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Core Insights - Monro Muffler Brake (MNRO) reported quarterly earnings of $0.21 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and showing an increase from $0.17 per share a year ago, resulting in an earnings surprise of +16.67% [1] - The company posted revenues of $288.91 million for the quarter ended September 2025, which was 3.08% below the Zacks Consensus Estimate and a decrease from $301.39 million year-over-year [2] - Monro shares have declined approximately 27.1% year-to-date, contrasting with the S&P 500's gain of 17.2% [3] Earnings Outlook - The future performance of Monro's stock will largely depend on management's commentary during the earnings call and the company's earnings outlook [4][5] - The current consensus EPS estimate for the upcoming quarter is $0.17 on revenues of $302.1 million, and for the current fiscal year, it is $0.60 on revenues of $1.2 billion [7] Industry Context - The Consumer Services - Miscellaneous industry, to which Monro belongs, is currently ranked in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Another company in the same industry, H&R Block (HRB), is expected to report a quarterly loss of $1.40 per share, reflecting a year-over-year decline of -19.7%, with revenues projected at $199.44 million, up 2.9% from the previous year [9]

Monro (NasdaqGS:MNRO) Q2 2026 Earnings Call October 29, 2025 08:30 AM ET Company ParticipantsBrian D'Ambrosia - Executive VP and CFOFelix Wechsler - VP of Investor RelationsDavid Hays - Certified Anti-Money Laundering SpecialistBret Jordan - Managing DirectorPeter Fitzsimmons - President and CEONone - Unknown Speaker 1Thomas Wendler - Senior AssociateConference Call ParticipantsJohn Healy - Managing Director and Research AnalystOperatorGood morning ladies and gentlemen and welcome to the Monro, Inc. earning ...

Monro (NasdaqGS:MNRO) Q2 2026 Earnings Call October 29, 2025 08:30 AM ET Speaker3Good morning ladies and gentlemen and welcome to the Monro, Inc. earnings conference call for the second quarter of fiscal 2026. At this time, participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. If anyone should require assistance during the call, please press star followed by zero on your touchtone phone. As a reminder, this conference call is ...

Financial Performance - Comparable store sales increased by 1.1% in Q2FY26, marking the third consecutive quarter of positive comps[11] - Adjusted diluted EPS was $0.21, exceeding the $0.17 in Q2FY25, a 23.5% increase[11, 13] - Gross margin expanded by 40 basis points year-over-year to 35.7%[11, 13] - Sales decreased by 4.1% from $301.4 million to $288.9 million[13] Strategic Initiatives - The company is focusing on four key areas: driving profitable customer acquisition & activation, improving customer experience & selling effectiveness, increasing merchandising productivity & mitigating tariff risk, and closed store real estate dispositions[5, 6] - The company exited 21 leases and sold 3 owned locations, generating $5.5 million in proceeds[6] - Inventory levels were reduced by approximately $11 million sequentially[11] Fiscal 2026 Expectations - The company expects the store optimization plan to reduce total sales by approximately $45 million in fiscal 2026[19] - CAPEX spend is expected to be $25 million to $35 million[19] Balance Sheet and Liquidity - Net bank debt was approximately $50 million as of September 2025[17] - Availability under the credit facility was approximately $410 million, with cash and equivalents of approximately $10 million as of September 2025[17]

