MONRO, INC. [MNRO] Filings

10-Q 1 mnro-20220924x10q.htm 10-Q mnro-20220924x10q

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 September 24, 2022

¨ 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 October 21, 2022, 31,455,472 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	24
Item 4. Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	25
Item 2. UnregisteredSales of Equity Securities and Use of Proceeds	25
Item 6. Exhibits	26
Signatures	27

‎

Monro, Inc. Q2 2023 Form 10-Q

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets



(thousands, except footnotes) (unaudited)	September 24, 2022		March 26, 2022
Assets
Current assets
Cash and equivalents	$	9,794	$	7,948
Accounts receivable		12,603		14,797
Inventories		135,006		166,271
Other current assets		83,408		56,486
Total current assets		240,811		245,502
Property and equipment, net		307,585		315,193
Finance lease and financing obligation assets, net		236,734		268,406
Operating lease assets, net		213,715		213,588
Goodwill		730,253		776,714
Intangible assets, net		18,162		26,682
Other non-current assets		38,172		20,174
Long-term deferred income tax assets		3,637		5,153
Total assets	$	1,789,069	$	1,871,412
Liabilities and shareholders' equity
Current liabilities
Current portion of finance leases and financing obligations	$	40,433	$	42,092
Current portion of operating lease liabilities		35,557		34,692
Accounts payable		184,098		131,989
Federal and state income taxes payable		9,806		2,921
Accrued payroll, payroll taxes and other payroll benefits		14,971		18,540
Accrued insurance		52,017		49,391
Deferred revenue		14,812		14,153
Other current liabilities		33,467		28,186
Total current liabilities		385,161		321,964
Long-term debt		130,000		176,466
Long-term finance leases and financing obligations		320,102		357,475
Long-term operating lease liabilities		193,660		192,637
Other long-term liabilities		11,314		10,821
Long-term deferred income tax liabilities		26,415		28,560
Long-term income taxes payable		647		583
Total liabilities		1,067,299		1,088,506
Commitments and contingencies - Note 9
Shareholders' equity:
Class C Convertible Preferred stock		29		29
Common stock		400		399
Treasury stock		(179,944)		(108,729)
Additional paid-in capital		247,907		244,577
Accumulated other comprehensive loss		(4,692)		(4,494)
Retained earnings		658,070		651,124
Total shareholders' equity		721,770		782,906
Total liabilities and shareholders' equity	$	1,789,069	$	1,871,412

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; 39,957,223 shares issued as of September 24, 2022 and 39,906,561 shares issued as of March 26, 2022

Treasury stock 7,977,316 shares as of September 24, 2022 and 6,359,871 shares as of March 26, 2022, at cost

See accompanying Notes to Consolidated Financial Statements.

Monro, Inc. Q2 2023 Form 10-Q

Table of Contents

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income and Comprehensive Income



	Three Months Ended				Six Months Ended
(thousands, except per share data) (unaudited)	September 24, 2022		September 25, 2021		September 24, 2022		September 25, 2021
Sales	$	329,818	$	347,699	$	679,353	$	689,517
Cost of sales, including distribution and occupancy costs		213,083		217,016		440,429		432,903
Gross profit		116,735		130,683		238,924		256,614
Operating, selling, general and administrative expenses		93,262		96,205		189,197		194,219
Operating income		23,473		34,478		49,727		62,395
Interest expense, net of interest income		5,705		6,276		11,364		13,217
Other income, net		(98)		(50)		(178)		(93)
Income before income taxes		17,866		28,252		38,541		49,271
Provision for income taxes		4,745		7,267		12,936		12,605
Net income	$	13,121	$	20,985	$	25,605	$	36,666
Other comprehensive loss
Changes in pension, net of tax		(99)		(103)		(198)		(206)
Other comprehensive loss		(99)		(103)		(198)		(206)
Comprehensive income	$	13,022	$	20,882	$	25,407	$	36,460
Earnings per share
Basic	$	0.40	$	0.62	$	0.77	$	1.09
Diluted	$	0.40	$	0.62	$	0.77	$	1.08
Weighted average common shares outstanding
Basic		32,204		33,523		32,844		33,510
Diluted		32,729		34,027		33,349		34,026

See accompanying Notes to Consolidated Financial Statements.

‎

Monro, Inc. Q2 2023 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 June 26, 2021	20	$	29	39,865	$	399	6,360	$	(108,729)	$	239,738	$	(4,722)	$	631,876	$	758,591
Net income															20,985		20,985
Other comprehensive loss
Pension liability adjustment													(103)				(103)
Dividends declared
Preferred															(120)		(120)
Common															(8,719)		(8,719)
Dividend payable															(39)		(39)
Stock options and restricted stock				35		—					1,206						1,206
Stock-based compensation											1,117						1,117
Balance at September 25, 2021	20	$	29	39,900	$	399	6,360	$	(108,729)	$	242,061	$	(4,825)	$	643,983	$	772,918

Balance at June 25, 2022	20	$	29	39,920	$	399	6,773	$	(125,945)	$	245,689	$	(4,593)	$	654,097	$	769,676
Net income															13,121		13,121
Other comprehensive loss
Pension liability adjustment													(99)				(99)
Dividends declared
Preferred															(129)		(129)
Common															(8,967)		(8,967)
Dividend payable

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