Monro Inc.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 05:59
Quarterly Report for Quarter Ending September 26, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Recent Developments
On October 23, 2026, the Company entered into a Credit Agreement (the "Credit Agreement") by and among the Company, as borrower, the lenders party thereto (the "Lenders") and Ares Capital Corporation ("Ares"), as administrative agent for the Lenders (the senior secured credit facilities provided thereunder, the "New Credit Facilities").
The Credit Agreement replaced the Company's former Credit Facility (the "Credit Facility") and the related credit agreement with nine banks, dated April 25, 2019. On October 23, 2026, the Company repaid in full all outstanding obligations under the Credit Facility and terminated all commitments thereunder.
See further detail in Item 5., "Other Information" below and Note 13 of our consolidated financial statements.
Financial Summary
Second quarter 2027 included the following notable items:
Diluted loss per common share was $0.05.
Adjusted diluted loss per common share, a non-GAAP measure, was $0.01.
Sales decreased 1.8 percent, due entirely to lower comparable store sales.
Operating income was $2.6 million.
Adjusted operating income, a non-GAAP measure, was $4.4 million.
Net loss was $1.6 million.
Adjusted net loss, a non-GAAP measure, was $0.2 million.
|
(Loss) Earnings Per Common Share |
Three Months Ended |
Six Months Ended |
|||||||||||||
|
September 26, 2026 |
September 27, 2025 |
Change |
September 26, 2026 |
September 27, 2025 |
Change |
||||||||||
|
Diluted (loss) earnings per common share |
$ |
(0.05) |
$ |
0.18 |
(127.8) |
% |
$ |
(0.13) |
$ |
(0.10) |
(30.0)% |
||||
|
Adjustments |
0.04 |
0.03 |
0.04 |
0.53 |
|||||||||||
|
Adjusted diluted (loss) earnings per common share |
$ |
(0.01) |
$ |
0.21 |
(104.8) |
% |
$ |
(0.09) |
$ |
0.43 |
(120.9)% |
||||
Adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share are useful in providing period-to-period comparisons of the results of our operations by excluding certain items that are not part of our core operations, such as litigation reserve costs, consulting costs related to the Company's Operational Improvement Plan, pension settlement expense, costs related to shareholder matters, transition costs related to back-office optimization, write-off of debt issuance costs and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations. Reconciliations of these non-GAAP financial measures to GAAP measures are provided on page 20 under "Non-GAAP Financial Measures."
We define comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. We believe this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company's stores and believes the metric is useful to investors because our overall results are dependent upon the results of our stores. Comparable sales measures vary across the retail industry. Therefore, our comparable store sales calculation is not necessarily comparable to similarly titled measures reported by other companies.
Analysis of Results of Operations
|
Summary of Operating Income |
Three Months Ended |
Six Months Ended |
||||||||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
Change |
September 26, 2026 |
September 27, 2025 |
Change |
||||||||||
|
Sales |
$ |
283,638 |
$ |
288,914 |
(1.8) |
% |
$ |
570,767 |
$ |
589,949 |
(3.3) |
% |
||||
|
Cost of sales, including occupancy costs |
183,689 |
185,800 |
(1.1) |
370,423 |
379,929 |
(2.5) |
||||||||||
|
Gross profit |
99,949 |
103,114 |
(3.1) |
200,344 |
210,020 |
(4.6) |
||||||||||
|
Operating, selling, general and administrative expenses |
97,358 |
90,364 |
7.7 |
194,058 |
203,345 |
(4.6) |
||||||||||
|
Operating income |
$ |
2,591 |
$ |
12,750 |
(79.7) |
% |
$ |
6,286 |
$ |
6,675 |
(5.8) |
% |
||||
|
Monro, Inc. Q2 2027 Form 10-Q |
18 |
|||
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Sales
Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 6 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period. There were 91 selling days in each of the three months ended September 26, 2026 and September 27, 2025, and 181 selling days in each of the six months ended September 26, 2026 and September 27, 2025.
