Monro, Inc 10-Q for FY2021 Q2

About this 10-Q

Headline figures

Monro, Inc. (MNRO)

10-Q 2020-11-05 For: 2020-09-26

Added on April 06, 2026

Monro, Inc filed this 10-Q on November 5, 2020, covering the quarter ended September 26, 2020 (FY2021 Q2).

As of
‎Acquisition Date

Dollars in
‎thousands

Weighted
‎Average
‎Useful Life

Customer lists

Quarter ended September 26, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $288.59M; down 11.0% from $324.11M a year earlier
Net income: $12.85M; down 36.8% from net income of $20.31M a year earlier
Diluted EPS: $0.38; down 36.7% from $0.60 a year earlier

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New York	16-0838627
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

200 Holleder Parkway, Rochester, New York	14615
(Address of principal executive offices)	(Zip code)


Part I. Financial Information	Page No.
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets	3
Consolidated Statements of Comprehensive Income	4
Consolidated Statements of Changes in Shareholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3. Quantitative and Qualitative Disclosures About Market Risk	20
Item 4. Controls and Procedures	20
Part II. Other Information
Item 1. Legal Proceedings	21
Item 1A. Risk Factors	21
Item 6. Exhibits	22
Signatures	23



	September 26,		March 28,
	2020		2020
	(Dollars in thousands)
Assets
Current assets:
Cash and equivalents	$	81,453	$	345,476
Trade receivables		14,022		14,510
Federal and state income taxes receivable		6,688		8,056
Inventories		167,739		187,441
Other current assets		45,632		40,537
Total current assets		315,534		596,020
Property, plant and equipment		696,570		682,932
Less - Accumulated depreciation and amortization		(368,308)		(354,295)
Net property, plant and equipment		328,262		328,637
Finance lease and financing obligation assets, net		272,179		196,575
Operating lease assets, net		202,866		199,729
Goodwill		671,831		671,843
Intangible assets, net		27,681		29,781
Other non-current assets		19,199		20,688
Long-term deferred income tax assets		5,930		6,184
Total assets	$	1,843,482	$	2,049,457
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of finance leases and financing obligations	$	35,713	$	32,257
Current portion of operating lease liabilities		29,960		30,181
Trade payables		127,615		99,504
Accrued payroll, payroll taxes and other payroll benefits		12,373		14,429
Accrued insurance		46,484		43,387
Deferred revenue		11,837		13,129
Other current liabilities		34,333		22,049
Total current liabilities		298,315		254,936
Long-term debt		231,300		566,400
Long-term finance leases and financing obligations		364,598		298,373
Long-term operating lease liabilities		178,368		170,954
Other long-term liabilities		21,495		12,873
Long-term deferred income tax liabilities		11,558		10,069
Long-term income taxes payable		1,481		1,412
Total liabilities		1,107,115		1,315,017
Commitments and contingencies
Shareholders' equity:
Class C Convertible Preferred Stock, $1.50 par value, $0.064 conversion value, ‎150,000 shares authorized; 21,802 shares issued and outstanding		33		33
Common Stock, $0.01 par value, 65,000,000 shares authorized; 39,667,277 and ‎39,644,228 shares issued at September 26, 2020 and March 28, 2020, respectively		397		396
Treasury Stock, 6,359,871 shares, at cost		(108,729)		(108,729)
Additional paid-in capital		231,095		229,774
Accumulated other comprehensive loss		(7,229)		(6,889)
Retained earnings		620,800		619,855
Total shareholders' equity		736,367		734,440
Total liabilities and shareholders' equity	$	1,843,482	$	2,049,457



	Quarter Ended				Six Months Ended
	September 26,		September 28,		September 26,		September 28,
	2020		2019		2020		2019
	(Dollars in thousands, ‎except per share data)
Sales	$	288,587	$	324,113	$	535,646	$	641,177
Cost of sales, including distribution and occupancy costs		184,061		202,040		343,666		390,957
Gross profit		104,526		122,073		191,980		250,220
Operating, selling, general and administrative expenses		80,101		88,716		156,154		180,493
Operating income		24,425		33,357		35,826		69,727
Interest expense, net of interest income		7,322		6,961		14,707		14,117
Other income, net of other loss		(77)		(207)		(68)		(382)
Income before income taxes		17,180		26,603		21,187		55,992
Provision for income taxes		4,334		6,289		5,354		13,072
Net income	$	12,846	$	20,314	$	15,833	$	42,920
Other comprehensive loss:
Changes in pension, net of tax benefit		(170)		(88)		(340)		(177)
Other comprehensive loss		(170)		(88)		(340)		(177)
Comprehensive income	$	12,676	$	20,226	$	15,493	$	42,743
Earnings per common share:
Basic	$	0.38	$	0.61	$	0.47	$	1.29
Diluted	$	0.38	$	0.60	$	0.47	$	1.26
Weighted average number of common shares outstanding ‎ used in computing earnings per share:
Basic		33,297		33,244		33,291		33,214
Diluted		33,849		33,979		33,851		33,971



