Monro - Q2 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to Monro Incorporated's Earnings Conference Call for the Q2 of fiscal 2024. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the call, please dial star zero on your touchtone phone. As a reminder, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Felix Veksler, Senior Director of Investor Relations at Monro. Please go ahead.

Felix Veksler (Senior Director, Investor Relations)

Thank you. Hello, everyone, and thank you for joining us on this morning's call. Before we get started, please note that as part of this call, we will be referencing a presentation that is available on the investor section of our website at corporate.monro.com/investors. If I could draw your attention to the safe harbor statement on slide two, I'd like to remind participants that our presentation includes some forward-looking statements about Monro's future performance. Actual results may differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Monro's filings with the SEC and in our earnings release. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Additionally, on today's call, management statements include a discussion of certain non-GAAP financial measures, which are intended to supplement and not be substitutes for comparable GAAP measures. Reconciliations of such supplemental information to the comparable GAAP measures will be included as part of today's presentation and in our earnings release. With that, I'd like to turn the call over to Monro's President and Chief Executive Officer, Michael Broderick.

Michael Broderick (President and CEO)

Thank you, Felix, and good morning, everyone. I'd like to spend the first part of our call this morning walking through our Q2 performance, which reflected top-line results that were challenged. This was due to consumers deferring tire purchases as persistent inflationary pressures impacted purchases of higher ticket items across the retail spectrum. This was clearly evidenced by an industry-wide slowdown in tire unit sales in the regions of the country where a vast majority of our store footprint is concentrated. We mitigated this slowdown with actions to reduce non-productive labor costs, including overtime hours in our stores. Despite a tough macroeconomic environment, the resiliency of our business model allowed us to expand gross margin and maintain our year-over-year profitability, even on a lower tire sales volume.

I'll also discuss our plans to deliver improved earnings this fiscal year, despite some of the consumer-related headwinds that we and others in our industry are experiencing. Before I get into the specifics, I'd be remiss if I didn't take a moment to recognize and thank all of our teammates for their continued dedication to Monro, serving the needs of our customers as well as their positive contributions to the communities where we operate. Now, turning to our Q2 results. Our Q2 comparable store sales declined approximately 2%. Comp store sales were down approximately 1% in our 300 small or underperforming stores and down approximately 2% in our remaining store locations.

As I stated earlier, our sales results in the quarter were challenged by consumer deferrals of tire purchases, as evidenced by an industry-wide slowdown in tire unit sales in the regions of the country where a vast majority of our store footprint is concentrated. This led to pressured store traffic, which was not supportive to sales of our higher margin service categories in the quarter. While our tire units were down approximately 10%, leveraging the strength of our manufacturer-funded promotions allowed us to optimize our assortment for improved tire profitability in the quarter. And while continued consumer trade-down dynamics led to a higher proportion of lower margin opening price point tires within overall industry unit sales, we remained focused on maintaining a healthy mix of opening price point tires in the quarter.

Encouragingly, based on the retail sellout data from Torteda, a subsidiary of ATD, we maintained our tire market share in our higher margin tiers. We mitigated this industry-wide slowdown in tires with actions to reduce non-productive labor costs, including overtime hours in our stores, which were down 26% year-over-year and 14% sequentially. This allowed us to expand gross margin and maintain our year-over-year profitability, even on lower tire sales volumes. We will continue to closely manage our labor costs and expenses to maximize profitability. Now, concluding with our plans to deliver improved earnings this fiscal year, despite a choppy consumer environment. While our preliminary comp store sales for fiscal October are down approximately 5%, our stores are properly staffed and ready for the back half of the year.

While we will need to see an improvement in the overall health of the consumer before we can fully capitalize on longer-term industry tailwinds, we have successfully repositioned our cost structure to deliver improved profitability, even on lower comp store sales. We will remain relentlessly focused on achieving comp store sales growth through accelerating growth in our 300 small or underperforming stores, maintaining a balanced approach between our tire and service categories with competitive pricing to drive store traffic, and continuously improving our customer experience. We will also strive to expand our gross margins through properly training our teammates to maximize their productivity. However, given the current pressures on the consumer, we are also laser-focused on maximizing profitability through prudent cost control, which includes right-sizing our fixed costs and rationalizing unproductive labor.

