- Drove 500 Basis Point Sequential Improvement in Year-over-Year
Comparable Store Sales Percentage Change from the Second Quarter of
Fiscal 20251
- Returned to Year-over-Year Comparable Store Sales Growth in
Fiscal December1
- Generated Cash from Operating Activities of $103 Million for
the First Nine Months of Fiscal 2025
- Distributed Third Quarter Fiscal 2025 Cash Dividend of $.28 per
Share
Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive
undercar repair and tire services, today announced financial
results for its third quarter ended December 28, 2024.
Third Quarter Results
Sales for the third quarter of the fiscal year ending March 29,
2025 (“fiscal 2025”) decreased 3.7% to $305.8 million, as compared
to $317.7 million for the third quarter of the fiscal year ended
March 30, 2024 (“fiscal 2024”). Comparable store sales decreased
0.8%1, a 500 basis point improvement from a decrease of 5.8% in the
second quarter of fiscal 2025. The third quarter of fiscal 2024 had
90 selling days compared to 89 selling days in the third quarter of
fiscal 2025. Comparable store sales, unadjusted for days, decreased
1.9%. This compares to a decrease in comparable store sales of 6.1%
in the prior year period.
Comparable store sales1, increased 30% for batteries, 13% for
alignments and 6% for front end/shocks compared to the prior year
period. Comparable store sales1, decreased 1% for tires, 2% for
maintenance services and 6% 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 120 basis points compared to the prior
year period, primarily resulting from higher material costs due to
mix within tires and an increased level of self-funded promotions
to attract value-oriented consumers into the Company’s stores,
which was partially offset by lower technician labor costs as a
percentage of sales.
Total operating expenses for the third quarter of fiscal 2025
were $94.8 million, or 31.0% of sales, as compared to $91.3
million, or 28.7% of sales in the prior year period. The increase
on a dollar basis was principally due to higher store direct and
departmental costs to support the Company’s stores.
Operating income for the third quarter of fiscal 2025 was $10.0
million, or 3.3% of sales, as compared to $21.4 million, or 6.7% of
sales in the prior year period.
Interest expense was $4.2 million for the third quarter of
fiscal 2025, as compared to $5.0 million for the third quarter of
fiscal 2024, principally due to a decrease in weighted average
debt.
Income tax expense in the third quarter of fiscal 2025 was $1.2
million, or an effective tax rate of 21.2%, compared to $4.2
million, or an effective tax rate of 25.8% in the prior year
period. The year-over-year difference in effective tax rate is
primarily due to state taxes, discrete tax impacts related to
share-based awards and an audit settlement of certain prior year
state income tax returns.
Net income for the third quarter of fiscal 2025 was $4.6
million, as compared to $12.2 million in the same period of the
prior year. Diluted earnings per share for the third quarter of
fiscal 2025 was $.15. This compares to $.38 in the third quarter of
fiscal 2024. Adjusted diluted earnings per share, a non-GAAP
measure, for the third quarter of fiscal 2025 was $.19. This
compares to adjusted diluted earnings per share of $.39 in the
third quarter of fiscal 2024. The Christmas holiday shift causing
fewer selling days in the quarter negatively impacted both diluted
earnings per share and adjusted diluted earnings per share by
approximately $.05 in the third quarter of fiscal 2025. Please
refer to the reconciliation of adjusted diluted earnings per share
in the table below for details regarding excluded items in the
third 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 third quarter of fiscal 2025, the Company closed 9
stores. Monro ended the quarter with 1,263 company-operated stores
and 48 franchised locations.
