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What changed in MONRO, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of MONRO, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+223 added−178 removedSource: 10-K (2024-05-28) vs 10-K (2023-05-22)

Top changes in MONRO, INC.'s 2024 10-K

223 paragraphs added · 178 removed · 141 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeMonro's primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated; car dealerships; mass merchandisers’ operating service centers; and, to a lesser extent, gas stations, independent garages, and Internet tire sellers.
Biggest changeOur competitors include service centers operated by national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, mass merchandisers, car dealerships, independent garages, and gas stations. We also compete with online merchandisers of tires and automotive parts, which increasingly partner with local service centers to provide installation services for parts and tires purchased online.
We partner with a customer analytics firm to provide market segmentation and demographic data specific to a geographic area near a Monro location to identify high value lookalike customers and market directly to them. We attempt to cluster stores in market areas to achieve economies of scale in advertising, supervision, and distribution costs.
We partner with a customer analytics firm to provide market segmentation and demographic data specific to a geographic area near a Monro location to identify high value lookalike customers and market directly to them. We attempt to cluster stores in market areas to achieve economies of scale in advertising and supervision costs.
We will continue to invest in and execute strategic initiatives to improve our guests’ in-store experience. This includes leveraging our scale and the strength of our financial position to make critical investments in our business, our technicians and technology, allowing us to further execute on our operational excellence initiatives in 2023. • Provide consistent value .
We will continue to invest in and execute strategic initiatives to improve our guests’ in-store experience. This includes leveraging our scale and the strength of our financial position to make critical investments in our business, our technicians and technology, allowing us to further execute on our operational excellence initiatives in 2024. • Provide consistent value .
Monro, Inc. 2023 Form 10-K 5 Table of Contents BUSINESS Business Strategy Our vision is to be America’s leading auto and tire service center, trusted by consumers as the best place in their neighborhoods for quality automotive service and tires.
Monro, Inc. 2024 Form 10-K 5 Table of Contents BUSINESS Business Strategy Our vision is to be America’s leading auto and tire service center, trusted by consumers as the best place in their neighborhoods for quality automotive service and tires.
Monro, Inc. 2023 Form 10-K 7 Table of Contents BUSINESS New technician development has been an area of particular focus for Monro to increase productivity and retention and make it easier for technicians to overcome barriers of joining the industry.
Monro, Inc. 2024 Form 10-K 7 Table of Contents BUSINESS New technician development has been an area of particular focus for Monro to increase productivity and retention and make it easier for technicians to overcome barriers of joining the industry.
We purchase parts (including oil) and tires from approximately 80 vendors. Management believes that our relationships with vendors are excellent and that alternative sources of supply exist, at comparable cost, for substantially all parts used in our business.
We purchase parts (including oil) and tires from approximately 56 vendors. Management believes that our relationships with vendors are excellent and that alternative sources of supply exist, at comparable cost, for substantially all parts used in our business.
Information available on our website is not a part of, and is not incorporated into, this Form 10-K. We intend to make future investor presentations available exclusively through our Investor Relations page. Monro, Inc. 2023 Form 10-K 10 Table of Contents RISK FACTORS
Information available on our website is not a part of, and is not incorporated into, this Form 10-K. We intend to make future investor presentations available exclusively through our Investor Relations page. Monro, Inc. 2024 Form 10-K 9 Table of Contents RISK FACTORS
Our safety standards and policies are based on Occupational Safety and Health Administration guidelines as well as the American National Standards Institute, and, during 2023, we implemented a national safety supplies program which will help ensure consistent standards of safety preparedness (such as eye wash stations and first aid kits) at every store should an incident occur.
Our safety standards and policies are based on Occupational Safety and Health Administration guidelines as well as the American National Standards Institute, and we have a national safety supplies program which will help ensure consistent standards of safety preparedness (such as eye wash stations and first aid kits) at every store should an incident occur.
Our filings with the SEC, including our reports and proxy statement, are also available on the SEC’s website at www.sec.gov. Our investor presentation regarding the financial results for the fiscal year ended March 25, 2023 is available and accessible at Monro's Investor Relations page at https://corporate.monro.com/investors under the Events and Presentations tab.
Our filings with the SEC, including our reports and proxy statement, are also available on the SEC’s website at www.sec.gov. Our investor presentation regarding the financial results for the fiscal year ended March 30, 2024 is available and accessible at Monro's Investor Relations page at https://corporate.monro.com/investors under the Events and Presentations tab.
Tire Auto Service Centers 318 Car-X Tire & Auto 72 Tire Warehouse Tires for Less 55 Ken Towery's Tire & Auto Care 34 Mountain View Tire & Auto Service 30 Tire Barn Warehouse 27 Other (a) 44 Total 1,299 (a) Includes recently acquired stores to be converted to certain brands named above.
Tire Auto Service Centers 317 Car-X Tire & Auto 72 Tire Warehouse Tires For Less 55 Ken Towery's Tire & Auto Care 34 Mountain View Tire & Auto Service 30 Tire Barn Warehouse 27 Other (a) 44 Total 1,288 (a) Includes recently acquired stores to be converted to certain brands named above.
One of the ways we embrace our teammates’ well-being is through the administration of our own Teammate Assistance Fund, a third-party 501(c)(3) organization available for all our teammates. Launched in March 2022, the fund provides an opportunity for all teammates to take care of each other through tax-deductible payroll and other one-time contributions.
One of the ways we embrace our teammates’ well-being is through the administration of our own Teammate Assistance Fund, a third-party 501(c)(3) organization available for all our teammates. This fund provides an opportunity for all teammates to take care of each other through tax-deductible payroll and other one-time contributions.
Using consumer demographic analytics, we believe we can better identify targets that operate in the markets with favorable demographics and customer trends, allowing us to enter regions from which we are poised to benefit most. During the last five years, we have completed 14 acquisitions, adding 199 locations and approximately $295 million in annualized revenue.
Using consumer demographic analytics, we believe we can better identify targets that operate in the markets with favorable demographics and customer trends, allowing us to enter regions from which we are poised to benefit most. During the last five years, we have completed 10 acquisitions, adding 156 locations and approximately $224 million in annualized revenue.
During 2023, we identified a key area of focus in our stores: ergonomics (to reduce sprains and strains) and implemented an ergonomic training program to all store locations accordingly. Monro’s training programs are key to our strong safety culture. Training increases awareness and helps to reduce and eliminate workplace accidents and injuries.
We identified a key area of focus in our stores: ergonomics (to reduce sprains and strains) and have an ergonomic training program for all store locations accordingly. Monro’s training programs are key to our strong safety culture. Training increases awareness and helps to reduce and eliminate workplace accidents and injuries.
Through donations from Monro and contributions from our teammates, Board members and others, the Teammate Assistance Fund provides timely financial assistance to teammates impacted by financially devastating circumstances beyond their control and their means.
Through donations from Monro and contributions from our teammates, members of our Board of Directors (the “Board of Directors”) and others, the Teammate Assistance Fund provides timely financial assistance to teammates impacted by financially devastating circumstances beyond their control and their means.
All new greenfield sites presently under consideration are within our established market areas. Monro, Inc. 2023 Form 10-K 6 Table of Contents BUSINESS Purchasing and Distribution We believe that our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing strategy.
All new greenfield sites presently under consideration are within our established market areas. Monro, Inc. 2024 Form 10-K 6 Table of Contents BUSINESS Purchasing and Distribution We believe that our substantial economies of scale and our flexibility in making sourcing decisions contributes to our successful purchasing strategy.
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. As of March 25, 2023, Monro had two retread facilities and 76 Car-X franchised locations.
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. As of March 30, 2024, Monro had two retread facilities and 50 Car-X franchised locations.
Local vendor purchases are made when needed at the store level and accounted for approximately 28 percent of all parts and tires purchased in 2023. Our ten largest vendors accounted for approximately 95 percent of our total stocking purchases, with the largest vendor accounting for approximately 33 percent of total stocking purchases in 2023.
Local vendor purchases are made when needed at the store level and accounted for approximately 29 percent of all parts and tires purchased in 2024. Our ten largest vendors accounted for approximately 95 percent of our total stocking purchases, with the largest vendor accounting for approximately 38 percent of total stocking purchases in 2024.
(During 2023, we acquired one and closed two franchised locations.) In June 2022, we completed the divestiture of assets relating to our wholesale operations (seven locations) and internal tire distribution operations to American Tire Distributors, Inc. (“ATD”). For details regarding the divestiture, see Note 2 to our consolidated financial statements.
In June 2022, we completed the divestiture of assets relating to our wholesale operations (seven locations) and internal tire distribution operations to American Tire Distributors, Inc. (“ATD”). For details regarding the divestiture, see Note 2 to our consolidated financial statements.
Monro strives to maintain an environmentally conscious corporate culture, demonstrated by our recycling policies at our offices and stores. In 2023, Monro recycled approximately 2.2 million gallons of oil and 3.3 million tires, as well as approximately 58,300 vehicle batteries and 343 tons of cardboard, all as part of our commitment to the environment.
Monro strives to maintain an environmentally conscious corporate culture, demonstrated by our recycling policies at our offices and stores. In 2024, Monro recycled approximately 2.1 million gallons of oil and 3.7 million tires, as well as approximately 79,000 vehicle batteries and 383 tons of cardboard, all as part of our commitment to the environment.
Tire Auto Service Centers,” “Car-X Tire & Auto,” “Tire Warehouse Tires for Less,” “Ken Towery’s Tire & Auto Care,” “Mountain View Tire & Auto Service,” and “Tire Barn Warehouse”. Company-operated Store Brands as of March 25, 2023 Stores Monro Auto Service and Tire Centers 363 Tire Choice Auto Service Centers 356 Mr.
Tire Auto Service Centers,” “Car-X Tire & Auto,” “Tire Warehouse Tires for Less,” “Ken Towery’s Tire & Auto Care,” “Mountain View Tire & Auto Service,” and “Tire Barn Warehouse”. Company-operated Store Brands as of March 30, 2024 Stores Monro Auto Service and Tire Centers 360 Tire Choice Auto Service Centers 349 Mr.
Growth Strategy Executing on accretive acquisition opportunities remains a key element of our growth strategy. We have a robust pipeline and believe the fragmentation of our industry allows for many opportunities for consolidation.
Growth Strategy Executing on accretive acquisition opportunities remains a key element of our long-term growth strategy. We believe the fragmentation of our industry allows for many opportunities for consolidation.
Greenfield stores include new construction as well as the acquisition of one to four store operations. Key factors in market and site selection for selecting new greenfield store locations include population, demographic characteristics, vehicle population, and the intensity of competition.
In addition to our plan to continue to seek suitable acquisitions , we plan to add new greenfield stores. Greenfield stores include new construction as well as the acquisition of one to four store operations. Key factors in market and site selection for selecting new greenfield store locations include population, demographic characteristics, vehicle population, and the intensity of competition.
The EPA, under the Clean Air Act, also regulates the installation of catalytic converters, engines, and equipment sold or distributed in the United States by periodically spot-checking repair jobs, and may impose sanctions, including but not limited to civil penalties of approximately $37,500 per violation (or approximately $37,500 per day for certain willful violations or failures to cooperate with authorities), for violations of the RCRA and the Clean Air Act.
The EPA, under the Clean Air Act, also regulates the installation of catalytic converters, engines, and equipment sold or distributed in the United States by periodically spot-checking repair jobs, and may impose sanctions, including but not limited to civil penalties of tens of thousands of dollars per violation, for violations of the RCRA and the Clean Air Act.
At March 25, 2023, we operated 1,299 retail tire and automotive repair stores and serviced approximately 5.0 million vehicles in fiscal 2023. Our retail tire and automotive repair stores operate primarily under the brands “Monro Auto Service and Tire Centers,” “Tire Choice Auto Service Centers,” “Mr.
At March 30, 2024, we operated 1,288 retail tire and automotive repair stores and serviced approximately 4.7 million vehicles in fiscal 2024. Our retail tire and automotive repair stores operate primarily under the brands “Monro Auto Service and Tire Centers,” “Tire Choice Auto Service Centers,” “Mr.
