MONRO, INC. (Form: 10-Q, Received: 08/02/2021 14:43:04)

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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 26, 2021

¨ 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.)

200 Holleder Parkway, Rochester, New York	14615
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (585) 647-6400

_________________________________________

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

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 x Accelerated filer ¨ 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 23, 2021, 33,505,537 shares of the registrant's common stock, $0.01 par value per share, were outstanding.

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CONSOLIDATED FINANCIAL STATEMENTS

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets



(thousands, except footnotes) (unaudited)	June 26, 2021		March 27, 2021
Assets
Current assets
Cash and equivalents	$	16,878	$	29,960
Accounts receivable		15,422		15,324
Federal and state income taxes receivable		3,085		10,844
Inventories		167,501		162,282
Other current assets		53,180		48,115
Total current assets		256,066		266,525
Property and equipment, net		321,465		327,063
Finance lease and financing obligation assets, net		285,573		275,360
Operating lease assets, net		219,694		203,329
Goodwill		757,667		689,524
Intangible assets, net		27,229		26,068
Other non-current assets		18,261		18,332
Long-term deferred income tax assets		5,813		5,613
Total assets	$	1,891,768	$	1,811,814
Liabilities and shareholders' equity
Current liabilities
Current portion of finance leases and financing obligations	$	39,986	$	37,803
Current portion of operating lease liabilities		32,752		30,903
Accounts payable		121,378		112,378
Accrued payroll, payroll taxes and other payroll benefits		29,157		20,842
Accrued insurance		52,684		49,681
Deferred revenue		12,669		11,956
Other current liabilities		31,634		27,053
Total current liabilities		320,260		290,616
Long-term debt		198,000		190,000
Long-term finance leases and financing obligations		379,711		366,330
Long-term operating lease liabilities		197,571		177,724
Other long-term liabilities		17,154		16,649
Long-term deferred income tax liabilities		19,398		19,783
Long-term income taxes payable		1,083		1,028
Total liabilities		1,133,177		1,062,130
Commitments and contingencies - Note 10
Shareholders' equity:
Class C Convertible Preferred stock		29		29
Common stock		399		398
Treasury stock		(108,729)		(108,729)
Additional paid-in capital		239,738		238,244
Accumulated other comprehensive loss		(4,722)		(4,619)
Retained earnings		631,876		624,361
Total shareholders' equity		758,591		749,684
Total liabilities and shareholders' equity	$	1,891,768	$	1,811,814

Class C Convertible Preferred stock Authorized 150,000 shares, $1.50 par value, $0.064 conversion value: 19,664 shares issued and outstanding

Common stock Authorized 65,000,000 shares, $0.01 par value; 39,865,158 shares issued as of June 26, 2021; 39,848,093 shares issued at March 27, 2021

Treasury stock 6,359,871 shares, at cost

See accompanying Notes to Consolidated Financial Statements.

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income and Comprehensive Income



	Three Months Ended
(thousands, except per share data) (unaudited)	June 26, 2021		June 27, 2020
Sales	$	341,818	$	247,059
Cost of sales, including distribution and occupancy costs		215,887		159,605
Gross profit		125,931		87,454
Operating, selling, general and administrative expenses		98,014		76,053
Operating income		27,917		11,401
Interest expense, net of interest income		6,941		7,385
Other (income) loss, net		(44)		9
Income before income taxes		21,020		4,007
Provision for income taxes		5,339		1,020
Net income	$	15,681	$	2,987
Other comprehensive loss
Changes in pension, net of tax		(103)		(170)
Other comprehensive loss		(103)		(170)
Comprehensive income	$	15,578	$	2,817
Earnings per share
Basic	$	0.46	$	0.09
Diluted	$	0.46	$	0.09
Weighted average common shares outstanding
Basic		33,498		33,285
Diluted		34,022		33,854

See accompanying Notes to Consolidated Financial Statements.

‎

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Changes in Shareholders’ Equity



	Class C											Accumulated
	Convertible									Additional		Other
	Preferred Stock			Common Stock			Treasury Stock			Paid-In		Comprehensive		Retained		Total
(thousands) (unaudited)	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Loss		Earnings		Equity
Balance at March 28, 2020	22	$	33	39,645	$	396	6,360	$	(108,729)	$	229,774	$	(6,889)	$	619,855	$	734,440
Net income															2,987		2,987
Other comprehensive loss
Pension liability adjustment													(170)				(170)
Dividends declared
Preferred															(112)		(112)
Common															(7,323)		(7,323)
Dividend payable															(11)		(11)
Stock options and restricted stock				1							5						5
Stock-based compensation											904						904
Balance at June 27, 2020	22	$	33	39,646	$	396	6,360	$	(108,729)	$	230,683	$	(7,059)	$	615,396	$	730,720

Balance at March 27, 2021	20	$	29	39,848	$	398	6,360	$	(108,729)	$	238,244	$	(4,619)	$	624,361	$	749,684
Net income															15,681		15,681
Other comprehensive loss
Pension liability adjustment													(103)				(103)
Dividends declared
Preferred															(110)		(110)
Common															(8,042)		(8,042)
Dividend payable															(14)		(14)
Stock options and restricted stock				17		1					739						740
Stock-based compensation											755						755
Balance at June 26, 2021	20	$	29	39,865	$	399	6,360	$	(108,729)	$	239,738	$	(4,722)	$	631,876	$	758,591

We declared $0.24 and $0.22 dividends per common share or equivalent for the three months ended June 26, 2021 and June 27, 2020, respectively.

See accompanying Notes to Consolidated Financial Statements.

‎

Monro, Inc. Q1 2022 Form 10-Q

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CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Cash Flows



	Three Months Ended
(thousands) (unaudited)	June 26, 2021		June 27, 2020
Operating activities
Net income	$	15,681	$	2,987
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		20,278		18,410
Share-based compensation expense		755		904
Gain on disposal of assets		(168)		(256)
Deferred income tax expense		2,931		494
Change in operating assets and liabilities (excluding acquisitions)
Accounts receivable		(98)		1,095
Inventories		(4,110)		10,985
Other current assets		(4,853)		3,745
Other non-current assets		7,950		7,294
Accounts payable		9,000		11,349
Accrued expenses		15,648		17,555
Federal and state income taxes receivable		7,759		711
Other long-term liabilities		(8,114)		(2,751)
Long-term income taxes payable		55		14
Cash provided by operating activities		62,714		72,536
Investing activities
Capital expenditures		(5,199)		(15,304)
Acquisitions, net of cash acquired		(62,059)		(200)
Proceeds from the disposal of assets		429		7
Other		67		323
Cash used for investing activities		(66,762)		(15,174)
Financing activities
Proceeds from borrowings		77,000		—
Principal payments on long-term debt, finance leases and financing obligations		(78,661)		(247,364)
Exercise of stock options		779		9
Dividends paid		(8,152)		(7,435)
Deferred financing costs		—		(874)
Cash used for financing activities		(9,034)		(255,664)
Decrease in cash and equivalents		(13,082)		(198,302)
Cash and equivalents at beginning of period		29,960		345,476
Cash and equivalents at end of period	$	16,878	$	147,174
Supplemental information
Leased assets obtained in exchange for new finance lease liabilities	$	6,599	$	64,216
Leased assets obtained in exchange for new operating lease liabilities	$	1,382	$	13,796

See accompanying Notes to Consolidated Financial Statements.

Monro, Inc. Q1 2022 Form 10-Q

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INDEX

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

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 1,291 Company-operated retail stores located in 32 states and 91 franchised locations as of June 26, 2021.

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.

As of June 26, 2021, Monro had seven wholesale locations and three retread facilities. The wholesale locations, in most cases, sell tires to customers for resale, although these tire sales do not include installation or other tire related services. The retread facilities re-manufacture tires through the replacement of tread on worn tires that are later sold to customers.

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 presentation 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 (“U.S. 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 27, 2021.

We use the same accounting policies in preparing quarterly and annual financial statements.

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 2022 and 2021 each contain 52 weeks. Unless specifically indicated otherwise, any references to “2022” or “fiscal 2022” and “2021” or “fiscal 2021” relate to the years ending March 26, 2022 and March 27, 2021, respectively.

Recent accounting pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance intended to simplify the accounting for income taxes. The new guidance removes certain exceptions to the general principles in Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes,” and amends existing guidance to improve consistent application. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020. We adopted this guidance during the first quarter of 2022. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC) and the SEC did not, or are not expected to have a material effect on Monro’s consolidated financial statements.

Note 2 – Impact of the COVID-19 Pandemic

The novel strain of coronavirus (“COVID-19”) pandemic has been a highly disruptive economic and societal event that has affected the Company’s business and has a significant impact on consumer shopping behavior. To date, our retail stores, wholesale locations and other facilities have remained open as an essential business. To serve our customers while also providing for the safety of employees, the Company has adapted certain aspects of the business. Throughout the pandemic, the Company has monitored the

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

rapidly evolving situation and will continue to adapt its operations to (i) address federal, state and local standards, (ii) meet the demand of customers, and (iii) implement standards that the Company believes to be in the best interests of the safety and well-being of its employees and customers.

