Monro, Inc. · NASDAQ:MNRO
Monro — Investor Presentation (January 2016)
24 slides from Monro's investor presentation, January 2016
Slide 1: Updated January 2016 Nasdaq: MNRO
Updated January 2016 Nasdaq: MNRO 1
Slide 2: Forward Looking Information
Forward Looking Information Statements contained in these materials regarding Monro’s expectations with respect to future operations and other information, which can be identified by the use of forward looking terminology, such as “may,” “will,” “expect,” “project,” “anticipate,” “estimate” or “cont
Slide 3: Who We Are
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Slide 4: Company Overview
Company Overview • Largest chain of Company-operated undercar care facilities in the United States • As of December 26, 2015, the Company operated 1,031 stores in 25 states • Through Car-X acquisition in April 2015, the Company is franchisor to 133 franchised locations in ten states and operates sev
Slide 5: Geographic Presence
Geographic Presence MAINTAINING DOMINANCE Service Tire Stores Stores IN THE NORTHEASTERN U.S. Connecticut 36 Delaware 2 6 Florida 52 Georgia 12 Illinois 5 Indiana 8 30 Kentucky 33 Maine 14 Maryland 9 66 Massachusetts 36 9 Michigan 17 Missouri 22 New Hampshire 9 17 New Jersey 13 33 New York 116 10 No
Slide 6: Service Mix
Service Mix FY14 Gross Margin % Brakes and Steering = +15 Maintenance and Exhaust = baseline company margin Tires = -10 FY15 FY15-Q3 FY16-Q3 Brakes Exhaust Steering Maintenance* Tires *Includes state inspections, lube, oil, filter, engine cooling service, scheduled maintenance and other. Note: Monro
Slide 7: Competitive Advantages
Competitive Advantages Operating Model • Company-operated stores – Faster, Better, Cheaper – Centralized purchasing and distribution – Efficient marketing (database mailing, email, direct mail and internet) – Superior customer service • Pricing power and fixed cost leverage – Low cost operator 7
Slide 8: Competitive Advantages
Competitive Advantages Customer Value Proposition • Monro establishes relationships with customers based on TRUST • Direct marketing to customers fosters repeat business and long-term relationships • Company-operated store model enhances customer experience through: – High standards of customer care
Slide 9: High Customer Satisfaction
High Customer Satisfaction Monro Website Internet Paid Ads •http://www.monro.com/Customer-Satisfaction-Rating 9
Slide 10: Industry Overview
Industry Overview Monro operates in $197 billion “Do-It-For-Me*” segment of $246 billion U.S. automotive aftermarket industry * Includes Replacement Tire Segment. U.S. Automotive Service Bay Population Aftermarket Industry Changes: 1999 – 2013 Total Bays / Mkt Share % Do-It-For-Me: (000’s) 1999 - 74
Slide 11: Average Vehicle Age
Average Vehicle Age Average Age of Car and Light Truck on the Road Source: November 2012 Lang Report, 2012 Wall Street Journal, June 2014 Lang Report and March and October 2015 The Lang Aftermarket iReport. 11
Slide 12: Favorable Industry Trends
Favorable Industry Trends Nearly 250 million vehicles on road Vehicles in operation projected to increase over 8% during 2015 - 2020 Increasing age of vehicles (11.9 years) Number of vehicles 6 years and older expected to increase Significant average annual miles driven per vehicle Decreasing number
Slide 13: Favorable Industry Trends
Favorable Industry Trends Cars and Light Trucks in Service Growing Independent DIFM Product Share (vs. Dealers) Light Vehicle DIFM Product Share Source: APAA Aftermarket Factbook, Lang Report and Analyst estimate. Source: September 2013 Lang Report and September 2014 Lang Report U.S. Annual Light Ve
Slide 14: EPS Trends
EPS Trends % Change 178% 24% 17% 17% 22% 17% 12% (4)% 3% 20% 34% 35% 17% (22%) 27% 13% 6%-9% •Adjusted for three-for-two stock split paid to shareholders of record as of October 21, 2003, September 21, 2007 and December 13, 2010. •Note: Monro’s fiscal year end is March of each year. 14
Slide 15: Historical Financials
Historical Financials rd rd (Dollars in millions except per share data) 3 Quarter 3 Quarter Fiscal Year Fiscal Year 2016 2015 2015 2014 Sales $238.9 $236.6 $894.5 $831.4 Sales Growth (vs. prior year) 1.0% 9.2% 7.6% 13.6% EBITDA * $ 37.2 $ 37.6 $146.4 $127.7 EBITDA Margin 15.6% 15.9% 16.4% 15.4% Oper
Slide 16: Balance Sheet Highlights
Balance Sheet Highlights Fiscal Q/E Fiscal Y/E December 26, March 28, 2015 2015 Current assets $ 189,787 $175,284 Property, plant & equipment, net 349,084 326,752 Other non-current assets 463,748 405,758 Total assets $1,002,619 $907,794 Current liabilities $ 161,316 $155,793 Capital leases and finan
Slide 17: Growth Strategy
Growth Strategy h Increase market share through same store sales growth h Acquire competitors cheaply h Continue new store openings in existing markets – Approximately 12 to 20 stores per year 17
Slide 18: Acquisitions and Opportunities
Acquisitions and Opportunities Building Tire Store Category h Combination of 37 acquisitions in the last 14 years - 569 stores - $700 million revenue h Could have up to 1,300 tire stores and 1,300 service stores in our 25 states - Creates market dominance and pricing power - Diversifies risk - Expan
Slide 19: Recent Acquisitions
Recent Acquisitions Kramer Tire (April 2012) Enger Tire Center/Enger Auto Service (December 2012) • 20 stores in Virginia • 12 stores in Ohio • 2011 sales - $25 million • 2011 sales - $9 million • Purchased real estate for eight locations Colony Tire (June 2012) • 18 stores in North Carolina Tire Ki
Slide 20: Recent Acquisitions
Recent Acquisitions Lentz USA/Kan Rock Tire (June 2014) Car-X (April 2015) • 19 stores in Michigan • Trade name and franchise rights to 146 franchise • 2013 sales - $14 million locations in Illinois, Indiana, Kentucky, Missouri, Ohio, • Purchased real estate for all locations Tennessee, Wisconsin, I
Slide 21: FY16 Earnings Assumptions
FY16 Earnings Assumptions • Earnings estimate for FY16: $2.00 - $2.05 vs $1.88 in FY15 – Q1 – FY16: $.57 vs. $.52 Q1 FY15 – Q2 – FY16: $.57 vs. $.50 Q2 FY15 – Q3 – FY16: $.46 vs. $.49 Q3 FY15 – Q4 – FY16: $.40 - $.45 vs. $.38 in Q4 FY15 • Comparable Store Sales flat to an increase of 1% for FY16; ‒
Slide 22: FY16 Other Assumptions
FY16 Other Assumptions • Interest Expense of $15 million • $40 million depreciation and amortization • EBITDA approximately $163 million, at midpoint • $44 million of cap-ex – $24 million in maintenance cap-ex – $20 million for new stores 22
Slide 23: FY16 Cash Flow Priorities
FY16 Cash Flow Priorities hAcquisitions q Same or contiguous markets q Buy right q Accretive to earnings in a reasonable timeframe h Pay down debt 23
Slide 24: Investment Highlights
Investment Highlights h Largest chain of Company-operated undercar care facilities in the U.S. h Wide breadth of product and service offerings h Superior customer service h Favorable industry trends h Leading market position in Northeast, Great Lakes and Mid-Atlantic with a presence in 25 states h S