While we take these actions, we will not cut productive labor at the sacrifice of our standards and to the detriment of our long-term service model. In addition, we will continue to create cash by optimizing inventory and leveraging the strength of our vendor partners for better availability, quality, and cost of parts and tires in our stores. In closing, despite the challenges posed by the current macroeconomic environment, our business continues to be well-positioned, and we are confident that we remain on a path to restore our gross margins back to pre-COVID levels, with double-digit operating margins over the longer term. With that, I'll now turn the call over to Brian, who will provide an overview of Monro's Q2 performance, strong financial position, and additional color regarding fiscal 2024. Brian?

Brian D'Ambrosia (EVP and CFO)

Thank you, Mike, and good morning, everyone. Turning to Slide eight, sales decreased 2.3% year-over-year to $322.1 million in the Q2, which was primarily due to lower tire unit sales. Comparable store sales decreased 2.3%, and sales from new stores increased approximately $1.2 million. Gross margin increased 30 basis points compared to the prior year, primarily resulting from lower material costs as a percentage of sales, which were partially offset by higher distribution and occupancy costs as a percentage of sales, as well as higher technician labor costs as a percentage of sales due to wage inflation.

Total operating expenses were $92.6 million or 28.8% of sales, as compared to $93.3 million or 28.3% of sales in the prior year period. The increase as a percentage of sales was principally due to lower year-over-year comparable store sales. Operating income for the Q2 declined to $22.4 million or 6.9% of sales. This is compared to $23.5 million or 7.1% of sales in the prior year period. Net interest expense decreased to $4.8 million, as compared to $5.7 million in the same period last year. This was principally due to a decrease in weighted average debt.

Income tax expense was approximately $4.7 million, or an effective tax rate of 26.8%, which is compared to $4.7 million, or an effective tax rate of 26.6% in the prior year period. Net income was approximately $12.9 million, as compared to $13.1 million in the same period last year. Diluted earnings per share was $0.40, compared to $0.40 for the same period last year. Adjusted diluted earnings per share, a non-GAAP measure, was $0.41. This is compared to adjusted diluted earnings per share of $0.43 in the Q2 of fiscal 2023.

Please refer to our reconciliation of adjusted diluted EPS in this morning's earnings press release and on Slide 8 in our earnings presentation for further details regarding excluded items in the Q2 of both fiscal years. As highlighted on Slide 9, we continue to maintain a very solid financial position. We generated $98 million of cash from operations during the H1 of fiscal 2024, including $36 million in working capital reductions. This has reduced our cash conversion cycle by approximately 72 days at the end of the Q2 compared to the prior year period. Our AP to inventory ratio at the end of the Q2 was 191% versus 178% at the end of fiscal 2023. We received $7 million in divestiture proceeds.

We invested $16 million in capital expenditures, spent $20 million in principal payments for financing leases, and distributed $18 million in dividends. Lastly, given the higher interest rate environment, we opted to pay down some of our debt in the Q2 to reduce interest expense versus repurchasing shares under our program, which authorizes us to repurchase up to $150 million of the company's common stock. We have used our significant cash flow to reduce invested capital by $71 million during the H1 of fiscal 2024. At the end of the Q2, we had bank debt of $55 million, cash and cash equivalents of $9 million, and a net bank debt to EBITDA ratio of 0.3 times. While we are not providing full year guidance, we are providing color to assist in your modeling.

We expect to drive higher year-over-year sales through comparable store sales growth and outsized performance in our 300 small or underperforming stores. This is inclusive of an extra week of sales in our fiscal Q4. We expect to drive year-over-year improvements in our gross margin through pricing actions, lower fixed distribution and occupancy costs as a percentage of sales due to a higher sales base, and productivity improvements from our labor investments and reductions from non-productive payroll, which will be partially offset by continued wage inflation. Total operating expenses as a percentage of sales are expected to be higher year-over-year due to increases in direct and departmental costs to support our store base, as well as the impact of inflation. Our tax rate should be approximately 26% for fiscal 2024.

Regarding our capital expenditures, we expect to spend approximately $35 to 45 million in fiscal 2024. We also expect to continue improving our operating cash flow, driven by continued working capital reductions. Our balanced approach of returning capital to shareholders through dividends and share repurchases, as well as opportunistically completing value-enhancing acquisitions, is expected to meaningfully increase our return on invested capital. And with that, I will now turn the call back over to Mike for some closing remarks.