The full impact of the COVID-19 pandemic will depend on factors such as the length of time of the pandemic; how federal, state and local governments are responding; the efficacy of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our customers, employees, vendors and other partners.

Note 3 – Acquisitions

Monro’s acquisitions are strategic moves in our plan to fill in and expand our presence in our existing and contiguous markets, expand into new markets and leverage fixed operating costs such as distribution, advertising and administration. Acquisitions in this footnote include acquisitions of five or more locations as well as acquisitions of one to four locations that are part of our greenfield store growth strategy.

2022

On April 25, 2021, we acquired 30 retail tire and automotive repair stores located in California from Mountain View Tire & Service, Inc. for $62.1 million. These stores will operate under the Mountain View Tire & Service name. The acquisition was financed through our Credit Facility, as defined in Note 9. The results of operations for the acquisition are included in our financial results from the acquisition date.

The acquisition resulted in goodwill related to, among other things, growth opportunities, synergies and economies of scale expected from combining the business with ours, as well as unidentifiable intangible assets. All of the goodwill is expected to be deductible for tax purposes.

We expensed all costs related to the acquisition in the three months ended June 26, 2021. The total costs related to the completed acquisition were $0.3 million and these costs are included in the Consolidated Statements of Income and Comprehensive Income primarily under operating, selling, general and administrative (“OSG&A”) expenses.

Sales related to the completed acquisition totaled $7.9 million for the period from acquisition date through June 26, 2021.

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

We accounted for the acquisition as a business combination using the acquisition method of accounting in accordance with the FASB ASC Topic 805, “Business Combinations.” The assets acquired and liabilities assumed were recorded at their acquisition-date fair values and were consolidated with those of the Company as of the acquisition date. The acquisition-date fair values were assigned based on preliminary valuations and estimates, and the consideration transferred and net liabilities assumed were recorded as goodwill.



2022 Acquisition-date Fair Values Assigned
(thousands)
Inventory	$	1,034
Other current assets		217
Property and equipment		960
Finance lease and financing obligation assets		12,098
Operating lease assets		22,867
Intangible assets		2,211
Other non-current assets		63
Long-term deferred income tax assets		3,482
Total assets acquired		42,932
Current portion of finance leases and financing obligations		1,184
Current portion of operating lease liabilities		1,960
Deferred revenue		955
Other current liabilities		208
Long-term finance leases and financing obligations		17,480
Long-term operating lease liabilities		26,417
Other long-term liabilities		747
Total liabilities assumed		48,951
Total net identifiable liabilities assumed	$	(6,019)
Total consideration transferred	$	62,117
Less: total net identifiable liabilities assumed		(6,019)
Goodwill	$	68,136

The total consideration of $62.1 million is comprised of $61.0 million in cash, and a $1.1 million payable to the seller. The payable is due upon finalization of a lease assignment for one store location.

We assigned $2.2 million to amortizable intangible assets, including customer list and trade name, with a weighted-average amortizable period of approximately eight years. We have assigned acquired right-of-use assets at the present value of remaining lease payments adjusted to reflect favorable or unfavorable market terms of the lease.

Supplemental pro forma information for the current or prior reporting periods has not been presented due to the impracticability of obtaining detailed, accurate or reliable data for the periods the acquired entities were not owned by Monro.

We continue to refine the valuation data and estimates primarily related to inventory, warranty reserves, intangible assets and real property leases and certain liabilities for the 2022 acquisition and the 2021 acquisition that closed in December 2020 and expect to complete the valuations no later than the first anniversary date of the acquisition. We anticipate that adjustments will continue to be made to the fair values of identifiable assets acquired and liabilities assumed and those adjustments may or may not be material.

During the three months ended June 26, 2021, we paid $0.8 million to the seller of the 2021 acquisition as the lease assignment for one store location was finalized during the period.

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

Note 4 – Earnings per Common Share

Basic earnings per common share amounts are calculated by dividing income available to common shareholders, after deducting preferred stock dividends, by the weighted average number of shares of common stock outstanding. Diluted earnings per common share amounts are calculated by dividing net income by the weighted average number of shares of common stock and common stock equivalents outstanding. Common stock equivalents represent shares issuable upon the assumed exercise of common stock options outstanding.



Earnings per Common Share	Three Months Ended
(thousands, except per share data)	June 26, 2021		June 27, 2020
Numerator for earnings per common share calculation:
Net income	$	15,681	$	2,987
Less: Preferred stock dividends		(110)		(112)
Income available to common shareholders	$	15,571	$	2,875
Denominator for earnings per common share calculation:
Weighted average common shares - basic		33,498		33,285
Effect of dilutive securities:
Preferred stock		460		510
Stock options		31		31
Restricted stock		33		28
Weighted average common shares - diluted		34,022		33,854

Basic earnings per common share	$	0.46	$	0.09
Diluted earnings per common share	$	0.46	$	0.09

The calculation of diluted earnings per common share excludes the effect of the assumed exercise of approximately 203,000 and 585,000 stock options for the three months ended June 26, 2021 and June 27, 2020, respectively. Such amounts were excluded as the exercise price of these stock options was greater than the average market value of our common stock for those periods, resulting in an anti-dilutive effect on diluted earnings per common share.

Note 5 – Income Taxes

For the three months ended June 26, 2021, our effective income tax rate was 25.4 percent, compared to 25.5 percent for the three months ended June 27, 2020.

Note 6 – Fair Value

Long-term debt had a carrying amount that approximates a fair value of $198.0 million as of June 26, 2021, as compared to a carrying amount and a fair value of $190.0 million as of March 27, 2021. The carrying value of our debt approximated its fair value due to the variable interest nature of the debt.

Note 7 – Cash Dividend

We paid dividends of $8.2 million during the three months ended June 26, 2021. However, the declaration of and any determination as to the payment 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 Credit Facility restrictions, and such other factors as the Board of Directors deems relevant. Under our Credit Facility, we were permitted to declare, make or pay any dividend or distribution up to $38.5 million in the aggregate for the period from June 30, 2020 to June 30, 2021 if we were in compliance with the financial covenants and other restrictions in the Credit Facility, as amended. For additional information regarding our Credit Facility, see Note 9.

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

Note 8 – 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 as well as commissions earned from the delivery of tires on behalf of certain tire vendors.

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 vary depending on the customer and generally range from 15 to 45 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	Three Months Ended
(thousands)	June 26, 2021		June 27, 2020
Tires ^(a)	$	176,229	$	137,270
Maintenance		84,459		57,620
Brakes		45,975		28,564
Steering		28,266		18,468
Exhaust		5,789		4,432
Other		1,100		705
Total	$	341,818	$	247,059

(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 26, 2021 and March 27, 2021 were $18.0 million and $16.7 million, respectively, of which $12.7 million and $12.0 million, respectively, are reported in Deferred revenue and $5.3 million and $4.7 million, respectively, are reported in Other long-term liabilities in our Consolidated Balance Sheets.



Changes in Deferred Revenue
(thousands)
Balance at March 27, 2021	$	16,712
Deferral of revenue		4,325
Deferral of revenue from acquisitions		1,605
Recognition of revenue		(4,637)
Balance at June 26, 2021	$	18,005

As of June 26, 2021, we expect to recognize $10.5 million of deferred revenue related to road hazard warranty agreements in the remainder of fiscal 2022, $6.0 million of deferred revenue during our fiscal year ending March 25, 2023, and $1.5 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 9 – Long-term Debt

In April 2019, we entered into a new five year $600 million revolving credit facility agreement with eight banks (the “Credit Facility”). Interest only is payable monthly throughout the Credit Facility’s term. 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. The Credit Facility bears interest at 75 to 200 basis points over the London Interbank Offered Rate (“LIBOR”) (or replacement index) or at the prime rate, depending on the type of borrowing and the rates then in effect.

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CONSOLIDATED FINANCIAL STATEMENTS

NOTES

On June 11, 2020, we entered into a First Amendment to the Credit Facility (the “First Amendment”), which, among other things, amended the terms of certain of the financial and restrictive covenants in the credit agreement through the first quarter of fiscal 2022 to provide us with additional flexibility to operate our business. The First Amendment permanently amended the interest rate charged on borrowings to be based on the greater of adjusted one-month LIBOR or 0.75 percent. For the period from June 30, 2020 to June 30, 2021, the minimum interest rate spread charged on borrowings was 225 basis points over LIBOR. 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 were in compliance with the financial covenants and other restrictions in the First Amendment and Credit Facility. The Credit Facility requires fees payable quarterly throughout the term between 0.125 percent and 0.35 percent of the amount of the average net availability under the Credit Facility during the preceding quarter. Except as amended by the First 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. 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 June 26, 2021.

