MNRO - Earnings call transcript Q3 2021

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Operator

Good morning, ladies and gentlemen, and welcome to Monro Inc's Earnings Conference Call for the Third Quarter Fiscal 2021. [Operator Instructions] I would now like to introduce Ms. Maureen Mulholland, Executive Vice President and Chief Legal officer at Monro. Please go ahead.

Maureen Mulholland

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

in the may Monro's the results forward-looking we include like information. intention suggested of our as a could the by management to would started, as Actual any new that employees. our this statements, significant whether our factors the significant information, comments the outlined statements remind duration and release and otherwise, call any except Before in SEC materially disclaims earnings I Monro's could and by during results to may or on uncertainty get obligation and COVID-XX impact officers of and from contains or performance filings company relating future law. required scope that result participants are differ that events with its to conference today. future make executive of forward-looking update most about customers, those affect The future course The revise pandemic or

be will and Rob Interim Chief measures are today. Reconciliations us Additionally, such statements substitutes Brian Officer discussion financial non-GAAP for certain to intended GAAP include GAAP joining in and Board which Executive D'Ambrosia, comparable Chairman on are the comparable our earnings release. Officer; included Monro's measures. to management of Mellor, measures, to and information be a Chief supplemental supplement call, Financial today's not of

to of Rob? be to that, portion like Rob question-and-answer our I Operating also With over available the the For questions. will call, Mellor. call turn Rob take Chief Officer, the to Rajkowski would

Robert Mellor

which for quarter business. can morning, will and see our the outlook results good talk a quarter, morning, about results. in you our you joining today. us This third Maureen, I had third for Thank and positive tough our We everyone, and you, thank

to align our for are revenues. levels the effectively the pandemic that our our was with the general and this, success downsizing of market there operations including stores While impact earlier conditions, number reasons COVID-XX a on staffing reason principal had our

have management curve. lower At the us we and meet recruited on them stay to recruit hundreds fact, sizing store store each up, our could presented number done them we in not to even When of July, prompt a pandemic, this picked allowed at teammates ramping a efforts Getting new XXX over ahead demand run decisive right to and standards, technicians. levels Our demand. our technicians actions since to technician outset new be the each of week. focused And operating staffing in had up we teammates challenge. on getting of to of day, board, the or rate full but in introducing our a

don't in the For and and our directly fully just able not reflected new -- October all Stores new takes become demand some were can were out. time and was opportunities impacted productive, top labor and to November our This they each before meet recruit sales missed. work productivity levels line.

month reversed our onboarding cents of accomplished earnings results During trend. the few task of was year. quarter third best the with and below the we December have December the last a only quarter, this pre-COVID-XX

sales January are comparable sales, earnings. last positive to and new even ahead levels. contributions better is Our looking pre-COVID-XX with significant technicians margins year's store making of

same-store and are forward. sales we to are and trends, well encouraged positive positioned profitability these by higher We going drive

all strong forward execute well-positioned financially our against look with of initiatives. to and Importantly, We fiscal confidence. we XXXX remain to growth

coming unprecedented of stronger, hardened and Our an battle through year. organization proud is

acquisition. over who I'll on Brian? business. the additional performance And and our with are turn all forward Our discuss in will call working, Brian to financial will detail Brian and initiatives further in with confidence a recent look as moment, we that, our provide

Brian D'Ambrosia

Thank you, Rob, and good everybody. morning,

quarter. in drove particularly Rob and proved market quarter, and conditions in by category October discussed, the categories. improved comparable initiative store our sales lower just Gross The store was performance basis service decreased with an at in XXX that the margin to the important with of market margin takeaway to the results, positively challenged X% gross increase was impacted and labor And by along looking third November, since posted third margin. XX.X% Variable third offset in pandemic. quarter gross profit conditions points a stores improvement productivity. sales relates general tires supported in per categories. pricing continued This a Our of management to comparable by a the more gross compared has into COVID-XX year-over-year in sales January best driven the tool. sales tire tire comparable higher of service This than key of by improvements -- increase was beginning trends monthly December, comp and by sales our which rollout store completed the X% mix

service expected, time economic deferred As items a can of be slowdown. for during periods short

by XXX sales, negatively were costs of from July largely X impacted addition as was teammates approximately in first new October. margins This percentage a especially quarter. the of through to the the of months technician labor variable higher due Additionally,

