MNRO - Earnings call transcript Q2 2025

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Operator

Good morning, ladies and gentlemen, and welcome to Monro Inc.'s Earnings Conference Call for the Second 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 Bechler, Senior Director of Investor Relations at Monro. Please go ahead.

Felix Veksler

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

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

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

a which not Officer, Monro's of certain and for supplemental on statements of will like turn Reconciliations of part release. the non-GAAP today's information and supplement discussion to included to call as With such to and measures, include Broderick. financial Michael be GAAP to presentation comparable intended GAAP measures. over our management's measures call, comparable Additionally, substitutes that, in Executive be I'd Chief today's the are earnings President

Michael Broderick

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

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

we further in our but initiatives that like our confidence taking us progressed. the acceleration gives a from our comp in quarter the hold. Turning well the our as quarter just progress, store the comp sales are to sequential Slide We accomplishments with getting We change drove year-over-year starting are first significant a This as started. percentage second second in as improvement X, quarter. trends

dollar and growth and tire exited from first sequentially month quarter, with our year-over-year units unit of in the the category tire quarter Importantly, our in improved sales the September.

strength process quarter. work to Slide X, meet We Courtesy value-oriented the more improvement our both from sales although drive the service oil to shown as the offer the service in growth quarter continue performance and on our do have our as ConfiDrive well to in Digital our improve promotions, we to leverage higher-margin consumer. which continue allowed our Inspection us us to our battery And of needs to of change allowed of and sales units categories, in the first as year-over-year dollars category sequential manufacturer-funded

initiatives. in year-over-year was Additionally, margin for alignments, traded we that in we offerings. second including Tier optimization resulted our material gross drive attachment our in dollars training industry improved productivity to down improvements, quarter, to units margins the trade-down month value-oriented general efficiencies impacted purchases through selling attachment dynamics, rate and continue our and of the alignment scheduling, X by a pressured labor more tire this September. growth And which sales in tire mix of with Consistent and our their both while quarter consumer in the

tires the supported with by from has brakes. categories, X%, to trends including only the and fiscal second momentum Encouragingly, into service down continued sales sales on quarter. objectives third our all store October Now preliminary our for quarter improving comp in our

have our of compared Milton, flat the Helene Hurricanes approximately the prior would store year. and preliminary Excluding sales impact to comp been

through continued units, as performance optimizing utilizing service growth third from which momentum achieve maintaining efficiencies to accelerating focus prudent this benefits categories, in in key cost continued well oil of include on and the traffic expect keen improvements improving our to productivity tire ConfiDrive leverage quarter by driven store services the trends We objectives, a labor change and our and control. as

an initiatives summary, in line top our results. In improvement are our driving

first as from sales exited Our our sequentially and the growth quarter store September. year-over-year by accelerated improved category, unit the in quarter second This trends with tire comp which the was quarter led progressed.

more of do a to in service to September. in we quarter While in year-over-year we category from improve work our year-over-year have service higher-margin alignments batteries performance in first quarter, of month the the sales and the the improvement sequential in growth categories, drove growth

a took we the we remain evidence we in operating with return as margins are levels the top serves to quarter, confident gross working. a our And margins gross our back on path longer that initiatives although This step pre-COVID restore to are double-digit over line our margin that as back to term growth.

from in regarding momentum overview of third Monro's XXXX. our traction achieve fiscal over Brian? who color with will and well initiatives that, our Brian, now as turn an sales to will us October quarter objectives. it continued position quarter I'll as strong provide to financial additional And performance, enable Our second

Brian D'Ambrosia

morning, and Thank you, everyone. good Mike,

X. Slide to Turning

Our improved fiscal year-over-year sales store in basis of of which million. store sales. comparable decreased a resulting sales the Sales quarter year-over-year, X.X% primarily from decline X.X% comparable was first change points by $XXX.X XXX sequentially in percentage XXXX, driven

