- 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
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030478813/en/
Investors and Media: Felix Veksler Senior Director, Investor
Relations ir@monro.com
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