Michael Broderick (President and CEO)

Thanks, Brian. We're optimistic about our outlook for fiscal 2024 and beyond. Although we still have important work to do, we remain well positioned to execute our growth strategy and deliver long-term value creation for our shareholders. With that, I'll now turn it over to the operator for questions.

Operator (participant)

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to exit the queue. We respectfully ask you to limit yourself to one question and one or two follow-up questions. Finally, when preparing to ask your question, please ensure your phone is unmuted locally. Our first question today is from the line of David Lantz of Wells Fargo. David, your line is now open. Please proceed.

David Lantz (VP, Equity Research, Hardline Retail)

Hey, good morning, guys, and thanks for taking my questions. So, you're guiding the comparable sales growth in fiscal 2024, and in the context of October comps being down 5%, curious if you can talk about your expectations for the balance of the year and if any of that improvement, you know, assumes an overall improvement in the macro?

Brian D'Ambrosia (EVP and CFO)

Thanks for the question, David. This is Brian. If you look at our back half, I just want to remind everyone, we've got an extra week in our Q4. That extra week is about 2% on the annual comp. So that is factored into that commentary around comparable store sales growth for the year. But we do expect, you know, and then factored into that comp store sales growth is improvement off of the down 5 trend we talked about in October. And I think that's, you know, driven by what we hope to be a better consumer dynamic in our tier 1 through 3 tires, which we are expecting that weather and that supports the tire selling season in the back half will help to drive that inflection.

David Lantz (VP, Equity Research, Hardline Retail)

Got it. That's helpful. Just a longer-term question. On getting back to the low double-digit EBIT margins, can you provide a glide path on what sort of improvement could be driven by gross margins and what else could come from SG&A?

Michael Broderick (President and CEO)

I'll start with the margin, David. I would say that we, even in this quarter, considering our down sales, were able to show margin improve. We do feel like that will continue to improve through assortment decisions and the right tire and service mix in our business. We feel like we've done a lot over the last 12 to 15 months to get ourselves in a position where we can clearly see what margin, and going back to margin of pre-COVID levels, and the fact that we have payroll very much under control. The team has done a nice job responding to the environment, whether it's up or down, and mitigating some of the wage investments that we've had to put in place over the last 2 to 3 years.

Brian D'Ambrosia (EVP and CFO)

And just to add to that, David, if you think about margin at 35.7 for our Q2, that was driven year over year by 120 basis points of improvement in material cost as a percent of sales, and then offset by about 90 basis points of a combination of our D&O and labor, and largely call that 90 basis points deleverage on the lower sales. So if you're, you know, if our planning assumptions around the top line to flat, you know, come true, then you look at that labor and D&O deleverage is kind of dissipating. You know, you put 90 basis points on top of the 35.7, and you start to get into the, some meaningful, you know, gross margin improvement on the path to double-digit operating margins.

But G&A has been a focus, and if you look at our G&A in the quarter, it was flat year over year from a dollar standpoint. It delivered a little bit because of the lower sales, but our focus is to continue to drive flat G&A year over year in order to try to, you know, gain as much flow-through on the sales we're delivering. You know, that's obviously our goal, and so far, we've been able to offset a lot of the year-over-year inflation with efficiency gains in G&A.

David Lantz (VP, Equity Research, Hardline Retail)

Got it. That's super, super helpful. Thank you.

Michael Broderick (President and CEO)

Thank you, David.

Operator (participant)

Our next question today is from the line of Bret Jordan of Jefferies. Brett, your line is now open. Please proceed.

Bret Jordan (Managing Director, Senior Equity Research Analyst)

Hey, good morning, guys.

Michael Broderick (President and CEO)

Morning, Brett.

Brian D'Ambrosia (EVP and CFO)

Morning.

Bret Jordan (Managing Director, Senior Equity Research Analyst)

Could you give us a good little detail on the car count, I guess, ticket versus traffic in the comp, and then I guess, Brian, the usual, the monthly comp breakout?

Michael Broderick (President and CEO)

I'll start with the traffic. Traffic was down mid-single digits, and the ticket was up low single digits, but I would say that for a -2, but a lot of what we looked at was going back to the tire story. So just to be clear on the OPP, this was a tire quarter for sure. We were just down, we mixed up, which we like, mixing up to Tier 1 through 3. That's drives profit, and I would say that because the tire count was down, we actually lost some of the attachment, too. So we do look forward to the consumer coming back in the quarter.

