Financial Highlights
Thirteen weeks ended | August 1, 2015 | August 2, 2014 |
Total revenues | $ 526,546,000 | $ 525,773,000 |
Net earnings (loss) | $ 4,810,000 | $ (273,000) |
Basic earnings per share: | ||
Average shares | 54,239,000 | 53,528,000 |
Basic earnings per share: | $ 0.09 | $ - |
Diluted earnings per share: Average shares | 54,431,000 | 53,528,000 |
Diluted earnings per share: | $ 0.09 | $ - |
Twenty-six weeks ended August 1, 2015 August 2, 2014
Total revenues | $ 1,068,807,000 | $ 1,064,595,000 |
Net earnings | $ 16,704,000 | $ 1,338,000 |
Basic earnings per share: Average shares | 54,167,000 | 53,499,000 |
Basic earnings per share: | $ 0.31 | $ 0.03 |
Diluted earnings per share: Average shares | 54,308,000 | 54,025,000 |
Diluted earnings per share: | $ 0.31 | $ 0.03 |
CONSOLIDATED BALANCE SHEETS
(dollar amounts in thousands)
Assets
Current assets:
August 1, 2015 January 31, 2015 August 2, 2014
Cash and cash equivalents
Accounts receivable, less allowance for
$ 62,408 $
38,044 $
38,423
uncollectible accounts of $1,719, $1,604 and $2,102 29,762 31,013 27,908
Merchandise inventories 636,692 656,957 659,547
Prepaid expenses 20,831 27,952 21,314
Other current assets 50,866 55,986 56,172
Assets held for disposal 2,466 2,648 2,647
Total current assets 803,025 812,600 806,011
Property and equipment, net of accumulated depreciation
of $1,276,588, $1,251,797 and $1,254,126 587,805 604,380 623,285
Goodwill 32,869 32,869 56,794
Deferred income taxes 49,136 56,571 56,406
Other long-term assets 34,345 35,321 38,236
Total assets
$ 1,507,180
$ 1,541,741 $
1,580,732
Liabilities and stockholders' equity
Current liabilities: Accounts payable
$ 216,826 $
227,132 $
219,423
Trade payable program liability 134,356 140,904 137,214
Accrued expenses 210,689 226,176 224,399
Deferred income taxes 65,542 61,216 70,785
Current maturities of long-term debt 2,000 2,000 2,000
Total current liabilities 629,413 657,428 653,821
Long-term debt less current maturities 193,000 211,000 220,000
Other long-term liabilities 43,154 45,567 46,899
Deferred gain from asset sales 97,125 103,596 108,521
Commitments and contingencies
Stockholders' equity:
Common stock, par value $1 per share:
Authorized 500,000,000 shares; issued 68,557,046 shares 68,557 68,557 68,557
Additional paid-in capital 296,750 298,299 297,924
Retained earnings 408,565 397,890 432,476
Accumulated other comprehensive income (294) (391) 213
Treasury stock, at cost - 14,576,481 shares; 14,988,205 shares and
15,265,028 shares (229,090) (240,205) (247,679) Total stockholders' equity 544,488 524,150 551,491
Total liabilities and stockholders' equity
$ 1,507,180
$ 1,541,741 $
1,580,732
Supplemental balance sheet information:
Working capital | $ 173,612 | $ 155,172 | $ 152,190 |
Current ratio | 1.28 | 1.24 | 1.23 |
Accounts payable to inventory ratio | 55.2% | 56.0% | 54.1% |
Total debt as a percent of total capitalization | 26.4% | 28.9% | 28.7% |
Debt as a percent of total capitalization, net | 19.6% | 25.0% | 25.0% |
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollar amounts in thousands, except per share amounts)
Thirteen weeks ended
August 1, 2015 August 2, 2014
Twenty-six weeks ended
August 1, 2015 August 2, 2014
Diluted earnings per share:
Earnings from continuing operations before discontinued operations
% % % %
Amount Sales Amount Sales Amount Sales Amount Sales
$ 0.09 $ - $ 0.31 $ 0.03
(1)
Discontinued operations, net of tax - - - - Diluted earnings per share $ 0.09 $ - $ 0.31 $ 0.03
Other comprehensive (loss) income:
Derivative financial instruments adjustment, net of tax | (49) | (128) | 97 | (166) |
Other comprehensive (loss) income | (49) | (128) | 97 | (166) |
Comprehensive income (loss) | $ 4,761 | $ (401) | $ 16,801 | $ 1,172 |
(1) As a percentage of earnings from continuing operations before income taxes and discontinued operations.
