Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 27, 2026
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 0-19357
Monro, Inc.
(Exact name of registrant as specified in its charter)
New York
16-0838627
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
295 Woodcliff Drive, Suite 202
Fairport, New York
14450
(Address of principal executive offices)
(Zip code)
Registrant’s telephone number, including area code: 1 (800) 876-6676
_________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
MNRO
The Nasdaq Stock Market
Rights to Purchase Series D Junior
Participating Serial Preferred Stock
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer x Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
As of July 18, 2026, 31,264,060 shares of the registrant's common stock, $0.01 par value per share, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
3
Consolidated Statements of Loss and Comprehensive Loss
4
Consolidated Statements of Changes in Shareholders’ Equity
5
Consolidated Statements of Cash Flows
6
Notes to Consolidated Financial Statements
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3. Quantitative and Qualitative Disclosures About Market Risk
24
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
25
Item 6. Exhibits
26
Signatures
27
CONSOLIDATED FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(thousands, except footnotes) (unaudited)
June 27, 2026
March 28, 2026
Assets
Current assets
Cash and equivalents
$
9,526
14,633
Accounts receivable
12,139
11,362
Federal and state income taxes receivable
3,414
3,850
Inventory
156,225
155,270
Other current assets
50,427
51,526
Total current assets
231,731
236,641
Property and equipment, net
239,346
241,857
Finance lease and financing obligation assets, net
142,842
148,807
Operating lease assets, net
179,239
175,899
Goodwill
736,435
Intangible assets, net
7,104
7,723
Assets held for sale
3,166
4,189
Other non-current assets
16,643
16,426
Total assets
1,556,506
1,567,977
Liabilities and shareholders' equity
Current liabilities
Current portion of finance leases and financing obligations
36,878
36,774
Current portion of operating lease liabilities
39,291
39,746
Accounts payable
289,286
313,740
Accrued payroll, payroll taxes and other payroll benefits
13,067
21,913
Accrued insurance
49,082
58,236
Deferred revenue
12,934
13,194
Other current liabilities
32,335
34,234
Total current liabilities
472,873
517,837
Long-term debt
108,435
60,000
Long-term finance leases and financing obligations
184,070
193,173
Long-term operating lease liabilities
159,169
156,209
Long-term deferred income tax liabilities
38,625
38,165
Other long-term liabilities
10,832
11,120
Total liabilities
974,004
976,504
Commitments and contingencies - Note 8
Shareholders' equity:
Class C convertible preferred stock
—
29
Common stock
414
401
Treasury stock
(250,111)
Additional paid-in capital
263,648
262,411
Accumulated other comprehensive loss
(2,041)
(2,915)
Retained earnings
570,592
581,658
Total shareholders' equity
582,502
591,473
Total liabilities and shareholders' equity
Class C convertible preferred stock Authorized 150,000 shares, $1.50 par value, one preferred stock share to 61.275 common stock shares conversion value; 19,664 shares issued and outstanding as of March 28, 2026. No shares issued or outstanding as of June 27, 2026. See Note 10 for more information.
Serial preferred stock Authorized 4,750,000 shares, $0.01 par value; of which 65,000 shares are designated as Series D Junior Participating Serial Preferred Stock. No shares issued or outstanding as of June 27, 2026 or March 28, 2026. See Note 10 for more information.
Common stock Authorized 65,000,000 shares, $0.01 par value; 41,368,748 shares issued as of June 27, 2026 and 40,124,348 shares issued as of March 28, 2026.
Treasury stock 10,104,688 shares as of June 27, 2026 and March 28, 2026, at cost.
See accompanying Notes to Consolidated Financial Statements.
Three Months Ended
(thousands, except per share data) (unaudited)
June 28, 2025
Sales
287,129
301,035
Cost of sales, including occupancy costs
186,734
194,129
Gross profit
100,395
106,906
Operating, selling, general and administrative expenses
96,700
112,981
Operating income (loss)
3,695
(6,075)
Interest expense, net of interest income
4,635
4,784
Other expense (income), net
1,056
(158)
Loss before income taxes
(1,996)
(10,701)
Provision for (benefit from) income taxes
153
(2,651)
Net loss
(2,149)
(8,050)
Other comprehensive income:
Changes in pension, net of tax
874
9
Other comprehensive income
Comprehensive loss
(1,275)
(8,041)
Loss per share:
Basic
(0.08)
(0.28)
Diluted
Weighted average common shares outstanding:
30,145
29,967
Class C
Accumulated
Convertible
Additional
Other
Preferred Stock
Common Stock
Treasury Stock
Paid-In
Comprehensive
Retained
Total
(thousands) (unaudited)
Shares
Amount
Capital
Loss
Earnings
Equity
Balance at March 29, 2025
20
40,068
10,105
258,804
(3,421)
615,059
620,761
Pension liability adjustment
Dividends declared:
Preferred
(337)
Common
(8,391)
Dividend payable
48
Stock options and restricted stock
(133)
Stock-based compensation
984
Balance at June 28, 2025
40,084
259,655
(3,412)
598,329
604,891
Balance at March 28, 2026
40,125
(8,406)
(174)
Preferred stock conversion (a)
(20)
(29)
1,205
12
17
39
1
(416)
(415)
1,636
Balance at June 27, 2026
41,369
(a)On June 18, 2026, a total of 19,664 shares of Class C Preferred Stock, with a par value of $1.50 per share and a conversion ratio of 61.275 shares of Common Stock per preferred share, were converted into 1,204,908 shares of Common Stock. See Note 10 for more information.
We declared and paid $0.28 dividends per common share or equivalent for each of the three months ended June 27, 2026 and June 28, 2025.
