MNRO - Earnings call transcript Q1 2021

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Operator

Good morning, ladies and gentlemen. And welcome to Monro, Inc.’s Earnings Conference Call for the First Quarter Fiscal 2021. 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] 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. 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. Thanks Hello, everyone. morning’s on call. this for joining us

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

information in be discussion call for as to I’d supplemental With Officer, management our included and over like Ponton. Chief a to measures measures, and to will statements of comparable part call, release. Reconciliations of and are the Additionally, be that, include measures. Brett? today’s of comparable Brett supplement President substitutes Executive to non-GAAP today’s to turn earnings GAAP certain intended our on presentation the which GAAP not such financial

Brett Ponton

economic crisis everyone. fluid. have good remains situation an and and and extremely Maureen, morning, months, we the us. Thanks seen last unprecedented the joining few COVID-XX health you, for Thank In

safety and and communities, business future have During of current we period and our this continuity of uncertainty, our maintaining well-being to the to customer’s support needs. teammates, ensuring customers been committed while

pleased Our pandemicand strong beginning and to that efforts diversified have our am the significant our continue stores disruption. this to teammate’s leverage gain despite since the initiatives us supply of X,XXX from stronger more immensely provide remained proud the which we challenges to chain help services continue Monro.Forward am our ongoing I believe I crisis. and essential than without execution traction, will open I of to emerge see

on approach our the at As gradually while three, schedule reduced as taken highlighted slide we store to a have of we environment more a measured normalized store to hours the the demand return operating improves. pandemic, onset

we key our received in including have stores and measures the positive our have contactless feedback safety drop regarding We services. customers from implemented

appropriate operate steps Importantly, as actions business COVID-XX pandemic. elements of to result we crisis. taken expect Overall, the near-term this positive to are the to continue see and protect during cash on within the a have of taken basis support control we strong during and teammate flow the on our a our and we them focused engagement to headwinds mitigate have

decided this store to resume operations to we and investments Monro.Forward context, have and reimage second quarter. have our our significant well financial we believe underpinned operate our and cost and make which us liquidity, technology discipline execute to is sheet flexibility rigorous management capital initiatives. robust our initiative critical support business safely gradually as strategy by financial balance Our ample and allocation, a to in In rebrand in future and provides as continued with the

our Lastly, acquisitions remain of strategy. growth a pillar

while We quality number potential fit strategy, discipline. that targets our maintaining of have a would evaluating are a robust strong pipeline and financial

would of a I we drove to sales our four, moment the are slide decrease Government in quarter a translated to spread trends and take restrictions to first curb quarter. our the store COVID-XX experiencing. in traffic, comparable Moving first discuss on XX% a current substantial performance like to in to which decline

note to XX%. a trends performance, the represented as driven April low current While in COVID-XX restrictions our point Despite other May driven store related traffic, our mobility with fiscal competitive improving abated miles the solidify position tracking it’s quarter as we that down resumption into in July we sequentially. to June line saw environment the evidenced government approximately continue topline improved These facing by our demand in challenges comparable are above our or sales and metrics. performance with gradually throughout important in in we encouraging continued by

second While results to-date. we product comps our service quarter sales encouraged decrease the all in the we to first categories monthly continued the and categories in the preliminary during experienced on comparable that trend that store improve a has across throughout based double-digit quarter, were all sequentially quarter, see

which category, Geographically, during high is severely price volumes had northeast pricing tires, management Midwestern dynamics competitive region in pandemic and allowed the of other entire where markets quarter. a and largest Importantly, the With all us assortment, COVID-XX and visibility system the outperformed improved by our tire while concentration represent during the rollout service the favorably demand impacted outperformed optimize northern traction. elasticity as southern has category first our as categories stores margins our product gaining and of of each markets tire quarter. the to the market impact our and our was have we the first most into

to as with weeks increasing has recovery the due restrictions rates. infection a in in states narrowed outperformance northeast higher many However, in this our pace recent are and slowdown southern strengthening performance in

of store to appropriate the and structurally -- and the to skill services able performed we pace our gave our demand and the consistently staffing adapt have us environment. our down changed the technicians mentioned demand our quickly The and right-sized right with some to model As level structure lower aligned of the opportunity we including believe are with quick before, corresponding flex in store. We the to staffing. also thoughtfully of and each labor initiatives accelerate to store of cost transformation our compensation level mix have pandemic

business we spend marketing we tightened encouraged Overall, we shift the savings our well higher to us channels. up the and sustainable position believe we Despite are these long-term Monro.Forward to performance operating addition, for digital are to its that accelerated advancing by have set strongly drive going which cost environment, towards forward. operating ROI In from better our growth. initiatives, derive committed challenging our

initiative, our would appearance on the program, discuss procedures. I store to standardized five, developments detail. largest in and reimage focuses our a rebrand more implementing and slide strategic to consistent To-date, recent greater creating which like operating Beginning Turning with in-store we XXX optimize and in a including approximately tire than in our key more XX of awareness transformation our the revenues rebranding number tire stores from brand markets. service-branded brands completed consolidating markets, and stores of increase stores to stores, have select tire-branded our store

