MONRO INC

Previous wording

Second quarter 2025 included the following notable items:

Current wording

Third quarter 2025 included the following notable items:

Previous wording

Diluted earnings per common share (“EPS”) were $0.18.

Current wording

Diluted earnings per common share (“EPS”) were $0.15.

Previous wording

Adjusted diluted EPS, a non-GAAP measure, were $0.17.

Current wording

Adjusted diluted EPS, a non-GAAP measure, were $0.19.

Previous wording

Sales decreased 6.4 percent, due to lower overall comparable store sales resulting from lower store traffic.

Current wording

Sales decreased 3.7 percent, primarily due to lower overall comparable store sales resulting from lower store traffic.

Previous wording

Adjusted net income, a non-GAAP measure, was $5.2 million.

Current wording

Adjusted net income, a non-GAAP measure, was $5.8 million.

Previous wording

Adjusted net income and adjusted diluted EPS, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted net income and adjusted diluted EPS are useful in providing period-to-period comparisons of the results of our operations by excluding certain non-recurring items, such as costs related to closed store impairment charges, store closing costs, transition costs related to back-office optimization, shareholder matters from our equity capital structure recapitalization, and a gain on sale of corporate headquarters net of closing and relocation costs. Reconciliations of these non-GAAP financial measures to GAAP measures are provided beginning onpage 17 under “Non-GAAP Financial Measures.”

Current wording

Adjusted net income and adjusted diluted EPS, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted net income and adjusted diluted EPS are useful in providing period-to-period comparisons of the results of our operations by excluding certain non-recurring items, such as costs related to litigation reserve, transition costs related to back-office optimization, store closing costs, closed store impairment charges, shareholder matters from our equity capital structure recapitalization, net loss on subsequent inventory adjustment related to the prior year sale of wholesale tire and distribution assets, and a gain on sale of corporate headquarters net of closing and relocation costs. Reconciliations of these non-GAAP financial measures to GAAP measures are provided beginning onpage 17 under “Non-GAAP Financial Measures.”

Previous wording

Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, etc., and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 7 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. There were 91 selling days in the three months ended September 28, 2024 and in the three months ended September 23, 2023, and 181 selling days in the six months ended September 28, 2024 and in the six months ended September 23, 2023.

Current wording

Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, etc., and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 7 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. There were 89 selling days in the three months ended December 28, 2024 and 90 selling days in the three months ended December 23, 2023, and 270 selling days in the nine months ended December 28, 2024 and 271 selling days in the nine months ended December 23, 2023. There was one fewer selling day in the three months and nine months ended December 28, 2024, as compared to the same period ended December 23, 2023, 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.

Previous wording

The sales decrease was primarily due to adecrease in comparable store sales resulting from lower store traffic. An increase in battery sales of 20% and 8% in the three months and six months ended September 28, 2024, respectively, slightly offsets the decrease in sales. The following table shows the primary drivers of the change in sales for the three months and six months ended September 28, 2024, as compared to the same period ended September 23, 2023.

Current wording

The sales decrease was primarily due to adecrease in comparable store sales resulting from lower store traffic. Although overall comparable sales were down for the three months and nine months ended December 28, 2024, we returned to year-over-year comparable store sales growth in fiscal December. The following table shows the primary drivers of the change in sales for the three months and nine months ended December 28, 2024, as compared to the same period ended December 23, 2023.

Previous wording

Broad-based economic pressures impacting consumers partly led to lower demand in tires and our higher-margin service categories during the three months and six months ended September 28, 2024. We expect the economic environment to continue to impact our customers throughout the remainder of fiscal 2025.

Current wording

An increase in battery sales of 30% and 16% and an increase in alignment services of 13% and 1% in the three months and nine months ended December 28, 2024, respectively, partially offset the decrease in sales in other categories. Broad-based economic pressures impacting consumers partly led to lower demand in tires and our higher-margin service categories during the three months and nine months ended December 28, 2024. We expect the economic environment to continue to impact our customers throughout the remainder of fiscal 2025. The following table shows the primary drivers of the comparable store product category sales change for the three months and nine months ended December 28, 2024, as compared to the same period ended December 23, 2023.

Previous wording

Gross profit, as a percentage of sales, decreased 40 basis points (“bps”) for the three months ended September 28, 2024, as compared to the prior year comparable period. Material costs increased, as a percentage of sales, due primarily to mix within tires. Occupancy costs increased, as a percentage of sales, as we lost leverage on these largely fixed costs with lower overall comparable store sales. Partially offsetting this was a decrease in technician labor costs, as a percentage of sales, due primarily to improvements in labor productivity and efficiency. Gross profit, as a percentage of sales, increased 100 basis points for the six months ended September 28, 2024, as compared to the prior year comparable period. The increase in gross profit, as a percentage of sales, was primarily due to improvements in labor productivity and efficiency, partially offset by the increase in occupancy costs as we lost leverage on these largely fixed costs.

