- Fourth Quarter Sales Up 7.4% to $328.0 Million; Comparable
Store Sales Increase 1.4%
- Fourth Quarter Diluted EPS of $.25; Adjusted Diluted EPS1 of
$.20
- Enters into Agreement to Divest Non-Core Wholesale and Tire
Distribution Assets for an Estimated Total Transaction Value of
$105 Million
- Increases First Quarter Fiscal 2023 Cash Dividend by $.02 to
$.28 per Share
- Announces $150M Share Repurchase Program Authorization
Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive
undercar repair and tire services, today announced financial
results for its fourth quarter and fiscal year ended March 26,
2022.
Fourth Quarter Results
Sales for the fourth quarter of the fiscal year ended March 26,
2022 (“fiscal 2022”) increased 7.4% to $328.0 million, as compared
to $305.5 million for the fourth quarter of the fiscal year ended
March 27, 2021 (“fiscal 2021”). The total sales increase for the
fourth quarter of $22.5 million resulted from a comparable store
sales increase of 1.4% for the period and an increase in sales from
new stores of $19.0 million, primarily from recent acquisitions.
This compares to an increase in comparable store sales of 9.4% in
the prior year period.
Comparable store sales increased approximately 2% for brakes and
were approximately flat for maintenance services and front
end/shocks compared to the prior year period. Comparable store
sales decreased approximately 1% for tires and alignments 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 320 basis points to 31.9% in the fourth
quarter of fiscal 2022 from 35.1% in the prior year period. The
decrease was primarily due to an incremental investment in
technician headcount and wages to support current and future sales
growth. The Company estimates that this incremental investment
impacted gross margin by 250 basis points in the fourth quarter.
Lower than expected comparable store sales growth also resulted in
higher fixed distribution and occupancy costs as a percentage of
sales. Material costs as a percentage of sales were flat, compared
to the prior year period, as the inflationary impacts of higher
material costs were offset by higher selling prices and a mix shift
towards the Company’s higher margin service categories.
Total operating expenses for the fourth quarter were $93.2
million, or 28.4% of sales, as compared to $86.4 million, or 28.3%
of sales in the prior year period. The year-over-year dollar
increase resulted primarily from the expenses of 41 net new stores
as well as due diligence and integration costs related to
acquisitions completed and evaluated in fiscal 2022.
Operating income for the fourth quarter of fiscal 2022 was $11.5
million, or 3.5% of sales, as compared to $20.7 million, or 6.8% of
sales in the prior year period. Interest expense was $5.7 million
for the fourth quarter of fiscal 2022, as compared to $6.7 million
for the fourth quarter of fiscal 2021, principally due to a
decrease in weighted average debt.
Income tax benefit in the fourth quarter of fiscal 2022 was a
net benefit of $2.4 million, which included a $3.1 million tax
benefit due to differences in statutory tax rates from loss years
in which net operating losses have been carried back. This compares
to $2.3 million of tax expense in the prior year period.
Net income for the fourth quarter of fiscal 2022 was $8.6
million, as compared to $11.8 million in the same period of the
prior year. Diluted earnings per share for the fourth quarter of
fiscal 2022 was $.25, compared to $.35 in the fourth quarter of
fiscal 2021. Adjusted diluted earnings per share, a non-GAAP
measure, for the fourth quarter of fiscal 2022 was $.20, which
excluded approximately $.04 per share of costs related to store
impairment charges and acquisition due diligence and integration
costs and $.09 per share of income tax benefit related to net
operating loss carryback. This compares to adjusted diluted
earnings per share of $.38 in the fourth quarter of fiscal 2021,
which excluded $.03 per share related to Monro.Forward initiatives,
management transition costs, and a distribution center closure.
Please refer to the “Non-GAAP Financial Measures” section below for
a discussion of this non-GAAP measure.
During the fourth quarter of fiscal 2022, the Company opened one
store. Monro ended the quarter with 1,304 company-operated stores
and 80 franchised locations.
“I’d like to thank all of our teammates and customers for their
contributions to Monro’s growth and prosperity, and our
shareholders for their continued support. After 20% comparable
store sales growth in the first nine months of fiscal 2022, the
fourth quarter was severely impacted by the surge in COVID-19.