Sales growth - from both comparable store sales and new stores - represents an important driver of our long-term profitability. We expect that comparable store sales growth will significantly impact our total sales growth. We believe that our ability to successfully differentiate our customers', often referred to as "guests", experience through a careful combination of merchandise assortment, price strategy, convenience, and other factors will, over the long-term, drive both increasing guest traffic and the average ticket amount spent.
|
Sales |
Three Months Ended |
Six Months Ended |
||||||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
||||||||||
|
Sales |
$ |
283,638 |
$ |
288,914 |
$ |
570,767 |
$ |
589,949 |
||||||
|
Dollar change compared to prior year |
$ |
(5,276) |
$ |
(19,182) |
||||||||||
|
Percentage change compared to prior year |
(1.8) |
% |
(3.3) |
% |
||||||||||
The sales decrease was due to a decrease in comparable store sales and, for the six month period, closed stores. The comparable store sales decrease was driven by a decrease in traffic, partially offset by an increase in average ticket. The following table shows the primary drivers of the change in sales for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
|
Sales Percentage Change |
Three Months Ended |
Six Months Ended |
|||||||
|
September 26, 2026 |
September 26, 2026 |
||||||||
|
Sales change |
(1.8) |
% |
(3.3) |
% |
|||||
|
Primary drivers of change in sales |
|||||||||
|
Comparable store sales |
(1.8) |
% |
(1.7) |
% |
|||||
|
Closed store sales |
- |
% |
(1.6) |
% |
|||||
The following table shows the primary drivers of the comparable store product category sales change for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
|
Comparable Store Product Category Sales Change |
Three Months Ended |
Six Months Ended |
|||||||
|
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
||||||
|
Batteries |
8 |
% |
(21) |
% |
8 |
% |
(9) |
% |
|
|
Maintenance service |
3 |
% |
0 |
% |
(1) |
% |
2 |
% |
|
|
Alignment |
(2) |
% |
(5) |
% |
(1) |
% |
(3) |
% |
|
|
Tires |
(4) |
% |
0 |
% |
(2) |
% |
2 |
% |
|
|
Brakes |
(4) |
% |
6 |
% |
(3) |
% |
8 |
% |
|
|
Front end/shocks |
(5) |
% |
18 |
% |
(2) |
% |
22 |
% |
|
|
Sales by Product Category |
Three Months Ended |
Six Months Ended |
|||||||
|
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
||||||
|
Tires |
47 |
% |
47 |
% |
47 |
% |
46 |
% |
|
|
Maintenance service |
27 |
27 |
27 |
28 |
|||||
|
Brakes |
14 |
14 |
14 |
14 |
|||||
|
Steering (a) |
9 |
9 |
9 |
9 |
|||||
|
Batteries |
2 |
2 |
2 |
2 |
|||||
|
Other |
1 |
1 |
1 |
1 |
|||||
|
Total |
100 |
% |
100 |
% |
100 |
% |
100 |
% |
|
(a)Steering product category includes front end/shocks and alignment product category sales.
|
Monro, Inc. Q2 2027 Form 10-Q |
19 |
|||
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
|
Change in Number of Company-Operated Retail Stores |
Three Months Ended |
Six Months Ended |
|||||
|
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
||||
|
Beginning store count |
1,115 |
1,115 |
1,115 |
1,260 |
|||
|
Opened (a) |
- |
1 |
- |
1 |
|||
|
Closed(b) |
(1) |
- |
(1) |
(145) |
|||
|
Ending store count |
1,114 |
1,116 |
1,114 |
1,116 |
|||
(a)We reopened a store that was temporarily closed in a prior year during the three months ended September 27, 2025.
(b)Stores closed in the first quarter of fiscal 2026 as a result of the Store Closure Plan.
Cost of Sales and Gross Profit
|
Gross Profit |
Three Months Ended |
Six Months Ended |
|||||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
|||||||||
|
Gross profit |
$ |
99,949 |
$ |
103,114 |
$ |
200,344 |
$ |
210,020 |
|||||
|
Percentage of sales |
35.2 |
% |
35.7 |
% |
35.1 |
% |
35.6 |
% |
|||||
|
Dollar change compared to prior year |
$ |
(3,165) |
$ |
(9,676) |
|||||||||
|
Percentage change compared to prior year |
(3.1) |
% |
(4.6) |
% |
|||||||||
Gross profit, as a percentage of sales, decreased 50 basis points ("bps") for the three months ended September 26, 2026, as compared to the prior year comparable period. Occupancy costs increased, as a percentage of sales, as we lost leverage on these largely fixed costs. Partially offsetting this was a decrease in material costs, as a percentage of sales. Gross profit, as a percentage of sales, decreased 50 basis points for the six months ended September 26, 2026, as compared to the prior year comparable period. The decrease in gross profit, as a percentage of sales, was primarily due to increased occupancy costs, partially offset by a decrease in technician labor costs and material costs.
