false
0000876427
0000876427
2024-05-23
2024-05-23
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):
May 23, 2024
MONRO, INC.
(Exact name of registrant as specified in its charter)
New York 0-19357 16-0838627
(State of (Commission (I.R.S. Employer
Incorporation) File Number) Identification No.)
200 Holleder Parkway 14615
,
Rochester
,
New York
(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:
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 Name of each exchange
Symbol(s) 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 ((s)230.405 of this chapter)
or Rule
12b-2
of the Securities Exchange Act of 1934
((s)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.
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Item 2.02 Results of Operations and Financial Condition.
On May 23, 2024, Monro, Inc. (the "Company") issued a press release announcing
its financial results for the fourth quarter and fiscal year ended March 30,
2024. 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 8.01 Voluntary Disclosure of Other Events
Today the Company also announced that its Board of Directors declared a
quarterly cash dividend of $.28 per share for the first quarter of the
Company's 2025 fiscal year, ending March 29, 2025. The dividend will be
payable on June 18, 2024 to shareholders of record as of June 4, 2024,
including shares of common stock to which the holders of the Company's Class C
Convertible Preferred Stock are entitled.
Item 9.01 Financial Statements and Exhibits.
(d)
Exhibits
.
Exhibit Description
Number
99.1 Earnings release issued by Monro, Inc. on May 23, 2024
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MONRO, INC.
(Registrant)
May 23, 2024 By: /s/ Maureen E. Mulholland
Maureen E. Mulholland
Executive Vice President - Chief Legal Officer and Secretary
Exhibit 99.1
200 HollederParkway, Rochester, New York 14615
CONTACT: Investors and Media: Felix Veksler
Senior Director, Investor Relations
ir@monro.com
FOR IMMEDIATE RELEASE
MONRO, INC. ANNOUNCESFOURTH QUARTER AND FISCAL 2024 FINANCIAL RESULTS
. Fourth Quarter Comparable Store Sales Increased 0.1% on a Reported Basis
. Fourth Quarter Gross Margin Expanded 210 Basis Points
. Generated Cash from Operating Activities of $125 Million during Fiscal 2024
. Approved First Quarter Fiscal 2025 Cash Dividend of $.28 per Share
ROCHESTER, N.Y. - May
23, 2024 -
Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive undercar repair
and tireservices, today announced financial results for its fourth quarter and
fiscal year ended March 30, 2024.
Fourth Quarter Results
Sales for the fourth quarter of the fiscal year ended March 30, 2024 ("fiscal
2024") decreased 0.2% to $310.1 million, as compared to$310.8 million for the
fourth quarter of the fiscal year ended March 25, 2023 ("fiscal 2023"). Fiscal
2024 was a
53-week
year with 368 selling days as compared to 361 selling days in fiscal2023, and
therefore included $24.4 million for an extra week of sales in the fourth
quarter. Comparable store sales increased 0.1% on a reported basis and
decreased 7.2% when adjusted for days. This was primarily driven by a strained
low-to-middle
income consumer that traded-down to tires at opening price points as the
industry worked to clear-through an oversupply of lower-margin tires. This
compares toan increase in comparable store sales of 4.5% in the prior year
period.
Adjusted for days, comparable store sales decreased 1% for batteries, 4%
foralignments, 6% for tires, 7% for maintenance services, 9% for brakes, and
14% for front end/shocks compared to the prior year period. Please refer to
the "Comparable Store Sales" section below for a discussion of how the Company
definescomparable store sales.
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Gross margin increased 210 basis points compared to the prior year period,
primarily resulting from lowertechnician labor costs as a percentage of sales,
including a 15% reduction in overtime hours and lower material costs as a
percentage of sales, which were partially offset by higher fixed occupancy
costs as a percentage of sales.
Total operating expenses for the fourth quarter of fiscal 2024 were $99.7
million, or 32.2% of sales, as compared to $97.6 million, or 31.4% ofsales in
the prior year period. The increase on a dollar basis was principally due to
$1.6 million of higher
non-recurring
costs in the quarter compared to the prior year period. Excluding these
costs,total operating expenses, inclusive of an extra week, increased $0.5
million compared to the prior year period.
Operating income for the fourthquarter of fiscal 2024 was $10.3 million, or
3.3% of sales, as compared to $6.2 million, or 2.0% of sales in the prior year
period.
Interestexpense was $5.0 million for the fourth quarter of fiscal 2024, as
compared to $5.9 million for the fourth quarter of fiscal 2023, principally
due to a decrease in weighted average debt.
