OCHESTER, N.Y.–(BUSINESS WIRE)–Monro, Inc. (Nasdaq: MNRO), a leading provider of automotive undercar repair and tire services, today announced financial results for its fourth quarter and fiscal year ended March 30, 2024.
Fourth Quarter Results
Sales for the fourth quarter of the fiscal year ended March 30, 2024 (“fiscal 2024”) decreased 0.2% to $310.1 million, as compared to $310.8 million for the fourth quarter of the fiscal year ended March 25, 2023 (“fiscal 2023”). Fiscal 2024 was a 53-week year with 368 selling days as compared to 361 selling days in fiscal 2023, and therefore included $24.4 million for an extra week of sales in the fourth quarter. Comparable store sales increased 0.1% on a reported basis and decreased 7.2% when adjusted for days. This was primarily driven by a strained low-to-middle income consumer that traded-down to tires at opening price points as the industry worked to clear-through an oversupply of lower-margin tires. This compares to an increase in comparable store sales of 4.5% in the prior year period.
Adjusted for days, comparable store sales decreased 1% for batteries, 4% for alignments, 6% for tires, 7% for maintenance services, 9% for brakes, and 14% for front end/shocks compared to the prior year period. Please refer to the “Comparable Store Sales” section below for a discussion of how the Company defines comparable store sales.
Gross margin increased 210 basis points compared to the prior year period, primarily resulting from lower technician labor costs as a percentage of sales, including a 15% reduction in overtime hours and lower material costs as a percentage of sales, which were partially offset by higher fixed occupancy costs as a percentage of sales.
Total operating expenses for the fourth quarter of fiscal 2024 were $99.7 million, or 32.2% of sales, as compared to $97.6 million, or 31.4% of sales in the prior year period. The increase on a dollar basis was principally due to $1.6 million of higher non-recurring costs in the quarter compared to the prior year period. Excluding these costs, total operating expenses, inclusive of an extra week, increased $0.5 million compared to the prior year period.
Operating income for the fourth quarter of fiscal 2024 was $10.3 million, or 3.3% of sales, as compared to $6.2 million, or 2.0% of sales in the prior year period.
Interest expense was $5.0 million for the fourth quarter of fiscal 2024, as compared to $5.9 million for the fourth quarter of fiscal 2023, principally due to a decrease in weighted average debt.
Income tax expense in the fourth quarter of fiscal 2024 was $2.0 million, or an effective tax rate of 35.0%, compared to $0.2 million, or an effective tax rate of 35.2% in the prior year period.
Net income for the fourth quarter of fiscal 2024 was $3.7 million, as compared to $0.4 million in the same period of the prior year. Diluted earnings per share for the fourth quarter of fiscal 2024 was $.12. This compares to $.01 in the fourth quarter of fiscal 2023. Adjusted diluted earnings per share, a non-GAAP measure, for the fourth quarter of fiscal 2024 was $.21. This compares to adjusted diluted earnings per share of $.08 in the fourth quarter of fiscal 2023. Please refer to the reconciliation of adjusted diluted earnings per share in the table below for details regarding excluded items in the fourth quarters of fiscal 2024 and 2023. Please refer to the “Non-GAAP Financial Measures” section below for a discussion of this non-GAAP measure.
During the fourth quarter of fiscal 2024, the Company closed 8 stores. Monro ended the quarter with 1,288 company-operated stores and 51 franchised locations.
“We expanded gross margins, both in the fourth quarter and for the full fiscal year. We continued to mitigate a challenged topline with actions to reduce non-productive labor costs, including overtime hours in our stores. While an industry-wide deferral and trade-down cycle has lasted longer than most in our industry would have expected, we are navigating weakness in the tire market well with our actions and our recently implemented initiatives. We have made foundational progress that will enable Monro to reap benefits when tire volumes recover”, said Mike Broderick, President and Chief Executive Officer.
Broderick continued, “Our business is durable, well-positioned to withstand the current downturn and poised for long-term success.”
