MNRO - Earnings call transcript Q1 2025

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Operator

Good morning, ladies and gentlemen, and welcome to the Monro, Inc.'s Earnings Conference Call for the First Quarter of fiscal 2025. [Operator Instructions] And as a reminder, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Felix Veksler, Senior Director of Investor Relations at Monro. Please go ahead.

Felix Veksler

Thank you. Hello, everyone, and thank you for joining us on this morning's call.

our please be as is referencing the section started, call, of available get Investors will corporate.monro.com/investors. we a of we note part that this on Before at website presentation that I performance. Slide I'd presentation on includes draw harbor that statements forward-looking remind X, attention the like to If safe could about statement some participants to our your Monro's future

in to most future from may suggested by outlined The company differ or results today. as The disclaims information, except release. any affect of could materially intention by result earnings those any filings whether future or SEC significant obligation statements, results required or otherwise, the that as update forward-looking Actual comments events factors our new revise a law. with and Monro's are our in

Additionally, to comparable measures. release. statements call, measures, for today's are a intended certain be our part as of of supplement Reconciliations presentation will management's such comparable which and of earnings discussion the substitutes non-GAAP in and GAAP information not measures financial to be included GAAP on today's include supplemental

that, like With call Chief Executive turn over Officer, I'd Michael the President Monro's Broderick. to to and

Michael Broderick

update This first outline Thank morning, Felix, good in second share on achieve that the we I'd objectives quarter quarter. several you everyone. and to like an accomplishments. you, After I'll with our morning, that, plan to

dedication to to I'd begin, like and for recognize our Monro and thank our customers. their I Before of all teammates

first Turning to with Slide in X, accomplishments quarter. starting our the

initiatives drove significant comp trends progressed. results, begun first see that as have our not are to hold. We store we top satisfied a implemented are recently the we with confident in sales quarter line While our acceleration our we take

growth in with our of turned in entire June. we to category Importantly, in the units month return the a corner

of we more inspection change our strength the do manufacturer ConfiDrive coupon work assortment. And and our our June although to improve both while the value-oriented meet us allowed to of categories in the promotions have us of the our the tire to oil optimizing battery profitability categories, continue funded service of an service which the process, a to performance leverage digital quarter needs and in as progressed. consumer, combination service We of also to well dollars improvement allowed of the month sales courtesy as our as drive growth units in offer higher-margin

with stores, productivity labor reduce labor we parallel with to our continued margin improvements, drive through costs. in actions optimization overtime initiatives initiatives, our topline scheduling, labor to costs, efficiency gross training selling including nonproductive expansion first the lower through our in and including In hours material quarter and attachment

represents pre-COVID the to Our margin quarter levels. gross restoring our another expansion gross margins step towards in back major

Now on to objectives the second our quarter. for

to include: our We on change as second and which services in achieve objectives, store quarter tire through cost the Accelerating in maintaining efficiencies growth and key labor prudent control. our improvements continued and the of by categories units. quarter leverage traffic traction service the first performance well Improving in will keen trends productivity optimizing focus oil as driven continued initiatives from our a

beginning recently improvement in results. implemented to are topline In summary, our our initiatives drive an

in by sales unit first led to the progressed comp category, June. as which our Our tire returned accelerated store quarter growth trends

in June as working. as the serve progressed, While an service categories, the we to in improvement higher have growth more as to that our our margin as improve well categories our service of in initiatives work performance do evidence batteries are quarter

margins on pre-COVID over operating restore with labor efficiency double-digit us turn in quarter position and that, expansion back further to longer margins our put who financial first a to we place it strong to that initiatives will performance, levels fiscal the provide and additional objectives. to over confidence enable through productivity regarding Monro's us through overview And margin will I'll quarter gross an Our our now optimization, material of quarter costs color term. The gross in remain the lower improvements XXXX. achieve labor gives we path with Brian, second Brian?