Income tax expense in the fourth quarter of fiscal 2024 was $2.0 million, or
an effective tax rate of 35.0%, compared to $0.2 million, or aneffective tax
rate of 35.2% in the prior year period.
Net income for the fourth quarter of fiscal 2024 was $3.7 million, as compared
to$0.4 million in the same period of the prior year. Diluted earnings per
share for the fourth quarter of fiscal 2024 was $.12. This compares to $.01 in
the fourth quarter of fiscal 2023. Adjusted diluted earnings per share, a
non-GAAP
measure, for the fourth quarter of fiscal 2024 was $.21. This compares to
adjusted diluted earnings per share of $.08 in the fourth quarter of fiscal
2023. Please refer to the reconciliation of adjusteddiluted earnings per share
in the table below for details regarding excluded items in the fourth quarters
of fiscal 2024 and 2023. Please refer to the
"Non-GAAP
Financial Measures" section below fora discussion of this
non-GAAP
measure.
During the fourth quarter of fiscal 2024, the Company closed 8 stores.Monro
ended the quarter with 1,288 company-operated stores and 51 franchised
locations.
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"We expanded gross margins, both in the fourth quarter and for the full fiscal
year. We continued tomitigate a challenged topline with actions to reduce
non-productive
labor costs, including overtime hours in our stores. While an industry-wide
deferral and trade-down cycle has lasted longer than most in ourindustry would
have expected, we are navigating weakness in the tire market well with our
actions and our recently implemented initiatives. We have made foundational
progress that will enable Monro to reap benefits when tire volumes
recover",said Mike Broderick, President and Chief Executive Officer.
Broderick continued, "Our business is durable, well-positioned to withstand
the currentdownturn and poised for long-term success."
Full Year Results
1
. Sales decreased 3.7% to
$1.277 billion from $1.325
billion in fiscal 2023,
primarily driven by apressured
low-to-middle
income consumer that traded-down and deferred purchases in the Company's high-ticket tire
category, which resulted in lower year-over-yearcomparable store sales. Comparable store
sales decreased 2.0% on a reported basis and 3.9% adjusted for days, compared to increases
of 2.8% for total company and 3.5% for Retail locations in the prior year period.
. Gross margin for fiscal 2024 was 35.4%, compared to 34.4% in the prior year
period, primarily due to lowermaterial costs as a percentage of sales,
which were partially offset by higher fixed occupancy costs as a percentage
of sales and higher technician labor costs as a percentage of sales.
. Total operating expenses for fiscal 2024 were $380.7 million, or 29.8% of sales compared to$376.4
million, or 28.4% of sales. The increase on a dollar basis was principally due to $3.3 million of higher
non-recurring
costs during fiscal 2024 compared to the prior year period. Excludingthese costs, total operating
expenses, inclusive of an extra week, increased $1.0 million compared to the prior year period.
1 Financial performance includes the results of the divested Wholesale and tire distribution assets for fiscal2023 through June 16
th
.
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. Operating income was $71.4 million, or 5.6% of sales, compared to $79.8 million, or 6.0% of sales inthe prior year period.
. Interest expense was $20.0 million in fiscal 2024, compared to $23.2 million
in fiscal 2023,principally due to a decrease in weighted average debt.
. Net income for fiscal 2024 was $37.6 million, or $1.18 per diluted share, as
compared to $39.0 million,or $1.20 per diluted share in the prior year period.
. Adjusted diluted
earnings per share, a
non-GAAP
measure, in fiscal 2024was $1.33. This compares to adjusted diluted earnings
per share of $1.36 in fiscal 2023. Please refer to the reconciliation
of adjusted diluted earnings per share in the table below for details
regarding excluded costs in fiscal 2024 and fiscal2023. Please refer to the
"Non-GAAP
Financial Measures" section
below for a discussion of this
non-GAAP
measure.
Strong Financial Position
During fiscal 2024, theCompany generated operating cash flow of $125 million.
As of March 30, 2024, the Company had total liquidity of $475 million.
FourthQuarter Fiscal 2024 and First Quarter Fiscal 2025 Cash Dividend
On March 22, 2024, the Company paid a cash dividend for the fourth quarter
offiscal 2024 of $.28 per share.
The Company also announced today that its Board of Directors has approved a
cash dividend for the first quarter of fiscalyear 2025 of $.28 per share. The
cash dividend is payable on June 18, 2024 on the Company's outstanding shares
of common stock, including the shares of common stock to which the holders of
the Company's Class C Convertible Stockare entitled. The dividend is payable
to shareholders of record on June 4, 2024.