Generally, we're waiting on a weather event right now in the month of November to drive the customer coming back, and then we'll appropriately drive the improved transactions as well as the attachment that goes along with it.

Brian D'Ambrosia (EVP and CFO)

... Okay, and then regarding the cadence in the quarter, July was up 0.5, August was down 2.5, September down 5. And those trends all really, like Mike said, driven by tire unit declines as the quarter went on, and also consistent with the industry data that we mentioned in the prepared remarks that we were comparing ourselves against.

Bret Jordan (Managing Director, Senior Equity Research Analyst)

Was there much regional dispersion? I guess you guys kind of called out that your primary markets saw a lot of pressure from the consumer. Was the West better?

Michael Broderick (President and CEO)

The West was better, but I would say it's marginally better. To our prepared remarks, a lot of the pressure was definitely on the East Coast.

Bret Jordan (Managing Director, Senior Equity Research Analyst)

Okay. Then one final question, I guess. The working capital benefit, when you think about how you're running with sort of a an inventory lighter model, what do you think is left? Like, what's, if as we look at the balance sheet today and the model, like, what more could we extract from the inventory on cash?

Brian D'Ambrosia (EVP and CFO)

Great question. I think if you look at Q1 to Q2, you know, you definitely heard the metrics start to flatten out a little bit. We're still at about 72 days of cash conversion cycle reduction, still around 9.19, 1.95 of that inventory to AP ratio or AP to inventory ratio. So I think you know, it's definitely showing that we're in some of the later innings, but there's still more benefit to come, as we get new vendors signed up for extended terms and also continue to drive volume through our existing vendors on the programs. But I think the slowdown in some of the growth in the year-over-year metrics is indicative of kind of later innings.

Bret Jordan (Managing Director, Senior Equity Research Analyst)

Okay, great. Thank you.

Michael Broderick (President and CEO)

Thank you.

Operator (participant)

Our next question today is from the line of Brian Nagel of Oppenheimer. Brian, your line is now open. Please go ahead.

William Dawson (Analyst)

Hey, this is William Dawson on for Brian. Thanks for taking my question.

Michael Broderick (President and CEO)

Good morning, William.

William Dawson (Analyst)

Cool. Thank you. The first question is just about the consumer. What can you do internally to drive comps and gain increased traction as the consumer remains pressured? And with respect to the industry, what pressures need to ease for us to see an improvement in the current, you know, trade down trends and deferral trends that you're seeing here?

Michael Broderick (President and CEO)

So William, this is Mike. I'll take it. Regarding your first question, we talked about this in Q4 also, the fact that we decided not to literally shift our mix to OPP. There was a lot of reasons for it. First of all, it wasn't profitable. We were making little money, and we were spending quality wages on really expert technicians to be able to install, you know, cheap tires. That's not our business. Oh, and by the way, we actually saw customers who were buying those tires did not want to attach, even though their cars, you know, required it. And that specifically hurt us on the brake category and some of the other service categories that we like and we actually, that's our business model. That's number one.

Number two, so what we did is, we put price in, and we reabsorbed at our stores. We actually saw the fact that our assortment, it drives a profitable consumer, that drives profit for our organization. We're able to manage our margins appropriately, and we're able to mitigate whatever expenses that we have just through oversight on overtime and some of the wage investments that we've put in place. So now what we're coming through is Q3 of last year. We have a lot of this in the marketplace. Q4, we really made the change, where we were starting to get a balanced mix. When I say balanced mix, basically, we wanted to have healthy growth in Tier 1 through 3 and the appropriate offering for Tier 4.

At this point in time, when we're looking at the consumer, to answer your second question, it's all about now a weather event to really drive a customer that's coming in. We do not see that customer. Literally, they're deferring. There's high ticket, they're deferring. We see a weather event, really changing the consumer and when they come into our stores. We really look at this winter selling season as it's gonna be very short. When it comes, it's gonna come strong, and we're well positioned for it. Really coming into Q3 as well as in Q4, we actually see a lot of what we put in place in Q3, mitigating in Q4, where we can see now back to normal comps.

