Monro, Inc.

Good morning, ladies and gentlemen, and welcome to Monroe, Inc.' 's earnings conference call for the second quarter of fiscal 2022. 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 operator assistance during the call, please press star zero on your touchtone phone. And as a reminder, ladies and gentlemen, this conference call is being recorded and may not be pre-produced in whole or in part without permission from the company. I would now like to introduce Ms. Maureen Mulholland, Executive Vice President and Chief Legal Officer at Monroe. Please go ahead.

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 Investors section of our website at corporate.monroe.com forward slash investors forward slash investor hyphen resources. 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 Monroe'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 Monroe's filings with the SEC and in our earnings release. and include the significant uncertainty relating to the duration and scope of the COVID-19 pandemic and its impact on our customers, executive officers, and employees. 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 to 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 Monroe's President and Chief Executive Officer, Mike Broderick. Mike?

Thank you, Maureen, and good morning, everyone. Thanks for joining us. We had another strong quarter to round out a great first half of the fiscal year. Top line performance surpassed pre-pandemic levels and we achieved another record sales quarter. We delivered double digit comparable store sales growth across all our regions and categories. This was driven by strong demand, continued implementation of our Monroe Forward initiatives, and consistent execution across the organization. Our last few quarters, I've witnessed the skill and determination of our seasoned leadership team and our teammates across the nation. I'm appreciative of the hard work they're doing to drive our business towards the goals we have set while navigating through a challenging environment over the last 18 months. Turning to slide three, as we continue to deal with COVID-19 and its impact on our stores, teammates, and customers, We are encouraged by our strong fiscal first half performance and remain confident in the strength of our business for the remainder of the fiscal year. Encouragingly, vehicle miles traveled continues to improve as drivers return to the road. Additionally, consumers are holding onto their cars longer, as evidenced by lower new car sales. As a best-in-class service provider, we believe we are well-positioned to capitalize on these favorable trends. and the strengthening of the demand environment. We are particularly encouraged to have increased our service sales as a percentage of total sales during the quarter, contributing to improved gross margins. Our second quarter performance reflects both higher traffic and higher average ticket. We continue to manage our business to ensure our staffing levels are appropriate and our marketing efforts are optimized with the intention to efficiently match capacity with demand. Notably, on slide four, we exit the second quarter with strong momentum into our fiscal third quarter with comps up approximately 14% in fiscal October compared to comps down 12% in the same period last year. Moving to slide five, we are relentlessly focused on improving our in-store operational execution in the five key areas, or what we call the big five. staffing, scheduling, training, attachment selling, and outside purchase management. We've already made investments in technology to assist us in delivering improvements in these areas, specifically our technology-based labor and scheduling tool and our online learning management system, Monroe University, which provide the foundation for managing and developing our most important asset, our teammates. We are now using this foundation to drive tangible improvements in our business. regarding staffing and scheduling. We are optimizing our staffing levels and store schedules to ensure that every store is staffed with the right number and skill level of technicians every hour we are open. This ensures we can perform our services at a time convenient for our customers and has directly contributed to the outperformance of our service category comp sales during this fiscal year. While we are encouraged by the results to date, We have a significant amount of opportunity in this area. Over the past 90 days, we have made considerable inroads against a historically tight labor market by hiring over 250 net new technicians. Although the environment remains challenging, this marks a positive inflection where we were in the first quarter of the year. We strive to be the employer of choice in the auto aftermarket service industry as we recognize that our highly adept technicians are integral to the success of the entire organization. Regarding training, we are augmenting our online learning management system with virtual instructor-led training, as well as with in-store training performed by our highly skilled field trainers. We are using these different training methods to support not only our focus on the Big Five, but to deliver other important content to our teammates, This content centers around the critical factors that make a store successful and is tailored and targeted to both store management and technicians. We've laid out a clear path for how our teammates will be the key enabler for us to realize the full potential of our growth strategy. Operational excellence starts with our teammates, and we continue to make investments