teammates full productivity. As Rob training to discussed earlier, reach required these new

labor We initiatives our through the driven productivity training as of that data combined pleased store staffing have with rollout model are driven quarter. we completed the our increased move

technician sales January. result, December, as well declined labor a as costs of a steadily percentage as As in

are a margin and rent these cost through of As lower reduce fixed these costs costs to sales in comparable were distribution in We largely included able sales concessions, but resulting lower outpaced also reductions, our primarily which fixed fixed cost reminder, store gross nature. year-over-year. occupancy are in

against expenses sales from slight reductions and increase control, spend right size cost decline importantly, lower a reflects higher XX sales. weighted structure expenses driven as fewer percentage year-over-year cost Lower decrease of million. fixed this a cost fixed as But while operating comparable Net we sales and quarter, operating we this interest borrowing realign our store margin from rate offset our lease stores. marketing and channels, rates increase operating disciplined drove in expenses $X.X finance generate interest digital our outpaced of acquisitions The lower store an weighted a in average new efforts a leases, improve. renegotiations. management fiscal decreased average quarter with experienced increase [ph] also third staffing. connection execute by XXXX in for from operating to saw by the expect in partially and ROI lower towards to lease our to benefits continue expense This debt We increased on these margin to was in

the the initiatives XX.X% share and diluted was earnings for related to which earnings $X.X XXXX diligence benefit This measure for per and related per was to Monro.Forward share share a $X.XX adjusted $X.XX, was Adjusted for reserve the tax of quarter which a was earnings to costs Our XX.X% of was year. of penny per related compares third related income and a potential diluted penny share to fiscal for effective costs $X.XX. of diluted litigation integration. to share and $X.XX, third a per Monro.Forward quarter, longer necessary. Net approximately quarter $X.XX initiatives quarter, no per third that rate due for third to of excludes acquisition for last same period the compared excluded the non-GAAP million,

fiscal strategy. million for distributed last during $XX million ample have in store to months to growth $XX XX% We flexibility We We first for period primarily of XXXX, to the million paid principal reimage an operating $XXX were expenditures, fiscal and our in same $XX our cash our dividends generated compared paid and debt and in and leases. approximately million for of million shareholders X in continue representing related to the financing cash approximately of initiatives rebrand operations acquisitions. $XXX execute able months million the during approximately capital first and We XXXX. flow ongoing reduce investments $XX bank We increase support million technology our to to our year. approximately of in net X by invested $XX

are to stores to continue to XXX rebranding our X.Xx. the XXX million quarter net number approximately or substantially compared rebranding outperformance expenditure XXX have EBITDA million, average. see of in fiscal of stores markets, range to generate reimage We key a stores strong XXXX. and $XX $XX of beyond. stores tire the we stores branded net end XXX of the of and Today bank the We our a of We to third bank capital completed and transformation of $XXX expect the flow service to approximately reimaging during operations we stores [ph] cash in At chain now the ratio to from including had of fourth completed rebranded well-positioned in debt assuming quarter. quarter, approximately of million continue and a the transformation third debt

a on accurately million. impact the of equivalents pandemic make our we operations. had approximately XXXX, As continues approximately and of of cash difficult January COVID-XX the credit $XX of on The cash availability million forecast future pandemic to and it $XXX facility impact the to of XX, revolving

we in fiscal guidance. top optimization not of the marketing the year. $XX quarter cost the cost the during realized and store of cost We of first efficiency, staffing, savings half reductions. improvement of approximately achieved are management million on the million $XX our additional So XXXX providing the These overhead third resulted savings general in from

approximately additional quarter, achieve During savings. the in fourth we million cost to expect $X

in by previously approximately operating store XXXX. our announced income closures are to reminder, a expected As benefit million our $X.X fiscal

the in million previously $X expect structural sales. to Coast in to closures. quarter, we continue annual would third California savings, the growing provide locations approximately XXXX, acquisition to update like expected Southern now in strategy. in fiscal a the to acquisition I in $XX cost annualized benefits million are stores in moment We These on million to million an of expanding approximately beyond $XX region. in XX approximately our add Looking annual addition from store to $XX completed our announced take West presence

contribution this stores. We year prospects of COVID-XX region. Idaho the have achieved earnings California, excited dynamic are related acquired this previously attractive lockdowns, impact growth the the Nevada Monro and in from particularly we our and strong for Despite about

back robust Strategically NDAs to remain of our with a and strategy, ranging from some for our are valuations Our X pillar well-positioned located at to closing acquisitions will stores. opportunities remarks. in currently XX signed over growth for industry. attractive advantage opportunities Mellor call I acquisition that, for we pipeline the many remains XX Rob to consolidation the turn with take And of

