Monro, Inc. — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Second quarter fiscal 2027 sales decreased 1.8% year-over-year to $283.6 million from $288.9 million in the prior year period, driven entirely by a 1.8% decline in comparable store sales.
• Gross margin decreased 50 basis points year-over-year, primarily due to higher occupancy costs as a percentage of sales, partially offset by lower material costs.
• Total operating expenses increased to $97.4 million (34.3% of sales) from $90.4 million (31.3% of sales) in the prior year, driven by $6.1 million in store closing costs, $3.4 million in higher continuing location costs (primarily front shop labor), $3.2 million in higher marketing costs, $1.7 million in higher litigation reserve costs, and $0.3 million in higher shareholder matter costs.
• Operating income for the quarter was $2.6 million (0.9% of sales), a significant decrease from $12.8 million (4.4% of sales) in the prior year.
• Adjusted operating income was $4.4 million (1.6% of sales), compared to $14.0 million (4.8% of sales) in the prior year.
• Interest expense rose to $4.7 million from $4.4 million, principally due to higher weighted average debt.
• Net loss for the quarter was $1.6 million, compared to net income of $5.7 million in the prior year; diluted loss per share was $0.05 versus $0.18 in the prior year.
• Adjusted diluted loss per share was $0.01, compared to adjusted diluted earnings per share of $0.21 in the prior year.
• For the first six months of fiscal 2027, sales decreased 3.3% to $570.8 million from $589.9 million; comparable store sales decreased 1.7% compared to a 3.4% increase in the prior year.
• Six-month gross margin was 35.1% compared to 35.6% in the prior year.
• Six-month operating income was 1.1% of sales, matching the prior year percentage, while adjusted operating income fell to $6.6 million (1.2% of sales) from $28.0 million (4.7% of sales).
• Six-month net loss was $3.8 million ($0.13 per diluted share), compared to a net loss of $2.4 million ($0.10 per diluted share) in the prior year.
• Adjusted diluted loss per share for the six months was $0.09, compared to $0.43 in the prior year.
• As of September 26, 2026, cash and equivalents were $14.958 million, down from $14.633 million at the prior year-end; inventory was $155.370 million.
• Long-term debt stood at $100.0 million as of September 26, 2026, up from $60.0 million at the prior year-end.

Guidance and Future Outlook:

• The company is not providing fiscal 2027 financial guidance at this time but will offer perspective on expectations during the earnings conference call.
• Management expressed confidence that current initiatives designed to strengthen competitive position will translate into improved performance as market conditions normalize.

Business Segments and Product Lines:

• Comparable store sales increased 8% for batteries and 3% for maintenance services.
• Comparable store sales decreased 2% for alignments, 4% for tires and brakes, and 5% for front/end shocks.
• The ConfiDrive courtesy inspection process contributed to average repair order growth and gains in batteries and maintenance services.
• The District Manager Toolkit has been deployed across a majority of the store network, with an operating efficiency team actively coaching and training in the field.
• The company closed one store during the second quarter, ending the period with 1,114 company-operated stores and 47 franchised locations.

Market and Competitive Landscape:

• The operating environment continues to challenge the full-service auto aftermarket, characterized by lower store traffic and consumers deferring higher-ticket spending.
• Consumers traded down to lower-cost alternatives in tires.
• The company utilized self-funded promotions to drive unit growth in the brake category.
• Monro's full-service model is cited as a genuine competitive advantage, with results reflecting the strength of identifying customer needs in real time and addressing them with quality and care.

Risks and Challenges:

• Higher occupancy costs as a percentage of sales negatively impacted gross margin.
• Increased store closing costs, litigation reserve costs, and costs related to shareholder matters contributed to higher operating expenses.
• Forward-looking statements note risks including uncertainty related to the operational improvement plan, product demand, adoption of electric vehicle technology, dependence on third-party inventory, competition, general economic conditions, inflation, unemployment, seasonality, debt service obligations, trade environment changes, tariffs, parts supply restraints, weather trends, industry regulation, and data protection risks.

Management Commentary and Tone:

• Peter Fitzsimmons, President and CEO, noted that the 1.8% decline in comparable store sales reflects a challenging environment but highlighted that the full-service model remains a competitive advantage.
• Management emphasized that the effectiveness of the ConfiDrive process and the traction from the District Manager Toolkit are driving early but meaningful bottom-line improvements in a subset of locations.
• The company maintained marketing investment despite sales falling short of targets.
• Management stated that initiatives are designed to strengthen competitive position through cycles like the current one.

Other Key Points:

• On September 8, 2026, the company paid a cash dividend of $0.28 per share for the second quarter of fiscal 2027.
• On October 23, 2026, the company entered into a new credit agreement with Ares Capital Corporation providing $375.0 million in senior secured credit facilities ($250.0 million term loan and $125.0 million revolving credit facility), maturing on October 23, 2030.
• The new credit facilities replace the prior facility in place since April 2019, which was repaid upon closing.
• The new credit agreement includes financial maintenance covenants, prepayment requirements, and restrictions on dividend payments subject to compliance with financial metrics.
• In connection with the new credit facilities, the company substantially paid down obligations under its supply chain financing program and will no longer accept new supplier obligations into that program after December 31, 2026.
• As of October 24, 2026, the company held $27.3 million in cash and equivalents and had $60.0 million available under the New Credit Facilities.
• The company hosted an earnings conference call and audio webcast on October 29, 2026, at 8:30 a.m. Eastern Time.