false 0000876427 0000876427 2024-10-30 2024-10-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): October 30, 2024

 

 

MONRO, INC.

(Exact name of registrant as specified in its charter)

 

 

 

New York   0-19357   16-0838627

(State

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

295 Woodcliff Drive, Suite 202, Fairport, NY   14450
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code (585) 647-6400

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, par value $.01 per share   MNRO   The Nasdaq Stock Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On October 30, 2024, Monro, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended September 28, 2024, as well as results for the first half of fiscal 2025.

A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under such section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01

Financial Statements and Exhibits

 

Exhibit
No.
   Description
99.1    Press release dated October 30, 2024
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      MONRO, INC.
      (Registrant)
October 30, 2024     By:  

/s/ Maureen E. Mulholland

      Maureen E. Mulholland,
      Executive Vice President – Chief Legal Officer and Secretary

Exhibit 99.1

 

LOGO   
  

 

295 Woodcliff Drive, Suite 202, Fairport, NY 14450

 

CONTACT:   

Investors and Media: Felix Veksler

Senior Director, Investor Relations

ir@monro.com

FOR IMMEDIATE RELEASE

MONRO, INC. ANNOUNCES SECOND QUARTER FISCAL 2025 FINANCIAL RESULTS

 

   

Drove 410 Basis Point Sequential Improvement in Year-over-Year Comparable Store Sales Percentage Change from the First Quarter of Fiscal 2025

 

   

Generated Cash from Operating Activities of $88 Million for the First Half of Fiscal 2025

 

   

Distributed Second Quarter Fiscal 2025 Cash Dividend of $.28 per Share

FAIRPORT, N.Y. – October 30, 2024 – Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive undercar repair and tire services, today announced financial results for its second quarter ended September 28, 2024.

Second Quarter Results

Sales for the second quarter of the fiscal year ending March 29, 2025 (“fiscal 2025”) decreased 6.4% to $301.4 million, as compared to $322.1 million for the second quarter of the fiscal year ended March 30, 2024 (“fiscal 2024”). Comparable store sales decreased 5.8%, as compared to a decrease in comparable store sales of 2.3% in the prior year period.

Comparable store sales increased 20% for batteries and were flat for alignments compared to the prior year period. Comparable store sales decreased 4% for tires, 5% for front end/shocks, 7% for maintenance services, and 12% for brakes compared to the prior year period. Please refer to the “Comparable Store Sales” section below for a discussion of how the Company defines comparable store sales.

Gross margin decreased 40 basis points compared to the prior year period, primarily resulting from higher material costs due to mix within tires and higher fixed occupancy costs as a percentage of sales, partially offset by lower technician labor costs as a percentage of sales.


Total operating expenses for the second quarter of fiscal 2025 were $93.2 million, or 30.9% of sales, as compared to $92.6 million, or 28.8% of sales in the prior year period. The increase as a percentage of sales was principally due to lower year-over-year comparable store sales and an increase in advertising spend.

Operating income for the second quarter of fiscal 2025 was $13.2 million, or 4.4% of sales, as compared to $22.4 million, or 6.9% of sales in the prior year period.

Interest expense was $5.1 million for the second quarter of fiscal 2025, as compared to $4.8 million for the second quarter of fiscal 2024, principally due to an increase in the Company’s weighted average interest rate.

Income tax expense in the second quarter of fiscal 2025 was $2.5 million, or an effective tax rate of 30.9%, compared to $4.7 million, or an effective tax rate of 26.8% in the prior year period. The year-over-year difference in effective tax rate is primarily due to state taxes and discrete tax impacts related to share-based awards.

Net income for the second quarter of fiscal 2025 was $5.6 million, as compared to $12.9 million in the same period of the prior year. Diluted earnings per share for the second quarter of fiscal 2025 was $.18. This compares to $.40 in the second quarter of fiscal 2024. Adjusted diluted earnings per share, a non-GAAP measure, for the second quarter of fiscal 2025 was $.17. This compares to adjusted diluted earnings per share of $.41 in the second quarter of fiscal 2024. Please refer to the reconciliation of adjusted diluted earnings per share in the table below for details regarding excluded items in the second quarters of fiscal 2025 and 2024. Please refer to the “Non-GAAP Financial Measures” section below for a discussion of this non-GAAP measure.

During the second quarter of fiscal 2025, the Company closed 12 stores. Monro ended the quarter with 1,272 company-operated stores and 50 franchised locations.


