Monro(MNRO) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents Monro, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for periods ended December 25, 2021 Item 1. Financial Statements (Unaudited) This chapter presents Monro, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows Consolidated Balance Sheets This section details the company's financial position, including assets, liabilities, and equity, as of December 25, 2021 Consolidated Balance Sheet Highlights (thousands) | Metric | December 25, 2021 | March 27, 2021 | | :--------------------------------- | :------------------ | :--------------- | | Total assets | $1,889,190 | $1,811,814 | | Total liabilities | $1,107,679 | $1,062,130 | | Total shareholders' equity | $781,511 | $749,684 | | Cash and equivalents | $9,514 | $29,960 | | Goodwill | $779,091 | $689,524 | Consolidated Statements of Income and Comprehensive Income This section details Monro, Inc.'s sales, gross profit, operating income, and net income for the specified periods Consolidated Statements of Income and Comprehensive Income (thousands, except per share data) | Metric | Three Months Ended Dec 25, 2021 | Three Months Ended Dec 26, 2020 | Nine Months Ended Dec 25, 2021 | Nine Months Ended Dec 26, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Sales | $341,781 | $284,591 | $1,031,298 | $820,237 | | Gross profit | $120,582 | $96,138 | $377,196 | $288,118 | | Operating income | $27,436 | $15,688 | $89,830 | $51,515 | | Net income | $16,287 | $6,683 | $52,953 | $22,516 | | Basic EPS | $0.48 | $0.20 | $1.57 | $0.67 | | Diluted EPS | $0.48 | $0.20 | $1.56 | $0.67 | Consolidated Statements of Changes in Shareholders' Equity This section details changes in Monro, Inc.'s shareholders' equity, including net income, dividends, and stock compensation Key Changes in Shareholders' Equity (thousands) | Metric | Three Months Ended Dec 25, 2021 | Nine Months Ended Dec 25, 2021 | | :-------------------------- | :------------------------------ | :----------------------------- | | Net income | $16,287 | $52,953 | | Common dividends declared | $(8,722) | $(25,483) | | Stock-based compensation | $1,258 | $3,130 | | Total shareholders' equity | $781,511 | $781,511 | - Dividends declared per common share were $0.26 for the three months ended December 25, 2021, and $0.76 for the nine months ended December 25, 2021[15] Consolidated Statements of Cash Flows This section summarizes Monro, Inc.'s cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows (thousands) | Activity | Nine Months Ended Dec 25, 2021 | Nine Months Ended Dec 26, 2020 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $127,237 | $159,216 | | Cash used for investing activities | $(99,460) | $(55,896) | | Cash used for financing activities | $(48,223) | $(423,837) | | Decrease in cash and equivalents | $(20,446) | $(320,517) | | Cash and equivalents at end of period | $9,514 | $24,959 | Notes to Consolidated Financial Statements This section provides detailed explanations of Monro, Inc.'s accounting policies, business operations, and other financial disclosures Note 1 Description of Business and Basis of Presentation This note describes Monro, Inc.'s business operations, store network, and the basis for its financial statement presentation - Monro, Inc. operates 1,303 Company-operated retail stores and 81 franchised locations across 32 states, primarily offering automotive undercar repair, tire replacement sales, and tire-related services[22] - The company's operations are organized as a single segment, providing a broad range of services including brakes, mufflers, exhaust systems, steering, drivetrain, suspension, and wheel alignment[25] - Monro adopted new FASB accounting guidance for income taxes in Q1 2022, which did not materially impact its consolidated financial statements[29] Note 2 Impact of the COVID-19 Pandemic This note discusses the ongoing impact of the COVID-19 pandemic on Monro, Inc.'s operations and financial outlook - Monro's retail stores, wholesale locations, and other facilities have remained open as an essential business throughout the COVID-19 pandemic, adapting operations for customer and employee safety[34] - The full impact of the pandemic remains uncertain, depending on factors like its duration, government responses, vaccine efficacy, and long-term effects on the economy and consumer behavior[35] Note 3 Acquisitions This note details Monro, Inc.'s business acquisitions, including purchase prices and their contributions to sales - In the first nine months of fiscal 2022, Monro acquired multiple businesses for an aggregate purchase price of $83.2 million, adding 47 retail tire and automotive repair stores, primarily in California and Iowa[37][38][39][40] - These 2022 acquisitions contributed $13.7 million in sales for the three months and $33.1 million for the nine months ended December 25, 2021[42] - In fiscal 2021, Monro acquired 17 retail stores in California for $17.1 million, which contributed $0.9 million in sales for the period from acquisition date through December 26, 2020[49][51] Note 4 Earnings per Common Share This note provides a breakdown of basic and diluted earnings per common share calculations Earnings per Common Share (thousands, except per share data) | Metric | Three Months Ended Dec 25, 2021 | Three Months Ended Dec 26, 2020 | Nine Months Ended Dec 25, 2021 | Nine Months Ended Dec 26, 2020 | | :--------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Income available to common shareholders | $16,167 | $6,571 | $52,603 | $22,179 | | Weighted average common shares - basic | 33,542 | 33,307 | 33,521 | 33,296 | | Basic earnings per common share | $0.48 | $0.20 | $1.57 | $0.67 | | Diluted earnings per common share | $0.48 | $0.20 | $1.56 | $0.67 | Note 5 Income Taxes This note presents the effective income tax rates for the reported periods Effective Income Tax Rate | Period | December 25, 2021 | December 26, 2020 | | :--------------------------------- | :------------------ | :------------------ | | Three Months Ended | 25.3% | 25.2% | | Nine Months Ended | 25.5% | 25.2% | Note 6 Fair Value This note discloses the carrying amount and fair value of Monro, Inc.'s long-term debt Long-term Debt Carrying Amount and Fair Value (thousands) | Date | Carrying Amount | Fair Value | | :----------------- | :-------------- | :--------- | | December 25, 2021 | $195,000 | $195,000 | | March 27, 2021 | $190,000 | $190,000 |