|
Gross Profit as a Percentage of Sales Change |
Three Months Ended |
Six Months Ended |
||||||
|
September 26, 2026 |
September 26, 2026 |
|||||||
|
Gross profit change |
(50) |
bps |
(50) |
bps |
||||
|
Primary drivers of change in gross profit as a percentage of sales |
||||||||
|
Occupancy costs |
(80) |
bps |
(80) |
bps |
||||
|
Material costs |
30 |
bps |
10 |
bps |
||||
|
Technician labor costs |
- |
bps |
20 |
bps |
||||
OSG&A Expenses
|
OSG&A Expenses |
Three Months Ended |
Six Months Ended |
|||||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
|||||||||
|
OSG&A Expenses |
$ |
97,358 |
$ |
90,364 |
$ |
194,058 |
$ |
203,345 |
|||||
|
Percentage of sales |
34.3 |
% |
31.3 |
% |
34.0 |
% |
34.5 |
% |
|||||
|
Dollar change compared to prior year |
$ |
6,994 |
$ |
(9,287) |
|||||||||
|
Percentage change compared to prior year |
7.7 |
% |
(4.6) |
% |
|||||||||
The increase of $7.0 million in operating, selling, general and administrative ("OSG&A") expenses for the three months ended September 26, 2026, from the comparable prior year period is primarily due to an increase in store closing costs, net of gains (losses) on sales of closed stores, comparable stores costs, primarily front shop labor, and store advertising costs. The following table shows the impact of these costs on the change in OSG&A expenses for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
|
OSG&A Expenses Change |
Three Months Ended |
Six Months Ended |
||||
|
(thousands) |
September 26, 2026 |
September 26, 2026 |
||||
|
OSG&A expenses change |
$ |
6,994 |
$ |
(9,287) |
||
|
Drivers of change in OSG&A expenses |
||||||
|
Increase (decrease) in store closing costs, net |
$ |
6,118 |
$ |
(11,658) |
||
|
Increase from comparable stores |
$ |
3,357 |
$ |
7,915 |
||
|
Increase in store advertising costs |
$ |
3,237 |
$ |
8,153 |
||
|
Increase in litigation reserve |
$ |
1,650 |
$ |
1,650 |
||
|
Increase in costs related to shareholder matters |
$ |
313 |
$ |
393 |
||
|
Decrease from closed stores |
$ |
(225) |
$ |
(4,333) |
||
|
Decrease in transition costs related to back-office optimization |
$ |
(351) |
$ |
(589) |
||
|
Decrease in consulting costs related to Operational Improvement Plan |
$ |
(7,105) |
$ |
(10,818) |
||
|
Monro, Inc. Q2 2027 Form 10-Q |
20 |
|||
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Other Performance Factors
Net Interest Expense
Net interest expense of $4.7 million for the three months ended September 26, 2026 increased $0.3 million as compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.7 percent. Weighted average debt outstanding for the three months ended September 26, 2026 increased by approximately $15.1 million as compared to the three months ended September 27, 2025. This increase is primarily related to higher debt outstanding under our Credit Facility. The weighted average interest rate increased approximately 20 basis points as compared to the same period of the prior year.
Net interest expense of $9.3 million for the six months ended September 26, 2026 increased $0.2 million compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.6 percent. Weighted average debt outstanding for the six months ended September 26, 2026 increased by approximately $0.3 million as compared to the six months ended September 27, 2025. The weighted average interest rate for the six months ended September 26, 2026 increased approximately 10 basis points as compared to the same period of the prior year.
Provision for Income Taxes
For the three months and six months ended September 26, 2026, our effective income tax rate was 17.0 percent and 4.5 percent, respectively, compared to 32.9 percent and (5.4) percent for the three months and six months ended September 27, 2025. The year-over-year difference in effective tax rate is primarily due to the impact of discrete tax expense related to share-based awards and other adjustments, none of which are individually significant.
Non-GAAP Financial Measures
In addition to reporting operating income, net (loss) income and diluted (loss) earnings per share, which are GAAP measures, this Form 10-Q includes adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, which are non-GAAP financial measures. We have included reconciliations to adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share from our most directly comparable GAAP measures, operating income, net (loss) income, and diluted (loss) earnings per share below. Management views these non-GAAP financial measures as indicators to better assess comparability between periods because management believes these non-GAAP financial measures reflect our core business operations while excluding certain items that are not part of our core operations, such as litigation reserve costs, consulting costs related to the Company's Operational Improvement Plan, pension settlement expense, costs related to shareholder matters, transition costs related to back-office optimization, write-off of debt issuance costs and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations.