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS
(dollar amounts in thousands)
Twenty-six weeks ended August 1, 2015 August 2, 2014
Cash flows from operating activities: Net earnings
Adjustments to reconcile net earnings to net cash provided by continuing operations:
$ 16,704 $
1,338
Net (earnings) loss from discontinued operations (108) 125
Depreciation 33,195 36,346
Amortization of deferred gain from asset sales (6,471) (6,302) Amortization of deferred financing costs 1,252 1,311
Stock compensation expense 2,267 1,799
Deferred income taxes 10,261 2,727
Net (gain) loss from dispositions of assets (485) 410
Loss from asset impairment 2,476 3,839
Other (554) (79) Changes in assets and liabilities, net of the effects of acquisitions:
Decrease in accounts receivable, prepaid expenses and other 14,675 12,572
Decrease in merchandise inventories 20,265 12,807
Decrease in accounts payable (9,022) (34,591) Decrease in accrued expenses (15,147) (15,167) Decrease in other long-term liabilities (1,839) (1,277)
Net cash provided by continuing operations 67,469 15,858
Net cash used in discontinued operations (194) (300) Net cash provided by operating activities 67,275 15,558
Cash flows from investing activities:
Net cas
Cash flows from financing activities:
Borrowings under line of credit agreements 112,193 339,179
Payments under line of credit agreements (129,193) (317,679) Borrowings on trade payable program liability 80,890 94,353
Payments on trade payable program liability (87,438) (86,940) Debt payments (1,000) (1,000) Proceeds from stock issuance 1,673 496
Net cash (used in) provided by financing activities (22,875) 28,409
Net increase in cash and cash equivalents 24,364 4,992
Cash and cash equivalents at beginning of period 38,044 33,431
Cash and cash equivalents at end of period
$ 62,408 $
38,423
Supplemental cash flow information: A Cash paid for income taxes
Cash received from income tax refunds
Cash paid for interest
Accrued purchases of property and equipment
$ 940
$ -
$ 5,257
$ 2,110 $
$660
$244
$5,584
3,537
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
COMPUTATION OF BASIC AND DILUTED EARNINGS PER SHARE (in thousands, except per share data)
Thirteen weeks ended Twenty-six weeks ended
August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014
(a) Earnings (loss) from continuing operations before discontinued operations
$ 4,736 $
(177) $
16,596 $
1,463
Earnings (loss) from discontinued operations, net of tax 74 (96) 108 (125)
Net earnings (loss)
$ 4,810 $
(273) $
16,704 $
1,338
(b) Basic average number of common shares outstanding during period 54,239 53,528 54,167 53,499
Common shares assumed issued upon exercise of dilutive stock options,
net of assumed repurchase, at the average market price 192 - 141 526
(c) Diluted average number of common shares assumed outstanding during period 54,431 53,528 54,308 54,025
Basic earnings per share:
Earnings from continuing operations before discontinued operations (a) / (b) $
0.09 $
- $ 0.31 $
0.03
Discontinued operations, net of tax - - - -
Basic earnings per share
$ 0.09 $
- $ 0.31 $
0.03
Diluted earnings per share:
Earnings from continuing operations before discontinued operations (a) / (c) $
0.09 $
- $ 0.31 $
0.03
Discontinued operations, net of tax - - - -
Diluted earnings per share
$ 0.09 $
- $ 0.31 $
0.03
THE PEP BOYS - MANNY, MOE & JACK AND SUBSIDIARIES
ADDITIONAL INFORMATION (dollar amounts in thousands)
Thirteen weeks ended
Twenty-six weeks ended
August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014
Capital expenditures | $ 9,835 | $ 24,445 | $ 22,102 | $ 39,010 |
Depreciation | $ 16,301 | $ 18,026 | $ 33,195 | $ 36,346 |
Non-operating income: | ||||
Net rental revenue | $ 277 | $ 284 | $ 581 | $ 683 |
Investment income | 52 | 46 | 112 | 93 |
Other income | 5 | (14) | 13 | (18) |
Total | $ 334 | $ 316 | $ 706 | $ 758 |
Comparable sales percentages:
Service -0.4 % 5.4 % 0.5 % 4.3 % Merchandise 0.5 % -3.8 % 0.6 % -3.3 % Total 0.3 % -1.8 % 0.6 % -1.6 %
Total square feet of retail space (including service centers) | 12,885,000 | 12,807,000 |
Store count Supercenter | 562 | 565 |
Service & Tire Center | 234 | 228 |
Retail Only | 5 | 6 |
Total 801 799
Sales and gross profit by line of business (A):
Service center revenue | $ 290,806 | $ 288,302 | $ 591,689 | 582,215 |
Retail sales | 235,740 | 237,471 | 477,118 | 482,380 |
Total revenues | $ 526,546 | $ 525,773 | $ 1,068,807 | $ 1,064,595 |
Gross profit from service center revenue, prior to impairment charge | $ 64,316 | $ 62,063 | $ 131,966 | 126,798 |
Service center revenue impairment charge | (605) | (1,379) | (1,356) | (2,335) |
Gross profit from service center revenue | $ 63,711 | $ 60,684 | $ 130,610 | $ 124,463 |
Gross profit from retail sales, prior to impairment charge | $ 64,934 | $ 64,901 | $ 131,847 | 134,464 |
Retail sales impairment charge | (1,073) | (1,288) | (1,118) | (1,503) |
Gross profit from retail sales | $ 63,861 | $ 63,613 | $ 130,729 | $ 132,961 |
Total gross profit $ 127,572
$ 124,297
$ 261,339
$ 257,424
Comparable sales percentages by line of business (A):
Service center revenue | 0.6 % | -0.2 % | 1.2 % | -0.6 % |
Retail sales | 0.0 % | -3.6 % | -0.2 % | -2.7 % |
Total revenues | 0.3 % | -1.8 % | 0.6 % | -1.6 % |
Gross profit percentage by line of business (A):
Gross profit percentage from service center revenue, prior to impairment charge | 22.1 % | 21.5 % | 22.3 % | 21.8 % |
Impairment charge | (0.2) | (0.5) | (0.2) | (0.4) |
Gross profit percentage from service center revenue | 21.9 % | 21.0 % | 22.1 % | 21.4 % |
Gross profit percentage from retail sales, prior to impairment charge | 27.5 % | 27.3 % | 27.6 % | 27.9 % |
Impairment charge | (0.5) | (0.5) | (0.2) | (0.3) |
Gross profit percentage from retail sales | 27.1 % | 26.8 % | 27.4 % | 27.6 % |
Total gross profit percentage 24.2 % 23.6 % 24.5 % 24.2 % (A) Retail sales include DIY and commercial sales. Service center revenue includes revenue from labor and installed parts and tires.
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