Current wording

Gross profit, as a percentage of sales, decreased 120 basis points (“bps”) for the three months ended December 28, 2024, as compared to the prior year comparable period. Material costs increased, as a percentage of sales, due primarily to mix within tires and increased levels of self-funded promotions. Partially offsetting this was a decrease in technician labor costs, as a percentage of sales, due primarily to improvements in labor productivity and efficiency. Gross profit, as a percentage of sales, increased 20 basis points for the nine months ended December 28, 2024, as compared to the prior year comparable period. The increase in gross profit, as a percentage of sales, was primarily due to improvements in labor productivity and efficiency, partially offset by an increase in occupancy costs, as we lost leverage on these largely fixed costs, and an increase in material costs due primarily to mix within tires and increased levels of self-funded promotions.

Previous wording

The increase of $.6 million in operating, selling, general and administrative (“OSG&A”) expenses for the three months ended September 28, 2024, from the comparable prior year period is due to an increase in OSG&A expenses from store advertising costs, closed store impairment charges, comparable stores, transition costs related to back-office optimization, as well as costs from new stores and other non-recurring costs. Partially offsetting these increases was the net gain on the sale of the corporate headquarters, as well as a decrease in costs from closed stores and decreased costs related to shareholder matters from our equity capital structure recapitalization incurred during the comparable period. The following table shows the impact of these costs on the change in OSG&A expenses for the three months and six months ended September 28, 2024, as compared to the same periods ended September 23, 2023.

Current wording

The increase of $3.5 million in operating, selling, general and administrative (“OSG&A”) expenses for the three months ended December 28, 2024, from the comparable prior year period is primarily due to an increase in OSG&A expenses from comparable stores, litigation reserve, transition costs related to back-office optimization, as well as costs related to store closings. Partially offsetting these increases were decreases due to closed stores, store advertising costs, costs related to shareholder matters and other net non-recurring costs. The following table shows the impact of these costs on the change in OSG&A expenses for the three months and nine months ended December 28, 2024, as compared to the same periods ended December 23, 2023.

Previous wording

Net interest expense of $5.1 million for the three months ended September 28, 2024 increased $0.3 million as compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.7 percent. Weighted average debt outstanding for the three months ended September 28, 2024 decreased by approximately $21.3 million as compared to the three months ended September 23, 2023. This decrease is primarily related to lower finance lease debt related to our stores, partially offset by an increase in debt outstanding under the Credit Facility. The weighted average interest rate increased approximately 60 basis pointsas compared to the same period of the prior year.

Current wording

Net interest expense of $4.2 million for the three months ended December 28, 2024 decreased $0.8 million as compared to the prior year period, and decreased as a percentage of sales from 1.6 percent to 1.4 percent. Weighted average debt outstanding for the three months ended December 28, 2024 decreased by approximately $59.5 million as compared to the three months ended December 23, 2023. This decrease is primarily related to lower debt outstanding under the Credit Facility as well as lower finance lease debt related to our stores. The weighted average interest rate decreased approximately 23 basis pointsas compared to the same period of the prior year.

Previous wording

Net interest expenseof $10.3 million for the six months ended September 28, 2024 increased $0.3 million compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.7 percent. Weighted average debt outstanding for the six months ended September 28, 2024 decreased by approximately $21.9 million and the weighted average interest rate increased approximately 40 basis points as compared to the same period of the prior year.

Current wording

Net interest expenseof $14.5 million for the nine months ended December 28, 2024 decreased $0.5 million compared to the prior year period, and remained at 1.6 percent as a percentage of sales. Weighted average debt outstanding for the nine months ended December 28, 2024 decreased by approximately $34.7 million and the weighted average interest rate increased approximately 20 basis points as compared to the same period of the prior year.

Previous wording

Our effective income tax rate for the three months and six months ended September 28, 2024 was 30.9 percent and 29.7 percent, respectively, compared with 26.8 percent and 27.1 percent in the comparable prior-year periods. The difference from the statutory rate is primarily due to state taxes and the discrete tax impact related to share-based awards.

Current wording

Our effective income tax rate for the three months and nine months ended December 28, 2024 was 21.2 percent and 27.5 percent, respectively, compared with 25.8 percent and 26.7 percent in the comparable prior-year periods. The difference from the statutory rate is primarily due to state taxes and the discrete tax impact related to share-based awards and the audit settlement of certain prior year state income tax returns.