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

September. X% exited an were down July, comps the in reference, in quarter X% by improvement down X% August, down in to we For and followed

exited tire quarter flat we the low second the of quarter, in units in year-over-year While September. the during units single-digit were month with growth

our tire our the underperforming were share or quarter. the overall sales higher-margin Comp tiers comp gained in stores in consistent also with our store market in XXX quarter. small We in

partially the costs higher basis costs tires and mix points as to within margin Gross sales, X. due material labor higher costs primarily prior a occupancy a offset percentage fixed year, of sales. Slide from resulting to percentage XX lower technician to of compared Turning by decreased as

principally compared Operating was income due were in the sales period. or year-over-year in expenses to XX.X% The million a million advertising lower declined percentage prior store $XX.X an spend. second Total the of and XX.X% for sales quarter as interest $XX.X or the weighted of as increase to of comparable operating $X.X of sales last to period. period of This year increase same in prior or year was $XX.X sales. interest rate. to million to sales the in or year. an $XX.X million to million in increase compared X.X% principally expense our compared Net $X.X This to is increased as sales average due million X.X%

the in due awards. same Income $X.X $XX.X was the tax Net last Diluted per year. Adjusted tax of an same non-GAAP primarily period. share prior difference year. in to million quarter adjusted XXXX. was in of share-based earnings sales. year-over-year to earnings effective earnings comparable difference decrease Driving impacts million effective measure compared an rate $X.XX compared $X.XX, $X.XX diluted XX.X% The and the related earnings XX.X%, tax was in diluted per share period per state or $X.X last year diluted and expense share income compared share, year-over-year store $X.XX. per to $X.XX rate fiscal This of the million a is second is compared was the tax to $X.X this to was adjusted million in tax is period the X.X% for is in to rate discrete taxes or which effective as of

on in reminder, of release details earnings the refer diluted years. every represents items excluded quarter reconciliation morning's Slide a about share. and fiscal adjusted XX Please our per appendix quarterly earnings diluted this in store $X.XX our earnings X% regarding the both of As to comp press for presentation change in EPS to sales in adjusted second further of

from of of position. first As cash generated strong half highlighted a operations, including capital on working XXXX. the of fiscal financial Slide X, $XX We reductions we continue million to $XX million maintain during

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

on made As margin in foundational by coupled of with performance. focus inspection leveraging several and financial our expansion in position. we digital strong courtesy experience improving earlier ConfiDrive our for optimization on underperforming focus we initiatives, inventory stores earnings our including vendor partnerships progress These XXXX, financial have market-facing or change improvements, recent have oil half as fiscal our improved commented customer areas, are us gross up and including the relentless calls, process, our first offer small solid the foundational as well XXX setting on significant and our

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

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

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

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

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

Michael Broderick

Brian. Thanks,

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

half in continue results. flow This, enable to volumes expand as generation recover. first the our driving as our foundational reap tire initiatives of Monro margins as to top cash our improvement an well in fiscal XXXX Our benefits progress line with are to along will

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

Operator

comes Instructions] first [Operator from question Wendler Stephens from Thomas Our Inc.

Tom Wendler

bankruptcy to wanted distributors filing. American on tire just touch I the

them. them to you're you have your contract I million $X.X Can tires and expecting? give us of think idea that the with your of still from purchase just impacts then requires an there a earn-out kind XX% of you you

Michael Broderick

usual, our Mike. Thomas. a is category. tire big no us business right and key Sure, now, is This they're growing There supporting to impact is

we been to have We're just filed. So what's a differently nothing than anything as report great customer. acting

Tom Wendler

where the I to Tier a an the idea kind Yes. tires think tire out mix Okay. us of tiers? mix between give of And just shift gears, the mentioned you quarter. shook Can you different X shifting during then

