MNRO - Earnings call transcript Q3 2019

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Operator

Good morning, ladies and gentlemen, and welcome to Monro, Inc. Earnings Conference Call for the Third Quarter Fiscal 2019. At this 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. [Operator Instructions] 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. to like now would introduce Ms. I Senior Monro. Mulholland, Vice President, at Secretary and Counsel General Maureen ahead. go Please

Maureen Mulholland

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

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

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

Brett Ponton

growth, we our make our top line on We Monro. to Thanks reflecting joining line today. solid another morning progress delivered quarter everyone. good and bottom across continue of business strong execution Maureen, for you, Thank as and us

sales compared the Christmas we third Overall, shift. X.X% holiday the adjusted day year for Forward achieved the store one prior to period strategy. to selling less due in comparable quarter when of

sustained the driven a third fourth the our and quarterly Similar XXXX. store quarter sales ticket since operational to improved from our performance these in-store driving are average represents to of of positive last focus consecutive comparable our consistent by relentless marks our positive five was and sales on trends experience a higher brake this our in delivering to highest the increase a categories. strength fiscal Importantly, believe excellence execution testament tire that quarter top quarter, and star We comparable store comp line customers. and

lifetime long-term that across are enthusiastically outstanding and have we believe also growth. ongoing of changes to embraced they We commitment our reflect implementing the our sustainable teammates value the and increased customer organization efforts drive who

share, an In third achieved invest of earnings addition, our like sales store during record quarter trends quarter. the initiatives. we experienced per overview comparable we to now would provide in while strategic the continuing I to

and growth October November, from winter illustrated top we was on in a accelerated sales offset weather saw three, line experienced in by we As which our December, markets. slowdown resulting mild across conditions store partially comparable Slide in

snowfall to in that strength to Specifically, above negatively year, in month, in month. this limited markets during compared offset partially top December comparable while last was levels the our store sales last our saw snowfall year's November, contributed which line by impacted early northern in we which

to the the saw experienced of holiday stronger was However, of we temporary growth approximately store store January, fourth the points period fiscal encouraged than XXX selling are half line around which comparable far XXXX, comparable so X% extra were store lower we fourth the in back and the softness for by Quarter-to-date, sales, quarter. quarter approximately our basis in one we reported in comparable led sales. the sales trends day of adjusted top have

our by notable again half this our business quarter, which sales in performance our and we strength of to represents category. tire experienced on Moving category, our largest

yield comp a making to growth. positive continues third Our tire X% comparable fourth of optimized sales in our tire increase and quarter quarter, drove pricing store sales tire consecutive the and strategy results during sales

tire experienced momentum was unbundled quarter our strategy continued Our by previous performance volume. also price appointments. in unit trends which in and XXXX, the the with increased driven conversion pricing sustained with our saw we online quarters, tire higher drive stable service fiscal since online installation tires In to line ticket we of of fourth and has in

sales on growth Turning strong to we to delivering double-digit continue repair brakes, category quarter. categories, and the for second for the consecutive in capitalize our service this demand comp

packages with brake XX% to optimized report Our drove brake for comparable pleased expansion our categories, up pricing, remaining and are volume, alignments end/shocks an to maintenance, comparable increase gross store of Good-Better-Best front In transaction slightly again sales brake flat margin combined while year-over-year. and higher package we our this that were in for brake contributed sales, declined quarter.

outperformed as quarter the whole, For markets. southern our a northern our markets

faced would we conditions. as December mild However, they northern underperform expect, in our of we as markets the weather month saw

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

on we Moving continue for to on scalable acquisition build capitalize growth. Slide accretive platform opportunities strong, to a X, to

announce tires. XXXX. Louisiana, footprint of definitive diluted the new and a The to market in expected fiscal XXXX close quarter sales We sales, our annualized service in XX agreement and break-even building expanding mix South. per These locations is fourth that and in earnings representing acquisition are we to fiscal presence add acquire of expected share signed the to in our million store are XX% be a XX XX% to in out a to to pleased approximately stores geographical in

These to service and representing sales, locations In addition, annualized X mix approximately in announced we in million sales of acquisition the XX% expected a completed XX% previously tires. stores add of five are Ohio.