See accompanying Notes to Consolidated Financial Statements
Operating activities
Adjustments to reconcile net loss to cash used for operating activities:
Depreciation and amortization
15,652
15,591
Share-based compensation expense
(Gain) loss on disposal of assets
(2,265)
1,476
Pension settlement expense
1,171
Deferred income tax expense (benefit)
Change in operating assets and liabilities:
(777)
(258)
Federal and state income taxes payable
525
81
(848)
7,420
682
(3,190)
9,338
9,654
(24,454)
(21,269)
Accrued expenses
(18,708)
4,339
(10,344)
(6,066)
Cash used for operating activities
(30,388)
(1,939)
Investing activities
Capital expenditures
(7,531)
(7,400)
Deferred proceeds received from divestiture
3,474
Proceeds from the disposal of assets
2,985
1,560
Cash used for investing activities
(4,546)
(2,366)
Financing activities
Proceeds from borrowings on long-term debt
101,753
61,132
Principal payments on long-term debt
(53,318)
(50,836)
Principal payments on finance leases and financing obligations
(9,275)
(9,760)
Dividends paid
(8,743)
(8,728)
Deferred financing costs
(590)
(464)
Cash provided by (used for) financing activities
29,827
(8,656)
Decrease in cash and equivalents
(5,107)
(12,961)
Cash and equivalents at beginning of period
20,762
Cash and equivalents at end of period
7,801
Supplemental information:
Leased assets obtained (reduced) in exchange for new (reduced) finance lease liabilities
899
(471)
Leased assets obtained in exchange for new operating lease liabilities
12,305
6,341
NOTES
INDEX TO NOTES
Notes to Consolidated Financial Statements (unaudited)
Note 1 Description of Business and Basis of Presentation
Note 2 Loss per Common Share
10
Note 3 Income Taxes
11
Note 4 Fair Value
Note 5 Dividends
Note 6 Revenues
Note 7 Long-term Debt
Note 8 Commitments and Contingencies
13
Note 9 Supplier Finance Program
Note 10 Shareholder Governance Matters
Note 11 Segment Reporting
14
Note 12 Related Parties and Transactions
15
Note 1 – Description of Business and Basis of Presentation
Description of business
Monro, Inc. and its direct and indirect subsidiaries (together, “Monro”, the “Company”, “we”, “us”, or “our”), are engaged principally in providing automotive undercar repair and tire replacement sales and tire related services in the United States. Monro had 1,115 Company-operated retail stores located in 32 states and 46 Car-X franchised locations as of June 27, 2026.
A certain number of our retail locations also service commercial customers. Our locations that serve commercial customers generally operate consistently with our other retail locations, except that the sales mix for these locations includes a higher number of commercial tires.
Monro’s operations are organized and managed as one single segment designed to offer to our customers replacement tires and tire related services, automotive undercar repair services as well as a broad range of routine maintenance services, primarily on passenger cars, light trucks and vans. We also provide other products and services for brakes; mufflers and exhaust systems; and steering, drive train, suspension and wheel alignment.
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial statements. While these statements reflect all adjustments (consisting of items of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statement presentation. The consolidated financial statements should be read in conjunction with the financial statement disclosures in our Form 10-K for the fiscal year ended March 28, 2026.
We use the same significant accounting policies in preparing quarterly and annual financial statements. For a description of our significant accounting policies followed in the preparation of the financial statements, see Note 1 of our Form 10-K for the fiscal year ended March 28, 2026.
Due to the seasonal nature of our business, quarterly operating results and cash flows are not necessarily indicative of the results that may be expected for other interim periods or the full year.
Fiscal year
We operate on a 52/53 week fiscal year ending on the last Saturday in March. Fiscal years 2027 and 2026 each cover 52 weeks. Unless specifically indicated otherwise, any references to “2027” or “fiscal 2027” and “2026” or “fiscal 2026” relate to the years ending March 27, 2027 and March 28, 2026, respectively.
Correction of previously issued financial statements
While preparing the 2026 consolidated financial statements, the Company identified a prior period error in the financing activities section of our Consolidated Statements of Cash Flows for the years ended March 29, 2025 and March 30, 2024 and the quarters ended June 28, 2025, September 27, 2025 and December 27, 2025, related to the presentation of proceeds from borrowings and principal payments on borrowings associated with the Company’s Credit Facility. The error did not have an impact to our Consolidated Balance Sheets, Consolidated Statement of Income and Comprehensive Income or Consolidated Statement of Changes in Shareholders’ Equity for any of the impacted periods, nor did it have any impact on total cash flows from operating, investing, or financing activities.
Although the Company determined that the error did not have a material impact on its previously issued annual and quarterly consolidated financial statements, the Company corrected the error on the affected annual statements of cash flow, as shown in Note 1 of our Form 10-K for fiscal 2026. Additionally, the Company is correcting the error on the affected interim statement of cash flows for the quarter ended June 28, 2025 herein and will correct the affected interim statements of cash flows in future filings of quarterly reports on Form 10-Q, as applicable, to reflect proceeds from borrowings under the credit facility as cash inflows from financing activities and repayments of borrowings under the credit facility as cash outflows from financing activities, without affecting any cash flow totals. Our interim Consolidated Statement of Cash Flows reflect the changes in proceeds from borrowings under the credit facility as cash inflows (outflows) from financing activities for the quarter ended June 28, 2025 as shown in the chart below.
Changes in Consolidated Statement of Cash Flows
Quarter Ended June 28, 2025
(thousands)
As Reported
Adjustment
As Revised
Proceeds from borrowings on long-term debt, net principal payments
10,296
(10,296)
Cash used for financing activities
Recent accounting pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance, ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and operating, selling, general and administrative expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of adopting this guidance.
In September 2025, the FASB issued new accounting guidance, ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which removes references to prescriptive software development stages and includes an updated framework for capitalizing internal software costs. The guidance is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within that fiscal year. We are currently evaluating the impact of adopting this guidance.
In December 2025, the FASB issued new accounting guidance, ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements, which clarifies the scope and requirements for interim financial statement disclosures. The amendments create a comprehensive list of required interim disclosures and introduce a disclosure principle requiring entities to disclose, in interim periods, any event or change since the previous year-end that has a material effect on the entity. The guidance is effective for annual reporting periods beginning after December 15, 2027, and for interim periods within that fiscal year. We are currently evaluating the impact of adopting this guidance.
Other recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification (“ASC”) and the SEC did not or are not expected to have a material effect on our consolidated financial statements.
Supplemental information
Property and equipment, net: Property and equipment balances are shown on the Consolidated Balance Sheets net of accumulated depreciation of $398.7 million and $399.8 million as of June 27, 2026 and March 28, 2026, respectively.
Guarantees
At the time we issue a guarantee, we recognize an initial liability for the value of the obligation we assume under that guarantee. Monro has guaranteed certain lease payments related to lease assignments amounting to $18.2 million. This amount represents the maximum potential amount of future payments under the guarantees as of June 27, 2026. Leases guaranteed by Monro have options that expire through various dates from September 2026 through January 2044. In the event of default by the assignee, Monro retains the right to assume the lease of the related store. As of June 27, 2026 and March 28, 2026, we had a liability of $1.3 million related to the estimated probability of defaults under the foregoing leases, with $0.5 million and $0.1 million within Other current liabilities, and $0.8 million and $1.2 million Other long-term liabilities in our Consolidated Balance Sheets, respectively.
Store Closings
On May 23, 2025, following an evaluation of market segmentation and demographic data specific to geographic areas where our stores are located, our Board of Directors approved a plan to close 145 underperforming stores that we identified to have failed to maintain an acceptable level of profitability (the “Store Closure Plan”). These stores were closed during the first quarter of fiscal 2026 and $14.8 million of net store closing costs were recorded during the three months ended June 28, 2025. These expenses included $10.7 million in expected costs to be incurred related to the vacating of stores, utilities, real estate taxes, maintenance, other on-going costs related to the properties, $3.5 million related to the disposal of inventory and other store assets and $0.6 million related to third-party vendors and other expected cost adjustments. As of June 27, 2026 and March 28, 2026, the Company had a remaining liability of $3.0 million and $3.7 million, representing such costs to be settled in future periods, with $1.3 million and $1.8 million included within Other current liabilities and $1.7 million and $1.9 million included within Other long-term liabilities in our Consolidated Balance Sheets, respectively. We expect these costs to be settled within the next one to five years.
During the three months ended June 27, 2026, the Company sold four owned stores and related equipment. We received net proceeds of $2.7 million and recorded a net gain of $1.6 million. Additionally, the Company assigned one lease to a third party and early terminated five leases. We received net proceeds of $0.2 million and recorded a net gain of $0.5 million, which included the derecognition of lease liabilities.
All losses (gains) related to store closings are included in operating, selling, general and administrative expenses in our Consolidated Statements of Loss and Comprehensive Loss.
We classify long-lived assets to be sold as held for sale in the period in which all of the required criteria are met. We initially measure a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon determining that a long-lived asset meets the criteria to be classified as held for sale, we cease depreciation and report long-lived assets, if material, as Assets held for sale in our Consolidated Balance Sheets.
We completed the closure of 145 underperforming stores under the Store Closure Plan during the first quarter of fiscal 2026 and determined that $13.0 million of building, land and certain equipment met the criteria to be classified as held for sale as of June 28, 2025. As of June 27, 2026, $3.2 million of buildings, land and certain equipment remain classified as assets held for sale.
Note 2 – Loss per Common Share
Basic loss per common share amounts are calculated by dividing loss available to common shareholders, after deducting preferred stock dividends, by the weighted average number of shares of common stock outstanding. Diluted loss per common share amounts are calculated by dividing net loss by the weighted average number of shares of common stock outstanding adjusted to give effect to potentially dilutive securities.
Loss per Common Share
(thousands, except per share data)
Numerator for loss per common share calculation:
Less: Preferred stock dividends
Loss available to common shareholders
(2,486)
(8,387)
Denominator for loss per common share calculation:
Weighted average common shares - basic
Effect of dilutive securities(a):
Preferred stock
Stock options
Restricted stock
Weighted average common shares - diluted
Basic loss per common share
Diluted loss per common share
(a)For the three months ended June 27, 2026 and June 28, 2025, the computation of diluted loss per common share excludes the effect of approximately 307 thousand and 105 thousand shares related to restricted stock, and 1,086 thousand and 1,205 thousand preferred stock
conversions, respectively, as the impact of these items is generally anti-dilutive during periods of net loss. Because of this, there is no difference between basic and diluted loss per common share for periods with net losses.
The computation of diluted loss per common share for the three months ended June 27, 2026 and June 28, 2025 excludes the effect of approximately 500 thousand and 771 thousand shares related to restricted stock and stock options, respectively, as the shares related to these restricted stock and the exercise price of these stock options were greater than the average market value of our common stock for those periods, resulting in an anti-dilutive effect on diluted loss per common share.
Note 3 – Income Taxes
For the three months ended June 27, 2026, our effective income tax rate was (7.7) percent compared to 24.8 percent for the three months ended June 28, 2025. The difference from the statutory rate is primarily due to state taxes and the discrete tax impact related to share-based awards and other adjustments, none of which are individually significant.
Note 4 – Fair Value
Long-term debt had a carrying amount that approximates a fair value of $108.4 million as of June 27, 2026, as compared to a carrying amount and a fair value of $60.0 million as of March 28, 2026. The carrying value of our debt approximated its fair value due to the variable interest nature of the debt.
Note 5 – Dividends
We declared and paid dividends of $0.28 per share totaling $8.7 million during the three months ended June 27, 2026. The declaration of future dividends will be at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, compliance with charter and contractual restrictions, and such other factors as the Board of Directors deems relevant. Our Credit Facility contains covenants that may limit, subject to certain exemptions, our ability to declare dividends and other distributions. For additional information regarding our Credit Facility, see Note 7.
Note 6 – Revenues
Automotive undercar repair, tire replacement sales and tire related services represent the vast majority of our revenues. We also earn revenue from the sale of tire road hazard warranty agreements, commissions earned from the delivery of tires on behalf of certain tire vendors, as well as franchise royalties.
Revenue from automotive undercar repair, tire replacement sales and tire related services is recognized at the time the customers take possession of their vehicle or merchandise. For sales to certain customers that are financed through the offering of credit on account, payment terms are established for customers based on our pre-established credit requirements. Payment terms may vary depending on the customer and generally are 30 days. Based on the nature of receivables, no significant financing components exist. Sales are recorded net of discounts, sales incentives and rebates, sales taxes and estimated returns and allowances. We estimate the reduction to sales and cost of sales for returns based on current sales levels and our historical return experience. Such amounts are immaterial to our consolidated financial statements.
Revenues
Tires (a)
133,136
138,396
Maintenance
77,378
82,928
Brakes
41,842
44,469
Steering
26,366
26,741
Batteries
4,299
4,206
Exhaust
3,726
3,906
Franchise royalties
382
389
(a) Includes the sale of tire road hazard warranty agreements and tire delivery commissions.
Revenue from the sale of tire road hazard warranty agreements is initially deferred and is recognized over the contract period as costs are expected to be incurred in performing such services, typically 21 to 36 months. The deferred revenue balances at June 27, 2026 and March 28, 2026 were $18.4 million and $18.8 million, respectively, of which $12.9 million and $13.2 million, respectively, are reported in Deferred revenue and $5.5 million and $5.6 million, respectively, are reported in Other long-term liabilities in our Consolidated Balance Sheets.