Robert Mellor

Brian. Thanks,

hold late evidenced performance taking January. are initiatives the as our that by encouraged in and strengthening our third are quarter, We

the cash support our strong strategic leverage. make sheet provide to and our substantially our increasing flow without flexibility and acquisitions operations balance us solid Importantly, with business financial

benefits This will always confident continue value. execute strategy sheet conservatively for on shareholders. to growth so. allowed sustainable and maximum has are our our have this committed fully the that We us doing term to create managed And remain our of flexibility balance to we long

moment a take Before provide regarding up to a to opening call would for permanent questions, I for CEO. search an the update like our

momentum make soon forward forward more drive to and as build are with skills the progress necessary and believe definitive our are We strategy have evaluating are number currently and as continue created. upon transformation the We update that we a look of able. to you individuals, Monro.Forward we as providing to a experience

continuity During Officer. to of recognize the this our leadership Maureen for period organization and to proud has President recently was driving to team partner would has ensure who execution across Vice commitment our served corporate Chief efforts. senior tremendous of am further Executive Legal contributions steps I Mulholland, of of like and Rob support forward. exceptional Maureen highlight continues I recently to taken transition, business -- promoted their and also responsibility XXXX I'd our our operations. since to Counsel in ongoing Brian like with the social our we've Monro.Forward as and strategy of recent to General also to closely

and in our our the responsible as Our success. key part to We a execution long-term components long-term the of strategy which incorporates care building we and view of customers, doing of responsibility Monro.Forward take sustainable communities our operate, actually in to manner. our environment teammates,

of raised I'm As turn our finally, our And thank committed to being a our months. their teammates, and contributions a their extend to where through to the part of the for to we driving ongoing quarter. the to in are from company, that, teammates, incredible And to safety, and America questions. would the $XXX,XXX the communities Directors, our efforts, customers we the Feeding Board we midst over support sincere to expanding during of challenges neighbor corporate increasing commitment commitment excellence our the and for coming customers and support with despite in the our in responsibility the pleased strong now our formalization like good of third operate, transparency over serving for for in your With are announce that environment. to of the you I'll I operational call operator

Operator

first Capital with question Jonathan from [Operator BMO is Please Markets. Lamers Our proceed. Instructions]

Jonathan Lamers

Good morning.

Robert Mellor

Good morning.

Brian D'Ambrosia

Jonathan. morning, Good

Jonathan Lamers

the Do reimage on for how plans you are mentioned have outperforming reimaging the next overall and outperforming the you much year? color stores Brian, any comp. they're for

Brian D'Ambrosia

Absolutely, our going quarters, better. so can to weather, Jonathan. the as outperformance. XXX in last work, bps largely better what far due which Related only got -- consistent couple X that terms about done outperformance we've do Northeast. ahead in QX occurs it's a of be the is that's XX the as reimaging about described is and a fact we're to in for weather we've We're lot to The QX, lot that winter for of the we gets And in the about outside stores reimaging done with plans, comp year. of XXX better, points the done of

out go then out in come pace to forward, acquired we our back stores, from need the that a quarter be reimage XX what finish we'll there announced stores QX, as is back as execution some on about pace. stores we pace rollout with going So and up recently and West, which

feel our pause that to this about back in QX. ability post good quickly on up track and taking we're on So ramped initiative we

Jonathan Lamers

Okay.

the on vehicle with message January improvement, So traveled. October, line I miles comp the performing of comps kind in are mean, in was

your this Now soft. continue improvement big labor in miles and productivity. had Vehicle to you've pretty be capacity traveled

to macro X% down to and think we I in how continue XX% that delta how relative for you I characterize you would looked. sustainable consider XX% they Like see would were trends decline to be? last January, or the that comp

Brian D'Ambrosia

Sure.