There was $198.0 million outstanding and $372.4 million available under the Credit Facility at June 26, 2021.

We were in compliance with all debt covenants at June 26, 2021.

Note 10 – Commitments and Contingencies

Commitments



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	$	198,000		—	$	198,000		—		—
Finance lease commitments/financing obligations ^(a)		533,744	$	58,034		114,582	$	103,894	$	257,234
Operating lease commitments ^(a)		266,783		39,184		71,021		58,413		98,165
Accrued rent		1,348		1,191		87		27		43
Other liabilities		933		841		92		—		—
Total	$	1,000,808	$	99,250	$	383,782	$	162,334	$	355,442

(a)Finance and operating lease commitments represent future undiscounted lease payments and include $112.0 million and $70.2 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.

As previously disclosed by the Company, an action was filed against us on June 12, 2020 in the U.S. District Court for the Western District of Pennsylvania by Mark Cerini. The plaintiff, who is a former service store manager, sought certification to represent similarly situated store managers in a nationwide collective action for unpaid overtime wages, damages and attorneys’ fees. Plaintiff alleges violations of the Fair Labor Standards Act and various state laws relating to, among other things, overtime and unpaid wages. The parties have reached an agreement in principle to resolve this matter. The Company included the potential settlement amount of $3.9 million in OSG&A expenses in the Company’s Consolidated Statement of Income and Comprehensive Income for the three months ended June 26, 2021. A settlement agreement is currently being reviewed and the terms of the settlement may be subject to change. Settlement is subject to court approval.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Financial Summary

First quarter 2022 included the following notable items:

Diluted earnings per common share (“EPS”) were $0.46.

Adjusted diluted EPS, a non-GAAP measure, were $0.55.

Sales increased 38.4 percent, driven by an increase in comparable store sales.

Comparable store sales increased 34.5 percent, driven primarily by an increase in guest traffic and average ticket amount.

Operating income of $27.9 million was 144.9 percent higher than the prior year comparable period.

Net income was $15.7 million.

Adjusted net income, a non-GAAP measure, was $18.8 million.


Earnings Per Common Share	Three Months Ended
	June 26, 2021		June 27, 2020		Change
Diluted EPS	$	0.46	$	0.09	411.1	%
Adjustments		0.09		0.06
Adjusted diluted EPS	$	0.55	$	0.15	266.7	%

Adjusted diluted EPS and adjusted net income, each of which are a measure not derived in accordance with U.S. GAAP, exclude the impact of certain items. Management believes that adjusted diluted EPS and adjusted net income are useful in providing period-to-period comparisons of the results of our operations by excluding certain non-recurring items and items related to store closings as well as Monro.Forward or acquisition initiatives. Reconciliations of these non-GAAP financial measures to GAAP measures are provided beginning on page 18 under “Non-GAAP Financial Measures.”

We define comparable store sales, or same store sales, as sales for stores 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 sales calculation is not necessarily comparable to similarly titled measures reported by other companies.

Impact of COVID-19

The full impact of the COVID-19 pandemic will depend on factors such as the length of time of the pandemic; how federal, state and local governments are responding; the efficacy and distribution of the COVID-19 vaccines; the longer-term impact of the pandemic on the economy and consumer behavior; and the effect on our customers, referred to as “guests”; employees, referred to as “teammates”; vendors and other partners.

During this time, we are focused on protecting the health and safety of our teammates and guests, while seeking to continue operating our business responsibly.

While we expect many teammates to return to our offices later this calendar year, the timing of such a return could be affected by resurgences of COVID-19 in areas where our offices are located. When we return to our offices, we expect many teammates to continue to work in a hybrid of in-person and remote work. These changes to our operations going forward may present additional challenges and increased costs to insure our offices are safe and functional for hybrid work that enable effective collaboration of both in-person and remote teammates.

Although we are experiencing unprecedented challenges during this pandemic, we continue our focus to remain as efficient as possible while still offering safe and high quality service to our guests.

Given the level of volatility and uncertainty surrounding the future impact of COVID-19, we cannot estimate with certainty the long-term impacts of the COVID-19 pandemic on our business, financial condition, results of operations, and cash flows.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Analysis of Results of Operations



Summary of Operating Income	Three Months Ended
(thousands)	June 26, 2021		June 27, 2020		Change
Sales	$	341,818	$	247,059	38.4	%
Cost of sales, including distribution and occupancy costs		215,887		159,605	35.3
Gross profit		125,931		87,454	44.0
Operating, selling, general and administrative expenses		98,014		76,053	28.9
Operating income	$	27,917	$	11,401	144.9	%

Sales

Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, etc., and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 8 to the Company’s 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 of equivalent length. There were 90 selling days in the three months ended June 26, 2021 and in the three months ended June 27, 2020.

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 guests’ experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will over the long-term drive both increasing guest traffic and the average ticket amount.



Sales	Three Months Ended
(thousands)	June 26, 2021			June 27, 2020
Sales	$	341,818		$	247,059
Dollar change compared to prior year	$	94,759
Percentage change compared to prior year		38.4	%

The sales increase was primarily due to an increase in comparable store sales from an increase in guest traffic and average ticket amount as the prior year period includes the low point of guest traffic during the COVID-19 pandemic to date. Additionally, there was an increase in sales from new stores. Partially offsetting these increases was a decrease in sales from closed stores. The following table shows the primary drivers of the change in sales between the three months ended June 26, 2021 and the three months ended June 27, 2020.



Sales Percentage Change	Three Months Ended
	June 26, 2021
Sales change	38.4	%
Primary drivers of change in sales
Comparable stores sales	34.5	%
New store sales ^(a)	5.7	%
Closed store sales	(1.3)	%

(a)Sales from 2022 and 2021 acquisitions represented 5.5 percent of the change between the three months ended June 26, 2021 and the three months ended June 27, 2020.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

As the COVID-19 pandemic has evolved, demand for automotive undercar repair services as well as replacement tires and tire related services continues to be volatile. During the three months ended June 26, 2021, comparable store sales growth increased across our product categories with significant higher growth in our higher-margin brakes and maintenance service categories, as well as our tire category, each of which experienced significant declines during the three months ended June 27, 2020.


Comparable Store Product Category Sales Change	Three Months Ended
	June 26, 2021		June 27, 2020
Tires	25	%	(14)	%
Maintenance	42	%	(35)	%
Brakes	57	%	(41)	%
Alignment	54	%	(32)	%
Front end/shocks	40	%	(36)	%
Exhaust	35	%	(37)	%



Sales by Product Category	Three Months Ended
	June 26, 2021		June 27, 2020
Tires	52	%	56	%
Maintenance	25		23
Brakes	14		12
Steering ^(a)	8		8
Exhaust	1		1
Total	100	%	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 at March 27, 2021		1,263
Opened ^(a)		30
Closed		(2)
Ending store count at June 26, 2021		1,291

(a)Related to stores acquired from the 2022 acquisition.

Cost of Sales and Gross Profit



Gross Profit	Three Months Ended
(thousands)	June 26, 2021			June 27, 2020
Gross profit	$	125,931		$	87,454
Percentage of sales		36.8	%		35.4	%
Dollar change compared to prior year	$	38,477
Percentage change compared to prior year		44.0	%

The increase in gross profit, as a percentage of sales, of 140 basis points (“bps”) from the prior year comparable period was primarily due to 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. The increase in gross profit, as a percentage of sales, was also partially due to a decrease in material costs, as a percentage of sales, as a result of a shift in sales mix to our higher margin brakes and maintenance service categories. Additionally, through the use of our tire category and management pricing tool in place, we expanded our gross profit per tire from the prior year comparable period. Partially offsetting these decreases was an increase in technician labor costs, which increased as a percentage of sales, as staffing levels continue to normalize during the three months ended June 26, 2021 as compared to minimum staffing levels in the prior year period which were adjusted to lower demand due to the COVID-19 pandemic. Also, more technicians working overtime, in order to meet the surge in demand, during the three months ended June 26, 2021 resulted in an increase in technician labor costs, as a percentage of sales, from the prior year comparable period.

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MANAGEMENT’S DISCUSSION AND ANALYSIS



Gross Profit as a Percentage of Sales Change	Three Months Ended
	June 26, 2021
Gross profit change	140	bps
Primary drivers of change in gross profit as a percentage of sales
Distribution and occupancy costs	260	bps
Material costs	170	bps
Technician labor costs	(280)	bps

OSG&A Expenses



OSG&A Expenses	Three Months Ended
(thousands)	June 26, 2021			June 27, 2020
OSG&A Expenses	$	98,014		$	76,053
Percentage of sales		28.7	%		30.8	%
Dollar change compared to prior year	$	21,961
Percentage change compared to prior year		28.9	%

The increase of $22.0 million in OSG&A expenses from the prior year comparable period is primarily due to increased expenses from comparable stores, mainly store management compensation to match demand and advertising expense. However, we gained leverage with higher overall comparable store sales, which resulted in the decrease in OSG&A expenses, as a percentage of sales, from the prior year comparable period. The increase in OSG&A expenses was also partially due to litigation settlement costs (related to the Cerini matter described in Note 10) as well as increased expenses from new stores. Partially offsetting these increases were lower expenses from 10 stores closed compared to the prior year period.