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Share Repurchases
The Company did not repurchase any shares under its current Board
authorization of up to $150 million of common stock during the fourth quarter
of fiscal2024. The Company repurchased 1.5 million shares of its common stock
at an average price of $28.50 for $44 million during fiscal 2024. In total,
the Company has repurchased 3.7 million shares at an average price of $37.61
for$141 million under the current authorization from the Company's Board of
Directors.
The method, timing and actual number of shares repurchasedwill depend on a
variety of factors, including price, general business and market conditions,
alternative investment opportunities, and legal requirements.
The Company's repurchase program has no expiration date, does not require the
purchase of any minimum number of shares and may be suspended, modified
ordiscontinued at any time without prior notice.
Company Expectations
Monro is not providing fiscal 2025 financial guidance at this time but will
provide perspective on its expectations for the fiscal first quarter as well
as thefull 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 Thursday, May 23,
2024 at 8:30 a.m. Eastern Time. The conference call may be accessed bydialing
1-833-470-1428
and using the required access code of 167286. A replay will be available
approximately two hours after therecording through Thursday, June 6, 2024 and
can be accessed by dialing
1-866-813-9403
and using the required access code of952959. 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) isone 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 andparts
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
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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 needsevery day to get customers
back on the road safely. For more information, please visit
corporate.monro.com
.
Cautionary Note RegardingForward-Looking Statements
The statements contained in this press release that are not historical facts
may contain statements of futureexpectations 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," "guidance,"
"intend," "invest", "may," "anticipate," "believe," "could," "design,"
"focus," "vision," "will,""would," 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, butare 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 inwhich
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
serviceour 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 ofcapital 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 theCompany's Securities and Exchange
Commission filings, including the Company's annual report on Form
10-K
for the fiscal year ended March 25, 2023 and the Form
10-K
for the fiscal year ended March 30, 2024, which the Company intends to file
with the Securities and Exchange Commission this month. Except as required by
law, the Company does not undertake andspecifically 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.
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Non-GAAP
Financial Measures
In addition to reporting diluted earnings per share ("EPS"), which is a
generally accepted accounting principles ("GAAP") measure, thispress 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, dilutedEPS.
Management views this
non-GAAP
financial measure as a way to better assess comparability between periods
because management believes the
non-GAAP
financial measureshows 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, corporate headquarters relocation costs, and items
related to store closings, as well as acquisition initiatives.
This
non-GAAP
financial measure is not intended to represent, and should not be considered
more meaningful than, or asan alternative to, its most directly comparable
GAAP measure. This
non-GAAP
financial measure may be different from similarly titled
non-GAAP
financial measures used byother companies.
Comparable Store Sales
TheCompany 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 usescomparable 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
###
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MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars and share counts in thousands)
Quarter Ended Fiscal March
2024 2023 % Change
Sales $ 310,077 $ 310,836 (0.2 )%
Cost of sales, including distribution and occupancy costs 200,020 207,036 (3.4 )%
Gross profit 110,057 103,800 6.0 %
Operating, selling, general and administrative expenses 99,719 97,623 2.1 %
Operating income 10,338 6,177 67.4 %
Interest expense, net 4,953 5,864 (15.5 )%
Other income, net (307 ) (318 ) (3.5 )%
Income before income taxes 5,692 631 802.1 %
Provision for income taxes 1,992 222 797.3 %
Net income $ 3,700 $ 409 804.6 %
Diluted earnings per share $ 0.12 $ 0.01 1100.0 %
Weighted average number of diluted shares outstanding 31,189 31,945
Number of stores open (at end of quarter) 1,288 1,299
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MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars and share counts in thousands)
Twelve Months Ended Fiscal
March
2024 2023 % Change
Sales $ 1,276,789 $ 1,325,382 (3.7 )%
Cost of sales, including distribution and occupancy costs 824,686 869,207 (5.1 )%
Gross profit 452,103 456,175 (0.9 )%
Operating, selling, general and administrative expenses 380,678 376,425 1.1 %
Operating income 71,425 79,750 (10.4 )%
Interest expense, net 20,005 23,176 (13.7 )%
Other income, net (460 ) (593 ) (22.4 )%
Income before income taxes 51,880 57,167 (9.2 )%
Provision for income taxes 14,309 18,119 (21.0 )%
Net income $ 37,571 $ 39,048 (3.8 )%
Diluted earnings per share $ 1.18 $ 1.20 (1.7 )%
Weighted average number of diluted shares outstanding 31,894 32,653
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MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
March 30, March 25,
2024 2023
Assets
Cash and equivalents $ 6,561 $ 4,884
Inventories 154,085 147,397
Other current assets 92,643 106,186
Total current assets 253,289 258,467
Property and equipment, net 280,154 304,989
Finance lease and financing obligation assets, net 180,803 217,174
Operating lease assets, net 202,718 211,101
Other 775,850 785,146
non-current
assets
Total assets $ 1,692,814 $ 1,776,877
Liabilities and Shareholders' Equity
Current liabilities $ 455,156 $ 449,177
Long-term debt 102,000 105,000
Long-term finance leases and financing obligations 249,484 295,281
Long-term operating lease liabilities 181,852 191,107
Other long-term liabilities 47,547 41,390
Total liabilities 1,036,039 1,081,955
Total shareholders' equity 656,775 694,922
Total liabilities and shareholders' equity $ 1,692,814 $ 1,776,877
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MONRO, INC.