Changes in Deferred Revenue
18,753
Deferral of revenue
4,440
Recognition of revenue
(4,815)
18,378
As of June 27, 2026, we expect to recognize $10.7 million of deferred revenue related to road hazard warranty agreements in the remainder of fiscal 2027, $6.1 million of deferred revenue during our fiscal year ending March 25, 2028, and $1.6 million of deferred revenue thereafter.
Under various arrangements, we receive from certain tire vendors a delivery commission and reimbursement for the cost of the tire that we may deliver to customers on behalf of the tire vendor. The commission we earn from these transactions is as an agent and the net amount retained is recorded as sales.
Note 7 – Long-term Debt
Credit Facility
In April 2019, we entered into a five-year $600 million revolving credit facility agreement with eight banks (the “Credit Facility”) that includes an accordion feature permitting us to request an increase in availability of up to an additional $250 million. In November 2022, we entered into a Third Amendment to the Credit Facility (the “Third Amendment”). The Third Amendment, among other things, extended the term of the Credit Facility to November 10, 2027, and amended certain of the financial terms in the Credit Facility. The Third Amendment amended the interest rate charged on borrowings to be based on 0.10 percent over the Secured Overnight Financing Rate (“SOFR”), replacing the previously used LIBOR. In addition, one additional bank was added to the bank syndicate for a total of nine banks now within the syndicate. Under the Third Amendment, we were required to maintain an interest coverage ratio, as defined in the Credit Facility, of at least 1.55 to 1. In addition, our ratio of adjusted debt to EBITDAR, as defined in the Credit Facility, cannot exceed 4.75 to 1, subject to certain exceptions under the Credit Facility. These terms are modified during the “Further Extended Covenant Relief Period,” described below.
On May 23, 2024, we entered into a Fourth Amendment to the Credit Facility (the “Fourth Amendment”). Among other changes, the Fourth Amendment modified the definition of “EBITDAR” to permit add-backs relating to expenses, and restrict add-backs related to gains, associated with store closures of (a) all non-cash items and (b) cash items up to 20% of EBITDA from the first quarter of fiscal 2025 through the fourth quarter of fiscal 2026 and up to 15% of EBITDA from the first quarter of fiscal 2027 and thereafter.
On May 23, 2025, we entered into a Fifth Amendment to the Credit Facility (the “Fifth Amendment”). Among other changes, the Fifth Amendment further modified the definition of “EBITDAR” to permit add-backs relating to non-cash impairment and other expenses, with the restriction for add-backs of certain cash expense items up to 20% of EBITDA from the first quarter of fiscal 2026 through the fourth quarter of fiscal 2026 and up to 15% of EBITDA from the first quarter of fiscal 2027 and thereafter. In addition, the Fifth Amendment permanently reduced the Credit Facility from $600 million to $500 million.
See Note 6 of our Form 10-K for the fiscal year ended March 28, 2026 for additional information.
On May 21, 2026, we entered into a Sixth Amendment to our Credit Facility (the “Sixth Amendment”). The Sixth Amendment amends the terms of certain of the financial and restrictive covenants in the Credit Facility to provide us with additional flexibility to operate our business to the Credit Facility maturity date or November 10, 2027 (the “Further Extended Covenant Relief Period”). During the Further Extended Covenant Relief Period, the minimum interest coverage ratio will be reduced from 1.55x to 1.25. During the Further Extended Covenant Relief Period, the maximum ratio of adjusted debt to EBITDAR remains at 4.75x to 1.00x, except that, if we completed a qualified acquisition during the Further Extended Covenant Relief Period, the maximum ratio would increase to 5.00x to 1.00x for a certain 12-month period after the qualified acquisition. In addition to the Fourth and Fifth Amendment modifications, the Sixth Amendment further modifies the definition of “EBITDAR” to permit add-backs relating to non-cash pension accounting charges.
During the Further Extended Covenant Relief Period, the interest rate spread charged on borrowings is 225 basis points.
During the Further Extended Covenant Relief Period, the restrictions on our ability to declare dividends were modified to reduce the cushion inside the threshold required for us to be able to declare dividends without restriction from 0.50x to 0.25x. In addition, during the Further Extended Covenant Relief Period, we must have minimum liquidity of at least $200 million to declare dividends. We are prohibited from repurchasing our securities during the Further Extended Covenant Relief Period if there are outstanding amounts under
the Credit Facility immediately before or after giving effect to the repurchase. During the Further Extended Covenant Relief Period, we may acquire stores or other businesses as long as we have minimum liquidity of at least $200 million after completing the acquisition.
In addition, the Sixth Amendment permanently reduces the Credit Facility from $500 million to $400 million.
Except as amended by the First Amendment, Second Amendment, Third Amendment, Fourth Amendment, Fifth Amendment and Sixth Amendment, the remaining terms of the Credit Facility remain in full force and effect.
We were in compliance with all debt covenants at June 27, 2026.
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 June 27, 2026.
There was $108.4 million outstanding and $261.5 million available under the Credit Facility as of June 27, 2026, subject to compliance with our covenants.
Note 8 – Commitments and Contingencies
Commitments
Commitments Due by Period
Within
Within 2 to
Within 4 to
After
1 Year
3 Years
5 Years
Finance lease commitments/financing obligations (a)
267,198
46,047
78,428
56,112
86,611
Operating lease commitments (a)
235,317
47,515
75,740
48,892
63,170
610,950
93,562
262,603
105,004
149,781
(a)Finance and operating lease commitments represent future undiscounted lease payments and include $42.9 million and $29.3 million, respectively, related to options to extend lease terms that are reasonably certain of being exercised.
Contingencies
We are currently a party to various claims and legal proceedings incidental to the conduct of our business. If management believes that a loss arising from any of these matters is probable and can reasonably be estimated, we will record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another.
As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Litigation is subject to inherent uncertainties, and unfavorable rulings could occur and may include monetary damages. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which any such ruling occurs, or in future periods.
Note 9 – Supplier Finance Program
We facilitate a voluntary supply chain financing program to provide our suppliers with the opportunity to sell receivables due from us (our accounts payable) to a participating financial institution subject to the independent discretion of both the supplier and the participating financial institution. Should a supplier choose to participate in the program, it may receive payment from the financial institution in advance of agreed payment terms; our responsibility is limited to making payments to the respective financial institution on the terms originally negotiated with our supplier, which are generally for a term of up to 360 days.
