Monro, Inc. · NASDAQ:MNRO
Monro — Non-Deal Roadshow (January 2006)
24 slides from Monro's roadshow presentation, January 2006
Slide 1: Nasdaq: MNRO
Updated January 2006 Nasdaq: MNRO 1 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
Who We Are 3 3
Slide 4: Company Overview
Company Overview • Largest chain of Company-operated undercar care facilities in the United States • As of December 24, 2005, the Company operated 625 stores in 17 states 4 4
Slide 5: Service Mix
Service Mix FY04 26% Gross Margin % Brakes and Exhaust = +10 13% Service and Steering = baseline company margin 29% FY05 Tires = -10 15% 26% 17% 20% Q3 FY06 26% 29% 15% 13% 26% 22% 13% 10% Brakes Exhaust Steering Maintenance* Tires * Includes state inspections, lube, oil, filter, engine cooling serv
Slide 6: Geographic Presence
MONRO Geographic Presence MUFFLER/ BRAKE eeneg) Of SFL MONRO MARKETS COMPANY-OPERATED STORES CLUSTER MARKETS City/state 3. Akron/Canton, OH. Pittsburgh, PA Eedirrelle DO, Service Tire & Service Cluster Cluster Markets kets Markets 9. Sy O Service Philadelphia 5 NY By Service/Tire Designation: Total
Slide 7: Competitive Advantages
Competitive Advantages We do only one thing: Service Retail Customers • Company-operated stores allow Company to accomplish objectives q Faster, Better, Cheaper • Company-owned centralized purchasing and distribution q Point of sale/inventory management systems • Efficient marketing (database mailin
Slide 8: Industry Overview
Industry Overview Monro operates in $136 billion “Do-It-For-Me” segment of $180 billion U.S. automotive aftermarket industry U.S. Automotive Service Outlet Share: Aftermarket Industry 1999 – 2004 32 Do-It-For-Me Service Outlet Product Share % 28 76.2% 24 20 2004 16 1999 12 8 Do-It-Yourself 4 23.8% 0
Slide 9: Favorable Industry Trends
Favorable Industry Trends O Increasing number of vehicles O Increasing age of vehicles O Number of vehicles age 6 - 10 years old will increase 15% to 70 million over the next five years O Significant average annual miles driven per vehicle O Decreasing number of service outlets and bays O Increasing
Slide 10: Favorable Industry Trends
Favorable Industry Trends Cars and Light Trucks in Service Average Age of Car and Light Truck on the Road 225 10.5 225 215 10.0 215 Number of Vehicles (in Millions) 205 9.5 204 9.5 Age (in years) 195 201 9.3 9.4 9.0 9.3 185 192 9.0 9.1 187 8.5 8.8 175 8.6 178 8.0 165 7.5 155 145 7.0 1993 1995 1997 1
Slide 11: EPS Trends
EPS Trends $1.75 $1.20 $1.50 $1.00 $1.25 $0.80 $1.52 - $1.55 $1.00 $1.13 $0.60 $1.09 $1.09 $0.75 $1.35 $1.03 $1.02 $0.93 $0.92 $0.85 $1.15 $0.95 $0.40 $0.50 $0.81 $0.69 $0.53 $0.57 $0.25 $0.20 $0.20 $0.00 $0.00 '99 '00 '01 '02 '03 '04 FY05 FY 06 '95 '96 '97 '98 '99 '00 '01 '01 (Est.) '02 % Change 18
Slide 12: Historical Financials
Historical Financials (Dollars in millions except 3rd Qtr. 2nd Qtr. 1st Qtr. Fiscal Year Fiscal Year per share data) 2006 2006 2006 2005 2004 ** Sales $90.2 $95.6 $94.6 $337.4 $279.5 Sales Growth (vs. prior year) 12.0% 8.2% 8.3% 20.7% 8.3% EBITDA $11.8 $17.5 $ 17.7 $ 49.7 $ 43.3 EBITDA Margin 15.5%
Slide 13: Balance Sheet Highlights
Balance Sheet Highlights December 24, March 26, 2005 2005 Current assets $ 80,263 $ 77,519 Property, plant & equipment 163,132 164,309 Other 51,450 43,157 Total $ 294,845 $284,985 Current liabilities $ 48,145 $ 50,361 Long-term debt 47,178 55,438 Other 10,640 11,697 105,963 117,496 Shareholders’ equ
Slide 14: Growth Strategy