Reconciliation of Adjusted Diluted Earnings Per Share (EPS)
(Unaudited)
Quarter Ended Fiscal
March
2024 2023
Diluted EPS $ 0.12 $ 0.01
Store impairment charges 0.04 0.02
Net loss (gain) on sale of wholesale tire and distribution assets -- (0.04 )
(a)
Store closing costs 0.01 0.01
Monro.Forward initiative costs -- --
Acquisition due diligence and integration costs -- --
Litigation reserve/settlement costs -- 0.04
Management restructuring/transition costs 0.03 --
Costs related to shareholder matters -- 0.02
Transition costs related to back-office optimization 0.01 0.01
Corporate headquarters relocation costs -- --
Certain discrete tax items -- 0.01
(c)
Adjusted Diluted EPS $ 0.21 $ 0.08
Supplemental Reconciliation of Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Quarter Ended Fiscal
March
2024 2023
Net Income $ 3,700 $ 409
Store impairment charges 1,915 982
Net loss (gain) on sale of wholesale tire and distribution assets -- (1,528 )
(a)
Store closing costs 234 283
Monro.Forward initiative costs -- 150
Acquisition due diligence and integration costs -- 40
Litigation reserve/settlement costs -- 1,550
Management restructuring/transition costs 1,210 --
Costs related to shareholder matters -- 679
Transition costs related to back-office optimization 537 361
Corporate headquarters relocation costs 179 --
Certain discrete tax items -- 390
(c)
Provision for income taxes on (1,103 ) (647 )
pre-tax
adjustments
(b)
Adjusted Net Income $ 6,672 $ 2,669
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MONRO, INC.
Reconciliation of Adjusted Diluted Earnings Per Share (EPS)
(Unaudited)
Twelve Months Ended
Fiscal March
2024 2023
Diluted EPS $ 1.18 $ 1.20
Store impairment charges 0.04 0.02
Net loss (gain) on sale of wholesale tire and distribution assets 0.01 (0.08 )
(a)
Store closing costs -- 0.01
Monro.Forward initiative costs -- 0.01
Acquisition due diligence and integration costs -- --
Litigation reserve/settlement costs -- 0.05
Management restructuring/transition costs 0.03 0.03
Costs related to shareholder matters 0.03 0.03
Transition costs related to back-office optimization 0.03 0.01
Corporate headquarters relocation costs 0.01 --
Certain discrete tax items -- 0.09
(c)
Adjusted Diluted EPS $ 1.33 $ 1.36
Note: The calculation of the impact of
non-GAAP
adjustments on diluted EPS isperformed on each line independently. The table may not add down by +/- 0.01 due to rounding.
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Supplemental Reconciliation of Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Twelve Months Ended
Fiscal March
2024 2024
Net Income $ 37,571 $ 39,048
Store impairment charges 1,915 982
Net loss (gain) on sale of wholesale tire and distribution assets 304 (3,496 )
(a)
Store closing costs 208 515
Monro.Forward initiative costs -- 260
Acquisition due diligence and integration costs 5 31
Litigation reserve/settlement costs -- 2,000
Management restructuring/transition costs 1,210 1,338
Costs related to shareholder matters 1,355 1,232
Transition costs related to back-office optimization 1,236 361
Corporate headquarters relocation costs 334 --
Certain discrete tax items -- 3,034
(c)
Provision for income taxes on (1,740 ) (825 )
pre-tax
adjustments
(b)
Adjusted Net Income $ 42,398 $ 44,480
a) Amounts include a loss on subsequent inventory adjustments in fiscal 2024, and
gain on sale of relatedwarehouse, net of associated closing costs, in fiscal 2023.
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.
c) Amount relates to the sale of wholesale tire locations and distribution assets,
as well as the revaluation ofdeferred tax balances due to changes in the mix of
pre-tax
income in various U.S. state
jurisdictions as a result of the sale.
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