While strategy the onset the reinforce reimage we report to store we to confidence stores same-store drive have the pleased portfolio since our and consolidation that in retail trends outperform average. comparable our rebrand of initiative positive pandemic brand These program sales our our to fiscal to are our and of this to positive light pandemic, quarter. long-term growth. refresh chain continue our with approach we undertake of resume a in in XXX decided sales backdrop, the moderated financial second goal healthy Accounting stores have measured is XXXX. to XX current In the position, for

that six our part addition stores adjustment, first the estate As the to quarter underperforming in the portfolio of of onetime XX the closure real fourth of in were XXXX. quarter completed we during fiscal stores closed

basis. were store We drive of estimate to accordance will our performance on stores not operating XX the these a -- an noted, model analytic As in we by our with planned closure stronger of COVID-XX. previously million $X.X income improve closures were in approximately and strong long-term response company these to annual

past on have of to up years, over we our these experience which channels the the initiatives, customers, customer-centric since Moving the pandemic. of star X.X has strong all-time marketing the our our on to Building higher rating improving stars. towards focused have digital beginning for shift off we engagement accelerated driven efforts results, strategic our the ROI been few

for actions, online optimizing to approximately performance store the of like scheduling search consumer results, appointment online the to our at location. whether ranking to have in which XX% directions in making focused store, of improvements significant that’s in efforts the have part has categories resulted SEO tires. led the get As a now These Monro we stores call and on phone or digital been a clicking our strategy, product key top our three

acquire stronger lower digital with us Importantly, advertising and cost, our retain allow phone targeted marketing driving digital and our system new in results. to at a customers investments while combined

the company, of more our to our we that -- exceeded services. broader rollout collaboration announce to efforts have Amazon part states tire we our with X,XXX omnichannel of an XX of to all create with for presence completed now in our installation providing locations announced excited are than As

strong receive is step and and to We efforts. furthering builds retailer an continue positive in to tire initiative, the success customer other engagement of satisfaction our response our upon this metrics feedback which agreements in online customer-centric important

in excuse Turning our on critical -- me, turning critical to technology. now, invest investments to our

that and We continue long-term number to instrumental margin on make we in progress will expansion. believe of initiatives growth sustainable tremendous a topline be driving

just including our network we mentioned. the rollout base, of quarter, During I our first the digital substantially across the system, new completed infrastructure phone upgrade store

store allows measure to our and the the us infrastructure approach of results to with ability consistent modernized Our execution to efforts. sophisticated more customer a drive marketing

call conversion our the we customer this customer pandemic, we by the improve significantly During technology and encouraged it new and provides confident responsiveness. establish that and our to leveraged of have traction early flexibility a added enhance centralized going Overall, experiences contribute will initiative improves to forward. are COVID-XX center

and our pricing as adjustments higher As process we as across to which pricing fiscal driving to tool our relative well and complete in and drive of dynamically volume, quarter we base, market out are XXXX. tire strength category. category us expand the this the This make in tire we margins in to strategy. our our demand to are new the track optimized is rolling pricing at rapid management level to higher allows trends This mentioned tire third new category as expect assortment store able by better earlier, system

the priorities ability are drive stores confident significant to and This effectively it store the in important ramp-up is which quarter support we program ensuring first margin balance proving to in of in mix Lastly, It skills beginning since our us technology-based match store. to store seamlessly have is our of our effectively in COVID-XX model, also labor real-time right the we of demand the now. labor our to gross staffing critical forward. right efficiency right-size positively continue to trends, to impacted one staffing our pandemic, each will store allowed and improving has demand going

cloud-based store As we our base, software we our scheduling the Monro third expect which we leveraging platform received positive far. to and are rolling train across out so by our staffing store to University our have are teammates quarter, complete and overwhelmingly feedback be

believe the help our In our differentiator a robust skill will supporting key Monro current proposition in will competitiveness has forward. tools addition these University has teammates rollout important our which value in moving their broader enhance grow as employer strategy our to curriculum supporting we the marketplace be to to set, career critical strategic technical our a the environment. and continues significantly Overall, advance of and enhanced initiatives and

to experience proud Before to best-in-class safely dedication reiterate to our like would how our over call the Brian, team’s a provide I customers. I to am of passing

crisis Our ability that, drive structural our even performance call made I Brian, turn to position. changes financial and first performance adjust seamlessly and will additional teammates provide the emerge strong we to stronger environment our will quickly the and improve across embrace subsides. demonstrated have to evolving detail quarter and their on this operating business the who With when have to

Brian D'Ambrosia

morning, and everyone. Thank you, good Brett,

decline to Turning six, our same-store more by provide I’d detailed like overview million, a to Sales a performance fell sales. to in XX.X% this XX.X% quarter. of $XXX.X slide year-over-year driven primarily

in the COVID-XX restrictions curb substantially spread pandemic significantly results, our decreased the expected, quarter. ongoing traffic the government as impacted As to

encouraged the recent see from store closed a from million quarter partially service abated all across to of in approximately Brett by product from geographies. restrictions increased of by as Sales offset we noted, sequential stores some $XX.X gradually sales new As million $XX.X stores during our categories, or acquisitions, million. decrease $X.X in have sales and improvement were key comparable