Growth Strategy h Increase market share through same store sales growth h Expand product offerings h Acquire competitors cheaply h Continue new store openings in existing markets qApproximately 15 stores per year 14 14
Slide 15: Acquisitions and Opportunities
Acquisitions and Opportunities Building Tire Store Category h Combination of five acquisitions in the last three years q 80 stores q $100 million revenue h Could have up to 1,000 tire stores and 1,000 service stores in our 17 states - Creates market dominance and pricing power - Diversifies risk - E
Slide 16: Acquisitions and Opportunities: Strauss Business
Acquisitions and Opportunities Strauss Business h $170 million in sales ($65 service and $105 retail) h 100 stores (70 Wet - retail and service, 30 Dry – retail only) q New York City – New Jersey- Pennsylvania q Dominant store density q Below market rents Transaction Overview h Phase 1: $2 million f
Slide 17: Acquisitions and Opportunities: Strauss Initiatives
Acquisitions and Opportunities Strauss In Process Initiatives h Improve phone skills and start taking service appointments h Increase gross profit margin – raise prices/reduce outside purchases h Payroll reduction and improve productivity h Culture and Attitude h Improve tire sales h Drive traffic w
Slide 18: Acquisitions and Opportunities: Strauss Next Steps
Acquisitions and Opportunities Strauss Next Steps h Rationalize assets (ie 14th Street lease, four owned properties, warehouse/office, real estate opportunities parts stores) h Become full line tire dealer h Purchasing h 400 basis points improvement over two years h Corporate overhead h Up to $2 mil
Slide 19: Acquisitions and Opportunities: BJ's Wholesale Clubs
Acquisitions and Opportunities BJ’s Wholesale Clubs h Converting BJ’s tire centers to full service Monro Muffler Brake & Service shops h Currently 34 open, more on the way h Conversion costs $140,000 per location (5 bays) plus $50,000 of inventory h Potential 85 locations, $50 million in sales, $2-$
Slide 20: FY06 Earnings Assumptions
FY06 Earnings Assumptions • Earnings estimate for FY06 = $1.52 - $1.55 – Q1 – FY06 $.52 vs. $.47 in FY05 – Q2 – FY06 $.51 vs. $.45 in FY05 – Q3 – FY06 $.27 vs. $.24 in FY05 – Q4 – FY06 $.22 - $.25 vs. $.19 in FY05 • Comparable Store Sales increase of 2-3% for the year • Gross Margin flat with FY05 –
Slide 21: FY06 Other Assumptions
FY06 Other Assumptions • SG&A at historical levels (30 - 31% of sales) • Interest Expense of $3.0 - $3.5 million with $18 - 20 million of debt paydown • $21.0 million of Cap-ex ($15 million in maintenance cap-ex) • $17 million depreciation and amortization • EBITDA approximately $55 million 21 21
Slide 22: FY06 Overall Priorities
FY06 Overall Priorities h Increase comparable store sales (2-3%) – Continue to increase traffic (positive the last four years) – Increase prices – Increase Commercial sales – Focus on Scheduled Maintenance and Tires h Successfully integrate new acquisitions h Top line growth minimum of 20% h Bottom
Slide 23: FY06 Cash Flow Priorities
FY06 Cash Flow Priorities h Acquisitions q Same or contiguous markets q Buy right q Accretive to earnings in a reasonable timeframe h Pay down debt 23 23
Slide 24: Investment Highlights
Investment Highlights h Largest chain of Company-operated undercar care facilities in the United States h Breadth of product and service offerings h Leading market position in northeast with a presence in 17 states h Superior customer service h Favorable industry trends h Consistent and growing EPS