During fiscal 2022, we made significant investments in technician
headcount to expand sales and earnings. While this put pressure on
gross margin, it has positioned us to capture growing industry
demand for our products and services. We are implementing a
strategy to improve our underperforming stores and we have evidence
that our efforts are already working. As we move forward into
fiscal 2023, sales trends are encouraging. While April’s comparable
store sales were 3% lower than a record April last year, May is
trending 3% higher on a larger sales base,” said Mike Broderick,
President and Chief Executive Officer.
Broderick continued, “Today we announced our intention to divest
our non-core Wholesale and tire distribution assets to American
Tire Distributors for an estimated $105 million. As part of the
transaction, we will enter into a supply agreement that will give
us better availability of tires, quicker delivery and better
pricing. Beyond the financial benefits, this divestiture will
enable us to sharpen our focus and resources on our Retail
operations. The proceeds, along with cash generated from
operations, will allow us to return capital to shareholders through
healthy dividend and share repurchase programs as well as
capitalize on acquisitions.”
Full Year Results
Sales for fiscal 2022 increased 20.8% to $1.359 billion from
$1.126 billion in fiscal 2021. Comparable store sales increased
15.2% compared to a decrease of 11.1% in the prior year. Comparable
store sales increased approximately 29% for brakes, 26% for
alignments, 16% for front end/shocks, 16% for maintenance services,
and 11% for tires compared to the prior year.
Gross margin for fiscal 2022 was 35.4%, compared to 35.1% in the
prior year, primarily due to higher comparable store sales, which
resulted in lower fixed distribution and occupancy costs and lower
material costs as a percentage of sales. This was partially offset
by incremental investments in technician headcount and wages to
support current and future sales growth amidst improving consumer
demand.
Total operating expenses for fiscal 2022 were $380.5 million, or
28.0% of sales compared to $323.0 million, or 28.7% of sales in the
prior year. The year-over-year dollar increase resulted from
increased store management payroll and store operating expenses
needed to support current and future topline growth, expenses of 41
net new stores as well as an increase in litigation settlement
costs.
Operating income was $101.3 million, or 7.5% of sales, compared
to $72.2 million, or 6.4% of sales in the prior year. Interest
expense was $24.6 million in fiscal 2022 compared to $28.2 million
in the prior year, principally due to a decrease in weighted
average debt.
Net income for fiscal 2022 was $61.6 million, or $1.81 per
diluted share, as compared to $34.3 million, or $1.01 per diluted
share in fiscal 2021.
Adjusted diluted earnings per share, a non-GAAP measure, in
fiscal 2022 was $1.85, which excluded $.08 per share related to
one-time litigation settlement costs, $.03 per share related to
acquisition due diligence and integration costs, $.02 per share of
costs related to store impairment charges, $.02 per share of costs
related to Monro.Forward initiatives, and $.10 per share of income
tax benefit related to net operating loss carryback and the benefit
of an adjustment to the estimate for prior year store closing
costs. This compares to adjusted diluted earnings per share of
$1.14 in fiscal 2021, which excluded $.06 per share related to
store closing costs $.05 per share of costs related to
Monro.Forward initiatives, $.01 per share of costs related to
acquisition due diligence and integration costs, $.01 per share of
costs related to management transition and a distribution center
closure, and $.01 per share benefit related to a reserve for
potential litigation that was no longer necessary. Please refer to
the “Non-GAAP Financial Measures” section below for a discussion of
this non-GAAP measure.
Strong Financial
Position
During fiscal 2022, the Company generated approximately $174
million in operating cash flow. As of March 26, 2022, the Company
had cash and cash equivalents of approximately $8 million and
availability on its revolving credit facility of approximately $394
million.
Divestiture Update
Subsequent to the fourth quarter of fiscal 2022, the Company
entered into an agreement with American Tire Distributors to divest
its Wholesale and tire distribution assets for an estimated total
transaction value of $105 million. As part of this transaction, the
Company is expecting to enter into a supply agreement for tire
distribution directly to its stores that will improve the Company’s
tire availability, allowing the Company to be a better seller of
tires at higher margins. The divestiture will enable the Company to
focus on its Retail operations, category management and working
capital optimization. The transaction is expected to close in
June.