One you January look then through the the consistently being if from been our in and think to business. improved moved look it And X%, those we've into and service the our and conditions improvements or as QX. industry think saw in the and and QX you U.S that and business December we And in have market outperformed general slightly. industry through talked business, at we during about, tire and at improved softer up I we performed January, October with lenses. our as saw to performance discussed market line tire improvements January, in through December those have we I two tire performance December the into outperform both in conditions those and we retail November. we And as one through November line

the the If in you our service primarily teammates. lens new was business, look of service the our through business of quarter what we in impacted the as onboarding of discussed our prepared remarks, our

service task impacted support to time is as dependent to that technician's into supported onboarding been -- that improvements supported ability has more training our underlying certainly January in categories. in the and really that achieve service to work to and are we needed and present technicians takes to Our store to to inspections December, we ability our And manager improvement on key And What be even the sales. that in sell. up service quarter. the perform And store in sales for is comp consolidated category to largely happy speed that that identify key vehicles, store to able move improvement improvement fully service the work sales our business X% has and completed completed ability get have in about heavily January. on our our through

Jonathan Lamers

Okay, thanks.

us comps circle the please? for breakout Just could of on to you QX, up monthly that, give the

Brian D'Ambrosia

January. Absolutely. December, down up that in then X% we and in X% were XX% XX% We November, as October, set in in

Jonathan Lamers

there implemented. potential implemented, thanks. think gross sales you higher were But some about measures impacting Asia, these know on I think uncertainty year? I timing tier and new on over exact be this and to on your the Southeast this Okay, mix this to policy how there's of duties as profits if And from discussion the shift would would intuitively, could tires. tires

Brian D'Ambrosia

continue cost to position question. our chain integrated other differentiator key I costs appreciate pressures, which and industry. supply material vertically the diversified drives we'll concerns, our and tariffs global macro in including remain us Amid helps a ongoing leverage and leadership our the

the in to in region. tariffs plans regarding potential mitigate contingency points place expect multiple the network And have the we supply of exposure. our We

we're our tire the be chain, consumers. Lastly, costs by supply any passed differentiated increase expected to not mitigated on to

Jonathan Lamers

pass Thank Okay. line. I'll Fair enough. the you.

Brian D'Ambrosia

Thanks, Jonathan.

Operator

Co. Brian is question next proceed. with from Our Nagel Oppenheimer Please &

Brian Nagel

Thanks. morning. good Hi,

Robert Mellor

morning, Good Brian.

Brian D'Ambrosia

Brian. morning, Good

Brian Nagel

one, Or with a forward? how change? of role. the guidance, fiscal the puts have, I lot takes So a gross bigger on And turnaround think back, then mean, we here quarter. margins financial I you admin in puts a the management going gross recognizing we? Brian, those have I guess, are talked we the lot question, some shorter then about picture takes then on at Recognizing how and in shorter the sort bigger question. terms COVID the just question, weak you're I Monro.Forward where of picture not effort? here or the the and to providing trajectory should in But margin whole third Stepping financial there's second regard line, clearly disruptions, Thanks. question about might repositioning where going initiative are again, the even changes of

Brian D'Ambrosia

Yes. Thanks, Brian.

and in margins, relevant Regarding that quarter. we on obviously, the highlighted the prepared because gross of question the impact the a remarks something

and in at probably As the drivers current the line in in we beyond. top to could improving trends that affect at helpful on QX bit a of business how forward-looking quarter, color the trends our then little in look -- those of real it's our and give look a

and increases costs. start occupancy flip comparable XX% overall in the in gain certainly leverage store comparable and fixed that costs. obviously, sales because, that down sales we'll to fixed those in improvement costs on that store And the gross any distribution put does The our pressure on quarter, first is obviously reside margin lower

sales current if the deleverage flip fixed top in continue, we're what from trends to could we costs significant line profile with be fixed headwind that that a move gross drive as expect comparable higher store our we meaningful So certainly And margin costs January, that's those and sales. on in forward seeing a leverage improvement.

second piece expect abate as The improvement we QX, expect move do would in our way The we further a our that category news making our well. improvements start that, not there of mix in mix service rollout as the we're yet, headwind within all categories management to but variable the good tire service is with and that is to and improvement quarter, we are would versus and categories got the make category to we tire January, we've through tool. the to tires related to our the and pricing that related strong to impacted margin

to has So already January the turn, expect seen continue we as investment versus decreasing December certainly October, been seen it that finally, category, then November. in into we've well. with in sales relates I mix as labor, percentage results that in positive And the we we've as the us, made pricing while it technician within running trend tool. months that from those costs to and saw labor of turned a against

