MNRO - Earnings call transcript Q2 2019

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Operator

Good morning, ladies and gentlemen, and welcome to Monro, Inc.'s Earnings Conference Call for the Second Quarter Fiscal 2019. At the time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. And as a reminder, ladies and gentlemen, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. President, and Vice at Senior Mulholland, General Secretary Counsel Monro. Maureen ahead. go Please

Maureen E. Mulholland

you. you morning's thank everyone, joining Thank and this for Hello, us on call.

participants of like at that the some on is this started, as that on statements attention the on Monro's events we the get to about note of The available or otherwise. to result I those most be the new results whether our and release. slide earnings our SEC could section in part your future disclaims website differ today. will suggested presentation that we statements statement as factors morning, If a materially call, outlined call could affect in X, intention update our future Safe includes a from Before referencing or remind Harbor Investors I'd to Actual this company corporate.monro.com\investor\investor-resources. or please morning's a performance. obligation presentation that significant looking results draw future revise The comments with by any of forward-looking forward filings our any are may Monro's information,

Additionally, on of of non-GAAP comparable President Chief like I'd discussion call supplemental to include today's the statements over Reconciliations Ponton. part the be Executive measures. Monro's; GAAP and presentation. management's information to will included With that, a such measures Officer, financial as certain today's call of to Brett turn

Brett Ponton

us Thanks everyone. joining morning, today. good and for Maureen, you, Thank

Monro.Forward We bottom we growth, invest line during execute in to are delivered strong strategy. second with pleased while our line and performance our top the as continuing quarter and

tremendous reflecting and commitment begun organization. our business consistent teammates doing customers. our momentum experience delivering to for is to to as are driving We take our strategic in excellence the sustained testament initiatives a our have This our work X-star throughout a operational have our hold, seen

position us across of in foundation capabilities a on long-term well baseline and variety we've established industry. lay the to the favorable our for of sustainable couple over quarters capitalize growth the business trends Importantly, past our

X, quarter, grew comparable third slide increase highest As XXXX. second since store shown quarterly in the fiscal X.X% of the sales quarter on comparable store the sales representing

positive strong We approximately the delivered the growth that momentum changes by to Comparable platform we improved fiscal the are The notable report long-term store second driven driven first into in-store carried quarter sales sales to implementing sustained for quarter strength quarters from the sales for past sales XXXX. quarters store our of also organization comparable tire to sustainable of sales the since and the drive of a in store categories. growth couple performance time and Overall, pleased early three our over with comparable ticket success comparable October, demonstrates two-year up and brake accelerated are across consecutive higher business. have by store our have our proud are in execution our improvement during we strength stacked X% in comparable average store tire month-to-date, scalable we was growth.

throughout these by top which and encouraged continue of line very remainder We positive XXXX trends, expect beyond. are to the we fiscal

are I'd in in our seen of our tire X% marking positive we've of results. half third on consecutive our Now, second in the driving is our strategy We sales more an growth. to that the tire sales comparable pricing quarter, Representing category, store largest tire sales delivered and increase sales of the provide optimized comp quarter like tires. detail we in to strength pleased report

performance driven by Our a volume. ticket higher and was stable unit

price since to of new has and our conversion appointments. drive online we the we good discussed, seen previously online continued and unbundled increased installation, have service also strategy As tires with our traction tire-pricing which

the third in strength October. of has business tire accelerated in comparable our growth units driving tire addition, In quarter to tire month-to-date the with beginning continued in sales improve

Turning to sales X% I our were brake this update like quarter, an up would comp from to XX% we service category, last on store with which acceleration demand. an start to experience sales and categories, the saw comparable quarter. high repair growth Brake our has continued

compared As a our package Despite suboptimal the brake period. quarter Good-Better-Best packages prior raised grew in and transaction reminder, in higher to we X% at our volume first to brake late in year correct second launch. our first package prices the prices, launched brake quarter the quarter, the pricing

been to our quarter to the to forward. brake this well margin have this contributed demand quickly data continue strong and package which expansion positions by able us on in We category optimize opportunities gross analytics, to to pricing going identify leveraging capitalize

store on markets. to markets, front slightly our in maintenance flat Southern shocks, declined while were we categories, saw sales Geographically, end comparable and strength Northern year-over-year. which our both, remaining for Moving outperformed our alignments

added Lastly, stores new including million $XX.X from revenue, million $XX.X recent acquisitions. in

of industry in cornerstone fragmented We growth very X, accretive operate continue our of Turning advantage opportunities. slide to and to M&A strategy. a remain a take acquisitions

sales We to in are a quarter is of and earnings X XXXX, diluted to fiscal to fiscal XX% pleased share our acquire we be XXXX. annualized mix sales, in per million The XX% Ohio. expected third add stores close tires. market of to in breakeven service agreement approximately of acquisition definitive and in five locations the a These representing to that announce to existing signed are expected