First Quarter Fiscal 2023 Cash Dividend
Increased
Monro announced today that its Board of Directors has approved a
$.02 per share increase in the Company’s cash dividend for the
first quarter of fiscal year 2023 to $.28 per share. The Company
has increased its cash dividend 17 times during the 17 years since
a cash dividend was first issued. In the past five years, the
Company has increased its quarterly cash dividend from $.18 per
share to $.28 per share. The cash dividend is payable to
shareholders of record 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 Preferred Stock are
entitled. The dividend is payable on June 20, 2022 to shareholders
of record at the close of business on June 6, 2022.
Share Repurchase
Authorization
Monro also announced today that its Board of Directors has
authorized a share repurchase program for the repurchase of up to
$150 million of the Company’s common stock.
The Company may repurchase shares of common stock from time to
time as market conditions warrant, subject to regulatory
considerations.
The method, timing and actual number of shares repurchased will
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 or discontinued at any time without prior
notice.
Company Outlook
Monro is not providing fiscal 2023 financial guidance at this
time but will provide perspective on its outlook for fiscal 2023
during its earnings conference call.
Earnings Conference Call and
Webcast
The Company will host a conference call and audio webcast on
Thursday, May 19, 2022 at 8:30 a.m. Eastern Time. The conference
call may be accessed by dialing 1-844-200-6205 and using the
required access code of 313647. A replay will be available
approximately two hours after the recording through Thursday, June
2, 2022 and can be accessed by dialing 1-866-813-9403 and using the
required access code of 858506. 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 approximately $1.4 billion in sales in fiscal
2022 and continues to expand its national presence through
strategic acquisitions and the opening of newly constructed stores.
Across more than 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 www.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 “expected,” “estimate,” “guidance,” “outlook,”
“potential,” “anticipate,” “believe,” “could,” “may,” “will,”
“intend,” 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, whether the Company is able to divest the wholesale and
tire distribution assets and enter into distribution and related
service agreements with American Tire Distributors, product demand,
dependence on and competition within the primary markets in which
the Company’s stores are located, the need for and costs associated
with store renovations and other capital expenditures, the effect
of general business or economic conditions on the Company’s
business, including the direct and indirect effects of the COVID-19
pandemic and the Russian invasion of Ukraine on the economy,
consumer spending levels, inflation, and unemployment, seasonality,
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 27, 2021 and the Form 10-K for the fiscal year
ended March 26, 2022, which the Company intends to file with the
Securities and Exchange Commission this month. 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 and items related to store
impairment charges and closings as well as our Monro.Forward or
acquisition initiatives.
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.
MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars and share counts in
thousands)
Quarter Ended Fiscal
March
2022
2021
% Change
Sales
$
328,030
$
305,485
7.4
%
Cost of sales, including distribution and
occupancy costs
223,391
198,408
12.6
%
Gross profit
104,639
107,077
(2.3
)%
Operating, selling, general and
administrative expenses
93,171
86,354
7.9
%
Operating income
11,468
20,723
(44.7
)%
Interest expense, net
5,738
6,708
(14.5
)%
Other income, net
(480
)
(55
)
772.7
%
Income before income taxes
6,210
14,070
(55.9
)%
Provision for/(benefit from) income
taxes
(2,405
)
2,267
(206.1
)%
Net income
$
8,615
$
11,803
(27.0
)%
Diluted earnings per share
$
.25
$
.35
(28.6
)%
Weighted average number of diluted shares
outstanding
34,049
33,956
Number of stores open (at end of
quarter)
1,304
1,263
MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars and share counts in
thousands)
Year Ended Fiscal
March
2022
2021
% Change
Sales
$
1,359,328
$
1,125,721
20.8
%
Cost of sales, including distribution and
occupancy costs
877,492
730,526
20.1
%
Gross profit
481,836
395,195
21.9
%
Operating, selling, general and
administrative expenses
380,538
322,957
17.8
%
Operating income
101,298
72,238
40.2
%
Interest expense, net
24,631
28,235
(12.8
)%
Other income, net
(618
)
(188
)
228.7
%
Income before provision for income
taxes
77,285
44,191
74.9
%
Provision for income taxes
15,717
9,872
59.2
%
Net income
$
61,568
$
34,319
79.4
%
Diluted earnings per common share
$
1.81
$
1.01
79.2
%
Weighted average number of diluted shares
outstanding
34,038
33,876
MONRO, INC.