William Dawson (Analyst)

Okay, yeah, that's, that's very helpful. Thank you. And to follow up on that and to ask about the guidance for the full year, can you remind us what the compares are with the weather, and what gives you confidence that the weather can drive improved comps via just historical knowledge of the business? And also just with the full year comp, can you talk about the breakdown or your expectations between ticket and traffic?

Michael Broderick (President and CEO)

I'll start with the ticket and traffic. We generally focus on a balanced approach to it, so we do expect to have... I mean, coming out of October, if we have a weather event, we have a heavy, a heavy customer count growth, and then also it shifts to tires, which is a large ticket item, and then we have to just manage the expenses. When I look at the comp for the rest of the year, I'm seeing that we're gonna go through a tough November, December. We're gonna. If we have a winter event, we'll be able to mitigate our comp story, but Q4, which is Q4, it seems like we started this initiative in Q4, and the comps do get softer in Q4.

Of course, we have a 53rd week that's also included in that.

William Dawson (Analyst)

Okay. Thank you very much.

Michael Broderick (President and CEO)

Thank you, William. William?

Operator (participant)

... As a reminder, if you would like to ask a question, please dial star followed by one on your telephone keypad. Our next question today is from the line of Daniel Imbro of Stephens. Daniel, your line is now open.

Daniel Imbro (Managing Director)

Yep. Hey, good morning, guys. Thanks for taking our questions. I guess I want to start again, Mike, maybe on the 300 small or underperforming stores. You know, obviously, they're seeing the same maybe deferrals and struggles as the rest of the industry. But I'm curious, just operationally, when you look across them, we've been improving those for about a year. They've generally done better than the stores. Like, what's left to do from a self-help standpoint in those smaller stores? Can they grow without an industry turnaround, or from here, are they kind of dependent on a similar macro improvement at those 300 underperforming stores?

Michael Broderick (President and CEO)

Daniel, when I look at the overall store performance, I focus on those underperforming stores as a double-digit growth opportunity for us. There's a lot of variability in that performance. I actually see a large subset of those stores that are performing extremely well. That gives me a lot of confidence that we're on the right path. It's a people story. It's a retail execution story. I would say this is always gonna be something that we're gonna focus on. From the day I started with the organization, we always identified underperforming stores, poor-performing stores. It's just part of retail. These stores are located in good areas. It's all about people. It's all about process. It's all about execution, and that's why it's always gonna be part of our storyline of the reason why I feel confident that we can grow this company.

Daniel Imbro (Managing Director)

Okay, that's, that's helpful. And then maybe moving over on the, on the market share side, I think your commentary said you retained share in the higher margin tire tiers, but obviously, I didn't hear a commentary on the lower end tier. So is it just that we're seeing some competitors be priced irrational out there on that opening price point, so you just don't maybe want to retain share there? And then based on history, just if you could share some context, during periods of past macro pressure, I would guess opening price point maybe gains, you know, a larger percentage of industry sales. Is that true? So maybe where you guys are losing share, is that gonna maybe become a bigger part of the industry for the next few quarters if the macro keeps getting tougher?

Michael Broderick (President and CEO)

First of all, just to go back to market share, we definitely decided not to overstock our stores with OPP tires. So it wasn't just about pricing, it was about assortment, too, and there was a lot of reasons for it. We proved that out in Q4. In Q3 of last year, when we sold a lot of OPP tires, we didn't make a lot of money on it. When I look at market trends, I do believe, I do believe that Tier 1 through 3 have a position in the customers from a customer lens. They absolutely have demand. We did not expect to have a soft Tier 1 through 3 when we looked at this in our really our forecasting and our performance modeling.

We do expect that business to come back, and when that comes back, we're well positioned for it. We have an OPP offering. That Tier 4, we have it in our stores. It's priced right. It's just a question of we're not gonna lean into it, because when we lean into it, we saw that we don't make money. We saw customers trading down from 1 through 3 unnecessarily into Tier 4, and we wanted to stop that because it wasn't good for the consumer.

Daniel Imbro (Managing Director)

Helpful color. And then last one, maybe, Brian, just to follow up on Brett's question, you know, cash conversion has stabilized, cash flow maybe improves when sales do, but can you talk about how you're thinking about uses of cash? You know, another quarter, I don't think you guys were active on the buyback. Just where does that fit into your capital priorities? And maybe what are you guys looking for to get more active on that use of cash? Thanks.