As of March 25, 2023, Monro had approximately 8,600 employees, of whom 8,260 were employed in the field organization, 310 were employed at our corporate headquarters, referred to as “store support center”, and 30 were employed in other offices. Monro's employees are not members of any union.
As of March 30, 2024, Monro had approximately 7,660 employees, of whom 7,470 were employed in the field organization, 170 were employed at our corporate headquarters, referred to as “store support center”, and 20 were employed in other offices. Monro’s employees are not members of any union.
Monro, Inc. 2023 Form 10-K 9 Table of Contents BUSINESS Sales can also be volatile in areas in which we operate because of warmer weather in winter months, which typically causes a decline in tire sales, or severe weather, which can result in store closures.
Sales can also be volatile in areas in which we operate because of warmer weather in winter months, which typically causes a decline in tire sales, or severe weather, which can result in store closures.
Monro, Inc. 2023 Form 10-K 8 Table of Contents BUSINESS We also view training as a tool to foster inclusion and, through Monro University, we provide Unconscious Bias Diversity and Inclusion Awareness courses to all our teammates.
We also view training as a tool to foster inclusion and, through Monro University, we provide Unconscious Bias Diversity and Inclusion Awareness courses to all our teammates.
Competition Our segment of the retail industry is fragmented and highly competitive, and the number, size, and strength of competitors vary widely from region to region. We operate in the automotive repair service and tire industry, which is currently and is expected to continue to be highly competitive with respect to price, store location, name awareness, and customer service.
We operate in the automotive repair service and tire industry, which is currently and is expected to continue to be highly competitive with respect to price, store location, name awareness, and customer service.
We also leverage annual processes that support individual performance planning, individual professional development planning, and conduct a broad review of talent throughout our organization. Our continuous efforts to build out our human capital strategy are reflected in lower turnover rates in recent years.
We also leverage annual processes that support individual performance planning, individual professional development planning, and conduct a broad review of talent throughout our organization.
Additionally, during this time, we have entered five states, solidifying our presence in existing markets as well as expanding into the Western region. As of March 25, 2023, we have stores in 32 states. In addition to our plan to continue to seek suitable acquisitions , we plan to add new greenfield stores.
Additionally, during this time, we have entered three states, solidifying our presence in existing markets as well as expanding into the Western region. We did not complete any acquisitions in fiscal 2024. As of March 30, 2024, we have stores in 32 states.
Removed
Cybersecurity To reduce the likelihood and severity of cyber intrusions, we have a cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of data and systems, including oversight by the Board of Directors’ Audit Committee. Our security approach includes multiple layers of cybersecurity tools, processes, and systems.
Added
Monro, Inc. 2024 Form 10-K 8 Table of Contents BUSINESS Competition Our segment of the retail industry is fragmented and highly competitive, and the number, size, and strength of competitors vary widely from region to region.
Removed
This includes regular security testing for outside penetration, vulnerability assessment and routine monitoring of the security landscape and completing yearly Payment Card Industry audits. We also manage a 24/7 security operations center that monitors our security landscape by leveraging behavioral analytics, artificial intelligence, and extended detection and response services.
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All teammates are subject to mandatory annual data security training requirements and receive frequent education and dissemination of security information throughout the year. Our current security position and policies as well as compliance efforts are intended to address evolving and changing cyber threats. See Part I , Item 1A. , “ Risk Factors ” for discussion of related risks.
Removed
Monro considers TBC Corporation (operating primarily under the NTB, Midas and Tire Kingdom brands), Firestone Complete Auto Care service stores, The Pep Boys – Manny, Moe, and Jack service stores, Meineke, and Mavis Discount Tire to be direct competitors.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, if automobile manufacturers offer lower pricing on new or leased cars, more consumers may purchase or lease new vehicles rather than servicing older vehicles. A general reduction in the level of consumer spending or shifts in consumer spending to other services could have a material adverse effect on our growth, sales, and profitability.
Biggest changeAlternatively, during periods of good economic conditions, consumers may decide to purchase new vehicles rather than servicing their older vehicles. In addition, if automobile manufacturers offer lower pricing on new or leased cars, more consumers may purchase or lease new vehicles rather than servicing older vehicles.
Our systems could be subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, including breaches of our transaction processing or other systems that result in the compromise of confidential customer data, catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees.
Our systems could be subject to damage or interruption from power outages, technology and telecommunications failures, computer viruses, security breaches, including breaches of our transaction processing or other systems that result in the compromise of confidential customer data, catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees.
We cannot assure that we will be able to attract, motivate and maintain an adequate skilled workforce necessary to operate our existing and future stores efficiently, or that labor expenses will not increase because of a shortage in the supply of skilled field personnel, thereby adversely impacting our financial performance.
We cannot assure that we will be able to attract, motivate and maintain an adequate skilled workforce necessary to operate our existing and future stores efficiently, or that labor expenses will not continue to increase because of a shortage in the supply of skilled field personnel, thereby adversely impacting our financial performance.
The concentration of voting control will limit or preclude our common shareholders’ ability to influence corporate matters for the foreseeable future and could have the effect of delaying, preventing, or deterring a change in control of our company, could deprive holders of our common stock of an opportunity to receive a premium for their shares as part of a sale of our company and could negatively affect the market price of our common stock.
The concentration of voting control will limit or preclude our common shareholders’ ability to influence corporate matters and could have the effect of delaying, preventing, or deterring a change in control of our company, could deprive holders of our common stock of an opportunity to receive a premium for their shares as part of a sale of our company and could negatively affect the market price of our common stock.
The adoption of electric vehicles may accelerate in coming years because of tax incentives and other legislative action, such as proposed legislation in multiple states to prohibit the sale or disincentivize the purchase of new gas-powered vehicles by 2035. An increase in the proportion of electric vehicles sold could decrease our service-related revenue.
The adoption of electric vehicles may accelerate in coming years because of decreases in upfront costs for electric vehicles, tax incentives and other legislative action, such as proposed legislation in multiple states to prohibit the sale or disincentivize the purchase of new gas-powered vehicles by 2035. An increase in the proportion of electric vehicles sold could decrease our service-related revenue.
Therefore, the Class C Preferred holders have an effective veto over all matters put to a vote of our common stock and could use that veto power to block any matter that the holders of common stock may approve. As of March 25, 2023, Peter J.
Therefore, the Class C Preferred holders have an effective veto over all matters put to a vote of our common stock and could use that veto power to block any matter that the holders of common stock may approve. As of March 30, 2024, Peter J.
We have experienced more difficulty hiring skilled technicians than pre-pandemic and may be unable to replace employees as quickly as we need to fill positions in our stores.
We have experienced and expect to continue to experience more difficulty hiring skilled technicians than pre-pandemic and may be unable to replace employees as quickly as we need to fill positions in our stores.
When the retail cost of gasoline increases, such as after the Russian invasion of Ukraine and the imposition of economic sanctions on Russia and companies affiliated with the Russian government, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs.
When the retail cost of gasoline increases, such as after the Russian invasion of Ukraine and the imposition of economic sanctions on Russia and companies affiliated with the Russian government in addition to other geopolitical events, the number of miles driven by automobile owners may decrease, which could result in less frequent service intervals and fewer repairs.
We also face other risks associated with the delivery of inventory originating outside the United States, including: potential economic and political instability in countries where our suppliers are located; increases in shipping costs; Monro, Inc. 2023 Form 10-K 12 Table of Contents RISK FACTORS transportation delays and interruptions, including those occurring as a result of geopolitical events, like the war in Ukraine, or public health emergencies; compliance with the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or making other prohibited payments to foreign officials; and significant fluctuations in exchange rates between the U.S. dollar and foreign currencies.
Monro, Inc. 2024 Form 10-K 11 Table of Contents RISK FACTORS We also face other risks associated with the delivery of inventory originating outside the United States, including: potential economic and political instability in countries where our suppliers are located or along the shipping routes used to deliver the products; increases in shipping costs; transportation delays and interruptions, including those occurring as a result of geopolitical events, like the war in Ukraine, the Israel-Hamas war or public health emergencies; compliance with the United States Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or making other prohibited payments to foreign officials; and significant fluctuations in exchange rates between the U.S. dollar and foreign currencies.
Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices, trends toward remote work and fluctuations in the general economy.
Our industry is influenced by the number of miles driven by automobile owners. Factors that may cause the number of miles driven by automobile owners to decrease include the weather, travel patterns, gas prices, trends toward remote work and fluctuations in the general economy.
To continue to provide high quality services, we require an adequate supply of skilled field managers and technicians. Trained and experienced automotive field personnel are in high demand, and may be in short supply in some areas, a challenge that has been highlighted by the tight labor market following the easing of pandemic restrictions.
To continue to provide high quality services, we require an adequate supply of skilled field managers and technicians. Trained and experienced automotive field personnel are in high demand, and may be in short supply in some areas, a challenge that has been highlighted by the tight labor market in recent years.
Although we believe that we will remain in compliance with our debt covenants, if we are not able to do so our lenders may restrict our ability to draw on our Credit Facility, which could have a negative impact on our operations, ability to pay dividends, and growth potential, including our ability to complete acquisitions.
If we are not able to remain in compliance with our debt covenants, our lenders may restrict our ability to draw on our Credit Facility, which could have a negative impact on our operations, ability to pay dividends, and growth potential, including our ability to complete acquisitions.
These provisions include: the concentration of voting power in the Class C Preferred shares; our classified board of directors, with approximately half of our board of directors elected at each year’s annual meeting; the vote of at least two-thirds of the outstanding shares of common stock required to approve amendments to certain provisions in our certificate of incorporation; Monro, Inc. 2023 Form 10-K 16 Table of Contents RISK FACTORS the board of directors’ ability to issue shares of serial preferred stock without shareholder approval; and the advance notice required by our bylaws for any shareholder who wishes to bring business before a meeting of shareholders or to nominate a director for election at a meeting of shareholders.
These provisions include: the concentration of voting power in the Class C Preferred shares; our classified Board of Directors, with approximately half of our Board of Directors elected at each year’s annual meeting; the vote of at least two-thirds of the outstanding shares of common stock required to approve amendments to certain provisions in our certificate of incorporation; the Board of Directors’ ability to issue shares of serial preferred stock without shareholder approval; and the advance notice required by our bylaws for any shareholder who wishes to bring business before a meeting of shareholders or to nominate a director for election at a meeting of shareholders.
Some of our competitors have greater financial resources, have access to more developed distribution networks, are more geographically diverse and have better name recognition than we do, which might place us at a competitive disadvantage to those competitors.
Some of our competitors have greater financial resources, have access to more developed distribution networks, have business models with lower operating costs, are more geographically diverse and have better name recognition than we do, which might place us at a competitive disadvantage to those competitors.
This could adversely affect the market price of our common stock. The multi-class structure of our capital stock has the effect of concentrating power with holders of our Class C Convertible Preferred Stock, which severely limits the ability of our common shareholders to influence or direct the outcome of matters submitted to our shareholders for approval.
The multi-class structure of our capital stock has the effect of concentrating power with holders of our Class C Convertible Preferred Stock, which severely limits the ability of our common shareholders to influence or direct the outcome of matters submitted to our shareholders for approval.
Even when electric vehicles need repairs, given the cost to replace some battery-related components, an electric vehicle owner’s insurance provider may not approve the cost to repair the vehicle. If drivers must replace their vehicles instead of servicing older vehicles, demand for our services would decrease. Our business is affected by advances in automotive technology.
Even when electric vehicles need repairs, given the cost to replace some battery-related components, an electric vehicle owner’s insurance provider may not approve the cost to repair the vehicle. If drivers must replace their vehicles instead of servicing older vehicles, demand for our services would decrease.
Planned store closings have resulted in acceleration of costs and future store closings could result in additional costs. From time to time, in the ordinary course of our business, we close certain stores, generally based on considerations of store profitability, competition, strategic factors and other considerations.