Full Year Results1
- Sales decreased 3.7% to $1.277 billion from $1.325 billion in fiscal 2023, primarily driven by a pressured low-to-middle income consumer that traded-down and deferred purchases in the Company’s high-ticket tire category, which resulted in lower year-over-year comparable store sales. Comparable store sales decreased 2.0% on a reported basis and 3.9% adjusted for days, compared to increases of 2.8% for total company and 3.5% for Retail locations in the prior year period.
- Gross margin for fiscal 2024 was 35.4%, compared to 34.4% in the prior year period, primarily due to lower material costs as a percentage of sales, which were partially offset by higher fixed occupancy costs as a percentage of sales and higher technician labor costs as a percentage of sales.
- Total operating expenses for fiscal 2024 were $380.7 million, or 29.8% of sales compared to $376.4 million, or 28.4% of sales. The increase on a dollar basis was principally due to $3.3 million of higher non-recurring costs during fiscal 2024 compared to the prior year period. Excluding these costs, total operating expenses, inclusive of an extra week, increased $1.0 million compared to the prior year period.
- Operating income was $71.4 million, or 5.6% of sales, compared to $79.8 million, or 6.0% of sales in the prior year period.
- Interest expense was $20.0 million in fiscal 2024, compared to $23.2 million in fiscal 2023, principally due to a decrease in weighted average debt.
- Net income for fiscal 2024 was $37.6 million, or $1.18 per diluted share, as compared to $39.0 million, or $1.20 per diluted share in the prior year period.
- Adjusted diluted earnings per share, a non-GAAP measure, in fiscal 2024 was $1.33. This compares to adjusted diluted earnings per share of $1.36 in fiscal 2023. Please refer to the reconciliation of adjusted diluted earnings per share in the table below for details regarding excluded costs in fiscal 2024 and fiscal 2023. Please refer to the “Non-GAAP Financial Measures” section below for a discussion of this non-GAAP measure.
Strong Financial Position
During fiscal 2024, the Company generated operating cash flow of $125 million. As of March 30, 2024, the Company had total liquidity of $475 million.
Fourth Quarter Fiscal 2024 and First Quarter Fiscal 2025 Cash Dividend
On March 22, 2024, the Company paid a cash dividend for the fourth quarter of fiscal 2024 of $.28 per share.
The Company also announced today that its Board of Directors has approved a cash dividend for the first quarter of fiscal year 2025 of $.28 per share. The cash dividend is payable on June 18, 2024 on the Company’s outstanding shares of common stock, including the shares of common stock to which the holders of the Company’s Class C Convertible Stock are entitled. The dividend is payable to shareholders of record on June 4, 2024.
Share Repurchases
The Company did not repurchase any shares under its current Board authorization of up to $150 million of common stock during the fourth quarter of fiscal 2024. The Company repurchased 1.5 million shares of its common stock at an average price of $28.50 for $44 million during fiscal 2024. In total, the Company has repurchased 3.7 million shares at an average price of $37.61 for $141 million under the current authorization from the Company’s Board of Directors.
The method, timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, alternative investment opportunities, and legal requirements.
The Company’s repurchase program has no expiration date, does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.
Company Expectations
Monro is not providing fiscal 2025 financial guidance at this time but will provide perspective on its expectations for the fiscal first quarter as well as the full year of fiscal 2025 during its earnings conference call.
About Monro, Inc.
Monro, Inc. (NASDAQ: MNRO) is one of the nation’s leading automotive service and tire providers, delivering best-in-class auto care to communities across the country, from oil changes, tires and parts installation, to the most complex vehicle repairs. With a growing market share and a focus on sustainable growth, the Company generated almost $1.3 billion in sales in fiscal 2024 and continues to expand its national presence through strategic acquisitions and the opening of newly constructed stores. Across approximately 1,300 stores and 9,000 service bays nationwide, Monro brings customers the professionalism and high-quality service they expect from a national retailer, with the convenience and trust of a neighborhood garage. Monro’s highly trained teammates and certified technicians bring together hands-on experience and state-of-the-art technology to diagnose and address automotive needs every day to get customers back on the road safely. For more information, please visit corporate.monro.com.