Previous wording

In addition to reporting net income and diluted EPS, which are GAAP measures, this Form 10-Q includes adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures. We have included reconciliations to adjusted net income and adjusted diluted EPS from our most directly comparable GAAP measures, net income and diluted EPS, below. Management views these non-GAAP financial measures as indicators to better assess comparability between periods because management believes these non-GAAP financial measures reflect our core business operations while excluding certain non-recurring items, such as costs related to closed store impairment charges, store closing costs, transition costs related to back-office optimization, shareholder matters from our equity capital structure recapitalization, and a gain on sale of corporate headquarters net of closing and relocation costs.

Current wording

In addition to reporting net income and diluted EPS, which are GAAP measures, this Form 10-Q includes adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures. We have included reconciliations to adjusted net income and adjusted diluted EPS from our most directly comparable GAAP measures, net income and diluted EPS, below. Management views these non-GAAP financial measures as indicators to better assess comparability between periods because management believes these non-GAAP financial measures reflect our core business operations while excluding certain non-recurring items, such as costs related to litigation reserve, transition costs related to back-office optimization, store closing costs, closed store impairment charges, shareholder matters from our equity capital structure recapitalization, net loss on subsequent inventory adjustment related to the prior year sale of wholesale tire and distribution assets, and a gain on sale of corporate headquarters net of closing and relocation costs.

Previous wording

(a) Amount includes the gain on sale of the corporate headquarters building net of closing and relocation costs.

Current wording

(a) Amounts include the gain on sale of the corporate headquarters building net of associated closing and relocation costs.

Previous wording

(b) Amount includes the gain on sale of the corporate headquarters building net of closing and relocation costs.

Current wording

(b) Amounts include the gain on sale of the corporate headquarters building net of associated closing and relocation costs.

Previous wording

The other adjustments to diluted EPS reflect estimated annual effective income tax rates of 27.3 percent and 25.8 percent for the three months ended September 28, 2024 and September 23, 2023, respectively and 27.1 percent and 25.3 percent for the six months ended September 28, 2024 and September 23, 2023, respectively. These estimated annual effective income tax rates exclude the income tax impacts from share-based compensation. See adjustments from the Reconciliation of Adjusted Net Income table above for pre-tax amounts.

Current wording

The other adjustments to diluted EPS reflect estimated annual effective income tax rates of 28.4 percent and 25.8 percent for the three months ended December 28, 2024 and December 23, 2023, respectively, and 28.0 percent and 25.6 percent for the nine months ended December 28, 2024 and December 23, 2023, respectively. These estimated annual effective income tax rates exclude the income tax impacts from share-based compensation and the audit settlement of certain prior year state income tax returns. See adjustments from the Reconciliation of Adjusted Net Income table above for pre-tax amounts.

Previous wording

We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems, to be $25 million to $35 million in the aggregate in fiscal 2025. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $477.4 million in lease payments, of which $96.6 million is due within one year. For details regarding these lease commitments, see Note 9 to our consolidated financial statements.

Current wording

We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems, to be $25 million to $30 million in the aggregate in fiscal 2025. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $463.9 million in lease payments, of which $95.5 million is due within one year. For details regarding these lease commitments, see Note 9 to our consolidated financial statements.

Previous wording

As of September 28, 2024, we had $62.0 million outstanding under the Credit Facility, none of which is due in the succeeding 12 months. For details regarding our indebtedness that is due, see Note 8 to our consolidated financial statements.

Current wording

As of December 28, 2024, we had $59.3 million outstanding under the Credit Facility, none of which is due in the succeeding 12 months. For details regarding our indebtedness that is due, see Note 8 to our consolidated financial statements.

Previous wording

We paid cash dividends of $0.28 per share totaling $8.7 million and $8.9 million for the three months ended September 28, 2024 and September 23, 2023, respectively, and $0.56 per share totaling $17.4 million and $17.9 million for the six months ended September 28, 2024 and September 23, 2023, respectively.

Current wording

We declared dividends of $0.28 per share totaling $8.7 million for the three months ended December 28, 2024 and December 23, 2023, and $0.84 per share totaling $26.2 million and $26.8 million for the nine months ended December 28, 2024 and December 23, 2023, respectively.

Previous wording

As of September 28, 2024, we had a working capital deficit of $234.7 million, an increase of $32.8 million from a deficit of $201.9 million as of March 30, 2024. The overall working capital deficit is a result of our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers. As part of our working capital management, we facilitate a voluntary supply chain finance program to provide our suppliers with the opportunity to sell receivables due from Monro to a participating financial institution. For details regarding our supply chain finance program, see Note 10 to our consolidated financial statements.