OSG&A Expenses Change	Three Months Ended
(thousands)	June 26, 2021
OSG&A expenses change	$	21,961
Drivers of change in OSG&A expenses
Increase from comparable stores	$	16,153
Increase in litigation settlement costs	$	3,920
Increase from new stores	$	3,185
Decrease from closed stores	$	(1,297)

Other Performance Factors

Net Interest Expense

Net interest expense of $6.9 million for the three months ended June 26, 2021 decreased $0.4 million as compared to the prior year period, and decreased as a percentage of sales from 3.0 percent to 2.0 percent. Weighted average debt outstanding for the three months ended June 26, 2021 decreased by approximately $294 million as compared to the three months ended June 27, 2020. This decrease is related to a decrease in debt outstanding under our five year $600 million revolving credit facility agreement with eight banks (the “Credit Facility”). Partially offsetting this decrease was an increase in finance lease debt recorded in connection with the 2022 and 2021 acquisitions and greenfield expansion, along with renegotiated leases. Additionally, there was an increase in the weighted average interest rate of approximately 130 basis points from the prior year comparable period due primarily to an increase in borrowing rates associated with the Credit Facility.

Provision for Income Taxes

For the three months ended June 26, 2021, our effective income tax rate was 25.4 percent compared to 25.5 percent for the three months ended June 27, 2020.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Non-GAAP Financial Measures

In addition to reporting net income and diluted EPS, which are GAAP measures, this Form 10-Q 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. 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 and items related to store closings as well as Monro.Forward or 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.

Adjusted net income is summarized as follows:



Reconciliation of Adjusted Net Income	Three Months Ended
(thousands)	June 26, 2021		June 27, 2020
Net income	$	15,681	$	2,987
Store closing costs		(272)		2,527
Monro.Forward initiative costs		103		182
Acquisition due diligence and integration costs		310		17
Management transition costs		59		—
Litigation settlement costs		3,920		—
Provision for income taxes on adjustments		(997)		(641)
Adjusted net income	$	18,804	$	5,072

Adjusted diluted EPS is summarized as follows:



Reconciliation of Adjusted Diluted EPS	Three Months Ended
	June 26, 2021		June 27, 2020
Diluted EPS	$	0.46	$	0.09
Store closing costs		(0.01)		0.06
Monro.Forward initiative costs^(a)		—		—
Acquisition due diligence and integration costs ^(a)		0.01		—
Management transition costs^(a)		—		—
Litigation settlement costs		0.09		—
Adjusted diluted EPS	$	0.55	$	0.15

(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.

The adjustments to diluted EPS reflect effective tax rates of 24.2 percent and 23.5 percent for the three months ended June 26, 2021 and June 27, 2020, respectively. See adjustments from the Reconciliation of Adjusted Net 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 the last three fiscal years. The cash we generate from our operations allows us to support business operations and Monro.Forward initiatives as well as invest in attractive acquisition opportunities intended to drive long-term sustainable growth, while paying down debt and returning 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 from time to time determine that it is in our best interests to voluntarily repay certain indebtedness early.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Accordingly, we believe that our current sources of funds will provide us with adequate liquidity during the 12-month period following June 26, 2021, as well as in the long-term.

See the sections below for more details regarding material requirements for cash in our business and our sources of liquidity to meet such needs.

Material Cash Requirements

We currently expect our capital expenditures to support our projects, including upgrading our facilities and systems as well as funding our Monro.Forward initiatives, to be $30 million to $45 million in 2022. Additionally, we have contractual finance lease and operating lease commitments with landlords through October 2040 for $618.3 million in lease payments, of which $96.3 million is due within one year. For details regarding these lease commitments, see Note 10 to the Company’s consolidated financial statements.

As of June 26, 2021, we had $198.0 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 10 to the Company’s consolidated financial statements.

We paid cash dividends totaling $8.2 million ($0.24 per share) during the three months ended June 26, 2021. For details regarding our cash dividend, see Note 7 to the Company’s consolidated financial statements.

Sources and Conditions of Liquidity

Our sources to fund our material cash requirements are predominantly cash from operations, cash and equivalents on hand, and availability under our Credit Facility.

As of June 26, 2021, we had $16.9 million of cash and equivalents. In addition, we had $372.4 million available under the Credit Facility as of June 26, 2021.

Summary of Cash Flows

The following table presents a summary of our cash flows from operating, investing and financing activities.



Summary of Cash Flows	Three Months Ended
(thousands)	June 26, 2021		June 27, 2020
Cash provided by operating activities	$	62,714	$	72,536
Cash used for investing activities		(66,762)		(15,174)
Cash used for financing activities		(9,034)		(255,664)
Decrease in cash and equivalents		(13,082)		(198,302)
Cash and equivalents at beginning of period		29,960		345,476
Cash and equivalents at end of period	$	16,878	$	147,174

Cash provided by operating activities

For the three months ended June 26, 2021 cash provided by operating activities was $62.7 million, which consisted of net income of $15.7 million, adjusted by non-cash charges of $23.8 million and by a change in operating assets and liabilities of $23.2 million. The non-cash charges were largely driven by $20.3 million of depreciation and amortization. The change in operating assets and liabilities was primarily due to accounts payable and accrued liabilities, net of vendor rebate receivables, being a source of cash of $19.8 million driven by timing of payments, as well as our federal and state income taxes receivable being a source of cash of $7.8 million due largely to an income tax refund that was received. These sources of cash were partially offset by our inventory balance being a use of cash of $4.1 million due to increased inventory purchases to meet higher demand.

For the three months ended June 27, 2020 cash provided by operating activities was $72.5 million, which consisted of net income of $3.0 million, adjusted by non-cash charges of $19.6 million and by a change in operating assets and liabilities of $49.9 million. The non-cash charges were largely driven by $18.4 million of depreciation and amortization. The change in operating assets and liabilities was primarily due to accounts payable and accrued liabilities, net of vendor rebate receivables, being a source of cash of $37.0 million driven by timing of payments, as well as our inventory balance being a source of cash of $11.0 million due to decreased inventory purchases to adjust to lower demand.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

Cash used for investing activities

For the three months ended June 26, 2021 cash used for investing activities was $66.8 million. This was primarily due to cash used for acquisitions and capital expenditures, including property and equipment, of $62.1 million and $5.2 million, respectively. Included in the $62.1 million used for acquisitions was $0.8 million paid to the seller of the 2021 acquisition as the lease assignment for one store location was finalized during the period.

For the three months ended June 27, 2020 cash used for investing activities was $15.2 million. This was primarily due to cash used for capital expenditures, including property and equipment, of $15.3 million.

Cash used for financing activities

For the three months ended June 26, 2021 cash used for financing activities was $9.0 million which was primarily due to payment of finance lease principal and dividends of $9.7 million and $8.2 million, respectively, partially offset by net borrowing under our Credit Facility of $8.0 million.

For the three months ended June 27, 2020 cash used for financing activities was $255.7 million which was primarily due to payment of amounts previously borrowed under our Credit Facility and finance lease principal of $240.2 million and $7.1 million, respectively, as well as payment of dividends of $7.4 million.

Critical Accounting Policies and 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.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the economy, our business operations and financial markets. The estimates used for, but not limited to, determining fair value of long-lived assets, goodwill, self-insurance reserves and our ability to realize the tax benefits associated with deferred tax assets could be impacted. We have assessed the impact and are not aware of any specific events or circumstances that required an update to our estimates and assumptions or materially affected the carrying value of our assets or liabilities as of the date of issuance of this report. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

For a description of our critical accounting policies and estimates, refer to Part II, Item 7., “Critical Accounting Policies” of our Form 10-K for the fiscal year ended March 27, 2021. There have been no material changes to our critical accounting policies and estimates since our Form 10-K for the year ended March 27, 2021.

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 26, 2021 and the expected impact on the consolidated financial statements for future periods.