Additionally, million diluted existing to in fiscal we XX definitive XXXX. close locations a signed to earnings mix of expected retail The fourth XXXX. expected tires, these XX% and Southeast, is acquire acquisition the are quarter a annualized sales and market. of sales, $XX share in breakeven XX% service fiscal filling be an to per to approximately Overall, locations representing agreement add in in in to

in Lastly, I would seven sales. an like announced to stores, previously update on annualized the of million provide representing $X acquisition

annualized the close In million fourth total, diligence release, announced of is in this press second the extended fiscal we acquisition and in thus delayed fiscal of far initially represent expected an sales. the for and XXXX. transaction period, the to been acquisitions As quarter noted to quarter closing collectively planned this completed morning's now in has due due XXXX in $XX

opportunities and to in continue a have stores, our the M&A XX will pipeline sweet been and consolidation robust with capitalize and currently which between over that has targets very X deal traditional of We acquisitions with ROI. our spot. have XX NDAs signed therefore marketplace execution our the operational are on allow better Overall, model, makes us should a across the our base Monro.Forward to lead more us acquirer to a driving will and as strategy consistency integrate we structured higher efficient into store

Amazon.com tire installation we across to provide United services pleased X, slide very collaboration their States. customers have to to on Moving are with Eastern expanded our to

As stores a Greater in Baltimore in first area. July launched reminder, collaboration we this at XX the

expanded have states. XXX and customers We are building of collaboration stores online the initial pleased installation to our a XX of of made Ship-to-Store pillar this Amazon.com this the our option tire presence, for purchase the across option at the results key with out select tires online The omni-channel who over in launch now and highlights we've from expansion progress strategy.

installer the one-to-one to locations customers these long-term states build year. are these drive services We they While agreements help online Monro retail all business, newly-acquired allowing Amazon.com to to at next course small relationships. available to XX of stores, traffic and part our customers our add a preferred over database our look recently-launched increased across to tire us of our retailers CRM forward making with the

the head the we second Monro.Forward we very are initiatives. As year, of with making pleased our into the are half we on progress strategic

our a Our customers. best-in-class and our excellence commitment is deliver entire organization experience consistent embracing to to operational drive

earlier to a during Day, key achieved management Investor our base this execution to customer Monro.Forward continues our improve centers out supported of during satisfaction across of online slide technology with important on business. outlined milestones data-driven by new program analytics number in across customer investments the strategy X, entire second we around in and initiatives our February. quarter. four Starting our our our As year, and are we reputation our and progress which experience, late rolled our on The store schedule pillars, initiatives

should improved our higher investments which solicit instrumental have drive Our technology to driving traffic feedback to in traffic, stores. in in customer search turn been

work to improvement This in-store satisfaction, online the to the continue in from to and short material customer we star sites surveys we in we led across our company's As execution. review leverage online period of collect improve a to rating enhance has a customer feedback reviews time.

rating We star are to average year has X.X proud from stars ago our just a migrated currently. all-time that report X.X stars to

as established improve to consistent brand by create which our across initiative in-store slide implementation On we largest our experience call is our appearance. on our X, in in-store achieve this, for we To third of value with the locations. customers' the twofold, This our the customers, we our standardized the we to lifetime Monro reimaging how procedures, beginning more X,XXX a and stores the launched overall starts operate we of standards playbook of quarter. effort followed focused our operating increasing

Following of now standardized stores pilot the of the Rochester, Monro we York. process out our store cloud-based in are our fourth rolling XX visit XXXX; beginning fiscal in playbook quarter with launch our New

for stores at clearly-defined process and have to and the our selling take We procedures, these on include customer our responsibilities trained teams operating which an roles our approach in-store teammates. educational

advisors upon Our our advise teammates vehicle needs. to their clearly on based objective is who their specific as can expert options empower our professionally customers and

our align We brand have standards also to begun the of implementation of the appearance stores.

