Monro reports solid Q2, acquisitions in Calif., Iowa

ROCHESTER, N.Y. — Monro Inc. reported double-digit gains in operating income and sales for the quarter ended Sept. 25, based on business rebounding at the firm's existing stores and first-time contributions of stores acquired earlier this year.

Monro also disclosed it is buying 17 more stores — 11 in Iowa and six in California — that represent up to $25 million in annualized sales, but did not identify the dealerships being acquired.

Operating income for the company's fiscal 2022 second quarter jumped 41.4% to $34.5 million on 20.5% higher sales of $347.7 million. As a result, the operating ratio increased over a full point to 9.9%. Net income was up 64% to $21 million.

Monro President and CEO Mike Broderick credited the firm's strong second quarter performance to the dedication of its employees and leadership of its "seasoned" management team.

"We delivered double-digit comparable store sales growth across all of our regions bolstered by strength in our services categories and continued growth in tires," Mr. Broderick said, noting that management is "encouraged" to see comparable store sales up approximately 14% thus far in October.

Monro noted the sales increase for the quarter of $59.1 million was split nearly equally between growth in comparable store sales and sales from recent acquisitions.

Within the comparable store performance gains, Monro noted gains in business by product category of: 33% in brakes, 31% for alignments, 16% for front/end shocks, 15% for maintenance services and 10% for tires.

Looking ahead, Mr. Broderick noted management believes the firm is "well-positioned" to benefit from the company's Monro.Forward initiatives.

"Importantly," he said, "our commitment to our teammates will be critical to further solidify our position as a field-led, best-in-class service organization to drive sustainable growth. We believe our earnings growth, strong cash flow generation and solid balance sheet afford us the flexibility to invest in value-accretive acquisitions to deliver long-term value to all stakeholders, as evidenced by our announced acquisitions of 17 stores in California and Iowa."

During the quarter, Monro hired 250 new automotive technicians, which will help offset a high amount of overtime the company has been paying this year.

For the six months ended Sept. 25, operating income rose 74.2% to $62.4 million on 28.7% higher sales of $685.9 million, yielding an operating ratio of 9.5%. Net income was $36.7 million.

During the quarter, Monro closed three stores, leaving it with 1,288 company-operated stores and 92 franchised locations.