Cautionary Note Regarding Forward-Looking Statements

This report 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,” “appear,” “believe,” “contemplate,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “see,” “strategy,” “vision,” “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:

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MANAGEMENT’S DISCUSSION AND ANALYSIS

•the potential effect of general business or economic conditions on our business, including the direct and indirect effects of the COVID-19 pandemic on the economy, consumer spending levels, and unemployment in our markets;

•the uncertainty of the impact of the COVID-19 pandemic and public health measures on our business and results of operations, including uncertainties surrounding possible disruptions in our supply chain or sources of supply, the physical and financial health of our customers, the effectiveness and duration of government assistance programs to individuals, households and businesses to support consumer spending, levels of traffic in our stores, changes in customer demand for our services, and increased expenses for higher wages and compensation paid to employees and the cost of personal protective equipment and additional cleaning supplies and protocols for the safety of our employees;

•our expectations regarding cost increases in the future, including costs relating to our COVID-19 response initiatives, increases in the minimum wage by states and localities, potential federal minimum wage legislation, increases in distribution and fuel costs and potential new legal requirements to provide increased pay for employees who work during pandemic restrictions;

•the effect of economic conditions, seasonality and the impact of weather conditions and natural disasters on customer demand;

•the dependence on and our expectation regarding competition within the primary markets in which our stores are located;

•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 competitive services and pricing;

•the reliability of, and cost associated with, our sources of parts supply, particularly imported goods such as those sourced from China;

•the impact of trade relations and the ongoing trade dispute between the United States and China, including the actual and potential effect of Section 301 tariffs on Chinese goods imposed by the United States Trade Representative, uncertainties surrounding the policies of the new presidential administration, and other potential impediments to imports;

•the impact of industry regulation;

•our ability to service our debt obligations, including our expected annual interest expense;

•our cash needs, including our ability to fund our future capital expenditures and working capital requirements;

•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;

•advances in automotive technologies;

•risks relating to disruption or unauthorized access to our computer systems;

•our failure to protect customer and employee personal data;

•business interruptions;

•potential outcomes related to pending or future litigation matters;

•risks relating to acquisitions and the integration of acquired businesses with ours;

•the effect of changes in labor laws, and the effect of the Fair Labor Standards Act as it relates to the qualification of our managers for exempt status, minimum wage and health care law;

•our assessment of the materiality and impact on our business of recent accounting pronouncements adopted by the FASB;

•management’s estimates and expectations as they relate to income tax liabilities, deferred income taxes and uncertain tax positions; and

•management’s estimates associated with our critical accounting policies, including business combinations, self-insurance liabilities and valuations for our goodwill and indefinite-lived intangible assets impairment analyses.

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 27, 2021, 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.

Monro, Inc. Q1 2022 Form 10-Q

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DISCLOSURES ABOUT MARKET RISK & CONTROLS AND PROCEDURES

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from potential changes in interest rates. As of June 26, 2021, 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 $2.0 million based upon our debt position at June 26, 2021 and approximately $1.9 million based upon our debt position at March 27, 2021, respectively, given a change in LIBOR of 100 basis points.

Debt financing had a carrying amount that approximates a fair value of $198.0 million as of June 26, 2021, as compared to a carrying amount and a fair value of $190.0 million as of March 27, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports that we file or submit to the SEC pursuant to the Securities Exchange Act of 1934, as amended, 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 26, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Monro, Inc. Q1 2022 Form 10-Q

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SUPPLEMENTAL INFORMATION

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we are a party to or otherwise involved in legal proceedings arising out of the normal course of business. Legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of one or more of these matters could have a material adverse impact on the Company, its financial condition and results of operations.

As previously disclosed by the Company, an action was filed against us on June 12, 2020 in the U.S. District Court for the Western District of Pennsylvania by Mark Cerini. The plaintiff, who is a former service store manager, sought certification to represent similarly situated store managers in a nationwide collective action for unpaid overtime wages, damages and attorneys’ fees. Plaintiff alleged violations of the Fair Labor Standards Act and various state laws relating to, among other things, overtime and unpaid wages. The parties have reached an agreement in principle to resolve this matter. The Company included the potential settlement amount of $3.9 million in OSG&A expenses in the Company’s Consolidated Statement of Income and Comprehensive Income for the three months ended June 26, 2021. A settlement agreement is currently being reviewed and the terms of the settlement may be subject to change. Settlement is subject to court approval. In resolving the matter, the Company believes the settlement is, at this time, the best use of management’s time and other resources.

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Monro, Inc. Q1 2022 Form 10-Q

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SUPPLEMENTAL INFORMATION

Item 6. Exhibits

Exhibit Index

3.02 – Amended and Restated By-Laws of the Company, dated May 13, 2021. (May 2021 Form 8-K, Exhibit No. 3.02)

10.67 – Letter Agreement by and between Monro, Inc. and Maureen Mulholland, dated April 15, 2021 (April 2021 Form 8-K, Exhibit No. 10.67)*

10.72 – Employment Agreement by and between the Company and Matt Henson, dated July 6, 2021*

31.1 – Certification of Michael T. Broderick 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)

* Management contract or compensatory plan or arrangement.
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SUPPLEMENTAL INFORMATION

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: August 2, 2021	By:	/s/ Michael T. Broderick
		Michael T. Broderick
		President and Chief Executive Officer ‎(Principal Executive Officer)

DATE: August 2, 2021	By:	/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)

Monro, Inc. Q1 2022 Form 10-Q

Exhibit 10.72

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, entered into on July 6, 2021 and effective as of the Start Date (as defined below) (the “Effective Date”), between Monro, Inc. (the “Company”) and Matt Henson (the “Executive”).

WHEREAS, the Company wishes to appoint the Executive as its Chief Human Resources Officer effective as of the Effective Date, and the Executive wishes to serve in that capacity; and

WHEREAS, the Company and the Executive wish for the Executive to be employed by the Company upon the terms and conditions as set forth herein commencing on the Effective Date;

NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Employment and Duties

Employment by the Company

. The Company hereby agrees to employ the Executive for the Term (as herein defined), to render exclusive and full-time services in the capacity of Chief Human Resources Officer of the Company, subject to the control and direction of the Company’s Chief Executive Officer (the “CEO”).

Duties/Authority

. During the Term, the Executive shall have responsibility for the conduct of the business and fiscal affairs of the Company and the general supervision of and control over the assets, business interests, and agents of the Company, in each case subject to the control and direction of the CEO. The Executive’s duties hereunder shall be consistent with the duties, responsibilities, and authority generally incident to the position of Chief Human Resources Officer and such other reasonably related duties as may be assigned to him from time to time by the CEO consistent with his role as a senior executive.

Principal Place of Employment

. The Executive’s principal place of employment shall be at the Company’s headquarters in Rochester, New York, subject to customary travel.

Term of Employment

. The “Term” of this Agreement shall commence on a date to be mutually agreed by the parties, but in no event later than July 6, 2021 (the “Start Date”) and end on December 31, 2023 (the “Initial Term”), unless sooner terminated as provided herein. Unless earlier terminated, the Term shall automatically renew (each a “Renewal Term”) at the end of the Initial Term and on each anniversary thereafter for a period of one (1) year unless either party shall give written notice of intent not to extend the then-current Term to the other party not later than ninety (90) days prior to the end of then-current Term. References herein to the Term shall mean the period of the Executive’s employment during the Initial Term and any Renewal Term.

Compensation

Salary

. As consideration for services rendered, the Company shall pay the Executive a salary of $340,000 per annum (the “Base Salary”), payable not less frequently than monthly. The Executive’s Base Salary will be reviewed annually by the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”)and may be increased (but not decreased without the Executive’s consent) to reflect the Executive’s performance and responsibilities.

Annual Bonus

. Pursuant to the Company’s bonus plan (the “Bonus Plan”), the Company shall pay the Executive, within 120 days of its fiscal year-end, a cash bonus in respect of each prior fiscal year during the Term, of 37.5% of the Base Salary if the company achieves its threshold performance levels and 50% of the Base Salary if the Company achieves its target level of performance set by the Committee with respect to such fiscal year, increased up to a maximum of 75% of the Base Salary if the Company exceeds such performance targets by amounts to be determined by the Committee (the “Annual Bonus”). For 2021, the Annual Bonus shall be prorated based on the portion of the year the Executive is employed by the Company. If this Agreement terminates other than at the end of a fiscal year either: (i) upon the expiration of the Term; or (ii) pursuant to Section 4, and the Executive is entitled to a pro rata bonus for such partial fiscal year pursuant to Section 5 or Section 6 hereof, such pro rata bonus shall be equal to the bonus the Executive would have received under the Bonus Plan, based on the Company’s actual performance during such fiscal year, had he been employed by the Company for the entire fiscal year, multiplied by a fraction, the numerator of which shall be the number of days during such fiscal year he was so employed and the denominator of which shall be the number of days in such fiscal year (the “Pro Rata Bonus”). The Executive may be entitled to the Annual Bonus for the fiscal year prior to the fiscal year in which the Executive’s employment is terminated, to the extent not yet paid (the “Preceding Bonus”). The Executive shall be entitled to receive the Preceding Bonus and/or the Pro Rata Bonus, as applicable: (a) at the same time the annual bonuses for the same periods are paid to other senior executives of the Company; and (b) only to the extent the Board or the Committee determines to pay such bonus to the other senior executives of the Company. The Annual Bonus shall, in all respects, be subject to the terms of the Bonus Plan.

