200 Holleder Parkway, Rochester, New York 14615 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (585) 647-6400 Not Applicable (Former name or former address, if changed since last report) | --- | --- | --- | --- | |--------|----------------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | New | York | | | | | | | | | (State | | | | | of | Incorporation) | | | Pursuant to the requirements of the Securities Exchang ...

PART I [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from projections - Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed[11](index=11&type=chunk) - Key risk categories include competitive services and pricing, economic conditions and geopolitical uncertainty, advances in automotive technologies (including EVs), dependence on third-party vendors, debt obligations, cash needs, anticipated sales and profit margins, income tax liabilities, critical accounting policies, industry regulation, litigation, business interruptions, cybersecurity, acquisitions, store operations, dividend payments, brand protection, human capital, and climate change impacts[12](index=12&type=chunk) [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Monro, Inc. operates 1,288 retail tire and automotive repair stores nationwide, offering services and focusing on customer experience and growth - Monro, Inc. is a leading nationwide operator of retail tire and automotive repair stores, offering replacement tires, tire-related services, undercar repair, and routine maintenance[16](index=16&type=chunk) Company-operated Store Brands as of March 30, 2024 | Company-operated Store Brands | Stores | | :------------------------------ | :----- | | Monro Auto Service and Tire Centers | 360 | | Tire Choice Auto Service Centers | 349 | | Mr. Tire Auto Service Centers | 317 | | Car-X Tire & Auto | 72 | | Tire Warehouse Tires For Less | 55 | | Ken Towery's Tire & Auto Care | 34 | | Mountain View Tire & Auto Service | 30 | | Tire Barn Warehouse | 27 | | Other | 44 | | Total | 1,288 | - The company serviced approximately **4.7 million** vehicles in fiscal 2024[17](index=17&type=chunk) - Monro operates in one segment, encompassing retail and commercial locations, and maintains its corporate headquarters in Rochester, New York[23](index=23&type=chunk)[24](index=24&type=chunk) [General](index=5&type=section&id=General) This section provides a general overview of Monro's business operations and market position [Business Strategy](index=6&type=section&id=Business%20Strategy) This section outlines Monro's strategic initiatives for enhancing customer experience, optimizing offerings, and driving growth [Purchasing and Distribution](index=7&type=section&id=Purchasing%20and%20Distribution) This section describes Monro's processes for acquiring and distributing tires and automotive parts to its store network [Human Capital](index=7&type=section&id=Human%20Capital) This section details Monro's approach to managing its workforce, including recruitment, training, and employee relations [Competition](index=9&type=section&id=Competition) This section analyzes the competitive landscape within the automotive repair and tire industry where Monro operates [Regulation](index=9&type=section&id=Regulation) This section addresses the various governmental regulations and compliance requirements affecting Monro's business operations [Seasonality](index=9&type=section&id=Seasonality) This section discusses the seasonal fluctuations in demand for Monro's products and services throughout the year [Available Information](index=9&type=section&id=Available%20Information) This section specifies where public information about Monro, Inc. can be accessed by investors and the public [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including competition, economic sensitivity, EV adoption, vendor reliance, debt compliance, and cybersecurity, that could materially affect Monro's operations - The automotive repair industry is highly competitive and fragmented, with competition based on price, reputation, name awareness, customer service, and store location[65](index=65&type=chunk) - Economic conditions, including inflation and interest rates, impact consumer spending, potentially leading to reduced demand for services or 'trading down' to lower-priced options[66](index=66&type=chunk) - Advances in electric vehicle technology and longer-lasting automotive parts may decrease demand for traditional services like oil changes and exhaust repairs[70](index=70&type=chunk)[71](index=71&type=chunk) - The company relies on key vendor relationships, particularly with American Tire Distributors (ATD), for most tire inventory, and changes in U.S. trade policies (e.g., tariffs) could increase costs[72](index=72&type=chunk)[73](index=73&type=chunk)[79](index=79&type=chunk) - Failure to generate sufficient cash flows or comply with debt covenants (e.g., interest coverage ratio, adjusted debt to EBITDAR) could impair liquidity, growth, and dividend payments[80](index=80&type=chunk)[81](index=81&type=chunk)[85](index=85&type=chunk) - Cybersecurity threats, data breaches, and the inability to attract and retain skilled personnel are also significant operational risks[96](index=96&type=chunk)[115](index=115&type=chunk) [Item 1B. Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[123](index=123&type=chunk) [Item 1C. Cybersecurity](index=18&type=section&id=Item%201C.%20Cybersecurity) Monro maintains a comprehensive cybersecurity program aligned with NIST standards, with Board oversight and CISO/CLO operational responsibility - Monro's cybersecurity program is aligned with NIST Cybersecurity Framework, prioritizing prevention, protection, detection, assessment, and response to threats[124](index=124&type=chunk) - Key controls include quarterly cybersecurity awareness training, monthly phishing simulations, a 24/7 dedicated security operations team, intrusion detection/prevention, vulnerability management, and multi-factor authentication[125](index=125&type=chunk) - The Board of Directors delegates cybersecurity oversight to the Audit Committee, which receives quarterly presentations from the CISO[130](index=130&type=chunk)[132](index=132&type=chunk) - The CISO and Chief Legal Officer (CLO) have primary operational responsibility for assessing and managing cybersecurity risks, supported by a well-defined Incident Response Plan (IRP)[128](index=128&type=chunk)[131](index=131&type=chunk) [Item 2. Properties](index=21&type=section&id=Item%202.%20Properties) As of March 30, 2024, Monro operated **1,288** stores, mostly leased, with its corporate headquarters held for sale pending relocation Company-operated Stores and Other Properties as of March 30, 2024 | | Stores | | :------------------------ | :----- | | Owned | 330 | | Leased | 902 | | Owned buildings on leased land | 56 | | Total | 1,288 | - The company's corporate headquarters building in Rochester, New York, was classified as held for sale as of March 30, 2024, with a carrying value of **$5.9 million**, as the company plans to relocate[138](index=138&type=chunk) - Approximately **59%** of store leases (**569** stores) expire after March 2034, considering all renewal options[135](index=135&type=chunk) [Item 3. Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) Monro is involved in various legal proceedings, which management believes are not materially adverse, though outcomes are inherently uncertain - Monro is a party to various claims and legal proceedings incidental to its business, but management does not believe they will have a material adverse effect on financial condition or results of operations[139](index=139&type=chunk) - Litigation is subject to inherent uncertainties, and unfavorable rulings could potentially have a material adverse impact[139](index=139&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Monro, Inc - Not applicable[140](index=140&type=chunk) PART II [Item 5. Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20Market%20for%20the%20Company%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Monro's common stock is listed on Nasdaq, with an authorized share repurchase program and dividends subject to Board discretion - Monro's common stock is listed on the Nasdaq Stock Market under the symbol '**MNRO**'[143](index=143&type=chunk) - As of May 17, 2024, **29,916,345** shares of common stock were outstanding[5](index=5&type=chunk) Share Repurchase Program Activity (as of March 30, 2024) | Program Authorization | Repurchased Shares | Total Investment | Remaining Value | | :-------------------- | :----------------- | :--------------- | :-------------- | | $150 million | 3.7 million | $140.9 million | $9.1 million | Dividends Declared Per Common Share | Fiscal Year | Dividend Per Share | | :---------- | :----------------- | | 2024 | $1.12 | | 2023 | $1.12 | | 2022 | $1.02 | - An agreement was made in May 2023 to reclassify the equity capital structure to eliminate the Class C Preferred Stock, with mandatory conversion expected by **2026**[143](index=143&type=chunk)[397](index=397&type=chunk) [Market Information](index=23&type=section&id=Market%20Information) This section provides details on the trading market for Monro's common stock and related market data [Share Repurchase Activity](index=23&type=section&id=Share%20Repurchase%20Activity) This section outlines the company's share repurchase program and recent activity regarding equity buybacks [Holders of Record](index=23&type=section&id=Holders%20of%20Record) This section reports the number of record holders for Monro's common stock as of a specified date [Dividends](index=23&type=section&id=Dividends) This section details the company's dividend policy and historical dividend payments to common shareholders [Stock Performance Graph](index=24&type=section&id=Stock%20Performance%20Graph) This section presents a graphical comparison of Monro's cumulative total return against market indices [Item 6. [Reserved]](index=24&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is reserved[150](index=150&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Monro focuses on strategic investments for growth, with fiscal 2024 sales and EPS decreasing, while leveraging operating cash flow and its Credit Facility - Monro's strategy focuses on improving guest experience, enhancing customer-centric engagement, optimizing product and service offerings, and accelerating productivity and team engagement[151](index=151&type=chunk) - The company completed the divestiture of its wholesale tire operations and internal tire distribution operations to American Tire Distributors, Inc. (ATD) in June 2022 for **$102 million**[153](index=153&type=chunk) - The U.S. economy experienced high inflation and increased interest rates in fiscal 2023 and 2024, potentially leading to an economic slowdown and impacting demand for products and services[154](index=154&type=chunk) Fiscal 2024 Financial Summary | Metric | 2024 ($M) | 2023 ($M) | % Change | | :--------------------- | :-------- | :-------- | :------- | | Sales | 1,276.8 | 1,325.4 | (3.7)% | | Operating Income | 71.4 | 79.8 | (10.4)% | | Net Income | 37.6 | 39.0 | (3.6)% | | Diluted EPS | $1.18 | $1.20 | (1.7)% | | Adjusted Diluted EPS | $1.33 | $1.36 | (2.2)% | - Sales decreased primarily due to closed stores and a **2.0%** decrease in comparable store sales (**3.9%** adjusted for days), driven by low-to-middle income consumers trading down to lower-margin tires and milder weather impacting tire sales[161](index=161&type=chunk)[164](index=164&type=chunk) - Gross profit as a percentage of sales increased by **100 basis points** in 2024, mainly due to tire mix improvement and opportunistic pricing actions, partially offset by increased retail occupancy and technician labor costs[169](index=169&type=chunk)[170](index=170&type=chunk) - Net interest expense decreased by **$3.2 million** in 2024 due to lower weighted average debt outstanding, despite an increase in the weighted average interest rate[173](index=173&type=chunk) - The effective income tax rate decreased to **27.6%** in 2024 from **31.7%** in 2023, primarily due to discrete tax impacts from the divestiture and revaluation of deferred tax balances in 2023[174](index=174&type=chunk) - Monro expects to generate positive operating cash flow and plans to use it for business operations, acquisitions, debt reduction, and dividend payments[181](index=181&type=chunk) Cash Flow Summary (Fiscal Years Ended March) | (thousands) | 2024 | 2023 | 2022 | | :------------------------------ | :-------- | :-------- | :-------- | | Cash