“We drove sequential improvement in our year-over-year comparable store sales percentage change from the first quarter as well as a significant acceleration in our comp trends as the second quarter progressed. Importantly, our tire dollar and unit sales improved sequentially from the first quarter and our tire category exited the quarter with year-over-year growth in units in the month of September. Our ConfiDrive digital courtesy inspection process and our oil change offer allowed us to drive sequential improvement from the first quarter in our service category sales as well as year-over-year growth in both battery units and sales dollars in the quarter. Additionally, we improved our attachment rate for alignments, which resulted in year-over-year growth in both alignment units and sales dollars in the month of September. Encouragingly, our sales momentum from the second quarter has continued into fiscal October with our preliminary comparable store sales down only 1%, supported by improving trends in tires and all service categories, including brakes. Excluding the impact of Hurricanes Helene and Milton, our preliminary comparable store sales would have been approximately flat compared to the prior year”, said Mike Broderick, President and Chief Executive Officer.

Broderick continued, “We expect to leverage our sales momentum in October as well as continued traction from our initiatives to achieve our third quarter objectives.”

First Six Months Results

For the current six-month period:

 

   

Sales decreased 8.4% to $594.6 million from $649.1 million in the same period of the prior year. Comparable store sales decreased 7.8%, compared to a decrease of 0.9% in the prior year period.

 

   

Gross margin for the six-month period was 36.3%, compared to 35.3% in the prior year period.

 

   

Operating income was 4.4% of sales, compared to 6.1% in the prior year period.

 

   

Net income for the first six months of fiscal 2025 was $11.5 million, or $.37 per diluted share, as compared to $21.7 million, or $.68 per diluted share in the prior year period.

 

   

Adjusted diluted earnings per share, a non-GAAP measure, in the first six months of fiscal 2025 was $.39. This compares to adjusted diluted earnings per share of $.72 in the first six months of fiscal 2024. Please refer to the reconciliation of adjusted diluted earnings per share in the table below for details regarding excluded costs in the first six months of fiscal 2025 and 2024. Please refer to the “Non-GAAP Financial Measures” section below for a discussion of this non-GAAP measure.


Strong Financial Position

During the first half of fiscal 2025, the Company generated operating cash flow of $88 million. As of September 28, 2024, the Company had total liquidity of $529 million.

Second Quarter Fiscal 2025 Cash Dividend

On September 10, 2024, the Company paid a cash dividend for the second quarter of fiscal 2025 of $.28 per share.

Company Expectations

Monro is not providing fiscal 2025 financial guidance at this time but will provide perspective on its expectations for the full year of fiscal 2025 during its earnings conference call.

Earnings Conference Call and Webcast

The Company will host a conference call and audio webcast on Wednesday, October 30, 2024 at 8:30 a.m. Eastern Time. The conference call may be accessed by dialing 1-833-470-1428 and using the required access code of 881759. A replay will be available approximately two hours after the recording through Wednesday, November 13, 2024 and can be accessed by dialing 1-866-813-9403 and using the required access code of 278261. A replay can also be accessed via audio webcast at the Investors section of the Company’s website, located at corporate.monro.com/investors.

About Monro, Inc.

Monro, Inc. (NASDAQ: MNRO) is one of the nation’s leading automotive service and tire providers, delivering best-in-class auto care to communities across the country, from oil changes, tires and parts installation, to the most complex vehicle repairs. With a growing market share and a focus on sustainable growth, the Company generated almost $1.3 billion in sales in fiscal 2024 and continues to expand its national presence through strategic acquisitions and the opening of newly constructed stores. Across approximately 1,300 stores and 9,000 service bays nationwide, Monro brings customers the professionalism and high-quality service they expect from a national retailer, with the convenience and trust of a neighborhood garage. Monro’s highly trained teammates and certified technicians bring together hands-on experience and state-of-the-art technology to diagnose and address automotive needs every day to get customers back on the road safely. For more information, please visit corporate.monro.com.


Cautionary Note Regarding Forward-Looking Statements

The statements contained in this press release that are not historical facts may contain statements of future expectations and other forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by such words and phrases as “expect,” “estimate,” “may,” “anticipate,” “believe,” “could,” “focus,” “will,” and other similar words or phrases. Forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those expressed. These factors include, but are not necessarily limited to product demand, advances in automotive technologies including adoption of electric vehicle technology, our dependence on third parties for certain inventory, dependence on and competition within the primary markets in which the Company’s stores are located, the effect of general business or economic and geopolitical conditions on the Company’s business, including consumer spending levels, inflation, and unemployment, seasonality, our ability to service our debt obligations and comply with the terms of our credit agreement, changes in the U.S. trade environment, including the impact of tariffs on products imported from China, the impact of competitive services and pricing, product development, parts supply restraints or difficulties, the impact of weather trends and natural disasters, industry regulation, risks relating to leverage and debt service (including sensitivity to fluctuations in interest rates), continued availability of capital resources and financing, risks relating to protection of customer and employee personal data, risks relating to litigation, risks relating to integration of acquired businesses and other factors set forth elsewhere herein and in the Company’s Securities and Exchange Commission filings, including the Company’s annual report on Form 10-K for the fiscal year ended March 30, 2024. Except as required by law, the Company does not undertake and specifically disclaims any obligation to update any forward-looking statement to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Non-GAAP Financial Measures

