Monro(US:MNRO)2026-01-28 13:31Financial Performance - The company reported diluted earnings per share (EPS) of $0.35 for the three months ended December 27, 2025, representing a 133.3% increase compared to $0.15 in the prior year [102]. - Adjusted diluted EPS was $0.16, a decrease of 15.8% from $0.19 in the same period last year [103]. - Operating income for the three months ended December 27, 2025, was $18.6 million, an increase of 86.4% from $9.9 million in the prior year [104]. - The company ended the nine months with a net income of $11.1 million, while adjusted net income was $5.0 million [108]. - Adjusted operating income for the three months ended December 27, 2025, was $10,312 thousand, compared to $11,650 thousand in the prior year [127]. - Adjusted net income for the three months ended December 27, 2025, was $5,028 thousand, compared to $5,791 thousand in the prior year [128]. - Adjusted diluted EPS for the three months ended December 27, 2025, was $0.16, down from $0.19 in the prior year [130]. Sales and Store Performance - Sales decreased by 4.0% to $293.4 million for the three months ended December 27, 2025, compared to $305.8 million in the prior year [104]. - Comparable store sales increased by 1.2% for the three months ended December 27, 2025, while the nine-month period saw a 2.6% increase [110]. - The company closed 145 underperforming stores as part of the Store Closure Plan, resulting in net store closing costs of $14.8 million recorded in Q1 of fiscal 2026 [99]. - The total net gain from store closures, including lease assignments and early terminations, was $21.1 million for the nine months ended December 27, 2025 [100]. - The company’s store count decreased from 1,263 to 1,115 during the nine months ended December 27, 2025, due to the closure of 146 stores [113]. - The company expects that comparable store sales growth will significantly impact total sales growth moving forward [106]. Profitability and Expenses - Gross profit for the three months ended December 27, 2025, was $102,367 thousand, a decrease of $2,436 thousand (2.3%) compared to the prior year, with a gross profit margin increase of 60 bps to 34.9% [115][118]. - OSG&A expenses decreased by $11,043 thousand (11.6%) for the three months ended December 27, 2025, resulting in a percentage of sales of 28.6%, down from 31.0% in the prior year [119][120]. - Net interest expense for the three months ended December 27, 2025, was $4.0 million, a decrease of $0.2 million compared to the prior year, maintaining 1.4% of sales [121]. - The effective income tax rate for the three months ended December 27, 2025, was 23.6%, up from 21.2% in the prior year [123][124]. - Gross profit as a percentage of sales decreased by 20 bps for the nine months ended December 27, 2025, primarily due to increased technician labor costs from wage inflation [118]. Cash Flow and Liquidity - Cash provided by operating activities for the nine months ended December 27, 2025, was $48.2 million, down from $103.0 million for the same period in 2024 [145][146]. - Cash used for financing activities for the nine months ended December 27, 2025, was $71.0 million, primarily due to finance lease principal and dividend payments [150]. - The company declared dividends of $0.28 per share totaling $8.7 million for the three months ended December 27, 2025 [138]. - As of December 27, 2025, the company had a working capital deficit of $274.5 million, an increase of $27.6 million from the previous deficit [140]. - The company anticipates adequate liquidity for the 12-month period following December 27, 2025, supported by cash from operations and available credit [142]. - The company had $45.0 million outstanding under the Credit Facility as of December 27, 2025, with no amounts due in the next 12 months [137]. - The company expects annual interest expense fluctuations of approximately $0.5 million based on its floating rate debt position [159]. Capital Expenditures - Capital expenditures for fiscal 2026 are expected to be between $25 million and $35 million, with lease commitments totaling $449.1 million through October 2040 [136]. - The weighted average debt outstanding for the nine months ended December 27, 2025, decreased by approximately $45.1 million compared to the prior year, primarily due to lower finance lease debt [122]. - As of December 27, 2025, the company had $4.9 million in cash and equivalents, with $424.9 million available under the Credit Facility [141]. - Cash provided by investing activities for the nine months ended December 27, 2025, was $7.0 million, primarily from asset disposals [147].