Financial Highlights
(Unaudited)
(Dollars in thousands)
March 26,
March 27,
2022
2021
Assets
Cash and equivalents
$
7,948
$
29,960
Inventories
166,271
162,282
Other current assets
71,283
74,283
Total current assets
245,502
266,525
Property and equipment, net
315,193
327,063
Finance lease and financing obligation
assets, net
268,406
275,360
Operating lease assets, net
213,588
203,329
Other non-current assets
828,723
739,537
Total assets
$
1,871,412
$
1,811,814
Liabilities and Shareholders’
Equity
Current liabilities
$
321,964
$
290,616
Long-term debt
176,466
190,000
Long-term finance leases and financing
obligations
357,475
366,330
Long-term operating lease liabilities
192,637
177,724
Other long-term liabilities
39,964
37,460
Total liabilities
1,088,506
1,062,130
Total shareholders’ equity
782,906
749,684
Total liabilities and shareholders’
equity
$
1,871,412
$
1,811,814
MONRO, INC.
Reconciliation of Adjusted
Diluted Earnings Per Share (EPS)
(Unaudited)
Quarter Ended Fiscal
March
2022
2021
Diluted EPS
$
0.25
$
0.35
Store impairment charge
0.02
-
Store closing costs
-
0.01
Monro.Forward initiative costs
-
0.02
Acquisition due diligence and integration
costs
0.01
-
Management transition costs
-
0.01
Income tax benefit related to net
operating loss carryback
(0.09
)
-
Adjusted Diluted EPS
$
0.20
$
0.38
Note: The calculation of the impact of
non-GAAP adjustments on diluted earnings per share is performed on
each line independently. The table may not add down by +/- $0.01
due to rounding.
Supplemental Reconciliation of
Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Quarter Ended Fiscal
March
2022
2021
Net Income
$
8,615
$
11,803
Store impairment charge
759
45
Store closing costs
(12
)
242
Monro.Forward initiative costs
120
733
Acquisition due diligence and integration
costs
659
99
Management transition costs
-
229
Provision for income taxes on pre-tax
adjustments
(364
)
(329
)
Income tax benefit related to net
operating loss carryback
(3,119
)
-
Adjusted Net Income
$
6,658
$
12,822
MONRO, INC.
Reconciliation of Adjusted
Diluted Earnings Per Share (EPS)
(Unaudited)
Twelve Months Ended
Fiscal
March
2022
2021
Diluted EPS
$
1.81
$
1.01
Store impairment charge
0.02
-
Store closing costs
(0.01
)
0.06
Monro.Forward initiative costs
0.02
0.05
Acquisition due diligence and integration
costs
0.03
0.01
Management transition costs
-
0.01
Litigation settlement
0.08
(0.01
)
Income tax benefit related to net
operating loss carryback
(0.09
)
-
Adjusted Diluted EPS
$
1.85
$
1.14
Note: The calculation of the impact of
non-GAAP adjustments on diluted earnings per share is performed on
each line independently. The table may not add down by +/- $0.01
due to rounding.
Supplemental Reconciliation of
Adjusted Net Income
(Unaudited)
(Dollars in Thousands)
Twelve Months Ended
Fiscal
March
2022
2021
Net Income
$
61,568
$
34,319
Store impairment charge
759
144
Store closing costs
(437
)
2,738
Monro.Forward initiative costs
689
2,243
Acquisition due diligence and integration
costs
1,249
260
Management transition costs
59
614
Litigation settlement
3,759
(250
)
Provision for income taxes on pre-tax
adjustments
(1,465
)
(1,351
)
Income tax benefit related to net
operating loss carryback
(3,119
)
-
Adjusted Net Income
$
63,062
$
38,717
1Adjusted diluted EPS is a non-GAAP measure. Please refer to the
“Non-GAAP Financial Measures” section below for a discussion of
this non-GAAP measure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220519005203/en/
Investors and Media: Felix Veksler Senior Director, Investor
Relations ir@monro.com
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