Brian D'Ambrosia

Mike, good morning, and you, Thank everyone.

decreased to Turning driven the year-over-year XX.X% to a primarily Slide decline $XXX.X X. comparable by Sales store sales. quarter, first in million X.X% in

Mike comp progressed. a trends significant walked just our As the sales through, in we quarter acceleration drove store as

the improvement were comps June. X% in a April, down slight and XX% we reference, For in to by in exited followed May, quarter XX% down down

While down returned June. quarter, to X% of during mid-single-digit month in first were tire we in the units growth the units

our progressed, the and our quarter Our were in Comp tire consistent stores underperforming improved share our the store overall quarter. XXX share in tiers. comp smaller maintained we higher-margin market as in sales with

percentage Turning X. to as prior of XXX costs basis partially sales, as margin technician and from year, costs costs a the which points resulting primarily to Slide fixed higher material increased a by occupancy of were sales. Gross lower labor compared percentage offset lower

of dollar was prior compared million or in XX.X% $XX as were sales period. to decrease expenses store basis lower sales year a operating or million on due to prior year to of The Total $XX.X the period. principally XX.X% the compared costs direct

Net Diluted prior same for million earnings period. decreased to Operating year the compared as income or the million same effective million to decrease first in period share per the in to an for tax compared million year. period last This in to year year. XX.X%, $X.X of last a of interest compared This expense to same or million is is due $X.XX. the period. period $X.X $X.X of $X.X sales. $X.X was This prior as which average million effective to million an compared was $XX.X in in $X.XX X.X% was $X.X debt. Income last expense compared principally rate of was is weighted quarter to or Net year. XX.X% million rate income X.X% or to tax declined the tax $XX.X sales the

X per in the fiscal release, a earnings $X.XX in of adjusted the EPS of per and quarter our the morning's quarter reconciliation years. Please is diluted to to presentation refer earnings first in non-GAAP diluted excluded $X.XX this earnings in appendix was Slide to XXXX. fiscal regarding measure, for this earnings our share details diluted on both items of first adjusted of share, Adjusted further and compared press

As days Slide to generated of cash has highlighted by on our during maintain X, position. the million This from cash We to $XX first the operations quarter. we solid quarter very cycle reduced year period. the end financial conversion XX at continued prior of compared the first a

the fiscal the at spent invested the divestiture of ratio received end in inventory quarter versus end was million in We XXXX. We million $X principal X.Xx liquidity in $X million bank $XX $XXX end the payments million. we ratio and for to had of AP in net capital of dividends. net first of million XXX% $X proceeds. distributed of financing the At XXX% first Our at quarter, total debt-to-EBITDA $XX of expenditures, million, debt leases and bank a

our for well expectations year X. Now full on quarter second the of Slide XXXX turning as as fiscal the to

in as expect percentage as prudent Although the as comp than higher our margins pay gains gross prior labor control. profitability from continued technician efficiency preliminary of the and in first we sales expect continue year cost from down our we of well higher through this quarter, to in deliver a period, lower X.X% to levels primarily to productivity relative store fiscal second quarter. Similar the sales to sales deliver to are July,

full expansion we XXXX. For fiscal XXXX, versus expect year fiscal gross margin

year. Please and We that XX-week with a basis the year, costs XXXX fiscal compared cost believe will flat goods when within from in of fiscal on was note occupancy that also dollar be prior the extra fixed our of is operating approximately XX-week XXXX benefited quarter. a an week year expenses fourth sales a while

of inclusive continued XXXX. The $XXX working strength position, generate capital including cash our dividend operating flow our capital priorities, during our XXXX. positions allocation flow, including us to our million of of fiscal reductions We of fund fiscal expect to cash financial at least in all

Regarding some we $XX back with fiscal million I And our will for $XX now to capital to XXXX. to Mike the closing expect in remarks. turn over that, call expenditures, spend million

Michael Broderick

Thanks, Brian.

an in strong. remains industry that Our fundamentally long-term business has durability

initiatives generate as enable Monro We recover. volumes tire to flow benefits have results. in that with topline progress our beginning foundational improvement to an cash This, along to reap continue to will and margins are implemented drive our expand

and to the over to poised scale, management with are win it will for our relationships experienced team. our questions. With strategic We operator turn that, now I

Operator

Instructions] from [Operator is Brian Co. first The question Nagel Oppenheimer with &