of track thus X on pilot layout contemporary Rochester moving the one and the now and with plans our of An appearance of is renovated our are more that at XX pilot of refreshed and stores presented on far. slide highly inviting, in the functional. shows are successfully overview We our new stores our stores

from initiative our had our pleasure stores our got feedback of visit last positive the far re-imaged traction. tremendous signs team customers. and week So, showing members store I is to newly our refresh and encouraging

of the locations the appropriate of capital three market still of investing size the the in for the operational these our scope we years, sales amount and and needed at appropriate each rollout to our stages in ensure of of modernize the across our we to While initiative highest of across base seen our portfolio five their store store stores double-digit complete, the age, next since is our Once in reinforces comparable in confidence locations returns. plan this standards X,XXX brand by our we have our improvement over early the achieve determining base. possible pilot refresh we examining to rollout refresh, store are to are launch demographics

in initiatives this Turning we made to engagement as customer-centric great slide X, strides quarter. our

service which As customer vehicle to data our needs. platform, and on CRM enable we analytics leverage to launched insights messages to us specific our recommendations their planned, and based tailored deliver will based customers data

able are of is customer of customer development repurpose drive CRM marketing the the new invest Through in higher instrumental this be channels database, marketing our platform we higher and in long-term will ROI core foundation to campaigns. and customer to data-driven Our one-to-one strategy relationships our to spend retention. acquisition

corporate a content the also presence. new our search functionality, out of phase first for and quarter, initiative a customers' With to successfully retail needs. in our milestone improve we During users, major the website tighter better retail rolled development websites, address our online mobile design modernized and of positions responsive omni-channel the streamlined our and our and us

customers, our Importantly, our our a after to keeping encouraged website it to launch, we better traffic also packages. month Only service is product this driving and showcases that engaged the our the see new Good-Better-Best and longer. format on we are provide solutions customers more including

average of new have number to a since in spent visitors that on time excited experienced our we report are double-digit We the site the and launch. increase

translated to a rates. Additionally, mobile upgrade appointment XX% increase is in conversion capable mobile into architecture the a

financial detailed also regarding provides that corporate invite performance. visit easy vision, We navigate new and you information values our our to website to

our initiatives increase provide for with the of store increase ability demand we for and of our optimize our base this customers significant brakes customers or this to our and to sales. success the trade Good-Better-Best to services their quarter. opportunity packages choose we clearly higher the evidence is first thrilled packages right the to These value across product response assortments service quarter options onto the Moving with that to again are launched teammates attachment give in vehicle strategy. The our the to in up defined offerings,

quarter, which As our first second quarter. into we margin tailwinds previously translated prices the mentioned, brake raised package in has positive in late the

a on of engagement staffing key initiatives. Lastly, I store optimization, update an component provide and productivity to want team our our

last momentum deployed quarter. in labor reminder, a our we offsetting and traffic return stores quarter. understaffed understaffed In we to added model were flat stores overstaffed As support trends able to improved our to sales first to to a second the quarter, by we sustained technicians rightsizing the staffing stores, the

technician overall labor forward. translated store margin efficiency and store achieve Our will optimization us greater into this tailwind going quarter allow gross a to

scheduling our XXXX we the our staffing on efficiency the our in the the by staffing store, each cloud-based staff services track system skill with and drive of data-driven appropriate Additionally, rebalancing have to fiscal in skills store that technical needed. further ensuring first remain of to quarter implement level for stores, level technicians

accomplished contributions an Chief year. and recently Before team our their for Information Officer am was commitment call was Senior would proud who for a promoted have and Brian, Monro to Officer I to as entire Marketing this moment the strategy. Monro.Forward the I they our over execution Vice Dasgupta, work what earlier like Senior President, Avi Brundage, to to Vice like also President, organization. continued outstanding thank passing I Deborah of their hard very would who recognize recently to we appointed Chief take of since joined

During of outlook. our continuing year leadership to that, on and I momentum. our the additional this who'll performance turn provide quarterly to our business and upon full collaboration to I'll call year build senior detail over half Brian, forward financial look With with strong first team the

Brian J. D'Ambrosia

you, everyone. Thank morning, good Brett, and

of million, closed in recent stores we sales slide decrease delivered year-over-year of acquisitions. store of including by from XX.X% solid Sales $XXX.X quarter. million, and a top from comparable This X.X% the to $XX.X sales line increased million. sales new second $X.X offset from by $XX.X performance increase a Turning was million in stores to approximately X, driven

line year prior period. quarter with had days, the selling in second XX The

September XX, compared XXXX. XX, and X,XXX of franchise stores as XXXX, franchised had company of in with locations, as XXX X,XXX company-operated company-operated As the stores XX locations September

leverage with and a prior increased increase percentage technician XX on a brake and in This from XXXX, mix by increase to quarter due sales decrease During store as closed as fiscal and pricing in was occupancy store gained the period. stores to distribution sales second year-over-year comparable fixed Gross to X. Also of sale. quarter, the points margin XX.X% the up as we we recent partially was basis company-operated added of the the increase. Free from increase acquisition. XX higher in optimization offset year earlier, second impact partially The XX.X% costs of these Service Brett discussed the package largely labor contributed Tire cost