Current wording

As of December 28, 2024, we had a working capital deficit of $234.0 million, an increase of $32.1 million from a deficit of $201.9 million as of March 30, 2024. The overall working capital deficit is a result of our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers. As part of our working capital management, we facilitate a voluntary supply chain finance program to provide our suppliers with the opportunity to sell receivables due from Monro to a participating financial institution. For details regarding our supply chain finance program, see Note 10 to our consolidated financial statements.

Previous wording

As of September 28, 2024, we had $20.9 million of cash and equivalents. In addition, we had $507.9 million available under the Credit Facility as of September 28, 2024.

Current wording

As of December 28, 2024, we had $10.2 million of cash and equivalents. In addition, we had $510.6 million available under the Credit Facility as of December 28, 2024.

Previous wording

For the six months ended September 28, 2024, cash provided by operating activities was $88.2 million, which consisted of net income of $11.5 million, increased by non-cash adjustments of $39.0 million and net change in operating assets and liabilities of $37.7 million. The non-cash charges were largely driven by $35.2 million of depreciation and amortization, as well as $3.4 million in deferred income tax expense. The change in operating assets and liabilities was primarily due toour supply chain finance program being a source of cash as we improved our cash flow by $67.5 million. This was partially offset by accrued expenses and other current assets being a use of cash of $17.0 million, as well as our inventory balance being a use of cash of $7.7 million.

Current wording

For the nine months ended December 28, 2024, cash provided by operating activities was $103.0 million, which consisted of net income of $16.1 million, increased by non-cash adjustments of $58.3 million and net change in operating assets and liabilities of $28.6 million. The non-cash charges were largely driven by $52.4 million of depreciation and amortization, as well as $5.7 million in deferred income tax expense. The change in operating assets and liabilities was primarily due toour supply chain finance program being a source of cash as we improved our cash flow by $80.7 million. This was partially offset by accrued expenses and other current assets being a use of cash of $24.4 million driven by timing of payments, as well as our inventory balance being a use of cash of $22.2 million due to increased inventory purchases.

Previous wording

Cash used for investing activities

Current wording

Cash provided by (used for) investing activities

Previous wording

For the six months ended September 28, 2024, cash provided by investing activities was $4.6 million. This was primarily due to cash provided by payments from the disposal of property and equipment, including the proceeds related to the sale of our corporate headquarters, for $9.9 million, and cash provided by the earnout payment from the sale of our wholesale tire locations and distribution assets of $8.5 million. This was partially offset by cash used for capital expenditures, including property and equipment, of $13.8 million.

Current wording

For the nine months ended December 28, 2024, cash provided by investing activities was $0.1 million. This was due to cash provided by payments from the disposal of property and equipment, including the proceeds related to the sale of our corporate headquarters, for $12.3 million, and cash provided by the earnout payment from the sale of our wholesale tire locations and distribution assets of $8.5 million, partially offset by cash used for capital expenditures, including property and equipment, of $20.7 million.

Previous wording

For the six months ended September 23, 2023, cash used for investing activities was $6.7 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $15.7 million, partially offset by cash provided by the earnout payment from the sale of our wholesale tire locations and distribution assets and the disposal of property and equipment of $7.3 million and $1.7 million, respectively.

Current wording

For the nine months ended December 23, 2023, cash used for investing activities was $0.3 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $18.9 million, partially offset by cash provided by the escrow and earnout payments from the sale of our wholesale tire locations and distribution assets and the disposal of property and equipment of $15.8 million and $2.8 million, respectively.

Previous wording

For the six months ended September 28, 2024, cash used for financing activities was $78.5 million, which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $40.0 million, as well as payment of finance lease principal and dividends of $20.0 million and $17.4 million, respectively.

Current wording

For the nine months ended December 28, 2024, cash used for financing activities was $99.5 million, which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $42.8 million, as well as payment of finance lease principal and dividends of $29.8 million and $25.8 million, respectively.

Previous wording

For the six months ended September 23, 2023, cash used for financing activities was $87.5 million, which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $50.0 million, as well as payment of finance lease principal and dividends of $19.6 million and $17.9 million, respectively.

Current wording

For the nine months ended December 23, 2023, cash used for financing activities was $111.2 million, which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $11.0 million, as well as payment of finance lease principal and dividends of $29.4 million and $26.8 million, respectively. Also, we used $44.0 million to repurchase common stock during the period.

Previous wording

The consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows may be affected.

Current wording

The consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by management. We evaluate our estimates and

Previous wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by, or including words such as “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “seek,” “should,” “strategy,” “will,” “would” and variations thereof and similar expressions. Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. For example, our forward-looking statements include, without limitation, statements regarding:

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by, or including words such as “anticipate,” “believe,” “can,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “seek,” “should,” “strategy,” “will,” “would” and variations thereof and similar expressions. Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. For example, our forward-looking statements include, without limitation, statements regarding: