Monro Q2 operating income falls 79.7% to $2.6M
The replacement facilities mature October 23, 2030, while a lender waiver addressed fiscal Q2 2027 adjusted debt-to-EBITDAR compliance.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Monro, Inc. (MNRO) reported second-quarter fiscal 2027 sales of $283.6 million, down 1.8% year over year, and operating income of $2.6 million, down 79.7%. It recorded a $1.6 million net loss, compared with $5.7 million net income a year earlier; adjusted diluted loss per share, a non-GAAP measure, was $0.01. For the first six months, sales were $570.8 million, down 3.3%, and net loss was $3.8 million versus $2.4 million. Lower comparable-store sales drove the quarterly sales decline, as lower traffic was partly offset by a higher average ticket.
Cash provided by operating activities for the six months was $4.2 million, compared with $30.4 million. Monro received a lender waiver for its adjusted debt-to-EBITDAR covenant for second-quarter fiscal 2027. On October 23, 2026, it repaid and terminated its former credit facility and entered into new senior secured facilities: a $250 million term loan and a revolving facility of up to $125 million, both maturing October 23, 2030. At closing, Monro paid down approximately $152.9 million of supplier-finance obligations; it will no longer accept additional supplier obligations into that program after December 31, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Moderate pointOperating income fell 79.7% to $2.6 million.
- Moderate pointQuarterly net results shifted to a $1.6 million loss from $5.7 million income.
- Moderate pointSix-month operating cash flow fell to $4.2 million from $30.4 million.
- Moderate pointA lender waiver addressed Monro's fiscal Q2 2027 adjusted debt-to-EBITDAR compliance.
Filing Explained
The new agreement phases down its leverage ceiling and conditions dividends on financial tests.
This unaudited quarterly report confirms that all outstanding Class C preferred stock converted on
The new credit agreement caps its lease-adjusted net leverage ratio at 7.50-to-1 for fiscal 2027’s fourth quarter, stepping down to 6.50-to-1 from fiscal 2031’s first quarter, and restricts dividends, barring them if specified financial tests are unmet.
Key Figures
Key Terms
adjusted debt to EBITDAR financial
Comparable store sales financial
anti-dilutive financial
Term SOFR financial
supply chain financing program financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were MNRO's second-quarter fiscal 2027 results?
What new credit facilities did MNRO enter into?
What did MNRO report about its debt covenant?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________
FORM
____________________________________________________________
(Mark One)
For the quarterly period ended
OR
For the transition period from _____________ to _____________
Commission File Number:
____________________________________________________________
(Exact name of registrant as specified in its charter)
____________________________________________________________
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(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
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(Address of principal executive offices) | (Zip code) |
Registrant’s telephone number, including area code: 1 (
_________________________________________
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ¨ x Non-accelerated filer ¨ Smaller reporting company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes
As of October 16, 2026,
Table of Contents
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION |
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Item 1. Financial Statements (Unaudited) |
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Consolidated Balance Sheets | 3 |
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income | 4 |
Consolidated Statements of Changes in Shareholders’ Equity | 5 |
Consolidated Statements of Cash Flows | 6 |
Notes to Consolidated Financial Statements | 8 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 18 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | 26 |
Item 4. Controls and Procedures | 26 |
PART II. OTHER INFORMATION |
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Item 1. Legal Proceedings | 27 |
Item 5. Other Information | 27 |
Item 6. Exhibits | 29 |
Signatures | 30 |
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| Monro, Inc. | |||
Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
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Assets |
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Inventory |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Finance lease and financing obligation assets, net |
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Operating lease assets, net |
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Goodwill |
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Assets held for sale |
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Total assets |
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Liabilities and shareholders' equity |
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Current liabilities |
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Current portion of finance leases and financing obligations |
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Current portion of operating lease liabilities |
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Accounts payable |
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Accrued payroll, payroll taxes and other payroll benefits |
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Accrued insurance |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Long-term finance leases and financing obligations |
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Long-term deferred income tax liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies - Note 8 |
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Shareholders' equity: |
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Common stock |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Retained earnings |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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Class C convertible preferred stock Authorized
Serial preferred stock Authorized
Common stock Authorized
Treasury stock
See accompanying Notes to Consolidated Financial Statements.
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| Monro, Inc. | |||
Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income
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(thousands, except per share data) (unaudited) |
| September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
| September 27, 2025 | ||||
Sales |
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Cost of sales, including occupancy costs |
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Gross profit |
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Operating, selling, general and administrative expenses |
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Operating income |
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Interest expense, net of interest income |
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Other (income) expense, net |
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(Loss) income before income taxes |
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(Benefit from) provision for income taxes |
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Net (loss) income |
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Other comprehensive income |
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Changes in pension, net of tax |
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Other comprehensive income |
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Comprehensive (loss) income |
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Diluted |
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Weighted average common shares outstanding |
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Diluted |
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See accompanying Notes to Consolidated Financial Statements.
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| Monro, Inc. | |||
Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Changes in Shareholders’ Equity
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(thousands) (unaudited) |
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| Amount |
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| Capital |
| Loss |
| Earnings |
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Balance at June 28, 2025 |
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Net income |
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Other comprehensive income: |
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Pension liability adjustment |
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Dividends declared: |
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Balance at September 27, 2025 |
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Balance at June 27, 2026 |
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Net loss |
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Other comprehensive income: |
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Pension liability adjustment |
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Dividends declared: |
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Common |
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Dividend payable |
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Stock options and restricted stock |
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Stock-based compensation |
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Balance at September 26, 2026 |
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Balance at March 29, 2025 |
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Net loss |
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Other comprehensive income: |
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Pension liability adjustment |
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Dividends declared: |
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Common |
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Dividend payable |
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Stock options and restricted stock |
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Stock-based compensation |
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Balance at September 27, 2025 |
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Balance at March 28, 2026 |
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Net loss |
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Other comprehensive income: |
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Pension liability adjustment |
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Dividends declared: |
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Preferred |
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Common |
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Dividend payable |
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Preferred stock conversion (a) |
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Stock options and restricted stock |
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Stock-based compensation |
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Balance at September 26, 2026 |
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(a)On June 18, 2026, a total of
We declared and paid $
See accompanying Notes to Consolidated Financial Statements
|
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| ||
| Monro, Inc. | |||
Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Cash Flows
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(thousands) (unaudited) |
| September 26, 2026 |
| September 27, 2025 | ||
Operating activities |
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Net loss |
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Adjustments to reconcile net loss to cash provided by operating activities: |
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Depreciation and amortization |
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Share-based compensation expense |
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Gain on disposal of assets, net |
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Pension settlement expense |
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Deferred income tax (benefit) expense |
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Change in operating assets and liabilities: |
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Accounts receivable |
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Inventory |
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Other current assets |
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Other non-current assets |
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Accounts payable |
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Accrued expenses |
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Other long-term liabilities |
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Cash provided by operating activities |
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Investing activities |
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Capital expenditures |
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Proceeds from the disposal of assets |
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Deferred proceeds received from divestiture |
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Cash used for investing activities |
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Financing activities |
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Proceeds from borrowings on long-term debt |
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Principal payments on long-term debt |
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Principal payments on finance leases and financing obligations |
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Dividends paid |
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Deferred financing costs |
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Cash provided by (used for) financing activities |
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Increase (decrease) in cash and equivalents |
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Cash and equivalents at beginning of period |
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Cash and equivalents at end of period |
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Supplemental information |
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Leased assets obtained in exchange for new finance lease liabilities |
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Leased assets obtained in exchange for new operating lease liabilities |
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See accompanying Notes to Consolidated Financial Statements.
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
INDEX TO NOTES
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Notes to Consolidated Financial Statements (unaudited) |
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Note 1 Description of Business and Basis of Presentation | 8 |
Note 2 (Loss) Earnings per Common Share | 11 |
Note 3 Income Taxes | 11 |
Note 4 Fair Value | 11 |
Note 5 Cash Dividend | 11 |
Note 6 Revenues | 12 |
Note 7 Long-term Debt | 12 |
Note 8 Commitments and Contingencies | 14 |
Note 9 Supplier Finance Program | 14 |
Note 10 Shareholder Governance Matters | 14 |
Note 11 Segment Reporting | 16 |
Note 12 Related Parties and Transactions | 16 |
Note 13 Subsequent Events | 17 |
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Monro, Inc. and its direct and indirect subsidiaries (together, “Monro”, the “Company”, “we”, “us”, or “our”), are engaged principally in providing automotive undercar repair and tire replacement sales and tire related services in the United States. Monro had
A certain number of our retail locations also service commercial customers. Our locations that serve commercial customers generally operate consistently with our other retail locations, except that the sales mix for these locations includes a higher number of commercial tires.
Monro’s operations are organized and managed as
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these statements reflect all adjustments (consisting of items of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statement presentation. The consolidated financial statements should be read in conjunction with the financial statement disclosures in our Form 10-K for the fiscal year ended March 28, 2026.
We use the same significant accounting policies in preparing quarterly and annual financial statements. For a description of our significant accounting policies followed in the preparation of the financial statements, see Note 1 of our Form 10-K for the fiscal year ended March 28, 2026.
Due to the seasonal nature of our business, quarterly operating results and cash flows are not necessarily indicative of the results that may be expected for other interim periods or the full year.
Fiscal year
We operate on a
Correction of previously issued financial statements
While preparing the 2026 consolidated financial statements, the Company identified a prior period error in the financing activities section of our Consolidated Statements of Cash Flows for the years ended March 29, 2025 and March 30, 2024 and the quarters ended June 28, 2025, September 27, 2025 and December 27, 2025, related to the presentation of proceeds from borrowings and principal payments on borrowings associated with the Company’s Credit Facility. The error did not have an impact to our Consolidated Balance Sheets, Consolidated Statement of Income and Comprehensive Income or Consolidated Statement of Changes in Shareholders’ Equity for any of the impacted periods, nor did it have any impact on total cash flows from operating, investing, or financing activities.
Although the Company determined that the error did not have a material impact on its previously issued annual and quarterly consolidated financial statements, the Company corrected the error on the affected annual statements of cash flow, as shown in Note 1 of our Form 10-K for fiscal 2026. Additionally, the Company is correcting the error on the affected interim statement of cash flows for the quarter ended September 27, 2025 herein and will correct the affected interim statements of cash flows in future filings of quarterly reports on Form 10-Q, as applicable, to reflect proceeds from borrowings under the credit facility as cash inflows from financing activities and repayments of borrowings under the credit facility as cash outflows from financing activities, without affecting any cash flow totals. Our interim Consolidated Statement of Cash Flows reflect the changes in proceeds from borrowings under the credit facility as cash inflows (outflows) from financing activities for the quarter ended September 27, 2025 as shown in the chart below.
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
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Changes in Consolidated Statement of Cash Flows |
| Six Months Ended September 27, 2025 | |||||||
(thousands) |
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Principal payments on long-term debt, net borrowings |
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Proceeds from borrowings on long-term debt |
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Principal payments on long-term debt |
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Cash used for financing activities |
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In November 2024, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance, ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and operating, selling, general and administrative expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of adopting this guidance.
In September 2025, the FASB issued new accounting guidance, ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes references to prescriptive software development stages and includes an updated framework for capitalizing internal software costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within that fiscal year. We are currently evaluating the impact of adopting this guidance.
In December 2025, the FASB issued new accounting guidance, ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements, which clarifies the scope and requirements for interim financial statement disclosures. The amendments create a comprehensive list of required interim disclosures and introduce a disclosure principle requiring entities to disclose, in interim periods, any event or change since the previous year-end that has a material effect on the entity. The guidance is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within that fiscal year. We are currently evaluating the impact of adopting this guidance.
Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification (“ASC”) and the SEC did not or are not expected to have a material effect on our consolidated financial statements.
Supplemental information
Our goodwill is subject to an impairment test on an annual basis. Goodwill, other intangible assets, and long-lived assets are also tested whenever events and circumstances indicate that goodwill, other intangible assets and/or long-lived assets may be impaired. Any excess goodwill resulting from the impairment test must be written off in the period of determination. For example, during the second quarter of 2027, we experienced a decline in our market capitalization as a result of a decrease in our stock price. Our stock price has a history of volatility, however, given the decrease was sustained throughout the quarter, we viewed this event as a triggering event and performed a quantitative analysis of the fair value of the Company’s single reporting unit as of September 26, 2026 which resulted in an estimated fair value that exceeded its carrying value, including goodwill.
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
On May 23, 2025, following an evaluation of market segmentation and demographic data specific to geographic areas where our stores are located, our Board of Directors approved a plan to close
During the three months ended September 26, 2026, the Company sold
During the six months ended September 26, 2026, the Company sold
All losses (gains) related to store closings are included in in our Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
We classify long-lived assets to be sold as held for sale in the period in which all of the required criteria are met. We initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon determining that a long-lived asset meets the criteria to be classified as held for sale, we cease depreciation and report long-lived assets, if material, as Assets held for sale in our Consolidated Balance Sheets.
We completed the closure of
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Basic (loss) earnings per common share amounts are calculated by dividing (loss) earnings available to common shareholders, after deducting preferred stock dividends, by the weighted average number of shares of common stock outstanding. Diluted (loss) earnings per common share amounts are calculated by dividing net (loss) earnings by the weighted average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities.
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(Loss) Earnings per Common Share |
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(thousands, except per share data) |
| September 26, 2026 |
| September 27, 2025 |
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Numerator for (loss) earnings per common share calculation: |
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Net (loss) income |
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Less: Preferred stock dividends |
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(Loss) income available to common shareholders |
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Denominator for (loss) earnings per common share calculation: |
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Weighted average common shares - basic |
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Effect of dilutive securities (a): |
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Preferred stock |
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Restricted stock |
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Weighted average common shares - diluted |
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Basic (loss) earnings per common share |
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Diluted (loss) earnings per common share |
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(a)The computation of diluted loss per common share for the three months and six months ended September 26, 2026, excludes the effect of approximately
For the three months and six months ended September 26, 2026, our effective income tax rate was
Long-term debt had a carrying amount that approximates a fair value of $
We declared and paid dividends of $
The declaration of future dividends will be at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with charter and contractual restrictions, and such other factors as the Board of Directors deems relevant. Our Credit Facility contains covenants that may limit, subject to certain exemptions, our ability to declare dividends and other distributions. For additional information regarding our Credit Facility, see Note 7.
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Automotive undercar repair, tire replacement sales and tire related services represent the vast majority of our revenues. We also earn revenue from the sale of tire road hazard warranty agreements, commissions earned from the delivery of tires on behalf of certain tire vendors, as well as franchise royalties.
Revenue from automotive undercar repair, tire replacement sales and tire related services is recognized at the time the customers take possession of their vehicle or merchandise. For sales to certain customers that are financed through the offering of credit on account, payment terms are established for customers based on our pre-established credit requirements. Payment terms may vary depending on the customer and generally are
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Revenues |
| Three Months Ended |
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(thousands) |
| September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
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Tires (a) |
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Maintenance |
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Brakes |
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Steering |
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Exhaust |
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(a) Includes the sale of tire road hazard warranty agreements and tire delivery commissions.
Revenue from the sale of tire road hazard warranty agreements is initially deferred and is recognized over the contract period as costs are expected to be incurred in performing such services, typically
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Changes in Deferred Revenue |
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Balance at March 28, 2026 |
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Deferral of revenue |
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Recognition of revenue |
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Balance at September 26, 2026 |
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As of September 26, 2026, we expect to recognize $
Under various arrangements, we receive from certain tire vendors a delivery commission and reimbursement for the cost of the tire that we may deliver to customers on behalf of the tire vendor. The commission we earn from these transactions is as an agent and the net amount retained is recorded as sales.
Credit Facility
In April 2019, we entered into a $
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Under the Third Amendment, we were required to maintain an interest coverage ratio, as defined in the Credit Facility, of at least
On May 23, 2024, we entered into a Fourth Amendment to the Credit Facility (the “Fourth Amendment”). Among other changes, the Fourth Amendment modified the definition of “EBITDAR” to permit add-backs relating to expenses, and restrict add-backs related to gains, associated with store closures of (a) all non-cash items and (b) cash items up to
On May 23, 2025, we entered into a Fifth Amendment to the Credit Facility (the “Fifth Amendment”). Among other changes, the Fifth Amendment further modified the definition of “EBITDAR” to permit add-backs relating to non-cash impairment and other expenses, with the restriction for add-backs of certain cash expense items up to
See Note 6 of our Form 10-K for the fiscal year ended March 28, 2026 for additional information.
On May 21, 2026, we entered into a Sixth Amendment to our Credit Facility (the “Sixth Amendment”). The Sixth Amendment amends the terms of certain of the financial and restrictive covenants in the Credit Facility to provide us with additional flexibility to operate our business to the Credit Facility maturity date or November 10, 2027 (the “Further Extended Covenant Relief Period”). During the Further Extended Covenant Relief Period, the minimum interest coverage ratio will be reduced from
During the Further Extended Covenant Relief Period, the interest rate spread charged on borrowings is
During the Further Extended Covenant Relief Period, the restrictions on our ability to declare dividends were modified to reduce the cushion inside the threshold required for us to be able to declare dividends without restriction from
In addition, the Sixth Amendment permanently reduces the Credit Facility from $
Except as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and Sixth Amendment, the remaining terms of the Credit Facility remain in full force and effect.
Other than the maximum ratio of adjusted debt to EBITDAR, the Company was in compliance with all debt covenants at September 26, 2026. The Company received a waiver from the lenders of the Credit Facility with respect to compliance with the ratio of adjusted debt to EBITDAR for the second quarter of fiscal 2027. Non-compliance with the adjusted debt to EBITDAR ratio covenant addressed pursuant to the waiver did not and does not trigger any cross-default provisions under the Company’s other debt agreements.
Within the Credit Facility, we have a sub-facility of $
There was $
On October 23, 2026, the Company paid in full all outstanding obligations under the Credit Facility and terminated all commitments thereunder in connection with entering into a new credit agreement to replace the Credit Facility. See Note 13 for additional information.
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CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Commitments
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Commitments Due by Period |
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Principal payments on long-term debt |
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Finance lease commitments/financing obligations (a) |
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(a)Finance and operating lease commitments represent future undiscounted lease payments and include $
Contingencies
We are currently a party to various claims and legal proceedings incidental to the conduct of our business. If management believes that a loss arising from any of these matters is probable and can reasonably be estimated, we will record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur and may include monetary damages. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which any such ruling occurs, or in future periods.
An action was filed against us in January 2026 in the U.S. District Court for the Western District of New York by two former Tire Choice employees who worked in Florida. The plaintiffs, former store managers, sought certification to represent similarly situated Tire Choice store managers in a collective action for unpaid overtime wages, damages and attorneys’ fees. Plaintiffs alleged violations of the Fair Labor Standards Act relating to overtime and unpaid wages. The parties conducted informal discovery, following which the parties agreed to resolve this matter for a limited subset of a potential collective. In anticipation of court approval, the Company included the settlement amount of approximately $
We facilitate a voluntary supply chain financing program to provide our suppliers with the opportunity to sell receivables due from us (our accounts payable) to a participating financial institution subject to the independent discretion of both the supplier and the participating financial institution. Should a supplier choose to participate in the program, it may receive payment from the financial institution in advance of agreed payment terms; our responsibility is limited to making payments to the respective financial institution on the terms originally negotiated with our supplier, which are generally for a term of up to
Our outstanding supplier obligations eligible for advance payment under the program totaled $
On October 23, 2026, the Company substantially paid down our obligations under our supply chain financing program. See Note 13 for additional information.
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CONSOLIDATED FINANCIAL STATEMENTS
NOTES
Rights Plan
On November 9, 2025, the Board of Directors approved the adoption of a limited-duration shareholder rights plan (the “Rights Plan”), intended to protect the best interests of all Company shareholders. Pursuant to the Rights Plan, the Company issued
Under the Rights Plan, any person that owns more than the triggering percentage as of the adoption of the Rights Plan may continue to own its shares of common stock but may not acquire any additional shares without triggering the Rights Plan. The Rights Plan has a duration, expiring on November 6, 2026. The Board of Directors may consider an earlier termination of the Rights Plan as circumstances warrant.
Equity Capital Structure Reclassification
On May 12, 2023, we entered into a reclassification agreement (the “Reclassification Agreement”) with the holders (the “Class C Holders”) of our Class C Convertible Preferred Stock (the “Class C Preferred Stock”) to reclassify our equity capital structure to eliminate the Class C Preferred Stock.
Under the Reclassification Agreement, after receiving shareholder approval on August 15, 2023, we filed amendments to our certificate of incorporation (the “Certificate of Incorporation”) to create a mandatory conversion of any outstanding shares of Class C Preferred Stock prior to an agreed sunset date of the earliest of (i) August 15, 2026; (ii) the first business day immediately prior to the record date established for the determination of the shareholders of the Company entitled to vote at the Company’s 2026 annual meeting of shareholders; and (iii) the date on which the Class C Holders, in the aggregate, cease to beneficially own at least
At the end of the sunset period, all shares of Class C Preferred Stock remaining outstanding will be automatically converted into shares of common stock at the adjusted conversion rate. In addition, the liquidation preference for the Class C Preferred Stock was amended to provide that, upon a liquidation event, each holder of Class C Preferred Stock would be entitled to receive, for each share of Class C Preferred Stock held by the holder upon a liquidation, dissolution, or winding up of the affairs of the Company, an amount equal to the greater of $
In accordance with the Reclassification Agreement, on June 18, 2026, one business day prior to the record date for the Company’s 2026 annual meeting, all outstanding shares of Class C Preferred Stock automatically converted into Common Stock. A total of
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CONSOLIDATED FINANCIAL STATEMENTS
NOTES
The Company has a reportable operating segment “Monro, Inc.” The accounting policies of the operating segment are the same as those described in Note 1 of our Form 10-K. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. The CODM primarily focuses on consolidated net income to evaluate its reportable segment. The CODM also uses consolidated net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees. All segment expenses reviewed, which represent the difference between segment revenue and segment net loss, consisted of the following:
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Segment Reporting |
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Sales |
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Less: |
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Cost of sales, including occupancy costs |
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(a)Other segment items consist of other (income) expense, net, included in the accompanying Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income.
As of September 26, 2026 and September 27, 2025, assets held in the U.S. accounted for
There were no major customers individually accounting for 10% or more of consolidated net revenues.
The Board of Directors of the Company appointed Peter D. Fitzsimmons to serve as the President and Chief Executive Officer as of March 28, 2025. At this time, Mr. Fitzsimmons was serving as a partner and managing director of AlixPartners, LLP (“AlixPartners”). In connection with Mr. Fitzsimmons’ appointment, the Company entered into a consulting agreement with AP Services, LLC (“APS”), an affiliate of AlixPartners, pursuant to which APS provided for Mr. Fitzsimmons to serve as the Company’s Chief Executive Officer and for the additional resources of APS personnel as required. On December 2, 2025, the Company entered into an employment agreement with Peter Fitzsimmons, whereby he continues to serve as our President and Chief Executive Officer, and appointed him as a member of the Board of Directors at which time Mr. Fitzsimmons ceased serving as partner and managing director of AlixPartners and the consulting agreement with APS was terminated.
On December 23, 2025, the Company entered into a new consulting agreement with AlixPartners pursuant to which AlixPartners will provide consulting services to the Company under various statements of work at standard engagement rates to support the Operational Improvement Plan.
See Note 16 of our Form 10-K for the fiscal year ended March 28, 2026 for additional information.
The Company recorded total expenses related to AlixPartners and APS of $
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Table of Contents
CONSOLIDATED FINANCIAL STATEMENTS
NOTES
On October 23, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the lenders party thereto (the “Lenders”) and Ares Capital Corporation (“Ares”), as administrative agent for the Lenders (the senior secured credit facilities provided thereunder, the “New Credit Facilities”). The New Credit Facilities consist of (i) a senior secured term loan facility in an aggregate principal amount of $
The Term Loan Facility is subject to amortization of principal, payable in equal quarterly installments on the last business day of each quarter, commencing with the quarter ending in December 2027, in an amount equal to
Any outstanding principal amount under the Revolving Credit Facility will be payable at the maturity date of the Revolving Credit Facility. The Revolving Credit Facility bears interest annually at rates based upon, at the option of the Company, either (i) the ABR, plus an applicable margin ranging from
Under the Credit Agreement, the Company and the Guarantors are subject to customary affirmative and negative covenants, and events of default for facilities of this type (with customary grace periods and thresholds, as applicable, and lender remedies). The Credit Agreement governing the New Credit Facilities includes financial covenants, including those that require the Company to maintain (i) a lease adjusted net leverage ratio (as defined in the Credit Agreement) of no more than (a)
The Credit Agreement includes a restriction on the amount the Company may use for dividend payments, and prohibits the Company’s payment of dividends if the Company does not comply with certain financial metric requirements, including lease adjusted net leverage ratio, fixed charge coverage ratio, minimum average daily liquidity and liquidity, each as defined in the Credit Agreement.
As part of the closing of the New Credit Facilities, the Company paid down approximately $
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Table of Contents
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Recent Developments
On October 23, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the lenders party thereto (the “Lenders”) and Ares Capital Corporation (“Ares”), as administrative agent for the Lenders (the senior secured credit facilities provided thereunder, the “New Credit Facilities”).
The Credit Agreement replaced the Company’s former Credit Facility (the “Credit Facility”) and the related credit agreement with nine banks, dated April 25, 2019. On October 23, 2026, the Company repaid in full all outstanding obligations under the Credit Facility and terminated all commitments thereunder.
See further detail in Item 5., "Other Information" below and Note 13 of our consolidated financial statements.
Financial Summary
Second quarter 2027 included the following notable items:
Diluted loss per common share was $0.05.
Adjusted diluted loss per common share, a non-GAAP measure, was $0.01.
Sales decreased 1.8 percent, due entirely to lower comparable store sales.
Operating income was $2.6 million.
Adjusted operating income, a non-GAAP measure, was $4.4 million.
Net loss was $1.6 million.
Adjusted net loss, a non-GAAP measure, was $0.2 million.
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(Loss) Earnings Per Common Share |
| Three Months Ended |
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| Six Months Ended | ||||||||||
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| September 26, 2026 |
| September 27, 2025 | Change |
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| September 26, 2026 |
| September 27, 2025 | Change | ||||
Diluted (loss) earnings per common share |
| $ | (0.05) |
| $ | 0.18 | (127.8) | % |
| $ | (0.13) |
| $ | (0.10) | (30.0)% |
Adjustments |
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| 0.04 |
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| 0.03 |
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| 0.04 |
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| 0.53 |
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Adjusted diluted (loss) earnings per common share |
| $ | (0.01) |
| $ | 0.21 | (104.8) | % |
| $ | (0.09) |
| $ | 0.43 | (120.9)% |
Adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share are useful in providing period-to-period comparisons of the results of our operations by excluding certain items that are not part of our core operations, such as litigation reserve costs, consulting costs related to the Company’s Operational Improvement Plan, pension settlement expense, costs related to shareholder matters, transition costs related to back-office optimization, write-off of debt issuance costs and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations. Reconciliations of these non-GAAP financial measures to GAAP measures are provided on page 20 under “Non-GAAP Financial Measures.”
We define comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. We believe this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company’s stores and believes the metric is useful to investors because our overall results are dependent upon the results of our stores. Comparable sales measures vary across the retail industry. Therefore, our comparable store sales calculation is not necessarily comparable to similarly titled measures reported by other companies.
Analysis of Results of Operations
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Summary of Operating Income |
| Three Months Ended |
| Six Months Ended | ||||||||||||
(thousands) |
| September 26, 2026 |
| September 27, 2025 | Change |
| September 26, 2026 |
| September 27, 2025 | Change | ||||||
Sales |
| $ | 283,638 |
| $ | 288,914 | (1.8) | % |
| $ | 570,767 |
| $ | 589,949 | (3.3) | % |
Cost of sales, including occupancy costs |
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| 183,689 |
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| 185,800 | (1.1) |
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| 370,423 |
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| 379,929 | (2.5) |
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Gross profit |
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| 99,949 |
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| 103,114 | (3.1) |
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| 200,344 |
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| 210,020 | (4.6) |
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Operating, selling, general and administrative expenses |
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| 97,358 |
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| 90,364 | 7.7 |
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| 194,058 |
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| 203,345 | (4.6) |
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Operating income |
| $ | 2,591 |
| $ | 12,750 | (79.7) | % |
| $ | 6,286 |
| $ | 6,675 | (5.8) | % |
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Table of Contents
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Sales
Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 6 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period. There were 91 selling days in each of the three months ended September 26, 2026 and September 27, 2025, and 181 selling days in each of the six months ended September 26, 2026 and September 27, 2025.
Sales growth – from both comparable store sales and new stores – represents an important driver of our long-term profitability. We expect that comparable store sales growth will significantly impact our total sales growth. We believe that our ability to successfully differentiate our customers’, often referred to as “guests”, experience through a careful combination of merchandise assortment, price strategy, convenience, and other factors will, over the long-term, drive both increasing guest traffic and the average ticket amount spent.
