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Monro(MNRO) - 2025 Q4 - Annual Report
MNROMonro(MNRO)2025-05-28 20:15
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Store Operations and Strategy - As of March 29, 2025, Monro operated 1,260 retail tire and automotive repair stores and serviced approximately 4.2 million vehicles in fiscal 2025[16]. - The company plans to close 145 underperforming stores in the first quarter of fiscal 2026 as part of its Store Closure Plan[21]. - Monro completed 5 acquisitions in the last five years, adding 69 locations and approximately 103millioninannualizedrevenue[29].−Thecompanyaimstoenhanceitsomni−channelpresencethroughimprovedbrandwebsites,allowingcustomerstosearchforstorelocations,accesscoupons,andmakeserviceappointments[27].−Monro′sgrowthstrategyincludesidentifyingacquisitionopportunitiesbasedonconsumerdemographicanalyticstoenterfavorablemarkets[28].−Thecompanyisfocusedonintegratingnewandacquiredstorestodrivegrowth,withchallengesinachievingexpectedprofitabilitylevels[102].FinancialPerformance−Fiscal2025dilutedlosspercommonsharewas(103 million in annualized revenue[29]. - The company aims to enhance its omni-channel presence through improved brand websites, allowing customers to search for store locations, access coupons, and make service appointments[27]. - Monro's growth strategy includes identifying acquisition opportunities based on consumer demographic analytics to enter favorable markets[28]. - The company is focused on integrating new and acquired stores to drive growth, with challenges in achieving expected profitability levels[102]. Financial Performance - Fiscal 2025 diluted loss per common share was (0.22), a decrease of 118.6% compared to 1.18infiscal2024[163].−Adjusteddilutedearningspershare(EPS)forfiscal2025were1.18 in fiscal 2024[163]. - Adjusted diluted earnings per share (EPS) for fiscal 2025 were 0.48, down 63.9% from 1.33infiscal2024[163].−Salesdecreasedby6.41.33 in fiscal 2024[163]. - Sales decreased by 6.4% primarily due to lower overall comparable store sales resulting from reduced store traffic and fewer selling days[164]. - Comparable store sales decreased by 5.3% from the prior year, or a decrease of 3.5% when adjusted for days[164]. - Operating income for fiscal 2025 was 12.6 million, representing an 82.4% decline from the previous year, impacted by a 22.4millionincreaseinstoreimpairmentcharges[164].−Salesfor2025were22.4 million increase in store impairment charges[164]. - Sales for 2025 were 1,195,334 thousand, a decrease of 6.4% compared to 1,276,789thousandin2024[166].−Grossprofitfor2025was1,276,789 thousand in 2024[166]. - Gross profit for 2025 was 417,645 thousand, down 7.6% from 452,103thousandin2024,withagrossprofitmarginof34.9452,103 thousand in 2024, with a gross profit margin of 34.9%[176]. - Operating, selling, general and administrative expenses increased by 6.4% to 405,080 thousand in 2025, primarily due to a 22,440thousandriseinstoreimpairmentcharges[178].−Adjustednetincomefor2025was22,440 thousand rise in store impairment charges[178]. - Adjusted net income for 2025 was 15,624 thousand, down from 42,398thousandin2024,reflectingsignificantimpairmentandtransitioncosts[184].EmployeeandLaborConsiderations−Monrohadapproximately7,360employeesasofMarch29,2025,with7,200employedinthefieldorganization[38].−Thecompanyisexperiencingincreasedpayrollexpensesduetomandatedminimumwageincreasesandinflation,whichcouldadverselyaffectprofitability[93].−Thecompanyfaceschallengesinhiringskilledtechniciansduetoatightlabormarket,whichcouldadverselyimpactfinancialperformance[119].EnvironmentalandSafetyCommitments−Monrorecycledapproximately2.0milliongallonsofoil,3.0milliontires,79,000vehiclebatteries,and351tonsofcardboardin2025aspartofitsenvironmentalcommitment[60].−Thecompanyhasacommitmenttoworkplacesafety,withtrainingprogramsaimedatreducingworkplaceaccidentsandinjuries[52].−Compliancewithvariousenvironmentalandconsumerprotectionregulationsmayimposesignificantoperationalburdensandcosts[90].FinancialObligationsandRisks−AsofMarch29,2025,Monrohad42,398 thousand in 2024, reflecting significant impairment and transition costs[184]. Employee and Labor Considerations - Monro had approximately 7,360 employees as of March 29, 2025, with 7,200 employed in the field organization[38]. - The company is experiencing increased payroll expenses due to mandated minimum wage increases and inflation, which could adversely affect profitability[93]. - The company faces challenges in hiring skilled technicians due to a tight labor market, which could adversely impact financial performance[119]. Environmental and Safety Commitments - Monro recycled approximately 2.0 million gallons of oil, 3.0 million tires, 79,000 vehicle batteries, and 351 tons of cardboard in 2025 as part of its environmental commitment[60]. - The company has a commitment to workplace safety, with training programs aimed at reducing workplace accidents and injuries[52]. - Compliance with various environmental and consumer protection regulations may impose significant operational