• Revenue: $305.8 million, a decrease of 3.7% year-over-year.
• Comparable Store Sales: Decreased 1.9% unadjusted for days; decreased 0.8% adjusted for days.
• Gross Margin: Decreased 120 basis points year-over-year.
• Operating Expenses: $94.8 million or 31% of sales, compared to 28.7% in the prior year period.
• Operating Income: $10 million or 3.3% of sales, down from $21.4 million or 6.7% of sales in the prior year.
• Net Income: $4.6 million, compared to $12.2 million in the prior year.
• Diluted Earnings Per Share (EPS): $0.15, compared to $0.38 in the prior year.
• Adjusted Diluted EPS: $0.19, compared to $0.39 in the prior year.
• Cash from Operations: $103 million, including $27 million of working capital reductions.
• Net Bank Debt: $49 million with a net bank debt to EBITDA ratio of 0.4 times.
• Total Liquidity: $521 million.

• Warning! GuruFocus has detected 7 Warning Signs with MNRO.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Monro Inc (NASDAQ:MNRO) achieved year-over-year comp store sales growth in December, indicating a positive trend in sales performance.
• The company successfully rolled out the ConfiDrive digital courtesy inspection process, enhancing customer communication and trust.
• Monro Inc (NASDAQ:MNRO) reported year-over-year growth in service categories such as batteries, alignment, and front-end shocks.
• The company maintained a strong financial position with $103 million in cash from operations and a net bank debt to EBITDA ratio of 0.4 times.
• Monro Inc (NASDAQ:MNRO) is committed to restoring gross margins to pre-COVID levels and achieving double-digit operating margins in the long term.

Negative Points

• Comparable store sales decreased by 1.9% year-over-year, indicating challenges in maintaining consistent sales growth.
• Gross margin decreased by 120 basis points due to higher material costs and increased self-funded promotions.
• Operating income for the third quarter declined significantly to $10 million from $21.4 million in the prior year period.
• Net income dropped to $4.6 million compared to $12.2 million in the same period last year, reflecting profitability challenges.
• The company faced pressure from a value-oriented consumer base trading down to lower-tier tire offerings, impacting material margins.

Q & A Highlights

Q: Will Monro continue to see improvement in gross profit comps, or will investments in price and promotion affect this? A: Brian D'Ambrosia, CFO, explained that gross margin declined due to increased material costs and self-funded tire promotions. Monro expects similar pressures going forward but remains committed to sales and unit growth, making necessary price and promotional investments.

Q: How did the weather impact Monro's fiscal third quarter, and what is the outlook? A: Michael Broderick, CEO, stated that the third quarter weather impact was neutral, but extreme weather in January could benefit future results. The company had momentum coming out of December, with service categories like brakes performing well.

Q: Can you elaborate on the benefits of the ConfiDrive digital courtesy inspection process? A: Michael Broderick noted that ConfiDrive has driven an increase in average ticket size, particularly in service categories like batteries and alignment. The process has improved customer attachment, although more customer growth is needed.

Q: What is the current mix of Tier 3 tires, and are promotions focused on this category? A: Michael Broderick stated that Tier 3 tires make up about 30% of the mix. Monro is steering customers towards Tier 3 to avoid them opting for cheaper Tier 4 tires, emphasizing the benefits of higher-tier tires through promotions.

Q: How is Monro's relationship with ATD amid their liquidity challenges? A: Brian D'Ambrosia confirmed that Monro still expects to collect $6.8 million from ATD and maintains a strong relationship with them during their restructuring process, with business operations continuing as usual.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.