to acquisition the for the to quarter $X.X costs noted, Free million from due in in were the initiatives, related Monro.Forward the compared million, essentially a costs. the wholesale business, locations primarily As lower increase incentive-based initiatives the increase we sales investments. completed related as operate now increased gross were with a or quarter in higher acquired with On XX.X% of sales plan dollar current of our a period. financial our for Operating $XX.X sales comparable tires, net mix and $X new The the year-over-year Expenses at we mix higher have as we includes higher XXX wholesale also year-over-year without and to margin, XX one-time prior second quarter previously line stores sales million gross $XX.X store improved of and XX.X% prior commercial part and year reflect with Service The Tire million sales or of to pay of the Monro.Forward points performance. to $XX.X from to the respect one-time year including year related tires have our and expenses for million expenses basis, basis period. approximately margins for installation. increased

due The to investments. which the of $XX.X effective interest interest rate prime quarter, average Net percentage quarter sales last the second from to year-over-year. decreased increased variety compared excluding the million increased million a significant. the operating quarter to same share which other year-over-year second of period. earnings operating decrease XX.X% rates. X% quarter year points $X.XX, which On costs basis XX%, for second income to a result by year and factors, management in the U.S. cost higher of same the compared capital well the costs. greenfield average income period Our Cuts to was compared from per debt as year-over-year by The of acquisitions store outstanding of approximately a the connection average fiscal share income related period. higher basis the Act, last and $XX.X rate non-recurring labor last XX% of none XXXX, of the increase $XX.X approximately interest as tax fiscal for as of for was year-over-year, to to XXXX largely quarter XX.X% XXXX expense compared XX.X%. with our $X.XX as one-time a share quarter Tax the of to year basis and XX million, year due and This for million Diluted quarter, as operating expansion. Monro.Forward recorded The corporate and margin for was per Monro.Forward to XX.X% comparable approximately prior for the $X.X $X.XX individually quarter for This is lease the income second Net to $X.XX points for the by our tax debt second prior declined the was as and included record the which rate same XX% The in weighted fiscal million the $XX weighted to year. federal transition in per from effective in increased tax year. period, for increased increased prior XX% second period increased XX compares including quarter debt in reduced second Jobs weighted a

$X.XX quarter note earnings per year fiscal prior fiscal included net period, Florence, compared impact earnings the to Irma representing quarter in $X.XX XXXX, share impact Hurricane Hurricane XXXX, was the in compared $X.XX to share of increase year-over-year. net second a of of second diluted second items, per diluted the the XX% fiscal from Please one-time of these Excluding XXXX. from in for $X.XX quarter of

Turning allocation. strategy a capital to slide to our are disciplined XX, while maintaining approach we executing

sustainable First, we growth. long-term will for continue invest to

five is technology. strategy the capital expecting our on rate support in we investments progressing re-imaging Monro.Forward Our $XX normal track store to still million and and expenditures next above over run are incremental in an years

in Our to capital of six months million expenditures was XXXX, Monro.Forward our $XX.X initiatives. the during of investments which first were $X.X million fiscal related

opportunities acquisition strategy. accretive on spent to executing store XXXX, $XX.X six including our greenfield Secondly, part a first one of on four fiscal we months approximately during of growth the expansion of And remains as pillar acquisitions million our strategy. completed acquisitions,

We are $XX.X about also first of through XXXX. shareholders committed the program during returning to million dividend paid our in to and months six dividends capital fiscal

solid of our remain We Finally, and balance ample $X.X ended approximately under growth generated sheet months We from first flexibility of $XX million during XXXX. six cash the approximately during on of maintaining million ample operating quarter the room support profitability the our and financial to fiscal increased first second activities our six strong revolver we focused under by leverage initiatives. with flows covenants. a fiscal ratios with have Debt months XXXX.

our week XXXX and sales. to quarter. and be fiscal Fiscal This announced X% that $X.XXX fiscal X.X% an XXXX continues billion XX-week to the anticipate a increase on and compared $X.XXX sales to billion, guidance from fourth XX-week while we to turning on of XXXX compares note fiscal sales business in of the current to economic range outlook Please XX. sales XXXX basis. $X.XXX recently year, the of X.X% to as an trends, year, Now completed and slide to to Based benefited increase in guidance sales X% a fiscal acquisitions, of on XXXX billion range XX-week store fiscal a $X.XXX sales XXXX for is sales, a was previous comparable to assume billion. extra of now

makes achieve assuming of our fiscal While in us that sales Monro.Forward to to we we our Similarly, we maintain normal the performance believe second on maintaining a successes earnings likely conditions. share the guidance strong per early to accelerate weather to increase, initiatives half winter position high-end would range. our guidance achieve light X% flexibly of In of range, we the investments our we year X% are year-to-date the the well range, are continued our our comparable store store so. diluted well sense to positioned comparable and when strategy, it like of that traction do Monro.Forward of between sales believe to