provided by operating activities | $125,196 | $215,016 | $173,759 | | Cash (used for) provided by investing activities | $(1,956) | $26,546 | $(109,801) | | Cash used for financing activities | $(121,563) | $(244,626) | $(85,970) | | Increase (decrease) in cash and equivalents | $1,677 | $(3,064) | $(22,012) | | Cash and equivalents at end of period | $6,561 | $4,884 | $7,948 | - On May 23, 2024, Monro entered into a Fourth Amendment to its Credit Facility, providing additional flexibility by reducing the minimum interest coverage ratio and modifying the EBITDAR definition for a 'Covenant Relief Period' through Q4 fiscal 2026, while increasing the interest rate spread by **25 basis points** and imposing restrictions on share repurchases during this period[152](index=152&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk) [Executive Overview](index=25&type=section&id=Executive%20Overview) This section provides a high-level summary of Monro's financial performance and strategic priorities for the fiscal year [Recent Developments](index=25&type=section&id=Recent%20Developments) This section highlights significant events and changes that have impacted Monro's business recently [Economic Conditions](index=25&type=section&id=Economic%20Conditions) This section discusses the prevailing economic environment and its potential effects on Monro's operations and consumer demand [Financial Summary](index=25&type=section&id=Financial%20Summary) This section presents a concise overview of Monro's key financial results for the reporting period [Analysis of Results of Operations](index=26&type=section&id=Analysis%20of%20Results%20of%20Operations) This section provides a detailed discussion of Monro's revenues, expenses, and profitability trends [Other Performance Factors](index=28&type=section&id=Other%20Performance%20Factors) This section examines additional factors influencing Monro's operational and financial performance [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures used by Monro to provide additional insights [Analysis of Financial Condition](index=30&type=section&id=Analysis%20of%20Financial%20Condition) This section analyzes Monro's balance sheet, liquidity, and capital resources to assess its financial health [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section discusses accounting estimates that require significant judgment and could materially impact financial results [Accounting Standards](index=34&type=section&id=Accounting%20Standards) This section outlines the new and recently adopted accounting standards relevant to Monro's financial reporting [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=34&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Monro is exposed to market risk from interest rate changes on its floating-rate debt, with a **100 basis point** SOFR change impacting annual interest expense by **$1.0 million** - Monro is exposed to market risk from potential changes in interest rates, specifically on its floating-rate debt[220](index=220&type=chunk) - As of March 30, 2024, a **100 basis point** change in SOFR would result in approximately **$1.0 million** in annual interest expense fluctuations[220](index=220&type=chunk) - Long-term debt had a carrying amount and fair value of **$102.0 million** as of March 30, 2024[220](index=220&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Monro's audited consolidated financial statements for fiscal years 2022-2024, including core statements and notes, along with management and auditor reports - Management assessed the effectiveness of the Company's internal control over financial reporting as of March 30, 2024, and determined it was effective[227](index=227&type=chunk) - PricewaterhouseCoopers LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of March 30, 2024[233](index=233&type=chunk) - A critical audit matter identified was the evaluation of long-lived assets for impairment for certain asset groups, due to significant management judgment in developing recoverability estimates and high auditor judgment in evaluating assumptions[240](index=240&type=chunk)[241](index=241&type=chunk) Consolidated Balance Sheet Highlights (thousands) | Metric | March 30, 2024 | March 25, 2023 | | :------------------------- | :------------- | :------------- | | Total Current Assets | $253,289 | $258,467 | | Property and equipment, net | $280,154 | $304,989 | | Goodwill | $736,435 | $736,457 | | Total Assets | $1,692,814 | $1,776,877 | | Total Current Liabilities | $455,156 | $449,177 | | Long-term debt | $102,000 | $105,000 | | Total Liabilities | $1,036,039 | $1,081,955 | | Total Shareholders' Equity | $656,775 | $694,922 | Consolidated Statements of Income and Comprehensive Income Highlights (thousands, except per share data) | Metric | 2024 | 2023 | 2022 | | :------------------------- | :---------- | :---------- | :---------- | | Sales | $1,276,789 | $1,325,382 | $1,359,328 | | Gross profit | $452,103 | $456,175 | $481,836 | | Operating income | $71,425 | $79,750 | $101,298 | | Net income | $37,571 | $39,048 | $61,568 | | Diluted EPS | $1.18 | $1.20 | $1.81 | Consolidated Statements of Cash Flows Highlights (thousands) | Activity | 2024 | 2023 | 2022 | | :------------------------- | :---------- | :---------- | :---------- | | Operating activities | $125,196 | $215,016 | $173,759 | | Investing activities | $(1,956) | $26,546 | $(109,801) | | Financing activities | $(121,563) | $(244,626) | $(85,970) | | Cash and equivalents at end of period | $6,561 | $4,884 | $7,948 | [Report on Management's Assessment on Internal Control Over Financial Reporting](index=36&type=section&id=Report%20on%20Management%27s%20Assessment%20on%20Internal%20Control%20Over%20Financial%20Reporting) This section presents management's assessment of the effectiveness of the company's internal control over financial reporting [Report of Independent Registered Public Accounting Firm](index=37&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) This section contains the independent auditor's opinion on the consolidated financial statements and internal controls [Audited Financial Statements](index=39&type=section&id=Audited%20Financial%20Statements) This section includes the complete set of Monro's audited consolidated financial statements [Notes to Consolidated Financial Statements](index=43&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=62&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure[402](index=402&type=chunk) [Item 9A. Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Monro's management concluded that disclosure controls and internal control over financial reporting were effective as of March 30, 2024 - The Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of March 30, 2024[404](index=404&type=chunk) - Management concluded that Monro's internal control over financial reporting was effective as of March 30, 2024[405](index=405&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended March 30, 2024[406](index=406&type=chunk) [Item 9B. Other Information](index=62&type=section&id=Item%209B.%20Other%20Information) Monro amended its Credit Facility on May 23, 2024, establishing a 'Covenant Relief Period' through Q4 fiscal 2026, adjusting covenants, interest rates, and capital distribution restrictions - On May 23, 2024, Monro entered into a Fourth Amendment to its Credit Facility, establishing a 'Covenant Relief Period' from Q1 fiscal 2025 through Q4 fiscal 2026[407](index=407&type=chunk) - During the Covenant Relief Period, the minimum interest coverage ratio will be reduced from **1.55x** to **1.00x**, gradually increasing to **1.55x** by Q1 fiscal 2027[408](index=408&type=chunk) - The amendment modifies the EBITDAR definition to permit add-backs for non-cash and up to **20%** cash expenses related to store closures (decreasing to **15%** after Q4 fiscal 2026)[410](index=410&type=chunk) - The interest rate spread on borrowings increases by **25 basis points** during the Covenant Relief Period[411](index=411&type=chunk) - Restrictions on dividends and share repurchases are adjusted, requiring minimum liquidity of at least **$400 million** for these activities during the Covenant Relief Period[412](index=412&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=63&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Monro, Inc - Not applicable[413](index=413&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from Monro's 2024 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement[416](index=416&type=chunk)[417](index=417&type=chunk) [Item 11. Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from Monro's 2024 Proxy Statement - Information on executive compensation is incorporated by reference from the 2024 Proxy Statement[418](index=418&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners, management, and equity compensation plans is incorporated by reference from Monro's 2024 Proxy Statement - Information on security ownership of certain beneficial owners and management, and equity compensation plan information, is incorporated by reference from the 2024 Proxy Statement[418](index=418&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related party transactions, and director independence is incorporated by reference from Monro's 2024 Proxy Statement - Information on certain relationships, related party transactions, and director independence is incorporated by reference from the 2024 Proxy Statement[419](index=419&type=chunk) [Item 14. Principal Accountant Fees and Services](index=64&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from Monro's 2024 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement[419](index=419&type=chunk) PART IV [Item 15. Exhibits and Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the filed financial statements, including core statements, notes, and the auditor's report, plus a comprehensive list of exhibits - The report includes audited financial statements: Consolidated Balance Sheets, Statements of Income and Comprehensive Income, Statements of Changes in Shareholders' Equity, and Statements of Cash Flows, along with Notes to Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm[426](index=426&type=chunk) - A comprehensive list of exhibits is provided, covering organizational documents, stock incentive plans, deferred compensation plans, credit agreements, and other material contracts[427](index=427&type=chunk)[429](index=429&type=chunk) [Item 16. Form 10-K Summary](index=68&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[431](index=431&type=chunk) [Signatures](index=69&type=section&id=Signatures) This section contains the required signatures of Monro, Inc.'s principal executive officer, principal financial officer, and Board members, certifying the report filing - The report is signed by Michael T. Broderick (President and Chief Executive Officer) and Brian J. D'Ambrosia (Executive Vice President – Finance, Chief Financial Officer and Treasurer) on May 28, 2024[434](index=434&type=chunk)[435](index=435&type=chunk) - Members of the Board of Directors also signed the report, with Michael T. Broderick acting as Attorney-in-Fact for some directors[435](index=435&type=chunk)

Company Performance - Monro Muffler Brake reported quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.34 per share, and showing an increase from $0.08 per share a year ago, resulting in an earnings surprise of -38.24% [1] - The company posted revenues of $310.08 million for the quarter ended March 2024, missing the Zacks Consensus Estimate by 4.99%, and a slight decrease from $310.84 million year-over-year [2] - Over the last four quarters, Monro has surpassed consensus EPS estimates only once and has not beaten consensus revenue estimates during the same period [2] Stock Performance - Monro shares have declined approximately 11.5% since the beginning of the year, contrasting with the S&P 500's gain of 11.3% [3] - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $333 million, and for the current fiscal year, it is $1.68 on revenues of $1.34 billion [7] Industry Outlook - The Consumer Services - Miscellaneous industry, to which Monro belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Monro's stock performance [5][6]

Exhibit 99.1 200 Holleder Parkway, Rochester, New York 14615 CONTACT: Investors and Media: Felix Veksler Senior Director, Investor Relations ir@monro.com FOR IMMEDIATE RELEASE MONRO, INC. ANNOUNCES FOURTH QUARTER AND FISCAL 2024 FINANCIAL RESULTS ROCHESTER, N.Y. – May 23, 2024 – 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 four ...