In addition to reporting diluted earnings per share (“EPS”), which is a generally accepted accounting principles (“GAAP”) measure, this press release includes adjusted diluted EPS, which is a non-GAAP financial measure. The Company has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS. Management views this non-GAAP financial measure as a way to better assess comparability between periods because management believes the non-GAAP financial measure shows the Company’s core business operations while excluding certain non-recurring items such as costs related to shareholder matters from the Company’s equity capital structure recapitalization, transition costs related to the Company’s back-office optimization, store impairment charges, net gain on sale of the Company’s corporate headquarters, and items related to store closings.


This non-GAAP financial measure is not intended to represent, and should not be considered more meaningful than, or as an alternative to, its most directly comparable GAAP measure. This non-GAAP financial measure may be different from similarly titled non-GAAP financial measures used by other companies.

Comparable Store Sales

The Company defines comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. The Company believes this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company’s stores and believes the metric is useful to investors because the Company’s overall results are dependent upon the results of its stores.

Source: Monro, Inc.

MNRO-Fin

###


MONRO, INC.

Financial Highlights

(Unaudited)

(Dollars and share counts in thousands)

 

     Quarter Ended Fiscal
September
       
     2024     2023     % Change  

Sales

   $ 301,391     $ 322,091       (6.4 )% 

Cost of sales, including occupancy costs

     195,014       207,118       (5.8 )% 
  

 

 

   

 

 

   

Gross profit

     106,377       114,973       (7.5 )% 

Operating, selling, general and administrative expenses

     93,175       92,618       0.6
  

 

 

   

 

 

   

Operating income

     13,202       22,355       (40.9 )% 

Interest expense, net

     5,136       4,801       7.0

Other income, net

     (110     (34     223.5
  

 

 

   

 

 

   

Income before income taxes

     8,176       17,588       (53.5 )% 

Provision for income taxes

     2,529       4,716       (46.4 )% 
  

 

 

   

 

 

   

Net income

   $ 5,647     $ 12,872       (56.1 )% 
  

 

 

   

 

 

   

Diluted earnings per share

   $ 0.18     $ 0.40       (55.0 )% 
  

 

 

   

 

 

   

Weighted average number of diluted shares outstanding

     31,224       32,272    

Number of stores open (at end of quarter)

     1,272       1,298    


MONRO, INC.

Financial Highlights

(Unaudited)

(Dollars and share counts in thousands)

 

     Six Months Ended
Fiscal September
       
     2024     2023     % Change  

Sales

   $ 594,573     $ 649,059       (8.4 )% 

Cost of sales, including occupancy costs

     379,010       419,691       (9.7 )% 
  

 

 

   

 

 

   

Gross profit

     215,563       229,368       (6.0 )% 

Operating, selling, general and administrative expenses

     189,114       189,664       (0.3 )% 
  

 

 

   

 

 

   

Operating income

     26,449       39,704       (33.4 )% 

Interest expense, net

     10,279       10,009       2.7

Other income, net

     (201     (92     118.5
  

 

 

   

 

 

   

Income before income taxes

     16,371       29,787       (45.0 )% 

Provision for income taxes

     4,861       8,086       (39.9 )% 
  

 

 

   

 

 

   

Net income

   $ 11,510     $ 21,701       (47.0 )% 
  

 

 

   

 

 

   

Diluted earnings per share

   $ 0.37     $ 0.68       (45.6 )% 
  

 

 

   

 

 

   

Weighted average number of diluted shares outstanding

     31,201       32,112    


MONRO, INC.

