Monro, Inc. Announces Fourth Quarter and Fiscal 2024 Financial Results
Monro (NASDAQ: MNRO) announced its financial results for Q4 and fiscal year 2024, ending March 30, 2024. Q4 sales slightly decreased by 0.2% to $310.1 million while comparable store sales grew 0.1% but fell 7.2% when adjusted for days. Despite lower sales, gross margin improved by 210 basis points. Operating income rose to $10.3 million compared to $6.2 million in the previous year, with net income at $3.7 million, up from $0.4 million. Full-year sales declined by 3.7% to $1.277 billion. Operating cash flow for fiscal 2024 was $125 million. The company's Board approved a $0.28 per share cash dividend for Q1 fiscal 2025.
- Q4 gross margin expanded by 210 basis points.
- Net income for Q4 increased to $3.7 million from $0.4 million.
- Operating income for Q4 rose to $10.3 million.
- Fiscal 2024 operating cash flow was $125 million.
- Interest expense decreased to $5.0 million in Q4 and $20.0 million for the full year.
- Monro ended Q4 with $475 million in total liquidity.
- Approved Q1 fiscal 2025 cash dividend of $0.28 per share.
- Full-year adjusted diluted EPS was $1.33.
- Gross margin for fiscal 2024 increased to 35.4%.
- Q4 sales decreased by 0.2% to $310.1 million.
- Adjusted for days, comparable store sales fell 7.2% in Q4.
- Total operating expenses for Q4 were $99.7 million, up from $97.6 million.
- Full-year sales decreased by 3.7% to $1.277 billion.
- Operating income for fiscal 2024 was $71.4 million, compared to $79.8 million previously.
- Full-year net income decreased to $37.6 million from $39.0 million.
- No share repurchases in Q4 fiscal 2024.
- Company closed 8 stores during Q4.
Insights
Monro's financial performance presents a mixed bag, requiring a close look at the details. The company's revenue for the fourth quarter remained almost flat at
Net income for the fourth quarter increased markedly to
In summary, while Monro's cost management and margin expansion are commendable, the declining sales signal caution. Investors should be mindful of these mixed indicators.
The automotive service and repair industry is highly sensitive to macroeconomic conditions, particularly consumer spending trends. The reported decline in adjusted comparable store sales across various services such as tires, brakes and maintenance reflects broader market challenges. The low-to-middle income consumer base, which forms a significant part of Monro's clientele, is under pressure, leading to a shift towards lower-margin products. This trend is troubling as it can affect the company’s profitability in the long term if consumer spending power does not recover.
Monro's strategic focus on reducing non-productive labor costs and overtime hours is a positive move to safeguard margins. However, the decline in high-ticket items like tires is concerning, given that these products generally drive higher revenue. The closure of 8 stores in the fourth quarter also suggests a strategic pullback in response to market conditions, which could be seen as both a prudent measure to cut losses and a sign of market contraction.
Monro's emphasis on its durable business model and long-term positioning can provide solace to investors looking for stability. However, the immediate challenges in consumer spending and market dynamics need a cautious outlook.
Monro’s decision to maintain a consistent dividend at
Additionally, Monro's liquidity position is strong, with total liquidity of
Investors should appreciate the balance between returning cash to shareholders and maintaining a robust liquidity position.
-
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 -
Approved First Quarter Fiscal 2025 Cash Dividend of
$.28 per Share
Fourth Quarter Results
Sales for the fourth quarter of the fiscal year ended March 30, 2024 (“fiscal 2024”) decreased
Adjusted for days, comparable store sales decreased
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
Total operating expenses for the fourth quarter of fiscal 2024 were
Operating income for the fourth quarter of fiscal 2024 was
Interest expense was
Income tax expense in the fourth quarter of fiscal 2024 was
Net income for the fourth quarter of fiscal 2024 was
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$1.27 7 billion$1.32 5 billion2.0% on a reported basis and3.9% adjusted for days, compared to increases of2.8% for total company and3.5% for Retail locations in the prior year period. -
Gross margin for fiscal 2024 was
35.4% , compared to34.4% 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 29.8% of sales compared to$376.4 million 28.4% of sales. The increase on a dollar basis was principally due to$3.3 million $1.0 million -
Operating income was
$71.4 million 5.6% of sales, compared to$79.8 million 6.0% of sales in the prior year period. -
Interest expense was
$20.0 million $23.2 million -
Net income for fiscal 2024 was
$37.6 million $1.18 $39.0 million $1.20 -
Adjusted diluted earnings per share, a non-GAAP measure, in fiscal 2024 was
$1.33 $1.36
Strong Financial Position
During fiscal 2024, the Company generated operating cash flow of
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
The Company also announced today that its Board of Directors has approved a cash dividend for the first quarter of fiscal year 2025 of
Share Repurchases
The Company did not repurchase any shares under its current Board authorization of up to
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
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
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 |
|
|
||||
|
|
|
|
|
|
|
|
|
|||
Operating, selling, general and administrative expenses |
|
99,719 |
|
|
97,623 |
|
|
||||
Operating income |
|
10,338 |
|
|
6,177 |
|
|
||||
|
|
|
|
|
|
|
|
|
|||
Interest expense, net |
|
4,953 |
|
|
5,864 |
(15.5)% |
|
||||
|
|
|
|
|
|
|
|
|
|||
Other income, net |
|
(307) |
|
|
(318) |
(3.5)% |
|
||||
|
|
|
|
|
|
|
|
|
|||
Income before income taxes |
|
5,692 |
|
|
631 |
|
|
||||
|
|
|
|
|
|
|
|
|
|||
Provision for income taxes |
|
1,992 |
|
|
222 |
|
|
||||
|
|
|
|
|
|
|
|
|
|||
Net income |
$ |
3,700 |
|
$ |
409 |
|
|
||||
|
|
|
|
|
|
|
|
||||
Diluted earnings per share |
$ |
0.12 |
|
$ |
0.01 |
|
|||||
|
|
|
|
|
|
|
|
|
|||
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 |
|
||
|
|
|
|
|
|
|
||
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,
|
March 25,
|
||||
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
Source: Monro, Inc.
FAQ
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