a line an quarter occupancy of The lost increase percentage costs with primarily period. XXXX first due period. quarter fiscal leverage fixed to costs year in points of XXX Gross lower as decreased these days year in basis store XX-selling from had decrease to with of in XXXX XX.X% sales. prior distribution XX.X% This comparable previous on the and sales, the was as fiscal the in margin first we largely

slower sales impacted Additionally, vendor the year turns, by to inventory were mix period. well we prior due tires of to as lower rebates compared as higher

partially However, this ensuring offset necessary directly percentage technology-based related lower each right-size right a the while mix as technician as match we model, sales staffing in well of by to of to labor have store. was demand, skill costs our as we lower sets store labor

of for In to margin improved as compared sales, $XX.X and partial our sales the period. million category, the expenses tire $XX.X year quarter. positively by prior with XX.X% million addition, of gross pricing quarter in decreased the was million tool XX.X% which for within the of management Operating tire or the rollout category $XX.X or impacted

mentioned, a structure marketing store previously higher first offset The year-over-year by a expenses spend notably, in closing in match The and strategically million sales realigned quarter, sales. we expenses action partially reduction as by from $X.X period. channels most reflects to percentage comparable store of the took targeted lower the increase to our to ROI expenses This to year toward of in demand. stores right-size also in the lower a operating store previous four compared streamline decrease staffing was cost our compared prior Brett we was digital As decrease net period driven year costs. in operating

was last $XX.X for $XX.X compared for the year. to million quarter Our operating same income the quarter first million,

interest point of operating percentage decreased credit due sales, of year. financial X lease related the X.X%, the and income for connection period. our leases. the lower with was quarter by our rates, quarter XX.X% average in year-over-year debt The debt greenfield in primarily recorded to increased outstanding as weighted period. The to COVID-XX year increase compared outstanding the million $XXX fund the with as million, to to finance rate expansion. Net for was under last compared increased in $X.X prior to year increased expense to period a interest prime million the XXX The for approximately XXXX our same provide As -- first $X.X the as flexibility average LIBOR lower quarter prior compared well pandemic, increase in weighted fiscal borrowing revolving an facility and as interest as first well that purchase an as to the new approximately to basis acquisitions and during associated in points acquisitions increase by rates

costs Adjusted the XXXX period. earnings was income compared For the the Net compared period. income for prior income expense $X quarter in first XXXX. $XX.X share million, first Diluted year quarter, to tax of fiscal was to of $X.XX, million per This first per earnings share million $X.XX year XXXX, store the diluted costs non-GAAP prior to compared in for was per $X.XX share fiscal Monro.Forward share adjusted excluded of to share integration per and XXXX, compares related to the earnings earnings share diluted of a $X.XX closing $X.XX, per related quarter was acquisition which of measure $X.XX of fiscal costs. due which costs. per excludes and diligence diluted first initiatives to the net for fiscal $X.XX first $X.X share per $Xmillion, of in in the quarter the quarter of of quarter of first

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

The XX drop per year same closed on impacted with earning comparing in During sales our last period share earnings earnings a first decrease traffic is XX XX.X% resulting bridge comparable the per our performance presented COVID-XX-related the first XXXX in in significantly slide a quarter, performance -- A decline. stores. share fiscal seven. complete we and quarter store $X.XX

reconcile impacted approximately allows due to savings in The year per our per As number us in net our and $X.XX sales gross benefit have quarter. X% decrease in expenses into to previously we the in quarter. $X.XX margin prior adjusted share cost a to compared our the noted, period of decline by the share. per to lower share store The comparable stores reduction per $X.XX of of operations earnings every translates roughly

per closing previously planned $X.XX in noted, excludes this store share As costs.

strong I’d XXXX. update to slide quarter now position the allocation down fiscal our beginning capital $XXX.X Turning facility to credit eight, on like financial in an revolving million debt first with provide of our We paid strategy. our of

in technology store million expenditures quarter, first which initiatives, our was of our upgrade. including were approximately capital to $XX.X infrastructure Our $X.X the Monro.Forward million related

dividends the approximately paid quarter. in first million during we Additionally, $X.X

noted, and attractive support we our previously pipeline financial our M&A evaluating discipline. a that strong Brett strategy have As targets while robust maintaining are

We Overall, reimage focus in during we expect resume we but financial this position. a and and ensure rebrand a positive thoughtful take also impact to mitigate quarter, the our us will the paused the position to working first of our on we to protecting program streamlining allow near-term plan are initiative store and basis this operations bolstering operate we and second flow pandemic. our quarter, operating measured capital and costs and cash our headwinds throughout on to approach

covenants financial temporarily our provide with we which certain June us credit five-year will our of we in flexibility believe greater financial operate to revolving facility, existing business. Finally, unrestricted amended

nine. Moving on to slide

X.XX. of flow bank environment. first well-positioned fiscal and strong sheet end $XXX we cash in position liquidity to balance $XX net and million approximately the generated At Our to confidence during have XXXX. had navigate a net that quarter million the of remain first quarter, EBITDA we the debt of and the current we We are ratio operating of debt

equivalents million of XX, availability $XXX of and credit July approximately approximately a on revolving and facility $XXX XXXX, million. cash As we cash of had

COVID-XX, to guidance impact fiscal difficult remains ongoing uncertainty XXXX, we forecast financial providing future this time. the not surrounding our Turning assumptions pandemic on accurately Therefore, for XXXX given are it the of to our at fiscal the operations.