Financial Highlights

(Unaudited)

(Dollars in thousands)

 

     September 28,
2024
     March 30,
2024
 

Assets

     

Cash and equivalents

   $ 20,859      $ 6,561  

Inventory

     161,983        154,085  

Other current assets

     83,996        92,643  
  

 

 

    

 

 

 

Total current assets

     266,838        253,289  

Property and equipment, net

     272,523        280,154  

Finance lease and financing obligation assets, net

     178,789        180,803  

Operating lease assets, net

     195,300        202,718  

Other non-current assets

     767,850        775,850  
  

 

 

    

 

 

 

Total assets

   $ 1,681,300      $ 1,692,814  
  

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

     

Current liabilities

   $ 501,566      $ 455,156  

Long-term debt

     62,000        102,000  

Long-term finance leases and financing obligations

     241,203        249,484  

Long-term operating lease liabilities

     173,734        181,852  

Other long-term liabilities

     50,858        47,547  
  

 

 

    

 

 

 

Total liabilities

     1,029,361        1,036,039  

Total shareholders’ equity

     651,939        656,775  
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 1,681,300      $ 1,692,814  
  

 

 

    

 

 

 


MONRO, INC.

Reconciliation of Adjusted Diluted Earnings Per Share (EPS)

(Unaudited)

 

     Quarter Ended
Fiscal
 
     September  
     2024      2023  

Diluted EPS

   $ 0.18      $ 0.40  

Store impairment charges

     0.02        —   

Transition costs related to back-office optimization

     0.01        0.00  

Store closing costs

     0.01        (0.00

Costs related to shareholder matters

     —         0.01  

Net gain on sale of corporate headquarters (a)

     (0.06      0.00  
  

 

 

    

 

 

 

Adjusted Diluted EPS

   $ 0.17      $ 0.41  
  

 

 

    

 

 

 

Note: Amounts may not foot due to rounding.

Supplemental Reconciliation of Adjusted Net Income

(Unaudited)

(Dollars in Thousands)

 

     Quarter Ended Fiscal
September
 
     2024      2023  

Net Income

   $ 5,647      $ 12,872  

Store impairment charges

     1,031        —   

Transition costs related to back-office optimization

     553        97  

Store closing costs

     531        (43

Costs related to shareholder matters

     —         439  

Net gain on sale of corporate headquarters (a)

     (2,764      60  

Provision for income taxes on pre-tax adjustments (b)

     177        (143
  

 

 

    

 

 

 

Adjusted Net Income

   $ 5,175      $ 13,282  
  

 

 

    

 

 

 


MONRO, INC.

Reconciliation of Adjusted Diluted Earnings Per Share (EPS)

(Unaudited)

 

     Six Months Ended  
     Fiscal September  
     2024      2023  

Diluted EPS

   $ 0.37      $ 0.68  

Store impairment charges

     0.04        —   

Transition costs related to back-office optimization

     0.03        0.01  

Store closing costs

     0.02        0.00  

Costs related to shareholder matters

     —         0.03  

Acquisition due diligence and integration costs

     —         0.00  

Net gain on sale of corporate headquarters (a)

     (0.06      0.00  
  

 

 

    

 

 

 

Adjusted Diluted EPS

   $ 0.39      $ 0.72  
  

 

 

    

 

 

 

Note: Amounts may not foot due to rounding.

Supplemental Reconciliation of Adjusted Net Income

(Unaudited)

(Dollars in Thousands)

 

     Six Months Ended
Fiscal September
 
     2024      2023  

Net Income

   $ 11,510      $ 21,701  

Store impairment charges

     1,551        —   

Transition costs related to back-office optimization

     1,150        641  

Store closing costs

     712        4  

Costs related to shareholder matters

     —         1,275  

Acquisition due diligence and integration costs

     —         5  

Net gain on sale of corporate headquarters (a)

     (2,639      60  

Provision for income taxes on pre-tax adjustments (b)

     (210      (502
  

 

 

    

 

 

 

Adjusted Net Income

   $ 12,074      $ 23,184  
  

 

 

    

 

 

 

 

a)

Amount includes gain on sale of corporate headquarters building, net of closing and relocation costs.

b)

The Company determined the Provision for income taxes on pre-tax adjustments by calculating the Company’s estimated annual effective tax rate on pre-tax income before giving effect to any discrete tax items and applying it to the pre-tax adjustments.

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Document and Entity Information
Oct. 30, 2024
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Entity Central Index Key 0000876427
Document Type 8-K
Document Period End Date Oct. 30, 2024
Entity Registrant Name MONRO, INC.
Entity Incorporation State Country Code NY
Entity File Number 0-19357
Entity Tax Identification Number 16-0838627
Entity Address, Address Line One 295 Woodcliff Drive
Entity Address, Address Line Two Suite 202
Entity Address, City or Town Fairport
Entity Address, State or Province NY
Entity Address, Postal Zip Code 14450
City Area Code (585)
Local Phone Number 647-6400
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Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, par value $.01 per share
Trading Symbol MNRO
Security Exchange Name NASDAQ
Entity Emerging Growth Company false

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