I driven top all improving by line. think front, it's margin So, really gross the on positive an

the our service issues mix Our rearview productivity as improves, improving in labor and mirror.

looks from the the that think seen historically much we're in I we than saw what margin P&L. our on line path on more what to and we've to gross returning QX positive So,

initiatives drive of in we of second of As improvement and and major part P&L, our technology our we're continuous our And to Monro.Forward, those in upgrades completed just tire seeing lot initiatives. relates in our related the still a management. the while it for operations, really your labor more two question, those benefits for the to category to have we

the to [technical into increases. have still XXX of there. that returns continue to outsized stores comparable store XXX service us stores. rebranded about obviously So, are runway, in move we've and of made reimage. gain we our a and tire lot reimaged got difficulty] drive stores those And expect rollout to that branded there obviously, store forward the We've sales tire And investments would our be still early stages we're we've on our only potential stores, of of

the So, in the And repositioning, probably think made results. to we've work early we're the is Monro.Forward, later the all all innings is because significant yet fully done work will I that beyond, forward position of of Rob it we our why of confident the company QX reasons think of the it, having confidence, as one and still we in as for that to benefit and moving I we we're not while the as we've the results, relates reflected know mentioned, the return business terms our that are in seen you on to be. have it in our investments middle that call innings in in in of of

Brian Nagel

That's great. Very you. helpful. Thank

Brian D'Ambrosia

Brian. thanks, Yes,

Operator

with Our next Please Jordan is question Bret proceed. from Jefferies.

Bret Jordan

Hey, guys. good morning,

Robert Mellor

Bret. Hi,

Brian D'Ambrosia

Good morning, Bret.

Bret Jordan

talk stores us, the information, or color and Could market you see compares? some sense the your better some you Northeast? South And versus about some give competitive on you benefit regional you of NDAs share worse performance, I that guess, through Western could in either where guess the get I of

Robert Mellor

Sure, strong our Bret. and performing the appreciate posting we all, West consistent of look comps, West, our they're earnings. question. expectations, If the with in first but the isn't at included I Yes.

the have and uptick in all of the due as tires categories the Northeast tire to December seasonality, look service dip you that seasonality reversed. the November, October, seasonality. In didn't in and similarly at really the had performs a Midwest had the exception South, an January, If but with

markets in difference So, service similarly all categories the only categories. on the the tire to being performed due portfolio The across the really seasonality.

Brian D'Ambrosia

Yes.

supporting market Northeast in November in points December quarter. conditions. more if on Rob and the all and consolidated it in up among wider, roll be narrowed with a Midwest as tire dynamics dynamics, the the picked the the of of gap regions tire quarter part consistent first the basis, general to outperformed the in January, all business the the up the mentioned, October, because Southern was and region, category as by about our you and so, region Northeast Midwest That And X in

information bit or tire kind see the of that we our other As we're regions chains to or retail to really our to that a of how the relates NDAs country. accumulation it we performance smaller and and talked have, the industry, performing. mid-tier we and information the across a tire about industry exceeding that cross-section U.S little And of is meeting

So we feel said, the like on tire side, consistent. we we are

those it little service, With we as we're or we issues where probably clearly specific on I we to our some of mirror, labor, side moved in bit relates a also rearview business service challenges a disadvantage put As performing to talked good January. of the peers as us think, feel into had that we about, especially which Monro related early the near at quarter. in are, the have

Bret Jordan

great. of you rent couple pay improve? a results a in or if is -- then going you negotiate question, cost or some quarter. think Is owe of to as mentioned Or times any that concessions an And one did will this I expense permanent back? you concessions is that these reduction? Would basically lease the Okay, you back come sort

Brian D'Ambrosia

and lower and into No, about their -- extended rent were terms, in that for to I'm in I renegotiations the P&L are lease. to talking We've the rates extend extended renewal decrease those current term. some make exchange ones of related a get think the related way in in our that primarily our able we terms

rent lower period have of So, the throughout structurally the overall, that expense we'll still renegotiation. expect we