Monro, Inc. 2024 Form 10-K 15 Table of Contents RISK FACTORS Planned store closings have resulted in acceleration of costs and future store closings could result in additional costs. From time to time, in the ordinary course of our business, we close certain stores, generally based on considerations of store profitability, competition, strategic factors and other considerations.
Attacks have been targeted at us, our customers, or others who have entrusted us with information. Actual or anticipated attacks will cause us to incur increased costs, including costs to hire additional personnel, purchase additional protection technologies, train employees, and engage third-party experts and consultants.
Attacks have been targeted at us, our customers, or others who have entrusted us with information. Monro, Inc. 2024 Form 10-K 14 Table of Contents RISK FACTORS Actual or anticipated attacks will cause us to incur increased costs, including costs to hire additional personnel, purchase additional protection technologies, train employees, and engage third-party experts and consultants.
A material increase in these costs that we were unable to offset by increasing our prices or by other means could have a material adverse effect on our business, financial condition, and results of operations.
Our vendors are also subject to these factors, which may increase the prices we pay for their products. A material increase in these costs that we were unable to offset by increasing our prices or by other means could have a material adverse effect on our business, financial condition, and results of operations.
Accordingly, we could become subject to material liabilities relating Monro, Inc. 2023 Form 10-K 13 Table of Contents RISK FACTORS to the investigation and cleanup of contaminated properties, and to claims alleging personal injury or property damage because of exposure to, or release of, hazardous substances.
Accordingly, we could become subject to material liabilities relating to the investigation and cleanup of contaminated properties, and to claims alleging personal injury or property damage because of exposure to, or release of, hazardous substances.
We may subsequently experience unforeseen issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of recoverability of the recorded goodwill Monro, Inc. 2023 Form 10-K 15 Table of Contents RISK FACTORS and intangible assets.
We may subsequently experience unforeseen issues with the businesses we acquire, which may adversely affect the anticipated returns of the business or value of the intangible assets and trigger an evaluation of recoverability of the recorded goodwill and intangible assets.
In the long term, we are subject to the risk Monro, Inc. 2023 Form 10-K 17 Table of Contents RISK FACTORS that our stores are physically located in areas that could be threatened by heat and extreme weather events that make those areas uninhabitable.
In the long term, we are subject to the risk that our stores are physically located in areas that could be threatened by heat and extreme weather events that make those areas uninhabitable.
If we experience a data security breach and confidential customer or employee information is disclosed, we may be subject to penalties and experience negative publicity, which could affect our customer relationships and have a material adverse effect on our business. We may incur increasing costs in an effort to minimize these cyber security risks.
Any material interruption in our computer operations may have a material adverse effect on our business or results of operations. If we experience a data security breach and confidential customer or employee information is disclosed, we may be subject to penalties and experience negative publicity, which could affect our customer relationships and have a material adverse effect on our business.
Monro, Inc. 2023 Form 10-K 11 Table of Contents RISK FACTORS Adoption of electric vehicle technology may adversely affect the demand for our services. Advances in electric vehicle technology and production may adversely affect the demand for our services because electric vehicles do not have traditional engines, transmissions, and certain related parts.
Advances in electric vehicle technology and production may adversely affect the demand for our services because electric vehicles do not have traditional engines, transmissions, and certain related parts.
As of March 25, 2023, there was $105 million outstanding under the Credit Facility.
As of March 30, 2024, there was $102 million outstanding under the Credit Facility.
We have been subject to cyber-attacks in the past and we may suffer Monro, Inc. 2023 Form 10-K 14 Table of Contents RISK FACTORS data security breaches arising from future attacks. We may currently be at a higher risk of a security breach due to cyber-attacks related to the Russian invasion of Ukraine.
We have been subject to cyber-attacks in the past and we may suffer data security breaches arising from future attacks. We may currently be at a higher risk of a security breach due to cyber-attacks related to the ongoing geopolitical uncertainty.
The nature of our business involves the receipt and storage of personally identifiable data of our customers and employees. This type of data is subject to legislation and regulation in various jurisdictions.
We may incur increasing costs in an effort to minimize these cybersecurity risks. The nature of our business involves the receipt and storage of personally identifiable data of our customers and employees. This type of data is subject to legislation and regulation in many jurisdictions.
Historic increases in inflation following the COVID-19 pandemic may cause consumers to be more sensitive to price changes and cause consumers to “trade down” in the price of products or services purchased or to delay or forgo vehicle maintenance entirely. Alternatively, during periods of good economic conditions, consumers may decide to purchase new vehicles rather than servicing their older vehicles.
Historic increases in inflation following the COVID-19 pandemic have caused and may continue to cause consumers to be more sensitive to price changes and cause consumers to “trade down” in the price of products or services purchased or to delay or forgo vehicle maintenance entirely.
Difficulty integrating new executives, or the loss of key individuals could limit our ability to successfully execute our business strategy and could have an adverse effect on our overall financial condition. We are subject to the short- and long-term risks of climate change.
Difficulty integrating new executives, or the loss of key individuals could limit our ability to successfully execute our business strategy and could have an adverse effect on our overall financial condition. Challenging financial market conditions and changes in long-term interest rates could adversely impact the funded status of our pension plan.
The automotive repair industry in which we operate is generally highly competitive and fragmented, and the number, size and strength of our competitors vary widely from region to region. We believe that competition in the industry is based primarily on customer service, reputation, store location, name awareness and price.
The automotive repair industry in which we operate is generally highly competitive and fragmented, and the number, size and strength of our competitors vary widely from region to region. We face competition from a diversity of business models.
Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments. Although we have historically declared cash dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future.
Although we have historically declared cash dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future. This could adversely affect the market price of our common stock.
Our primary competitors include national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, car dealerships, mass merchandisers operating service centers and, to a lesser extent, gas stations, and independent garages.
Our competitors include service centers operated by national and regional undercar, tire specialty and general automotive service chains, both franchised and company-operated, mass merchandisers, car dealerships, independent garages, and gas stations. We also compete with online merchandisers of tires and automotive parts, which partner with local service centers to provide installation services for parts and tires purchased online.
We have experienced and expect further increases in payroll expenses because of federal, state, and local mandated increases in the minimum wage, inflation, and demand for workers in the current labor market. Our vendors are also subject to these factors, which may increase the prices we pay for their products.
Monro, Inc. 2024 Form 10-K 13 Table of Contents RISK FACTORS We have experienced and expect further increases in payroll expenses because of federal, state, and local mandated increases in the minimum wage, inflation, and demand for workers in the current labor market.
Any continued significant reduction in the number of miles driven by automobile owners will have a material adverse effect on our business and results of operations. Changes in economic conditions that impact consumer spending could harm our business.
Any continued significant reduction in the number of miles driven by automobile owners will have a material adverse effect on our business and results of operations. Monro, Inc. 2024 Form 10-K 10 Table of Contents RISK FACTORS Adoption of electric vehicle technology may adversely affect the demand for our services.
The realization of any of these short- or long-term risks could materially adversely affect our financial condition.
The realization of any of these short- or long-term risks could materially adversely affect our financial condition. We may be unable to achieve the priorities and initiatives set forth in our environmental, social and governance (“ESG”) report or otherwise meet the expectations of our stakeholders with respect to ESG matters.
If we are unable to compete successfully in new and existing markets, we may not achieve our projected revenue and profitability targets. We are subject to cycles in the general economy and customers’ use of vehicles and seasonality, which may impact demand for our products and services. Our industry is influenced by the number of miles driven by automobile owners.
A general reduction in the level of consumer spending or shifts in consumer spending to other services could have a material adverse effect on our growth, sales, and profitability. We are subject to cycles in the general economy and customers’ use of vehicles and seasonality, which may impact demand for our products and services.
The risk of disruption is increased in periods where complex and significant systems changes are undertaken. Any material interruption in our computer operations may have a material adverse effect on our business or results of operations.
The risk of disruption is increased in periods where complex and significant systems changes are undertaken. Even if we attempt to recover costs incurred as a result of any interruption or breach from an insurer, there can be no guarantee that any or all of those costs would be insured or recoverable.
Even if our shareholders approve an amendment to our certificate of incorporation to declassify our board of directors, annual elections of all of our directors will not begin immediately.
Monro, Inc. 2024 Form 10-K 16 Table of Contents RISK FACTORS Although shareholders approved an amendment to our certificate of incorporation to declassify our Board of Directors, annual elections of all of our directors will not begin until our 2025 annual meeting of shareholders (see Note 17 to the Company’s consolidated financial statements for further detail ).
Removed
For example, because of the COVID-19 pandemic, there was a marked decrease in the number of miles driven by automobile owners due to the stay-at-home orders, an increase in certain workers working from home, and a resulting negative effect on the demand for our products and services.
Added
We believe that competition in the industry is based primarily on price, reputation, name awareness, customer service and store location. The significance of any individual dimension of competition may vary by competitors’ business models.
Removed
If our shareholders approve the amendments to our certificate of incorporation to reclassify our equity capital structure to eliminate our Class C Preferred Stock at our annual meeting, and until the Class C Preferred shares are converted into common stock after the sunset period, Mr.
Added
If we are unable to compete successfully in new and existing markets, we may not achieve our projected revenue and profitability targets. Changes in economic conditions that impact consumer spending could harm our business.
Added
Even if the electric vehicle can be repaired, original vehicle manufacturers may restrict us from acquiring the necessary diagnostic tools, repair information, or certifications required to repair the vehicle. If we are restricted from repairing certain vehicles, our sales and profitability may decrease. Our business is affected by advances in automotive technology.
Added
Covenants in the agreements governing our Credit Facility restrict the manner in which we conduct our business.
Added
The Credit Facility contains covenants that may limit, subject to certain exemptions, our ability to incur other indebtedness or liens; make investments; repurchase our common stock; acquire stores or other businesses; prepay other indebtedness; and to declare dividends and other distributions, subject to certain exceptions.
Added
Monro, Inc. 2024 Form 10-K 12 Table of Contents RISK FACTORS The Credit Facility contains certain financial covenants that require us to maintain a minimum interest coverage ratio and a maximum ratio of adjusted debt to EBITDAR, as defined in the Credit Facility.
Added
The restrictions of the Credit Facility could adversely affect our ability to:  finance our operations;  make capital expenditures;  acquire stores or other businesses;  maintain the current rate or frequency of dividends;  withstand a future downturn in our business or the economy in general;  engage in business activities, including future opportunities, that may be in our interest; and  plan for or react to market conditions or otherwise execute our business strategies.
Added
Our ability to comply with the covenants, restrictions and specified financial ratios in the Credit Facility may be affected by events beyond our control, including prevailing economic, financial, and industry conditions. A breach of any of these covenants, subject to certain cure rights of the Company, could result in a default under the Credit Facility.
Added
Further, any indebtedness that we may incur in the future may subject us to further covenants.
Added
If a default under any such debt agreement is not cured or waived, the default could result in the acceleration of debt, which could require us to repay debt prior to the date it is otherwise due and that could adversely affect our financial condition.
Added
If we are unable to generate sufficient cash flows from our operations, we may breach financial covenants under the Credit Facility, and we may not have sufficient cash on hand or available liquidity that could be utilized to repay our outstanding indebtedness, which would have a material adverse effect on our business.
Added
Failure to protect our brands and our reputation could have a material adverse effect on our business and results of operations. We believe we have built an excellent reputation as a leading nation-wide operator of retail tire and automotive repair stores in the United States.
Added
We believe our continued success depends, in part, on our ability to preserve, grow, and leverage the value of the several brands our retail tire and automotive repair stores primarily operate under.
Added
Negative publicity and other reputational harm relating to events or activities attributed to us, our policies, our employees or others associated with us, whether or not justified, may diminish the value of our brands. If any of our brands are negatively impacted, it could have a material adverse effect on our business and results of operations.
Added
The compliance costs and operational burdens associated with applicable federal, state, and local environmental laws and regulations could be significant.
Added
We assess potential impairments to our long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable.
Added
For example, in fiscal 2024, we incurred store impairment charges of approximately $1.9 million after considering changes in their actual and forecasted financial performance, reassessing their recoverability using an undiscounted cash flow model, and determining their carrying value may not be recoverable.
Added
Our Credit Facility contains covenants that may limit, subject to certain exemptions, our ability to repurchase our common stock, and to declare dividends and other distributions. Holders of our common stock are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments.
Added
Although the Class C Preferred shares are subject to mandatory conversion prior to an agreed sunset date expected in 2026 (see Note 17 to the Company’s consolidated financial statements for further detail), until the Class C Preferred shares are converted into common stock after the sunset period, Mr.
Added
We have a defined benefit pension plan covering employees who met eligibility requirements but is closed to new participants. As of March 30, 2024, the pension plan was overfunded on a projected benefit obligation basis by approximately $0.8 million. Included in our financial results are pension plan costs that are measured using actuarial valuations.
Added
The actuarial assumptions used may differ from actual results. In addition, because our pension plan assets are invested in marketable securities, fluctuations in market values can negatively impact our funded status, recorded pension liability, and future required minimum contribution levels.
Added
Similar to fluctuations in market values, a decline in the discount rate used in the actuarial assumptions can negatively impact our funded status, recorded pension liability and future contribution levels. Monro, Inc. 2024 Form 10-K 17 Table of Contents RISK FACTORS Also, continued changes in the mortality assumptions can impact our funded status.
Added
Further volatility in the performance of financial markets, changes in actuarial assumptions or changes in regulations regarding minimum funding requirements could require material increases to our expected cash contributions to the pension plans in future years. We are subject to the short- and long-term risks of climate change.
Added
Increasing governmental and societal attention to ESG matters, including expanding mandatory and voluntary reporting, and disclosure topics such as climate change, sustainability, natural resources, waste reduction, energy, human capital, and risk oversight could expand the nature, scope, and complexity of matters that we are required to control, assess, and report.
Added
We strive to create long-term value for our guests, employees and shareholders, and we report on certain priorities and initiatives related to ESG matters in our ESG report (which is not a part of, and is not incorporated into, this Form 10-K), such as plans relating to employee safety and energy efficiency.
Added
Our stakeholders expect us to make progress on our ESG priorities and initiatives. A failure or a perceived failure to meet these expectations could damage our reputation and have a material adverse effect on our business and results of operations. Item 1B. Unresolved Staff Comments None.
Added
I tem 1C Cybersecurity Risk Management and Strategy We execute a comprehensive cybersecurity program designed to provide structured and thorough cybersecurity risk management and governance. Our cybersecurity program is aligned with industry-wide recognized standards, such as the National Institute of Standards and Technology (NIST) Cybersecurity Framework.
Added
Our program prioritizes, among other things, prevention of unauthorized access; protection of sensitive information; detection, assessment, and response to cybersecurity threats; and continuous improvement of our cybersecurity measures. The Company has established comprehensive incident response and recovery plans, regularly tests and evaluates the effectiveness of those plans, and maintains cybersecurity risk insurance.
Added
Our cybersecurity program has a set of controls and priorities with a multi-pronged approach that includes: ● Quarterly cybersecurity awareness training for teammates, monthly phishing simulation testing and other cybersecurity awareness campaigns (e.g., articles, flyers, cybersecurity awareness month); ● A dedicated security operations team to monitor, analyze, and respond to security threats 24/7; ● Security governance to manage and maintain security processes; ● Intrusion, detection, and prevention systems; ● A vulnerability management program to identify and remediate security liabilities; ● A configuration management program to harden systems based on industry standards; ● Industry-leading email security, endpoint detection, and response platforms; ● Threat intelligence from multiple resources to identify and anticipate emerging threats; Monro, Inc. 2024 Form 10-K 18 Table of Contents RISK FACTORS ● Network and web application firewalls; ● Multi-factor authentication; and ● Network segmentation to isolate and safeguard critical systems and sensitive data.
Added
The Company assesses cybersecurity risks on an ongoing basis, including assessing and deploying technical safeguards designed to protect its information systems from cybersecurity threats.
Added
We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements and examine the effectiveness and maturity of our cyber defenses through various means, including internal audits, targeted testing, incident response exercises, maturity assessments, and industry benchmarking.
Added
The Company engages with a range of external professionals, including cybersecurity experts, consultants, auditors, and legal counsel to leverage specialized knowledge, experience and insights, to help ensure our cybersecurity strategies and processes remain current.
Added
This includes: ● Engaging third-party experts to periodically advise and train our Board and management regarding the structure and oversight of our cybersecurity program, Incident Response Plan (“ IRP”) and various cybersecurity-related matters; ● Retaining data security and data privacy legal counsel whose practice focuses on data breach response, information security compliance, and compliance with the data privacy laws in the various jurisdictions in which the Company operates; and ● Utilizing specialized consultants and third-party managed service providers to assist us with projects that will improve the Company’s IT infrastructure, strengthen our security posture and cybersecurity incident investigations, and improve our cyber readiness.
Added
The Company has implemented processes to identify, prioritize, assess, mitigate and remediate risks associated with third-party service providers. As part of these processes, we conduct security assessments of critical third-party providers before engagement and contractually require third parties we engage to implement security programs commensurate with their risk.
Added
In the event of a cybersecurity incident, a cross-functional team - led by the Senior Vice President - Chief Information Officer (our “CISO”) and Chief Legal Officer (“CLO”) - is equipped with a well-defined IRP. The IRP includes immediate actions to mitigate the impact of the incident, and long-term strategies for remediation and prevention of future incidents.
Added
Among other things, the IRP sets forth roles and responsibilities in connection with detecting, assessing, and mitigating cybersecurity incidents and outlines applicable communication and escalation protocols.
Added
The IRP includes controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents to our Chief Executive Officer and Chief Financial Officer and to the Audit Committee so that, among other things, decisions regarding public disclosure and reporting of such incidents can be made in a timely manner.
Added
The Company regularly tests and evaluates the effectiveness of the IRP and the Company’s recovery plan. Our cybersecurity program is designed to prevent unauthorized access and protect sensitive information, with a focus on continuous improvement of our cybersecurity measures.
Added
While we have not experienced any material cybersecurity threats or incidents to date, we can give no assurance that we will be able to prevent, identify, respond to, or mitigate the impact of all cybersecurity threats or incidents.
Added
To the extent future cybersecurity threats or incidents result in significant disruptions and costs to our operations, reduce the effectiveness of our internal control over financial reporting, or otherwise substantially impact our business, it could have a material adverse effect on our business, liquidity, financial condition, and/or results of operations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties Company-operated Stores as of March 25, 2023 Stores Company-operated Stores as of March 25, 2023 Stores Arkansas 2 Minnesota 9 California 103 Missouri 26 Connecticut 35 Nevada 14 Delaware 7 New Hampshire 29 Florida 106 New Jersey 43 Georgia 13 New York 144 Idaho 4 North Carolina 56 Illinois 34 Ohio 140 Indiana 38 Pennsylvania 127 Iowa 18 Rhode Island 11 Kentucky 33 South Carolina 15 Louisiana 20 Tennessee 17 Maine 18 Vermont 7 Maryland 70 Virginia 69 Massachusetts 40 West Virginia 9 Michigan 31 Wisconsin 11 Total 1,299 Company-operated Stores and Other Properties as of March 25, 2023 Stores Owned 330 Leased 908 Owned buildings on leased land 61 Total 1,299 Our policy is to situate new Company-operated stores in the best locations, without regard to the form of ownership required to develop the locations.
Biggest changeProperties Company-operated Stores as of March 30, 2024 Stores Company-operated Stores as of March 30, 2024 Stores Arkansas 2 Minnesota 9 California 103 Missouri 25 Connecticut 35 Nevada 14 Delaware 7 New Hampshire 29 Florida 106 New Jersey 43 Georgia 13 New York 142 Idaho 4 North Carolina 56 Illinois 34 Ohio 135 Indiana 38 Pennsylvania 126 Iowa 18 Rhode Island 11 Kentucky 33 South Carolina 14 Louisiana 20 Tennessee 17 Maine 18 Vermont 7 Maryland 70 Virginia 68 Massachusetts 40 West Virginia 9 Michigan 31 Wisconsin 11 Total 1,288 Company-operated Stores and Other Properties as of March 30, 2024 Stores Owned 330 Leased 902 Owned buildings on leased land 56 Total 1,288 Our policy is to situate new Company-operated stores in the best locations, without regard to the form of ownership required to develop the locations.
In general, we lease store sites for a ten-year period with several renewal options (up to ten years). Giving effect to all renewal options, approximately 61 percent of the store leases (590 stores) expire after March 2033. We own our corporate headquarters building located in Rochester, New York, and we lease and own additional office space elsewhere in the U.S.
In general, we lease store sites for a five-year period with various renewal options. Giving effect to all renewal options, approximately 59 percent of the store leases (569 stores) expire after March 2034. We own our corporate headquarters building located in Rochester, New York, and we lease and own additional office space elsewhere in the U.S.
Removed
We also lease two retread facilities located in Florida and Tennessee. Monro, Inc. 2023 Form 10-K 19 Table of Contents LEGAL PROCEEDINGS & MINE SAFETY DISCLOSURES
Added
We also lease two retread facilities located in Florida and Tennessee. Assets held for sale We classify long-lived assets to be sold as held for sale in the period in which all of the required criteria are met.
Added
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.
Added
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.
Added
On June 1, 2023, we announced the planned sale of our corporate headquarters at 200 Holleder Parkway in Rochester, New York and our plan to relocate our corporate headquarters to another location in the greater Rochester area.
Added
We determined that the related assets of $5.9 million met the criteria to be classified as held for sale as of March 30, 2024. Monro, Inc. 2024 Form 10-K 21 Table of Contents LEGAL PROCEEDINGS & MINE SAFETY DISCLOSURES

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+4 added−3 removed0 unchanged
Biggest changeMonro, Inc. 2023 Form 10-K 21 Table of Contents OTHER INFORMATION Stock Performance Graph Fiscal Years Ended March 2018 2019 2020 2021 2022 2023 Monro, Inc. $ 100.00 $ 163.30 $ 83.80 $ 127.91 $ 87.85 $ 100.24 New Indexes: S&P SmallCap 600 Index 100.00 101.57 75.27 147.02 148.83 135.71 S&P Composite 1500 Specialty Retail Index 100.00 119.25 100.65 191.44 191.58 201.01 Former Indexes: S&P 500 Other Specialty Retail Index 100.00 145.93 117.35 190.56 220.33 242.65 S&P 500 Industrials Index 100.00 103.23 83.13 141.00 149.66 149.91 The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years ended March with the cumulative return on (i) the S&P SmallCap 600 Index, (ii) the S&P Composite 1500 Specialty Retail Index, (iii) the S&P 500 Other Specialty Retail Index, and (iv) the S&P 500 Industrials Index.
Biggest changeMonro, Inc. 2024 Form 10-K 23 Table of Contents OTHER INFORMATION Stock Performance Graph Fiscal Years Ended March 2019 2020 2021 2022 2023 2024 Monro, Inc. $ 100.00 $ 51.32 $ 78.33 $ 53.79 $ 61.38 $ 40.46 S&P SmallCap 600 Index 100.00 74.11 144.76 146.54 133.62 154.90 S&P Composite 1500 Specialty Retail Index 100.00 84.40 160.53 160.65 168.56 220.77 The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years ended March with the cumulative return on (i) the S&P SmallCap 600 Index and (ii) the S&P Composite 1500 Specialty Retail Index.
This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. Dividends Dividends declared per share for 2023, 2022, and 2021 are disclosed in our Consolidated Statements of Changes in Shareholders’ Equity .
This figure does not include an estimate of the indeterminate number of beneficial holders whose shares may be held of record by brokerage firms and clearing agencies. Dividends Dividends declared per share for 2024, 2023, and 2022 are disclosed in our Consolidated Statements of Changes in Shareholders’ Equity .
The graph assumes the investment of $100 in Monro common stock, the S&P SmallCap 600 Index, the S&P Composite 1500 Specialty Retail Index, the S&P 500 Other Specialty Retail Index, and the S&P 500 Industrials Index and reinvestment of all dividends.