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Sales |
| Three Months Ended |
| Six Months Ended | ||||||||||
(thousands) |
| September 26, 2026 |
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| September 27, 2025 |
| September 26, 2026 |
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| September 27, 2025 | ||||
Sales |
| $ | 283,638 |
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| $ | 288,914 |
| $ | 570,767 |
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| $ | 589,949 |
Dollar change compared to prior year |
| $ | (5,276) |
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| $ | (19,182) |
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Percentage change compared to prior year |
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| (1.8) | % |
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| (3.3) | % |
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The sales decrease was due to a decrease in comparable store sales and, for the six month period, closed stores. The comparable store sales decrease was driven by a decrease in traffic, partially offset by an increase in average ticket. The following table shows the primary drivers of the change in sales for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
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Sales Percentage Change | Three Months Ended |
| Six Months Ended | ||||||
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| September 26, 2026 |
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| September 26, 2026 |
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Sales change |
| (1.8) | % |
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| (3.3) | % |
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Primary drivers of change in sales |
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Comparable store sales |
| (1.8) | % |
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| (1.7) | % |
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Closed store sales |
| — | % |
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| (1.6) | % |
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The following table shows the primary drivers of the comparable store product category sales change for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
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Comparable Store Product Category Sales Change | Three Months Ended |
| Six Months Ended | ||||||
| September 26, 2026 | September 27, 2025 |
| September 26, 2026 | September 27, 2025 | ||||
Batteries | 8 | % | (21) | % |
| 8 | % | (9) | % |
Maintenance service | 3 | % | 0 | % |
| (1) | % | 2 | % |
Alignment | (2) | % | (5) | % |
| (1) | % | (3) | % |
Tires | (4) | % | 0 | % |
| (2) | % | 2 | % |
Brakes | (4) | % | 6 | % |
| (3) | % | 8 | % |
Front end/shocks | (5) | % | 18 | % |
| (2) | % | 22 | % |
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Sales by Product Category | Three Months Ended |
| Six Months Ended | ||||||
| September 26, 2026 | September 27, 2025 |
| September 26, 2026 | September 27, 2025 | ||||
Tires | 47 | % | 47 | % |
| 47 | % | 46 | % |
Maintenance service | 27 |
| 27 |
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| 27 |
| 28 |
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Brakes | 14 |
| 14 |
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| 14 |
| 14 |
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Steering (a) | 9 |
| 9 |
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| 9 |
| 9 |
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Batteries | 2 |
| 2 |
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| 2 |
| 2 |
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Other | 1 |
| 1 |
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| 1 |
| 1 |
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Total | 100 | % | 100 | % |
| 100 | % | 100 | % |
(a)Steering product category includes front end/shocks and alignment product category sales.
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Table of Contents
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
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Change in Number of Company-Operated Retail Stores | Three Months Ended |
| Six Months Ended | ||||
| September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
| September 27, 2025 |
Beginning store count | 1,115 |
| 1,115 |
| 1,115 |
| 1,260 |
Opened (a) | — |
| 1 |
| — |
| 1 |
Closed (b) | (1) |
| — |
| (1) |
| (145) |
Ending store count | 1,114 |
| 1,116 |
| 1,114 |
| 1,116 |
(a)We reopened a store that was temporarily closed in a prior year during the three months ended September 27, 2025.
(b)Stores closed in the first quarter of fiscal 2026 as a result of the Store Closure Plan.
Cost of Sales and Gross Profit
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Gross Profit | Three Months Ended |
| Six Months Ended | ||||||||||
(thousands) | September 26, 2026 | September 27, 2025 |
| September 26, 2026 | September 27, 2025 | ||||||||
Gross profit | $ | 99,949 |
| $ | 103,114 |
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| $ | 200,344 |
| $ | 210,020 |
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Percentage of sales |
| 35.2 | % |
| 35.7 | % |
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| 35.1 | % |
| 35.6 | % |
Dollar change compared to prior year | $ | (3,165) |
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| $ | (9,676) |
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Percentage change compared to prior year |
| (3.1) | % |
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| (4.6) | % |
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Gross profit, as a percentage of sales, decreased 50 basis points (“bps”) for the three months ended September 26, 2026, as compared to the prior year comparable period. Occupancy costs increased, as a percentage of sales, as we lost leverage on these largely fixed costs. Partially offsetting this was a decrease in material costs, as a percentage of sales. Gross profit, as a percentage of sales, decreased 50 basis points for the six months ended September 26, 2026, as compared to the prior year comparable period. The decrease in gross profit, as a percentage of sales, was primarily due to increased occupancy costs, partially offset by a decrease in technician labor costs and material costs.
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Gross Profit as a Percentage of Sales Change | Three Months Ended | Six Months Ended | ||||||
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| September 26, 2026 |
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| September 26, 2026 |
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Gross profit change |
| (50) | bps |
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| (50) | bps |
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Primary drivers of change in gross profit as a percentage of sales |
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Occupancy costs |
| (80) | bps |
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| (80) | bps |
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Material costs |
| 30 | bps |
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| 10 | bps |
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Technician labor costs |
| — | bps |
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| 20 | bps |
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OSG&A Expenses
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OSG&A Expenses | Three Months Ended |
| Six Months Ended | ||||||||||
(thousands) | September 26, 2026 | September 27, 2025 |
| September 26, 2026 | September 27, 2025 | ||||||||
OSG&A Expenses | $ | 97,358 |
| $ | 90,364 |
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| $ | 194,058 |
| $ | 203,345 |
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Percentage of sales |
| 34.3 | % |
| 31.3 | % |
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| 34.0 | % |
| 34.5 | % |
Dollar change compared to prior year | $ | 6,994 |
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| $ | (9,287) |
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Percentage change compared to prior year |
| 7.7 | % |
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| (4.6) | % |
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The increase of $7.0 million in operating, selling, general and administrative (“OSG&A”) expenses for the three months ended September 26, 2026, from the comparable prior year period is primarily due to an increase in store closing costs, net of gains (losses) on sales of closed stores, comparable stores costs, primarily front shop labor, and store advertising costs. The following table shows the impact of these costs on the change in OSG&A expenses for the three months and six months ended September 26, 2026, as compared to the same periods ended September 27, 2025.
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OSG&A Expenses Change | Three Months Ended | Six Months Ended | ||||
(thousands) | September 26, 2026 |
| September 26, 2026 |
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OSG&A expenses change | $ | 6,994 |
| $ | (9,287) |
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Drivers of change in OSG&A expenses |
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Increase (decrease) in store closing costs, net | $ | 6,118 |
| $ | (11,658) |
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Increase from comparable stores | $ | 3,357 |
| $ | 7,915 |
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Increase in store advertising costs | $ | 3,237 |
| $ | 8,153 |
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Increase in litigation reserve | $ | 1,650 |
| $ | 1,650 |
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Increase in costs related to shareholder matters | $ | 313 |
| $ | 393 |
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Decrease from closed stores | $ | (225) |
| $ | (4,333) |
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Decrease in transition costs related to back-office optimization | $ | (351) |
| $ | (589) |
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Decrease in consulting costs related to Operational Improvement Plan | $ | (7,105) |
| $ | (10,818) |
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Table of Contents
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Other Performance Factors
Net Interest Expense
Net interest expense of $4.7 million for the three months ended September 26, 2026 increased $0.3 million as compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.7 percent. Weighted average debt outstanding for the three months ended September 26, 2026 increased by approximately $15.1 million as compared to the three months ended September 27, 2025. This increase is primarily related to higher debt outstanding under our Credit Facility. The weighted average interest rate increased approximately 20 basis points as compared to the same period of the prior year.
Net interest expense of $9.3 million for the six months ended September 26, 2026 increased $0.2 million compared to the prior year period, and increased as a percentage of sales from 1.5 percent to 1.6 percent. Weighted average debt outstanding for the six months ended September 26, 2026 increased by approximately $0.3 million as compared to the six months ended September 27, 2025. The weighted average interest rate for the six months ended September 26, 2026 increased approximately 10 basis points as compared to the same period of the prior year.