burdens and costs[90]. Financial Obligations and Risks - As of March 29, 2025, Monro had 61.3 million outstanding under its Credit Facility, indicating reliance on external financing[80]. - The Credit Facility includes covenants that restrict the company's ability to incur additional debt, make investments, and declare dividends, which could adversely affect its financial condition[84]. - The company must maintain a minimum interest coverage ratio and a maximum ratio of adjusted debt to EBITDAR, with potential defaults impacting its financial stability[85]. - Total contractual obligations as of March 29, 2025, amounted to 618.0million,with618.0 million, with 97.8 million due within one year[194]. - The current borrowing capacity for the Credit Facility is 500million,withanaccordionfeatureallowingforanadditional500 million, with an accordion feature allowing for an additional 250 million[205]. - The company has a minimum liquidity requirement of 400milliontodeclaredividendsduringtheCovenantReliefPeriod[213].MarketandEconomicConditions−Theautomotiverepairindustryishighlycompetitive,withvariouscompetitorsincludingnationalandregionalservicecenters,massmerchandisers,andonlineretailers[65].−Economicconditionsaffectingconsumerspending,suchasinflationandinterestrates,couldadverselyimpactMonro′sfinancialperformance[66].−Theadoptionofelectricvehicletechnologymaydecreasedemandfortraditionalautomotiveservices,affectingrevenue[71].−Changesinautomotivetechnologymayleadtoreduceddemandforcertainservices,impactingsalesnegatively[72].−Monro′sbusinessisinfluencedbythenumberofmilesdriven,whichcanbeaffectedbyfactorslikegaspricesandweatherconditions[67].−Significantfluctuationsinshippingcostsandtransportationdelaysduetogeopoliticaleventscouldnegativelyimpactoperationsandfinancialresults[81].CybersecurityandLegalRisks−Thecompanyhasfacedacyberincidentinvolvingunauthorizedaccesstoemployeedata,leadingtopotentiallegalliabilitiesandincreasedcosts[99].−Thecompanyhasimplementedacomprehensivecybersecurityprogramalignedwithindustrystandards,focusingonprevention,detection,andresponsetothreats[126].ChangesinCorporateStructureandGovernance−Thecompanyhasundergonesignificantchangesinexecutiveleadership,whichmaycreateuncertaintyandimpactstrategicexecution[87].−TheconcentrationofvotingpowerinClassCConvertiblePreferredStocklimitstheinfluenceofcommonshareholdersoncorporatematters[114].−Thecompanymayreduceoreliminateitscommonstockdividendinthefuture,whichcouldadverselyaffectthemarketpriceofitscommonstock[113].AssetManagementandImpairments−Infiscal2025,thecompanyincurredstoreimpairmentchargesofapproximately400 million to declare dividends during the Covenant Relief Period[213]. Market and Economic Conditions - The automotive repair industry is highly competitive, with various competitors including national and regional service centers, mass merchandisers, and online retailers[65]. - Economic conditions affecting consumer spending, such as inflation and interest rates, could adversely impact Monro's financial performance[66]. - The adoption of electric vehicle technology may decrease demand for traditional automotive services, affecting revenue[71]. - Changes in automotive technology may lead to reduced demand for certain services, impacting sales negatively[72]. - Monro's business is influenced by the number of miles driven, which can be affected by factors like gas prices and weather conditions[67]. - Significant fluctuations in shipping costs and transportation delays due to geopolitical events could negatively impact operations and financial results[81]. Cybersecurity and Legal Risks - The company has faced a cyber incident involving unauthorized access to employee data, leading to potential legal liabilities and increased costs[99]. - The company has implemented a comprehensive cybersecurity program aligned with industry standards, focusing on prevention, detection, and response to threats[126]. Changes in Corporate Structure and Governance - The company has undergone significant changes in executive leadership, which may create uncertainty and impact strategic execution[87]. - The concentration of voting power in Class C Convertible Preferred Stock limits the influence of common shareholders on corporate matters[114]. - The company may reduce or eliminate its common stock dividend in the future, which could adversely affect the market price of its common stock[113]. Asset Management and Impairments - In fiscal 2025, the company incurred store impairment charges of approximately 24.4 million due to changes in financial performance and recoverability assessments[109]. - The company recorded $20.8 million in store impairment costs in fiscal 2025 related to the identified underperforming stores[110]. - The company has not identified any impairment of goodwill or intangible assets as of March 29, 2025, but future performance issues could lead to impairments[107]. - Future determinations of significant write-offs of goodwill or intangible assets could have a material negative impact on the company's financial condition[109].