Brian Nagel

here. good Congrats on progress a

sounds you is improvement that, improvement the as to for it talked was it about really help you to asking like you topline tire in Michael category. backdrop So the few I this detail little into about did with -- maybe last your But see more in more first really the both the that, question is quarters, Or we've go could talked you it I the a progressed. sector that I'm can the Michael, perspective, you from I significant more? Brian, more you June. your -- month what, over and starting Because a I also improvement the an see maybe are improving a backdrop? of difficult drive initiatives? the And describe quarter know this about mean a about talked the the in question -- lot sector? the sales And have lot guess is,

Michael Broderick

It's Mike. it. Brian, I'll take

growth. First for of profitable all, we journey are on a a

through going would kind it. talked. from our at don't last I about I control. So we looked time We say this. category we tire the much consumer, the started in fact did with talk anything the in we tires that see very is of the consumer different the But

tires, to going to were promotable in go the And last when get we that May going become back. made with and going the were we we decisions tires we is lead and that highly to we to presented going back were

vendor were There's our were a still drive down seeing us, being help That would the we that. tires -- making hasn't say unit sold to we are they and the to decision rely category. I that tire get We growth support Although in June. value fair of than the us changed. with were are we we sure share. that more talked we made. lot tire in partners going to industry, about was on started units that That our still going helping

we're that acting promotions to and very say continue would going now, the consumers tire going or to order that they stay as way high the the in are strong right as we're expected to long drive I We promotions category. literally

the because my in hot are we weather. categories, really little attention. we got batteries bump organization's weather service are focus I consider, I attention, the is of doing, what turn actually The a categories let's my of which June have lot like highly service underperforming. profitable Now conversation a hey, do still

call we it think also a driving and process really of I store, a together bit battery in a inspection of credit better And ConfiDrive, we the continue little strong But we weather. the put performance. process, in month to July, an that

just about focus to like Brian, feel consumer do our So consumer. tires, changed shape. get do being to lot in of to last, don't going this process, we're that's to happy I We're to marketplace, we've and I the much service really breaks. not think -- going very of really sold just brakes I'm the lot fair categories. still more on with with And credit good share inspection And in do but better board. get And the a in -- the with the of our go staffing. our than a There's that's a has our service category. I has done batteries back none is go across has we're nothing control, just of the

story. XX productivity and these put them in that We it's It's story. a that's place I believe big flat-rate X we're technicians, in and much about I And hourly have this a And Brian. self-help initiatives last we of Most employees When it's more did more our I weeks. about our are of now productive. In about long them a a taken technicians. change to really as as and I've organization, talking are productive, about past, the very we talked our making technicians self-help still story, it's Monro year. before, talk get than become the talked days

Brian Nagel

Mike, helpful. And if can that's just up. I follow

you've categories, drive So and if that's helping tire demand. better unit to more I'm the promotional, hearing you correctly, in this gotten

in guess, understand, margins. spot I in my help But mean So big mind, correctly. I I heard was, the bright sure to make your me the quarter gross that

despite being the gains So you're driving gross the margin commercial entire in more category?

Brian D'Ambrosia

Yes, that's right, Brian.

are mentioned, Mike through as we more our in promoting Tier X. So X

a our through Monro across happening is So tire some expand more material margins we're at we've screen, really funding, tire the units us more side also to got partners, manufacturer margins primarily promotions. our value There led our funded preserve through great offers allowing doing our on manufacturer material providing but preserve and while in it's tiers. but driving category those is it by better which

our through X we the our as that so promotional And on X category accelerating on that unit quarter really vendors growth those funded. Tier led activities by was saw tire went an based

Operator

Jordan next question Bret Jefferies. The is from with

Bret Jordan

the I was Could what the traffic guess, price comp you talk is? impact about, on QX unit versus or

Michael Broderick

was and Yes. Price was at June, what math and and on it at on flat basically and down, rest that's in you slightly and ticket do I significantly we're was traffic, flatten specifically When on. units up, can focused when the I look the -- ticket. category, the it was tire look

Bret Jordan

similar. you I Bridgestone, price in of oil the a sort there? promotional oil a category? see Firestone managed Is driver doing Do -- it traffic Or getting broader is the discounting? are And it more things Okay. strategy, is out sort competitive then a of think