XX%. We to earnings approximately earnings are fiscal be of made therefore reiterating growth year. XXXX includes breakeven in our Acquisitions per are fiscal XXXX expected to diluted range $X.XX $X.XX to $X.XX, guidance This to accretion to representing from guidance XX% of in acquisitions. share this $X.XX

to position supply overall global pressures, Our diversified and guidance fiscal oil differentiator differentiated leadership cost costs, increases continues on tire material expected are continues In key tire Any not the and remains oil to industry. our face chain and supply compared XXXX. of and cost our to cost a chain our assume and other our mitigated stable passed tariffs vertically-integrated to in drive consumers. by be to

increases are cost such and related guidance. consumer price any not in our fiscal XXXX assumed However,

and XX.X we to approximately guidance assumptions, be million. an is guidance expense million This store outstanding. X%. on growth expect continue comparable midpoint EBITDA to rate margin our the to these and average depreciation diluted generate expect shares approximately increase $XX earnings tax approximately of on sales interest based be Given $XX of reflects $XXX million, weighted be of million, XX% a approximately amortization and At effective an to XX.X%, we operating range, above to

we does always, over store call remarks before acquisitions to turn to As to our or Q&A. guidance I'll Brett any some move now provide future openings. assume not greenfield the closing

Brett Ponton

platform data as building Amazon, new which our in continue our progress October. presence. strategy, achieved momentum execution quarter encouraged Brian. conclusion, the our see well analytics-based our the expanded of our launch of we into collaboration We the as true including pleased our Monro.Forward underscores websites milestones our in with very Thanks, several performance with In are to and this CRM omni-channel and top-line

our are of program about excellence store to our efforts these store launch pilot base. Additionally, forward re-image expanding the operational looking and across we are excited and

to are we our that Importantly, continuing robust fit disciplined target opportunities of have pipeline acquisition our strategy execute and a focus.

underlying on for strategy, I that, questions. year-to-date momentum now over feel our the will to full-year Finally, the our and based and of With in for our confident call turn even performance operator Monro.Forward more beyond. we the outlook

Operator

you. Thank

now a question-and-answer be session. We conducting will

first comes question Matt of line question. the with from Please Goldman Our with Fassler proceed Sachs. your

Matthew J. Fassler

so be Thanks the and first relates unbundling, profile found of if everyone. tires the and working morning, to strength the does well. Can which Good much. primary out margin seems My to question the new in you the what to unbundling talk anything category? about

Brett Ponton

This is morning, Good Matt. Brett.

know it competitors. of guess we approach unbundle as As we reasons. decision bundling relative the landscape, were for couple I our was, you the last that fall, We of competitive unique One assessed pricing. a somewhat our did installation we made in our the to to

required to choice selling improved. of I installation we our think the the services. our I those well attachments on in-store. bit And to little the also has the QX, the related is it talked tires, so execute team two new far we or of when in packages Also in-store first mentioned, give we've think services. the process consumers certainly about So, for I allow more benefit competitiveness gives seen and team online, as And flexibility shops fact types installation for perception selling to that in-store as simplify consumer introduced on

also I result seeing revenue the think ability ability by as and system tire tire our drive the seen more of well a our to on are encouraged that. but I profile Brian in volume, margin So that through think as I we're that, unit we've

Matthew J. Fassler

think same-store Great. tracking so comp year, for And outlook quick fiscal X.X% a then the I year-to-date. about think second the just you're we about question sales as

that ahead that's three. so tracking the month-to-date, of only of out month obviously one You're

three guide if his is process you annual us, the in you have week extra have the to the momentum remind one How the sort might past with Just the this fiscal remarks. the of and that one just comparison will, your outlook on thought months talked to sales within reflected in same-store your Brian given over in and seven to three year?