on some performance. to provided assumptions XX which your we financial slide have modeling, first have We quarter assist updated for with our

of $XX Regarding we range range low year, XXXX of in environment. our the stores, fiscal stores. to for are end the assumes approximately our The rebranding our expenditures, approximately increasing number high on $XX on approximately assumes the depending during XX to to XXX million stores we plan rebranding capital CapEx of the million the end the rebranding account while of

addition, In our year-over-year. relatively to chain, slightly and tire global and cost we and remain expect continue to supply will oil to leverage stable diverse lower

As we have optimization will portfolio during and result, by completed store fiscal we approximately as a discussed, expect the first of planned income our benefit our the these XX we in quarter, $X.X million closure operating XXXX. stores

on actions our Moving to costs. to reduce

acted with the reductions million to in levels. year, the the our to for first anticipate We closing improving quickly second $XX quarter cost to we recruiting our our approximately million I some to lower ramp-up to savings for of match back marketing call to quickly demand benefits. million cost additional quarter, that, enhance stores $X in as recognize And remarks. we and will initiatives our align and with remainder costs $XX staffing some we demand, of turn in shift of in Brett the As spend the intend to the realize cost expect lower now

Brett Ponton

recessionary supported will and Thanks, Overall, improve to an and as gradually of as in particularly own heightened retailer consumers environment, currently first demand by to belief the encouraged our traditionally likely that been more visit will they that public remain throughout drive has a Monro optimistic second crisis is we Further, vehicle. by quarter cars flying repair than subsides. are new quarter continue to This purchase risk like improving to-date, our and industry the Brian. consumers a this performance aftermarket resilient face are given more, of our transportation. cautiously the

these uncertain, While I very the in organization to our proud environment of remains am we responded how challenges.

well in we this from seeing number and with emerge streamline changes During us COVID-XX are the combination traction the to made a operations, pandemic we the crisis. initiatives which quarter, stronger our from our to position Monro.Forward navigate of

it a commitment our and comes maintained position capital diligent We have remain financial strong when to allocation. to extremely

quarter, our underscores beyond. Monro turn initiative, well I’d drive now In safety to priorities our and of supported continuity rebrand plan execution value to that, During call us our by conclusion, and like our resume the reimage of to thank of to will With the work to for Monro.Forward aspects and our we everyone questions. in volatility second for the over at and store the I strategy market. our Operator protect their strength the business, customers. outstanding across These the business health through shareholders further for which the all for deliver position long-term COVID-XX despite

Operator

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

Brian Nagel

Hi. Good morning, guys.

Brett Ponton

Good Brian. morning,

Brian D'Ambrosia

Good morning.

Brian Nagel

at with The seeing let back. auto want make would numbers business to parts ask, and of in sure QX not what better and more what correctly, So Monro fiscal than comp. QX. probably improving rebound the COVID, still and are negative into this is through at trajectory part negative I clearly, generally, is, the first I of call hearing that -- auto been look if see our which it a understand -- question has I you comparable I that, business But here me the business the early necessarily economy we holding as business been what’s we the an suggest are the are But we say, there’s wear as the retailers. to XX the fiscal question we

improving So allowing point think back stronger reach, the even Monro to the trajectory in business? this do better is question company not an or is, have you at what holding the and even

Brett Ponton

closely monitor closely our the pretty expect, the Well, this pandemic look has business in vehicle Brian, and traveled. onset of pretty been since of Yeah. miles you we really might at metrics one

gasoline et really performance as is the correlated really our as metrics. cetera. of onset that, crisis at consumption, since And Looking pretty those positively well with

the high Monro’s when metrics. in of car very broader and am given level, in of the some Baltimore on up look But ramp that, regional we you our outperformed match I are of certainly [ph] shortage part up, of models And a -- demand. performance respective I because in sales-producing know, to recruiting investments as course, line in have at critical overall every improving nationally that, if said we faster ramp tracked our for our focused pretty, supporting area, is areas at in the the think pretty you sales, having our feel more actually our to business labor of national encouraged is in areas. labor on stores a like Washington and back though QX in look stores labor think, in actually the concentration I as making we with those some GMT northeast seen all planning much business unit to labor our the we Having in labor. is this model most we labor said is we the capability

feel to was granular helps issues may the we labor support encouraged I’d demand maybe at traffic, color appointment to recruiting marketing marketing allowed as have as driven stronger on at to performance looking efforts of calls a due be from on is, the we very we where got nice targeted invest really we energy the in Brian where serving just much in being identify additional think, under when our in us like labor that us store level, our by here, That’s increases results our are just that’s demand. more are digital to are we we that there, a align spend basis, pockets to are we the I up dollars QX and has and needs model that ramp as to but supporting it can have be in we our demand going also better store the seeing but improving labor support shift unfulfilled to our we refocus today. add measure. So, with And regional topline positive upside phone well online still

Brian Nagel

helpful. very That’s Brett. Thanks,

pull Second acquisition the have Any depth prepared if the you activity? unrelated question COVID the know crisis. I talked start this, least economy I out your hopefully to is on of at comment, don’t the to but of update in

Brett Ponton

Yeah.