Monro Muffler Brake (MNRO) shares soared 5.2% in the last trading session to close at $26.91. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 15.2% loss over the past four weeks.While there is no specific news or development that could be attributed to yesterday's price surge, Monro’s focus on store improvements and strategic acquisitions is expected to aid the upcoming results. That's probably what has made investors optimistic ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Monro, Inc.'s unaudited condensed consolidated financial statements detail financial position, performance, and cash movements [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets detail the company's financial position, showing changes in assets, liabilities, and equity | Metric | December 23, 2023 (thousands) | March 25, 2023 (thousands) | | :-------------------------------- | :----------------------------- | :-------------------------- | | Cash and equivalents | $23,846 | $4,884 | | Total current assets | $271,694 | $258,467 | | Total assets | $1,733,097 | $1,776,877 | | Total current liabilities | $486,632 | $449,177 | | Total liabilities | $1,073,379 | $1,081,955 | | Total shareholders' equity | $659,718 | $694,922 | - Cash and equivalents significantly increased from **$4.884 million** to **$23.846 million** as of December 23, 2023[9](index=9&type=chunk) - Total assets decreased from **$1,776.877 million** to **$1,733.097 million**, while total liabilities slightly decreased from **$1,081.955 million** to **$1,073.379 million**[9](index=9&type=chunk) [Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Consolidated Statements of Income detail financial performance, showing decreased sales and net income for the period | Metric (thousands) | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sales | $317,653 | $335,193 | $966,712 | $1,014,546 | | Gross profit | $112,677 | $113,451 | $342,046 | $352,375 | | Operating income | $21,383 | $23,846 | $61,087 | $73,573 | | Net income | $12,170 | $13,034 | $33,871 | $38,639 | | Basic EPS | $0.38 | $0.41 | $1.06 | $1.18 | | Diluted EPS | $0.38 | $0.41 | $1.05 | $1.17 | - Sales decreased by **5.2%** for the three months and **4.7%** for the nine months ended December 23, 2023, compared to the prior year periods[11](index=11&type=chunk)[78](index=78&type=chunk) - Net income decreased by **6.6%** for the three months and **12.3%** for the nine months ended December 23, 2023, compared to the prior year periods[11](index=11&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' Equity statements detail movements in net income, dividends, and share repurchases | Metric (thousands) | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :----------------- | :----------------------------- | :----------------------------- | | Net income | $33,871 | $38,639 | | Preferred dividends | $(804) | $(386) | | Common dividends | $(25,992) | $(27,096) | | Repurchase of stock | $(44,467) | $(96,919) | - The company repurchased **$44.467 million** of stock during the nine months ended December 23, 2023, a decrease from **$96.919 million** in the prior year[14](index=14&type=chunk) - Common dividends declared were **$0.84** per common share for both nine-month periods[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows summarize cash from operating, investing, and financing activities | Metric (thousands) | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $130,463 | $171,191 | | Cash (used for) provided by investing activities | $(285) | $35,551 | | Cash used for financing activities | $(111,216) | $(201,691) | | Increase in cash and equivalents | $18,962 | $5,051 | | Cash and equivalents at end of period | $23,846 | $12,999 | - Cash provided by operating activities decreased to **$130.5 million** from **$171.2 million** in the prior year, primarily due to changes in operating assets and liabilities[117](index=117&type=chunk)[118](index=118&type=chunk) - Investing activities shifted from providing **$35.6 million** in cash to using **$0.3 million**, largely due to lower proceeds from divestitures[120](index=120&type=chunk)[121](index=121&type=chunk) - Cash used for financing activities decreased significantly from **$201.7 million** to **$111.2 million**, driven by lower principal payments on debt and reduced stock repurchases[122](index=122&type=chunk)[123](index=123&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The Notes to Consolidated Financial Statements provide detailed explanations and additional information on the figures presented in the financial statements [Note 1 – Description of Business and Basis of Presentation](index=8&type=section&id=Note%201%20%E2%80%93%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Monro, Inc. operates 1,296 retail stores across 32 states, focusing on automotive repair and tire services as a single segment - Monro, Inc. operates **1,296** company-operated retail stores and **51** franchised locations in **32** states, focusing on automotive undercar repair and tire services[21](index=21&type=chunk) - The company's operations are organized and managed as one single segment[23](index=23&type=chunk) - Recent accounting guidance for supplier finance programs and contract assets/liabilities in business combinations was adopted in fiscal **2024**, with no material impact[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2 – Acquisitions and Divestitures](index=9&type=section&id=Note%202%20%E2%80%93%20Acquisitions%20and%20Divestitures) Monro acquired six retail stores and divested wholesale tire operations, receiving earnout payments with some outstanding - Monro acquired six retail tire and automotive repair stores in **2023** as part of its strategic expansion[38](index=38&type=chunk) - The divestiture of wholesale tire operations in June **2022** yielded **$62 million** at closing, with **$11.1 million** in earnout received in fiscal **2024** and **$20.2 million** outstanding[40](index=40&type=chunk) - A pre-tax gain of **$2.4 million** was recognized from the divestiture, which allows the company to focus on its core retail business[40](index=40&type=chunk)[42](index=42&type=chunk) [Note 3 – Earnings per Common Share](index=10&type=section&id=Note%203%20%E2%80%93%20Earnings%20per%20Common%20Share) Basic and diluted EPS calculations show a slight decrease for the three and nine months ended December 23, 2023 | Metric (thousands, except per share data) | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :---------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $12,170 | $13,034 | $33,871 | $38,639 | | Less: Preferred stock dividends | $(337) | $(129) | $(804) | $(386) | | Income available to common shareholders | $11,833 | $12,905 | $33,067 | $38,253 | | Basic earnings per common share | $0.38 | $0.41 | $1.06 | $1.18 | | Diluted earnings per common share | $0.38 | $0.41 | $1.05 | $1.17 | - Diluted EPS for the three months ended December 23, 2023, was **$0.38**, down from **$0.41** in the prior year, and for the nine months was **$1.05**, down from **$1.17**[45](index=45&type=chunk) [Note 4 – Income Taxes](index=10&type=section&id=Note%204%20%E2%80%93%20Income%20Taxes) Effective income tax rates decreased due to state taxes, share-based awards, and absence of prior year divestiture impacts | Period | Effective Income Tax Rate | | :------------------------- | :------------------------ | | 3 Months Ended Dec 23, 2023 | 25.8% | | 9 Months Ended Dec 23, 2023 | 26.7% | | 3 Months Ended Dec 24, 2022 | 27.6% | | 9 Months Ended Dec 24, 2022 | 31.7% | - The effective income tax rate for the nine months ended December 24, 2022, was higher by **4.7%** due to discrete tax impacts from the wholesale tire operations divestiture and revaluation of deferred tax balances[46](index=46&type=chunk) [Note 5 – Fair Value](index=10&type=section&id=Note%205%20%E2%80%93%20Fair%20Value) Long-term debt's carrying amount approximated its fair value at **$94.0 million** due to its variable interest rate | Metric | December 23, 2023 (millions) | March 25, 2023 (millions) | | :------------- | :--------------------------- | :------------------------ | | Long-term debt | $94.0 | $105.0 | - The carrying value of long-term debt approximates its fair value due to its variable interest nature[47](index=47&type=chunk) [Note 6 – Cash Dividend](index=10&type=section&id=Note%206%20%E2%80%93%20Cash%20Dividend) Monro paid **$26.8 million** in cash dividends, with future dividends at Board discretion and subject to Credit Facility covenants | Metric (millions) | Nine Months Ended Dec 23, 2023 | | :---------------- | :----------------------------- | | Dividends paid | $26.8 | - The declaration of future dividends is at the discretion of the Board of Directors and depends on financial condition, results of operations, capital requirements, and compliance with Credit Facility covenants[48](index=48&type=chunk) [Note 7 – Revenues](index=11&type=section&id=Note%207%20%E2%80%93%20Revenues) Revenues primarily from automotive repair and tire sales, with deferred revenue from road hazard warranties recognized over time | Revenue Category (thousands) | Three Months Ended Dec 23, 2023 | Nine Months Ended Dec 23, 2023 | | :--------------------------- | :------------------------------ | :----------------------------- | | Tires | $161,116 | $467,069 | | Maintenance | $84,179 | $267,325 | | Brakes | $39,824 | $133,663 | | Steering | $24,490 | $78,851 | | Exhaust | $5,031 | $15,386 | | Franchise royalties | $3,013 | $4,418 | | Total | $317,653 | $966,712 | - Deferred revenue from road hazard warranty agreements was **$22.1 million** as of December 23, 2023, with **$5.1 million** expected to be recognized in the remainder of fiscal **2024**[53](index=53&type=chunk)[54](index=54&type=chunk) [Note 8 – Long-term Debt](index=11&type=section&id=Note%208%20%E2%80%93%20Long-term%20Debt) Monro's long-term debt includes a **$600 million** revolving Credit Facility, with **$94.0 million** outstanding and compliance with covenants - The Credit Facility is a five-year **$600 million** revolving credit facility, extended to November 10, 2027, with interest rates based on SOFR[56](index=56&type=chunk)[57](index=57&type=chunk)[59](index=59&type=chunk) | Metric | December 23, 2023 (millions) | | :------------------------- | :--------------------------- | | Outstanding under Credit Facility | $94.0 | | Available under Credit Facility | $475.9 | - The company was