“We drove a sequential improvement in our year-over-year
comparable store sales percentage change from the second quarter
and returned our business to year-over-year comparable store sales
growth in the month of December, when adjusted for a shift in the
timing of the Christmas holiday. Importantly, the year-over-year
comparable store sales percentage change in both our tire dollar
and unit sales improved sequentially from the second quarter and
our tire category comped positive in the month of December, when
adjusted for the holiday shift, with year-over-year growth in units
in the quarter. Our ConfiDrive digital courtesy inspection process
and our oil change offer allowed us to drive sequential improvement
in our year-over-year service category comparable store sales
percentage change from the second quarter. We drove year-over-year
growth in both units and sales dollars for batteries, alignments
and front/end shocks. Our preliminary fiscal January comparable
store sales are down 1%, adjusted for one additional selling day in
the month. This is driven by weakness in tire category sales that
were impacted by extreme weather, which resulted in temporary store
closures and lower store traffic, partially offset by strength in
our service categories, including brakes. We believe the extreme
weather in January will benefit us in the coming months”, said Mike
Broderick, President and Chief Executive Officer.
Broderick continued, “With our commitment to sales and unit
growth and improving our customer counts, we expect to leverage our
initiatives to achieve our fourth quarter objectives.”
First Nine Months
Results
For the current nine-month period:
- Sales decreased 6.9% to $900.3 million from $966.7 million in
the same period of the prior year. Comparable store sales decreased
5.6%1. Comparable store sales, unadjusted for days, decreased 5.9%.
This compares to a decrease of 2.7% in the prior year period.
- Gross margin for the nine-month period was 35.6%, compared to
35.4% in the prior year period.
- Operating income was 4.0% of sales, compared to 6.3% in the
prior year period.
- Net income for the first nine months of fiscal 2025 was $16.1
million, or $.52 per diluted share, as compared to $33.9 million,
or $1.05 per diluted share, in the prior year period.
- Adjusted diluted earnings per share, a non-GAAP measure, in the
first nine months of fiscal 2025 was $.57. This compares to
adjusted diluted earnings per share of $1.11 in the first nine
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 nine 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 nine months of fiscal 2025, the Company
generated operating cash flow of $103 million. As of December 28,
2024, the Company had total liquidity of $521 million.
Third Quarter Fiscal 2025 Cash
Dividend
On December 17, 2024, the Company paid a cash dividend for the
third 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, January 29, 2025 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 875581. A replay will be available
approximately two hours after the recording through Wednesday,
February 12, 2025 and can be accessed by dialing 1-866-813-9403 and
using the required access code of 872796. 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
more than 1,250 stores and 8,500 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,”
“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, litigation
reserve, net loss on the sale of the Company’s wholesale and tire
distribution assets, 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 December
2024
2023
%
Change
Sales
$
305,769
$
317,653
(3.7
)%
Cost of sales, including occupancy
costs
200,966
204,976
(2.0
)%
Gross profit
104,803
112,677
(7.0
)%
Operating, selling, general and
administrative expenses
94,840
91,294
3.9
%
Operating income
9,963
21,383
(53.4
)%
Interest expense, net
4,246
5,043
(15.8
)%
Other income, net
(101
)
(62
)
62.9
%
Income before income taxes
5,818
16,402
(64.5
)%
Provision for income taxes
1,235
4,232
(70.8
)%
Net income
$
4,583
$
12,170
(62.3
)%
Diluted earnings per share
$
0.15
$
0.38
(60.5
)%
Weighted average number of diluted shares
outstanding
31,273
32,188
Number of stores open (at end of
quarter)
1,263
1,296
MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars and share counts in
thousands)
Nine
Months Ended Fiscal
December
2024
2023
%
Change
Sales
$
900,342
$
966,712
(6.9)%
Cost of sales, including occupancy
costs
579,976
624,666
(7.2)%
Gross profit
320,366
342,046
(6.3)%
Operating, selling, general and
administrative expenses
283,954
280,959
1.1%
Operating income
36,412
61,087
(40.4)%
Interest expense, net
14,526
15,052
(3.5)%
Other income, net
(303)
(153)
98.0%
Income before income taxes
22,189
46,188
(52.0)%
Provision for income taxes
6,096
12,317
(50.5)%
Net income
$
16,093
$
33,871
(52.5)%
Diluted earnings per share
$
0.52
$
1.05
(50.5)%
Weighted average number of diluted shares
outstanding
31,221
32,142
MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
December
28,
2024
March
30,
2024
Assets
Cash and equivalents
$
10,161
$
6,561
Inventory
176,544
154,085
Other current assets
86,967
92,643
Total current assets
273,672
253,289
Property and equipment, net
268,593
280,154
Finance lease and financing obligation
assets, net
172,822
180,803
Operating lease assets, net
190,074
202,718
Other non-current assets
764,768
775,850
Total assets
$
1,669,929
$
1,692,814
Liabilities and Shareholders’
Equity
Current liabilities
$
507,713
$
455,156
Long-term debt
59,250
102,000
Long-term finance leases and financing
obligations
232,706
249,484
Long-term operating lease liabilities
168,070
181,852
Other long-term liabilities
53,267
47,547
Total liabilities
1,021,006
1,036,039
Total shareholders’ equity
648,923
656,775
Total liabilities and shareholders’
equity
$
1,669,929
$
1,692,814
MONRO, INC.