The graph assumes the investment of $100 in Monro common stock, the S&P SmallCap 600 Index and the S&P Composite 1500 Specialty Retail Index, and reinvestment of all dividends.
Share Repurchase Activity On May 19, 2022, our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of shares of our common stock with no stated expiration. Under the program, we have repurchased 2.2 million shares of common stock at an average price of $44.00, for a total investment of $96.9 million.
Share Repurchase Activity On May 19, 2022, our Board of Directors authorized a share repurchase program for the repurchase of up to $150 million of shares of our common stock with no stated expiration. Under the program, we have repurchased 3.7 million shares of common stock at an average price of $37.61, for a total investment of $140.9 million.
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. We currently expect that comparable dividends will continue to be declared in the future.
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.
Item 5. Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Stock Market under the symbol "MNRO". We are authorized to issue up to 65,000,000 shares of common stock, par value $0.01, and up to 150,000 shares of preferred stock, par value $1.50.
Item 5. Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is listed on the Nasdaq Stock Market under the symbol "MNRO".
Under our Credit Facility, there are no restrictions on our ability to declare dividends as long as we are in compliance with the covenants in the Credit Facility. For additional information regarding our Credit Facility, see Note 6 to the Company’s consolidated financial statements.
Our Credit Facility contains covenants that may limit, subject to certain exemptions, our ability to declare dividends and other distributions. F or additional information regarding our Credit Facility, see Part II , Item 7 , “ Credit Facility ” of this report and Note 6 to the Company’s consolidated financial statements.
Removed
As of March 25, 2023, the dollar value of shares that may yet be purchased under the program is $53.1 million. We did not repurchase shares under this program during the three months ended March 25, 2023. Holders of Record As of May 12, 2023, our common stock was held by approximately 45 shareholders of record.
Added
We are authorized to issue up to 65,000,000 shares of common stock, par value $0.01, and up to 150,000 shares of Class C Preferred Stock, par value $1.50. In May 2023, we entered into an agreement to reclassify our equity capital structure to eliminate the Class C Preferred.
Removed
We have elected to replace the S&P 500 Other Specialty Retail and S&P 500 Industrials indexes with the S&P SmallCap 600 and S&P Composite 1500 Specialty Retail indexes because we are included in the S&P SmallCap 600 Index and the S&P Composite 1500 Specialty Retail Index aligns better with our industry and business focus than the former indexes.
Added
The Class C Preferred shares are subject to mandatory conversion prior to an agreed sunset date expected in 2026. For additional information regarding the equity capital structure reclassification, see Note 17 to the Company’s consolidated financial statements.
Removed
In this transition year, in accordance with Item 201(e) of the Regulations S-K, the stock performance graph above includes the two new indexes and the two former indexes used in the immediately preceding year.
Added
As of March 30, 2024, the dollar value of shares that may yet be purchased under the program is $9.1 million. We are currently prohibited from repurchasing our securities if there are outstanding amounts under the Credit Facility immediately before or after giving effect to the repurchase.
Added
For additional information regarding our Stock Repurchase Plan, see Note 16 to the Company’s consolidated financial statements. Holders of Record As of May 17, 2024, our common stock was held by approximately 44 shareholders of record.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

12 edited+3 added−7 removed3 unchanged
Biggest changeFinancial Summary Fiscal 2023 included the following notable items: Diluted earnings per common share (“EPS”) were $1.20. Adjusted diluted EPS, a non-GAAP measure, were $1.36. Sales decreased 2.5 percent, primarily due to lower overall tire sales because of the sale of our wholesale operations. Comparable store sales increased 2.8 percent from the prior year, driven primarily by an approximately 11 percent comparable store sales increase in approximately 300 of our small or underperforming stores.
Biggest changeFiscal 2024 included the following notable items: Diluted earnings per common share (“EPS”) were $1.18. Adjusted diluted EPS, a non-GAAP measure, were $1.33. Sales decreased 3.7 percent, primarily due to closed stores and lower overall comparable store sales. Comparable store sales decreased 2.0 percent from the prior year, or a decrease of 3.9 percent when adjusted for days. Operating income of $71.4 million was 10.4 percent lower than the prior year. Net income was $37.6 million. Adjusted net income, a non-GAAP measure, was $42.4 million.
Item 6. [Reserved] Monro, Inc. 2023 Form 10-K 22 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Executive Overview We continue to make strategic investments to support our operating and financial model designed to drive sustainable sales and profit growth.
Item 6. [Reserved] Monro, Inc. 2024 Form 10-K 24 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Executive Overview We continue to make strategic investments to support our operating and financial model designed to drive sustainable sales and profit growth.
The discussion of our fiscal 2022 performance compared to our fiscal 2021 performance and our financial condition as of March 26, 2022 is incorporated herein by reference to Part I ,
The discussion of our fiscal 2023 performance compared to our fiscal 2022 performance and our financial condition as of March 25, 2023 is incorporated herein by reference to Part I ,
The total purchase price was $102 million, consisting of $62 million paid by ATD at closing, of which $5 million is currently being held in escrow, and the remaining $40 million will be paid quarterly over approximately two years based on our tire purchases from or through ATD pursuant to a distribution and fulfillment agreement, of which $8.7 million was received during fiscal 2023.
The total purchase price was $102 million, consisting of $62 million paid by ATD at closing, of which $5 million was held in escrow, and the remaining $40 million to be paid quarterly over approximately three years based on our tire purchases from or through ATD pursuant to a distribution and fulfillment agreement.
Management believes that adjusted net income and adjusted diluted EPS are useful in providing period-to-period comparisons of the results of our operations by excluding certain non-recurring items, such as costs related to shareholder matters from our equity capital structure recapitalization, litigation reserves/settlement costs, and items related to store impairment charges and closings, as well as Monro.Forward or acquisition initiatives.
Management believes that adjusted net income and adjusted diluted EPS are useful in providing period-to-period comparisons of the results of our operations by excluding certain non-recurring items, such as costs related to shareholder matters from our equity capital structure recapitalization, transition costs related to back-office optimization, corporate headquarters relocation costs, and items related to store closings, as well as acquisition initiatives.
Earnings Per Common Share Percent Change 2023 2022 2023/2022 Diluted EPS $ 1.20 $ 1.81 (33.7) % Adjustments 0.17 0.05 Adjusted diluted EPS $ 1.36 $ 1.85 (26.5) % Note: Amounts may not foot due to rounding.
Earnings Per Common Share Percent Change 2024 2023 2024/2023 Diluted EPS $ 1.18 $ 1.20 (1.7) % Adjustments 0.15 0.17 Adjusted diluted EPS $ 1.33 $ 1.36 (2.2) % Note: Amounts may not foot due to rounding.
Adjusted net income and adjusted diluted EPS, each of which is a measure not derived in accordance with generally accepted accounting principles in the U.S. (“GAAP”), exclude the impact of certain items.
Monro, Inc. 2024 Form 10-K 25 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Adjusted net income and adjusted diluted EPS, each of which is a measure not derived in accordance with generally accepted accounting principles in the U.S. (“GAAP”), exclude the impact of certain items.
Analysis of Results of Operations Summary of Operating Income Percent Change (thousands) 2023 2022 2023/2022 Sales $ 1,325,382 $ 1,359,328 (2.5) % Cost of sales, including distribution and occupancy costs 869,207 877,492 (0.9) Gross profit 456,175 481,836 (5.3) Operating, selling, general and administrative expenses 376,425 380,538 (1.1) Operating income $ 79,750 $ 101,298 (21.3) % We have elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented.
Analysis of Results of Operations Summary of Operating Income Percent Change (thousands) 2024 2023 2024/2023 Sales $ 1,276,789 $ 1,325,382 (3.7) % Cost of sales, including distribution and occupancy costs 824,686 869,207 (5.1) Gross profit 452,103 456,175 (0.9) Operating, selling, general and administrative expenses 380,678 376,425 1.1 Operating income $ 71,425 $ 79,750 (10.4) % We have elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented.
Economic Conditions The United States economy has experienced high inflation during fiscal 2023 and there are market expectations that inflation may remain at elevated levels for a sustained period. In addition, labor availability has continued to be constrained and market labor costs have continued to increase. The U.S.
For details regarding the sale and subsequent proceeds, see Note 2 to our consolidated financial statements. Economic Conditions The United States economy has experienced high inflation during fiscal 2023 and fiscal 2024 and there are market expectations that inflation may remain at elevated levels for a sustained period.
It is unclear whether the current economic conditions and government responses to these conditions, including inflation, and increasing interest rates will result in an economic slowdown or recession in the United States. If that occurs, demand for our products and services may decline, possibly significantly, which may significantly and adversely impact our business, results of operations and financial position.
These conditions may give rise to an economic slowdown, and perhaps a recession, and could further increase our costs and/or impact our revenues. It is unclear whether the current economic conditions and government responses to these conditions, including inflation, changing interest rates, and geopolitical uncertainty, will result in an economic slowdown or recession in the United States.
Federal Reserve Board also has increased interest rates during fiscal 2023 and additional interest rate increases may occur in the coming months. These conditions may give rise to an economic slowdown, and perhaps a recession, and could further increase our costs and/or impact our revenues.
In addition, labor availability has continued to be constrained and market labor costs have continued to increase. The U.S. Federal Reserve Board also has increased interest rates during fiscal 2023 and fiscal 2024 and interest rate changes may occur in the coming months.
This designee is expected to be Peter J. Solomon, who is one of the Company’s current directors and one of the Class C Holders. 2023 Divestiture On June 17, 2022, we completed the sale of assets relating to our wholesale tire operations and internal tire distribution operations to ATD.
See additional discussion under Part II , Item 9B , “ Other Information ”, and Note 6 to our consolidated financial statements. 2023 Divestiture On June 17, 2022, we completed the sale of assets relating to our wholesale tire operations and internal tire distribution operations to ATD.
Removed
During fiscal 2023, we:  Invested in our team, including incremental investment in our technician labor and wages to support topline sales growth;  Offered attractive price points on key items to grow market share and capture new customers for the long-term; and  Opened six stores through acquisition.
Added
Recent Developments On May 23, 2024, we entered into a Fourth Amendment to our Credit Facility, which, among other things, amends the terms of certain of the financial and restrictive covenants in the credit agreement to provide us with additional flexibility to operate our business from the first quarter of fiscal 2025 through the fourth quarter of fiscal 2026.
Removed
Recent Developments On May 12, 2023, we entered into a reclassification agreement (the “Reclassification Agreement”) with the holders of our Class C Preferred Stock (the “Class C Holders”) in support of our plan to reclassify our equity capital structure to eliminate the Class C Preferred Stock, subject to shareholder approval.
Added
If that occurs, demand for our products and services may decline, possibly significantly, which may significantly and adversely impact our business, results of operations and financial position. Financial Summary We operate on a 52/53-week fiscal year ending on the last Saturday in March. Fiscal year 2024 contained 53 weeks and fiscal 2023 contained 52 weeks.
Removed
The Reclassification Agreement provides that, subject to the satisfaction of certain conditions, we will file 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.
Added
Any amounts noted as adjusted for days have been adjusted to remove the impact of the 53 rd week in fiscal 2024.
Removed
In exchange for this sunset of the Class C Preferred Stock, the conversion rate of Class C Preferred Stock will be adjusted so that each share of Class C Preferred Stock will convert into 61.275 shares of common stock (the “adjusted conversion rate”), an increase from the current conversion rate of 23.389 shares of common stock for each share of Class C Preferred Stock under the Certificate of Incorporation.
Removed
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. The Reclassification Agreement also provides that, during the sunset period, the Class C Holders will have the right to appoint one member of the board of directors.
Removed
For details regarding the sale, see Note 2 to our consolidated financial statements. During fiscal 2023, we experienced lower top-line sales due to the sale of our wholesale tire operations to ATD and we incurred $1.3 million in costs in connection with restructuring and elimination of certain executive management positions upon completion of the divestiture.
