Monro, Inc.

Good morning, ladies and gentlemen, and welcome to Monroe Inc's earnings conference call for the first quarter of fiscal 2024. At this time, all participants are in 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 a call, please press star zero on your touchtone phone. And as a reminder, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. And I'd like to introduce Felix Pexler, Senior Director of Investor Relations 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 investor section of our website at corporate.monroe.com forward slash 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 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 violence 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 Monroe's President and Chief Executive Officer, Michael Broderick.

Thank you, Felix, and good morning, everyone. I'd like to start off by acknowledging that our first quarter results fell short of the expectations that we set on our last earnings call in May. I'll spend the first part of our call this morning walking through the shortfall, which was primarily driven by lower than expected sales due to customer deferrals in our higher margin service categories in June. Broad-based inflationary pressures have persisted such that the consumer slowed their purchases of some of our higher ticket service categories. As a result of this, we took swift action to reduce non-productive labor costs, including overtime hours in our stores, which allowed us to preserve margins and profitability on lower than expected sales. I'll conclude with 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 started, I'd like to recognize and thank all of our teammates serving as trusted vehicle advisors in what continues to be a challenging macro environment for our customers. Now turning to our first quarter results and the actions that we took to reduce non-productive labor costs. Our first quarter comparable store sales growth of less than 1% fell short of our expectations. As I stated earlier, The shortfall was primarily driven by lower than expected sales due to customer deferrals in some of our key service categories in June. This also resulted in store comps for our 300 small underperforming stores that were consistent with our overall comps in the quarter. While our comps in the quarter fell short of expectations, customer traffic counts were in line with our expectations and remained consistent with improving traffic trends in the back half of fiscal 2023. And while our tire margins returned to solid footing, our overall gross margin in the quarter was impacted by a lower sales mix of higher margin service categories. This resulted in higher material costs and continued labor cost pressures as a percentage of sales relative to our expectations. We took swift actions to reduce non-productive labor costs, including overtime hours in our stores, which were down 23% year over year, and 13% sequentially. This allowed us to preserve margins and profitability on lower than expected sales. We will continue to closely manage our labor costs and expense to maximize store productivity. Now concluding with our plans to deliver improved earnings this fiscal year. While we will likely need to see an improvement in the overall health of the consumer before we can fully capitalize on longer-term industry tailwinds, We will remain relentlessly focused on achieving our mid single digit comp store sales expectations 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. Encouragingly, Our preliminary comp store sales growth for fiscal July are up approximately 1%, which is a positive rebound off the sales trends that we saw in fiscal June and a step in the right direction. We will also strive to expand our gross margins through appropriate staffing in our stores and 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, our business is 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 Monroe's first quarter performance, strong financial position, and additional color regarding fiscal 2024. Brian?