Sign-On Bonus

. On the first payroll date following the Start Date, the Company shall pay the Executive a cash sign-on bonus of $225,000 (the “Sign-On Bonus”). If the Executive’s employment is terminated by the Company with Cause or the Executive resigns other than for Good Reason, in either case within one (1) year following the Start Date, the Executive shall repay the Sign-On Bonus to the Company within ten (10) days following the date of termination (the “Sign-On Bonus Repayment”). With notice to the Executive, the Company may offset against the Sign-On Bonus Repayment any amounts that the Company then owes to the Executive.

Participation in Employee Benefit Plans

. The Executive shall be permitted during the Term, if and to the extent eligible, to participate in any group life, hospitalization or disability insurance plan, health program, or any pension plan or similar

benefit plan of the Company, which is available generally to other senior executives of the Company.

Equity Awards

(A)Sign-On Grant. Effective as of the Start Date, the Company shall grant the Executive restricted stock units (“RSUs”) with a value of $100,000 and nonqualified stock options (“Options”) with a value of $100,000, with each valued as of the Start Date in accordance with the Company’s standard procedures. The RSUs and the Options shall vest in four equal increments on each of the first four annual anniversaries of the Start Date, subject to the Executive’s continued employment with the Company through the applicable vesting date. The RSUs and the Options shall be granted pursuant to the Company’s 2007 Stock Incentive Plan and the standard forms of restricted stock unit agreement and stock option agreement thereunder (as modified to reflect this Section 3.5(A).

(B)Make-Up Grant. In consideration of the long-term incentive awards that the Executive will forfeit in connection with his resignation from his prior employer, the Company shall grant the Executive additional RSUs with a value of $525,000, with fifty percent (50%) of such RSUs granted as of the Start Date and the other fifty percent (50%) granted as of the first annual anniversary of the Start Date, with the number of RSUs granted on each grant date determined in accordance with the Company’s standard procedures. The RSUs shall vest in four equal increments on each of the first four annual anniversaries of the applicable grant date, subject to the Executive’s continued employment with the Company through the applicable vesting date. Such RSUs shall be granted pursuant to the Company’s 2007 Stock Incentive Plan and the standard forms of restricted stock unit agreement thereunder (as modified to reflect this Section 3.5(B).

(C)Annual Grants. During the Term, the Executive shall be eligible to receive annual equity incentive awards in a combination of awards on a basis comparable to such awards made to other senior executives of the Company, as determined by the Committee.

Expenses

. Subject to such policies generally applicable to senior executives of the Company, as may from time to time be established by the Board, the Company shall pay or reimburse the Executive for all reasonable expenses (including travel expenses) actually incurred or paid by the Executive during the Term in the performance of the Executive’s services under this Agreement (“Expenses”) upon presentation of expense statements or vouchers or such other supporting information as it may require. In addition, for up to two (2) years following the Effective Date or such longer period as agreed by the parties, the Company shall pay Executive’s reasonable travel expenses for his travel from his home to the Company’s offices in Rochester, New York, subject to the Company’s standard expense reimbursement policies, and shall provide Executive an apartment in Rochester, New York.

Vacation

. During the Term, the Executive shall be entitled to such amount of vacation which is available generally to other senior executives of the Company.

Additional Benefits

. During the Term, the Executive shall be entitled to the use of an automobile comparable to that provided to other senior executives in connection with the rendering of services to the Company pursuant to this Agreement, together with reimbursement for all gas, maintenance, insurance and repairs required by reason of his use of such vehicle.

Controlling Document

. To the extent there is any inconsistency between the terms of this Agreement and the terms of any plan or program under which compensation or benefits are provided hereunder, this Agreement shall control. Otherwise, the Executive shall be subject to the terms, conditions and provisions of the Company’s plans and programs, as applicable.

3.8Indemnification/Insurance. The Company agrees to indemnify, defend and hold the Executive harmless pursuant to the Company’s governing documents against any and all losses, judgments, liabilities, claims, fines and amounts paid in settlement of, and expenses (including attorneys’ fees and expenses) incurred by him in connection with any claim in connection with or arising out of the Executive’s service as an officer or director to the Company or any of its subsidiaries or affiliates (and the service at the request of the Company as a director, officer, member, employee, or agent of another corporation or a partnership, joint venture, trust, or other enterprise), and the defense of any action or proceeding (or any appeal therefrom) in which he is a party by reason of the fact that the Executive is or was an officer or director of the Company, but in all events excluding the Executive’s fraud or intentional misconduct. To the extent provided by its policies, the Company agrees to advance all of the Executive’s reasonable attorneys’ fees, costs and expenses of independent counsel selected by and representing the Executive in connection with any such action or proceeding, provided that such selection shall be subject to the Company’s written consent (which shall not be unreasonably withheld). The Executive shall promptly repay any such advance if there is a final determination by a court that the Executive was not entitled to indemnification in connection therewith. Without limiting the foregoing, the Company agrees that it shall maintain directors’ and officers’ and errors and omissions liability insurance, which insurance shall cover the Executive during the Term and following the termination thereof for any or no reason for a period of not less than six (6) years, on the same basis as such coverage is provided to the Company’s directors and other executive officers.

3.9Clawback Policy. The Executive agrees and acknowledges that all compensation paid to him shall be subject to any applicable clawback/recoupment policy adopted by the Board or the Compensation Committee.

Termination or Removal from Duties

Termination Upon Death

. This Agreement shall terminate automatically upon the Executive’s death.

Removal from Position Upon Disability

. If during the Term, as a result of a physical or mental incapacity or infirmity, the Executive is unable to perform the essential functions of his job with or without reasonable accommodation for a period or periods aggregating 90 days during any 12-month period, the Executive shall be deemed disabled (his “Disability”) and the Company, by written notice to the Executive, shall have the right to remove him from his position. The Executive’s status as an inactive employee of the Company shall continue after such removal for the period of time that his Disability continues. However, the Company shall have no obligation to reinstate or otherwise continue the Executive’s employment if he should recover from his Disability and any such termination shall not constitute a termination without Cause or without Good Reason (as herein defined). The existence of his Disability shall be determined by a reputable, licensed physician selected by the Company in good faith, whose determination shall be final and binding on the parties.

Termination for Cause

. The Company may at any time, by written notice to the Executive, terminate the Executive’s employment hereunder for Cause. For purposes hereof, the term “Cause” shall mean: (A) the Executive’s conviction of or pleading guilty or no contest to a felony; (B) failure or refusal of the Executive in any material respect (i) to perform the duties of his employment or to follow the lawful and proper directives of the CEO, provided such duties or directives are consistent with this Agreement and such duties or directives have been given to the Executive in writing, or (ii) to comply with the reasonable and substantial written policies, practices, standards or regulations of the Company (so long as same are not inconsistent with this Agreement) as may be established from time to time, if such failure or refusal under either clause (i) or clause (ii) continues uncured for a period of ten days after written notice thereof, specifying the nature of such failure or refusal and requesting that it be cured, is given by the Company to the Executive; (C) any willful or intentional act of the Executive committed for the purpose, or having the reasonably foreseeable effect, of injuring the Company, its business or reputation or of improperly or unlawfully converting for the Executive’s own personal benefit any property of the Company; or (D) any violation or breach of the provisions of Section 7 of this Agreement. For the avoidance of doubt, the Company’s failure to attain operating or other goals shall not be grounds for a termination for “Cause”.

Termination without Cause

. The Company may terminate the Executive’s employment without Cause at any time.

Termination with or without Good Reason

. With 45 days’ prior written notice to the Company, this Agreement and the Executive’s employment hereunder may be terminated by the Executive with or without Good Reason. For purposes of this Agreement, “Good Reason” means if the Executive is able to document, to the reasonable satisfaction of the Company’s outside counsel, that the reason for such resignation is as a direct result of either: (i) the Company’s material breach of this Agreement; or (ii) the CEO requiring the Executive to act, or omit to act, in a way that the Executive reasonably believes is illegal; provided, however, that a termination by the Executive for Good Reason pursuant to (i) or (ii) shall be effective only if, within 30 days following the delivery of written notice of a termination for Good Reason by Executive to the Company, the Company has failed to cure the circumstances giving rise to the Good Reason. The written notice of termination for Good Reason must specify in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, if applicable. Any resignation or termination

pursuant to the terms of this Section shall not constitute a breach of this Agreement by either party.

Rights and Obligations of the Company and the Executive Upon Termination, or Removal

. Other provisions of this Agreement notwithstanding, and except as otherwise provided by Section 6 hereof, upon the occurrence of an event described in Section 4, the parties shall have the following rights and obligations:

Death

. If the Executive’s employment is terminated during the Term by reason of the Executive’s death, the Company shall pay the Executive’s estate in one lump sum amount, one year’s Base Salary (as in effect as of the date of termination) payable on the six-month anniversary of the date of the Executive’s death; plus (B) any Preceding and/or Pro Rata Bonus to which the Executive is entitled, which shall be paid in accordance with Section 3.2. Any outstanding equity awards shall be treated as specified in the applicable equity plan and award agreement.