Brian J. D'Ambrosia

is The this three basis. is a on Brian. XX-week Matt, to Yeah, one

a we've XX weeks So the and year normalized reflects prior XX-week year-over-year.

it there's, and with we're through trajectory, by also was we know we as well, move relates certainly the in quarter a here, QX strength obviously some back that half encouraged strong quarter that we've the seen. for comp us the that weather – to year. we dynamics quarter sales filled the it's a And a last know As as October

So, all to three certainly happy consideration, two able more be we've to you a of but taken our of of guide that three, to half into to top to one the that know, are expectation. is

Matthew J. Fassler

you. Got

Brett Ponton

maybe – add Matt, And, just add to color to Matt, that. to a little

think I rarely amount the you doing, are of currently drive team our when experience, my is from results linear. change your transformational

to in the end so. some want comps Brian good about seeing So initiatives I give look way lot side need said, are upper accelerate the our very that that, EPS feel the with to on think as driving Again, our but but got if transformational of of pleased the change we're extremely the we mainly to here. flexibility our we've to do sales momentum seeing a ourselves QX. guidance, coming out we're how responding we encouraged about to team We're to also is half, second little feel

Matthew J. Fassler

Understood. Thank you.

Operator

you. Thank

Our next Brian Oppenheimer question comes line your Please proceed from with Company. Nagel of & with question. the

Brian Nagel

morning. for taking... Good Thanks Hello.

Brett Ponton

morning, Good Brian.

Brian Nagel

guess, I market your look bigger you're way for undertaking initiatives. you as what question, out in the to improved place Is dynamic first to a demand how that seeing maybe versus nature. seems My initiatives be what quarter. results, really Clearly, some we're there here, space? you picture share at or nice the separate, as taking within an in have data much ...so lot improvement result of results of there of overall improving now a is

Brett Ponton

tackle two Maybe, Brian. Yeah. me let ways, this

talk introduction I'd the to I look we just providing to their back performance a the really QX. a tablets of And like included and when about to them our introduced. field do and store our operation what we take of the to help assess teams, the job. started in we audit process First, by year, tools build at our performance, standardized started visibility dashboards new and quarter step fourth foundation our last with That

sales also reputation QX, know or brakes foundational lot we sales focus us. customer line execution, packages in-store Good-Better-Best and tires satisfaction. around second top and recall. the we balanced as the And a comp that between introduction of tool of program changed plan say store management To results drives The if and changes. across compensation as balancing be drives you'll for or the system was the more oil or foundation you introduced well I builds should also profitability, In as

favorable. out the want tremendous side. we explain team last I service asked strong executing the I do. progress, the to as That's our year, would has So think, made backdrop, initiatives think certainly, a all in we've that certainly credit winter it have they I normalized on more the continued But give winter for the of us. been to to drove QX into spring season with Coming selling them

for we the pickup category. now that than a as of roll table we're seeing the summer pleased business. the strength We're of evidenced (XX:XX) As season out our tire demand fall our with brake into normalized in more

starting in favor at backdrop pretty execute. to the our targeted for skew of starting feel car macro segments. to about And bit vehicles of a term, as growth starts more you we ability average to team's good know, the show end our in more with a XXXX, more us, then So, the park bit age longer our the FY

well. give they've we're favorable but about also credit I executed for encouraged way at, to backdrop, we're where our QX to want in as the team So,

Brian Nagel

what – Brian question numbers could That's – could and actual what just help I key understand year. very investment both second follow-up form made incremental take? to through this the in or you what I could us Either opt allocate about shape, think, of investment size to of comments fiscal Great. investments what Maybe flexibility those dollars, where of – that half have you initiatives? – size the regard of helpful. with And

Brian J. D'Ambrosia

Brian. Yeah,

that spend technology some maybe forward we upfront see think would would be upfront technology in look require which going some the forward, back work drive those where value opportunities pull items, I tremendous at and as return but we and opportunities that primarily of we primarily they to some amount think around half, of cost.

as some we be area the in I primary got at certainly we're flexibly. pilot of store the Rochester think would refresh side well that the on And capital our look staying where we progress the flexible as So initiatives.

Brian Nagel

Got Nice you. again. Congrats it. Thank quarter.

Brett Ponton

Thanks, Brian.

Operator

you. Thank

Our next Inc. of question. Please Stephens, Nelson with question line proceed comes your from the with Rick

Rick Nelson

the economics Thanks. the attracting be morning. on in and early of I'd follow-up Amazon helpful. are could like there some share fact Good customers would your new you anything partnership on learnings to are

Brett Ponton

and about our as Rick, expect, detail morning. the speak Thanks, with Well, might can't we level specifically. you good in Amazon, programs performance of

– going initial determining with can of our continue collaborative nature to to about I'd We stores have XX this I locations, phase Amazon. pilot them. of of next stores our that and the performance the XXX also Amazon all expand say pleased performance of And that with relationship them in However, but with of to look takes share as across we collaborate Monro. the did the monitor the the up locations we're collaborated we're out. we we the with That with continue to have we us to the program to rolled now

generally As for installation online and it I'll performance, retailing the relates okay. specifically, online about just to talk our capability or retailers,

feel that's and to elect company. for think buy well. Meanwhile, omni-channel very strategy that creating it's as And business. We're still we important our value omni-channel We what initiative with building where capability we still building to see remind own also an historically. also our I pretty performance we're be committed the out the still part consistent shared our is small consumers this relevant represents a that you tires. of out very accretive think very, to