Our outstanding supplier obligations eligible for advance payment under the program totaled $205.9 million, $226.8 million and $231.7 million as of June 27, 2026, March 28, 2026 and June 28, 2025, respectively, and are included within Accounts Payable on our Consolidated Balance Sheets. Our outstanding supplier obligations do not represent actual receivables sold by our suppliers to the financial institutions, which may be lower.
Note 10 – Shareholder Governance Matters
Rights Plan
On November 9, 2025, the Board of Directors approved the adoption of a limited-duration shareholder rights plan (the “Rights Plan”), intended to protect the best interests of all Company shareholders. Pursuant to the Rights Plan, the Company issued one right for each common share outstanding as of the close of business on November 24, 2025. The rights trade with the Company’s common stock and will generally become exercisable only if an entity, person or group acquires beneficial ownership of 17.5% or more of the Company’s outstanding shares (the “triggering percentage”). If the rights become exercisable, all holders of rights (other than the entity, person or group that acquired the triggering percentage) will be entitled to purchase one one-thousandth of a share of Series D Junior Participating Serial Preferred Stock, par value $0.01 per share, of the Company at a purchase price of $90.00, or the Company’s Board of Directors may exchange one share of the Company’s common stock for each outstanding right (other than rights owned by such entity, person or group, that acquired the triggering percentage, which would have become void).
Under the Rights Plan, any person that owns more than the triggering percentage as of the adoption of the Rights Plan may continue to own its shares of common stock but may not acquire any additional shares without triggering the Rights Plan. The Rights Plan has a one-year duration, expiring on November 6, 2026. The Board of Directors may consider an earlier termination of the Rights Plan as circumstances warrant.
Equity Capital Structure Reclassification
On May 12, 2023, we entered into a reclassification agreement (the “Reclassification Agreement”) with the holders (the “Class C Holders”) of our Class C Convertible Preferred Stock (the “Class C Preferred Stock”) to reclassify our equity capital structure to eliminate the Class C Preferred Stock.
Under the Reclassification Agreement, after receiving shareholder approval on August 15, 2023, we filed amendments to our certificate of incorporation (the “Certificate of Incorporation”) to create a mandatory conversion of any outstanding shares of Class C Preferred Stock prior to an agreed sunset date of the earliest of (i) August 15, 2026; (ii) the first business day immediately prior to the record date established for the determination of the shareholders of the Company entitled to vote at the Company’s 2026 annual meeting of shareholders; and (iii) the date on which the Class C Holders, in the aggregate, cease to beneficially own at least 50% of all shares of the Class C Preferred Stock issued and outstanding as of May 12, 2023. In exchange for this sunset of the Class C Preferred Stock, the conversion rate of Class C Preferred Stock was 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 prior conversion rate of 23.389 shares of common stock for each share of Class C Preferred Stock under the Certificate of Incorporation.
At the end of the sunset period, all shares of Class C Preferred Stock remaining outstanding will be automatically converted into shares of common stock at the adjusted conversion rate. In addition, the liquidation preference for the Class C Preferred Stock was amended to provide that, upon a liquidation event, each holder of Class C Preferred Stock would be entitled to receive, for each share of Class C Preferred Stock held by the holder upon a liquidation, dissolution, or winding up of the affairs of the Company, an amount equal to the greater of $1.50 per share and the amount the holder would have received had each share of Class C Preferred Stock been converted to shares of common stock immediately prior to the liquidation, dissolution, or winding up. 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. 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. We have determined the amendments to the Class C Preferred Stock, because of the Reclassification Agreement, should be accounted for as a modification.
In accordance with the Reclassification Agreement, on June 18, 2026, one business day prior to the record date for the Company’s 2026 annual meeting, all outstanding shares of Class C Preferred Stock automatically converted into Common Stock. A total of 19,664 shares of Class C Preferred Stock, with a par value of $1.50 per share and a conversion ratio of 61.275 shares of Common Stock per preferred share, were converted into 1,204,908 shares of Common Stock. Any fractional shares resulting from the conversion were settled in cash.
Note 11 – Segment Reporting
The Company has a single reportable operating segment “Monro, Inc.” The accounting policies of the operating segment are the same as those described in Note 1 of our Form 10-K. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who regularly reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance for the Company’s single reportable segment. The CODM primarily focuses on consolidated net income to evaluate its reportable segment. The CODM also uses consolidated net income for evaluating pricing strategy and to assess the performance for determining the compensation of certain employees. All segment expenses reviewed, which represent the difference between segment revenue and segment net loss, consisted of the following:
Segment Reporting
Less:
173,284
181,090
94,498
110,429
Depreciation and amortization expenses
Other segment items (a)
(a)Other segment items consist of other expense (income), net, included in the accompanying Consolidated Statements of Loss and Comprehensive Loss.
As of June 27, 2026 and June 28, 2025, assets held in the U.S. accounted for 100% of total assets.
There were no major customers individually accounting for 10% or more of consolidated net revenues.
Note 12 – Related Parties and Transactions
The Board of Directors of the Company appointed Peter D. Fitzsimmons to serve as the President and Chief Executive Officer as of March 28, 2025. At this time, Mr. Fitzsimmons was serving as a partner and managing director of AlixPartners, LLP (“AlixPartners”). In connection with Mr. Fitzsimmons’ appointment, the Company entered into a consulting agreement with AP Services, LLC (“APS”), an affiliate of AlixPartners, pursuant to which APS provided for Mr. Fitzsimmons to serve as the Company’s Chief Executive Officer and for the additional resources of APS personnel as required. On December 2, 2025, the Company entered into an employment agreement with Peter Fitzsimmons, whereby he continues to serve as our President and Chief Executive Officer, and appointed him as a member of the Board of Directors at which time Mr. Fitzsimmons ceased serving as partner and managing director of AlixPartners and the consulting agreement with APS was terminated.
On December 23, 2025, the Company entered into a new consulting agreement with AlixPartners pursuant to which AlixPartners will provide consulting services to the Company under various statements of work at standard engagement rates to support the Operational Improvement Plan.
See Note 16 of our Form 10-K for the fiscal year ended March 28, 2026 for additional information.