fiscal expected sales, of mix in share be break-even to announced earnings XX% are stores in XXXX. acquisition and and We XX in are sales add service the acquisitions also which Florida, XX in XX% of completed diluted tires. existing a previously fill expected annualized These approximately million markets to per representing to

acquisition million announced period, representing extended Overall, sales. pursue completed and stores annualized markets, not existing million a represent growth due in we of the sales. been annualized strategy, of decided key in see collectively XX in fiscal we by continue our marketplace. to and consolidation located have in for an remain to Acquisitions Following opportunities diligence X thus the encouraged pillar in announced Monro's we far seven significant further the acquisitions potential previously XXXX

to well robust We a have have over each. XX acquisitions believe M&A and that that NDAs execute positioned and higher which our We further allow and ROI forward. targets our currently we of implementation with will effectively that standardized base, the store I'll to We pipeline procedures have detail more between on in going integrate stores signed in-store these drive five been targets. and brand a moment, standards us discuss across believe operating are XX in

three locations our quarter, Lastly, openings greenfield bringing we fiscal greenfield during third store total to XX the opened XXXX. in

report Turning the to our to Slide pleased of am execution that I Monro. X,

anticipated, to continues I'd provide strategy an update during steps as progress third important quarter. Forward and to the on achieved like the we

milestone York. May customer As create sustainable quarter to Monro last with our focus the initiatives, areas around unveiled and implementation initiatives four built value the experience, for Starting are overall our scalable in a our year, with customers improve every XX key of help reminder, during Playbook, at of lifetime as them our star a call, a order increase steps to platform reached forward of a growth. we successful these of our experience the to in time improve pilot new have a every we that in-store operating Rochester, our a New efforts, in procedures, one appearance deliver customers' taken as and experience locations. across to Monro stores Through well which our refreshed store the we major we five of ensure

education-centered consistently locations. we taken First, across our to all our in-store to an have process Playbook approach trained customer educated and the execute Monro to teams -- selling

quality. Monro a operating responsibilities our procedures made in-store up roles of is Our include on defined clearly focus that with Playbook for teammates standardized and service

advisers, properly is about right to provide they options, educate goal position customers vehicles. who expert our choose needs for can their can clear our them services the and so as teammates with vehicle their Our

locations and we and standards stronger guests our stores be product and across quarter. this on a selling Overall, coupled wide formats. align include established best want brand instrumental and of further lasting started To We brand across stores serve. re-imagining our the clear during consistency our complement neighborhoods playbook, also will appearance positive with of conversion. third currently options, to we completed drive in our higher expect stores we consistent impressions range that make Monro the with We standards that our strategy XX pilot good, of and in-store merchandise of X,XXX better the clear stores our our approach, implementation to driving the

locations renovated appearance. All modernized a now of more have consistent these and

are more look inviting As on depicted slide, and more and functional. the contemporary they

customers has and far, from the overwhelmingly feedback teammates our So been positive.

proud teammates stores of with have are process. in-store made the is energized a by customers selling in are our the Monro we actions to taking the Our simplified changes better serve and

still and seen stores. the While we at completing our the stores' re-imaging, our very early pilot at results have seen the Playbook conversion we we've customer in After Monro excited innings, and stores. implementing about improved are satisfaction these

and first suppliers completion stores refresh of modernize scale three in years. the initiative expect currently across approximately store operational brand look are southern this finalizing In forward of the rolling purchasing Following portfolio in with our negotiations to the XXXX. the standards near-term, to successful next five quarter our of pilot our fiscal to store out our over to the re-imagining our XX we markets our program, and base we appearance

market determining ensure the returns. of the by previously we of appropriate capital refresh possible achieve As to and amount needed highest for the are size stores our to discussed, we scope demographics of investing each examining appropriate age, their are

As the these and stores rollout, we we realize prioritize increase the integration standards operating procedures will will brand the as benefit believe our our value part from of newly our initiative acquired we implementation process standardized in-store and stores. of

and to customer while to build tremendous -- on effectively Slide in we Moving satisfaction, building progress continue online enhance managing our presence. making to X,

drive started our initiative that a each proud management has X.X year dramatically base we Following this our rating to of by This in of entire satisfaction our almost reviews our average stars leveraging report improvement stores. before to all-time are delivered the customer the feedback across stars operational X.X targeted currently. was and from surveys from online ago, we we collect online and star store customer reputation increased rollout program to

instrumental higher these been scores customer and have Importantly, conversion. impressive in search driving improved satisfaction traffic

customer-centric Turning data-driven initiatives, on strategy. marketing our X, to starting like an to I provide engagement Slide update with would our

in current customers to meet Our higher goal ROI are. our invest where channels they is to and future

to customer therefore, marketing acquisition data-driven in campaigns. are, relationship our spend customer invest repurposing marketing We and