Bret Jordan

variability Or granular final the gone question, and about the the cadence seen too on? we're X%? of And comps, get has plus you improve the talk then month you it X%, on but that I given has not to to guess, plus continued January, great. have month, as Okay, the through fact could almost within one

Brian D'Ambrosia

into a getting by weekly blow blow … Without

Bret Jordan

We could daily. do

Brian D'Ambrosia

like say I'm and from you'd full on fiscal Saturday. our December January November, … -- into seen, January January, right. past just yes, strength December that basically We continued we've is number which sure would would this closed XX that January, Bret. we

the plus books, first since our put pandemic this increase Saturday, we obviously, in a COVID-XX comp through past began. So the X%

So right the manage as we're that through to things we doing manage we're the gives business now us right the the business with has that extremely returned. performance the confidence and encouraged pandemic, -- to and is demand things did

Bret Jordan

Right. Thank you.

Brian D'Ambrosia

Bret. Thanks,

Operator

Our Please Rick is next proceed. Nelson with from Stephens, Inc. question

Nels Nelson

Thanks. Good morning.

Robert Mellor

Rick. Hi,

Nels Nelson

technician forward do still will you need with? normalized as level talked about efficiency there levels, at What are I you normalized something we push productivity we I’m back today? when improvements, think to if are we or So that be guess curious that to we is not

Robert Mellor

Rick, thanks. the appreciate question. I

current moving we current trends certainly continue pleased we'll to hard and improvement mindset, with a are our While work productivity, to improve have in we the and continuous improvement the performance forward.

see XXX the As in Plus to continue categories --and seen as our the look have move that across and growth and have all new technicians encouraged been we performance we trained, margin productivity forward.

Nels Nelson

fact January operating same-store Are Is there leverage expense? expenses, achieve sales plus in operating level X%? that leveraging to to you you need that's

Brian D'Ambrosia

Absolutely.

quarter, I if to think our store went comparable were SG&A XX.X% sales -- if and in at from as down Rick, look mean, a percentage I XX% of you our we sales, XX.X%.

a our by operating $XX So that was reduction driven expenses. million in

on structure line, or a top So leverage probably at breakeven significant to comp. even the we've cost business the down slightly have positioned of

January puts fixed line. X% cost lower QX that back of in in pretty top against costs I a year QX to low a still us million job structure. So we line, from a about top managing plus really only plus standpoint. million good reduction, comps, that's X%, expect with performance, needed lower $XX January be the last that lower in But we put point to I've the our $X of reaction fixed to really and $X $X leverage new cost than which lower million will as higher support we the at leverage in did a cost QX. QX will did the because drive in our a being cost And talk million reductions believe

Nels Nelson

if improved you Okay. And get you Is the to taking multiples? that could and right Thanks. front, you're on a the to acquisitions where speak finally break about talked NDAs. pricing business the to M&A pipeline, And on and the core now a acquisitions? focused situation this

Brian D'Ambrosia

they are accretive there Absolutely. robust a that our in key component to execute competencies actionable we be And and a strategy, of be. them very in and growth of Acquisitions to acquisitions our beneficial way and we have pipeline for core feel continue wheelhouse business. and and strategic a able to -- are very much our is

to that I December, trends evidenced that make not deal by it do not ability day early need that manage to negative that's to closed and acquisitions, I on business, business transaction, like for look in our on value. and are improved January, on and to And on our our creating think and action seeing that's driver improve Allen had our Tire to long-term still the to got do that. operate we and so think continue choice. the resources or day. We business think deal any our does we business despite adequate either So, the that December impact in we improve We've tension most the executed meaningful into to fact shareholder having our continue and our the is

that And to with consistent reasons, to for those what that term. it obviously. relates multiples, near causing the As nothing think seeing we've on expectations historically. are I see competitive we that and that any consistent But seen there's of I multiples sellers in don't we comment of change it's

Nels Nelson

Thanks lot, a and Great. good luck.