The Company recorded total expenses related to AlixPartners and APS of $1.0 million and $5.4 million in operating, selling, general and administrative expenses in our Consolidated Statements of Loss and Comprehensive Loss during the three months ended June 27, 2026 and June 28, 2025, respectively, of which $0.5 million and $3.2 million are within Other current liabilities in our Consolidated Balance Sheets at June 27, 2026 and June 28, 2025, respectively.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Recent Developments
On May 12, 2023, we entered into a reclassification agreement (the “Reclassification Agreement”) with the holders (the “Class C Holders”) of our Class C Convertible Preferred Stock (the “Class C Preferred Stock”) to reclassify our equity capital structure to eliminate the Class C Preferred Stock. In accordance with the Reclassification Agreement, on June 18, 2026, one business day prior to the record date for the Company’s 2026 annual meeting, all outstanding shares of the Class C Preferred Stock automatically converted into Common Stock. A total of 19,664 shares of Class C Preferred Stock, with a par value of $1.50 per share and a conversion ratio of 61.275 shares of Common Stock per preferred share, were converted into 1,204,908 shares of Common Stock. Any fractional shares resulting from the conversion were settled in cash. See additional discussion in Note 10 of our consolidated financial statements.
On May 21, 2026, we entered into an amendment (the “Sixth Amendment”) to our Credit Facility, which, among other things, 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. See additional discussion related to the Sixth Amendment in Note 7 to our consolidated financial statements.
Financial Summary
First quarter 2027 included the following notable items:
Diluted loss per common share was $0.08.
Adjusted diluted loss per common share, a non-GAAP measure, was $0.09.
Sales decreased 4.6 percent, due to closed stores and lower comparable store sales.
Comparable store sales decreased 1.7 percent from the prior year period.
Operating income was $3.7 million.
Adjusted operating income, a non-GAAP measure, was $2.2 million.
Net loss was $2.1 million.
Adjusted net loss, a non-GAAP measure, was $2.3 million.
(Loss) Earnings Per Common Share
Change
71.4
%
Adjustments
(0.01)
0.50
Adjusted diluted (loss) earnings per common share
(0.09)
0.22
(140.9)
Adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share are useful in providing period-to-period comparisons of the results of our operations by excluding certain items that are not part of our core operations, such as pension settlement expense, consulting costs related to the Company’s Operational Improvement Plan, transition costs related to back-office optimization, write-off of debt issuance costs, costs related to shareholder matters, and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations. Reconciliations of these non-GAAP financial measures to GAAP measures are provided on page 19 under “Non-GAAP Financial Measures.”
We define comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. We believe this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company’s stores and believes the metric is useful to investors because our overall results are dependent upon the results of our stores. Comparable sales measures vary across the retail industry. Therefore, our comparable store sales calculation is not necessarily comparable to similarly titled measures reported by other companies.
Analysis of Results of Operations
Summary of Operating Income (Loss)
(4.6)
(3.8)
(6.1)
(14.4)
160.8
Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 6 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period. There were 90 selling days in each of the three months ended June 27, 2026 and June 28, 2025.
Sales growth – from both comparable store sales and new stores – represents an important driver of our long-term profitability. We expect that comparable store sales growth will significantly impact our total sales growth. We believe that our ability to successfully differentiate our customers’, often referred to as “guests”, experience through a careful combination of merchandise assortment, price strategy, convenience, and other factors will, over the long-term, drive both increasing guest traffic and the average ticket amount spent.
Dollar change compared to prior year
(13,906)
Percentage change compared to prior year
The sales decrease was due to closed stores and lower comparable store sales. The following table shows the primary drivers of the change in sales for the three months ended June 27, 2026, as compared to the same period ended June 28, 2025.
Sales Percentage Change
Sales change
Primary drivers of change in sales
Closed store sales
(2.9)
Comparable store sales
(1.7)
During the three months ended June 27, 2026, comparable store sales increased in our batteries, front end/shocks and alignment categories. The following table shows the primary drivers of the comparable store product category sales change for the three months ended June 27, 2026, as compared to the same period ended June 28, 2025.
Comparable Store Product Category Sales Change
Front end/shocks
Alignment
0
Tires
(1)
Maintenance service
(5)
Sales by Product Category
46
28
Steering (a)
2
100
(a)Steering product category includes front end/shocks and alignment product category sales.
Change in Number of Company-Operated Retail Stores
Beginning store count
1,115
1,260
Closed (a)
(145)
Ending store count
(a)All 145 stores were closed in the first quarter of fiscal 2026 as a result of the Store Closure Plan.
Cost of Sales and Gross Profit
Gross Profit
Percentage of sales
35.0
35.5
(6,511)
Gross profit, as a percentage of sales, decreased 50 basis points (“bps”) for the three months ended June 27, 2026, as compared to the prior year comparable period. Occupancy costs, as a percentage of sales, increased as we lost leverage on these largely fixed costs. Partially offsetting this was a decrease in technician labor costs, as a percentage of sales, due primarily to improvements in labor productivity and efficiency.
Gross Profit as a Percentage of Sales Change
Gross profit change
(50)
bps
Primary drivers of change in gross profit as a percentage of sales:
Occupancy costs
(90)
Technician labor costs
40
OSG&A Expenses
33.7
37.5
(16,281)
The decrease of $16.3 million in operating, selling, general and administrative (“OSG&A”) expenses for the three months ended June 27, 2026, from the comparable prior year period is primarily due to a decrease in store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations. The following table shows the impact of these costs on the change in OSG&A expenses for the three months ended June 27, 2026, as compared to the same period ended June 28, 2025.
OSG&A Expenses Change
OSG&A expenses change
Drivers of change in OSG&A expenses:
Decrease in store closing costs, net
(17,776)
Decrease from closed stores
(4,136)
Decrease in consulting costs related to the Operational Improvement Plan
(3,713)
Decrease from transition costs related to back-office optimization
(238)
Increase from costs related to shareholder matters
80
Increase from comparable stores
4,581
Increase in store advertising costs
4,921
Other Performance Factors
Net Interest Expense
Net interest expense of $4.6 million for the three months ended June 27, 2026 decreased $0.1 million as compared to the prior year period, and remained as a percentage of sales at 1.6 percent. Weighted average debt outstanding for the three months ended June 27, 2026 decreased by approximately $14.1 million as compared to the three months ended June 28, 2025. This decrease is primarily related to lower finance lease debt related to our stores. The weighted average interest rate increased approximately 10 basis points as compared to the same period of the prior year.
Provision for Income Taxes
For the three months ended June 27, 2026, our effective income tax rate was (7.7) percent compared to 24.8 percent for the three months ended June 28, 2025. The year-over-year difference in effective tax rate is primarily related to a decrease in unrecognized tax benefits as well as the impact from other adjustments, none of which are significant, on the change in pre-tax loss.
