MNRO Monro Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 11-KT

(Mark One)

OR

For the transition period from April 1, 2021 to December 31, 2021

Commission File Number 0-19357

MONRO, INC.

401(k) PLAN

MONRO, INC.

200 HOLLEDER PARKWAY

ROCHESTER, NY 14615

MONRO, INC.

401(k) PLAN

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

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The accompanying notes are an integral part of the financial statements.

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The accompanying notes are an integral part of the financial statements.

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MONRO, INC.

401(k) PLAN

MONRO, INC.

401(k) PLAN

NOTES TO FINANCIAL STATEMENTS

Forfeited balances of terminated participants’ nonvested accounts are used to reduce future Company contributions and to pay administrative expenses of the Plan. Forfeited accounts used to reduce Company contributions and to pay administrative expenses amounted to approximately $37,000 for the nine months ended December 31, 2021. At December 31, 2021 and March 31, 2021, remaining forfeitures available to offset future contributions were approximately $516,000 and $166,000, respectively.

Notes Receivable from Participants

Participants may borrow from their 401(k) account in various amounts as specified by the Plan. Notes receivable must be a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balances. The terms for notes receivable range from one to five years, or up to ten years for the purchase of a primary residence. The notes receivable are secured by the balance in the participant’s account and bear interest at a rate commensurate with local prevailing rates as determined by the Benefits Committee. Principal and interest are paid ratably through payroll deductions. Notes receivable of approximately $614,000 and $574,000 were granted during the nine months ended December 31, 2021 and the year ended March 31, 2021, respectively. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are charged directly to the participants’ accounts when they are incurred. No allowance for credit losses has been recorded as of December 31, 2021 or March 31, 2021. Delinquent notes receivable are reclassified as distributions based upon the terms of the Plan document.

Administrative Expenses

Plan expenses are primarily paid by the Plan. Expenses related to the administration of notes receivable from participants are charged directly to the participants’ account and are included in administrative expenses. Investment related expenses are included in net depreciation in fair value of investments.

Administration

The Monro, Inc. Benefits Committee is solely responsible for the general administration of the Plan and carrying out the Plan provisions. The Benefits Committee determines the appropriateness of the Plan’s investment offerings, monitors investment performance and reports to the Company’s Board of Directors. The Company reserves the right, by action of the Board of Directors, to discontinue contributions and terminate the Plan at any time. In the event of a termination of the Plan, each participant shall immediately become fully vested.

Since December 2014, the administrator, custodian and trustee of the Plan was Wells Fargo Bank, N.A. (“Wells Fargo”). The Company changed benefit plan administrators, custodian and trustee for the Plan from Wells Fargo to Prudential Financial, Inc. (“Prudential”), effective for the plan year beginning on April 1, 2021. Subsequent to year-end, on April 4, 2022, Empower Retirement, LLC (“Empower”) completed the acquisition of Prudential’s full-service retirement business and became the benefit plan administrator, custodian and trustee of the Plan.

During the nine months ended December 31, 2021, all assets of the Plan were held by Prudential Retirement Services, an operating division of Prudential. The operations of Prudential Retirement Services are conducted principally through Prudential Retirement Insurance & Annuity Company (“PRIAC”), a wholly owned subsidiary of Prudential. PRIAC was responsible for, among other things, the custody and investing of the Plan’s assets and the payment of benefits to eligible participants. Prudential Bank & Trust Company, FSB (“PBT”), a wholly owned subsidiary of Prudential, served as the trustee for which PRIAC was the record keeper of assets.

Certain Plan investments are invested in shares of registered investment companies, common collective trusts and PRIAC. The PRIAC investment option available to participants as of December 31, 2021 included the PRIAC Guaranteed Income Fund (the “Fund”). The Fund is fully benefit responsive; therefore, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the Fund. Contract value represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses.

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MONRO, INC.

401(k) PLAN

NOTES TO FINANCIAL STATEMENTS

The Fund is a stable value fund designed to provide safety of principal, liquidity, and a competitive rate of return. The Fund is a group annuity product issued by PRIAC. It invests in a broadly diversified, fixed-income portfolio within PRIAC’s general account. The portfolio is primarily invested in public bonds, commercial mortgages, and private placement bonds.

Subsequent Events

The Plan Administrator has evaluated subsequent events through the date and time the financial statements were issued.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

Basis of Accounting

The Financial Statements of the Plan have been prepared using the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

Investment Valuation and Income Recognition

Investments are reported at fair value, with the exception of fully benefit-responsive investment contracts, which are reported at contract value (see Note 6). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Plan’s Benefit Committee determines the Plan’s valuation policies utilizing information provided by the investment administrator, custodian and trustee. See Note 5 for discussion of fair value measurements.

The Plan presents, in the Statement of Changes in Net Assets, the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains (losses) and the unrealized appreciation (depreciation) of those investments.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes therein. Actual results could differ from those estimates.