		Class C Convertible ‎Preferred Stock			Common Stock			Treasury Stock			Additional ‎Paid-in		Accumulated ‎Other ‎Comprehensive		Retained
		Shares	Amount		Shares	Amount		Shares	Amount		Capital		Loss		Earnings		Total
Balance at June 29, 2019		22	$	33	39,582	$	396	6,360	$	(108,729)	$	224,742	$	(4,625)	$	606,771	$	718,588
Net income																20,314		20,314
Other comprehensive loss:
Pension liability adjustment ‎ ($118) pre-tax														(88)				(88)
Cash dividends ⁽¹⁾:	Preferred															(112)		(112)
	Common															(7,319)		(7,319)
Dividend payable																(13)		(13)
Activity related to equity-based plans					46							1,244						1,244
Stock-based compensation												962						962
Balance at September 28, 2019		22	$	33	39,628	$	396	6,360	$	(108,729)	$	226,948	$	(4,713)	$	619,641	$	733,576

Balance at June 27, 2020		22	$	33	39,646	$	396	6,360	$	(108,729)	$	230,683	$	(7,059)	$	615,396	$	730,720
Net income																12,846		12,846
Other comprehensive loss:
Pension liability adjustment ‎ ($226) pre-tax														(170)				(170)
Cash dividends ⁽¹⁾:	Preferred															(112)		(112)
	Common															(7,328)		(7,328)
Dividend payable																(2)		(2)
Activity related to equity-based plans					21		1					(199)						(198)
Stock-based compensation												611						611
Balance at September 26, 2020		22	$	33	39,667	$	397	6,360	$	(108,729)	$	231,095	$	(7,229)	$	620,800	$	736,367


Balance at March 30, 2019		22	$	33	39,511	$	395	6,360	$	(108,729)	$	220,173	$	(4,536)	$	592,174	$	699,510
Accounting change - cumulative effect																(582)		(582)
Adjusted balance		22		33	39,511		395	6,360		(108,729)		220,173		(4,536)		591,592		698,928
Net income																42,920		42,920
Other comprehensive loss:
Pension liability adjustment ‎ ($235) pre-tax														(177)				(177)
Cash dividends ⁽¹⁾:	Preferred															(224)		(224)
	Common															(14,624)		(14,624)
Dividend payable																(23)		(23)
Activity related to equity-based plans					117		1					4,888						4,889
Stock-based compensation												1,887						1,887
Balance at September 28, 2019		22	$	33	39,628	$	396	6,360	$	(108,729)	$	226,948	$	(4,713)	$	619,641	$	733,576

Balance at March 28, 2020		22	$	33	39,645	$	396	6,360	$	(108,729)	$	229,774	$	(6,889)	$	619,855	$	734,440
Net income																15,833		15,833
Other comprehensive loss:
Pension liability adjustment ‎ ($453) pre-tax														(340)				(340)
Cash dividends ⁽¹⁾:	Preferred															(224)		(224)
	Common															(14,651)		(14,651)
Dividend payable																(13)		(13)
Activity related to equity-based plans					22		1					(194)						(193)
Stock-based compensation												1,515						1,515
Balance at September 26, 2020		22	$	33	39,667	$	397	6,360	$	(108,729)	$	231,095	$	(7,229)	$	620,800	$	736,367



“Quarter Ended Fiscal September 2020”	June 28, 2020 – September 26, 2020 (13 weeks)
“Quarter Ended Fiscal September 2019”	June 30, 2019 – September 28, 2019 (13 weeks)
“Six Months Ended Fiscal September 2020”	March 29, 2020 – September 26, 2020 (26 weeks)
“Six Months Ended Fiscal September 2019”	March 31, 2019 – September 28, 2019 (26 weeks)