As well view that cash company. we of from the talked given restart how us given of and commented, especially couple balance of light point the our we navigate state I confidence trends flow in One through, team of crisis business our a sheet. the the rebrand It’s think, have initiatives about. major is we in the in the seen strategic initiatives improving to has

stores we have We kick we are our to and pretty very always we we going right evaluating are right have are a But in those now to adding we year. development are portfolio. with XX robust approach where targets. M&A build going capital off in our business also to the team a mode take But and like XXX certainly engaged to is of now disciplined in we reengaged evaluating, targets team this Monro, our actively got pipeline how invest our on but acquisitions, and

Brian Nagel

very of you Best much. luck. Thank

Brett Ponton

Brian. Thanks,

Brian D'Ambrosia

you. Thank

Operator

you. Thank

of proceed from BMO question with the line Capital comes next Our Jonathan Lamers your questions. Markets. of Please

Jonathan Lamers

Good morning.

Brett Ponton

Good morning.

Brian D'Ambrosia

morning. Good

Jonathan Lamers

in other the bucket? seven, What $X.XX the slide EPS on bridge? is Brian, the

Brian D'Ambrosia

Yeah. in by that in the largely cost driven reductions -- footnote to script that the the by slide. we described That’s also really and

levels. So we focused making lower areas sure with that our three demand did our when on we We right-size we $XX are March that’s in at about stores to of business. beginning to our very first that demand on seeing of we were cost our that. million really was really we meet focus in aggressively lower structure business that in reductions And in quarter. and And the the meet labor quarter the able in achieve lower a down the moved the to

we to in such the opportunity We in And employees through our eliminated overhead our advertising there. adjusted also well store measure lot support advertising, warehouses the focused then at also of look responsive of we as non-store we took primarily other center as some Brett marketing a talked and advertising. down could furloughing about and and on those

demand improving demand on we that quarter saw those we in the across trends the as to higher appropriately trends, categories. to improving Now, those support and trends went aided back demand response

we have as $XX again about savings see across those labor to million the will come cost of FY’XX, are going your reductions, that million to us move talked the categories, structural half we what through today to about just and assume XX% forward, it’s structural on benefit we those operating out FY’XX is just at And basis to give fluid we markets $XX the and in are of XX% we back -- roughly while plans in labor adding be will cost what resources structural that question to another spending improving and incremental XXX and we basis continue outside that. Brett savings in forward you with about non-store $XX As three XXX coming and million talked we same the amount obviously targeted $X we points of reductions. focused change of FY’XX appropriate that occurring same-store we improvement of to FY’XX in of the support that Probably move FY’XX labor you that described XX% is the most and change, of will of things we really forward billion through see be our points where QX that’s as additional through and we exited increase if is demand. because as that what created biggest overhead for and as happens will out help and as look marketing those very margin sales of stand year, about

I So, that is long that $X.XX but within that cost just answer, really described. reduction

Brett Ponton

Monro.Forward those initiatives think, I good work all in technology some that I answer COVID. planned I as because that to that longer They that might weren’t of a these if the vectors. prior the that capitalize leveraged can add a Yeah. were to Maybe part COVID. just accelerate, on to COVID our make with add little about And done we the color throughout talked three to as we to able on of initiatives we longer. progress us installing just too initiatives enabled team has out all on of making were good pace

it’s structural going the and good of business benefit benefit to the the work a gets that team forward. into short-term long-term our So, translated

Jonathan Lamers

answer. Great Okay.

year that Just benefit, of $XX XXXX. HX versus million are fiscal you to Brian to confirm said, $X at fiscal million one speaking point HX XXXX year incremental

year-over-year, to that So million that’s is million $X right? $XX

Brian D'Ambrosia

correct. That is

Jonathan Lamers

the Okay. rebrand Switching an Thank the stores update rebranded performance quarter? the the network on to rebranded Do have of this gears you stores. you. previously -- versus

Brett Ponton

Yeah.

outperformance As in others. rebranded stores our the about, saw we we talked versus

You nature to expect, regional speaking they and Jon, the of geographically that stores well might comparison. where draw those land given tough

the versus bps we However, coming seen chain out have sale improvement of about rebranded what comp average is our XXX stores. of

Jonathan Lamers

same-store color curious in or Okay. Amazon on announcement, updated some quarter a for for Amazon the And orders for the growth be the stores significant topical the am on could you there? XX have than just how I onboard online more Do that months. that had economics for

Brett Ponton

back, on Yeah. level But I mean specificity. that’s comment a not going something Jonathan. have to would that are we we step of taken that I say,

COVID. of challenges We despite are the pleased

completed have the We with Amazon. rollout

also in not significant get installed stores. relationship there function similar now comment of we can stores are increase a tires We our What are online the during at to we the with have COVID installers. seen our to tire relationships on in in service tire X,XXX with available step although I over states. and pleased sellers, online services having But appointments installations the with seen really in our at increase other maybe installation that, third-party XX pleased a all from have done our we our change is, pretty

think that’s value got the category right in I vehicle. pretty around, sure talking location see they broader thesis make confusing to our consumers we go and and still store consumers professionals their tire to for So think experts shop, at tires for consistent with pretty

broader So we it pursue capability presence brick-and-mortar expand X,XXX a build but advantage Monro support with we continue our to for think to third-party of omnichannel resellers, also as also and e-commerce having efforts all the online continued well. relationships way our own to our as locations,

