Monro, Inc.

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

Recent Developments

On October 23, 2026, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, the lenders party thereto (the “Lenders”) and Ares Capital Corporation (“Ares”), as administrative agent for the Lenders (the senior secured credit facilities provided thereunder, the “New Credit Facilities”).

The Credit Agreement replaced the Company’s former Credit Facility (the “Credit Facility”) and the related credit agreement with nine banks, dated April 25, 2019. On October 23, 2026, the Company repaid in full all outstanding obligations under the Credit Facility and terminated all commitments thereunder.

See further detail in Item 5., "Other Information" below and Note 13 of our consolidated financial statements.

Financial Summary

Second quarter 2027 included the following notable items:

Diluted loss per common share was $0.05.

Adjusted diluted loss per common share, a non-GAAP measure, was $0.01.

Sales decreased 1.8 percent, due entirely to lower comparable store sales.

Operating income was $2.6 million.

Adjusted operating income, a non-GAAP measure, was $4.4 million.

Net loss was $1.6 million.

Adjusted net loss, a non-GAAP measure, was $0.2 million.

Adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share, each of which is a measure not derived in accordance with GAAP, exclude the impact of certain items. Management believes that adjusted operating income, adjusted net (loss) income and adjusted diluted (loss) earnings per share are useful in providing period-to-period comparisons of the results of our operations by excluding certain items that are not part of our core operations, such as litigation reserve costs, consulting costs related to the Company’s Operational Improvement Plan, pension settlement expense, costs related to shareholder matters, transition costs related to back-office optimization, write-off of debt issuance costs and store closing costs, net of gains (losses) on sales of closed stores, lease assignments and early lease terminations. Reconciliations of these non-GAAP financial measures to GAAP measures are provided on page 20 under “Non-GAAP Financial Measures.”

We define comparable store sales as sales for locations that have been opened or owned at least one full fiscal year. We believe this period is generally required for new store sales levels to begin to normalize. Management uses comparable store sales to assess the operating performance of the Company’s stores and believes the metric is useful to investors because our overall results are dependent upon the results of our stores. Comparable sales measures vary across the retail industry. Therefore, our comparable store sales calculation is not necessarily comparable to similarly titled measures reported by other companies.

Analysis of Results of Operations

Sales

Sales include automotive undercar repair, tire replacement and tire related service sales, net of discounts, returns, and revenue from the sale of warranty agreements and commissions earned from the delivery of tires. See Note 6 to our consolidated financial statements for further information. We use comparable store sales to evaluate the performance of our existing stores by measuring the change in sales for a period over the comparable, prior-year period. There were 91 selling days in each of the three months ended September 26, 2026 and September 27, 2025, and 181 selling days in each of the six months ended September 26, 2026 and September 27, 2025.

Sales growth – from both comparable store sales and new stores – represents an important driver of our long-term profitability. We expect that comparable store sales growth will significantly impact our total sales growth. We believe that our ability to successfully differentiate our customers’, often referred to as “guests”, experience through a careful combination of merchandise assortment, price strategy, convenience, and other factors will, over the long-term, drive both increasing guest traffic and the average ticket amount spent.