- 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
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 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 fiscal 2023,
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
to an increase in comparable store sales of 4.5% in the prior year
period.
Adjusted for days, comparable store sales decreased 1% for
batteries, 4% for alignments, 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 defines
comparable store sales.
Gross margin increased 210 basis points compared to the prior
year period, primarily resulting from lower technician 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% of sales 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 fourth quarter 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.
Interest expense 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 an effective 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 adjusted diluted 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 for a 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.
“We expanded gross margins, both in the fourth quarter and for
the full fiscal year. We continued to mitigate 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 our industry 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 current downturn and poised for long-term
success.”
Full Year Results1
- Sales decreased 3.7% to $1.277 billion from $1.325 billion in
fiscal 2023, primarily driven by a pressured 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-year
comparable 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 lower material 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. Excluding these costs, total operating expenses,
inclusive of an extra week, increased $1.0 million compared to the
prior year period.
- Operating income was $71.4 million, or 5.6% of sales, compared
to $79.8 million, or 6.0% of sales in the 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 2024 was $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
fiscal 2023. Please refer to the “Non-GAAP Financial Measures”
section below for a discussion of this non-GAAP measure.
Strong Financial
Position
During fiscal 2024, the Company generated operating cash flow of
$125 million. As of March 30, 2024, the Company had total liquidity
of $475 million.
Fourth Quarter Fiscal 2024 and First
Quarter Fiscal 2025 Cash Dividend
On March 22, 2024, the Company paid a cash dividend for the
fourth quarter of fiscal 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 fiscal year 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 Stock are entitled. The dividend is payable to
shareholders of record on June 4, 2024.
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 fiscal 2024. 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 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 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 the full year of fiscal 2025 during
its earnings conference call.
Earnings Conference Call and
Webcast
The Company will host a conference call and audio webcast on
Thursday, May 23, 2024 at 8:30 a.m. Eastern Time. The conference
call may be accessed by dialing 1-833-470-1428 and using the
required access code of 167286. A replay will be available
approximately two hours after the recording through Thursday, June
6, 2024 and can be accessed by dialing 1-866-813-9403 and using the
required access code of 952959. A replay can also be accessed via
audio webcast at the Investors section of the Company’s website,
located at corporate.monro.com/investors.
About Monro, Inc.
Monro, Inc. (NASDAQ: MNRO) is one of the nation’s leading
automotive service and tire providers, delivering best-in-class
auto care to communities across the country, from oil changes,
tires and parts installation, to the most complex vehicle repairs.
With a growing market share and a focus on sustainable growth, the
Company generated almost $1.3 billion in sales in fiscal 2024 and
continues to expand its national presence through strategic
acquisitions and the opening of newly constructed stores. Across
approximately 1,300 stores and 9,000 service bays nationwide, Monro
brings customers the professionalism and high-quality service they
expect from a national retailer, with the convenience and trust of
a neighborhood garage. Monro’s highly trained teammates and
certified technicians bring together hands-on experience and
state-of-the-art technology to diagnose and address automotive
needs every day to get customers back on the road safely. For more
information, please visit corporate.monro.com.
Cautionary Note Regarding
Forward-Looking Statements
The statements contained in this press release that are not
historical facts may contain statements of future expectations and
other forward-looking statements made pursuant to the Safe Harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by such words and
phrases as “expect,” “estimate,” “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, but are not
necessarily limited to product demand, advances in automotive
technologies including adoption of electric vehicle technology, our
dependence on third parties for certain inventory, dependence on
and competition within the primary markets in which the Company’s
stores are located, the effect of general business or economic and
geopolitical conditions on the Company’s business, including
consumer spending levels, inflation, and unemployment, seasonality,
our ability to service our debt obligations and comply with the
terms of our credit agreement, changes in the U.S. trade
environment, including the impact of tariffs on products imported
from China, the impact of competitive services and pricing, product
development, parts supply restraints or difficulties, the impact of
weather trends and natural disasters, industry regulation, risks
relating to leverage and debt service (including sensitivity to
fluctuations in interest rates), continued availability of capital
resources and financing, risks relating to protection of customer
and employee personal data, risks relating to litigation, risks
relating to integration of acquired businesses and other factors
set forth elsewhere herein and in the Company’s Securities and
Exchange Commission filings, including the Company’s annual report
on Form 10-K for the fiscal year ended March 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
and specifically disclaims any obligation to update any
forward-looking statement to reflect the occurrence of anticipated
or unanticipated events or circumstances after the date of such
statements.
Non-GAAP Financial
Measures
In addition to reporting diluted earnings per share (“EPS”),
which is a generally accepted accounting principles (“GAAP”)
measure, this press release includes adjusted diluted EPS, which is
a non-GAAP financial measure. The Company has included a
reconciliation from adjusted diluted EPS to its most directly
comparable GAAP measure, diluted EPS. Management views this
non-GAAP financial measure as a way to better assess comparability
between periods because management believes the non-GAAP financial
measure shows the Company’s core business operations while
excluding certain non-recurring items such as costs related to
shareholder matters from the Company’s equity capital structure
recapitalization, transition costs related to the Company’s
back-office optimization, 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 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.
MNRO-Fin
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
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
MONRO, INC. Financial Highlights
(Unaudited) (Dollars in thousands)
March
30, 2024
March
25, 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 non-current assets
775,850
785,146
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
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(a)
−
(0.04)
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(c)
−
0.01
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(a)
−
(1,528)
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(c)
−
390
Provision for income taxes on pre-tax
adjustments(b)
(1,103)
(647)
Adjusted Net Income
$
6,672
$
2,669
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(a)
0.01
(0.08)
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(c)
−
0.09
Adjusted Diluted EPS
$
1.33
$
1.36
Note: The calculation of the impact of non-GAAP adjustments on
diluted EPS 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
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(a)
304
(3,496)
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(c)
−
3,034
Provision for income taxes on pre-tax adjustments(b)
(1,740)
(825)
Adjusted Net Income
$
42,398
$
44,480
- Amounts include a loss on subsequent inventory adjustments in
fiscal 2024, and gain on sale of related warehouse, net of
associated closing costs, in fiscal 2023.
- 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.
- Amount relates to the sale of wholesale tire locations and
distribution assets, as well as the revaluation of deferred tax
balances due to changes in the mix of pre-tax income in various
U.S. state jurisdictions as a result of the sale.
1 Financial performance includes the results of the divested
Wholesale and tire distribution assets for fiscal 2023 through June
16.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240523729251/en/
Investors and Media: Felix Veksler Senior Director, Investor
Relations ir@monro.com
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