Reconciliation of Adjusted
Diluted Earnings Per Share (EPS)
(Unaudited)
Quarter Ended Fiscal
December
2024
2023
Diluted EPS
$
0.15
$
0.38
Net loss on sale of wholesale tire and
distribution assets (a)
−
0.01
Transition costs related to back-office
optimization
0.01
0.00
Store closing costs
0.01
(0.00)
Litigation reserve
0.01
−
Costs related to shareholder matters
−
0.00
Net gain on sale of corporate headquarters
(b)
0.00
0.00
Adjusted Diluted EPS
$
0.19
$
0.39
Note: Amounts may not foot due to rounding.
Supplemental Reconciliation of
Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Quarter Ended Fiscal
December
2024
2023
Net Income
$
4,583
$
12,170
Net loss on sale of wholesale tire and
distribution assets (a)
−
304
Transition costs related to back-office
optimization
527
58
Store closing costs
437
(30)
Litigation reserve
650
−
Costs related to shareholder matters
−
80
Net gain on sale of corporate headquarters
(b)
73
95
Provision for income taxes on pre-tax
adjustments (c)
(479)
(131)
Adjusted Net Income
$
5,791
$
12,546
MONRO, INC.
Reconciliation of Adjusted
Diluted Earnings Per Share (EPS)
(Unaudited)
Nine Months Ended
Fiscal December
2024
2023
Diluted EPS
$
0.52
$
1.05
Store impairment charges
0.04
−
Net loss on sale of wholesale tire and
distribution assets (a)
−
0.01
Transition costs related to back-office
optimization
0.04
0.01
Store closing costs
0.03
(0.00)
Litigation reserve
0.01
−
Costs related to shareholder matters
−
0.03
Acquisition due diligence and integration
costs
−
0.00
Net gain on sale of corporate headquarters
(b)
(0.06)
0.00
Adjusted Diluted EPS
$
0.57
$
1.11
Note: Amounts may not foot due to rounding.
Supplemental Reconciliation of
Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Nine Months Ended Fiscal
December
2024
2023
Net Income
$
16,093
$
33,871
Store impairment charges
1,551
−
Net loss on sale of wholesale tire and
distribution assets (a)
−
304
Transition costs related to back-office
optimization
1,677
699
Store closing costs
1,149
(26)
Litigation reserve
650
−
Costs related to shareholder matters
−
1,355
Acquisition due diligence and integration
costs
−
5
Net gain on sale of corporate headquarters
(b)
(2,566)
155
Provision for income taxes on pre-tax
adjustments (c)
(689)
(637)
Adjusted Net Income
$
17,865
$
35,726
a)
Amounts include a loss on subsequent inventory adjustments on
prior year sale of wholesale tire and distribution assets.
b)
Amounts include gain on sale of Corporate headquarters building,
net of closing and relocation costs.
c)
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.
___________________________ 1Adjusted for one fewer selling day
in the current year quarter due to a shift in the timing of the
Christmas holiday from the fourth quarter in fiscal 2024 to the
third quarter in fiscal 2025
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250129586170/en/
Investors and Media: Felix Veksler Senior Director, Investor
Relations ir@monro.com
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