Brian D'Ambrosia

Rick. Thanks,

Robert Mellor

Rick. Thanks,

Operator

with proceed. from is Bellinger Please Research. Wolfe David question next Our

David Bellinger

question the for Thanks the Hey. here. taking

labor that meaningful impact had made it October, you in clear So, November.

excluding you're labor the high that of fully any to up staffing, there the track, you down quantify sales of single call missed way quarter? out ramped to digits level it, mid in is on any these Could impact? sales comparable now So

Robert Mellor

than earlier, dynamic, I Yes, service we or comparable earlier the by as are look conditions as really driven to year tire about growth as conditions, two quarter at Northeast, more it market the labor labor really talked general service the weaker more prior year. the the in our we the whereas QX, dynamic are we better good we And look through dynamics. the you than the to and were particularly terms stores our lenses typical really in that in categories. the as that ability the of in have that and driven general QX -- prior at they support market into have think in exiting our And dynamics even year, by of prior I

of trends headwinds that quarter, the useful if conditions And that expect saw market expect probably the both and part were as of the in that in macroeconomic footing. our saying January much of January specifics where hold, the would So, general as the positioning our much to early better in on indicative throughout be that areas not of conditions are quantify in is versus where QX. general rest we is the to quarter trend the more we those we

David Bellinger

did you through change end you average any after brands trends, any repairs will are you. within and just maybe or now? category? significant Okay. spend full quarter higher in see the move my Got normal consumers seasonality more more in follow-up, And tire And as especially ticket into you engage the seeing

Brian D'Ambrosia

Yes.

were QX, a traffic. more here. on driven and that’s bit in miles certainly we've little tickets pressure and traffic given pretty where of pretty pandemic higher the seen we're now right And think throughout at I led ticket results by globally typical the Our where -- nature it's versus and

mixing towards that by that's our and category helped good But and the the So seeing as did that the got in as well. a a better ticket on also on, we're labor of quarter of that result we the side. went out service investments training ticket tires. But is service

David Bellinger

Okay. Thank you.

Robert Mellor

[Indiscernible] Brian.

Brian D'Ambrosia

Thank you.

Operator

Benjamin Proceed. Truist. Stephanie with is from next Our Please question

Stephanie Benjamin

Thank you for the Hi, morning. good question.

Brian D'Ambrosia

you. morning. Thank Good

Robert Mellor

Stephanie. Hi,

Stephanie Benjamin

you little with gave steep did to sit I'm And improving in and category vehicle trying to a a January, the helpful? through November? just to sense spoke the October November, a beat of or month in of decline get monthly nice quarter, tire I'm much -- what tracking a of a direct December maybe woods of, was of you very trying driven. what it that I'm sense, pretty would trying of COVID mean, trying to maybe you of improvement in an as color to And kind saw when see just how and think dead a category pullback as much on pretty performance and and I'm curious but did Not in tumultuous -- we out a is was forward. decline a in cause give we bit in give can any pretty we November, on? front think time. of little you line So a off this at in when the miles that pretty the such in it as obviously, at can of here, sort meaningful just much what was to yet? end you saw center last get understanding November going due number, I that November difference we get the I with that drop look I'm kind in kind was just was you Or and horse October, in November? of the are be the

Brian D'Ambrosia

XX by it Northeast A the absolutely. the industry. above tire the we driven but, category that significantly at/or down -- retail were though was really we U.S were in even The and in Yes, in question. tire great driven down In was And November, yes, really still tire the by category, category. Midwest.

conditions the by was really phenomenon, it the by November. an compared driven in weather in soft prior really So Northeast market the mild Midwest, in industry year driven to and

earlier per ended performance were demand we our and outsized on, So the in to by softer we was even profit disappointed continuing, we which up about that but we prepared as being gross expand certainly the up though in quarter, category, particularly saw, November. in in weakness drove also by tire, talked that while encouraged tire the consistent the remarks, X% fact our

Stephanie Benjamin

last And you. Thank question it? for Got me.

board there's procurement, any chain just hearing the and reacceleration of part the to demand. just from inventory to automotive able strong, another a and standpoint is across lot inability issue are think have being I has very just headlines constraints that semiconductor there and potential tire -- we're of supply been been obviously a the kind get parts, needed to meet any

Robert Mellor

Stephanie, thanks. question. the Appreciate

And effects. For that mitigate plans source contingency change. felt But supply we from our multiple to and we if product diversified haven't do We've any this point. our get effects really we at to vendors. have felt we network happens chain, of with place within us, exposure, to in various been haven't little our able our supply product -- points any

Stephanie Benjamin

Great. Thank you so much.

Brian D'Ambrosia

Thanks.

Operator

[Operator Instructions] Our next with question Please King Associates. is Stember from & C.L. proceed. Scott

Scott Stember

Good my guys, for morning, questions. taking thanks and

Brian D'Ambrosia

Good morning, Scott.