Non-GAAP Financial Measures
In addition to reporting operating income (loss), net loss and diluted loss per share, which are GAAP measures, this Form 10-Q includes adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, which are non-GAAP financial measures. We have included reconciliations to adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share from our most directly comparable GAAP measures, operating income (loss), net loss, and diluted loss per share below. Management views these non-GAAP financial measures as indicators to better assess comparability between periods because management believes these non-GAAP financial measures reflect our core business operations while excluding certain items that are not part of our core operations, such as pension settlement expense, consulting costs related to the Company’s Operational Improvement Plan, transition costs related to back-office optimization, write-off of debt issuance costs, costs related to shareholder matters, and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations.
These non-GAAP financial measures are not intended to represent, and should not be considered more meaningful than, or as an alternative to, their most directly comparable GAAP measures. These non-GAAP financial measures may be different from similarly titled non-GAAP financial measures used by other companies.
Adjusted operating income is summarized as follows:
Reconciliation of Adjusted Operating Income
Consulting costs related to the Operational Improvement Plan
1,009
4,722
Transition costs related to back-office optimization
333
571
Costs related to shareholder matters
Store closing costs, net (a)
(2,960)
14,816
Adjusted operating income
2,157
14,034
(a)Amounts include the closing costs and asset write-offs related to the closure of 145 underperforming stores, in accordance with the Store Closure Plan, net of related gains on the sale of owned locations, lease assignments and early lease terminations.
Adjusted net (loss) income is summarized as follows:
Reconciliation of Adjusted Net (Loss) Income
Write-off of debt issuance costs
221
263
Provision for (benefit from) income taxes on pre-tax adjustments
38
(5,297)
Adjusted net (loss) income
(2,257)
7,025
Adjusted diluted (loss) earnings per share is summarized as follows:
Reconciliation of Adjusted Diluted (Loss) Earnings per Share
Diluted loss per share
0.03
0.02
0.12
0.01
Costs related to shareholder matters (b)
0.00
(0.07)
0.37
Adjusted diluted (loss) earnings per share
(b)Amounts, in the periods presented, may be too minor in amount, net of the impact from income taxes, to have an impact on the calculation of adjusted diluted (loss) earnings per share.
Note: The calculation of the impact of non-GAAP adjustments on diluted (loss) earnings per share is performed on each line independently. The table may not add down +/- $0.01 due to rounding.
The other adjustments to diluted (loss) earnings per share reflect estimated annual effective income tax rates of 26.0 percent for the three months ended June 27, 2026 and June 28, 2025. This represents the tax effect of non-GAAP adjustments calculated at an estimated blended statutory tax rate. See adjustments from the Reconciliation of Adjusted Net (Loss) Income table above for pre-tax amounts.
Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We expect to continue to generate positive operating cash flow as we have done in each of the last three fiscal years. We believe the cash we generate from our operations will allow us to continue to support business operations and pay down debt. Additionally, we intend to return cash to our shareholders through our dividend program.
In addition, because we believe a large portion of our future expenditures will be to fund our growth, through acquisition of retail stores and/or opening greenfield stores, we continually evaluate our cash needs and may decide it is best to fund the growth of our business through borrowings on our Credit Facility. Conversely, we may also periodically determine that it is in our best interests to voluntarily repay certain indebtedness early.
Future Cash Requirements
We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems, to be $25 million to $35 million in the aggregate in fiscal 2027. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $430.2 million in lease payments, of which $92.4 million is due within one year. For details regarding these lease commitments, see Note 8 to our consolidated financial statements.
As of June 27, 2026 we had $108.4 million outstanding under the Credit Facility, none of which is due in the succeeding 12 months. For details regarding our indebtedness that is due, see Note 7 to our consolidated financial statements.
Dividends
We declared and paid dividends of $0.28 per share totaling $8.7 million for each of the three months ended June 27, 2026 and June 28, 2025.
Working Capital Management
As of June 27, 2026, we had a working capital deficit of $241.1 million, a decrease of $40.1 million from a deficit of $281.2 million as of March 28, 2026. The overall working capital deficit is a result of our supply chain finance program. We have agreed to contractual payment terms and conditions with our suppliers. As part of our working capital management, we facilitate a voluntary supply chain finance program to provide our suppliers with the opportunity to sell receivables due from the Company to a participating financial institution subject to the independent discretion of both the supplier and participating financial institution. For details regarding our supply chain finance program, see Note 9 to our consolidated financial statements.
Sources and Conditions of Liquidity
Our sources to fund our material cash requirements are predominantly cash from operations, availability under our Credit Facility, and cash and equivalents on hand.
As of June 27, 2026, we had $9.5 million of cash and equivalents. In addition, we had $261.5 million available under the Credit Facility as of June 27, 2026, subject to compliance with our covenants.
We believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following June 27, 2026, as well as in the long-term.
Summary of Cash Flows
The following table presents a summary of our cash flows from operating, investing and financing activities.
For the three months ended June 27, 2026, cash used for operating activities was $30.4 million, which consisted of a net loss of $2.1 million and a change in operating assets and liabilities of $44.6 million, partially offset by non-cash adjustments of $16.3 million. The change in operating assets and liabilities was largely driven by timing of payments that caused accounts payable and accrued expenses to be a use of cash of $43.2 million. The non-cash charges were largely driven by $15.7 million of depreciation and amortization, $1.6 million in share-based compensation expenses and $1.2 million in pension settlement expense, offset by a $2.3 million net gain on disposal of assets.
For the three months ended June 28, 2025, cash used for operating activities was $1.9 million, which consisted of a net loss of $8.1 million and a change in operating assets and liabilities of $9.2 million, partially offset by non-cash adjustments of $15.4 million. The change in operating assets and liabilities was driven by timing of payments that caused accounts payable to be a use of cash of $21.3 million. This was partially offset by our inventory being a source of cash of $7.4 million and accrued expenses being a source of cash of $4.3 million. The non-cash charges were driven by $15.6 million of depreciation and amortization, $1.5 million in loss on disposal of assets and $1.0 million in share-based compensation expense, offset by $2.7 million in deferred income tax expense.
For the three months ended June 27, 2026, cash used for investing activities was $4.5 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $7.5 million, partially offset by proceeds from the disposal of property and equipment of $3.0 million.