in compliance with all debt covenants, including an interest coverage ratio of at least **1.55** to **1** and an adjusted debt to EBITDAR ratio not exceeding **4.75** to **1**[61](index=61&type=chunk) [Note 9 – Commitments and Contingencies](index=12&type=section&id=Note%209%20%E2%80%93%20Commitments%20and%20Contingencies) Total commitments are **$718.3 million**, including debt and lease obligations, with potential adverse impact from legal proceedings | Commitment Type (thousands) | Total | Within 1 Year | | :-------------------------- | :----------- | :------------ | | Principal payments on long-term debt | $94,000 | $0 | | Finance lease commitments | $365,192 | $51,045 | | Operating lease commitments | $259,079 | $46,356 | | Total | $718,271 | $97,401 | - The company is involved in legal proceedings, and unfavorable rulings could have a material adverse impact on its financial position and results of operations[63](index=63&type=chunk) [Note 10 – Supplier Finance Program](index=12&type=section&id=Note%2010%20%E2%80%93%20Supplier%20Finance%20Program) Monro facilitates a voluntary supply chain financing program for suppliers, with **$168.4 million** in eligible outstanding obligations - Monro operates a voluntary supply chain financing program for suppliers to sell receivables to a financial institution[64](index=64&type=chunk) - The program is considered a trade payable program, not a borrowing arrangement[64](index=64&type=chunk) | Metric (millions) | December 23, 2023 | March 25, 2023 | December 24, 2022 | | :------------------------------------ | :---------------- | :------------- | :---------------- | | Outstanding supplier obligations eligible for advance payment | $168.4 | $167.3 | $133.9 | [Note 11 – Share Repurchase](index=13&type=section&id=Note%2011%20%E2%80%93%20Share%20Repurchase) Monro repurchased **1.54 million** common shares for **$44.0 million** under a board-authorized program, including excise tax | Metric (thousands, except per share data) | Three Months Ended Dec 23, 2022 | Nine Months Ended Dec 23, 2023 | | :---------------------------------------- | :------------------------------ | :----------------------------- | | Number of shares purchased | 1,543.6 | 1,543.6 | | Average price paid per share | $28.50 | $28.50 | | Total repurchased | $43,997 | $43,997 | - The share repurchase activity includes an excise tax of **$0.4 million** for the three and nine months ended December 23, 2023[67](index=67&type=chunk) [Note 12 – Equity Capital Structure Reclassification](index=13&type=section&id=Note%2012%20%E2%80%93%20Equity%20Capital%20Structure%20Reclassification) Monro reclassified Class C Convertible Preferred Stock and shareholders approved declassifying the Board of Directors - A reclassification agreement was made to eliminate Class C Convertible Preferred Stock, with an adjusted conversion rate of **61.275** common shares per preferred share[69](index=69&type=chunk)[70](index=70&type=chunk) - Shareholders approved an amendment to declassify the Board of Directors, transitioning to one-year terms for all directors starting from the **2025** annual meeting[71](index=71&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, operations, liquidity, non-GAAP measures, and forward-looking statements [Recent Developments](index=14&type=section&id=Recent%20Developments) No material recent developments affected Monro's financial reporting during the quarter ended December 23, 2023 - No material recent developments occurred during the quarter ended December 23, 2023, that affected financial reporting[73](index=73&type=chunk) [Economic Conditions](index=14&type=section&id=Economic%20Conditions) U.S. economic conditions, including inflation and interest rates, may impact demand and increase costs for Monro - The U.S. economy faced higher inflation, constrained labor availability, and increased interest rates in fiscal **2023** and **2024**[74](index=74&type=chunk) - These economic conditions could lead to a slowdown or recession, potentially decreasing demand for products and services and increasing operational costs[74](index=74&type=chunk) [Financial Summary](index=14&type=section&id=Financial%20Summary) Third quarter diluted EPS was **$0.38**, with sales decreasing **5.2%** due to lower comparable store sales | Metric | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Diluted EPS | $0.38 | $0.41 | $1.05 | $1.17 | | Adjusted diluted EPS | $0.39 | $0.43 | $1.11 | $1.27 | - Sales decreased **5.2%** for the three months ended December 23, 2023, primarily due to a **6.1%** decrease in comparable store sales[77](index=77&type=chunk) - Operating income was **$21.4 million**, a **10.3%** decrease from the prior year, and net income was **$12.2 million**[77](index=77&type=chunk) [Analysis of Results of Operations](index=15&type=section&id=Analysis%20of%20Results%20of%20Operations) Sales decreased due to lower comparable store sales, while gross profit percentage increased from tire mix and staffing | Metric (thousands) | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sales | $317,653 | $335,193 | $966,712 | $1,014,546 | | Gross profit | $112,677 | $113,451 | $342,046 | $352,375 | | Operating income | $21,383 | $23,846 | $61,087 | $73,573 | | Sales Percentage Change | Three Months Ended Dec 23, 2023 | Nine Months Ended Dec 23, 2023 | | :---------------------- | :------------------------------ | :----------------------------- | | Sales change | (5.2)% | (4.7)% | | Comparable store sales | (6.1)% | (2.7)% | | Closed store sales | (0.1)% | (2.6)% | | New store sales | 0.3% | 0.4% | | Franchise royalties | 0.7% | 0.2% | | Comparable Store Product Category Sales Change | Three Months Ended Dec 23, 2023 | | :--------------------------------------------- | :------------------------------ | | Tires | (9)% | | Maintenance service | (3)% | | Brakes | (1)% | | Alignment | (5)% | | Front end/shocks | (5)% | - Gross profit as a percentage of sales increased by **170** basis points for the three months and **70** basis points for the nine months ended December 23, 2023, driven by tire mix improvement and reduced technician labor costs[89](index=89&type=chunk)[90](index=90&type=chunk)[91](index=91&type=chunk) [OSG&A Expenses](index=17&type=section&id=OSG%26A%20Expenses) OSG&A expenses increased due to comparable/new store costs, optimization, and relocation, partially offset by other decreases | Metric (thousands) | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | OSG&A Expenses | $91,294 | $89,605 | $280,959 | $278,802 | | Percentage of sales | 28.7% | 26.7% | 29.1% | 27.5% | - The increase in OSG&A expenses was driven by comparable and new store costs, back-office optimization, and corporate headquarters relocation, partially offset by decreases from closed stores and litigation reserve/settlement costs[93](index=93&type=chunk)[94](index=94&type=chunk) [Other Performance Factors](index=17&type=section&id=Other%20Performance%20Factors) Net interest expense decreased from lower debt, while the effective tax rate decreased due to the absence of prior divestiture impacts | Metric (millions) | Three Months Ended Dec 23, 2023 | Nine Months Ended Dec 23, 2023 | | :---------------- | :------------------------------ | :----------------------------- | | Net interest expense | $5.0 | $15.1 | - Weighted average debt outstanding decreased by approximately **$104 million** for the three months and **$121 million** for the nine months ended December 23, 2023, compared to prior year[95](index=95&type=chunk)[96](index=96&type=chunk) | Period | Effective Income Tax Rate | | :------------------------- | :------------------------ | | 3 Months Ended Dec 23, 2023 | 25.8% | | 9 Months Ended Dec 23, 2023 | 26.7% | | 3 Months Ended Dec 24, 2022 | 27.6% | | 9 Months Ended Dec 24, 2022 | 31.7% | [Non-GAAP Financial Measures](index=18&type=section&id=Non-GAAP%20Financial%20Measures) Monro uses adjusted net income and diluted EPS as non-GAAP measures, excluding non-recurring items for comparability | Metric (thousands) | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :----------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $12,170 | $13,034 | $33,871 | $38,639 | | Adjusted net income | $12,546 | $13,603 | $35,726 | $41,811 | | Metric | Three Months Ended Dec 23, 2023 | Three Months Ended Dec 24, 2022 | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :--------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Diluted EPS | $0.38 | $0.41 | $1.05 | $1.17 | | Adjusted diluted EPS | $0.39 | $0.43 | $1.11 | $1.27 | - Non-GAAP adjustments exclude items like costs related to shareholder matters, back-office optimization, corporate headquarters relocation, store closings, acquisition due diligence, litigation, management restructuring, and the net gain/loss on the sale of wholesale tire and distribution assets[98](index=98&type=chunk)[99](index=99&type=chunk) [Analysis of Financial Condition](index=19&type=section&id=Analysis%20of%20Financial%20Condition) Monro expects positive operating cash flow for growth and debt repayment, with a working capital deficit and liquidity from cash and Credit Facility - Monro's capital allocation strategy focuses on generating positive operating cash flow to support business operations, invest in acquisitions, pay down debt, return cash to shareholders via dividends, and repurchase common stock[106](index=106&type=chunk) - Expected capital expenditures for fiscal **2024** are **$30 million** to **$35 million**[108](index=108&type=chunk) | Metric (millions) | December 23, 2023 | March 25, 2023 | | :------------------------ | :---------------- | :------------- | | Working capital deficit | $214.9 | $190.7 | | Cash and equivalents | $23.8 | - | | Available Credit Facility | $475.9 | - | - The working capital deficit increased by **$24.2 million**, primarily due to an increase in accounts payable from the supply chain finance program[112](index=112&type=chunk) [Summary of Cash Flows](index=20&type=section&id=Summary%20of%20Cash%20Flows) Cash flows show **$130.5 million** from operations, **$0.3 million** used in investing, and **$111.2 million** used in financing | Metric (thousands) | Nine Months Ended Dec 23, 2023 | Nine Months Ended Dec 24, 2022 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $130,463 | $171,191 | | Cash (used for) provided by investing activities | $(285) | $35,551 | | Cash used for financing activities | $(111,216) | $(201,691) | | Increase in cash and equivalents | $18,962 | $5,051 | | Cash and equivalents at end of period | $23,846 | $12,999 | - Operating cash flow decreased due to changes in operating assets and liabilities, despite improvements from the supply chain finance program[117](index=117&type=chunk)[118](index=118&type=chunk) - Investing activities shifted to a net cash outflow, primarily due to capital expenditures partially offset by divestiture-related payments[120](index=120&type=chunk) - Financing cash outflow decreased significantly, driven by lower net payments on the Credit Facility and reduced stock repurchases[122](index=122&type=chunk)[123](index=123&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) Monro's critical accounting estimates remain unchanged since the Form 10-K for fiscal year ended March 25, 2023 - There have been no material changes to the company's critical accounting estimates since the Form 10-K for the fiscal year ended March 25, 2023[125](index=125&type=chunk) [Recent Accounting Pronouncements](index=21&type=section&id=Recent%20Accounting%20Pronouncements) Impact of recent accounting standards on financial statements is discussed in Note 1 - Refer to Note 1 for a discussion of the impact of recently issued accounting standards[126](index=126&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=21&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a cautionary note on forward-looking statements, highlighting risks and uncertainties - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[127](index=127&type=chunk) - Key risk factors include competitive services and pricing, economic conditions, automotive technology changes, dependence on third-party vendors, debt obligations, capital expenditures, sales, gross profit margin, OSG&A expenses, income tax liabilities, critical accounting policies, industry regulation, litigation, business interruptions, data security, acquisitions, growth plans, dividend payments, personnel, and climate change[128](index=128&type=chunk)[131](index=131&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Monro faces market risk from interest rate changes on floating rate debt, with a **100** bps SOFR change impacting interest expense by **$0.9 million** - Monro is exposed to market risk from potential changes in interest rates, specifically on its floating rate debt[132](index=132&type=chunk) - A **100** basis point change in SOFR would result in approximately **$0.9 million** annual interest expense fluctuation based on the debt position at December 23, 2023[132](index=132&type=chunk) | Metric | December 23, 2023 (millions) | March 25, 2023 (millions) | | :------------- | :--------------------------- | :------------------------ | | Debt financing | $94.0 | $105.0 | [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective as of December 23, 2023[135](index=135&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended December 23, 2023[136](index=136&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) Monro is involved in legal proceedings, where unfavorable resolutions could materially impact financial condition and operations - Monro is a party to various legal proceedings incidental to its business[138](index=138&type=chunk) - Unfavorable rulings in legal matters could have a material adverse impact on the company's financial position and results of operations[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Monro repurchased **1.54 million** shares for **$43.997 million** under a **$150 million** program, with **$9.150 million** remaining - The Board of Directors authorized a **$150 million** share repurchase program with no stated expiration[139](index=139&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :-------------------------------------- | :------------------------------- | :--------------------------- | | September 24, 2023 through October 21, 2023 | — | — | | October 22, 2023 through November 25, 2023 | 799,002 | $27.46 | | November 26, 2023 through December 23, 2023 | 744,565 | $29.63 | | Total | 1,543,567 | $28.50 | - As of December 23, 2023, **$9.150 million** remained available for repurchase under the program[140](index=140&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL data - Exhibits include a Supply Agreement, Amended and Restated Employment Agreements, Certifications under the Sarbanes-Oxley Act, and XBRL Instance Document and Taxonomy Extensions[142](index=142&type=chunk) [Signatures](index=26&type=section&id=Signatures) The report is duly signed by Monro, Inc.'s President and CEO, and EVP, CFO, and Treasurer on January 24, 2024 - The report was signed by Michael T. Broderick, President and Chief Executive Officer, and Brian J. D'Ambrosia, Executive Vice President – Finance, Chief Financial Officer and Treasurer, on January 24, 2024[148](index=148&type=chunk)

Financial Data and Key Metrics Changes - Sales decreased 5.2% year-over-year to $317.7 million in the third quarter, primarily due to lower tire unit sales [35] - Comparable store sales declined approximately 6% from the prior year period [31] - Net income was approximately $12.2 million compared to $13 million in the same period last year [3] - Diluted earnings per share was $0.38 compared to $0.41 for the same period last year, with adjusted diluted earnings per share at $0.39 compared to $0.43 in the third quarter of fiscal 2023 [37] Business Line Data and Key Metrics Changes - Tire units were down approximately 14%, while average ticket price increased by 5% [51][69] - Comparable store sales in the 300 small or underperforming stores were consistent with the overall comp in the quarter [31] - Gross margin increased 170 basis points compared to the prior year, primarily due to lower material costs and technician labor costs as a percentage of sales [56] Market Data and Key Metrics Changes - The tire market experienced a mid-single-digit decline in units across the industry [9] - Preliminary January month-to-date sales were down 6%, but comps accelerated materially in the last two weeks with the return of normal seasonal weather [32][42] Company Strategy and Development Direction - The company aims to improve sales, expand margins, and create cash while focusing on enhancing the customer experience and optimizing inventory [33][40] - Plans to deliver an improvement in diluted earnings per share this fiscal year despite consumer-related headwinds [30] - The company is focused on maintaining a balanced approach between tire and service categories with competitive pricing [33] Management's Comments on Operating Environment and Future Outlook - Management noted a tough macroeconomic environment with consumer deferrals of tire purchases impacting sales [51] - The company expects lower year-over-year full-year sales but anticipates improvements in gross margin through pricing actions and tire mix optimization [39] - Management expressed confidence in restoring gross margins back to pre-COVID levels with double-digit operating margins over the long term [55] Other Important Information - Total operating expenses were $91.3 million, or 28.7% of sales, compared to $89.6 million, or 26.7% of sales in the prior year period [36] - The company generated $130 million of cash from operations during the first nine months of fiscal 2024 [38] - Share repurchases amounted to approximately $44 million under the share repurchase program [59] Q&A Session Summary Question: Can you provide more detail on the labor cost reduction? - Management indicated that labor hours were reduced, contributing to a 40 basis points benefit, and emphasized the importance of managing non-productive payroll [10][65] Question: What are the trends in comparable store sales? - Management noted that the first half of January was challenging, but sales improved significantly in the second half due to favorable weather [41][42] Question: How did the underperforming stores perform? - Performance was variable, with one-third of the 300 underperforming stores being extremely successful, one-third meeting expectations, and one-third falling short [105]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, equity changes, and cash flows, along with detailed notes on financial performance and position [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Consolidated Balance Sheet Highlights (Millions USD) | Metric | September 23, 2023 | March 25, 2023 | Change | | :-------------------------------- | :------------------- | :------------- | :----- | | Cash and equivalents | $9.1M | $4.9M | +$4.2M | | Total current assets | $247.9M | $258.5M | -$10.6M | | Total assets | $1,726.8M | $1,776.9M | -$50.1M | | Total current liabilities | $472.4M | $449.2M | +$23.2M | | Long-term debt | $55.0M | $105.0M | -$50.0M | | Total liabilities | $1,026.6M | $1,082.0M | -$55.3M | | Total shareholders' equity | $700.1M | $694.9M | +$5.2M | [Consolidated Statements of Income and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income Consolidated Statements of Income Highlights (Millions USD, except per share data) | Metric | Three Months Ended Sep 23, 2023 | Three Months Ended Sep 24, 2022 | Six Months Ended Sep 23, 2023 | Six Months Ended Sep 24, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Sales | $322.1M | $329.8M | $649.1M | $679.4M | | Gross profit | $115.0M | $116.7M | $229.4M | $238.9M | | Operating income | $22.4M | $23.5M | $39.7M | $49.7M | | Net income | $12.9M | $13.1M | $21.7M | $25.6M | | Basic EPS | $0.40 | $0.40 | $0.68 | $0.77 | | Diluted EPS | $0.40 | $0.40 | $0.68 | $0.77 | [Consolidated Statements of Changes in Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This section outlines the changes in the company's shareholders' equity over a period, reflecting net income, dividends, and stock-based compensation Changes in Shareholders' Equity (Millions USD) | Metric | Balance at March 25, 2023 | Net Income (6 months) | Dividends Declared (6 months) | Stock-based Compensation (6 months) | Balance at September 23, 2023 | | :-------------------------- | :------------------------ | :-------------------- | :---------------------------- | :---------------------------------- | :---------------------------- | | Total Shareholders' Equity | $694.9M | $21.7M | $(18.1M) | $1.9M | $700.1M | - Common dividends declared for the six months ended September 23, 2023, totaled **$17.6 million**, with **$0.56 per common