Robert Mellor

Scott. Hi,

Scott Stember

dynamic it do a Just has it lot board well fair more are like looking tires. is is segments to of off in And recovery of month the based your January, seen into a in tire -- the the of assume that at other to we're we've and December that seeing? with everything comments, across that that as the is all that up this or seems January,

Brian D'Ambrosia

units. as we certainly move and there is the the the and really of talked benefiting tire market as that from to retail we've November by U.S category. into to Tires earlier, we two conditions Scott, the lenses about market December Yes, is it. in And industry general in January outperformed firming maintained

to last quarter. of to categories that into category the trend is improvement say that's saying all not those service that the really in positive, to every improving seen we've the I'm it It's improvements of that is service contributing on seen and because seeing. better the in that our over single I'm improved but both As fair we've also contributing comp the we're X January. the to the that category And single months tires. are boarded we've every in dynamics and saying side of relates technicians productivity

Scott Stember

your well. Brian about you I there's being -- that with you're at confidence tough pullback You service more demand utilization the pretty and that you underlying I of with what kind more, of, you're and talk your of I job the on under the next couple a your pressure, cyclicality if seeing still market that customers we with the in Could continue see the reliance in of level significant know, technicians, tires improved guess, -- speakers] your move out forward. you're equation, should to very confident won't in lot taking the market, a guess, Yes, store of are the looking side business, months? at of that some [multiple or the is markets in you're don't the help

Brian D'Ambrosia

Yes.

Scott, we've I to to it -- end of the ability is much think we've as -- our that we've capacity at accomplished day quarter in that, I gotten we the are the that think what our relates closer gotten demand.

January, in the quarter up demand demand. into that that the to our and of service part the of to the to as gap ability demand we've there. moved right we early So, between moved now our ability And the level service was a demand we've the had

that not the -- miles means we net terms a behavior of we And that I'm more vehicle vaccinations as obviously certainly affected guess so, are it's by we're full But we while wager going think variations constructive consumer we demand. the And in the out. move of what that traveled, vehicle seeing forward will the be in in encouraged or that trends miles by that uptrend we're on on are to a traveled, for a our business. rolling

confidence tire particularly obviously in forward, we still as we we hopeful we we move quarter. are fourth us the exit rest that and move business firm gives see that as tire So industry forward the a of as

Scott Stember

guys later. if it business kind November, there comes then anything do you Got stand can come business Is typically, then business if we of this weather, don't volatility? bigger can every last -- weather do there's and of are negatively. picture, question, craters exposure view and it. you couple now get from, just in quarters of already your or And or how a drive if to so to Where October back to the a out that like it in or we to about up doing positively topic tires few right smooth and your the again, months seasonality you saw try can your

Brian D'Ambrosia

by And are trends exposure our correlated which our we think U.S Northeast that. that unfortunately. part And seasonal the can't are Midwest, in And industry, of being the stores, have move do we the to and changes. I to trends that affected we of see retail the industry.

demand. And diversify in the the or an seasonality initiatives of continue the we we we helps we important regardless Coast, have continue and Southeast backdrop, up which rely industry underway macro on of on our to also to have we the think we concentrated the away and do tire the to our industry, it's the acquire changes. to feel stores West the Northeast to have to been, geographies down demand. as of And has the take that we stimulate business outperform industry forward. of going but as which -- been want in just -- acquire fragmentation and from so to take opportunity And we And tire with share, share not

going can there. be dynamics. So, what to But influenced we're still short-term, we we're the weather in doing by

Scott Stember

That's all it. you. Thank Got I have.

Brian D'Ambrosia

Thanks, Scott.

Robert Mellor

Thanks, Scott.

Operator

turn back This does would like session. closing remarks. I conclude our to call for over the to question-and-answer management

Robert Mellor

with quarter. an say that update Monro. We you progress safe Well, forward your joining look today have for providing bye. and day. next great hope thank Bye, all on of want to us I just continued and for you interest a you to support and We our

Operator

Thank conference. you. today's conclude This does

you this your your thank may for at participation. lines and time, You disconnect

Robert Mellor

you. Thank

Operator

Thank you.

Monro (MNRO) 27 Jan 212021 Q3 Earnings call transcript