Michael Broderick

Tier -- It's us X with see, are we look down of still the The X, market approximately And it and X. and without you customers inexpensive changed XX%. We vendors question, using that trading sure. the delivering the at lot category. the to promotions, X Tier Tier Tier in share X into shifted a the XX%. grew tire tires business. -- support and really is in also we're biggest definitely still our their shifted down. everything say, probably at really grew when X. through Nothing's The outlier vendor industry Yes, I industry them. X gaining Tier Tier against and to our are teams would selling That's

balanced participating more We just doing in are approach. We're Tier a it also in X.

units I the think better improving protecting value it's the good and a it's for It's units. all at our showing think for for good that where same we're time. I we're ASP, customer the

Operator

question Our Wells David from comes next from Fargo. Lantz

David Lantz

around half you buckets detail? well. the as in can gross any second more about helpful provide And to a about talk think be how color Can margin the bit within you would then

Brian D'Ambrosia

Sure, David.

rebates last the the are contributor lower the negatively was manufacturer higher biggest XX just and margins to mix to overall If from the drove lower cost by was secondary was we trade year. you buckets, Tier landing. Tire of relative X over prior just pressure material We X. look few margins from manufacturer margin rebates quarters. then were quarter, the tires purchases also pressure affected related and down categories, the down tire material discussed recognized the to primarily our service And way had to brakes. to the X A in especially the contributing the Tier tire in bps decrease at quarter

on the Contributing year-over-year to also costs sales. related on the XX lower decrease deleverage bps to was occupancy

relatively value delevered. that continue the they versus XXX was the year, bps occupancy deliver -- which sales and technician was we flat on that see of year. lower to So versus the payroll were prior costs but prior partially Offsetting productivity, offsetting

into of of half, without can specific I As it year, getting are half back kind forces the that at the the explain for to relates back call work. the

the think to think is we persists. costs, when look down continue So about we to Consumer material for tire value. trade going

tire abate So in have rebates supportive half. couple purchases doesn't that in rebates as over dynamic will to of the expect change the in do But much the higher back related back half the the half. we our quarters that back tire that, to been more purchasing last

service they're year-over-year that significant in starting between we're gap in as of the be mix to categories, our making also, close to abating performance terms headwind improvement then our also tires, overall And an tire service. of terms in and and will

as to then pay, are on expect a improve continue to said top we And we'll technician prior we as costs gain as we've a good percent year. occupancy lap line, the sales relates to the performance of We for deliver productivity, to deliver of and costs. but those fixed continue it good leverage while now, better to we starting as

relative just the in year-over-year be prior there. So we to of be still gains think They'll technician will the productivity year. diminishing size terms

David Lantz

you quarter? could Got traffic talk for the helpful. And trends overall and about business, just ticket in it. That's then the

Michael Broderick

to to offset The everything it's That's our digits, customer the what and board. have get going over and get that down back, to that's approximately one the we're quarter, going When you thing business going business got the look in October, in in when it's into look we're the decline, that. back, at improved over month results. and single at and high back, it tire we're thing, David, and business back. and one our did were We to we seeing we Oil our customers month we the We're some ASP going -- -- X% Mike. get Brakes business you tire month. declared across

David Lantz

last me. for then And question helpful. That's it. Got

down paid million in $XX debt quarter. this about You

So through have forward. any think expense to you how curious interest on if color going

Brian D'Ambrosia

is of Sure. expense interest A leases. our financing our lot related to

that. would expense the with the interest portion So of consistent reductions half fairly where million of in are to good the as for that was in finance seeing of We we expect roughly down. debt $XXX a year. lease bringing the But we're generates it year back be debt prior

Michael Broderick

Jordan Bret from comes from Jefferies. question next The

Bret Jordan

not could guess, On give the offset some to? X maybe count? and us would the tailwind, ASP the a that to do attribute like color? tailwind did obviously, be it strength batteries you And Tier price of I mean I to you what but real negative shift see sort traffic you where sounds ASP, in tire other