These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly titled non-GAAP financial measures used by other companies.
Adjusted operating income is summarized as follows:
|
Reconciliation of Adjusted Operating Income |
Three Months Ended |
Six Months Ended |
|||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
|||||||
|
Operating income |
$ |
2,591 |
$ |
12,750 |
$ |
6,286 |
$ |
6,675 |
|||
|
Litigation reserve |
1,650 |
- |
1,650 |
- |
|||||||
|
Consulting costs related to the Operational Improvement Plan |
1,159 |
8,264 |
2,168 |
12,986 |
|||||||
|
Costs related to shareholder matters |
313 |
- |
393 |
- |
|||||||
|
Transition costs related to back-office optimization |
176 |
527 |
509 |
1,098 |
|||||||
|
Store closing costs, net (a) |
(1,443) |
(7,561) |
(4,403) |
7,255 |
|||||||
|
Adjusted operating income |
$ |
4,446 |
$ |
13,980 |
$ |
6,603 |
$ |
28,014 |
|||
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
|
Monro, Inc. Q2 2027 Form 10-Q |
21 |
|||
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Adjusted net (loss) income is summarized as follows:
|
Reconciliation of Adjusted Net (Loss) Income |
Three Months Ended |
Six Months Ended |
|||||||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
|||||||
|
Net (loss) income |
$ |
(1,611) |
$ |
5,665 |
$ |
(3,760) |
$ |
(2,385) |
|||
|
Litigation reserve |
1,650 |
- |
1,650 |
- |
|||||||
|
Consulting costs related to the Operational Improvement Plan |
1,159 |
8,264 |
2,168 |
12,986 |
|||||||
|
Costs related to shareholder matters |
313 |
- |
393 |
- |
|||||||
|
Transition costs related to back-office optimization |
176 |
527 |
509 |
1,098 |
|||||||
|
Pension settlement expense |
- |
- |
1,171 |
- |
|||||||
|
Write-off of debt issuance costs |
- |
- |
221 |
263 |
|||||||
|
Store closing costs, net(a) |
(1,443) |
(7,561) |
(4,403) |
7,255 |
|||||||
|
Provision for income taxes on pre-tax adjustments |
(481) |
(320) |
(443) |
(5,617) |
|||||||
|
Adjusted net (loss) income |
$ |
(237) |
$ |
6,575 |
$ |
(2,494) |
$ |
13,600 |
|||
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
Adjusted diluted (loss) earnings per share is summarized as follows:
|
Reconciliation of Adjusted Diluted (Loss) Earnings per Share |
Three Months Ended |
Six Months Ended |
|||||||||
|
September 26, 2026 |
September 27, 2025 |
September 26, 2026 |
September 27, 2025 |
||||||||
|
Diluted (loss) earnings per share |
$ |
(0.05) |
$ |
0.18 |
$ |
(0.13) |
$ |
(0.10) |
|||
|
Litigation reserve |
0.04 |
- |
0.04 |
- |
|||||||
|
Consulting costs related to the Operational Improvement Plan |
0.03 |
0.19 |
0.05 |
0.32 |
|||||||
|
Costs related to shareholder matters |
0.01 |
- |
0.01 |
- |
|||||||
|
Transition costs related to back-office optimization (b) |
0.00 |
0.01 |
0.01 |
0.03 |
|||||||
|
Pension settlement expense |
- |
- |
0.03 |
- |
|||||||
|
Write-off of debt issuance costs |
- |
- |
0.01 |
0.01 |
|||||||
|
Store closing costs, net (a) |
(0.03) |
(0.18) |
(0.11) |
0.18 |
|||||||
|
Adjusted diluted (loss) earnings per share |
$ |
(0.01) |
$ |
0.21 |
$ |
(0.09) |
$ |
0.43 |
|||
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
(b)Amounts, in the periods presented, may be too minor in amount, net of the impact from income taxes, to have an impact on the calculation of adjusted diluted (loss) earnings per share.
Note: The calculation of the impact of non-GAAP adjustments on diluted (loss) earnings per share is performed on each line independently. The table may not add down +/- $0.01 due to rounding.
