Monro, Inc. · NASDAQ:MNRO
Monro — Investor Presentation (November 2018)
30 slides from Monro's investor presentation, November 2018
Slide 1: Monro, Inc. Investor Presentation November 2018
Monro, Inc. Investor Presentation November 2018
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 adjacent markets ▪ Fiscal 2018 sales of $1,127.8 million ▪ 1,184 company operated stores in 28 states and 97 franchised locat
Slide 4: A Strong Brand Portfolio
A Strong Brand Portfolio Multiple Store Brand Strategy Driving Increased Store Density ▪ 10 well-known regional brands underneath Monro’s corporate umbrella Brand Portfolio ▪ Operating two store formats in key markets − Service stores – 561 stores Service Tire • 80% maintenance services, 20% tires •
Slide 5: 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 The following types of parts are sourced from various cities in China: ▪ Brake Rotors and Pads ▪ Filters ▪ Steering and Suspension ▪ Wipers ▪ Belts
Slide 6: 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 Five Years U.S. Annual Light Vehicle Sales U.S. Light Vehicles in Operation (VIO) 18 300 290 16 280 270 14 260 250 12 240 230 10 220 210 8 200
Slide 7: 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 8: A Favorable Industry Backdrop
A Favorable Industry Backdrop Monro Operates in the $230 Billion Do-It-For-Me* Segment of $287 Billion U.S. Automotive Aftermarket Industry Automotive Aftermarket DIFM vs. DIY Sales 2008 % (outlets) 2016 % (outlets) CAGR 300,000 250,000 Dealers 20,770 15.6% 16,680 12.7% (2.7%) 200,000 General Repair
Slide 9: Second Quarter Fiscal 2019 Highlights
Second Quarter Fiscal 2019 Highlights Sustained Top-Line Momentum Driven by Accelerating Comparable Store Sales Y/Y Comps Trend Improvement 2-Year Stacked Comps Trend Improvement3 8.0% 7.0% 6.0% 6.0% 4.0% 5.0% 2.0% 4.0% 0.0% 3.0% Jan-18 Feb-18 1 Mar-18 Apr-18 May-18 2 Jun-18 2 Jul-18 Aug-18 Sep-18 O
Slide 10: A Scalable Platform: Recent Acquisitions
A Scalable Platform: Recent Acquisitions Acquisitions Completed and Announced to Date in Fiscal 2019 Represent $80M in Annualized Sales Announced Acquisitions ▪ Completed previously announced Pohlman Tire & Auto Service, Inc. acquisition in the third quarter ▪ Five retail locations in Ohio, filling
Slide 11: 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 12: Improve Customer Experience
Improve Customer Experience Online Reputation Improve SEO and local listing management Management Effectively build and manage online presence Deliver a best-in-class experience to all customers Consistent In-Store Provide clear product choices and quality service to Delivering a Experience
Slide 13: Enhance Customer-Centric Engagement
Enhance Customer-Centric Engagement Focus marketing spend to higher ROI channels Launch direct marketing via new analytic-based Customer Retention CRM platform Enhance private label credit card offering Use analytics to optimize digital efforts Leverage market segmentation and demographic
Slide 14: Omnichannel: Expanded Amazon.com Collaboration
Omnichannel: Expanded Amazon.com Collaboration Expanded 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 Sh
Slide 15: Optimize Product & Service Offering
Optimize Product & Service Offering Past Present Future Simplify invoices and inspection forms Redefined Selling Clearly defined ‘Good, Better, Best’ product options Approach Educate customers on new tire installation, brake and oil change service options Improve tire sales strategy to offer
Slide 16: Accelerate Productivity & Team Engagement
Accelerate Productivity & Team Engagement Achieve the right balance of labor and technical Optimized Store abilities across our stores Staffing Model Implement data-driven store scheduling software Attract, train and retain talented technicians and Clearly Defined Career Path managers and Enha
Slide 17: Monro.Forward Progress Update
Monro.Forward Progress Update Monro.Forward Initiatives Well Underway and Advancing as Planned Continuing to execute customer satisfaction and online reputation management Improve Customer program across Monro’s store base Experience Focus on the in-store experience is having significant impact
Slide 18: Monro.Forward Progress Update (Cont.)