Jonathan Lamers

Thanks.

for stores, that rebranded the this the category attribute would tire stores the Just Does that I last tire or you what that expanded on quarter. the others the significantly noticed question departments to? refreshed outperformed reflect

Brett Ponton

Yeah.

think we business. there’s as three at I our look things

we February a fairly go about start back of things talked results, I tires. year soft one you to QX on was the think the if January, to our

of benefit calendar QX. into see, industry pent-up little demand did QX think the rolled I that calendar part a we So from felt from some

that’s dynamic. So one

management are team’s out However, our with on we category our really efforts pleased tool. rolling pricing

installed, under our that’s operationalized We of covering as impact work volume, performance. with marketing I now also and that half you has certainly might just stores have on our highest clearly, done variable about shift our And think, that marketing a the stores stores to the helped. of right around been rebranding tire has now, and and system have expect, SEO we was being initiative. we good the picked highest self-help our The team improving digital talked fourth the

are now around on core in As the three ranked and stores. we top we half categories our over online for talked our search right about, of

a four like I that’s performance think together tires. things coming key those outsized So, in category creating are

Jonathan Lamers

Thank you your comments. for

Brett Ponton

Jon. Thanks,

Brian D'Ambrosia

Thank you.

Operator

you. Thank

of next Jefferies. Our questions. line coming question your with Please is Bret from Jordan the proceed with

Bret Jordan

morning, Good Hey. guys.

Brett Ponton

Bret. morning. Good

Brian D'Ambrosia

morning, Good Bret.

Bret Jordan

customer requests you level, that Hi. the you own get in guess, capacity? you how shortage? the might sort I mean, versus at number through or about you system, I fulfill, in your I you of headwind July, digital labor maybe can’t the the what’s think as the in guess, issues labor phone the that the I a quantify, market have feeling, I that labor can of for headwind to the guess, guess, been comp lost have store much do

Brett Ponton

Yeah.

that up little a you a definitive with it’s might of come As difficult kind to expect, number. parse

to the is, has That’s able we that the performance watching that think degree signals traffic allowing metrics feel be seeing and positive by are delivered to demand that point into investment is we to if really right it’s to Sunday we marketing XXX to that for XXX are labor addressing I right Sundays July in we open you We little just a created One more still on we of the had technology obviously, translate are now we on But sales about for ramped play estimates to I fewer I’d a I to closely comp to in X% the down XXX our that that out stores roughly to that labor, stores difficult thing really translating concerns. the obviously, do. Sunday. online we of it pinpoint that will up are in stores the on on the say, that stores that the number on Sunday. open appointments are we are operating comp believe level done now and are are into fewer us very we is open team though, a We we seeing effort business. like, us stores got what have end. open the encouraged Bret, however, during phone can we have the the on to point quarter on having front and Pre-COVID, about QX. are question. could better that headwind by -- do that

and as are marketing unmet now So that’s market recruiting a of but pretty headwind, to of that see easier demand for view strong. our to our we the as appears from a the right opportunity in refocusing to point be consumer quantify that’s why of we part, reason some an investment candidates terms little labor

Bret Jordan

little you is but the of sort west a about talk you market how talked about that in was the new performance general? outperforming Okay. a obviously bit south that Could Coast northeast, West the

Brett Ponton

Yeah.

are kind into of lapping As you acquisition we California. our know, initial

progress speaking all really saw relatively really, California our are in that acquired results. on has basis are we our with The we pleased year-on-year on integration certainly of stores, the that done. We but a seeing

in a really issues Vegas talking the out our about by strength signs think, pipeline But California strong that the relatively lot of that and of our pivoting out doing at give But on had a California. extremely of speaking. just few now us confidence and strategy, consideration. the gives have for encouraged We have really look in I now platform is we number Las to M&A us permitting in performing well we are built targets it

Bret Jordan

monthly then Great. April, I And Thank get guess, could rate you. housekeeping the for comps the I Brian, June?

Brett Ponton

in then, July down in XX Yes. May, XX XX June, obviously, down We and preliminary. in were XX April, in

Bret Jordan

you, Thank guys. Thank Thanks. you.

Brett Ponton

Bret. Thanks,

Operator

Thank you.

Our proceed Please next question coming with is with Nelson your line the from Stephens. Rick questions. of

Rick Nelson

Thanks Good I’d like a morning. to… lot.

Brett Ponton

Good morning, Rick.

Brian D'Ambrosia

Good morning.

