Monro(US:MNRO)2025-10-29 11:55Financial Performance - Diluted earnings per share (EPS) for Q2 2026 was $0.18, while adjusted diluted EPS was $0.21, reflecting a 23.5% increase from the prior year[95][97]. - Operating income for Q2 2026 was $12.8 million, with adjusted operating income at $14.0 million, indicating a decrease of 3.4% compared to the prior year[97][99]. - The company recorded a net income of $5.7 million for Q2 2026, with adjusted net income at $6.6 million[97]. - Total sales for the three months ended September 27, 2025, decreased by 4.1% to $288.9 million, primarily due to closed stores, although comparable store sales increased by 1.1%[97][102]. - Gross profit for the three months ended September 27, 2025, was $103.1 million, representing a gross profit margin of 35.7%, an increase of 40 basis points from the prior year[109][110]. - Adjusted operating income for the three months ended September 27, 2025, was $13.98 million, compared to $12.55 million for the same period in 2024[121]. - Adjusted net income for the three months ended September 27, 2025, was $6.575 million, an increase from $5.175 million in the prior year[122]. Store Operations - The company closed 145 underperforming stores, incurring $14.8 million in net store closing costs during Q1 fiscal 2026, and recorded an additional $7.2 million in net store closing costs during the six months ended September 27, 2025[92][97]. - The company operated 1,116 stores at the end of Q2 2026, having closed 145 stores during the first half of the fiscal year[107][108]. - Comparable store sales growth is expected to significantly impact total sales growth, with a 3.4% increase for the six months ended September 27, 2025[103][101]. Expenses and Costs - Operating, selling, general and administrative (OSG&A) expenses decreased by 3.0% to $90.4 million for the three months ended September 27, 2025, primarily due to reduced store closing costs[111]. - OSG&A expenses decreased by $2.8 million for the three months ended September 27, 2025, and increased by $14.2 million for the six months ended September 27, 2025[113]. - Net interest expense for the three months ended September 27, 2025, was $4.4 million, a decrease of $0.8 million from the prior year, with a percentage of sales dropping from 1.7% to 1.5%[114]. Cash Flow and Capital Expenditures - Cash provided by operating activities for the six months ended September 27, 2025, was $30.4 million, despite a net loss of $2.4 million[138]. - Capital expenditures for fiscal 2026 are expected to be between $25 million and $35 million[129]. - Cash and equivalents at the end of the period were $10.5 million, down from $20.8 million at the beginning of the period[137]. - As of September 27, 2025, the company had a working capital deficit of $268.4 million, an increase of $21.5 million from the previous period[132]. Debt and Financing - The company had $60.0 million outstanding under the Credit Facility as of September 27, 2025, with no amounts due in the next 12 months[130]. - As of September 27, 2025, the company had no debt financing at fixed interest rates, with annual interest expense fluctuations of approximately $0.6 million based on a 100 basis point change in SOFR[153]. - The carrying amount of debt financing was approximately $60.0 million as of September 27, 2025, compared to $61.3 million as of March 29, 2025[154]. Future Outlook - The company is implementing an Operational Improvement Plan with AlixPartners to enhance store operations, marketing, and inventory management through November 1, 2025[93]. - Forward-looking statements include expectations regarding cash flows, sales, and the impact of economic conditions and competitive services[149]. - The company evaluates its accounting estimates and assumptions on an ongoing basis, which may lead to material differences in future financial statements[144].