Disability

(A) If the Executive is removed from his position during the Term because of a Disability, the Executive, for the period of time during which his Disability continues, may continue to participate in certain of the employee benefit plans in which he participated immediately prior to his removal. These benefits would include participation in, as applicable and to the extent defined in the Company’s applicable plans, group life, medical/dental and disability insurance plans, each at the same ratio of employer/employee contribution as applicable to the Executive immediately prior to his removal; and, thereafter, at the same ratio of employer/employee contribution as then-applicable to other executive-level employees in the Company. In addition, the Executive shall be entitled to compensation and benefits accrued through the date of his removal from his duties, including any amounts payable to the Executive under any Company profit sharing or other employee benefit plan up to the date of removal, to the extent permitted under the terms of such plan. For avoidance of doubt, the payment of any bonus to which the Executive may be entitled for the period of time up to the date of his removal pursuant to Section 4.2 hereof, would be paid pursuant to Section 5.2(B), below. However, the Executive’s rights to bonuses and fringe benefits accruing after his removal, if any, shall cease upon such removal; provided, however, that nothing contained in this Agreement is intended to limit or otherwise restrict the availability of any benefits to the Executive required to be provided pursuant to Section 4980B of the Code.

(B) If the Executive is removed from his position during the Term because of a Disability, the Executive shall be entitled to payments equal to one year’s Base Salary (as in effect as of the date of removal) payable as continued payment of Base Salary (payable in

accordance with the Company’s payroll practice); plus (ii) any Preceding and/or Pro Rata Bonus to which the Executive is entitled (payable in accordance with Section 3.2). Any outstanding equity awards shall be treated as specified in the applicable equity plan and award agreement.

Termination for Cause or without Good Reason

. If the Executive’s employment shall be terminated during the Term (A) by the Company for Cause, or (B) by the Executive without Good Reason, the Company shall pay to the Executive his Base Salary through the date of termination at the rate then in effect and shall reimburse the Executive for any Expenses incurred but not yet paid and shall have no further obligations to the Executive under this Agreement.

Termination without Cause or with Good Reason; Termination Due to Nonrenewal by the Company

. If the Executive’s employment is terminated (A) during the Term (x) by the Company without Cause, or (y) by the Executive with Good Reason, or (B) due to nonrenewal of the Term by the Company pursuant to Section 2, the Company shall pay (unless otherwise noted, in the normal course) to the Executive or provide the following amounts or benefits:

(ii) to the extent not yet paid, the Executive’s Base Salary through the date of termination at the rate in effect on the date of termination;

(iii) one year’s Base Salary (as in effect as of the date of termination), payable as continued payment of Base Salary (payable in accordance with the Company’s payroll practice);

(iv) payment of the Preceding and/or Pro Rata Bonus to which the Executive is entitled, payable in accordance with Section 3.2;

(v) vesting of any unvested RSUs granted pursuant to Section 3.5; and

(vi) any and all time-vesting equity awards that have been granted to the Executive (that have neither expired nor been previously exercised by the Executive) through the termination date shall be deemed fully vested on such termination date and, to the extent applicable, exercisable for a period of 90 days following such date (but, in no case, beyond each such award’s specified expiration date), and any performance-vesting equity awards shall be eligible to vest on a pro rata basis based on the period of time the Executive was employed during the performance period and achievement of the applicable performance goals, all in accordance with the other terms of any such plan or grant.

All payments to be provided to the Executive under this Section 5.4 shall be subject to the Executive’s (x) compliance with the restrictions in Section 7 and (y) execution, within 60 days of the Executive’s termination, of a general release and waiver of claims against the Company, its officers, directors, employees and agents from any and all liability arising from the Executive’s employment relationship with the Company (which release will include an agreement between both parties not to disparage the other) that is not revoked.

Change in Control

1.2 In the event of the occurrence of a Change in Control of the Company, the Executive shall remain employed by the Company, pursuant to the terms and conditions of this Agreement. If, within two years after the Change in Control, (A) the Executive’s employment is terminated without Cause or with Good Reason, (B) the Term ends due to nonextension of the Term by the Company pursuant to Section 2, or (C) the Executive resigns following:

(i) a material diminution in his duties as set forth in Section 1.2 of this Agreement; or

(ii) in the case of the sale of the Company, the Executive either: (a) is not offered a comparable position by the buyer; or (b) is required by the buyer to be based anywhere beyond 50 miles from the Company’s current offices in Rochester, New York (except for required travel on Company business to an extent substantially consistent with that preceding the Change in Control), (either (i) or (ii), a “Resignation for Good Cause”), then the Executive shall be entitled to the benefits described in Section 6.2.

1.3 Upon a termination without Cause or with Good Reason in a Change in Control, the Term ends due to nonextension of the Term by the Company or a Resignation for Good Cause described in Section 6.1 during the Term, the Executive will receive in one lump sum amount, unless otherwise noted:

(A) to the extent not yet paid, the Executive’s Base Salary through the date of termination at the rate in effect on the date of termination;

(B) two year’s Base Salary (as in effect as of the date of such termination or resignation), payable as continued payment of Base Salary (payable in accordance with the Company’s payroll practice);

(C) payment of the Preceding and/or Pro Rata Bonus to which the Executive is entitled, payable in accordance with Section 3.2; and

(D) vesting of any unvested RSUs granted pursuant to Section 3.5;

(E) any and all time-vesting equity awards that have been granted to the Executive (that have neither expired nor been previously exercised by the Executive) through the termination date shall be deemed fully vested on such termination date and, to the extent applicable, exercisable for a period of 90 days following such date (but, in no case, beyond each such award’s specified expiration date), and any performance-vesting equity awards shall be eligible to vest on a pro rata basis based on the period of time the Executive was employed during the

performance period and achievement of the applicable performance goals, all in accordance with the other terms of any such plan or grant.

All payments to be provided to the Executive under this Section shall be subject to the Executive’s (x) compliance with the restrictions in Section 7 and (y) execution, within 60 days of the Executive’s termination, of a general release and waiver of claims against the Company, its officers, directors, employees and agents from any and all liability arising from the Executive’s employment relationship with the Company (which release will include an agreement between both parties not to disparage the other) that is not revoked.

1.4 For purposes of this Agreement, a “Change in Control” shall mean any of the following: (A) any person who is not an “affiliate” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) of the Company as of the date of this Agreement becomes the beneficial owner, directly or indirectly, of 50% or more of the combined voting power of the then outstanding securities of the Company except pursuant to a public offering of securities of the Company; (B) the sale of the Company substantially as an entity (whether by sale of stock, sale of assets, merger, consolidation, or otherwise) to a person who is not an affiliate of the Company as of the date of this Agreement; or (C) there occurs a merger, consolidation or other reorganization of the Company with a person who is not an affiliate of the Company as of the date of this Agreement, and in which shareholders of the Company immediately preceding the merger hold less than 50% (the voting and consent rights of Class C Preferred Stock shall be disregarded in this calculation) of the combined voting power for the election of directors of the Company immediately following the merger. For purposes of this Section 6.3, the term “person” shall include a legal entity, as well as an individual. A Change in Control shall not be deemed to occur because of the sale or conversion of any or all of Class C Preferred Stock of the Company unless there is a simultaneous change described in clauses (A), (B) or (C) of the preceding sentence.

Confidentiality and Covenant against Competition

Non-Disclosure

(A) The Executive shall forever hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be public knowledge (other than as a result of a breach of this Section 7.1 by the Executive). The Executive shall not, without the prior written consent of the Company or except as required by law or in a judicial or administrative proceeding with subpoena powers, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

(B) Notwithstanding the foregoing, nothing in this Agreement shall (i) prohibit the Executive from making reports of possible

violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or of any other whistleblower protection provisions of state or federal law or regulation, or (ii) require notification or prior approval by the Company of any reporting described in clause (i).

(C) Pursuant to The Defend Trade Secrets Act (18 USC § 1833(b)), the Executive may not be held criminally or civilly liable under any federal or state trade secret law for disclosure of a trade secret: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law; and/or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, the Executive, if suing the Company for retaliation based on the reporting of a suspected violation of law, may disclose a trade secret to his attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the Executive does not disclose the trade secret except pursuant to court order.