Rick Nelson

were July trend, on …follow-up you down XX%. sales

If you are sequential narrowing? as changes month any speak could progressed, the those declines to

Brett Ponton

exited, Yeah. a July. saw we We I guess, from about, that finished obviously Well, talked moderating June improvement have as we XX%. June, down

gradual of was now we of the the Rick, saw That July fiscal accelerate of two As we We rolling the pace our counteracted the talked a by August, July the are of cities. tale slowdown about, into Exiting improvements we middle in in in maybe continued part encouraged in what’s recovery I a with northeast. improvement think, saw our that are a seeing south. overall. that business we it’s

Rick Nelson

trends seen And states, perhaps the you in these changes or COVID markets have outbreaks in where are the sales southern recent customer there? behavior we seeing any

Brian D'Ambrosia

Yeah.

said. consistent seeing That’s a we where are the largely of, it’s I would what think with I slowdown improvement. say, we

improvement a It’s increase. the variables. still improvement. tight two correlation pace are slowed pretty But certainly the those have We of seeing outbreaks has the as between seen we

Rick Nelson

And challenges on how your gas curious here comments step acquisition on they performing you the less think sellers, you. Are any front. there are independents, about and COVID on kind during Got willing would be of appetite sellers, Okay. to the willing the valuation more helpful? the

Brett Ponton

Yeah.

of play couple a here. there’s things think that I

pipeline at my seen think, our think, I as as have certainly, robust, have we I about, as robust here Monro. is certainly, talked I tenure in

As decline of the this a time. period demand maybe helped lot of during to health of It that I in we the seen around it Protection. think operators certainly those bridge certainly independents, the the think Paycheck programs have relates government I

there. call is anything consistent necessarily I and I was wouldn’t with But I So the think sentiment what in particular mood think the out pre-COVID. it

business they independent second they generation have and in that to I lot their exploring interested owners are lack think certainly got a of access. plans to succession we options

state about going companies as opportunities forward. just acquiring improvement attractiveness pipeline the conversations business, really as, our gives our restart good about in around obviously, well the the balance feel see to sheet us the we in of that confidence we that our rebranding and initiative, So

Rick Nelson

think seen shaping about some or there. talking offices know is there in businesses how have driven, we challenges up? of like miles Yeah. about driven expectation XXXX. I between Do are some to opening Google for you July miles out correlation And a think opening do you your

Brett Ponton

Look, the crisis I the through core still once we or think, pandemic… a unfold of there’s there, core Yeah. look, lot get to course,

Rick Nelson

Okay.

Brett Ponton

consumer uncertain, structural think, I …and that the so, it’s I commuting office what or plays of understand still in out. working TBD. that’s terms Bret, other take area, But behavior, shopping there in form and and -- an in what place changes think, how whether behaviors it’s of --

I to more the drive our that’s, favor we as to transit on air apt and less versus travel. well have in more vacations cars, from look also to willingness be measures shift to around mass when probably, airplanes countervailing think the destinations, to drive-away

our our we of things, a positive environment a store We pretty negatives. our there’s the that any as and are countervailing give to overlay about to be defensible around consumers our longer, we structure concentration cost chain, hold trends of with lot recessionary here just I So well-positioned take onto on of is supply have you their feel well-positioned in general full. capitalize future in cars to talked they if the little conscience offset more become think And potential their behavior. a Monro those creates like value sentiment business and

Rick Nelson

Makes and Thanks good a sense. Great. of luck. lot

Brett Ponton

Thanks, Rick.

Brian D'Ambrosia

Rick. Thanks,

Operator

Thank you.

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

Stephanie Benjamin

Good morning. Hi.

Brett Ponton

morning. Good

Stephanie Benjamin

the in speak was new bit you might categories. hoping for could pricing that on a of tools some have management place I category you other and

to I Monro.Forward remind us, also them beyond the the tire if so leg And initiative focus, tires, could brakes big for are you you, remind next pricing tool? you initiatives the the might rebranding and rebranding, but the called out this in the that what’s be obviously, have year, look other Thanks. what the Just stool? and next then we as believe on you what strategy

Brett Ponton

is let also important. the the I the handle it our to extremely by category XX% Stephanie. the and itself most management shot will lends question. is Brian the important Thanks, category. relates being to pricing second that business, part tire Yeah. as of over It’s category But of consumers tools,

with have we that’s the So operational sophisticated management more category are, system. reason that that system data big our why like we I about using with XXX-plus are mentioned, there are focus now stores we

certainly, say, expect across will an normally say brakes through less in-store apply of bought roll I Once will our certainly But that price the logic that like and core services for base QX. get I categories are done, oil. They out we sensitive those to store other oil. completely categories We selling/conversion by in-store would are outside process. other and usually with shopped. consumers are not brakes

improvement is think but expect I that probably focus the category so degree of clear premise the applies is we that to So would there. diminished, see there

the forward the color forward? way strategic going us during changes to have we just will staffing for by in done of in more now changes were Brian, moves that in the get by go now as end on right scheduling do the benefits our that lot which make that tool, model enabled For And staffing the to we operationalize just it’s out get that, operationalize COVID system. allows saw a helps and refinements structural be given us, that more that system in you real-time translate the the we that visibility through cloud-based That’s all QX we well. get into the over initiatives pilot that here, the us of business. about That us around key but we that QX near-term cloud-based us want we cloud-based controls mix made, of we to efficient a the visibility to scale tighter begin to all and due markets. our to going a add installing create But couple rolling given in in that made in business expect helps

Brian D'Ambrosia

Yeah.