Brian D'Ambrosia (EVP and CFO)

No, thanks, Daniel. We look at it as a balanced approach. Like, we are looking to continue to, you know, reduce our invested capital, and we talked about that being $70 million so far through the first six months, approximately. And it's been more debt-led right now, but if you look at the balance since we announced the buyback, it's been pretty much 50/50 in terms of debt reduction and share repurchase, for the amount of total capital that invested capital that we've retired. So I would think that going forward over, you know, a period of time, that's gonna continue to be balanced, particularly as we start to get lower in the debt balance and the opportunity, you know, kind of diminishes to continue to pay down debt and reduce interest expense.

You know, there's gonna be more opportunity to fulfill the remaining authorization that we have of $53 million on our $150 million authorization. So, it's gonna be balanced, and, you know, we look to continue to generate that excess cash flow in order to continue to return that invested capital.

Daniel Imbro (Managing Director)

All right. Thanks so much, and best of luck going forward.

Brian D'Ambrosia (EVP and CFO)

Thank you.

Michael Broderick (President and CEO)

Thank you.

Operator (participant)

Our next question today is from the line of John Healy of North Coast Research. John, your line is now open. Please go ahead.

John Healy (Managing Partner)

Thanks, guys, for taking my question. Just wanted to ask a little-

Michael Broderick (President and CEO)

Sure

John Healy (Managing Partner)

... bit about the comments on... Morning. I just wanted to ask a little bit about the comments on reducing less productive labor. It sounds like a tricky thing to do, whether it's the location or maybe the tenure or the talent, and especially with the shortages of mechanics out there. So we'd just love to get your big picture thoughts on how you're evaluating that and what you're doing there. And are we interpreting it the right way, thinking that the labor is, you know, at the store level?

Michael Broderick (President and CEO)

Yeah. No, you're interpreting it the right way. We're very focused on the store level payroll. We've spent over the last 2.5+ years staffing up our stores so we can get ready for the, what we believe is the tailwinds of the industry. We're very focused on training our technicians, very focused on making sure we retain them, and we keep them qualified to do the work that comes through our shops. What I focused a lot of my, and the team's focused on, is really mitigating wage and the wage expansion, and why we're so focused on talking about overtime every quarter, because that's the number one way that we're controlling payroll, unproductive payroll, making sure the stores are staffed, and mitigating the wages through overtime.

We definitely are focused on making sure our stores continue to be staffed with quality technicians. That's not gonna change. When I talk about unproductive payroll, it's mostly about overtime.

John Healy (Managing Partner)

Got it. That makes perfect sense. And then just kind of an industry-type question. One of the things that surprised me recently was some of the Michelin commentary that U.S. replacement shipments into the U.S. were up, like, low double digits in September. Just kind of your reaction to that. Is that a sign that the industry is restocking, or maybe a sign that you're starting to get some relief on pricing, so maybe folks are, you know, taking in product, or you just thought it was an odd number? Just kind curious, kind of your thoughts on that.

Michael Broderick (President and CEO)

Yeah. I don't have really anything that I have to support or comment about it, so I just look at making sure our vendors are shipping to us, when we require it. We have an excellent relationship with ATD, so we have a lot of our inventories just in time, and we have a very supportive vendor community. When we're down 1 to 6%, we're down 6% in Tier 1-3, that affects obviously our large manufacturers, and they're investing in us to drive traffic. So, the good news is, we have great relationships with our vendor partners. We'll continue relying on that vendor partnership relationship, and we do expect the customer to come back, and they will be beneficiaries of it, just like us.

John Healy (Managing Partner)

Great. Thanks, guys.

Michael Broderick (President and CEO)

Thank you.

John Healy (Managing Partner)

Thanks.

Operator (participant)

We have no further questions in the queue today, so I'd like to hand back to Monro's CEO, Michael Broderick, for any closing remarks.

Michael Broderick (President and CEO)

Thank you for joining us today. This continues to be an exciting time to be part of Monro. We have a strong foundation to build upon to create long-term value for all our stakeholders. I look forward to keeping you updated on our progress. Have a great day.

Operator (participant)

This concludes today's call. Thank you all for joining. You may now disconnect your lines.