last retention. analytics-based customer driving As we quarter, first higher with a rolled our step, a data CRM out focus on platform

pilot the innings tire early our increase of vehicle approach the on leveraging will the offerings, are their very unlock initiatives in insights and and campaigns next us By by allow optimize launched a brake will we conversion. key a to of we led targeted to customers develop service notable in are in The efforts, and long-term relationships. to our we recommendations based quarter. have analytics, strong purchase our Overall, consist still customer with leveraging propensity one-to-one deliver the confident to been which messages predictive insights tailored customer that able marketing to identified higher phase While of our and data to marketing third and specific our we consumer customers needs. encouraged to results data-driven

quarter. drive rolling fourth step, As in plan next to acquisitions our out initiative a new we the on customer

provide with to them targeting market our data vicinity partnered to potential and a of identify marketing firm customers efforts locations to have on value specific Monro in and high our customer directly. focus We the segmentation areas analytics geographic demographic

customer and identify information We also to market existing segmentation for well as as greenfield real expansion. assess our markets estate and intend acquisitions demographic to portfolio, leverage this key

success Moving of pleased the launched online the customers to increase online our that experience we our driving stores, strategy at retail tire Improved driving website our presence, traffic led experienced we a and better while very on in the omni-channel modernized of stores. as our are and for XX% functionalities last by appointments quarter. searches are our evidenced to our to online development with content

to very a to We the rates. encouraged see led in are phone to an capable XX% also mobile architecture upgrade increase has mobile conversion

strong installation. of be provide XXXX. XX in-store stores will the the second in a At schedule seamlessly nearly across for expansion announced an and phase an our final XXX lays customers omni-channel of our our which half purchase out completed, monetization appointment third the we we states. view and to expect tires to beginning tire with roll services their of website of for build-out, to collaboration online fiscal Amazon.com the installation able the Our Once at customers quarter, to foundation

rollout states available Amazon.com course locations make the customers at pleased these are year. Monro to XX at services program next retail the are these track over of with all on and the locations this We smooth to across of

to merchandising strategy and service Turning initiatives base optimize our are launched Good-Better-Best our of to excited offering, first our store the in the continued quarter. our with product we momentum across

Our Good-Better-Best and opportunities, price provide turn higher and customers relevant trade-up attachment with options segments driving assortments to defined increased conversion. which in-store for consumer all is clearly allow in

we Importantly, significant and margin translated our again demand the in a success that tailwinds have are for this past once report of the quarters brake for pleased increase seen to into brakes packages three positive quarter.

opportunities. quarter part of given fourth new we make offer to towards of our on are our we branded right of they also tire our and of sure additional that looking an business, we category tires are Monro's the on offering right represent capitalize our in important introduction in with strength points tire customers. build want for tires margin at tire part and half expansion the price our sales, optimize the the the Tires high-margin to our expanding As efforts assortment, to

also to quarter, Lastly, to the over allowed rightsizing We an better expansion on margin stores -- or couple of I provide update and overstaffed understaffed labor store in that us third After in optimization quarter. team and anticipate efficiency the the technician gross technical past greater initiatives. our overall quarters, our of productivity like would store achieve our which for technicians the the at appropriate by supported ensuring re-balancing engagement are the the the next be efficiency system skills store, data-driven a store in will have stores of staffing this fiscal of required in and more our of cloud-based level in with journey implementation services XXXX to store. skill step the quarter scheduling each further that the staffed technical level second accurately staffing who drive our

training University also important launched in talent. have initiative the our retain We our right attract an strategy to Monro program pilot, and

that complex teammates today We have skill high-quality handle will provide system training with the developed to a comprehensive of technology. serve requirements our adoption future management needed as effectively set customers technical and technician to cloud-based vehicles more learning with both ongoing the our increased become

Our component proposition key a employer value our of is Monro.

defined aligned platform, creating path on teammates. guest why are satisfaction our We Monro and commitment personally that Forward accordingly. to business better developmental objectives professionally. strategy, have we they teammates' our both our and an and sure underscores to a Leveraging making program University teammate exceptional focused career support is transparent experience, the clearly engagement our we training are recognize job grow X,XXX have and which essential and keenly to

the talent, impact level since across changes fiscal to proud have retain turnover We its and commitment strong are lowest fourth to made professional by a as evidenced to support our that reaching cultural the report teammates' quarterly quarter development we have XXXX. the our organization our our tremendous ability of had on

moment take dedication hard the team asset, With who thank customers. I'll organization detail our biggest their quarterly on turn and to to Brian, additional work like across our outlook. is to year for our over provide and call the full financial will our and a performance teammates would I to Our that,

