MONRO, INC. [MNRO] Filings

10-Q 1 mnro-20211225x10q.htm 10-Q mnro-20211225x10q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 10-Q

____________________________________________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 25, 2021

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 0-19357

____________________________________________________________

Monro, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________________________


New York	16-0838627
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

200 Holleder Parkway, Rochester, New York	14615
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (585) 647-6400

_________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

MNRO

The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of January 21, 2022, 33,546,040 shares of the registrant's common stock, $0.01 par value per share, were outstanding.

Table of Contents

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets	3
Consolidated Statements of Income and Comprehensive Income	4
Consolidated Statements of Changes in Shareholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4. Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	24
Item 6. Exhibits	25
Signatures	26

‎

Monro, Inc. Q3 2022 Form 10-Q

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets



(thousands, except footnotes) (unaudited)	December 25, 2021		March 27, 2021
Assets
Current assets
Cash and equivalents	$	9,514	$	29,960
Accounts receivable		14,709		15,324
Federal and state income taxes receivable		—		10,844
Inventories		169,664		162,282
Other current assets		57,349		48,115
Total current assets		251,236		266,525
Property and equipment, net		315,302		327,063
Finance lease and financing obligation assets, net		272,550		275,360
Operating lease assets, net		222,934		203,329
Goodwill		779,091		689,524
Intangible assets, net		26,082		26,068
Other non-current assets		17,099		18,332
Long-term deferred income tax assets		4,896		5,613
Total assets	$	1,889,190	$	1,811,814
Liabilities and shareholders' equity
Current liabilities
Current portion of finance leases and financing obligations	$	41,192	$	37,803
Current portion of operating lease liabilities		34,685		30,903
Accounts payable		117,893		112,378
Federal and state income taxes payable		55		—
Accrued payroll, payroll taxes and other payroll benefits		23,634		20,842
Accrued insurance		52,906		49,681
Deferred revenue		13,833		11,956
Other current liabilities		27,923		27,053
Total current liabilities		312,121		290,616
Long-term debt		195,000		190,000
Long-term finance leases and financing obligations		362,522		366,330
Long-term operating lease liabilities		201,081		177,724
Other long-term liabilities		11,496		16,649
Long-term deferred income tax liabilities		24,259		19,783
Long-term income taxes payable		1,200		1,028
Total liabilities		1,107,679		1,062,130
Commitments and contingencies - Note 10
Shareholders' equity:
Class C Convertible Preferred stock		29		29
Common stock		399		398
Treasury stock		(108,729)		(108,729)
Additional paid-in capital		243,349		238,244
Accumulated other comprehensive loss		(4,927)		(4,619)
Retained earnings		651,390		624,361
Total shareholders' equity		781,511		749,684
Total liabilities and shareholders' equity	$	1,889,190	$	1,811,814

Class C Convertible Preferred stock Authorized 150,000 shares, $1.50 par value, $0.064 conversion value; 19,664 shares issued and outstanding

Common stock Authorized 65,000,000 shares, $0.01 par value; 39,905,671 shares issued as of December 25, 2021 and 39,848,093 shares issued as of March 27, 2021

Treasury stock 6,359,871 shares, at cost

See accompanying Notes to Consolidated Financial Statements.

Monro, Inc. Q3 2022 Form 10-Q

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income and Comprehensive Income



	Three Months Ended				Nine Months Ended
(thousands, except per share data) (unaudited)	December 25, 2021		December 26, 2020		December 25, 2021		December 26, 2020
Sales	$	341,781	$	284,591	$	1,031,298	$	820,237
Cost of sales, including distribution and occupancy costs		221,199		188,453		654,102		532,119
Gross profit		120,582		96,138		377,196		288,118
Operating, selling, general and administrative expenses		93,146		80,450		287,366		236,603
Operating income		27,436		15,688		89,830		51,515
Interest expense, net of interest income		5,676		6,819		18,893		21,526
Other income, net		(43)		(65)		(138)		(132)
Income before income taxes		21,803		8,934		71,075		30,121
Provision for income taxes		5,516		2,251		18,122		7,605
Net income	$	16,287	$	6,683	$	52,953	$	22,516
Other comprehensive loss
Changes in pension, net of tax		(102)		(170)		(308)		(510)
Other comprehensive loss		(102)		(170)		(308)		(510)
Comprehensive income	$	16,185	$	6,513	$	52,645	$	22,006
Earnings per share
Basic	$	0.48	$	0.20	$	1.57	$	0.67
Diluted	$	0.48	$	0.20	$	1.56	$	0.67
Weighted average common shares outstanding
Basic		33,542		33,307		33,521		33,296
Diluted		34,056		33,827		34,036		33,840

See accompanying Notes to Consolidated Financial Statements.

‎

Monro, Inc. Q3 2022 Form 10-Q

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Changes in Shareholders’ Equity



	Class C											Accumulated
	Convertible									Additional		Other
	Preferred Stock			Common Stock			Treasury Stock			Paid-In		Comprehensive		Retained		Total
(thousands) (unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Loss		Earnings		Equity
Balance at September 26, 2020	22	$	33	39,667	$	397	6,360	$	(108,729)	$	231,095	$	(7,229)	$	620,800	$	736,367
Net income															6,683		6,683
Other comprehensive loss
Pension liability adjustment													(170)				(170)
Dividends declared
Preferred															(112)		(112)
Common															(7,328)		(7,328)
Dividend payable															(10)		(10)
Stock options and restricted stock																	—
Stock-based compensation											613						613
Balance at December 26, 2020	22	$	33	39,667	$	397	6,360	$	(108,729)	$	231,708	$	(7,399)	$	620,033	$	736,043

Balance at September 25, 2021	20	$	29	39,900	$	399	6,360	$	(108,729)	$	242,061	$	(4,825)	$	643,983	$	772,918
Net income															16,287		16,287
Other comprehensive loss
Pension liability adjustment													(102)				(102)
Dividends declared
Preferred															(120)		(120)
Common															(8,722)		(8,722)
Dividend payable															(38)		(38)
Stock options and restricted stock				6		—

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