The other adjustments to diluted (loss) earnings per share reflect estimated annual effective income tax rates of 26.0 percent for the three and six months ended September 26, 2026 and September 27, 2025. This represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate. See adjustments from the Reconciliation of Adjusted Net (Loss) Income table above for pre-tax amounts.
Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We expect to continue to generate positive operating cash flow as we have done in each of the last three fiscal years. We believe the cash we generate from our operations will allow us to continue to support business operations and pay down debt.
In addition, because we believe a large portion of our future expenditures will be to fund our growth, through acquisition of retail stores and/or opening greenfield stores, we continually evaluate our cash needs and may decide it is best to fund the growth of our business through borrowings on our New Credit Facilities. Conversely, we may be required to make prepayments under the New Credit Facilities, or we may periodically determine that it is in our best interests to voluntarily repay certain indebtedness early.
|
Monro, Inc. Q2 2027 Form 10-Q |
22 |
|||
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Future Cash Requirements
We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems, to be $25 million to $35 million in the aggregate in fiscal 2027. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $418.9 million in lease payments, of which $90.9 million is due within one year. For details regarding these lease commitments, see Note 8 to our consolidated financial statements.
As of September 26, 2026 we had $100.0 million outstanding under the Credit Facility, none of which was due in the succeeding 12 months, but which was repaid in full on October 23, 2026, in connection with the New Credit Facilities. For details regarding our indebtedness that is due, see Note 7 to our consolidated financial statements.
Dividends
We declared and paid dividends of $0.28 per share totaling $8.8 million and $8.7 million during the three months ended September 26, 2026 and September 27, 2025, respectively, and $0.56 per share totaling $17.5 million during each of the six months ended September 26, 2026 and September 27, 2025.
Working Capital Management
As of September 26, 2026, we had a working capital deficit of $257.7 million, a decrease of $23.5 million from a deficit of $281.2 million as of March 28, 2026. The overall working capital deficit is a result of our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers. As part of our working capital management, we facilitate a voluntary supply chain finance program to provide our suppliers with the opportunity to sell receivables due from the Company to a participating financial institution subject to the independent discretion of both the supplier and participating financial institution. For details regarding our supply chain finance program, see Note 9 and Note 13 to our consolidated financial statements.
Sources and Conditions of Liquidity
Our sources to fund our material cash requirements are predominantly cash from operations, availability under the New Credit Facilities, and cash and equivalents on hand.
As of October 24, 2026, we had approximately $27.3 million in cash on hand. In addition, we had $60.0 million available under the New Credit Facilities, subject to compliance with covenants under the Credit Agreement.
We believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following September 26, 2026, as well as in the long-term.
Summary of Cash Flows
The following table presents a summary of our cash flows from operating, investing and financing activities.
|
Summary of Cash Flows |
Six Months Ended |
|||||
|
(thousands) |
September 26, 2026 |
September 27, 2025 |
||||
|
Cash provided by operating activities |
$ |
4,211 |
$ |
30,396 |
||
|
Cash used for investing activities |
(7,260) |
(2,411) |
||||
|
Cash provided by (used for) financing activities |
3,374 |
(38,279) |
||||
|
Increase (decrease) in cash and equivalents |
325 |
(10,294) |
||||
|
Cash and equivalents at beginning of period |
14,633 |
20,762 |
||||
|
Cash and equivalents at end of period |
$ |
14,958 |
$ |
10,468 |
||
Cash provided by operating activities
For the six months ended September 26, 2026, cash provided by operating activities was $4.2 million, which consisted of a net loss of $3.8 million and a change in operating assets and liabilities of $23.8 million, offset by non-cash adjustments of $31.8 million. The non-cash charges were largely driven by $30.9 million of depreciation and amortization, as well as $3.6 million in share-based compensation expense, $1.2 million in pension settlement expense, partially offset by a $3.8 million net gain on disposal of assets. The change in operating assets and liabilities was primarily driven by timing of payments that caused accounts payable and accrued expenses to be a use of cash of $24.6 million.
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Monro, Inc. Q2 2027 Form 10-Q |
23 |
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
For the six months ended September 27, 2025, cash provided by operating activities was $30.4 million, which consisted of a net loss of $2.4 million, offset by non-cash adjustments of $27.1 million, and a change in operating assets and liabilities of $5.7 million. The non-cash charges were largely driven by $30.9 million of depreciation and amortization, as well as $1.2 million in share-based compensation expense, partially offset by a $5.1 million net gain on disposal of assets. The change in operating assets and liabilities was primarily driven by our inventory balance providing a source of cash of $18.0 million. This was partially offset by timing of payments that caused accounts payable and accrued expenses to be a use of cash of $13.4 million.