Rick Nelson

share flat. saw color, for follow-up same-store like market industry? if by in talk was you and sales you from October, and Thanks price driven what quarter think could in that X% speak if about is number tire versus the like sounds Monro standpoint for the Brett. Also, then to that you the month I'd category, And the there on to the acceleration the this a could units you units happening

Brett Ponton

Yes.

start let's with October. So

assortments, to and product on as And and mix, effort tires I of on mix mix between I X just collaboration by, assortments certainly here but terms selling point our driven very versus in as on brands. our to more have price a we how think, would think, I optimizing in-store. had in think, Tier price. we've with build improvement our We've product tires call our concerted October, opening volume an seen the Tiers, tighter unit price then also favorable we our I analytics focused pure store personnel in seen Rick, it, favorable, our within accelerated all organization streams. We've well, moment some seen some addition stronger those be favorable

by the encouraged effort feel we hold. is So taking very optimization how

commented see we more As we have starting into well are about favorable the unit fall backdrop see by weather encouraged you little both, initiatives there October as we volume normalized well. on our we're mix year. think in as as and the we roll these And did stated, to helped bit a with second improvement as that more half I of conditions

that unit with balance strategy of trends, to the margin really As execution the category. I coupled best the by in we performance from improved we but it, proxy with pricing the but right the the think right in-store think And line certainly, we dial manufacturers. seen our we've call tire to have we get in manufacturers. for consider measure against right what I versus somewhat get assess a maximize I the assess opportunities expect performance as And over volume, unit performance, still to our probably market, unit reported is still lot would what the also volumes we our, profile

Rick Nelson

good and a luck. lot Great. Thanks

Brett Ponton

Rick. Thanks,

Operator

you. Thank

Jordan the Our next your question of Please with from comes proceed with Jefferies. line question. Bret

Bret Jordan

guys. morning, Good Hi.

Brett Ponton

Good morning, Bret.

Brian J. D'Ambrosia

morning. Good

Bret Jordan

with come A compares on your the (XX:XX)? ATD how Amazon Tire that to installation seeing customers And through you're quick what TireBuyer program. that with prior programs ancillary or question far as might installation Rack as have referral sales,

Brett Ponton

I can't with progress But think As we with had Amazon program. speak the I at early line other Amazon experienced business pleased in XX-plus detail we the expectations of about in would Bret, and Amazon, again, is over I doing what would mentioned, that incremental pick that tire years think with have, the be generally very business we've speaking, that the the from online have this up we for installers. we innings we're

Bret Jordan

Yeah. you from the the customer tire don't ballpark? – to is same think it in volume just the of number (XX:XX) that I came know or not Okay. for refused that revenue want to $XXX – talked you're a install, Amazon, getting about whether from I

Brett Ponton

think, related going others all things I seeing again, what encouraged that lump speaking, retail called and Generally up these we're to expansion joined. tire by the to we're portfolio, our online category of one until Amazon Yeah. into we're the in with

Bret Jordan

a some And who volatility shift distribution ATD. don't ATD then Obviously, customers seeing around lot of disruption there in access, have follow-up. Are either Goodyear, any is of inventory ATD bought Okay. volume picking previously might a you those quick and any from and up have breakup? as that

Brett Ponton

think distribution change the backfilling given really a needs, what see of done have relationship of I their manufacturers we there. their from kind tire good job

given wholesale really in has significant have do incremental us the way with So, been as alternative our a created disruption us there couple Bret, we demand that tire well. And to has amount not it's as locations I of any haven't supported But some on opportunities of news manufacturers think been the – some – sources insulated, – our to in at have those distribution. the change portfolio. drive has we the locations this seen point certainly of pretty exposure somewhat

Bret Jordan

Thank great. you. Okay,

Brett Ponton

Thanks, Bret.

Operator

you. Thank

next comes Edge the of Research. Please question with proceed with James from your question. line Our Albertine Consumer

James J. Albertine

Good congratulations quarter. progress the in on you. show morning Great. Thank you the and

Brett Ponton

Thank you, Jamie.