Removed
Monro, Inc. 2023 Form 10-K 23 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS  Operating income of $79.8 million was 21.3 percent lower than the prior year, driven primarily by a decrease in gross profit.  Net income was $39.0 million.  Adjusted net income, a non-GAAP measure, was $44.5 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

49 edited+19 added−20 removed31 unchanged
Biggest changeGross Profit as a Percentage of Sales Change 2023 Gross profit change (100) bps Drivers of change in gross profit as a percentage of sales Retail material costs (200) bps Technician labor costs (130) bps Retail distribution and occupancy costs 20 bps Impact from sale of wholesale operations 210 bps Operating, Selling, General and Administrative Expenses Operating, Selling, General and Administrative Expenses (thousands) 2023 2022 Operating, Selling, General and Administrative Expenses $ 376,425 $ 380,538 Percentage of sales 28.4 % 28.0 % Dollar change compared to prior year $ (4,113) Percentage change compared to prior year (1.1) % The decrease of $4.1 million in operating, selling, general and administrative (“OSG&A”) expenses from the prior year is primarily due to lower expenses from 16 retail stores closed and our wholesale tire locations that were sold as well as decreased expenses from comparable stores mainly a result of cost control.
Biggest changeGross Profit as a Percentage of Sales Change 2024 Gross profit change 100 bps Drivers of change in gross profit as a percentage of sales Retail material costs 140 bps Retail occupancy costs (30) bps Technician labor costs (10) bps Monro, Inc. 2024 Form 10-K 27 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Operating, Selling, General and Administrative Expenses Operating, Selling, General and Administrative Expenses (thousands) 2024 2023 Operating, Selling, General and Administrative Expenses $ 380,678 $ 376,425 Percentage of sales 29.8 % 28.4 % Dollar change compared to prior year $ 4,253 Percentage change compared to prior year 1.1 % The increase of $4. 3 million in operating, selling, general and administrative (“OSG&A”) expenses from the prior year is primarily due to an increase in OSG&A expenses from the gain on the sale to ATD of our wholesale tire locations and distribution assets, net of closing costs and costs associated with the closing of a related warehouse and inventory adjustments during the prior year, comparable and new stores, store impairment charges, as well as transition costs related to back-office optimization.
Due to the complexity of some of these uncertain tax positions, the ultimate resolution may result in an actual tax liability that differs from our estimated tax liabilities for unrecognized tax benefits and our effective tax rate may be materially impacted. Income taxes are described further in Note 8 to the consolidated financial statements.
Due to the complexity of some of these uncertain tax positions, the ultimate resolution may result in an actual tax liability that differs from our estimated tax liabilities for unrecognized tax benefits and our effective tax rate may be materially impacted. Income taxes are described further in Note 8 of the Company’s consolidated financial statements.
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 Monro to a participating financial institution. For details regarding our supply chain finance program, see Note 1 to our consolidated financial statements.
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 Monro to a participating financial institution. For details regarding our supply chain finance program, see Note 15 to our consolidated financial statements.
For details regarding our share repurchase program, see Part II , Item 5 , “ Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ” of this report and Note 15 to our consolidated financial statements.
For details regarding our share repurchase program, see Part II , Item 5 , “ Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ” of this report and to our consolidated financial statements.
The effective income tax rate for 2023 was higher by 5.3 percent because of discrete tax impacts from the divestiture of assets relating to our wholesale tire operations and internal tire distribution operations as well as the revaluation of deferred tax balances due to changes in the mix of pre-tax income in various U.S. state jurisdictions because of the divestiture.
The effective income tax rate for 2023 was higher by 4.1 percent, primarily due to discrete tax impacts from the divestiture of assets relating to our wholesale tire operations and internal tire distribution operations as well as the revaluation of deferred tax balances due to changes in the mix of pre-tax income in various U.S. state jurisdictions because of the divestiture.
Accounting Standards See “Recent Accounting Pronouncements” in Note 1 to the Company’s consolidated financial statements for a discussion of the impact of recently issued accounting standards on our consolidated financial statements as of March 25, 2023 and for the year then ended, as well as the expected impact on the consolidated financial statements for future periods.
Accounting Standards See “Recent Accounting Pronouncements” in Note 1 to the Company’s consolidated financial statements for a discussion of the impact of recently issued accounting standards on our consolidated financial statements as of March 30, 2024 and for the year then ended, as well as the expected impact on the consolidated financial statements for future periods.
The cash we generate from our operations will allow us to continue to support business operations as well as invest in attractive acquisition opportunities intended to drive long-term sustainable growth, pay down debt, return cash to our shareholders through our dividend program and repurchase shares of our common stock under our common stock repurchase program.
We believe the cash we generate from our operations will allow us to continue to support business operations as well as invest in attractive acquisition opportunities intended to drive long-term sustainable growth, pay down debt and return cash to our shareholders through our dividend program.
Cash used for financing activities For 2023, cash used for financing activities was $244.6 million which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $71.5 million, as well as payment of finance lease principal and dividends of $39.5 million and $36.4 million, respectively.
Also, we used $44.0 million to repurchase common stock during 2024. For 2023, cash used for financing activities was $244.6 million which was primarily due to payment on our Credit Facility, net of amounts borrowed during the period, of $71.5 million, as well as payment of finance lease principal and dividends of $39.5 million and $36.4 million, respectively.
We expect that comparable store sales growth will significantly impact our total sales growth. We believe that our ability to successfully differentiate our 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.
We believe that our ability to successfully differentiate our 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.
Item 7. , “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” located in our Form 10-K for the fiscal year ended March 26, 2022, filed on May 23, 2022.
Item 7. , “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” located in our Form 10-K for the fiscal year ended March 25, 2023, filed on May 22, 2023.
Income Taxes We estimate our provision for income taxes, deferred tax assets and liabilities, income taxes payable, and unrecognized tax benefit liabilities based on several factors including, but not limited to, historical pre-tax operating income, future estimates of pre-tax operating income, tax planning strategies, differences between tax laws and accounting rules of various items of income and expense, statutory tax rates and credits, uncertain tax positions, and valuation allowances.
Monro, Inc. 2024 Form 10-K 33 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Income Taxes We estimate our provision for income taxes, deferred tax assets and liabilities, income taxes payable, and unrecognized tax benefit liabilities based on several factors including, but not limited to, historical pre-tax operating income, future estimates of pre-tax operating income, tax planning strategies, differences between tax laws and accounting rules of various items of income and expense, statutory tax rates and credits, uncertain tax positions, and valuation allowances.
This source of cash was partially offset by our inventory balance being a use of cash of $18.2 million as well as our federal and state income taxes payable being a use of cash of $2.4 million.
This source of cash was partially offset by our inventory balance being a use of cash of $18.2 million as well as our federal and state income taxes payable being a use of cash of $2.4 million. Cash used for / provided by investing activities For 2024, cash used for investing activities was $2.0 million.
The non-cash charges were largely driven by $77.0 million of depreciation and amortization. The change in operating assets and liabilities was largely due to our supply chain finance program being a source of cash as we improved our cash flow by $120.5 million.
The change in operating assets and liabilities was largely due to our supply chain finance program being a source of cash as we improved our cash flow by $120.5 million.
Note: The calculation of the impact of non-GAAP adjustments on diluted EPS is performed on each line independently. The table may not add down by +/- $0.01 due to rounding.
Note: The calculation of the impact of non-GAAP adjustments on diluted EPS is performed on each line independently. The table may not add down by +/- $0.01 due to rounding. The certain discrete tax items for 2023 are tax affected .
Additionally, during the same period, we were permitted to declare, make, or pay any dividend or distribution up to $38.5 million in the aggregate and the acquisition of stores or other businesses up to $100 million in the aggregate were permitted if we are in compliance with the financial covenants and other restrictions in the First Amendment and Credit Facility.
Monro, Inc. 2024 Form 10-K 31 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Additionally, during the same period, we were permitted to declare, make, or pay any dividend or distribution up to $38.5 million in the aggregate and the acquisition of stores or other businesses up to $100 million in the aggregate were permitted if we are in compliance with the financial covenants and other restrictions in the First Amendment and Credit Facility.
We believe that our sources of liquidity, namely cash flow from operations, availability under our Credit Facility, and cash and equivalents on hand, will continue to be adequate to meet our contractual obligations, working capital and capital expenditure needs, finance acquisitions, fund debt maturities, pay dividends and repurchase our common stock for at least the next 12 months and the foreseeable future.
Monro, Inc. 2024 Form 10-K 32 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS We believe that our sources of liquidity, namely cash flow from operations, availability under our Credit Facility, and cash and equivalents on hand, will continue to be adequate to meet our contractual obligations, working capital and capital expenditure needs, finance acquisitions, fund debt maturities, and pay dividends for at least the next 12 months and the foreseeable future.
Credit Facility Interest only is payable monthly throughout the term of our Credit Facility. The borrowing capacity for the Credit Facility of $600 million includes an accordion feature permitting us to request an increase in availability of up to an additional $250 million.
Also, we used $96.9 million to repurchase common stock during 2023. Credit Facility Interest only is payable monthly throughout the term of our Credit Facility. The borrowing capacity for the Credit Facility of $600 million includes an accordion feature permitting us to request an increase in availability of up to an additional $250 million.
Monro, Inc. 2023 Form 10-K 27 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Adjusted diluted EPS is summarized as follows: Reconciliation of Adjusted Diluted EPS 2023 2022 Diluted EPS $ 1.20 $ 1.81 Store impairment charge 0.02 0.02 Gain on sale of wholesale tire and distribution assets (0.08) — Store closing costs 0.01 (0.01) Monro.Forward initiative costs 0.01 0.02 Acquisition due diligence and integration costs (a) 0.00 0.03 Litigation reserve/settlement costs 0.05 0.08 Management restructuring/transition costs (a) 0.03 0.00 Costs related to shareholder matters 0.03 — Transition costs related to back-office optimization 0.01 — Income tax benefit related to net operating loss carryback — 0.09 Certain discrete tax items 0.09 — Adjusted diluted EPS $ 1.36 $ 1.85 (a) 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 EPS.
Adjusted diluted EPS is summarized as follows: Reconciliation of Adjusted Diluted EPS 2024 2023 Diluted EPS $ 1.18 $ 1.20 Store impairment charges 0.04 0.02 Net loss (gain) on sale of wholesale tire and distribution assets 0.01 (0.08) Store closing costs (a) 0.00 0.01 Monro.Forward initiative costs — 0.01 Acquisition due diligence and integration costs (a) 0.00 0.00 Litigation reserve/settlement costs — 0.05 Management restructuring/transition costs 0.03 0.03 Costs related to shareholder matters 0.03 0.03 Transition costs related to back-office optimization 0.03 0.01 Corporate headquarters relocation costs 0.01 — Certain discrete tax items — 0.09 Adjusted diluted EPS $ 1.33 $ 1.36 (a) 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 EPS.
(d) Certain discrete tax items related to the sale of our wholesale tire locations and tire distribution assets as well as the revaluation of deferred tax balances due to changes in the mix of pre-tax income in various U.S. state jurisdictions because of the sale.
(b) Costs incurred in connection with restructuring and elimination of certain management positions. (c) Certain discrete tax items related to the sale of our wholesale tire locations and tire distribution assets as well as the revaluation of deferred tax balances due to changes in the mix of pre-tax income in various U.S. state jurisdictions because of the sale.
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 non-recurring items, such as costs related to shareholder matters from our equity capital structure recapitalization, litigation reserves/settlement costs, and items related to store impairment charges and closings, as well as Monro.Forward or acquisition initiatives.
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 non-recurring items, such as costs related to shareholder matters from our equity capital structure recapitalization, transition costs related to back-office optimization, corporate headquarters relocation costs, and items related to store closings, as well as acquisition initiatives.
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.
Monro, Inc. 2024 Form 10-K 28 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS 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.
Monro, Inc. 2023 Form 10-K 31 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS These accruals are reviewed on a quarterly basis. For more complex reserve calculations, such as workers’ compensation, we periodically use the services of an actuary to assist in determining the required reserve for open claims.
These accruals are reviewed on a quarterly basis. For more complex reserve calculations, such as workers’ compensation, we periodically use the services of an actuary to assist in determining the required reserve for open claims.