For the three months ended June 28, 2025, cash used for investing activities was $2.4 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $7.4 million, partially offset by subsequent proceeds from the sale of our wholesale tire locations and distribution assets and proceeds from the disposal of property and equipment of $3.5 million and $1.6 million, respectively.
For the three months ended June 27, 2026, cash provided by financing activities was $29.8 million. This was primarily due to amounts borrowed on our Credit Facility, net of payments made during the period, of $48.4 million. This was offset by payment of finance lease principal and dividends of $9.3 million and $8.7 million, respectively, as well as deferred financing costs of $0.6 million.
For the three months ended June 28, 2025, cash used for financing activities was $8.7 million. This was primarily due to payment of finance lease principal and dividends of $9.8 million and $8.7 million, respectively, as well as deferred financing costs of $0.5 million. These were offset by amounts borrowed on our Credit Facility, net of payments made during the period, of $10.3 million.
Critical Accounting Estimates
The consolidated financial statements are prepared in accordance with GAAP. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows may be affected.
For a description of our critical accounting estimates, refer to Part II, Item 7., “Management's Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended March 28, 2026. There have been no material changes to our critical accounting estimates since our Form 10-K for the year ended March 28, 2026 was filed.
Recent Accounting Pronouncements
See “Recent Accounting Pronouncements” in Note 1 to our consolidated financial statements for a discussion of the impact of recently issued accounting standards on our consolidated financial statements as of June 27, 2026 and the expected impact on the consolidated financial statements for future periods.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments, and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by, or including words such as “anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “strategy,” “will,” “would” and variations thereof and similar expressions. Forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed. For example, our forward-looking statements include, without limitation, statements regarding:
•the impact of competitive services and pricing;
•the effect of economic conditions and geopolitical uncertainty, seasonality, and the impact of weather conditions and natural disasters on customer demand;
•advances in automotive technologies including adoption of electronic vehicle technology;
•our dependence on third-party vendors for certain inventory;
•the risks associated with vendor relationships and international trade, particularly goods sourced from countries targeted with import tariffs;
•the impact of changes in U.S. trade relations and ongoing trade disputes between the United States, China, and other countries and other potential impediments to imports;
•our ability to generate sufficient cash flows from operations and service our debt obligations, including our expected annual interest expense, fund our capital expenditures and working capital requirements, and to comply with the debt covenants of our Credit Facility;
•our anticipated sales, comparable store sales, gross profit margin, costs of goods sold (including product mix), OSG&A expenses and other fixed costs, and our ability to leverage those costs;
•management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes, and uncertain tax positions;
•management’s estimates associated with our critical accounting policies, including insurance liabilities, income taxes, and valuations for our goodwill and long-lived assets impairment analyses;
•the impact of industry regulation, including changes in environmental, consumer protection, and labor laws;
•potential outcomes related to pending or future litigation matters;
•business interruptions;
•risks relating to disruption or unauthorized access to our computer systems;
•our ability to protect customer and employee personal data;
•risks relating to acquisitions and the integration of acquired businesses with ours;
•our growth plans, including our plans to add, renovate, re-brand, expand, remodel, relocate, or close stores and any related costs or charges, our leasing strategy for future expansion, and our ability to renew leases at existing store locations;
•the impact of costs related to planned store closings or potential impairment of goodwill, other intangible assets, and long-lived assets;
•expected dividend payments;
•our ability to protect our brands and our reputation; and
•our ability to attract, motivate, and retain skilled field personnel and our key executives.
Any of these factors, as well as such other factors as discussed in Part I, Item 1A., “Risk Factors” of our Form 10-K for the fiscal year ended March 28, 2026 as well as in our periodic filings with the SEC, could cause our actual results to differ materially from our anticipated results. The information provided in this report is based upon the facts and circumstances known as of the date of this report, and any forward-looking statements made by us in this report speak only as of the date on which they are made. Except as required by law, we undertake no obligation to update these forward-looking statements after the date of this Form 10-Q to reflect events or circumstances after such date, or to reflect the occurrence of unanticipated events.
DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk from potential changes in interest rates. As of June 27, 2026, excluding finance leases and financing obligations, we had no debt financing at fixed interest rates, for which the fair value would be affected by changes in market interest rates. Our cash flow exposure on floating rate debt would result in annual interest expense fluctuations of approximately $1.1 million based upon our debt position at June 27, 2026 and approximately $0.6 million based upon our debt position at March 28, 2026, respectively, given a change in SOFR of 100 basis points.
Debt financing had a carrying amount that approximates a fair value of $108.4 million as of June 27, 2026, as compared to a carrying amount and a fair value of $60.0 million as of March 28, 2026.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that we file or submit to the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In conjunction with the close of each fiscal quarter and under the supervision of our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), we conduct an update, a review and an evaluation of the effectiveness of our disclosure controls and procedures. It is the conclusion of our Chief Executive Officer and Chief Financial Officer, based upon an evaluation completed as of the end of the most recent fiscal quarter reported on herein, that our disclosure controls and procedures were effective.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 27, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
SUPPLEMENTAL INFORMATION
PART II – OTHER INFORMATION
From time to time we are a party to or otherwise involved in legal proceedings arising out of the normal course of business. Legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of one or more of these matters could have a material adverse impact on the Company, its financial condition and results of operations.
EXHIBITS
Exhibit Index
10.22f – Amendment No. 6 to Amended and Restated Credit Agreement, dated as of May 21, 2026. (2026 Form 10-K, Exhibit No. 10.22f)**
31.1 – Certification of Peter D. Fitzsimmons pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
31.2 – Certification of Brian J. D’Ambrosia pursuant to Section 302 of the Sarbanes – Oxley Act of 2002
32.1 – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes – Oxley Act of 2002
101.INS – XBRL Instance Document
101.LAB – XBRL Taxonomy Extension Label Linkbase
101.PRE – XBRL Taxonomy Extension Presentation Linkbase
101.SCH – XBRL Taxonomy Extension Schema Linkbase
101.DEF – XBRL Taxonomy Extension Definition Linkbase
101.CAL – XBRL Taxonomy Extension Calculation Linkbase
104 – Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
**Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K of the Securities Act of 1933, as amended. The Company will furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
MONRO, INC.
DATE: July 29, 2026
By:
/s/ Peter D. Fitzsimmons
Peter D. Fitzsimmons
President and Chief Executive Officer (Principal Executive Officer)
/s/ Brian J. D’Ambrosia
Brian J. D’Ambrosia
Executive Vice President – Finance, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)