Brian D'Ambrosia

you, and everyone. Thank Brett, morning, good

holiday X.X% X.X% we in of of comparable year-over-year million, stores Slide for performance recent third shift in a the the increased quarter the less XXXX store presentation, third decrease Sales timing from approximately a the from current million was the increase fiscal adjusted in This from Christmas solid sales in new acquisitions, a driven quarter. quarter top stores in fourth including by delivered offset the fiscal due $XX.X X when sales by million, the and closed line from one to million. quarter XXXX. of sales to in year Turning day of selling $XXX.X $XX.X to $X.X to of

prior period. year The XX selling in the had third compared to XX quarter days

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

model, occupancy was the by a partially one. staffing increased we in fiscal from store sales and higher prior mix service distribution costs basis our stores our in the fixed optimized as quarter, decrease margin This sales, packages as increase year company-operated was quarter Tire XX.X% the to added of largely well points leverage impact acquisition. closed due continued a percentage sales. to on of XXXX comparable as XX% XX in of these the This from Good-Better-Best we from store with benefit gained Free Service and Gross third X largely period. the and offset as costs During

Operating noted, previously part of sales a tires Tire as to and acquired $XX.X we've without tires, increased for with As Service the sales of and our related with mix sales, year-over-year installation. the and higher $X.X Free locations $X.X costs in Monro. lower acquisition wholesale sales, for we of gross the primarily increase margin, million, the wholesale were XX.X% expenses due commercial The $XX.X of period. higher prior the or the respect million, of million compared or at to as to includes XX.X% operate million quarter year business, dollar mix

also $X.X performance. were with associated and management field million financial our onetime which XX corporate current higher Forward year-over-year net incentive new improved in base X.X in to related and and initiative, onetime reflects The realignment. costs stores expenses includes dollar nature, increase pay from of million year

a and in management in fiscal expenses costs. XXXX quarter included costs million for litigation reminder, transition of $X operating third $X.X million As the settlement

at year, for million X.X%. income $XX.X prior XX.X% year-over-year, approximately the increased to prime operating fiscal a in sales from as percentage increased million, XXXX the in X.X% greenfield last recorded third quarter flat Christmas was Net credit was income operating decreased weighted million The as The margin for by the outstanding facility, outstanding for revolving fiscal the decreased compared rate interest to approximately operating third expense to Our period our the holiday LIBOR to to quarter increase average partially decrease the in same quarter interest connection which for $XX.X acquisition million weighted third debt compared decrease third and by primarily Adjusted basis of by XX the same impact last for the due increased $X.X with year. an year quarter for the XX.X%. quarter of third shift, debt points as compared debt is as expansion. under and the offset the higher by XXXX, a to capital of This and $X related our rates. and average interest lease for XXXX quarter largely period. of

rate XXXX a tax certain tax the and in fiscal change for decrease XXXX The of the benefit decreased tax quarter quarter the a in during to the reduced to method to a same for onetime Net that of the year. to income third the XX%, tax related $X.XX, in just tax the of difference an XX% period to the during An in years per U.S. quarter deductions share earnings adjustment of expense also the of of fiscal later a onetime tax corporate $XX.X federal net prior to onetime retroactive The a The returns. change adjustment XX% the share tax and benefit income last rate of Act. accounting third effective as implementation related the fiscal quarter of is which The Cuts Act, our year examination IRS deferral for the compared XX.X% year-over-year deduction in XX% recorded accepted tax third costs the to Jobs rate the our Monro. onetime result income the XXXX tax XXXX Diluted and tax resulted period due in for prior amount the the was third deductions method examination adjustment and effective rate quarter primarily years. related applies impact third increased the in Our quarter year-over-year. Tax XX.X% to refund years, resulted from and year-over-year onetime the record additional the income the rate related XX.X% including income from examination expense in December that in deferred Federal to of such enactment current XX%, of million the income federal adjustment period. compared Tax increased year income per tax benefit tax tax applies. Jobs instead which of Cuts $X.XX for was of for was to accounting

non-recurring the realignment, in and management $X.XX Christmas holiday share costs related of $X.XX impact tax year $X.XX share Forward which per to corporate enacted newly of the and per costs, of tax the investments, per This compares and mentioned $X.XX settlement shift, management to per per onetime from in prior calendar to $X.XX share of share legislation. costs, costs, $X.XX the negative period, field from net per income benefit. $X.XX in previously impact transition share comprised onetime the $X.XX included litigation share related

earnings these diluted XXXX third $X.XX was items, year prior $X.XX XX% onetime the quarter increase to share fiscal a in year-over-year. the representing period, compared Excluding of for per

allocation, our to Turning to disciplined we Slide approach X, strategy. capital our maintain while continued executing to