store time as that continuation similar that it pricing as system we tire the think very the to will very scheduling. out, I a to and similar. into relates category on QX roll staffing continue It be of management line to the

place be our of initiatives across couple those next in getting the firmly quarters will base. two So entire store

continuing our will the be to network new leverage infrastructure We -- upgrade. store also

at we to ways the now got have So on, other as be that. looking will leverage we phone system digital

consumer is of we of and with place. continue the that of really our Monro presence One we course, in to with omnichannel about to platform streamlining have inspection more workforce, a exit out and our the we workforce the the interacting this make further to technology be us have got our got continue of we then, path relates paths And have appointments in-store cloud-based made it’s career sure and Monro way sophisticated that University for lower as with were the and levels items we on have that already the to turnover that we investments to can to build continuing in a particularly U. in trained based now are the career improving we it in fill that online talked consumer achieve where right as of imperative which experiencing going the staffing pre-COVID on we in technicians, the

Brett Ponton

been scalable a confidence major tools is, had have lot I at technology take platform team pricing. and think, consistency to a a to look store-to-store platform growth two portion going consistency next-generation our one scalable march we accelerate of What just is organization gives enable systems progress help year transformational it out installing guarantees it the Monro.Forward, growth made in M&A to on maybe built us, a these are strategy what our that technology organically, store. So year to right allows aggressively us behind this has sustainable laid with and forward, of by technology lot by we us like to drives of very store we M&A from feel to that the forward. from transformational strategy the because with that operational playbook our to I got the largely once the am building whole labor tire those encouraged an around hold bring And around management was about as more installed front, has We creating altogether, about I if you drive business underlying and our foundation. think, this from objective

the the were able that So acceleration do are pleased and on really to during of progress business. we we the our first with quarter

Stephanie Benjamin

Got for it. Thanks so much there. the leave color. it all I will

Brett Ponton

Stephanie. Thanks,

Operator

you. Thank

of comes with the CL Stember your Please question. Our from with line King. proceed next question Scott

Scott Stember

Good morning, guys.

Brett Ponton

morning, Scott. Good

Brian D'Ambrosia

Good morning, Scott.

Scott Stember

the between performance meaningful, the gap if dimensionalize region the in northern maybe difference, and or southern you comp stores stores? it’s Could

Brian D'Ambrosia

quarter talked and a slowdown and that we in the we plus that that, in maybe Well, that in about and Yeah. and July. points was north seeing basis exited we saw we the of then XXX were narrow, in said, about as think, that I south I we underperformance outperformance am in sorry, the the quarter, saw narrow then as we north the

Scott Stember

the it. in -- amount you not your which trying on underperformance can versus touch got feeling your quarter? have maybe about within guys markets, the about just of you larger purchases And talk t trends to I down the outsized But I so an the employment ticket some store the industry, brakes, point you talked know the they Okay. such as are and whether potentially customer and good delaying were staffing.

Brett Ponton

Yeah.

a think, I think, think, look, be Scott. I that’s going to going certainly I factor, forward,

miles next does the about, conscientious think, get So thing, is through need that’s the I a big, back, we to think, once which is if crisis, variable be vehicle to will, I think, going travel. how we the be very you which levels quickly employment core driving in I bounce

probably about it the to granularity relates have in a markets, around that don’t I that. comments of our think, ton As we

is if on this see our we tire that given fact tires, our in did ticket, category, households. where it’s me, applies hitting in things quarter or of consumer’s normally call a the did with the believe outsized excuse last category higher higher tire outperformance One part that were well see of the to as performance stimulus checks around that some we timeframe we

just I certainly, So, we stimulus back. levels that still fairly pretty away from guidance which reason post-pandemic. and -- are as balance the you performance. levels vehicle employment watching obviously to of we think quickly the characterize tempered be uncertainty one employment the traveled that’s around how is part element we checks, got further And that’s I we But the with miles why bounce going provided think, haven’t closely is

Scott Stember

Okay.

my that about in quarter, that, trying talk just why it’s you Maybe defer, brakes talk much, that were I know usually to one you the the so progressed. quarter improved you everything could so as just hands things down lastly, that? sequentially brakes on the Just of can’t am get about I said,

Brett Ponton

Yeah.

I think a couple things in the quarter.

Conversely, as certainly talked look February about, has look If fact -- maybe if in performance had as back for is performance, tires, usually at exiting industry our undersized at you winter January QX, think, the bounced an in I demand peak but the and brake QX. we you that months in into we months. our our business

it tightest our that March, So number the timeframes. And in April, time. say of stores puts we with needless also think COVID probably in but was peak one conditions maximum you have that during the saw consumer, we May same impact timeframe period labor where I to

of of brakes, you think, some done be overlay two wallet choose that macro dynamic large those. issues seeing the on where tires items we that I one and many need have car ticket cases, consumer, share you to your also to have will So, if with possibly with

So maybe getting see team as with availability well consumers as I little that up a bit recover expect to also, financing and household tight brakes discretionary on to is little a year. open to working think, in funds. credit our a we And would Brian, options, later more secondary on

Scott Stember

all I That’s guys. have. Thanks,

Brett Ponton

Thanks, Scott.

Brian D'Ambrosia

Scott. Thanks,

Operator

no now back call I closing [Operator to queue. the over remarks. further Instructions] are will for questions pass the in any management There

Brett Ponton

your rest for Thank We interest and healthy wish for Monro. a today support you us your of continued at Well, you. and week. joining and thank you safe

Operator

This conference. today’s does conclude

lines participation you You great day. Thank a may and your at this time. disconnect for your have

Monro (MNRO) 29 Jul 202021 Q1 Earnings call transcript