Sales by Product Category 2023 2022 Tires 50 % 53 % Maintenance 27 24 Brakes 14 13 Steering (a) 8 8 Exhaust 1 2 Total 100 % 100 % (a) Steering product category includes front end/shocks and alignment product category sales.
Sales by Product Category 2024 2023 Tires 48 % 50 % Maintenance service 28 27 Brakes 14 14 Steering (a) 8 8 Other 2 1 Total 100 % 100 % (a) Steering product category includes front end/shocks and alignment product category sales.
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 of equivalent length. There were 361 selling days in both 2023 and 2022. Sales growth – from both comparable store sales and new stores – represents an important driver of our long-term profitability.
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 of equivalent length. There were 368 selling days in 2024 and 361 selling days in 2023.
Other specific terms and the maintenance of specified ratios are generally consistent with our prior financing agreement. Additionally, the Credit Facility is not secured by our real property, although we have agreed not to encumber our real property, with certain permissible exceptions. We were in compliance with all debt covenants at March 25, 2023.
Mortgages and specific lease financing arrangements with other parties (with certain limitations) are permitted under the Credit Facility. Other specific terms and the maintenance of specified ratios are generally consistent with our prior financing agreement. Additionally, the Credit Facility is not secured by our real property, although we have agreed not to encumber our real property, with certain permissible exceptions.
Sources and Conditions of Liquidity Our sources to fund our material cash requirements are predominantly cash from operations, availability under our Credit Facility, and cash and equivalents on hand. Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing, and financing activities.
Sources and Conditions of Liquidity Our sources to fund our material cash requirements are predominantly cash from operations, availability under our Credit Facility, and cash and equivalents on hand.
Also, we used $96.9 million to repurchase common stock during 2023. For 2022, cash used for financing activities was $86.0 million which was primarily due to payment of finance lease principal and dividends of $39.4 million and $34.7 million, respectively, as well as payment on our Credit Facility, net of amounts borrowed during the period, of $13.5 million.
Cash used for financing activities For 2024, cash used for financing activities was $121.6 million which was primarily due to the payment of finance lease principal and dividends of $39.0 million and $35.5 million, respectively, as well as payment on our Credit Facility, net of amounts borrowed during the period, of $3.0 million.
Adjusted net income is summarized as follows: Reconciliation of Adjusted Net Income (thousands) 2023 2022 Net income $ 39,048 $ 61,568 Store impairment charge 982 759 Gain on sale of wholesale tire and distribution assets (a) (3,496) — Store closing costs 515 (437) Monro.Forward initiative costs 260 689 Acquisition due diligence and integration costs 31 1,249 Litigation reserve/settlement costs 2,000 3,759 Management restructuring/transition costs (b) 1,338 59 Costs related to shareholder matters 1,232 — Transition costs related to back-office optimization 361 — Provision for income taxes on pre-tax adjustments (825) (1,465) Income tax benefit related to net operating loss carryback (c) — (3,119) Certain discrete tax items (d) 3,034 — Adjusted net income $ 44,480 $ 63,062 (a) Amount includes the gain on sale of related warehouse, net of associated closing costs.
Adjusted net income is summarized as follows: Reconciliation of Adjusted Net Income (thousands) 2024 2023 Net income $ 37,571 $ 39,048 Store impairment charges 1,915 982 Net loss (gain) on sale of wholesale tire and distribution assets (a) 304 (3,496) Store closing costs 208 515 Monro.Forward initiative costs — 260 Acquisition due diligence and integration costs 5 31 Litigation reserve/settlement costs — 2,000 Management restructuring/transition costs (b) 1,210 1,338 Costs related to shareholder matters 1,355 1,232 Transition costs related to back-office optimization 1,236 361 Corporate headquarters relocation costs 334 — Provision for income taxes on pre-tax adjustments (1,740) (825) Certain discrete tax items (c) — 3,034 Adjusted net income $ 42,398 $ 44,480 (a) Amounts include a loss on subsequent inventory adjustments in fiscal 2024, and gain on sale of related warehouse, net of associated closing costs, in fiscal 2023.
Summary of Cash Flows (thousands) 2023 2022 Cash provided by operating activities $ 215,016 $ 173,759 Cash provided by (used for) investing activities 26,546 (109,801) Cash used for financing activities (244,626) (85,970) Decrease in cash and equivalents (3,064) (22,012) Cash and equivalents at beginning of period 7,948 29,960 Cash and equivalents at end of period $ 4,884 $ 7,948 Cash provided by operating activities For 2023, cash provided by operating activities was $215.0 million, which consisted of net income of $39.0 million, adjusted by non-cash charges of $80.9 million and by a change in operating assets and liabilities of $95.1 million.
Summary of Cash Flows (thousands) 2024 2023 Cash provided by operating activities $ 125,196 $ 215,016 Cash (used for) provided by investing activities (1,956) 26,546 Cash used for financing activities (121,563) (244,626) Increase (decrease) in cash and equivalents 1,677 (3,064) Cash and equivalents at beginning of period 4,884 7,948 Cash and equivalents at end of period $ 6,561 $ 4,884 Cash provided by operating activities For 2024, cash provided by operating activities was $125.2 million, which consisted of net income of $37.6 million, adjusted by non-cash charges of $86.3 million and by a change in operating assets and liabilities of $1.4 million.
Non-GAAP Financial Measures In addition to reporting net income and diluted EPS, which are GAAP measures, this Form 10-K includes adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures. We have included reconciliations to adjusted net income and adjusted diluted EPS from our most directly comparable GAAP measures, net income, and diluted EPS, below.
We have included reconciliations to adjusted net income and adjusted diluted EPS from our most directly comparable GAAP measures, net income, and diluted EPS, below.
Conversely, we may also periodically determine that it is in our best interests to voluntarily repay certain indebtedness early. Dividends We paid cash dividends totaling $36.4 million ($1.12 per share) in 2023 and $34.7 million ($1.02 per share) in 2022, a per share increase of 10 percent.
Conversely, we may also periodically determine that it is in our best interests to voluntarily repay certain indebtedness early. Dividends We paid cash dividends of $1.12 per share totaling $35.5 million in 2024 and $36.4 million in 2023. Share Repurchases We returned $44.5 million to shareholders through share repurchases during fiscal 2024, inclusive of excise tax of $0.4 million.
For 2022, cash provided by operating activities was $173.8 million, which consisted of net income of $61.6 million, adjusted by non-cash charges of $99.3 million and by a change in operating assets and liabilities of $12.8 million. The non-cash charges were largely driven by $81.2 million of depreciation and amortization.
For 2023, cash provided by operating activities was $215.0 million, which consisted of net income of $39.0 million, adjusted by non-cash charges of $80.9 million and by a change in operating assets and liabilities of $95.1 million. The non-cash charges were largely driven by $77.0 million of depreciation and amortization.
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.
See adjustments from the Reconciliation of Adjusted Net Income table above for pre-tax amounts. Monro, Inc. 2024 Form 10-K 29 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS 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.
Sales Percentage Change 2023 Sales change (2.5) % Primary drivers of change in sales Closed store sales (a) (7.0) % Comparable stores sales (b)(c) 2.5 % New store sales (d) 2.0 % (a) The change in closed store sales is primarily due to sales from the wholesale locations sold to ATD.
Monro, Inc. 2024 Form 10-K 26 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Sales Percentage Change 2024 Sales change (3.7) % Primary drivers of change in sales Closed store sales (a) (2.2) % Comparable stores sales (b) (2.0) % New store sales (c) 0.3 % Franchise royalties 0.2 % (a) The change in closed store sales is primarily due to sales from the wholesale locations sold to American Tire Distributors (“ATD”).
The sub-facility requires fees aggregating 87.5 to 212.5 basis points annually of the face amount of each standby letter of credit, payable quarterly in arrears. There was a $29.6 million outstanding letter of credit at March 25, 2023. Mortgages and specific lease financing arrangements with other parties (with certain limitations) are permitted under the Credit Facility.
Within the Credit Facility, we have a sub-facility of $80 million available for the purpose of issuing standby letters of credit. The sub-facility requires fees aggregating 87.5 to 212.5 basis points annually of the face amount of each standby letter of credit, payable quarterly in arrears. There was a $30.1 million outstanding letter of credit at March 30, 2024.
OSG&A Expenses Change (thousands) 2023 OSG&A expenses change $ (4,113) Drivers of change in OSG&A expenses Decrease from closed retail stores and wholesale tire locations sold $ (4,873) Decrease from comparable stores $ (3,829) Decrease from gain on sale of wholesale tire locations, tire distribution assets and related warehouses, net $ (3,496) Decrease in litigation reserve/settlement costs $ (1,759) Increase from new stores $ 7,274 Increase in management restructuring costs $ 1,338 Increase in costs related to shareholder matters $ 1,232 Monro, Inc. 2023 Form 10-K 26 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Other Performance Factors Net Interest Expense Net interest expense of $23.2 million for 2023 decreased $1.5 million as compared to the prior year and decreased as a percentage of sales from 1.8 percent to 1.7 percent.
OSG&A Expenses Change (thousands) 2024 OSG&A expenses change $ 4,253 Drivers of change in OSG&A expenses Increase from gain on sale of wholesale tire locations and distribution assets, net $ 3,800 Increase from comparable stores $ 3,171 Increase from new stores $ 1,187 Increase from store impairment charges $ 933 Increase from transition costs related to back-office optimization $ 875 Decrease from other non-recurring costs, net $ (264) Decrease from litigation reserve/settlement costs $ (2,000) Decrease from closed stores $ (3,449) Other Performance Factors Net Interest Expense Net interest expense of $20.0 million for 2024 decreased $3.2 million as compared to the prior year and decreased as a percentage of sales from 1.7 percent to 1.6 percent.
The certain discrete tax items for 2023 and income tax benefit related to net operating loss carryback adjustment for 2022 to each of net income and diluted EPS are tax affected . The other adjustments to diluted EPS reflect adjusted effective tax rates of 25.6 percent and 24.1 percent for 2023 and 2022, respectively.
The other adjustments to diluted EPS reflect adjusted effective tax rates of 26.5 percent and 25.6 percent for 2024 and 2023, respectively. These adjusted effective tax rates exclude the income tax impacts from share-based compensation and for 2024 and 2023 and exclude certain discrete tax items for 2023.
Weighted average debt outstanding for 2023 decreased by approximately $98 million as compared to 2022. This decrease is primarily related to a decrease in debt outstanding under our Credit Facility. The weighted average interest rate increased approximately 50 basis points from the prior year due primarily to an increase in the Credit Facility’s floating borrowing rates.
The weighted average interest rate increased approximately 70 basis points from the prior year due primarily to an increase in the Credit Facility’s floating borrowing rates. Provision for Income Taxes Our effective income tax rate was 27.6 percent for 2024 compared to 31.7 percent for 2023.
Broad-based inflationary pressures impacting consumers, including higher fuel prices and the negative impact on miles driven, partly led to lower demand in some of our key service categories during fiscal 2023. We expect the inflationary environment to continue to impact our customers in fiscal 2024.
(b) Comparable store sales decreased by 3.9 percent when adjusted for days. (c) Sales from the fiscal 2023 acquisitions primarily represent the change. Broad-based inflationary pressures impacting consumers partly led to lower demand in tires and our higher margin service categories during fiscal 2024. We expect the inflationary environment to continue to impact our customers in fiscal 2025.
Monro, Inc. 2023 Form 10-K 30 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS As of May 12, 2023, we had approximately $15.1 million in cash on hand. In addition, we had $494.9 million available under the Credit Facility as of May 12, 2023.
As of May 17, 2024, we had approximately $6.9 million in cash on hand. In addition, we had $472.9 million available under the Credit Facility as of May 17, 2024.
The increase was driven by an increase in accounts payable as a result of certain of our suppliers that participate in our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers.
Working Capital Management As of March 30, 2024, we had a working capital deficit of $201.9 million, an increase from $190.7 million as of March 25, 2023. 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.
Except as amended by the First Amendment, Second Amendment and Third Amendment, the remaining terms of the credit agreement remain in full force and effect. Within the Credit Facility, we have a sub-facility of $80 million available for the purpose of issuing standby letters of credit.