Monro. Our

we and run rate million X in to capital in over expenditures strategy $XX continue to support years on track, investments the technology. progressing re-imaging an and incremental expect our Forward store normal next is above

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

initiatives. Forward

Greenfield $XX strategy. Additionally, acquisitions first as executing growth spent expansion opportunities approximately on strategy, of X pillar including X X store and acquisition acquisitions, accretive the months part of XXXX, on million fiscal of a our completed our remains to during we

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

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

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

We fiscal continue momentum strong to our performance the Monro. our believe and of year-to-date

in for are representing XXXX earnings range break-even $X.XX approximately earnings fiscal made Acquisitions includes this to to $X.XX XXXX growth fiscal are therefore guidance increase, earnings be Forward and quarter. winter to of achieve assuming fourth initiative in store expected between likely from the closer are This to normal sales well X% accretion for the share XX% to to us conditions upper in XX%. earnings remainder reiterating X% to year. position acquisition. $X.XX to share per to diluted continue $X.XX, to our of positioned well diluted the guidance achieve we share Similarly, per per our weather end the the expectation comparable we of believe range, of

our overall leadership XXXX. and industry. tariffs assume to our key drive the phase stable cost and differentiator and supply costs and global chain pressures, remains In continues fiscal tire our guidance to compared vertically-integrated continues a cost in oil Our position material other of to diversified

cost and mitigated expected not be As our consumers. are to to differentiated by increases tire previously chain mentioned, any supply oil on passed

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

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

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

Brett Ponton

had summary, another quarter Brian. In top our encouraged experienced line Thanks comparable the quarter and January. of execution, of half by store sales trends consecutive delivering fourth we growth strong second of we positive are in

Our Monro.

shaping Forward re-image and our of across to look success our on are capitalizing forward the up program base. nicely. excellence initiatives We store operational expanding pilot store by these efforts

from a by our our of growth to Importantly, acquisitions acquisitions. new annualized fiscal remain in we cornerstone add state as evidenced the geographic sales will and footprint XXXX strategy the fourth quarter $XX million in

to for fiscal will I for that, now to our creating remain call our our the XXXX we and ahead, value ability With questions. outlook over continue in for long-term confident Looking shareholders. the operator in turn

Operator

with from first Please the Our comes question Nagel Instructions] [Operator question. proceed your with Oppenheimer Brian line and Company. of

Brian Nagel

type the with a want business -- internal to improved. ask push forward question I your of as So, but at asked -- the for this just clearly sector you same again, your I past, the we has backdrop in I've want to time, to initiatives, start the continue

the much you results improved of at relates acceleration, comps if So, continued backdrop? if how initiatives you we an today, the versus internal think in look to the will,

Brett Ponton

point. on I've consistent shared Brian, you the answer I'll think, this previously give with I you

credit internally. all, to I think our give want I team first of to

past have asked supportive of over driven year. I they've that we've been change everything the initiatives embraced think, the them culture done to do very and the we have and they've

starting favorable. number year, So, I'd like the Number became two, macro net certainly environment to credit, more last give think one. I them

in little created in, backdrop contribute good about, that the we Our that November favorable to drove itself help last weather probably we snowfall November most throughout and the year, on fairly comp performance reversed and got by that mid-single QX, the a here, a kind saw. favorable at into outsize quarter well. us encouraged we in we're back a from season. strong that spring some I November our year a then think, summer for strong But a winter selling we how season I'm summer, helped season as led into talked that a certainly first performance year-on-year pace in last half you compared saw in look bit recently that, as digit December, January environment holiday traditional that in as had a our second early to when with of of harsh little leading to recovered Rolling we brake

think want to I has also for I car give somewhat to think old part is age to to difficult to view and So, us XX-year credit in vehicles. team, opportunities certainly, the longer X I which but further the macro term drive our parse continues our to the and normalcy, always out. is, cohort, it's improved

