Monro, Inc.

and full year fiscal 2024. At this time, all participants are in a listen-only mode. Later, we'll conduct a question and answer section, and instructions will follow at that time. If anyone should require assistance during the 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. I would now like to introduce Felix Wechsler, 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 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 monroe's president and chief executive officer michael broderick thank you felix and good morning everyone i'd like to spend the first part of our call this morning discussing the longer term durability of our business within the broader auto aftermarket tire and services space then i'll talk about current tire dynamics as well as the actions we've taken to navigate an industry-wide deferral and trade down cycle that has lasted longer than most in our industry would have expected. After that, I'll introduce four initiatives we've recently implemented to offset weakness in the tire market. I'll conclude my comments today with the foundational progress we've made that will enable Monroe to reap benefits when tire volumes recover. Starting with the longer term durability of our business. First, we are positioned as one of the leading players in our highly fragmented industry. At approximately 1,300 stores in 32 states, we have significant scale that gives us important competitive advantages over smaller players in our industry. We leverage this scale and the strength of our financial position to make critical investments in our business, our people, and technology to deliver an outstanding guest experience. Second, the fundamentals of the industry remain strong, as shown on slide three. These fundamentals include an overall growing trend of more than 280 million vehicles in operation. Vehicle miles traveled that have recovered to pre-COVID levels and an average vehicle age of more than 12 years that continues to increase. Further, on slide four, an increase in the complexity of vehicles continues to drive a shift from do-it-yourself to do-it-for-me. with future technology advances expected to accelerate the shift to do it for me. Third, while the non-discretionary nature of our products and services may result in consumers deferring purchases or trading down, they cannot eliminate these purchases altogether. And finally, we have an experienced management team that is keenly focused on maximizing efficiencies, including costs, to protect margins during what we believe to be a temporary period of challenges to our top line. All of this gives us confidence that Monroe is well positioned to withstand the current downturn and poise for long-term success. Now onto the current tire dynamics as well as the actions we've taken to navigate. Turning to slide five, tires are providing a temporary yet meaningful negative impact given that they represent around 50% of our overall business. Strained low to middle income consumers are deferring tire purchases in higher margin tiers and disproportionately trading down to tires at opening price points. This is being supported by an oversupply of lower margin tires in the US. Additionally, milder weather has contributed to the general tire deferral cycle. The overall impact of this is fewer US tire replacement units being sold at a lower overall average selling price. This has led to pressured store traffic for us, which is not supportive to attachment of our higher margin service categories. We are navigating the tire situation by leveraging the strength of our manufacturer-funded promotions, which has allowed us to optimize our assortment for improved tire profitability with a higher average selling price per tire. Encouragingly, based on retail sellout data from Torqueda, a subsidiary of ATD, our tire market shares remain broadly in line with the overall market in our higher margin tiers. We are also responding to continued consumer trade-down dynamics by accelerating our proportion of opening price point tires. If consumer continues to stay value-oriented and our tire manufacturers don't meet our expectations with a step up in their support quickly, we are prepared to continue to meet our customers where they are by further increasing our tire mix at opening price points. Next, we recently implemented four initiatives to offset weakness in the tire market. Turning to slide six, the first is an investment we've made in our stores to convert our 32-point courtesy inspection from a paper-based process to a digital, tablet-based system that presents other needed services to our customers via industry data and pictures. This gives our store teams greater ability to build engagement and trust with our guests, which supports additional service attachment. This also supports the marketing back of any declined work for future visits. It also allows us to capture more structured data on the vehicles that we see and gives us more control over a key in-store process. We have now completed the rollout to all of our stores, and we are pleased with early results. We'll be sure to update you on the progress of our digital courtesy inspections in the future. The second is a service coupon where we are offering customers a $50 rebate toward the purchase of additional services with the purchase of one set of brake pads or rotors. With new pads and rotors on both axles, Customers can earn up to $200 in coupons that can be applied to any additional purchase of services or tires. The goal of this promotion is to increase service attachment and add value for our customers. The third is a buy three tires, get one free promotion we've been running with the help of three of our tire suppliers, which allows us to sell better quality tires to a value-oriented consumer. The fourth is an oil change offer that was developed as part of our renewed partnership with Valvoline, where our customers can earn cash back on an oil change. Now, concluding with the foundational progress we've made that will enable Monroe to benefit when tire volumes recover. Turning to slide seven, despite a deferral and trade down cycle that has lasted longer than most would have expected, we've expanded our gross margins through tire mix optimization, labor optimization through actions to reduce non-productive labor costs including overtime in our stores and labor efficiency through productivity improvements including scheduling training and our attachment selling initiatives we will continue to remain relentlessly focused on improving our 300 smaller underperforming stores maintaining a balanced approach between tire and service categories with competitive pricing to drive store traffic and continuously improving our customer experience. In addition, our efforts to optimize inventories by leveraging strong vendor partnerships is resulting in better availability, quality, and cost of parts and tires in our stores. It has improved our cash conversion cycle through inventory management and extended payment terms. Our solid financial position, including operating cash flow generation, and a strong balance sheet supports capital return to shareholders through a healthy dividend program. We have positioned the business for a return to earnings growth when we're able to achieve flat tire units with appropriate attachments on service categories. In closing, our business has long-term durability, and while tires are providing a temporary negative impact, we are navigating the situation well with our actions. We have implemented initiatives to offset weakness in the tire market And we have made foundational progress that will enable Monroe to benefit when tire volumes recover. 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. Before I turn the call over to Brian, I'd like to recognize and thank all of our teammates for their efforts in serving the needs of our customers. And with that, I'll now turn it over to Brian, who will provide an overview of Monroe's fourth quarter performance, strong financial position, and additional color regarding fiscal 2025.