Financial Performance - Diluted earnings per share (EPS) for Q2 2026 was $0.18, while adjusted diluted EPS was $0.21, reflecting a 23.5% increase from the prior year[95][97]. - Operating income for Q2 2026 was $12.8 million, with adjusted operating income at $14.0 million, indicating a decrease of 3.4% compared to the prior year[97][99]. - The company recorded a net income of $5.7 million for Q2 2026, with adjusted net income at $6.6 million[97]. - Total sales for the three months ended September 27, 2025, decreased by 4.1% to $288.9 million, primarily due to closed stores, although comparable store sales increased by 1.1%[97][102]. - Gross profit for the three months ended September 27, 2025, was $103.1 million, representing a gross profit margin of 35.7%, an increase of 40 basis points from the prior year[109][110]. - Adjusted operating income for the three months ended September 27, 2025, was $13.98 million, compared to $12.55 million for the same period in 2024[121]. - Adjusted net income for the three months ended September 27, 2025, was $6.575 million, an increase from $5.175 million in the prior year[122]. Store Operations - The company closed 145 underperforming stores, incurring $14.8 million in net store closing costs during Q1 fiscal 2026, and recorded an additional $7.2 million in net store closing costs during the six months ended September 27, 2025[92][97]. - The company operated 1,116 stores at the end of Q2 2026, having closed 145 stores during the first half of the fiscal year[107][108]. - Comparable store sales growth is expected to significantly impact total sales growth, with a 3.4% increase for the six months ended September 27, 2025[103][101]. Expenses and Costs - Operating, selling, general and administrative (OSG&A) expenses decreased by 3.0% to $90.4 million for the three months ended September 27, 2025, primarily due to reduced store closing costs[111]. - OSG&A expenses decreased by $2.8 million for the three months ended September 27, 2025, and increased by $14.2 million for the six months ended September 27, 2025[113]. - Net interest expense for the three months ended September 27, 2025, was $4.4 million, a decrease of $0.8 million from the prior year, with a percentage of sales dropping from 1.7% to 1.5%[114]. Cash Flow and Capital Expenditures - Cash provided by operating activities for the six months ended September 27, 2025, was $30.4 million, despite a net loss of $2.4 million[138]. - Capital expenditures for fiscal 2026 are expected to be between $25 million and $35 million[129]. - Cash and equivalents at the end of the period were $10.5 million, down from $20.8 million at the beginning of the period[137]. - As of September 27, 2025, the company had a working capital deficit of $268.4 million, an increase of $21.5 million from the previous period[132]. Debt and Financing - The company had $60.0 million outstanding under the Credit Facility as of September 27, 2025, with no amounts due in the next 12 months[130]. - As of September 27, 2025, the company had no debt financing at fixed interest rates, with annual interest expense fluctuations of approximately $0.6 million based on a 100 basis point change in SOFR[153]. - The carrying amount of debt financing was approximately $60.0 million as of September 27, 2025, compared to $61.3 million as of March 29, 2025[154]. Future Outlook - The company is implementing an Operational Improvement Plan with AlixPartners to enhance store operations, marketing, and inventory management through November 1, 2025[93]. - Forward-looking statements include expectations regarding cash flows, sales, and the impact of economic conditions and competitive services[149]. - The company evaluates its accounting estimates and assumptions on an ongoing basis, which may lead to material differences in future financial statements[144].

Sales Performance - Sales for the second quarter of fiscal 2026 decreased 4.1% to $288.9 million, compared to $301.4 million in the same period of fiscal 2025[2]. - For the six months ended September 2025, sales decreased by 0.8% to $589,949 thousand compared to $594,573 thousand in 2024[30]. Comparable Store Sales - Comparable store sales increased 1.1% in the second quarter, with notable increases of 18% for front end/shocks and 6% for brakes[5][3]. - The company is not providing fiscal 2026 financial guidance at this time but expects to deliver positive comparable store sales[17][14]. Profitability Metrics - Gross margin expanded by 40 basis points to 35.7%, primarily due to lower occupancy and material costs[6][13]. - Operating income for the second quarter was $12.8 million, or 4.4% of sales, with adjusted operating income at $14.0 million, or 4.8% of sales[8]. - Net income for the second quarter was $5.7 million, with diluted earnings per share remaining at $0.18, while adjusted diluted earnings per share increased to $0.21[11]. - Operating income significantly declined by 74.8% to $6,675 thousand, compared to $26,449 thousand in the prior year[30]. - The net loss for the six months was $2,385 thousand, a decrease of 120.7% from a net income of $11,510 thousand in 2024[30]. - Adjusted operating income for the six months increased to $28,014 thousand from $27,223 thousand, reflecting a year-over-year growth of 2.9%[40]. - Adjusted net income rose to $13,600 thousand for the six months, compared to $12,074 thousand in 2024, marking an increase of 12.6%[42]. Earnings Per Share - The diluted loss per share for the six months was $(0.10), compared to earnings of $0.37 per share in the previous year[30]. - For the quarter ended September 2025, adjusted diluted earnings per share increased to $0.21 from $0.17 in 2024[38]. - Adjusted diluted earnings per share for the six months ended fiscal September 2025 were $0.43, an increase from $0.39 in the prior year[44]. Operating Expenses - Total operating expenses for the second quarter were $90.4 million, or 31.3% of sales, compared to $93.2 million, or 30.9% of sales in the prior year[7]. - Consulting costs related to the operational improvement plan amounted to $12,986 thousand for the six months, indicating a significant investment in operational efficiency[42]. Store Operations - The company ended the quarter with 1,116 company-operated stores and 48 franchised locations[12]. - The company closed 145 underperforming stores as part of its Store Closure Plan, which included related asset write-offs[45]. - There were no store impairment charges recorded for the six months ended fiscal September 2025, compared to $0.04 million in the prior year[44]. - The store closing costs, net, amounted to $0.18 million for the six months ended fiscal September 2025, compared to $0.02 million in the same period of 2024[44]. Cash Flow and Dividends - The company generated $30 million in cash from operating activities for the first half of fiscal 2026[15]. - The company paid a cash dividend of $0.28 per share for the second quarter of fiscal 2026[16]. Assets and Liabilities - The total assets as of September 2025 were $1,584,000 thousand, a decrease from $1,641,823 thousand in 2024[32]. - The effective tax rate for the six months ended fiscal September 2025 was adjusted to 26.0%, down from 27.1% for the same period in 2024[46]. Transition and Optimization Costs - Transition costs related to back-office optimization remained consistent at $0.03 million for both periods[44]. - The write-off of debt issuance costs was $0.01 million for the six months ended fiscal September 2025, with no such costs in the prior year[44]. - The net gain on the sale of the corporate headquarters was $(0.06) million in the prior year, with no gain recorded in the current period[45].