to drive motivated, inclusive, and high-performing teammates. The next item in the Big Five is attachment selling. As customers come to our store, they want to make sure they are receiving top-tier care from someone they trust to work on one of their most valuable possessions. Our complimentary inspection ensures that not only is the customer's car being serviced appropriately, but also that any other problem associated with this vehicle can be addressed. This also provides us with the opportunity to offer additional products and services. We are committed to ensuring that our technicians perform the complimentary courtesy inspection on every customer vehicle. This allows our store managers to present the needed work and provide our customers with a solution to their car care needs. Improvements in our execution of the courtesy inspection and the related selling of the additional services was another contributor to the outperformance of our service category comp sales during the fiscal year. Again, encouraging, but we still have opportunity in this area. Our objective is to be the trusted partner for any automotive issue, and the courtesy inspection helps to quickly establish a relationship with the customers that can last for years. Which brings us to the last item in the Big Five, outside purchase management. We continue to consolidate our purchasing power behind our preferred suppliers within both the tire and parts categories to take full advantage of our buying power and scale. This allows us to leverage relationships with key suppliers while maintaining appropriate diversification in our sourcing strategy. An important part of this consolidation is making sure that any purchases made by our store teams are being made with our preferred suppliers. We have made improvements in this area through training, technology, and process that have been a contributing factor to our gross margin improvement. This consolidation in tandem with an increased focus on our company-owned distribution positions us to support continued growth and profitability going forward. Our experienced management team has been instrumental in driving our business forward and navigating through COVID, and I cannot thank them enough. They have been motivated and focused, and we look to continue to build upon our accomplishments to drive operational excellence. At the heart of our mission is being a best-in-class, service-first organization that prioritizes its customers and the communities it serves. We are focused on bringing customers the professionalism and high-quality service they expect from a national retailer with the convenience and trust of a neighborhood garage. We also remain committed to our store re-image program. We are currently focused on bringing the stores that were currently acquired on the West Coast in line with our standards. and kicked off this work at the beginning of October. Following the completion of comprehensive review of our various brands, we will move forward with the re-image of our remaining stores as needed. We are also performing a review of the inventory stocking plan needed to support any store-level brand changes. Turning to slide six, our strong cash flow and balance sheet positions us to take advantage of strategic and value-enhancing consolidation opportunities in a fragmented industry. Similar to the past quarters, we are and will continue to be a key acquirer of family-owned businesses. We are excited about the 17 stores we are expecting to add to our portfolio in the next quarter with six in Southern California and 11 in Iowa. These stores are expected to add annualized sales of $25 million and will further our geographical expansion. This will bring our year-to-date acquisition total to 47 stores. with expected annualized sales of $70 million. We are looking to expand upon this success, and we still have a large runway to deliver more store openings. With regards to our corporate responsibility and ESG efforts, we've been taking these months following the release of our inaugural corporate responsibility report to work with our senior leadership team, and to engage with our field managers to continue creating a framework of new and current initiatives against which we can measure our progress in this area. Our efforts are structured around the pillars of teammates, customers, communities, and environments, which include business practices throughout Monroe that we believe can aid our resilience over time. The Board of Directors, through our recently renamed Nominating and Corporate Responsibility Committee, is engaged with us on these issues as we continue along our journey. We look forward to sharing additional information on these important initiatives in the quarters and years ahead. Ultimately, we delivered improved performance this quarter and see a number of opportunities for both top line and margin expansion going forward. We believe our steadfast commitment to operational execution will continue to drive strong cash flow that will enable us to invest in attractive acquisitions to build a strong, scalable platform for sustainable growth. As we look ahead, our focus on our customers, teammates, and in-store execution will be the key drivers to realize the full potential of our Monroe Forwarding Strategy. We will focus on advancing our vision to be a best-in-class field-led service organization to increase the overall lifetime value to our customers and stakeholders. With that, I'll now turn the call over to Brian, who will provide an overview of Monroe's second quarter performance and strong financial position. Brian?