James J. Albertine

to in, maybe a could first one sneak ask Wanted if question an operating I second strategic question.

and ongoing kind technician dealers reading technicians on sense from other shortages. been in we've labor technicians term on concern making kind initiatives side, wanted your maybe turnover? And operating across some employers the space, this and to things of progress Thanks. you're and longer on get perhaps with about that you hearing about the of where getting promote your the And first of are terms nature. to The to Monro on help of stay existing reducing into of

Brett Ponton

Yeah. Thanks Jamie. for question, the

if Monro you maintenance a back. taking And business services by undercar start look model, the on at and step tires, me scheduled services. very we're Let focused other

I positioned car So, focus the real solve technical the a are sense I car new we the that to have to think that dealer, for their don't say, challenges would would on, in we relative consumer. uniquely dealer

is technical car real positioning, great of as result our labor as a As not that strategic for, requirement say, the dealer.

higher to more How a read trends that one value improve. We been see also which build what that, training to I on around I is for improving their QX, making a the employer. appearance, attractive significant skills in Monro end point refer over think professionally. a is, you've set. of Monro have And and that around technical making also, think, certainly said as preposition they time. QX our for platform, and opportunity have we has The – year well. personally those still the professionally both, bit strides grow to the helping that's University, employer key made more I store of expand is benefits about technicians we labor launch have to technician acumen path think, I clearly value enhanced where, we commented Number their the believe, grow and plan think the still clear as geared shortage late that is, this at we planned initiatives investments have and our gaps makes we're closing the And I clearly defined as and a that proposition some enhance, have here. of I our certain Having from view turnover market, about.

to what early they're of seems responding been forward. – going of center support giving So, That them. pretty see technicians right the in very to keep that our the innings support we've level encouraged, we team forward. right to pretty to And be our well format we're going because store skill a us the can going be as us leaves that the in set with from confident I'm

James J. Albertine

going the in But strategic the if a appreciate on bankruptcy of little there's in we've update wanted And on that. just in particularly your that I also into bit sort as to I dialed it with the the for space. late. and and view prepared that Thanks landscape going bit get restructuring. for And I heard quite side, remarks, news a the the color. consolidation missed well, Sears on been of M&A, apologize

tire some home testing about heard that also may distributors nature. of things We installation be

to seeing you're kind get Just on and opportunities see key you threats the wanted as strategic of side? of key of that roundup potential sort what

Brett Ponton

Sure Jamie.

we we revenue deals we As acquired that that's robust. remains so about evidence prepared million, our the as that comments, that the pipeline this still talked two our we our that commented, think year pipeline. are in And NDAs plentiful we announced takes made in $XX total I to quarter – our the in

transforming So, able we that see also underlying maintain the I'm the acquisition, Monro.Forward our a strong activity to front. through initiatives. encouraged stores through on our while on we're M&A focus grow And

So, to be able maintain we a feel pretty that confident going we're to basis. on go-forward that

if to think still tremendous industry of in positioned we're you going only in number like to point vehicles. of our service in capability technology commentary is gives space the presence building consumers having a services, on the on our view handle that technology out are on of consumers And a But mobile is do the we which presence, think and like but the on feel equipment, to we mobile a the needs, also tire consumer well look, as some tires investments that where the do remain us from which need look, are there from you And building mobile a the we safe introduce few the a today of to certain we're some would services. our do opportunities commercial fleets and flexibility mobile is right around right installing focused that to our that. making forward. are We home it that. of and portfolio, can that some needs merits and the where tremendous do locations to geared building the three-year omni-channel an their supports technology I of flexibility We our remind have amount the strong to to our efforts services and us that. But omni-channel forward around relates more brick-and-mortar do is committed brick-and-mortar services, questions we're capability in I in building that focused out tell, a it amount infrastructure that of Certainly brick-and-mortar, very have our like technology for future like large in there that on not handle a of view, commercial strategy basically paramount but course. we equipment, piloting much heavy a a everybody just felt we consumers' point in remain company to environment. the now, company, have As do the as out trucks, focused so to think do here, there core very it. we going very have players going we as We towards scalability, I competency ability question very the our ultimate which see we and right to of plan

James J. Albertine

best progress Thank for sense. for next of and the the much you quarter. the on detail. luck Make Congrats so

Brett Ponton

Thanks, Jamie.

Brian J. D'Ambrosia

Thank you.

Operator

at are remarks. I questions for the further closing would turn any this to Mr. Thank There you. Ponton no time. like over call back to

Brett Ponton

Thank you for Monro. today your us support continued all joining of and for

great the the forward. progress of a our half excited and We have day. to path Have next updating had forward we on reflecting initiatives look very of first you are tremendous our quarter. We all Monro.Forward traction about a year, largely our

Operator

Thank This for participation. you Thank conference. today's concludes you.

and disconnect now may have a your nice You day. lines

Monro (MNRO) 25 Oct 182019 Q2 Earnings call transcript