Brian Nagel

then I a And follow-up. have

maybe outperformance what then give now units retrofitted, mechanical in I guess, calendar we what on maybe does of they regard better know and -- how stores And more fixed about fiscal you this your we've and -- of, your us questions at -- kind impact comments, Now, comps. is the is but been discussed seen your nature, calendar market is if prepared that It's QX -- two say, that home so seen to we've up? talked shift QX sort QX? I a of With discussed, in affect date shift, question can the far merged second -- you've as a comps in but it's How those all, far but in as it early, that together you are here. to you the idea in

Brett Ponton

take reply the part. second and part to first I'll let the Brian

in we related its say, on Rochester stores pilot would to that Brian. entirety, November, So, December, the in of re-image, the I completed end late

two that the me So, let it's underlying a early doing at at trends. really when macro we we improved re-image driving indicators of drive initial customer in look customer score, trends we're that, process. promoter early as some this, is market. our what four. is, you at look on seeing satisfaction, in-store we're pilot procedures when that one, stores improved pretty as would are net of there with One expectation bifurcate and new we we on traffic/sales higher hard. conversion installed satisfaction our new metrics that we look conversion of a rates positive there's innings metrics, playbook, And well the Number saw parts course more in-store, There while

we I As that think December, fact we calendar But, we in customer traffic would help given metrics the the well I that. on forward. that over would traffic expect And it's to November, wrapped shift. let too re-image, drive Brian on satisfaction, trend the for we up it into also the, to relates that clearly bode how but satisfaction pretty going underlying, I'll improvements. just expect comment think see translate early the late time trends that

Brian D'Ambrosia

Yes.

XXX basis helped So, by -- as day is X% far shift. the goes we've He as X%, the with that, were reported that calendar January prepared that had Brett the commented also extra it in about points that with is in that about number remarks the number. his talked

way up probably in were quarter X of if down set we X first then when got the weather said, saw in mid-single that of up, we a the had January for what that that's been low-single digits up weather at later harsher bit little about since down consistently of I in you about once up think month, adjusted about we've look kind we days then. digits December, in Brett in the we also part in X the mild October, December. And November,

to after pretty the seeing that the encouraged what now kind closely trends are the that, we to saw November. We're holiday October back we right up and So, correlate the of of that re-reflective softness that we're weather holiday clearly in saw. and run

Operator

Our with next your question. question comes John from Please Research. line Healy of proceed with the Northcoast

John Healy

on changing mixing the And a you Brett, up you your sounded to comment that of I about little planning bit. to mix tires me maybe little guys premium. more towards and ask the a bit about bit tire were going it want a the little like

kind the going operational higher it understand of hoping was mix strategy and I customer what's the right So, there for to really move? is why your

Brett Ponton

in business give about north on how some that of do quarter XX different pricing with year, the Certainly, that the know some me some and you last I'll John, on saw pricing there, the manufacturers take manufacturers, last of tire currently Today, we if color we we don't give but context we actions. category. some environment. I let imply think you tire tire necessarily

Given well increases wouldn't price as we're vast those. of I our industry-wide. to scale mitigate certainly, characterize feel like those majority and our size, of course, But we positioned

that that price, ours of suppliers to others take some not chose have have. We

this shift areas potentially product up opportunity size of using doesn't in to our kind product realign down assortment an reassess in trying our or the and best the stream. consumers. for strategy our and our scale, necessarily and create as us that Given we're value It mean to

Just going value us available to look the create overall, to the for and for for Monro. best we're best options consumers

we're looking rollout we at point efficient for price we'll year, that doing, looking really part more ways become second that next on tires. can The is opening

now of opportunities right on that screen from. have of tier manufacturers to the screen our X tier tier it, we product the again, X, and that creates call our evaluating lower consider more X we're end portfolio the more product So, become on, leveraging to flexibility efficient tires, consolidate, in

John Healy

a mentioned days in clarification wanted And the up that any that we question. hurting there comps you day either as I number? that I are X% ask is that running of just so. XQ basis, or or or movements January, to same started a were Is helping X% on thought

Brian D'Ambrosia

about points helped Yes, is basis day related of XXX shift. by as that X% the to an reported. It's because extra

Brett Ponton

as softer, which was part month, is November. see saw the parts month there, add second color we pick October, of the demand first kind just month maybe part the up we a previously digits, the it, what month; we of the of mid-single in to quite January we call there, John, saw, of in with mentioned line bit two of Hi, the some kind

But some of that month of return holiday us. half for the challenges and leading to or in. normalcy saw of we that normalcy second So, a clearly exiting period the created softness January, we've kind seen

