Monro(US:MNRO)2025-01-29 12:52Financial Performance - For Q3 2025, diluted EPS was $0.15, a decrease of 60.5% compared to $0.38 in the prior year, while adjusted diluted EPS was $0.19, down 51.3% from $0.39 [75]. - Sales for the three months ended December 28, 2024, were $305.8 million, a decrease of 3.7% from $317.7 million in the prior year, with comparable store sales down 1.9% [77][82]. - Operating income for Q3 2025 was $10.0 million, a decline of 53.4% from $21.4 million in the same period last year [79]. - Gross profit for the three months ended December 28, 2024, was $104.8 million, representing 34.3% of sales, down from 35.5% in the prior year [90]. - Adjusted net income for the three months ended December 28, 2024, was $5.8 million, compared to $12.5 million for the same period last year [99]. Expenses and Costs - OSG&A expenses increased by 3.9% to $94.8 million, accounting for 31.0% of sales, compared to 28.7% in the prior year [92]. - OSG&A expenses increased by $3.5 million for the three months ended December 28, 2024, driven primarily by a $3.6 million increase from comparable stores [93]. - Net interest expense decreased to $4.2 million for the three months ended December 28, 2024, down from $5.0 million in the prior year, representing a decrease from 1.6% to 1.4% of sales [94]. - The effective income tax rate for the three months ended December 28, 2024, was 21.2%, down from 25.8% in the prior year [96]. Cash Flow and Financing - Cash provided by operating activities for the nine months ended December 28, 2024, was $103.0 million, down from $130.5 million in the prior year [114]. - Cash used for financing activities for the nine months ended December 28, 2024, was $99.5 million, a decrease from $111.2 million for the same period in 2023, primarily due to a reduction in payments on the Credit Facility [118][119]. - Payments on the Credit Facility for the nine months ended December 28, 2024, totaled $42.8 million, compared to $11.0 million for the same period in 2023 [118][119]. - The company repurchased $44.0 million in common stock during the nine months ended December 23, 2023 [119]. - As of December 28, 2024, the company had a working capital deficit of $234.0 million, an increase of $32.1 million from the previous period [109]. - Cash and equivalents at the end of the period were $10.2 million, with $510.6 million available under the Credit Facility [110]. Business Operations and Strategy - The company experienced a 30% increase in battery sales and a 13% increase in alignment services during Q3 2025, partially offsetting declines in other categories [84][87]. - The total number of company-operated retail stores decreased from 1,298 to 1,263 over the three months ended December 28, 2024 [89]. - The company anticipates that comparable store sales growth will significantly influence total sales growth moving forward [81]. - The company is actively seeking remaining earnout payments of $6.8 million from American Tire Distributors, which filed for bankruptcy protection [73]. - The company plans to continue its growth strategy, including potential store expansions and renovations, which may involve related costs [126]. Economic Conditions and Risks - Economic conditions, including higher inflation and constrained labor availability, may lead to a potential economic slowdown impacting demand for products and services [74]. - The company is dependent on third-party vendors for certain inventory, which poses risks related to vendor performance and international trade [126]. - Forward-looking statements include expectations regarding sales, gross profit margin, and capital expenditures, which are subject to various risks and uncertainties [125][126]. Capital Expenditures - Capital expenditures for fiscal 2025 are expected to be between $25 million and $30 million [106]. Debt and Interest Rates - As of December 28, 2024, the carrying amount of debt financing approximated a fair value of $59.3 million, down from $102.0 million as of March 30, 2024 [131]. - The cash flow exposure on floating rate debt could result in annual interest expense fluctuations of approximately $0.6 million based on the debt position at December 28, 2024, with a 100 basis points change in SOFR [130]. - The company has no debt financing at fixed interest rates as of December 28, 2024, which could be affected by changes in market interest rates [130]. - The company evaluates its critical accounting estimates on an ongoing basis, with no material changes reported since the last Form 10-K [123].