Monro(MNRO) - 2026 Q1 - Quarterly Results

Part I First Quarter Fiscal 2026 Results Summary Monro reported a 2.7% sales increase to $301.0 million for Q1 FY2026, driven by a 5.7% rise in comparable store sales, leading to a GAAP net loss of $8.1 million due to one-time costs, while adjusted diluted EPS remained flat at $0.22 Q1 FY2026 Key Financial Metrics | Metric | Q1 FY2026 | Q1 FY2025 | % Change | | :--- | :--- | :--- | :--- | | Sales | $301.0 million | $293.2 million | 2.7% | | Comparable Store Sales | 5.7% | -9.9% | N/A | | Net (Loss) Income | ($8.1 million) | $5.9 million | -237.3% | | Diluted (Loss) EPS | ($0.28) | $0.19 | -247.4% | | Adjusted Diluted EPS | $0.22 | $0.22 | 0.0% | - The company completed a comprehensive store portfolio review, resulting in the closure of 145 underperforming stores during the quarter[5][16] - A cash dividend of $0.28 per share for the first quarter of fiscal 2026 was paid on June 17, 2025[5][15] Detailed Financial Analysis Sales growth was driven by strong service category performance, though profitability was significantly impacted by a 170 basis point gross margin decrease and a 17.8% surge in operating expenses to $113.0 million, leading to a GAAP operating loss of $6.1 million Q1 FY2026 Comparable Store Sales Growth by Category | Category | Comparable Store Sales Growth | | :--- | :--- | | Front End/Shocks | +26% | | Brakes | +9% | | Batteries | +9% | | Tires | +4% | | Maintenance Services | +4% | | Alignments | Flat | - Gross margin fell by 170 basis points, attributed to higher technician labor costs from wage inflation and increased material costs, partly due to promotional activities[6] - Operating expenses increased significantly due to $14.8 million in store closing costs and $4.7 million in consulting fees related to the company's operational improvement plan[7] Operating (Loss) Income Performance | Metric | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Operating (Loss) Income (GAAP) | ($6.1 million) | $13.2 million | | Adjusted Operating Income (Non-GAAP) | $14.0 million | $14.7 million | Management Commentary and Strategy CEO Peter Fitzsimmons highlighted two consecutive quarters of positive comparable store sales, driven by the ConfiDrive digital inspection process, with future strategy focusing on improving performance in the remaining 1,115 locations after closing 145 underperforming stores - Management attributes the mid-single-digit comparable store sales growth to the success of its ConfiDrive digital courtesy inspection process, which boosted sales in both tire and high-margin service categories[12] - Preliminary comparable store sales for fiscal July are up 2%, marking a potential sixth consecutive month of growth[12] - Future strategy will focus on improving performance in the 1,115 continuing locations by increasing merchandising productivity, driving customer acquisition, and enhancing the store experience[13] Financial Position and Corporate Updates As of June 28, 2025, Monro maintained a strong financial position with $398.4 million available under its credit facility and $7.8 million in cash, having completed its store portfolio review and released its fifth annual ESG report - The company has $398.4 million available under its credit facility and $7.8 million in cash and equivalents as of June 28, 2025[14] - Monro ended the quarter with 1,115 company-operated stores and 48 franchised locations after closing 145 underperforming stores[16] - The company recently released its fifth annual Environmental, Social & Governance (ESG) Report for fiscal year 2025[17] - Monro is not providing fiscal 2026 financial guidance at this time[18] Part II Consolidated Financial Statements Unaudited financial statements show a 2.7% sales increase to $301.0 million for Q1 FY2026, but a 17.8% rise in operating expenses led to an $8.1 million net loss, with total assets at $1.605 billion and liabilities at $1.000 billion Condensed Income Statement (Unaudited, in thousands) | | Quarter Ended June 2025 | Quarter Ended June 2024 | | :--- | :--- | :--- | | Sales | $301,035K | $293,182K | | Gross Profit | $106,906K | $109,185K | | Operating (Loss) Income | $(6,075)K | $13,246K | | Net (Loss) Income | $(8,050)K | $5,863K | Condensed Balance Sheet (Unaudited, in thousands) | | June 28, 2025 | March 29, 2025 | | :--- | :--- | :--- | | Total Current Assets | $254,802K | $277,399K | | Total Assets | $1,605,060K | $1,641,823K | | Total Current Liabilities | $505,963K | $524,290K | | Total Liabilities | $1,000,169K | $1,021,062K | | Total Shareholders' Equity | $604,891K | $620,761K | Non-GAAP Financial Measures and Reconciliations Monro provides non-GAAP measures to assess core operations by excluding items like $14.8 million in store closing costs and $4.7 million in consulting fees, reconciling a GAAP operating loss of $6.1 million to an adjusted operating income of $14.0 million - The company uses non-GAAP measures to exclude items not considered part of core operations, such as store closing costs, consulting fees for its operational improvement plan, and transition costs[22] Reconciliation of GAAP Operating (Loss) Income to Adjusted Operating Income (in thousands) | | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Operating (Loss) Income | $(6,075)K | $13,246K | | Store closing costs, net | $14,816K | $181K | | Consulting costs | $4,722K | $—K | | Other adjustments | $571K | $1,242K | | Adjusted Operating Income | $14,034K | $14,669K | Reconciliation of GAAP Diluted (Loss) EPS to Adjusted Diluted EPS | | Q1 FY2026 | Q1 FY2025 | | :--- | :--- | :--- | | Diluted (Loss) EPS | $(0.28) | $0.19 | | Store closing costs, net | $0.37 | $0.00 | | Consulting costs | $0.12 | $— | | Other adjustments | $0.02 | $0.02 | | Adjusted Diluted EPS | $0.22 | $0.22 | Definition of Key Metrics The company defines 'comparable store sales' as sales from locations open or owned for at least one full fiscal year, a key metric used by management to assess store operating performance - Comparable store sales are defined as sales for locations that have been open or owned for at least one full fiscal year, a period the company believes is required for new store sales to normalize[24]