Provision for Income Taxes
For the three months and six months ended September 26, 2026, our effective income tax rate was 17.0 percent and 4.5 percent, respectively, compared to 32.9 percent and (5.4) percent for the three months and six months ended September 27, 2025. The year-over-year difference in effective tax rate is primarily due to the impact of discrete tax expense related to share-based awards and other adjustments, none of which are individually significant.
Non-GAAP Financial Measures
In addition to reporting operating income, net (loss) income and diluted (loss) earnings per share, which are GAAP measures, this Form 10-Q includes adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, which are non-GAAP financial measures. We have included reconciliations to adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share from our most directly comparable GAAP measures, operating income, net (loss) income, and diluted (loss) earnings per share below. Management views these non-GAAP financial measures as indicators to better assess comparability between periods because management believes these non-GAAP financial measures reflect our core business operations while excluding certain items that are not part of our core operations, such as litigation reserve costs, consulting costs related to the Company’s Operational Improvement Plan, pension settlement expense, costs related to shareholder matters, transition costs related to back-office optimization, write-off of debt issuance costs and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations.
These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly titled non-GAAP financial measures used by other companies.
Adjusted operating income is summarized as follows:
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Reconciliation of Adjusted Operating Income | Three Months Ended |
| Six Months Ended | ||||||||
(thousands) | September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
| September 27, 2025 | ||||
Operating income | $ | 2,591 |
| $ | 12,750 |
| $ | 6,286 |
| $ | 6,675 |
Litigation reserve |
| 1,650 |
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| — |
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| 1,650 |
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| — |
Consulting costs related to the Operational Improvement Plan |
| 1,159 |
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| 8,264 |
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| 2,168 |
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| 12,986 |
Costs related to shareholder matters |
| 313 |
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| — |
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| 393 |
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| — |
Transition costs related to back-office optimization |
| 176 |
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| 527 |
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| 509 |
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| 1,098 |
Store closing costs, net (a) |
| (1,443) |
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| (7,561) |
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| (4,403) |
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| 7,255 |
Adjusted operating income | $ | 4,446 |
| $ | 13,980 |
| $ | 6,603 |
| $ | 28,014 |
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
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Table of Contents
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Adjusted net (loss) income is summarized as follows:
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Reconciliation of Adjusted Net (Loss) Income | Three Months Ended |
| Six Months Ended | ||||||||
(thousands) | September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
| September 27, 2025 | ||||
Net (loss) income | $ | (1,611) |
| $ | 5,665 |
| $ | (3,760) |
| $ | (2,385) |
Litigation reserve |
| 1,650 |
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| — |
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| 1,650 |
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| — |
Consulting costs related to the Operational Improvement Plan |
| 1,159 |
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| 8,264 |
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| 2,168 |
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| 12,986 |
Costs related to shareholder matters |
| 313 |
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| — |
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| 393 |
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| — |
Transition costs related to back-office optimization |
| 176 |
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| 527 |
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| 509 |
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| 1,098 |
Pension settlement expense |
| — |
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| — |
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| 1,171 |
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| — |
Write-off of debt issuance costs |
| — |
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| — |
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| 221 |
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| 263 |
Store closing costs, net (a) |
| (1,443) |
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| (7,561) |
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| (4,403) |
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| 7,255 |
Provision for income taxes on pre-tax adjustments |
| (481) |
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| (320) |
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| (443) |
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| (5,617) |
Adjusted net (loss) income | $ | (237) |
| $ | 6,575 |
| $ | (2,494) |
| $ | 13,600 |
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
Adjusted diluted (loss) earnings per share is summarized as follows:
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Reconciliation of Adjusted Diluted (Loss) Earnings per Share | Three Months Ended |
| Six Months Ended | ||||||||
| September 26, 2026 |
| September 27, 2025 |
| September 26, 2026 |
| September 27, 2025 | ||||
Diluted (loss) earnings per share | $ | (0.05) |
| $ | 0.18 |
| $ | (0.13) |
| $ | (0.10) |
Litigation reserve |
| 0.04 |
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| — |
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| 0.04 |
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| — |
Consulting costs related to the Operational Improvement Plan |
| 0.03 |
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| 0.19 |
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| 0.05 |
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| 0.32 |
Costs related to shareholder matters |
| 0.01 |
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| — |
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| 0.01 |
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| — |
Transition costs related to back-office optimization (b) |
| 0.00 |
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| 0.01 |
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| 0.01 |
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| 0.03 |
Pension settlement expense |
| — |
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| — |
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| 0.03 |
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| — |
Write-off of debt issuance costs |
| — |
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| — |
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| 0.01 |
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| 0.01 |
Store closing costs, net (a) |
| (0.03) |
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| (0.18) |
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| (0.11) |
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| 0.18 |
Adjusted diluted (loss) earnings per share | $ | (0.01) |
| $ | 0.21 |
| $ | (0.09) |
| $ | 0.43 |
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
(b)Amounts, in the periods presented, may be too minor in amount, net of the impact from income taxes, to have an impact on the calculation of adjusted diluted (loss) earnings per share.
Note: The calculation of the impact of non-GAAP adjustments on diluted (loss) earnings per share is performed on each line independently. The table may not add down +/- $0.01 due to rounding.
The other adjustments to diluted (loss) earnings per share reflect estimated annual effective income tax rates of 26.0 percent for the three and six months ended September 26, 2026 and September 27, 2025. This represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate. See adjustments from the Reconciliation of Adjusted Net (Loss) Income table above for pre-tax amounts.
Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We expect to continue to generate positive operating cash flow as we have done in each of the last three fiscal years. We believe the cash we generate from our operations will allow us to continue to support business operations and pay down debt.
In addition, because we believe a large portion of our future expenditures will be to fund our growth, through acquisition of retail stores and/or opening greenfield stores, we continually evaluate our cash needs and may decide it is best to fund the growth of our business through borrowings on our New Credit Facilities. Conversely, we may be required to make prepayments under the New Credit Facilities, or we may periodically determine that it is in our best interests to voluntarily repay certain indebtedness early.
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Future Cash Requirements
We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems, to be $25 million to $35 million in the aggregate in fiscal 2027. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $418.9 million in lease payments, of which $90.9 million is due within one year. For details regarding these lease commitments, see Note 8 to our consolidated financial statements.
As of September 26, 2026 we had $100.0 million outstanding under the Credit Facility, none of which was due in the succeeding 12 months, but which was repaid in full on October 23, 2026, in connection with the New Credit Facilities. For details regarding our indebtedness that is due, see Note 7 to our consolidated financial statements.
Dividends
We declared and paid dividends of $0.28 per share totaling $8.8 million and $8.7 million during the three months ended September 26, 2026 and September 27, 2025, respectively, and $0.56 per share totaling $17.5 million during each of the six months ended September 26, 2026 and September 27, 2025.
Working Capital Management
As of September 26, 2026, we had a working capital deficit of $257.7 million, a decrease of $23.5 million from a deficit of $281.2 million as of March 28, 2026. The overall working capital deficit is a result of our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers. As part of our working capital management, we facilitate a voluntary supply chain finance program to provide our suppliers with the opportunity to sell receivables due from the Company to a participating financial institution subject to the independent discretion of both the supplier and participating financial institution. For details regarding our supply chain finance program, see Note 9 and Note 13 to our consolidated financial statements.