Risks and Uncertainties

Investment securities are exposed to various risks, such as interest rate and market risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risk in the near term would materially affect participants’ account balances and the amount reported in the Statement of Net Assets Available for Benefits and the Statement of Changes in Net Assets Available for Benefits.

Benefit Payments

Benefits are recorded when paid.

Recently Issued Accounting Pronouncements

Recent accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) (including technical corrections to the FASB’s Accounting Standards Codification) did not, or are not, expected to have a material effect on the Plan’s financial statements.

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MONRO, INC.

401(k) PLAN

NOTES TO FINANCIAL STATEMENTS

NOTE 3 - PARTY-IN-INTEREST TRANSACTIONS:

Certain Plan investments are invested in shares of registered investment companies, common collective trusts and PRIAC. The PRIAC investment fund is managed by PRIAC, a wholly-owned subsidiary of Prudential, the Plan’s third party administrator, custodian and trustee. Therefore, transactions with Prudential qualify as party-in-interest transactions under ERISA. Net investment income from PRIAC amounted to approximately $15,600 for the nine months ended December 31, 2021. Fees paid by the Plan to Prudential for professional expenses amounted to approximately $146,000 for the nine months ended December 31, 2021. The Plan also invests in Monro, Inc. Stock Fund. Monro is the Plan Sponsor, and therefore, these transactions qualify as party-in-interest. Investment loss from investments sponsored by Monro amounted to approximately $187,000 for the nine months ended December 31, 2021.

NOTE 4 - FEDERAL INCOME TAX STATUS:

The Plan uses a Pension Protection Act of 2006 (PPA) Prototype Adoption Agreement with Prudential. The agreement has obtained an opinion letter from the Internal Revenue Service (“IRS”), which states that the document satisfies the applicable provisions of the Internal Revenue Code. The Plan has not received a determination letter from the IRS; however the Plan administrator and the Plan’s counsel believe that the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the Internal Revenue Code and, therefore, believe that the Plan is qualified and the related trust is tax-exempt.

Additionally, GAAP requires Plan management to evaluate the tax positions taken by the Plan and recognize a tax liability if the organization has taken an uncertain tax position that is more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2021 and March 31, 2021, there are no uncertain tax positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements.

NOTE 5 - FAIR VALUE OF FINANCIAL INSTRUMENTS:

The accounting standards related to fair value measurements include a hierarchy for information and valuations used in measuring fair value that is broken down into three levels based on reliability, as follows:

A financial instrument’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.    

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2021 and March 31, 2021.

Cash and cash equivalents: The Plan considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Employer Securities: These investments consist of common stock valued at the closing price reported on the active market on which the individual securities are traded.

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MONRO, INC.

401(k) PLAN

NOTES TO FINANCIAL STATEMENTS

Shares of Registered Investment Companies: Valued at the daily closing price as reported by the fund. Shares of registered investment options held by the Plan are open-end mutual funds that are registered with the U.S. Securities and Exchange Commission. These funds are required to publish daily net asset value (“NAV”) and to transact at that price. The shares of registered investment companies held by the Plan are deemed to be actively traded.

Common Collective Trusts: Comprised of fully benefit-responsive investment contracts issued by insurance companies, banks and other financial institutions. The net asset value is used as a practical expedient to estimate fair value. This practical expedient would not be used if it is determined to be probable that the fund will sell the investment for an amount different from the reported NAV. Participant transactions (purchases and sales) may occur daily.

The following tables set forth the Plan’s financial instruments measured at fair value as of December 31, 2021 and March 31, 2021.

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NOTE 6 – INVESTMENT CONTRACT WITH INSURANCE COMPANY:

The Plan participates in an investment contract with Prudential by investing in the PRIAC Guaranteed Income Fund. The principal investments underlying the guarantee are high-quality fixed income instruments mainly consisting of public bonds, commercial mortgages and private placement bonds, within a general account. The Guaranteed Income Fund is a group annuity contract issued by PRIAC and is backed by the full faith and creditworthiness of the issuer. Guarantees are based on the claims-paying ability of PRIAC and not on the value of the securities within the insurer’s general account. The credit rating of the issuer at December 31, 2021 was considered investment grade and there are no reserves against contract value for credit risk of the contract issuer or otherwise.

Only an event causing liquidity constraints at PRIAC could limit the ability of the Plan to transact at the contract value to be paid within 90 days or, in rare circumstances, the contract value to be paid over time. There are not any events that allow the issuer to terminate the contract and which require the Plan sponsor to settle at an amount different than contract value to be paid either within 90 days or over time. As discussed in Note 1, the Plan considers this contract to be fully benefit-responsive. The Guaranteed Income Fund is included at its contract value in the statements of net assets available for benefits. The Guaranteed Income Fund does not operate like a mutual fund, variable annuity product, or conventional fixed rate individual annuity product. Under the group annuity contract that supports this product, participants may ordinarily direct a permitted withdrawal or transfer of all or a portion of their account balance at contract value, within reasonable timeframes. Contract value represents deposits made to the contract, plus earnings at guaranteed crediting rates, less withdrawals and fees.

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