John Healy

final you one think? a or that just then coming pipeline, folks question, calendar for probably is better off the M&A been helping do hurting is that industry, what's in And your year

Brett Ponton

since can I our that say Monro. I've pipeline as it as has robust been been And been never for here me at has

a our favorable robust is way little and I very more the law So, calendar that very despite pipeline tax think, through, of maybe activity flushed M&A now year, active. certainty our its has kind is

about very we our growth forward. going prospects feel So, good

Operator

you. Thank

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

Bret Jordan

up customers on in, follow can Amazon doing you sales Maybe the online seeing or we're many as other, how as customer referral we're core Just those from far if coming are partnership. Amazon that now attached talk about profile differs stores what as and either how maybe customers?

Brett Ponton

Bret, I'd the just Sure, Look, Amazon. dive I'll like to reiterate we're why take before I maybe Yes. maybe, on it. doing into specifics that,

think well value-added at to itself to -- believe brick So, or mortar and providera I and brick services for and our that real and like we're out it, tires, Monro, car provided a participate. for in other mortar strong lends there business other we retailer/service your value-added installation we presence, suppliers Monro require think

today partner and with Amazon of and couple strategy, rate compelled being low with go others. we we you pretty current that online consumers penetration bought tires felt to our did right, So, by with as pretty

performing, incremental course, rate. gives in services still installation, our out believe online X with can't general, us to to comes this, its two, relationship participate installers still any around I'll or X the we're entirety, say stores; traffic drive is, comment how in things: As well gives high or Amazon, the opportunity why we attachment us supporting of to those in with particular but pleased won't do one that We value-added Amazon as But details relates it specifically the we as Bret. give with programs are others. right, the

just about is I'll Now, the dramatically $XXX. $XXX a as ticket before but course. margin, is of shared what attachment different, The average services as a reiterate ticket that content. tire of is on plus. The labor overall rate high and we've are installation those of see $XXX nature very comment our we ticket profitability, The average company general a north high

good pretty still in So, with economics program. we with but generally the speaking, broader early innings, feel the we it's about what still line see

As I going to that and of the comments over year to stand in to all ours partner going look X,XXX here XXX we stores with remarks, made forward. currently calendar to the we're with Amazon expand them prepared stores at

Bret Jordan

as expectations? expecting sellers as on are are the then far now, valuation deals quick follow-up as And anything you're one changing also question, And M&A, the you seeing doing more?

Brett Ponton

it's stable But us, of, say picked won't the let's -- has I terms a but we've last status quarter, No, quarter for in certainly the valuations. really in certainly pretty quarter in to seen say, quo, environment been particular. up activity,

Bret Jordan

just of management X times now And on on a bit far you've thought I as over a valuation your cost, that I there or or times talk guess mean, what prior topic, obviously sales X x percent is deals? since expected about replacement to ranges year, for team been used , as EBITDA the

Brett Ponton

to typically turns opportunities you, stores, there's companies. to But want consistency we share we standardization is. synergies our do like process our we don't I I acquire the forward that placing thing one we're four given to that with acquire see Yes, And but think whenever not by synergies, two synergies forward of going what of just turns on valuation emphasis we when going is kind signal can those companies. driving cost in feel and revenue driving expand we synergies

Operator

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

Rick Nelson

that, so would could put primarily and brackets facing X whether you're for these days you're in to shopping I'm be northern [indiscernible] just markets? deals follow helpful, or Brett, stores, XX to competition up you revenue on the curious southern that around pipeline, markets some acquisitions if more

Brett Ponton

first maybe the markets. about talk Let's

no to to no the continue diversify if you to players will, I going last, more, of to And Sunbelt, change really that to Louisiana Certainly, we're with As the top feel characterize look, the like Related forward. in exit our going represents we there's business competition, would Monro opportunity footprint we're no with like do quo. line, opportunities a we've there; just we quest number a status out I our continue see look, there feel create going for to we're to growing feel now still both and would people great country. our saw our of announcement, cost demographic target owners now to real recent to you entered and areas buyer forward. and synergies mentioned We going on credible develop. and competing their And expect grow a like for deals. good buyer. that for a remain their store We to strong

Rick Nelson

the March in the where year? came in should about one-timers Perhaps talk Brian rate next we into push for question think were. about XX%, tax we quarter there, involved of your on rate, how you below the as and tax some a When we

Brian D'Ambrosia

a think, a won't I And XX% onetime for bit in just our next of because we guidance, anticipate benefit to guided we rate to I it obviously of be Yes, year. little have year, north the item for the the would this that, year.