Core Insights - Monro, Inc. (NASDAQ: MNRO) is implementing an operational improvement plan and introducing new business intelligence tools in 2024 and 2025 to enhance its financial performance [1] Group 1: Company Initiatives - The management of Monro, Inc. is focused on improving financial performance through strategic operational changes [1] - The introduction of new business intelligence tools is expected to play a significant role in the company's operational improvements [1] Group 2: Analyst Perspective - The article reflects a positive outlook on Monro, Inc.'s potential for growth and value investment opportunities [1]

Core Insights - Monro, Inc. (NASDAQ: MNRO) is actively working to enhance its financial performance through a new operational improvement plan and the introduction of business intelligence tools in 2024 and 2025 [1] Group 1: Company Initiatives - The management of Monro, Inc. is focused on implementing strategies aimed at improving financial outcomes [1] Group 2: Analyst Perspective - The article reflects a positive outlook on Monro, Inc. based on the company's efforts to improve its operations and financial metrics [1]

Summary of Monro Inc. Conference Call Company Overview - **Company**: Monro Inc. - **Industry**: Automotive aftermarket services, specifically tire sales and vehicle maintenance - **Locations**: 1,115 locations across 32 states [3][4] Core Points and Arguments 1. **Turnaround Potential**: Monro is viewed as a company with strong turnaround potential due to its national presence and service-oriented business model, which is more valuable to customers compared to traditional retail [3][4] 2. **Financial Health**: The company has maintained profitability despite several years of negative comparable store sales, indicating strong fundamentals and sufficient liquidity to support turnaround efforts [3][4] 3. **Traffic Decline**: The automotive aftermarket industry has faced challenges, including a decline in customer traffic, which Monro aims to address through improved marketing strategies [4][6] 4. **Store Closures**: Monro closed 145 underperforming stores to streamline operations and improve overall performance, with minimal inventory write-off [8][9] 5. **Merchandising Improvements**: The company has hired a new merchandising leader to enhance product offerings and address tariff-related cost increases, aiming for better vendor collaboration [10][11] 6. **Digital Marketing Focus**: Monro has shifted to a more targeted digital marketing strategy, including paid search and social media, to attract repeat customers and drive traffic to stores [11][12] 7. **Customer Engagement**: The implementation of a call center and improved customer communication is expected to enhance service delivery and customer experience [13][14] 8. **Service Revenue Growth**: The company has seen significant increases in service-related revenue, particularly in ride control and brake services, indicating successful upselling strategies [15][16] 9. **Market Share Gains**: Monro gained market share in tire sales during the first quarter, despite industry challenges related to excess capacity [31][33] 10. **Balance Sheet Strength**: Monro reported a net bank debt of $64 million, indicating a conservative leverage position and sufficient cash flow to support capital allocation priorities [34] Additional Important Insights 1. **KPI Focus**: Key performance indicators for monitoring the turnaround include operating income, comparable store sales, earnings per share, and unit growth [35][36] 2. **Long-term Growth Strategy**: The company is considering expansion into new markets, particularly the Southwest, to drive future growth [36][38] 3. **Vendor Relationships**: Strong relationships with tire vendors are crucial for negotiating favorable terms and ensuring product availability [31][32] 4. **Tariff Considerations**: Potential tariffs on imported tires may impact pricing strategies and consumer choices, which the company is monitoring closely [32][33] This summary encapsulates the key points discussed during the conference call, highlighting Monro Inc.'s strategic initiatives, financial health, and market positioning within the automotive aftermarket industry.