Monro, Inc. · NASDAQ:MNRO
Monro — Q1 2021 Earnings Presentation
25 slides from Monro's earnings presentation, Jul 29, 2020
Slide 1: First Quarter Fiscal 2021 Earnings Call
Monro, Inc. First Quarter Fiscal 2021 Earnings Call Monro, Inc. Investor Presentation September 2020 July 29, 2020
Slide 2: Safe Harbor Statement and Non-GAAP Measures
Safe Harbor Statement and Non-GAAP Measures Certain statements in this presentation, other than statements of historical fact, including estimates, projections, statements related to our business plans and operating results are forward-looking statements within the meaning of the Private Securities
Slide 3: Company Overview
Company Overview A Leading Chain of Independently Owned and Operated Tire and Auto Service Locations ▪ Dominant in the Northeastern U.S. and expanding in Southern and Western markets ▪ Fiscal 2020 sales of $1,256.5 million ▪ 1,244 company operated stores in 32 states and 97 franchised locations as o
Slide 4: A Unique Operating Model
A Unique Operating Model Monro Has a Diversified Supply Chain, Sourcing High Quality, Low Cost Parts Direct and a Strong Portfolio of Tire Brands PARTS Monro sources these parts from leading Secondary parts distribution: aftermarket parts suppliers: ▪ Brake Rotors and Pads ▪ Filters ▪ Steering and S
Slide 5: A Favorable Industry Backdrop
A Favorable Industry Backdrop Favorable Industry Backdrop for Automotive Services with the Vehicles in Operation Expected to Grow Significantly Over the Next Few Years 20 U.S. Annual Light Vehicle Sales U.S. Light Vehicles in Operation (VIO) 300 18 290 16 280 14 270 12 260 10 250 8 240 6 230 4 220 2
Slide 6: A Favorable Industry Backdrop
A Favorable Industry Backdrop Monro is Well-Positioned to Capitalize on Positive Industry Trends, with Our Sweet Spot Experiencing the Fastest Growth in Vehicles in Operation Vehicles in Operation – 0 to 5 Years Vehicles in Operation – 6 to 12 Years 120 120 110 +6.56% CAGR -.03% CAGR 110 -3.97% CAGR
Slide 7: A Favorable Industry Backdrop
A Favorable Industry Backdrop Monro Operates in the $246 Billion Do-It-For-Me* Segment of $308 Billion U.S. Automotive Aftermarket Industry Automotive Aftermarket DIFM vs. DIY Sales 2010 % 2019 % CAGR (outlets) (outlets) 350,000 Dealers 18,460 14.3% 16,741 12.7% (1.1%) 300,000 General 250,000 Repair
Slide 8: Driving Long-Term Sustainable Growth
Driving Long-Term Sustainable Growth Improve Customer Experience Optimize Product & • Online reputation management Service Offering • Consistent in-store experience • Redefined selling approach • Consistent store appearance • Optimized tire assortment Scalable Platform to Enhance Customer-Centric Dr
Slide 9: Monro.Forward Progress Update
Monro.Forward Progress Update Progress on Monro.Forward Initiatives Positioning Us Well to Emerge Stronger Post COVID-19 Crisis ❑ Completed pre-COVID plan to streamline real estate portfolio with closure of 42 Improve Customer underperforming stores, including six in Q4FY20 and 36 in Q1FY21 Experien
Slide 10: Store Rebrand & Reimage Initiative
Store Rebrand & Reimage Initiative Store Rebrand & Reimage Initiative is an Important Part of Our Company Transformation ❑ Our largest initiative, which focuses on creating a more consistent store appearance and implementing standardized in-store operating procedures Improve Customer ❑ Have complete
Slide 11: Monro.Forward: Investments in Technology
Monro.Forward: Investments in Technology Significant Investments in Technology to Support Monro.Forward Strategy Area Strategic Rationale Timing • Launched in Q4 FY18 Business Intelligence • KPI dashboards for stores and management • Ongoing company-wide expansion • Ensures consistent onboarding and
Slide 12: Omnichannel: Amazon.com Collaboration
Omnichannel: Amazon.com Collaboration Collaboration With Amazon.com Supports Monro’s Online Tire Retailers Installation Strategy Expanded Amazon.com Collaboration ▪ Monro’s tire installation services available to customers who purchase tires online from Amazon.com and select the Ship-to-Store option
Slide 13: Scalable Platform to Drive Sustainable Growth