Sources and Conditions of Liquidity
Our sources to fund our material cash requirements are predominantly cash from operations, availability under the New Credit Facilities, and cash and equivalents on hand.
As of October 24, 2026, we had approximately $27.3 million in cash on hand. In addition, we had $60.0 million available under the New Credit Facilities, subject to compliance with covenants under the Credit Agreement.
We believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following September 26, 2026, as well as in the long-term.
Summary of Cash Flows
The following table presents a summary of our cash flows from operating, investing and financing activities.
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Summary of Cash Flows |
| Six Months Ended | ||||
(thousands) |
| September 26, 2026 |
| September 27, 2025 | ||
Cash provided by operating activities |
| $ | 4,211 |
| $ | 30,396 |
Cash used for investing activities |
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| (7,260) |
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| (2,411) |
Cash provided by (used for) financing activities |
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| 3,374 |
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| (38,279) |
Increase (decrease) in cash and equivalents |
|
| 325 |
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| (10,294) |
Cash and equivalents at beginning of period |
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| 14,633 |
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| 20,762 |
Cash and equivalents at end of period |
| $ | 14,958 |
| $ | 10,468 |
Cash provided by operating activities
For the six months ended September 26, 2026, cash provided by operating activities was $4.2 million, which consisted of a net loss of $3.8 million and a change in operating assets and liabilities of $23.8 million, offset by non-cash adjustments of $31.8 million. The non-cash charges were largely driven by $30.9 million of depreciation and amortization, as well as $3.6 million in share-based compensation expense, $1.2 million in pension settlement expense, partially offset by a $3.8 million net gain on disposal of assets. The change in operating assets and liabilities was primarily driven by timing of payments that caused accounts payable and accrued expenses to be a use of cash of $24.6 million.
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
For the six months ended September 27, 2025, cash provided by operating activities was $30.4 million, which consisted of a net loss of $2.4 million, offset by non-cash adjustments of $27.1 million, and a change in operating assets and liabilities of $5.7 million. The non-cash charges were largely driven by $30.9 million of depreciation and amortization, as well as $1.2 million in share-based compensation expense, partially offset by a $5.1 million net gain on disposal of assets. The change in operating assets and liabilities was primarily driven by our inventory balance providing a source of cash of $18.0 million. This was partially offset by timing of payments that caused accounts payable and accrued expenses to be a use of cash of $13.4 million.
Cash used for investing activities
For the six months ended September 26, 2026, cash used for investing activities was $7.3 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $13.3 million, partially offset by proceeds from the disposal of property and equipment of $6.0 million.
For the six months ended September 27, 2025, cash used for investing activities was $2.4 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $13.1 million, partially offset by subsequent proceeds from the sale of our wholesale tire locations and distribution assets and proceeds from the disposal of property and equipment of $3.5 million and $7.2 million, respectively.
Cash provided by (used for) financing activities
For the six months ended September 26, 2026, cash provided by financing activities was $3.4 million. This was primarily due to proceeds on our Credit Facility, net of amounts paid during the period, of $40.0 million, offset by payment of finance lease principal and dividends of $18.5 million and $17.5 million, respectively, and deferred financing costs of $0.6 million.
For the six months ended September 27, 2025, cash used for financing activities was $38.3 million. This was primarily due to payment of finance lease principal and dividends of $19.1 million and $17.5 million, respectively, deferred financing costs of $0.5 million, and payments on our Credit Facility, net of amounts borrowed during the period, of $1.2 million.
Critical Accounting Estimates
The consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows may be affected.
For a description of our critical accounting estimates, refer to Part II, Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended March 28, 2026. There have been no material changes to our critical accounting estimates since our Form 10-K for the year ended March 28, 2026 was filed.
Recent Accounting Pronouncements
See “Recent Accounting Pronouncements” in Note 1 to our consolidated financial statements for a discussion of the impact of recently issued accounting standards on our consolidated financial statements as of September 26, 2026 and the expected impact on the consolidated financial statements for future periods.
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by, or including words such as “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “strategy,” “will,” “would” and variations thereof and similar expressions. Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. For example, our forward-looking statements include, without limitation, statements regarding:
•the impact of competitive services and pricing;
•the effect of economic conditions and geopolitical uncertainty, seasonality, and the impact of weather conditions and natural disasters on customer demand;
•advances in automotive technologies including adoption of electronic vehicle technology;
•our dependence on third-party vendors for certain inventory;
•the risks associated with vendor relationships and international trade, particularly goods sourced from countries targeted with import tariffs;
•the impact of changes in U.S. trade relations and ongoing trade disputes between the United States, China, and other countries and other potential impediments to imports;
•our ability to generate sufficient cash flows from operations and service our debt obligations, including our expected annual interest expense, fund our capital expenditures and working capital requirements, and to comply with the debt covenants of our Credit Agreement;
•our anticipated sales, comparable store sales, gross profit margin, costs of goods sold (including product mix), OSG&A expenses and other fixed costs, and our ability to leverage those costs;
•management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes, and uncertain tax positions;
•management’s estimates associated with our critical accounting policies, including insurance liabilities, income taxes, and valuations for our goodwill and long-lived assets impairment analyses;
•the impact of industry regulation, including changes in environmental, consumer protection, and labor laws;
•potential outcomes related to pending or future litigation matters;
•business interruptions;
•risks relating to disruption or unauthorized access to our computer systems;
•our ability to protect customer and employee personal data;
•risks relating to acquisitions and the integration of acquired businesses with ours;
•our growth plans, including our plans to add, renovate, re-brand, expand, remodel, relocate, or close stores and any related costs or charges, our leasing strategy for future expansion, and our ability to renew leases at existing store locations;
•the impact of costs related to planned store closings or potential impairment of goodwill, other intangible assets, and long-lived assets;
•expected dividend payments;
•our ability to protect our brands and our reputation; and
•our ability to attract, motivate, and retain skilled field personnel and our key executives.
Any of these factors, as well as such other factors as discussed in Part I, Item 1A., “Risk Factors” of our Form 10-K for the fiscal year ended March 28, 2026 as well as in our periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this report is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this report speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.
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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk from potential changes in interest rates. As of September 26, 2026, excluding finance leases and financing obligations, we had no debt financing at fixed interest rates, for which the fair value would be affected by changes in market interest rates. Our cash flow exposure on floating rate debt would result in annual interest expense fluctuations of approximately $1.0 million based upon our debt position at September 26, 2026 and approximately $0.6 million based upon our debt position at March 28, 2026, respectively, given a change in SOFR of 100 basis points.
Debt financing had a carrying amount that approximates a fair value of $100.0 million as of September 26, 2026, as compared to a carrying amount and a fair value of $60.0 million as of March 28, 2026.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that we file or submit to the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In conjunction with the close of each fiscal quarter and under the supervision of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we conduct an update, a review and an evaluation of the effectiveness of our disclosure controls and procedures. It is the conclusion of our Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of the end of the most recent fiscal quarter reported on herein, that our disclosure controls and procedures were effective.
Changes in Internal Controls Over Financial Reporting
During the quarter ended September 26, 2026, we implemented Oracle Enterprise Resource Planning and Supply Chain Management, a platform for financial accounting, reporting, procurement, and supply chain processes. We executed certain changes to our processes and internal controls where appropriate and will continue to evaluate the design and operating effectiveness of internal controls as a result of this implementation in subsequent periods.