share**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities, illustrating changes in the company's cash position Summary of Cash Flows (Millions USD) for Six Months Ended | Activity | September 23, 2023 | September 24, 2022 | | :-------------------------------- | :------------------- | :------------------- | | Cash provided by operating activities | $98.3M | $120.3M | | Cash (used for) provided by investing activities | $(6.7M) | $37.9M | | Cash used for financing activities | $(87.5M) | $(156.4M) | | Increase in cash and equivalents | $4.2M | $1.8M | | Cash and equivalents at end of period | $9.1M | $9.8M | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements, clarifying accounting policies and significant transactions [Note 1 Description of Business and Basis of Presentation](index=8&type=section&id=Note%201%20Description%20of%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core business operations, fiscal year definition, and the basis for presenting its financial statements - Monro, Inc. operates **1,298 company-operated retail stores** and **77 franchised locations** in 32 states, focusing on automotive undercar repair, tire replacement, and related services[21](index=21&type=chunk)[23](index=23&type=chunk) - The company's fiscal year is 52/53 weeks, ending on the last Saturday in March; fiscal year 2024 is a **53-week year**[26](index=26&type=chunk) - Assets related to the planned sale of the corporate headquarters were classified as held for sale as of September 23, 2023[34](index=34&type=chunk) [Note 2 Acquisitions and Divestitures](index=9&type=section&id=Note%202%20Acquisitions%20and%20Divestitures) This note details the company's recent strategic transactions, including retail store acquisitions and the divestiture of wholesale tire operations - Acquired **six retail tire and automotive repair stores** in 2023 to expand market presence[36](index=36&type=chunk) - Completed the divestiture of wholesale tire operations in June 2022 for a total consideration of **$102 million**, with **$7.3 million** of the **$40 million** earnout received during the first six months of fiscal 2024[38](index=38&type=chunk) - The divestiture allows the company to focus resources on its core retail business operations[38](index=38&type=chunk) [Note 3 Earnings per Common Share](index=10&type=section&id=Note%203%20Earnings%20per%20Common%20Share) This note provides a breakdown of net income available to common shareholders and the calculation of basic and diluted earnings per common share Earnings per Common Share (Millions USD, except per share data) | Metric | Three Months Ended Sep 23, 2023 | Three Months Ended Sep 24, 2022 | Six Months Ended Sep 23, 2023 | Six Months Ended Sep 24, 2022 | | :----------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Net income | $12.9M | $13.1M | $21.7M | $25.6M | | Less: Preferred stock dividends | $(0.3M) | $(0.1M) | $(0.5M) | $(0.3M) | | Income available to common shareholders | $12.5M | $13.0M | $21.2M | $25.3M | | Basic earnings per common share | $0.40 | $0.40 | $0.68 | $0.77 | | Diluted earnings per common share | $0.40 | $0.40 | $0.68 | $0.77 | [Note 4 Income Taxes](index=10&type=section&id=Note%204%20Income%20Taxes) This note explains the company's effective income tax rates and the factors influencing their fluctuations between periods Effective Income Tax Rate | Period | September 23, 2023 | September 24, 2022 | | :------------------- | :------------------- | :------------------- | | Three Months Ended | 26.8% | 26.6% | | Six Months Ended | 27.1% | 33.6% | - The effective income tax rate for the six months ended September 24, 2022, was **higher by 6.9%** due to discrete tax impacts from the divestiture of wholesale tire operations and revaluation of deferred tax balances[43](index=43&type=chunk) [Note 5 Fair Value](index=10&type=section&id=Note%205%20Fair%20Value) This note discusses the fair value measurements of the company's financial instruments, particularly long-term debt Long-term Debt Fair Value (Millions USD) | Date | Carrying Amount | Fair Value | | :----------------- | :-------------- | :--------- | | September 23, 2023 | $55.0M | $55.0M | | March 25, 2023 | $105.0M | $105.0M | - The fair value of long-term debt approximates its carrying amount due to its variable interest rate nature[44](index=44&type=chunk) [Note 6 Cash Dividend](index=10&type=section&id=Note%206%20Cash%20Dividend) This note details the cash dividends paid and the factors influencing future dividend declarations - Paid **$17.9 million** in dividends during the six months ended September 23, 2023[45](index=45&type=chunk) - Future dividends are at the discretion of the Board of Directors and depend on financial condition, results of operations, capital requirements, and compliance with credit facility covenants[45](index=45&type=chunk) [Note 7 Revenues](index=11&type=section&id=Note%207%20Revenues) This note provides a breakdown of the company's revenue streams by category and details deferred revenue balances - Automotive undercar repair, tire replacement sales, and tire-related services constitute the vast majority of revenues[47](index=47&type=chunk) Revenues by Category (Millions USD) for Six Months Ended | Category | September 23, 2023 | September 24, 2022 | | :--------------- | :------------------- | :------------------- | | Tires | $306.0M | $331.0M | | Maintenance | $183.1M | $180.9M | | Brakes | $93.8M | $96.2M | | Steering | $54.4M | $57.6M | | Exhaust | $10.4M | $12.2M | | Other | $1.4M | $1.5M | | **Total** | **$649.1M** | **$679.4M** | Deferred Revenue (Millions USD) | Date | Balance | | :----------------- | :-------- | | September 23, 2023 | $22.2M | | March 25, 2023 | $22.4M | [Note 8 Long-term Debt](index=11&type=section&id=Note%208%20Long-term%20Debt) This note details the company's revolving Credit Facility, outstanding balances, and compliance with debt covenants - The company has a **$600 million** revolving Credit Facility, extended to November 10, 2027, with interest based on SOFR + 0.10%[52](index=52&type=chunk)[57](index=57&type=chunk) - As of September 23, 2023, **$55.0 million** was outstanding under the Credit Facility, with **$514.9 million** available[59](index=59&type=chunk) - The company was in compliance with all debt covenants as of September 23, 2023[59](index=59&type=chunk) [Note 9 Commitments and Contingencies](index=12&type=section&id=Note%209%20Commitments%20and%20Contingencies) This note outlines the company's contractual obligations, including debt, lease commitments, and potential impacts from legal proceedings Commitments Due by Period (Millions USD) | Commitment Type | Total | Within 1 Year | 2 to 3 Years | 4 to 5 Years | After 5 Years | | :------------------------------------ | :-------- | :------------ | :----------- | :----------- | :------------ | | Principal payments on long-term debt | $55.0M | $0 | $0 | $55.0M | $0 | | Finance lease commitments/obligations | $379.1M | $52.2M | $95.2M | $83.2M | $148.6M | | Operating lease commitments | $257.0M | $45.6M | $80.0M | $58.7M | $72.7M | | **Total** | **$691.1M** | **$97.8M** | **$175.2M** | **$197.0M** | **$221.2M** | - The company is a party to various legal proceedings, and unfavorable rulings could have a material adverse impact on its financial position and results of operations[61](index=61&type=chunk) [Note 10 Supplier Finance Program](index=12&type=section&id=Note%2010%20Supplier%20Finance%20Program) This note describes the company's voluntary supply chain financing program and the outstanding obligations eligible for advance payment - The company facilitates a voluntary supply chain financing program, allowing suppliers to sell receivables to a financial institution, which is classified as a trade payable program[62](index=62&type=chunk)[64](index=64&type=chunk) Outstanding Supplier Obligations Eligible for Advance Payment (Millions USD) | Date | Amount | | :----------------- | :-------- | | September 23, 2023 | $187.9M | | March 25, 2023 | $167.3M | | September 24, 2022 | $86.9M | [Note 11 Share Repurchase](index=13&type=section&id=Note%2011%20Share%20Repurchase) This note summarizes the company's share repurchase activities, including the number of shares and total value repurchased Share Repurchase Activity (Millions USD, except per share data) | Period | Number of Shares Purchased | Average Price Paid Per Share | Total Repurchased | | :-------------------------------- | :------------------------- | :--------------------------- | :---------------- | | Six Months Ended Sep 23, 2023 | — | $— | $— | | Six Months Ended Sep 24, 2022 | 1,617.4 | $44.00 | $71.2M | [Note 12 Equity Capital Structure Reclassification](index=13&type=section&id=Note%2012%20Equity%20Capital%20Structure%20Reclassification) This note details the approved amendments to reclassify the equity capital structure, including the conversion of preferred stock and declassification of the Board of Directors - Shareholders approved amendments to reclassify the equity capital structure, eliminating Class C Convertible Preferred Stock through mandatory conversion by August 15, 2026[69](index=69&type=chunk) - The conversion rate for Class C Preferred Stock was adjusted from **23.389 to 61.275 common shares** per preferred share[69](index=69&type=chunk) - The Board of Directors will be declassified, with all directors elected for one-year terms starting from the 2025 annual meeting[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition, highlighting recent developments, economic impacts, and operational results [Recent Developments](index=14&type=section&id=Recent%20Developments) This section highlights key recent events impacting the company, including the planned sale of its corporate headquarters and equity reclassification - Announced the planned sale and relocation of its corporate headquarters, incurring related costs during Q2[73](index=73&type=chunk) - Shareholders approved amendments to reclassify the equity capital structure, including mandatory conversion of Class C Preferred Stock at an adjusted rate and declassification of the Board of Directors[74](index=74&type=chunk) [Economic Conditions](index=14&type=section&id=Economic%20Conditions) This section discusses the prevailing macroeconomic environment, including inflation, labor availability, and interest rates, and their potential impact on the company - The U.S. economy is experiencing higher inflation, constrained labor availability, increasing