Monro.Forward Progress Update (Cont.) Monro.Forward Initiatives Well Underway and Advancing as Planned Launched Monro playbook and store re-image initiative pilot in Rochester, NY in the Improve Customer beginning of 3QFY19 Experience Modernized store layout to be rolled out across the Company’s
Slide 19: Monro.Forward Progress Update (Cont.)
Monro.Forward Progress Update (Cont.) Monro.Forward Initiatives Well Underway and Advancing as Planned In 2QFY19, rolled out modernized corporate and retail websites and direct marketing Enhance Customer- through analytic-based CRM platform Centric Engagement Expanded collaboration with Amazon.c
Slide 20: 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 2
Slide 21: 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 ▪ 45 acquisitions in the last 16 fiscal years, encompassing 681 locations and $900 million of revenue ▪ 29 acquisitions in the past 6 fiscal years, adding 386 locations and $520 m
Slide 22: Strong Second Quarter Fiscal 2019 Results
Strong Second Quarter Fiscal 2019 Results Higher Ticket From Improved In-Store Execution Drove Solid Top-Line Performance 2QFY19 2QFY18 Δ 1HFY19 1HFY18 Δ Sales (millions) $307.1 $278.0 10.5% $602.9 $556.5 8.3% Same Store Sales 3.2% -0.4% 360 bps 2.5% 0.5% 200 bps Gross Margin 39.1% 38.8% 30 bps 39.3
Slide 23: Fiscal 2019 Outlook
Fiscal 2019 Outlook1 Delivering Growth Today While Investing for Tomorrow Operating Margin ▪ Assumes operating margin of 11.1% at midpoint of FY19 sales guidance FY19 FY18 Δ (11.4% excluding FY19 acquisitions announced and completed to date) ▪ Expect stable tire and oil costs year-over-year Sales (m
Slide 24: Fiscal 2019 Outlook – Capital Investment
Fiscal 2019 Outlook – Capital Investment Incremental Capital Spending Focused Primarily on Store Refresh Pilot and Early Rollout Second Half of FY19 Capital Investment Area Store Refresh Initiative (Capital Spending by Area, $ in Million) Renovation Plus Refresh Light $39.1 $47.0 100% 3.8 5.4 90% IT
Slide 25: Three-Year Organic Growth Financial Targets
Three-Year Organic Growth Financial Targets Accelerating Same Store Sales Growth Drives Operating Leverage and Double Digit Earnings Growth 5.0% SSS Improvement 4.0% + 4.0% Same Store Sales Growth Accelerate from 2% to above 4% 3.0% 2.0% 2.0% 1.0% Operating Margin Return to 12%+ Operating Margin
Slide 26: Disciplined Capital Allocation
Disciplined Capital Allocation Executing on Growth Strategy While Maintaining a Disciplined Approach to Capital Allocation Investing in the Business ▪ 1HFY19 capex of $21.7M ▪ Continue to expect ~$75M of incremental CapEx over the next 5 years to invest in store re-image and technology Executing on
Slide 27: 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 market position in Northeast, Great Lakes and Mid-Atlantic with a presence in 28 states ▪ 17 years of consecutive annual sales growth ▪ Low cos
Slide 28: Appendix
Appendix 28
Slide 29: Monro.Forward Strategic Initiatives
Monro.Forward Strategic Initiatives Q4 FY18 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY20 Q2 FY20 Q3 FY20 Q4 FY20 FY21 Foundational technology & tools Scale store refresh & operational Pilot store excellence Improve Customer refresh & operational Technology based in-store experience Experience excellence Schedu
Slide 30: Fiscal 2019 Outlook – EPS Bridge
Fiscal 2019 Outlook – EPS Bridge $2.40 $0.02 ($0.02) $0.40 $0.17 ($0.07) $2.15 ($0.13) $2.35 $1.90 $1.98 $1.65 FY18 Adjusted EPS 2% Comp Sales Inflation Initiative Investments FY19 Tax Reform FY18 Acquisitions Other FY19E GAAP EPS Increase Impact Note: Guidance bridge based on midpoint of FY19 EPS g