Other than as discussed above, there have been no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended September 26, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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SUPPLEMENTAL INFORMATION
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
From time to time we are a party to or otherwise involved in legal proceedings arising out of the normal course of business. Legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of one or more of these matters could have a material adverse impact on the Company, its financial condition and results of operations.
An action was filed against us in January 2026 in the U.S. District Court for the Western District of New York by two former Tire Choice employees who worked in Florida. The plaintiffs, former store managers, sought certification to represent similarly situated Tire Choice store managers in a collective action for unpaid overtime wages, damages and attorneys’ fees. Plaintiffs alleged violations of the Fair Labor Standards Act relating to overtime and unpaid wages. The parties conducted informal discovery, following which the parties agreed to resolve this matter for a limited subset of a potential collective. In anticipation of court approval, the Company included the settlement amount of approximately $1.7 million in OSG&A expenses in the Company’s Consolidated Statement of (Loss) Income and Comprehensive (Loss) Income during the second quarter of fiscal 2027. In resolving this matter, the Company believes the settlement is the best use of management’s time and resources.
Item 5. Other Information
On October 23, 2026, the Company entered into a Credit Agreement by and among the Company, as borrower, the Lenders and Ares, as administrative agent for the Lenders. The New Credit Facilities consist of (i) a senior secured term loan facility in an aggregate principal amount of $250.0 million (the “Term Loan Facility”) and (ii) a super senior secured revolving credit facility in an aggregate principal amount not to exceed $125.0 million (the “Revolving Credit Facility”), which includes a sub-facility for the issuance of letters of credit in an aggregate principal amount not to exceed $10.0 million and a sub-facility for the extension of swing line borrowings in an aggregate principal amount not to exceed $10.0 million. The loans under the Term Loan Facility and the Revolving Credit Facility mature on October 23, 2030. The New Credit Facilities are guaranteed by the Company’s subsidiaries (subject to customary exceptions) (the “Guarantors”) pursuant to a Guaranty by each Guarantor for the benefit of the secured parties under the Credit Agreement (the “Guaranty”) and are secured by a lien on substantially all of the assets of the Company and the Guarantors, subject to customary exceptions (the “Collateral”), as more fully described in a Security Agreement by the Company and the Guarantors for the benefit of Ares, the Lenders, and the other secured parties under the Credit Agreement (the “Security Agreement”).
The Term Loan Facility is subject to amortization of principal, payable in equal quarterly installments on the last business day of each quarter, commencing with the quarter ending in December 2027, in an amount equal to 0.25% of the aggregate original principal amount of the Term Loan Facility payable each quarter and on the maturity date of the Term Loan Facility. The remaining outstanding principal amount will be payable at the maturity date of the Term Loan Facility. The Term Loan Facility bears interest annually at rates based upon, at the option of the Company, either (i) an alternate base rate tied to the greater of (a) the U.S. prime rate, (b) the federal funds effective rate plus 0.50%, (c) the daily secured overnight financing rate (“Daily SOFR”) plus 1.00% per annum, and (d) a floor of 2.00% per annum (the “ABR”) plus an applicable margin ranging from 4.75% to 5.25%; or (ii) a rate per annum tied to the greater of (a) the term secured overnight financing rate and (b) a floor of 1.00% per annum (“Term SOFR”), plus an applicable margin ranging from 5.75% to 6.25%.
Any outstanding principal amount under the Revolving Credit Facility will be payable at the maturity date of the Revolving Credit Facility. The Revolving Credit Facility bears interest annually at rates based upon, at the option of the Company, either (i) the ABR, plus an applicable margin ranging from 2.50% to 3.00%; or (ii) the Term SOFR plus an applicable margin ranging from 3.50% to 4.00%. Accrued interest on the New Credit Facilities is payable at least quarterly. The Company will also be required to pay fees based on the daily unused commitment under the Revolving Credit Facility, the issuance of letters of credit and on the balance of outstanding and undrawn letters of credit under the Revolving Credit Facility.
As part of the closing of the New Credit Facilities, the Company paid down approximately $152.9 million of our obligations under our supply chain financing program and, under the terms of the New Credit Facilities, will no longer accept additional supplier obligations into this program after December 31, 2026.
The Company may prepay the loans outstanding under the New Credit Facilities at any time, subject to certain exceptions, provided that the Company pays an applicable premium and customary benchmark rate breakage costs. The Company will be required to prepay the loans under the New Credit Facilities with, among other things, proceeds of asset sales, excess cash flow and/or proceeds of debt issuance under certain circumstances, with exceptions for the Company’s reinvestment of cash proceeds in its assets and properties.
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SUPPLEMENTAL INFORMATION
Under the Credit Agreement, the Company and the Guarantors are subject to customary affirmative and negative covenants, and events of default for facilities of this type (with customary grace periods and thresholds, as applicable, and lender remedies). The Credit Agreement governing the New Credit Facilities includes financial covenants, including those that require the Company to maintain (i) a lease adjusted net leverage ratio (as defined in the Credit Agreement) lower than a maximum threshold and (ii) a minimum average daily liquidity over a fiscal quarter. The Credit Agreement includes a restriction on the amount the Company may use for dividend payments, and prohibits the Company’s payment of dividends if the Company does not comply with certain financial metric requirements, including lease adjusted net leverage ratio, fixed charge coverage ratio, minimum average daily liquidity and liquidity, each as defined in the Credit Agreement.
The Credit Agreement replaced the Credit Facility and the related credit agreement with nine banks, dated April 25, 2019. On October 23, 2026, the Company repaid in full all outstanding obligations under the Credit Facility and terminated all commitments thereunder. No prepayment penalties were due in connection with this repayment.
The foregoing summary of the New Credit Facilities does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Credit Agreement, the Security Agreement, and the Guaranty which are included as Exhibits 10.23, 10.24, and 10.25 hereto and are incorporated by reference.
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EXHIBITS
Item 6. Exhibits
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Exhibit Index |
10.23 – Credit Agreement, dated as of October 23, 2026, by and among Monro, Inc., as Borrower, Ares Capital Corporation, as Administrative Agent, and Lenders party thereto. ** |
10.24 – Security Agreement, dated as of October 23, 2026, by and among, Monro, Inc., Car-X, LLC, MNRO Holdings, LLC and Ares Capital Management, as Administrative Agent for the lenders part to the Credit Agreement. ** |
10.25 – Guaranty Agreement, dated as of October 23, 2026, of Car-X, LLC and MNRO Holdings, LLC. ** |
31.1 – Certification of Peter D. Fitzsimmons pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 |
31.2 – Certification of Brian J. D’Ambrosia pursuant to Section 302 of the Sarbanes – Oxley Act of 2002 |
32.1 – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002 |
101.INS – XBRL Instance Document |
101.LAB – XBRL Taxonomy Extension Label Linkbase |
101.PRE – XBRL Taxonomy Extension Presentation Linkbase |
101.SCH – XBRL Taxonomy Extension Schema Linkbase |
101.DEF – XBRL Taxonomy Extension Definition Linkbase |
101.CAL – XBRL Taxonomy Extension Calculation Linkbase |
104 – Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
** Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K of the Securities Act of 1933, as amended. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| MONRO, INC. | |
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DATE: October 29, 2026 |
| By: | /s/ Peter D. Fitzsimmons |
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| Peter D. Fitzsimmons |
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| President and Chief Executive Officer |
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DATE: October 29, 2026 |
| By: | /s/ Brian J. D’Ambrosia |
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| Brian J. D’Ambrosia |
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| Executive Vice President – Finance, Chief Financial Officer and Treasurer |
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| (Principal Financial Officer and Principal Accounting Officer) |
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