labor costs, and rising interest rates[75](index=75&type=chunk) - These conditions may lead to an economic slowdown or recession, potentially increasing costs and/or impacting revenues[75](index=75&type=chunk) [Financial Summary](index=14&type=section&id=Financial%20Summary) This section provides a concise overview of the company's key financial performance metrics for the quarter, including sales, income, and EPS Q2 2024 Financial Highlights | Metric | Value | Change YoY | | :-------------------- | :------ | :--------- | | Diluted EPS | $0.40 | 0.0% | | Adjusted Diluted EPS | $0.41 | (4.7)% | | Sales | $322.1M | (2.3)% | | Operating Income | $22.4M | (4.8)% | | Net Income | $12.9M | (1.9)% | - Sales decreased due to lower overall comparable store sales, primarily from reduced store traffic[76](index=76&type=chunk) - Adjusted diluted EPS, a non-GAAP measure, excludes non-recurring items for better period-to-period comparability[77](index=77&type=chunk)[98](index=98&type=chunk) [Analysis of Results of Operations](index=15&type=section&id=Analysis%20of%20Results%20of%20Operations) This section provides a detailed analysis of the company's sales, cost of sales, gross profit, and operating expenses, explaining period-over-period changes [Sales](index=15&type=section&id=Sales) This section analyzes the company's sales performance, including total sales and the primary drivers of change such as comparable store sales Sales Performance (Millions USD) | Period | Sales | % Change YoY | | :-------------------------------- | :---------------- | :----------- | | Three Months Ended Sep 23, 2023 | $322.1M | (2.3)% | | Six Months Ended Sep 23, 2023 | $649.1M | (4.5)% | Primary Drivers of Sales Change (%) | Driver | Three Months Ended Sep 23, 2023 | Six Months Ended Sep 23, 2023 | | :-------------------- | :------------------------------ | :---------------------------- | | Comparable store sales | (2.3)% | (0.9)% | | Closed store sales | (0.4)% | (4.0)% | | New store sales | 0.4% | 0.4% | - Broad-based inflationary pressures led to lower demand in tires and higher-margin service categories[85](index=85&type=chunk) [Cost of Sales and Gross Profit](index=16&type=section&id=Cost%20of%20Sales%20and%20Gross%20Profit) This section examines the company's cost of sales and gross profit, detailing the factors influencing gross profit margins Gross Profit Performance (Millions USD) | Period | Gross Profit | Percentage of Sales | % Change YoY | | :-------------------------------- | :----------- | :------------------ | :----------- | | Three Months Ended Sep 23, 2023 | $115.0M | 35.7% | (1.5)% | | Six Months Ended Sep 23, 2023 | $229.4M | 35.3% | (4.0)% | Gross Profit as a Percentage of Sales Change (bps) | Driver | Three Months Ended Sep 23, 2023 | Six Months Ended Sep 23, 2023 | | :------------------------------------ | :------------------------------ | :---------------------------- | | Retail material costs | 120 bps | (10) bps | | Technician labor costs | (30) bps | (50) bps | | Retail distribution and occupancy costs | (60) bps | (20) bps | | Impact from the sale of wholesale operations | - bps | 90 bps | [OSG&A Expenses](index=17&type=section&id=OSG%26A%20Expenses) This section analyzes the company's operating, selling, general, and administrative expenses, highlighting the drivers of changes OSG&A Expenses (Millions USD) | Period | OSG&A Expenses | Percentage of Sales | % Change YoY | | :-------------------------------- | :------------- | :------------------ | :----------- | | Three Months Ended Sep 23, 2023 | $92.6M | 28.8% | (0.7)% | | Six Months Ended Sep 23, 2023 | $189.7M | 29.2% | 0.2% | - The decrease in OSG&A expenses for the three months was partially due to lower management restructuring costs and expenses from closed stores, offset by increases from shareholder matters, back-office optimization, and corporate headquarters relocation[92](index=92&type=chunk)[93](index=93&type=chunk) [Other Performance Factors](index=17&type=section&id=Other%20Performance%20Factors) This section reviews additional factors impacting financial performance, including net interest expense and provision for income taxes [Net Interest Expense](index=17&type=section&id=Net%20Interest%20Expense) This section analyzes the company's net interest expense, considering changes in debt outstanding and interest rates Net Interest Expense (Millions USD) | Period | Net Interest Expense | % of Sales | | :-------------------------------- | :------------------- | :--------- | | Three Months Ended Sep 23, 2023 | $4.8M | 1.5% | | Six Months Ended Sep 23, 2023 | $10.0M | 1.5% | - Net interest expense decreased due to a reduction in weighted average debt outstanding (approx. **$122M** for 3 months, **$130M** for 6 months), despite an increase in weighted average interest rates (approx. **80-90 bps**)[94](index=94&type=chunk)[95](index=95&type=chunk) [Provision for Income Taxes](index=18&type=section&id=Provision%20for%20Income%20Taxes) This section details the company's effective income tax rates and the specific factors influencing their period-over-period changes Effective Income Tax Rate | Period | September 23, 2023 | September 24, 2022 | | :------------------- | :------------------- | :------------------- | | Three Months Ended | 26.8% | 26.6% | | Six Months Ended | 27.1% | 33.6% | - The six-month effective tax rate for the prior year was **6.9% higher** due to discrete tax impacts from the wholesale tire operations divestiture and deferred tax revaluation[97](index=97&type=chunk) [Non-GAAP Financial Measures](index=18&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures, such as adjusted net income and adjusted diluted EPS, used for comparability - Adjusted net income and adjusted diluted EPS are non-GAAP measures used to assess comparability by excluding non-recurring items such as shareholder matters, back-office optimization, corporate headquarters relocation, and store closing costs[98](index=98&type=chunk) Adjusted Net Income (Millions USD) | Period | September 23, 2023 | September 24, 2022 | | :-------------------------------- | :------------------- | :------------------- | | Three Months Ended | $13.3M | $14.0M | | Six Months Ended | $23.2M | $28.2M | Adjusted Diluted EPS | Period | September 23, 2023 | September 24, 2022 | | :-------------------------------- | :------------------- | :------------------- | | Three Months Ended | $0.41 | $0.43 | | Six Months Ended | $0.72 | $0.85 | [Analysis of Financial Condition](index=19&type=section&id=Analysis%20of%20Financial%20Condition) This section analyzes the company's financial health, focusing on liquidity, capital resources, and working capital management [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations, including capital allocation strategies and future cash requirements [Capital Allocation](index=19&type=section&id=Capital%20Allocation) This section outlines the company's strategy for deploying capital, including funding operations, acquisitions, debt reduction, and shareholder returns - The company expects to generate positive operating cash flow to fund operations, strategic acquisitions, greenfield stores, debt reduction, and shareholder returns (dividends and share repurchases)[104](index=104&type=chunk) [Future Cash Requirements](index=19&type=section&id=Future%20Cash%20Requirements) This section details the company's anticipated capital expenditures, contractual lease commitments, and long-term debt obligations - Projected capital expenditures for fiscal 2024 are **$35 million to $45 million**[106](index=106&type=chunk) - Contractual finance and operating lease commitments total **$503.1 million**, with **$97.0 million** due within one year[106](index=106&type=chunk) - Long-term debt of **$55.0 million** is outstanding, with no amounts due in the succeeding 12 months[107](index=107&type=chunk) [Dividends](index=19&type=section&id=Dividends) This section reports on cash dividends paid and the company's intention to continue its quarterly dividend practice Cash Dividends Paid (Millions USD) | Period | Per Share | Total | | :-------------------------------- | :-------- | :---------------- | | Three Months Ended Sep 23, 2023 | $0.28 | $8.9M | | Six Months Ended Sep 23, 2023 | $0.56 | $17.9M | - The company has paid quarterly dividends since fiscal 2006 and intends to continue this practice[108](index=108&type=chunk) [Share Repurchases](index=20&type=section&id=Share%20Repurchases) This section provides an update on the company's share repurchase activities during the reporting period - No shares were repurchased during the six months ended September 23, 2023[110](index=110&type=chunk) [Working Capital Management](index=20&type=section&id=Working%20Capital%20Management) This section analyzes the company's working capital position, including the deficit and factors influencing its changes Working Capital Deficit (Millions USD) | Date | Amount | | :----------------- | :-------- | | September 23, 2023 | $(224.5M) | | March 25, 2023 | $(190.7M) | - The increase in working capital deficit was primarily driven by an increase in accounts payable due to the supply chain finance program[111](index=111&type=chunk) [Sources and Conditions of Liquidity](index=20&type=section&id=Sources%20and%20Conditions%20of%20Liquidity) This section identifies the company's primary sources of liquidity and management's assessment of its adequacy for future needs - Primary liquidity sources are cash from operations, availability under the Credit Facility, and cash and equivalents on hand[112](index=112&type=chunk) Liquidity Position (Millions USD) | Metric | September 23, 2023 | | :-------------------------- | :------------------- | | Cash and equivalents | $9.1M | | Available under Credit Facility | $514.9M | - Management believes current sources of funds will provide adequate liquidity for both the short-term (12 months) and long-term[113](index=113&type=chunk) [Summary of Cash Flows](index=20&type=section&id=Summary%20of%20Cash%20Flows) This section provides a summary of cash flows from operating, investing, and financing activities, explaining the key drivers of changes [Cash provided by operating activities](index=20&type=section&id=Cash%20provided%20by%20operating%20activities) This section details the cash generated from the company's core operations and the factors influencing its period-over-period changes Cash Provided by Operating