Michael Broderick

I going pressure forward to tire Yes. going a board. that say not we're into at ASP. continue and is doing a us be I definitely decline is And tire that and X across coming and to what the from X would we down -- organization, say say guy is the really that and X our of shift healthy, not even healthy, puts the like though that's we're decline doing that marketplace perspective, I continue would Monro going would good to still that to we're I help the the it Tier lot a from moving trend. mean quarter. on in X reversed feel traffic -- -- we the significant tire

The look how performing. brakes. our business. the call like that's you categories, they're alignment It's second service a ticket like big wears know all say opportunity. big batteries the part of is about really and big biggest the I at And I item. the I really I out equation would The when

So on. it's really going focused something be that to we're

Bret Jordan

I in And versus X price how the minus comp? guess is Okay. that in October, traffic

Brian D'Ambrosia

but price/mix, with improving comp We're by continuing led see to the trends. Yes. traffic

Operator

next from from question comes Brian Oppenheimer. The Nagel

Brian Nagel

you gross negative have, a in want Because kind I know seen margin, guess, look already, the from but of dramatically I just you line. gross what to the of the addressed prior So and dynamic shifted this we've the top sort bit question the trajectory I the the margin -- between I quarter. quarter understand better in to if

coming I So path I do -- off. about have we as we there think I going you to mean, line follow-up would Or of this see towards as in is that a forward, to improvement that, initially at some margins? trade comps is guess improving, the think simultaneous and as the be And margin? there trend, the is, gross solidifying going top business then ongoing to expense gross question this be about a strengthening extent

Brian D'Ambrosia

can I Brian. that, address

first thing trade-down recognize margins, that as the the in attract that environment we think have operating stores dynamics both as of get self-funded our into I well to using and promotions is buy guests material impact on we're the we're manufacturer-funded our that level to to continue and and tires. to

period -- putting period of pressure this on So overall that that is macro overall time in the -- this material is backdrop margins. at

really Our pre-COVID of those XX% on high path improving. relies back XX%, margins to dynamic that gross kind

material between particular margins, work affecting dynamic top a a and there it trade line promotional trade-off that's there's but period down this our time. at not during So is of

our same Also, the improving we're service at time, categories.

another the we path a and October. that's we this comps need that improve gross tires tailwind. this of XX% headwind would into XX XX% margins. in into headwind So in towards ultimately, occupancy terms particular it quarter, quarter continue item expect gross order in to was a But higher with and obviously occupancy continue progress then in X%, the another make to those margins, turn of with down that improved costs, see cost where to lever we to with brakes we take of to achieve down and like turn bps quarter to And made that positive only

there. think down effect created way margin So the I But bridge upon. certainly trade we the by it's the value-oriented and want acting downplay the don't that's pressure consumer is mix up the -- about the to that

Brian Nagel

And then. a Brian. to that maybe helpful, follow-up That's just

I go also you back an trajectory correctly, But again, was But but if margins to QX; look year-on-year were sales if fiscal this. stronger. for period. that belaboring improving you gross this recall was if in so QX, I sorry think fiscal So there at,

-- So was that in what from QX? change QX dynamic -- primary then changed what to from the

Brian D'Ambrosia

I Tier and primary would Tier X would The and Yes. X to say, X. change, the margins material be the

So to pressure that Tier Tier X preserve mix, the which X that We Tier in up lot on and were down X. in to grew And X relative starting by benefits hadn't QX. until trade the Tier and quarter. of protecting a quarter, really that the we But Tier the trying lap X to the point, really pay improvement. versus did seen time, QX much we having we difference Tier offerings the X and down Tier technician at We X really and some industry. primary good our Tier same time, that the X of X. saw through between trade same That at X in was also to Tier of some X we're

that tailwind to while QX, expected. basis QX, in which point was So in was us for XXX a XXX that subsided

Operator

further no have We questions.

now to back hand remarks. I'll Michael Broderick So over closing for

Michael Broderick

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

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

Operator

today's call. concludes Thank joining, everyone. you This for

may your lines. You disconnect now

Monro (MNRO) 30 Oct 242025 Q2 Earnings call transcript