Non-Competition

. The Executive will not, during the period of the Executive’s employment with the Company, and for a period of one year thereafter, directly or indirectly, (a) engage in (as a principal, partner, director, officer, stockholder (except as permitted below), agent, employee, consultant or otherwise); or (b) be financially interested in, any entity materially engaged in any portion of the business of the Company within the territory served, or contemplated to be entered, by the Company on the date of such termination of employment. Nothing contained herein shall prevent the Executive from owning beneficially or of record not more than five percent of the outstanding equity securities of any entity whose equity securities are registered under the Securities Act of 1933, as amended, or are listed for trading on any recognizable United States or foreign stock exchange or market. The business of the Company shall be defined to include the automotive repair/maintenance services, as well as the sale and service of tires and related accessories, each of which shall be deemed a portion of the business.

Non-Solicitation of Employees

. The Executive will not, during the period of the Executive’s employment with the Company, and for a period of one year after the termination of the Executive’s employment with the Company for any reason, directly or indirectly, recruit, solicit or otherwise induce or attempt to induce any employee of the Company to leave the employment of the Company, nor hire any such employee at any enterprise with which the Executive is then affiliated.

Enforceability of Provisions

. If any restriction set forth in this Section 7 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable, it being understood and agreed that by the execution of

this Agreement, the parties hereto regard the restrictions herein as reasonable and compatible with their respective rights.

Remedy for Breach

. The Executive hereby acknowledges that the provisions of this Section 7 are reasonable and necessary for the protection of the Company and its respective subsidiaries and affiliates. In addition, the Executive further acknowledges that the Company and its respective subsidiaries and affiliates will be irrevocably damaged if such covenants are not specifically enforced. Accordingly, the Executive agrees that, in addition to any other relief to which the Company may be entitled, the Company will be entitled to seek and obtain injunctive relief from a court of competent jurisdiction for the purposes of restraining the Executive from an actual or threatened breach of such covenants. In addition, and without limiting the Company’s other remedies, in the event of any breach by the Executive of such covenants, as determined by the applicable court, the Company will have no obligation to pay any of the amounts that remain payable by the Company in Sections 5 and 6 of this Agreement.

Executive’s Representations

. The Executive represents that he is not precluded from performing this employment by reason of a preexisting contractual restriction or physical or mental disability. Upon any breach or inaccuracy of the foregoing, the terms and benefits of this Agreement shall be null and void. The Executive shall indemnify and hold harmless the Company from and against any and all claims, liabilities, damages and reasonable costs of defense and investigation arising out of any breach or inaccuracy in any of the foregoing representations.

Other Provisions

Withholdings

. The Company may withhold from any amounts payable under this Agreement such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

Notices

. Any notice or other communication required or which may be given hereunder shall be in writing and shall be delivered personally, telecopied, or sent by certified, registered or express mail, postage prepaid, to the parties at the following addresses or at such other addresses as shall be specified by the parties by like notice, and shall be deemed given when so delivered personally, telecopied or if mailed, two days after the date of mailing, as follows:

(b)

if to the Company, to it at:

Monro, Inc.
200 Holleder Parkway
Rochester, New York 14615
Attention: Chief Financial Officer

with a copy to:

Monro, Inc.
200 Holleder Parkway
Rochester, New York 14615
Attention: General Counsel

(c)

if to the Executive, to him at the address reflected in the Company’s payroll records

Entire Agreement

. This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof and supersedes all prior written or verbal understandings with respect thereto.

Waivers and Amendments

. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

Governing Law; Jurisdiction

. This Agreement shall be governed by and construed and enforced in accordance with and subject to, the laws of the State of New York applicable to agreements made and to be performed entirely within such state. The courts of New York and the United States District Courts for New York shall have jurisdiction over the parties with respect to any dispute or controversy between them arising under or in connection with this Agreement.

Assignment

. This Agreement shall inure to the benefit of and shall be binding upon the Company and its successors. This Agreement is personal to the Executive and shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

Headings

. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

Severability

. If any term, provision, covenant or restriction of this Agreement, or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void, unenforceable or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

Section 280G

. In the event that the Executive becomes entitled to any payments or benefits under this Agreement and any portion of such payments or benefits, when combined with any other payments or benefits provided to Executive (including, without limiting the generality of the foregoing, by reason of the exercise or vesting of any stock options or the

receipt or vesting of any other equity awards), which in the absence of this Section 9.9 would be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the amount payable to the Executive under this Agreement shall, either (A) be reduced to the largest amount or greatest right such that none of the amounts payable to the Executive under this Agreement and any other payments or benefits received or to be received by Executive as a result of, or in connection with, an event constituting a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of Section 280G(b)(2)(A) of the Code) or the termination of employment shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code or (B) be made in full, with Executive bearing full responsibility for any Excise Tax liability, whichever of (A) or (B) provides the Executive with a larger net after-tax amount. The Company shall cooperate in good faith with the Executive in making such determination, including but not limited to providing the Executive with an estimate of any parachute payments as soon as reasonably practicable prior to an event constituting a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company (within the meaning of Section 280G(b)(2)(A) of the Code). Any reduction pursuant to this Section 9.9 shall be made in a manner compliant with Section 409A of the Code. This Section 9.9 shall apply in lieu of any provision applicable to the Executive under any other agreement or arrangement (including the Plan) with respect to Section 4999 of the Code. All determinations with respect to this Section 9.9 shall be made by an independent nationally recognized certified public accounting firm reasonably acceptable to the Executive at the Company’s sole expense. The after tax amount shall be calculated, as applicable, using the maximum marginal income tax rates for each year in which the payment is payable to the Executive (based upon the rates in effect for such year as set forth in the Code at the relevant time).

9.10Section 409A

. The compensation and benefits provided under this Agreement are intended to qualify for an exemption from or to comply with the requirements of Section 409A of the Code and the treasury regulations and other official guidance issued thereunder (collectively, “Section 409A”), so as to prevent the inclusion in gross income of any compensation or benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Executive, and this Agreement shall be administered and interpreted consistent with such intention. For purposes of Sections 4, 5 and 6 of this Agreement, “removal,” “termination of the Executive’s employment” and words of similar import mean a “separation from service” with the Company as defined by Section 409A. The reimbursement of taxable expenses such as contemplated in Sections 3.6 and 3.8 to the Executive shall be made no later than the end of the year following the year in which the expense was incurred, and the expenses reimbursed in one year shall not affect the expenses eligible for reimbursement in any other year. Where the 60-day period for the Executive to execute and not revoke a general release and waiver begins in one calendar year and ends in the following calendar year, payment shall be made no sooner than the first day of the following calendar year. Each payment shall be a payment in a series of separate payments for all purposes under Section 409A. If the Executive is a “specified employee” within the meaning of Section 409A at the time of his “separation from service” within the meaning of Section 409A, then any payment otherwise required to be made to him under this Agreement on account of his separation from service, to the extent such payment (after taking in to account all

exclusions applicable to such payment under Section 409A) is properly treated as deferred compensation subject to Section 409A, shall not be made until the first business day after (i) the expiration of six months from the date of the Executive’s separation from service, or (ii) if earlier, the date of the Executive’s death (the “Delayed Payment Date”) and, on the Delayed Payment Date, there shall be paid to the Executive or, if the Executive has died, to the Executive’s estate, in a single cash lump sum, an amount equal to aggregate amount of the payments delayed pursuant to the preceding clause.

9.11Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement on the date first above written.

MONRO, INC.

By:/s/ Michael T. Broderick
Name: Michael T. Broderick
Title: President and CEO

/s/ Matt Henson
Matt Henson

Exhibit 31.1

CERTIFICATION

I, Michael T. Broderick, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Monro, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2021


	/s/ Michael T. Broderick
	Michael T. Broderick
	Chief Executive Officer (Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

I, Brian J. D’Ambrosia, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Monro, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 2, 2021


	/s/ Brian J. D’Ambrosia
	Brian J. D’Ambrosia
	Executive Vice President – Finance, Treasurer and
	Chief Financial Officer (Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

(SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

Pursuant to, and solely for purposes of, 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002), each of the undersigned hereby certifies in the capacity and on the date indicated below that:

1. The Quarterly Report of Monro, Inc. ("Monro") on Form 10-Q for the period ended June 26, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Monro.


/s/ Michael T. Broderick	Dated: August 2, 2021
Michael T. Broderick
Chief Executive Officer (Principal Executive Officer)

/s/ Brian J. D’Ambrosia	Dated: August 2, 2021
Brian J. D’Ambrosia
Executive Vice President – Finance, Treasurer and
Chief Financial Officer (Principal Financial Officer)



Notes to Consolidated Financial Statements
Note 1 Description of Business and Basis of Presentation	8
Note 2 Impact of the COVID-19 Pandemic	8
Note 3 Acquisitions	9
Note 4 Earnings per Common Share	11
Note 5 Income Taxes	11
Note 6 Fair Value	11
Note 7 Cash Dividend	11
Note 8 Revenues	12
Note 9 Long-term Debt	12
Note 10 Commitments and Contingencies	13


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets	3
Consolidated Statements of Income and Comprehensive Income	4
Consolidated Statements of Changes in Shareholders’ Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	23
Item 6. Exhibits	24
Signatures	25