Activities (Millions USD) for Six Months Ended | Period | Amount | | :------------------- | :-------- | | September 23, 2023 | $98.3M | | September 24, 2022 | $120.3M | - The decrease in cash from operations was influenced by net income, non-cash charges (depreciation, deferred tax expense), and changes in operating assets and liabilities, with the supply chain finance program being a source of cash[116](index=116&type=chunk) [Cash used for / provided by investing activities](index=21&type=section&id=Cash%20used%20for%20%2F%20provided%20by%20investing%20activities) This section explains the cash flows related to the acquisition and disposal of long-term assets and strategic investments Cash (Used for) Provided by Investing Activities (Millions USD) for Six Months Ended | Period | Amount | | :------------------- | :-------- | | September 23, 2023 | $(6.7M) | | September 24, 2022 | $37.9M | - The shift from cash provided to cash used was primarily due to capital expenditures (**$15.7M**) in the current period, compared to significant proceeds from the wholesale tire operations divestiture (**$56.6M**) in the prior year[119](index=119&type=chunk)[120](index=120&type=chunk) [Cash used for financing activities](index=21&type=section&id=Cash%20used%20for%20financing%20activities) This section details cash flows related to debt, equity, and dividend payments, reflecting the company's capital structure management Cash Used for Financing Activities (Millions USD) for Six Months Ended | Period | Amount | | :------------------- | :-------- | | September 23, 2023 | $(87.5M) | | September 24, 2022 | $(156.4M) | - The decrease in cash used for financing was mainly due to no share repurchases in the current period (vs. **$71.2M** in prior year), alongside payments on the Credit Facility, finance lease principal, and dividends[121](index=121&type=chunk)[122](index=122&type=chunk) [Critical Accounting Estimates](index=21&type=section&id=Critical%20Accounting%20Estimates) This section highlights the significant accounting estimates and assumptions made by management that are crucial to the financial statements - The financial statements rely on management's estimates and assumptions, which are continuously evaluated[123](index=123&type=chunk) - No material changes to critical accounting estimates have occurred since the fiscal year ended March 25, 2023[124](index=124&type=chunk) [Recent Accounting Pronouncements](index=21&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 1 for a discussion on the impact of recently issued accounting standards on the consolidated financial statements - Refer to Note 1 for a discussion of the impact of recently issued accounting standards on the consolidated financial statements[125](index=125&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=21&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises that the report contains forward-looking statements subject to risks and uncertainties, and the company does not commit to updating them - The report contains forward-looking statements subject to various risks and uncertainties, including economic conditions, competition, technological advancements, and operational costs, that could cause actual results to differ materially[126](index=126&type=chunk)[127](index=127&type=chunk)[130](index=130&type=chunk) - The company does not undertake any obligation to update these forward-looking statements after the report date[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risk primarily from potential changes in interest rates on its floating-rate debt. A 100 basis point change in the Secured Overnight Financing Rate (SOFR) would result in an approximate $0.6 million annual fluctuation in interest expense based on the debt position as of September 23, 2023 - The company's market risk exposure stems from potential changes in interest rates on its floating-rate debt[131](index=131&type=chunk) - A **100 basis point** change in SOFR would lead to an approximate **$0.6 million** annual interest expense fluctuation based on the **$55.0 million** debt outstanding at September 23, 2023[131](index=131&type=chunk)[132](index=132&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) The company maintains effective disclosure controls and procedures, which were evaluated by the Chief Executive Officer and Chief Financial Officer as effective as of September 23, 2023. No material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures are designed to ensure timely and accurate reporting to the SEC[133](index=133&type=chunk) - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of September 23, 2023[134](index=134&type=chunk) - There were no material changes in internal control over financial reporting during the quarter ended September 23, 2023[135](index=135&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes information on legal proceedings, a list of exhibits filed with the report, and the official signatures of the company's authorized officers [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising from its normal course of business. While these matters are subject to inherent uncertainties, an unfavorable resolution could potentially have a material adverse impact on the company's financial condition and results of operations - The company is a party to various legal proceedings incidental to the conduct of its business[138](index=138&type=chunk) - An unfavorable resolution of these legal matters could have a material adverse impact on the company's financial position and results of operations[138](index=138&type=chunk) [Item 6. Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to the Restated Certificate of Incorporation, an amendment to an employment agreement, and certifications required by the Sarbanes-Oxley Act - Exhibits include Certificate of Amendment of the Restated Certificate of Incorporation, Amendment to Employment Agreement, and Certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[140](index=140&type=chunk) [Signatures](index=26&type=section&id=Signatures) The report is duly signed on October 25, 2023, by Michael T. Broderick, President and Chief Executive Officer, and Brian J. D'Ambrosia, Executive Vice President – Finance, Chief Financial Officer and Treasurer, as authorized representatives of Monro, Inc. - The report was signed on **October 25, 2023**[145](index=145&type=chunk) - Signatories include **Michael T. Broderick** (President and CEO) and **Brian J. D'Ambrosia** (EVP – Finance, CFO and Treasurer)[145](index=145&type=chunk)

MONRO MONRO TIRECHONE MR.TIRE 华영WVERVE @ TREWAREHOUSE THAM CAR 2 In addition to including references to diluted earnings per share ("EPS"), which is a generally accepted accounting principles ("GAAP") measure, this presentation includes references to adjusted diluted earnings per share, which is a nonGAAP financial measure. Monro has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS in Slide 8. Management views this non-GAAP financial measure as a ...

Financial Data and Key Metrics Changes - Sales decreased by 2.3% year-over-year to $322.1 million in the second quarter, primarily due to lower tire unit sales [25] - Comparable store sales decreased by 2.3%, while sales from new stores increased by approximately $1.2 million [25] - Operating income for the second quarter declined to $22.4 million or 6.9% of sales, compared to $23.5 million or 7.1% of sales in the prior year [26] - Net income was approximately $12.9 million, compared to $13.1 million in the same period last year, with diluted earnings per share remaining at $0.40 [27] - Gross margin increased by 30 basis points compared to the prior year, primarily due to lower material costs as a percentage of sales [13] Business Line Data and Key Metrics Changes - Tire units were down approximately 10%, but the company optimized its assortment for improved tire profitability [10] - Comparable store sales for fiscal October were down approximately 5% [11] - The company maintained its tire market share in higher margin tiers despite a higher proportion of lower margin opening price point tires in overall industry unit sales [10] Market Data and Key Metrics Changes - The company experienced an industry-wide slowdown in tire unit sales, particularly in regions where most of its store footprint is concentrated [21][107] - Traffic was down mid-single digits, while ticket size was up low single digits [38] Company Strategy and Development Direction - The company aims to restore gross margins back to pre-COVID levels with double-digit operating margins over the longer term [12] - Focus on maintaining a balanced approach between tire and service categories with competitive pricing to drive store traffic [11] - Plans to drive year-over-year improvements in gross margin through pricing actions and productivity improvements [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges posed by persistent inflationary pressures affecting consumer purchases of higher ticket items [8] - The company is confident in its ability to deliver improved earnings despite a choppy consumer environment [23] - Management expects to see an improvement in consumer dynamics, particularly with the potential for weather events to drive customer traffic [75] Other Important Information - The company generated $98 million of cash from operations during the first half of fiscal 2024, including $36 million in working capital reductions [15] - Capital expenditures are expected to be approximately $35 million to $45 million in fiscal 2024 [29] Q&A Session Summary Question: Guidance on comparable sales growth in fiscal 2024 - Management expects improvement in comparable store sales growth, factoring in an extra week of sales in the fiscal fourth quarter [47] Question: Details on car count, ticket versus traffic - Management noted that traffic was down, but ticket size was up, indicating a shift in consumer behavior [52] Question: Consumer pressures and internal strategies - Management emphasized the importance of maintaining a profitable assortment and managing labor costs effectively [60] Question: Market share in higher margin tiers - Management confirmed retention of market share in higher margin tiers while being cautious about lower-end tiers due to price competition [65] Question: Cash flow and uses of cash - Management discussed the balance between debt reduction and share repurchase as part of their capital priorities [67]