Cash used for investing activities
For the six months ended September 26, 2026, cash used for investing activities was $7.3 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $13.3 million, partially offset by proceeds from the disposal of property and equipment of $6.0 million.
For the six months ended September 27, 2025, cash used for investing activities was $2.4 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $13.1 million, partially offset by subsequent proceeds from the sale of our wholesale tire locations and distribution assets and proceeds from the disposal of property and equipment of $3.5 million and $7.2 million, respectively.
Cash provided by (used for) financing activities
For the six months ended September 26, 2026, cash provided by financing activities was $3.4 million. This was primarily due to proceeds on our Credit Facility, net of amounts paid during the period, of $40.0 million, offset by payment of finance lease principal and dividends of $18.5 million and $17.5 million, respectively, and deferred financing costs of $0.6 million.
For the six months ended September 27, 2025, cash used for financing activities was $38.3 million. This was primarily due to payment of finance lease principal and dividends of $19.1 million and $17.5 million, respectively, deferred financing costs of $0.5 million, and payments on our Credit Facility, net of amounts borrowed during the period, of $1.2 million.
Critical Accounting Estimates
The consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows may be affected.
For a description of our critical accounting estimates, refer to Part II, Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the fiscal year ended March 28, 2026. There have been no material changes to our critical accounting estimates since our Form 10-K for the year ended March 28, 2026 was filed.
Recent Accounting Pronouncements
See "Recent Accounting Pronouncements" in Note 1 to our consolidated financial statements for a discussion of the impact of recently issued accounting standards on our consolidated financial statements as of September 26, 2026 and the expected impact on the consolidated financial statements for future periods.
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Monro, Inc. Q2 2027 Form 10-Q |
24 |
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains "forward-looking statements" as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by, or including words such as "anticipate," "believe," "can," "could," "estimate," "expect," "intend," "may," "plan," "potential," "should," "strategy," "will," "would" and variations thereof and similar expressions. Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. For example, our forward-looking statements include, without limitation, statements regarding:
•the impact of competitive services and pricing;
•the effect of economic conditions and geopolitical uncertainty, seasonality, and the impact of weather conditions and natural disasters on customer demand;
•advances in automotive technologies including adoption of electronic vehicle technology;
•our dependence on third-party vendors for certain inventory;
•the risks associated with vendor relationships and international trade, particularly goods sourced from countries targeted with import tariffs;
•the impact of changes in U.S. trade relations and ongoing trade disputes between the United States, China, and other countries and other potential impediments to imports;
•our ability to generate sufficient cash flows from operations and service our debt obligations, including our expected annual interest expense, fund our capital expenditures and working capital requirements, and to comply with the debt covenants of our Credit Agreement;
•our anticipated sales, comparable store sales, gross profit margin, costs of goods sold (including product mix), OSG&A expenses and other fixed costs, and our ability to leverage those costs;
•management's estimates and expectations as they relate to income tax liabilities, deferred income taxes, and uncertain tax positions;
•management's estimates associated with our critical accounting policies, including insurance liabilities, income taxes, and valuations for our goodwill and long-lived assets impairment analyses;
•the impact of industry regulation, including changes in environmental, consumer protection, and labor laws;
•potential outcomes related to pending or future litigation matters;
•business interruptions;
•risks relating to disruption or unauthorized access to our computer systems;
•our ability to protect customer and employee personal data;
•risks relating to acquisitions and the integration of acquired businesses with ours;
•our growth plans, including our plans to add, renovate, re-brand, expand, remodel, relocate, or close stores and any related costs or charges, our leasing strategy for future expansion, and our ability to renew leases at existing store locations;
•the impact of costs related to planned store closings or potential impairment of goodwill, other intangible assets, and long-lived assets;
•expected dividend payments;
•our ability to protect our brands and our reputation; and
•our ability to attract, motivate, and retain skilled field personnel and our key executives.
Any of these factors, as well as such other factors as discussed in Part I, Item 1A., "Risk Factors" of our Form 10-K for the fiscal year ended March 28, 2026 as well as in our periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this report is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this report speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.
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Monro, Inc. Q2 2027 Form 10-Q |
25 |
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Monro Inc. published this content on October 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 29, 2026 at 11:59 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]