	As of ‎Acquisition ‎Date
	(Dollars in ‎thousands)
Inventories	$	2,952
Other current assets		448
Property, plant and equipment		1,779
Finance lease and financing obligation assets, net		18,962
Operating lease assets, net		26,339
Intangible assets		1,822
Other non-current assets		106
Long-term deferred income tax assets		3,723
Total assets acquired		56,131
Current portion of finance leases and financing obligations		1,820
Current portion of operating lease liabilities		2,894
Deferred revenue		1,120
Other current liabilities		215
Long-term finance leases and financing obligations		24,311
Long-term operating lease liabilities		28,201
Other long-term liabilities		1,231
Total liabilities assumed		59,792
Total net identifiable liabilities assumed	$	(3,661)
Total consideration transferred	$	64,121
Less: total net identifiable liabilities assumed		(3,661)
Goodwill	$	67,782



	Dollars in
	thousands
Balance at March 28, 2020	$	18,506
Deferral of revenue		6,908
Deferral of revenue from acquisitions		—
Recognition of revenue		(9,123)
Balance at September 26, 2020	$	16,291



			Within		2 to		4 to		After
	Total		1 Year		3 Years		5 Years		5 Years
	(Dollars in thousands)
Principal payments on long-term debt	$	231,300		—		—	$	231,300		—
Finance lease commitments/financing obligations ^(a)		517,489	$	53,518	$	106,833		99,356	$	257,782
Operating lease commitments ^(a)		239,906		35,511		64,754		52,754		86,887
Accrued rent		3,235		2,993		209		16		17
Other liabilities		1,533		800		733		—		—
Total	$	993,463	$	92,822	$	172,529	$	383,426	$	344,686



	Fiscal Month Ended
	April		May		June		July		August		September		October
Comparable store sales % (year-over-year decline)	(41)	%	(24)	%	(14)	%	(12)	%	(13)	%	(8)	%	(12)	%



Reconciliation of Adjusted Net Income
	Quarter Ended				Six Months Ended
	September 26,		September 28,		September 26,		September 28,
	2020		2019		2020		2019
	(Dollars in thousands)
Net income	$	12,846	$	20,314	$	15,833	$	42,920
Store impairment charge		99		—		99		—
Store closing costs		(17)		—		2,510		—
Monro.Forward initiative costs		248		769		430		1,307
Acquisition due diligence and integration costs		22		287		39		769
Management transition costs		257		—		257		—
Provision for income taxes on adjustments		(141)		(263)		(782)		(518)
Adjusted net income	$	13,314	$	21,107	$	18,386	$	44,478



Reconciliation of Adjusted Diluted EPS
	Quarter Ended				Six Months Ended
	September 26,		September 28,		September 26,		September 28,
	2020		2019		2020		2019
Diluted EPS	$	0.38	$	0.60	$	0.47	$	1.26
Store impairment charge ^(a)		—		—		—		—
Store closing costs^(a)		—		—		0.06		—
Monro.Forward initiative costs		0.01		0.02		0.01		0.03
Acquisition due diligence and integration costs ^(a)		—		0.01		—		0.02
Management transition costs		0.01		—		0.01		—
Adjusted diluted EPS	$	0.39	$	0.62	$	0.54	$	1.31


	MONRO, INC.

DATE: November 5, 2020	By:	/s/ Robert E. Mellor
		Robert E. Mellor
		Interim Chief Executive Officer ‎(Principal Executive Officer)

DATE: November 5, 2020	By:	/s/ Brian J. D’Ambrosia
		Brian J. D’Ambrosia
		Executive Vice President-Finance, Chief Financial Officer and
		Treasurer (Principal Financial Officer and Principal Accounting Officer)



	Quarter Ended				Six Months Ended
	September 26,		September 28,		September 26,		September 28,
	2020		2019		2020		2019
	(Dollars in thousands)
Revenues:
Brakes	$	35,489	$	46,538	$	64,053	$	93,314
Exhaust		5,710		7,108		10,142		14,061
Steering		21,565		26,178		40,033		52,410
Tires		154,505		158,805		291,775		312,870
Maintenance		70,486		84,641		128,106		166,815
Other		832		843		1,537		1,707
Total	$	288,587	$	324,113	$	535,646	$	641,177