During the Covenant Relief Period, we may acquire stores or other businesses as long as we have minimum liquidity of at least $400 million after completing the acquisition. Except as amended by the First Amendment, Second Amendment, Third Amendment and Fourth Amendment, the remaining terms of the Credit Facility remain in full force and effect.
Contractual Obligations Commitments Due by Period Within 2 to 4 to After (thousands) Total 1 Year 3 Years 5 Years 5 Years Principal payments on long-term debt $ 105,000 $ 105,000 Finance lease commitments/financing obligations (a) 415,296 $ 53,981 $ 99,984 90,489 $ 170,842 Operating lease commitments (a) 263,664 44,461 79,315 60,875 79,013 Total $ 783,960 $ 98,442 $ 179,299 $ 256,364 $ 249,855 (a) Finance and operating lease commitments represent future undiscounted lease payments and include $88.5 million and $57.6 million, respectively, related to options to extend lease terms that are reasonably certain of being exercised.
Contractual Obligations Commitments Due by Period Within 2 to 4 to After (thousands) Total 1 Year 3 Years 5 Years 5 Years Principal payments on long-term debt $ 102,000 $ 102,000 Finance lease commitments/financing obligations (a) 350,900 $ 49,955 $ 92,853 76,516 $ 131,576 Operating lease commitments (a) 255,954 46,895 83,368 58,285 67,406 Total $ 708,854 $ 96,850 $ 176,221 $ 236,801 $ 198,982 (a) Finance and operating lease commitments represent future undiscounted lease payments and include $77.2 million and $49.8 million, respectively, related to options to extend lease terms that are reasonably certain of being exercised.
The decrease in sales in 2023 from the prior year for the wholesale locations was approximately $90.6 million.
The decrease in sales from closed stores was driven primarily by the sale of our wholesale tire locations, representing approximately $23.9 million in sales for fiscal 2023.
Monro, Inc. 2023 Form 10-K 29 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Cash provided by / used for investing activities For 2023, cash provided by investing activities was $26.5 million.
Monro, Inc. 2024 Form 10-K 30 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Summary of Cash Flows The following table presents a summary of our cash flows from operating, investing, and financing activities.
Partially offsetting these increases was the impact from our wholesale operations which were sold during the first three months of fiscal 2023. Additionally, there was a decrease in distribution and occupancy costs, as a percentage of sales, as we gained leverage on these largely fixed costs with higher overall comparable store sales.
Partially offsetting this increase in gross profit, as a percentage of sales, were increased retail occupancy costs, as a percentage of sales, as we lost leverage on these largely fixed costs with lower overall comparable store sales, as well as an increase in technician labor costs, as a percentage of sales, due to the impact from wage inflation.
Comparable Store Product Category Sales Change 2023 2022 Tires (a) 5 % 11 % Maintenance 5 % 16 % Brakes (1) % 29 % Alignment (4) % 26 % Front end/shocks (2) % 16 % Exhaust (6) % 14 % (a) Comparable store tire sales increased six percent at our retail locations during 2023.
Comparable Store Product Category Sales Change (a) 2024 2023 Tires (4) % 5 % Maintenance Service (2) % 5 % Brakes (4) % (1) % Alignment (4) % (4) % Front end/shocks (8) % (2) % (a) The comparable store product category sales change for the year ended March 30, 2024 are adjusted for days.
For 2022, cash used for investing activities was $109.8 million. This was primarily due to cash used for acquisitions and capital expenditures, including property and equipment, of $83.3 million and $27.8 million, respectively.
This was primarily due to cash used for capital expenditures, including property and equipment, of $25.5 million, offset by subsequent proceeds from the sale of our wholesale tire locations and distribution assets and from other property and equipment for $20.6 million and 2.9 million, respectively. For 2023, cash provided by investing activities was $26.5 million.
Monro, Inc. 2023 Form 10-K 24 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Sales (thousands) 2023 2022 Sales $ 1,325,382 $ 1,359,328 Dollar change compared to prior year $ (33,946) Percentage change compared to prior year (2.5) % The sales decrease was due to a decrease in sales from closed stores, driven by the sale of our wholesale tire operations in the first quarter of 2023.
Sales (thousands) 2024 2023 Sales $ 1,276,789 $ 1,325,382 Dollar change compared to prior year $ (48,593) Percentage change compared to prior year (3.7) % The sales decrease was due to a decrease in sales from closed stores from the prior year, as well as a decrease in comparable store sales.
Removed
This was partially offset by an increase in comparable store sales from an increase in average ticket amount across product categories and price points, primarily due to a comparable store sales increase in approximately 300 of our small or underperforming stores, and an increase in sales from new stores.
Added
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.
Removed
The following table shows the primary drivers of the change in sales between 2023 and 2022.
Added
The decrease in comparable store sales is primarily driven by a strained low-to-middle income consumer that disproportionately traded-down to tires at opening price points as the industry worked to clear-through an oversupply of lower-margin tires. Additionally, milder weather contributed to the general tire deferral cycle. This put pressure on overall tire units industry-wide across all regions of the country.
Removed
(b) On a comparable store sales basis, comparable store sales increased by 2.8 percent. (c) On a comparable store sales basis, comparable store sales at our retail locations increased by 3.5 percent. (d) Sales from the fiscal 2023 acquisitions and fiscal 2022 acquisitions represent the change.
Added
This led to weaker store traffic, which was not supportive to sales of our higher-margin service categories. These decreases were partially offset by an increase in sales from new stores and franchise royalties. The following table shows the primary drivers of the change in sales between 2024 and 2023.
Removed
For 2022, the comparable store sales increase across all product categories reflect higher traffic and higher average ticket sales compared to the prior period in which the COVID-19 pandemic had a more volatile impact on demand.
Added
Change in Number of Stores 2024 Beginning store count 1,299 Opened 1 Closed (12) Ending store count 1,288 Cost of Sales and Gross Profit Gross Profit (thousands) 2024 2023 Gross profit $ 452,103 $ 456,175 Percentage of sales 35.4 % 34.4 % Dollar change compared to prior year $ (4,072) Percentage change compared to prior year (0.9) % Gross profit, as a percentage of sales, increased 100 basis points (“bps”) in 2024 as compared to the prior year.
Removed
Change in Number of Stores 2023 Beginning store count 1,304 Opened (a) 11 Closed (16) Ending store count 1,299 (a) Includes six stores opened related to the 2023 acquisitions.
Added
Retail material costs, as a percentage of sales, decreased due primarily to tire mix improvement and opportunistic pricing actions.
Removed
Monro, Inc. 2023 Form 10-K 25 Table of Contents MANAGEMENT’S DISCUSSION AND ANALYSIS Cost of Sales and Gross Profit Gross Profit (thousands) 2023 2022 Gross profit $ 456,175 $ 481,836 Percentage of sales 34.4 % 35.4 % Dollar change compared to prior year $ (25,661) Percentage change compared to prior year (5.3) % The decrease in gross profit, as a percentage of sales, of 100 basis points (“bps”) for 2023 as compared to the prior year was primarily due to an increase in retail material costs, which increased as a percentage of sales, mainly a result of a shift to a higher mix of tire sales at our retail locations and customers trading down to opening price point tires.
Added
Partially offsetting these increases were decreases in costs related to closed stores, litigation reserve/settlement costs and other non-recurring costs.
Removed
The decrease in gross profit, as a percentage of sales, was also partially due to an increase in technician labor costs, as a percentage of sales, as we have continued our incremental investment in technician labor costs during fiscal 2023 to support current and future sales growth. We do not expect further significant incremental investment in technician headcount.
Added
Weighted average debt outstanding for 2024 decreased by approximately $105 million as compared to 2023. This decrease is primarily related to lower finance lease debt related to our stores, as well as a decrease in debt outstanding under our Credit Facility.
Removed
The decrease in OSG&A expenses is also partially due to the gain on the sale of our wholesale tire locations and tire distribution assets, as well as the gain on the sale of related warehouses, net of associated closing costs, and a decrease in litigation reserve/settlement costs.
Added
See Note 8 to the Company’s consolidated financial statements for additional information. Non-GAAP Financial Measures In addition to reporting net income and diluted EPS, which are GAAP measures, this Form 10-K includes adjusted net income and adjusted diluted EPS, which are non-GAAP financial measures.
Removed
Partially offsetting these decreases were increased expenses from 11 new stores, a full year of expenses for stores acquired in 2022, an increase in costs incurred in connection with restructuring and elimination of certain executive management positions upon completion of the divestiture to ATD, and an increase in costs related to shareholder matters.
Added
The excise tax is assessed at one percent of the fair market value of net stock repurchases after December 31, 2022.
Removed
Provision for Income Taxes Our effective income tax rate was 31.7 percent for 2023 compared to 20.3 percent for 2022.
Added
The non-cash charges were largely driven by $72.2 million of depreciation and amortization. The change in operating assets and liabilities was largely due to an increase in accrued expenses of $14.9 million, primarily related to timing of payroll and insurance payments.
Removed
Our effective income tax rate for 2022 was lower by 4.0 percent due to the difference in statutory tax rates from a loss year to years in which such net operating loss may be carried back.
Added
This source of cash was offset by our accounts payable and inventory balances being a use of cash of $9.8 million and $6.4 million, respectively.
Removed
Additionally, the increase in our effective income tax rate for 2023 over the prior year was also due to other state income tax impacts from the divestiture. See Note 8 to the Company’s consolidated financial statements for additional information.
Added
We were in compliance with all debt covenants at March 30, 2024. On May 23, 2024, we entered into an amendment (the “Fourth Amendment”) to our Credit Facility.
Removed
(b) Costs incurred in fiscal 2023 in connection with restructuring and elimination of certain management positions upon completion of our sale of wholesale tire locations and distribution assets.
Added
The Fourth 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 from the first quarter of fiscal 2025 through the fourth quarter of fiscal 2026 (the “Covenant Relief Period”).
Removed
(c) Income tax benefit related to net operating loss carryback adjustment that reflects the difference in statutory tax rates from a loss year to years in which such net operating loss may be carried back.
Added
We may voluntarily exit the Covenant Relief Period at any time, which would revert the terms of the Credit Facility to the terms existing before the Fourth Amendment, with the exception of the modified definition of “EBITDAR,” described below.
Removed
These adjusted effective tax rates exclude the income tax impacts from share-based compensation and for 2023 and 2022 exclude certain discrete tax items and differences in statutory tax rates for net operating loss carrybacks, respectively. See adjustments from the Reconciliation of Adjusted Net Income table above for pre-tax amounts.
Added
During the Covenant Relief Period, the minimum interest coverage ratio will be reduced from 1.55x to 1.00x to: (a) 1.25x to 1.00x from the first quarter of fiscal 2025 through the first quarter of fiscal 2026; (b) 1.35x to 1.00x from the second quarter of fiscal 2026 through the fourth quarter of fiscal 2026; and (c) 1.55x to 1.00x for the first quarter of fiscal 2027 and thereafter.
Removed
We have paid dividends annually since fiscal 2006 and it is our intent to continue to do so in the future. Share Repurchases We returned $96.9 million to shareholders through share repurchases during fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDebt financing had a carrying amount and a fair value of $105.0 million as of March 25, 2023, as compared to a carrying amount and a fair value of $176.5 million as of March 26, 2022. Monro, Inc. 2023 Form 10-K 32 Table of Contents FINANCIAL STATEMENTS INDEX
Biggest changeDebt financing had a carrying amount and a fair value of $102.0 million as of March 30, 2024, as compared to a carrying amount and a fair value of $105.0 million as of March 25, 2023. Monro, Inc. 2024 Form 10-K 34 Table of Contents FINANCIAL STATEMENTS INDEX
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risk from potential changes in interest rates. As of March 25, 2023, 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.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risk from potential changes in interest rates. As of March 30, 2024, 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 $1.1 million, based upon our debt position as of March 25, 2023, given a change in SOFR of 100 basis points.
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 as of March 30, 2024, given a change in SOFR of 100 basis points.

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