Is a buyout by management in future for Rochester’s Monro, Inc.?

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Another lackluster earnings report and a still-languishing stock price may have executives at Monro, Inc., entertaining purchase offers or considering a management buyout and privatization of the company.

That’s the belief George Conboy, chairman of Brighton Securities, following Wednesday’s earnings call by Monro president and CEO Peter Fitzsimmons and chief financial officer Brian D’Ambrosia.

The Perinton-based automotive service and tire dealer reported decreased sales of 7.2 percent in the fourth quarter (to $273.8 million), a $6.6 million net loss and a diluted loss per share of $0.23.

Fitzsimmons attributed the declines to economic pressures felt by consumers, poor winter weather across the country that kept customers out of repair bays and the closing of 145 “underperforming” stores.

But with stock (MNRO) hovering between $15 and $18 over the past two months on the NASDAQ — after a high-water mark of $87.31 in June of 2019 — and not reaching $30 since the spring of 2024, D’Ambrosia told investors that the company is undergoing a “strategic review.”

That review includes “a full range of potential opportunities, including, but not limited to, asset sales, refinancing of the business, strategic acquisitions and operational improvements or sale of the company,” D’Ambrosia said.

The phrase “strategic review” is commonly considered Wall Street code for a company being amenable to M&A discussions or a buyout by management and/or private equity.

Monro could be considering such a move, Conboy said, because management may be very confident in what the future holds.

“My guess is that it will be a private equity and management hybrid buyout where the company goes private,” Conboy said. “It’s like saying, ‘If you guys (Wall Street investors) don’t cherish our asset, we do. If you guys can’t see a bright future for us, we do, and we’re willing to put up our money and buy it.”

Conboy cited a similar situation with The Gleason Works (Gleason Corp.), the Rochester-based manufacturer of beveled gears. In 1999, with stock sagging, management teamed with private equity firm Vestar Capital Partners to buy back the company.

Then in 2006, Gleason management borrowed funds and bought out Vestar, and the company is still privately owned.

Confidence in the future by Monro executives may come from their recent initiatives. Fitzsimmons expressed confidence that the reduced footprint to 1,162 stores and introduction of its ConfiDrive inspection tool will help Monro maintain and/or gain market share.

ConfiDrive “has become the cornerstone of our customer experience transformation,” Fitzsimmons said. The tool’s diagnostics are supported with pictures that provide a clear image of parts or systems that need attention.

“Its about fundamentally changing how customers perceive automotive service,” Fitzsimmons said. “When customers can understand exactly what we’re seeing through detailed visual documentation, it eliminates the skepticism that has historically plagued our industry.”

That could lead to a desire to buy back all stock, Conboy said.

“They say to a private equity firm, ‘Look, here’s the deal, our stock is down to $15, $16, (but) we think that our earnings in a year from now are really going to start to move because we’re seeing good trends, we did all this reorganization,’ ” Conboy explained.

“After all this work we did, they’re not bidding the price up (on Wall Street) so let’s get together and buy it. We’ll run the company privately.

“I’m betting it’s a transaction like that that they’re contemplating.”

D’Ambrosia said the company will not comment further on the review process “unless we determine that further disclosure is appropriate or necessary.”

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