Scalable Platform to Drive Sustainable Growth A Scalable Business Model with Multiple Avenues for Growth Same Store Sales Growth ▪ Through Monro.Forward, drive higher customer retention and acquisition rates Acquisitions ▪ Create value through profitable ▪ Continue to increase store density in our 3
Slide 14: A Proven M&A Strategy
A Proven M&A Strategy Monro’s Acquisition Strategy Has Delivered Significant Growth Over the Years A Proven Track Record ▪ 39 acquisitions in the past 8 fiscal years, adding 518 locations and $710 million in revenue ▪ Entered 13 new states, expanding our presence in the Southern and Western markets
Slide 15: COVID-19 Response
COVID-19 Response Executing on Elements Within Our Control to Support Our Business Operations Key Prioritizing health & Ensuring business Emerging stronger post safety in all aspects of continuity to serve our COVID-19 crisis Priorities our business customers Operations Update Financial Update ▪ Enh
Slide 16: First Quarter Fiscal 2021 Highlights
First Quarter Fiscal 2021 Highlights Navigating Uncertain Environment and Challenges Related to Ongoing COVID-19 Pandemic Quarterly Comps Trends Monthly Comparable Store Sales 5% 0% 0% 1 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Apr-20 May-20 Jun-20 Jul-20 -5% -10% -10% -20% -15% -30% -20% -25% -40% -30% -
Slide 17: First Quarter Fiscal 2021 Results
First Quarter Fiscal 2021 Results The COVID-19 Related Drop in Traffic Significantly Impacted Our First Quarter Performance Q1FY21 Q1FY20 Δ Sales (millions) $247.1 $317.1 (22.1%) Same Store Sales (25.8%) 0.8% (2,660 bps) Gross Margin 35.4% 40.4% (500 bps) Operating Margin 4.6% 11.5% (690 bps) Dilute
Slide 18: First Quarter Fiscal 2021 EPS Bridge
First Quarter Fiscal 2021 EPS Bridge $0.80 $0.67 ($0.77) $0.60 $0.40 $0.20 ($0.06) $0.45 $0.15 $0.09 $0.00 ($0.20) -$0.20 -$0.40 Q1FY20 Diluted Impact of -25.8% Impact of Gross Other 1 Q1FY21 Adjusted Planned Store Q1FY21 Diluted Earnings Per Share - Comp Sales Margin Decline Diluted Earnings Per Cl
Slide 19: Maximizing Financial Flexibility
Maximizing Financial Flexibility We Have Taken Proactive Measures to Operate on a Cash Flow Positive Basis During COVID-19 Pandemic Disciplined Capital Allocation First Quarter Fiscal 2021 Near-term Priorities ▪ Paid down $240.2M of bank debt ▪ Maintaining rigorous capital management ▪ Capex of $15.
Slide 20: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity Healthy Balance Sheet and Ample Liquidity to Support Ongoing Business Operations ▪ Generated $73M of operating cash flow during Q1FY21 ▪ Net bank debt of $179M as of June 2020 ▪ Net debt-to-EBITDA ratio as of June 2020 of 3.86x ▪ Strong liquidity position of ~$400M
Slide 21: Investment Highlights
Investment Highlights ▪ Leading chain of Company-operated undercar care facilities in the U.S. with a wide breadth of product and service offerings ▪ Strong position in Northeast, Great Lakes and Mid-Atlantic and expanding into Southern and Western markets with a presence in 32 states ▪ 19 years of
Slide 22: Appendix
Appendix 22
Slide 23: Fiscal 2021 Outlook – Financial Assumptions
Fiscal 2021 Outlook – Financial Assumptions Financial Assumptions as of July 29, 2020 Additional Assumptions Tire and Oil Costs Stable to slight decrease y/y ▪ Capex range accounts for rebrand of ~60 to ~120 stores as we resume this initiative Interest Expense ~$28M to ~$30M with a measured pace Dep
Slide 24: Store Refresh Transformation Timeline
Store Refresh Transformation Timeline 7 Stage Transformation Process from Beginning to End Takes ~17 Weeks BEFORE AFTER Store Team Trained Store Interior Remodel Store Exterior Painted Store Readiness Parts Inventory Store Inventory Storage Inventory Assortment on New Operating and Technology and Ne
Slide 25: Monro.Forward Strategic Initiatives
Monro.Forward Strategic Initiatives FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY21 Q2FY21 Pilot store refresh & Scale store refresh & operational operational excellence excellence Improve Customer Experience Scheduled maintenance in-store selling Data-driven CRM Digital phone and cus