Monro, Inc.

At this time, all participants are in a listen-only mode. Later, we will conduct a -and-answer session, and instructions will follow at that time. If anyone should require assistance during the call, please press the star 1 on your telephone phone. As a reminder, this conference call is being recorded and may be reproduced in a whole or in part without permission from the company. I would now like to introduce Felix Veskler, Vice President of Investor Relations at Monroe. Please go ahead, Felix.

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 .monroe.com forward slash investors. If I could draw your attention to the Safe Harbor Statement on slide 2, 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. Reconciliation 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, Peter Fitzsimmons.

Thank you, Felix, and thanks to everyone for joining us. Great to be here with you today. This morning, I'd like to update you on the progress we've made in the four key areas identified as opportunities for performance improvement during our initial assessment of the business, as shown on slide three of our presentation materials. As a reminder, these include closing unprofitable stores, increasing merchandising productivity, which includes mitigating tariff risk, driving profitable customer acquisition and activation, and improving our store location-based customer experience and selling effectiveness. After that, I'll briefly touch upon our fiscal first quarter results, which serve as a solid foundation to build upon as we implement our performance improvement plan to enhance Monroe's operations, drive profitability, and increase operating income and total shareholder returns. Let's start with closing unprofitable stores. During the first quarter, we successfully completed the closing of 145 underperforming stores, which included repositioning our inventory. To summarize quickly, we announced the closings on our May 28th earnings call. All of the stores were dark by the end of May. We then completed the removal of the vast majority of our inventory and IT equipment from these locations by the end of June. As a reminder, the closure of these stores will have limited impact on our total sales, but is expected to deliver meaningful improvement to our profitability. The 145 stores generated approximately 5% of our total sales in fiscal 2025, and we are likely to recapture some of the sales in other Monroe locations near the closed stores. We've now started a process to exit the real estate at these locations, which includes 40 owned stores. This process is expected to generate positive cash flow and be largely completed over the next 12 months. Importantly, and as discussed previously, this enables us to focus on improving performance in our 1,115 continuing locations for the remainder of fiscal 2026. Now, turning to performance improvement, let's first address merchandising, including mitigating tariff risk. In early June, we were very pleased to announce that Katie Chang joined Monroe as our Senior Vice President of Merchandising and will lead the merchandising team. Katie has significant experience in both the automotive aftermarket and retail, having previously served in senior roles at American Tire Distributors and the home improvement retailer Lowe's. With just two months under her belt, Katie's already making a significant impact. Together with others on the Monroe team, Katie has spent time with all of our largest vendors and tire distributors. We've had constructive discussions during which we have addressed a wide range of priorities for both Monroe and our valued suppliers, including product availability, resetting our assortment, product training in the stores, price, and go-forward marketing support. We will continue our dialogue during the remainder of the summer and expect to be well positioned with the right product to meet our customers' needs in the current fiscal year and beyond. As it relates to tariffs, our team continues to conduct fact-based negotiations with top suppliers to mitigate as much of the tariffs, actual and anticipated, as possible. We've experienced some materials cost-based and tariff-related increases. However, the impact on our first quarter was not as significant as originally anticipated. As it relates to tires, some cost increases to Monroe were offset with minimum advertised pricing adjustments to our customers, which mitigated the impact on our gross margin rate. Given continued uncertainty around where tariff increases will shake out, we will closely monitor and manage the impact on us and on our customers. Now let's turn to driving customer acquisition and activation. As previously discussed during our May earnings call, we've identified Monroe's highest value customers. As a reminder, these customers deliver significantly more profit per customer than our lowest tier of customers. They are repeat customers that visit us over a number of years, and they choose us because we provide both the tires they want and the auto aftermarket services that meet their vehicle needs. During the first quarter, we advanced our targeting efforts through marketing tests that have been conducted at a significant number of store locations. We have deployed a wide range of digital tools to reach our target audience, but we've also selectively reinvigorated local media, such as radio and direct mail. We are now implementing our refined targeting in a representative sample across several hundred stores in our chain. The full impact of a more systematic approach to traffic generation won't be felt until later this fiscal year, but when assessing markets where our approach has already been implemented, the early results are encouraging. The precision with which we are deploying this targeting may also enable us to leverage our learnings in the development of future marketing programs to reach different customers and in different markets. Finally, let's address things we are doing to improve the customer experience and selling effectiveness in our stores. Many of you have heard us talk a lot about the ConfiDrive digital courtesy inspection process. It's a tremendous tool that allows us to improve communications and educational selling to build trust as well as further solidify relationships with our customers. The progress we continue to make with ConfiDrive can clearly be seen in our first quarter results as evidenced by the sales and unit growth that we drove in our tire category and our high margin service categories, including front end shocks, brakes, batteries, and maintenance services. While we've made progress, we have opportunities to be more effective with this tool going forward. Another area in which we are systematically enhancing the customer experience is through better preparation for our customers before they even arrive at our stores. When guests schedule appointments by calling our stores, our call center, or through our online appointment system, we have opportunities to communicate with them in a variety of ways, including phone, text messages, and emails so that we can fully understand and confirm their tire and vehicle service needs prior to their store visit. We believe that consistent use of these tools will lead to a better customer experience. To accelerate the implementation of an enhanced guest experience, we've established a task force aimed at piloting potential improvements, including hands-on coaching and training in a range of locations across our store network. Now, let me briefly touch upon several key highlights of our fiscal first quarter results, which Brian will cover in more specific detail in just a few moments. Turning to slide four of our presentation materials, the Monroe team drove -single-digit comparable store sales growth in the quarter, which has enabled us to report two consecutive quarters of positive comps for the first time in a couple of years. We maintained prudent operating cost control as reflected in lower store direct costs in the quarter. We reduced inventory levels across the system by approximately $10 million, primarily as a result of reducing our store count. And our profitability on an adjusted diluted earnings per share basis was in line with our prior year first quarter. Further and encouragingly, our preliminary fiscal July comp store sales are up 2%, which would result in our sixth consecutive month of consistent comp store sales growth. To summarize, we're pleased with the progress we've made implementing the four key areas of focus identified during our initial assessment of the business, which we believe will allow us to accelerate the pace of the company's performance improvement, as well as better capitalize on positive industry trends to unlock Monroe's full potential. Our fiscal first quarter results serve as a solid foundation that we believe we can build upon to drive enhanced profitability and increased operating income and total shareholder returns in fiscal 2026. Before I hand the call over to Brian, I'd like to thank our teammates for their dedication to achieving our business objectives, as well as their commitment to our customers. And with that, I'll now turn it over to Brian, who will provide an overview of Monroe's first quarter performance, strong financial position, and some additional color regarding the remainder of fiscal 2026. Brian?