guided originally be year. I to to to that that we So, this closer expect had XX% would the

Rick Nelson

challenge in retailers, of know had I there get changed And the else just some the the to other really weather the you shut down anything the follow quarter up in Is first commentary could I'd January, on your discussed the quarter. back end to half. be government [Indiscernible] think impact from you there. maybe like impacting that that the in January some for

Brett Ponton

January But we that things. And as we of and of don't particular always we the weather we pull came point reversed in a demand in the some snowfall earlier, part the on our softer about do hate from Yes, early our given a the maybe early internally, That December. And the business, did our analyze itself certainly, and about tire view year-on-year. correlation Maybe good fact Look, talk we we measure, couple tell was business. November, see like does to have in about weather. to year-on-year. and of talked know, Rick. I talk we it weather I weather say question, monitor, I team will the

us itself. The the think, holiday that in talked that about holiday January. retailers the softness out book during to a of other have half a couple And we reversal weeks saw, weeks maybe I and I a dynamic back saw other season the leading around mid-single around season couple leading would holiday into of some digit kind that of certainly certainly for was of, second in the normalcy and of so we

have high-volume that, in that? to studied D.C. Tough dispersed the employees the we concentration macro, determine, nature Washington the a stores We do of any course, of on given And provide But to want you of have government the stores, impact pretty in significantly everywhere. do shutdown. the high color of pretty area. Brian,

Brian D'Ambrosia

Yes.

we though whole. -- some sales shutdown, So, and see a we as saw which consolidated as looked at Baltimore-D. stores the as our mover are Mr. chain during Tire as this store while on tire big stores, a Company well in at the needle of the significant that was, our the did well isn't but level the area, traffic chain the as other parts C. what versus going and geography primarily the we benchmark, declines entity, the to have

not did greater have really D.C.-Baltimore large the all impact the the in an it it But So, area. up, as and operations stores needle you on mover total. a in roll

Operator

Thank you.

Please Robinson SunTrust question comes with next Benjamin Humphrey. with your the question. from proceed line of Our Stephanie

Stephanie Benjamin

Company-wide or selling -- stores is know, had XX spoke new just that you when the that is approach, first procedures? launch launched is procedures, that you operating those educational new quick refreshed the a I -- the clarification, you just as those about of you across that

Brett Ponton

question, Rochester. launched Stephanie. in across the a that stores XX It's was just good Yes.

wanted pilot the procedures. by We we call So, the it way. playbook, to the

the Choice, banner a in-store Monro execute it's of or outside So, our are X,XXX locations. consistent Tire a a whether Mr. is Tire, across we be that procedures to what the building, our on regardless of going

just this at the only couple there. we're things, Rochester, given So, stage, in standards stores at new two The the XX. ease happened first much piloting actual is the roll now, years brand playbook playbook. re-image, a with than over pace just the right of at to out the the re-imaging we're is it and one those XX faster will the two playbook But of but in execution next

Stephanie Benjamin

the kind of -- this? of move year of re-imaging And timeline? really results or stores based any is then, is on re-imagining kind you stores, of the Or X accelerate you X the like XX in an or newly first of even it to set of acquired newer to, as to that said, there some opportunity, these kind

Brett Ponton

we're think, being pretty I you methodical as can about this, tell.

then we procedures to was reasons; us for for can pilot the get them it, scale. step and two to one, to piloting refine First just we're where

investments cetera. value the from making second thing all engineer et is, signage, in to store, The we to we're fixtures the wanted that

remarks, request of work start how our in we'll across proposals across quarter. re-imagining too me, I that QX. that our in still pace determine. But fast process QX, it's portfolio, going the quarter said XX how completed to we we As this is excuse the made determine will think, this should had the think to this move end now forward, have leverage our well running and in at stores our comments in I we're planned from for scale that of -- prepared that We'll of first have stage, next then goes the point And new. year, -- by up now I be to do I

Operator

final are comments. there for no you further Ponton, time. the Mr. back questions I'll you. this any at Thank floor turn to

Brett Ponton

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

continued and momentum our solid We performance are the of pleased with our year-to-date Monro.

strategy. Forward

year all Have great opportunities our ahead We day. and look end. us updating are about a to progress the on of excited forward at you

Operator

This concludes today's teleconference.

may You Thank for this your participation. at your lines time. you disconnect

Monro (MNRO) 31 Jan 192019 Q3 Earnings call transcript