Michael Broderick

can to and really, needs with the do, do as these that the discounting. when promotions that are customers we managed get yes value, can focus consumers. that would to has a that have. in really And we sure our have we the as looking say take consumers we I very that within then work It's more rewarded that we sales. we that much for making It's is see minutes, making their XX say sure they of on walk of do a care to Monro

Bret Jordan

basis line It -- company -- on that with Are those? guess, can underperforming? that stack units was in I dispersion? there no line out yes. -- Or the on are in the they're what X-year X-year company you XXX average, with Yes, seems was I call longer a the they the for still generally

Brian D'Ambrosia

still numbers, opportunity the stores. disclose those I didn't in X-year there's but We mean,

launched slowed So productivity we in an environment line. time to tire a the the chain run expect respond we'll improving outsized But rate we has see saw stores tire at the least relative over outsized forward, those top way performance that when Monro, in versus down that they initiative. the moving from and from

growers. still So multiyear those are comp

Operator

is question David The Wells from with next Lantz Fargo.

David Lantz

relative for if curious to give gross there being quarter. points internal to talk I shook bit in up expectations? as being QX well. the guess XXX relation little in margin about color can if Curious And basis you in a guidance how can that up, more out you

Brian D'Ambrosia

Yes, exceeded our it expectations.

half we where obviously, when the then So if $X.XX we for that driven beat. comp running talked last, all, were EPS the between we we be first said of we run first bridge continue EPS the by, adjusted really to the expect a flat the in and was quarter, and through of quarter it to flat

by really We responding strong balance really that's were that It ran labor we our productive half add to So those the volumes XX%. productivity. The down rate, run down a and than having then a didn't really run driven expectations. without margin team and demand. was running relative exceeded in that tire meet $X.XX is XX% in that gross about technician of higher the to great to did job we to lot a back of for way productivity

achieve that our results that we levels to would is expectations the there back QX. increase so those is forward I as into gross to say we that and in durability similar saw continue And we half. productivity move productivity can margin here really still What are

David Lantz

year-over-year about rate clarify a you And similar basis? talking margin gross or just that, results on a the basis to are

Brian D'Ambrosia

in on they so have the -- the year, it. you at quarter on the the fluctuates too a bit, sights isn't But look the is of QX. way balance for different either XXs we for more our as More the year-over-year rate but little something delta well stay XXs of a mostly basis, for that

that certainly Mike service talking what supported will our improvements categories. be with by higher-margin in And earlier was about

David Lantz

-- buckets can And helpful. little costs a between That's gross help it. just the and more D&O detail, with too, bit technician on Got labor? then in you margin material

Brian D'Ambrosia

absolutely. Yes,

our those deleverage costs occupancy we've in percent in The a answered That sales year-over-year the preserving saw labor lower categories earlier, margins our our largely flattish XXX of And margin like costs had categories of we and tire year-over-year sales. improvement basis by occupancy year-over-year in percent basis to was category XXX backs relative costs. as was material the promotional points sales. of activities a XXX despite service So improvement point our as and in service on improvement basis we a the the fixed of point was margin vendors. a against a our undertook then driven

David Lantz

really That's quarter-to-date and if June. else a The a me. it. if Got are for of then just that function it's drivers July one Curious going bit of for comps if can you the last talk And something or helpful. on? really than about weaker compares there's

Michael Broderick

David, There's on we're to I for a crystal for going of I about We'll this to I'll Mike. that soft service tire to moving what's with the now compare, all continuing but a nothing year. And improving that. would want is our with it's least, significant focused to is leave rest it quarter-over-quarter to obviously happy have just categories have of say unit -- get I very the happen story, the ball going to don't but since not a take the company. that tire. and continue last margin with on. opportunity

Operator

Broderick hand closing no questions. to have I'll further back for We Mr. remarks. currently over

Michael Broderick

be us of an joining time Monro. you be Thank today. part for to exciting This continues

on updated a to value of day. progress. upon I foundation our our stakeholders. create you all keeping for forward strong long-term a have great to to We look build Have

Operator

concludes Thank for all Thank today's you call. you. joining. This

your You lines. may disconnect now

Monro (MNRO) 31 Jul 242025 Q1 Earnings call transcript