Monro, Inc.

please press star followed by zero on your touch-tone 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, Vice President 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 dot Monroe dot 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. Reconciliations of such supplemental information to the comparable GAAP measures are 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 continued progress we are making at Monroe. As we have on our prior quarterly calls, I will focus on the four key areas identified as opportunities for performance improvement, which are shown on slide three of our presentation materials. These include driving profitable customer acquisition and activation, improving our store-based customer experience and selling effectiveness, increasing merchandising productivity, which include mitigating tariff risk and continuing to work on real estate disposition related to the previous closure of 145 underperforming stores. After that, I'll briefly touch upon our fiscal second quarter results, which serve as a solid foundation to build upon as we continue to implement our performance improvement plan to enhance Monroe's operations, drive profitability, and increase adjusted operating income and total shareholder returns. Let's start with driving customer acquisition and activation. As previously discussed during our last two earnings calls, we've identified Monroe's highest value customers. As a reminder, these customers deliver significantly more profit per customer than the lowest tier of customers. They are repeat purchasers 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 second quarter, we continued to advance our acquisition marketing efforts through the deployment of a wide range of digital marketing tools to reach our target audience. We have increasingly activated our customer relationship management marketing to speak to our existing customers. Integrated into our marketing activities is the completion of a customer segmentation analysis that is helping to augment our marketing efforts with further granularity on higher value existing customers and potential customers, those who are expected to generate significantly more revenue and gross margin dollars than the average Monroe guest. We have now ramped our refined targeting to almost 600 stores. And we are encouraged to see that these stores are outperforming the balance of our store chain on several key metrics, such as call volumes, store traffic, sales, and gross profit dollar generation. And while we won't necessarily expand our marketing efforts to all stores, we do plan to ramp up and scale these efforts by the end of December. In early September, we were pleased to strengthen our marketing team with the hiring of a new leader. Tim Farrell as our Vice President of Marketing. Tim has extensive experience driving growth for multi-location businesses, including Valvoline and Sun Auto Tire and Service, with a focus on media strategy and targeting, brand positioning and messaging, digital marketing, lead generation, and conversion rate optimization. In two months, Tim has made meaningful enhancements to our marketing strategy and execution. Now let's discuss the things we are doing to improve the customer experience and selling effectiveness in the stores. During the second quarter, we further emphasized our digital courtesy inspection tool, Confidrive, to more effectively present pictures of needed vehicle maintenance and repairs to our guests during their visit to the stores. As part of improving our store operations, we've also built a periodic review process of key data coming out of Confidrive at the local level. As a reminder, we have a centralized call center that our customers call to schedule an appointment with us. This allows our store managers to focus more of their time on in-store activities without having the burden of answering each and every call that comes in. In the more than 700 stores where our Customer Call Center has already been implemented, we're encouraged to see that these stores are outperforming the balance of our store chain on key metrics, such as sales and gross profit dollar generation. We plan to expand the rollout of our Customer Call Center to all of our stores by early November. During the quarter, we also completed a field realignment to right-size and streamline our field management following the closure of the 145 underperforming stores. While this resulted in an overall reduction of district managers, it has also resulted in an overall increase in the quality of district managers across our chain. Finally, and importantly, we've also introduced a new district manager toolkit, which we believe will allow our district managers to better understand the input metrics and levers that drive store level sales, attachments, and gross margins. Now let's turn to merchandising, including mitigating tariff risk. We continue to work closely with our tire vendors to align on go-forward assortment opportunities that drive incremental sales for both parties. And we are now in the process of developing an updated tire assortment strategy that will resonate with our guests and position both Monroe and our strategic supplier partners for growth. We are encouraged by the level of vendor support we are receiving on all tire tiers, as well as with the enthusiasm of our suppliers to work with us. One area in which we have received additional support from vendors is with our fall promotions, which have helped us accelerate the sellout of tire inventory. We are also implementing new analytical tools for demand and inventory forecasting, as well as for pricing. These tools will enable us to run a more dynamic sales and operations planning process and ensure our price positioning is appropriately competitive while maximizing margins. As a complement to these tools, during the second quarter, we augmented the capabilities of our existing merchandising team with the addition of two new colleagues who are helping to lead tire acquisition and product and service pricing. We continue to carefully manage the impact of tariffs on our overall product acquisition cost and on our market pricing. We are also actively monitoring the impact of tariffs and other market conditions on actual and potential changes in tire mix as well as potential customer vehicle maintenance deferrals. Generally, we have been able to balance cost and price adjustments to enable us to maintain solid margins. And finally, just to provide an update on closed store real estate disposition. After having successfully completed the closure of 145 underperforming stores and repositioning our inventory in the first quarter, we started a process to exit the real estate at these locations, which includes 40 stores that we own. During the second quarter, we exited 21 leases and sold three owned locations. which resulted in proceeds of $5.5 million. As a reminder, this process is expected to generate positive cash flow and be largely completed during the next few quarters. Importantly, and as discussed previously, this enables us to focus on improving performance in our continuing locations for the remainder of fiscal 2026. Now let me briefly touch upon several key highlights of our fiscal second 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 comparable store sales growth again in the quarter, which has enabled us to report three consecutive quarters of positive comps for the first time in a couple of years. Further, our business generated 21 cents of adjusted diluted earnings per share which exceeded 17 cents of adjusted diluted EPS in the prior year second quarter. We achieved this through solid gross margin performance with a gross margin rate that expanded 40 basis points to 35.7% and prudent operating cost control as reflected in lower store direct costs and good corporate expense control. Further, for the second quarter in a row, we reduced inventory levels across the system, this time by approximately $11 million, which reflects improved inventory management. And while we have seen some recent softness in consumer demand, which is reflected in preliminary October comps that are down 2%, we expect to deliver positive comp store sales in fiscal 2026, And we have a variety of levers to pull that we believe will enable us to achieve meaningfully higher year over year adjusted operating income. To summarize, we continue to be pleased with the progress we've made implementing our four key areas of focus, 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 second quarter results serve as an indication of continued progress toward building enhanced profitability in fiscal 2026. Before I hand the call over to Brian, I would like again to thank our teammates for their dedication to achieving our business goals, as well as their commitment to serving our customers. And with that, I'll now turn it over to Brian, who will provide an overview of Monroe's second quarter performance strong financial position, and additional color regarding the remainder of fiscal 2026. Brian?

Thank you, Peter, and good morning, everyone. Turning to slide 5, sales decreased 4.1% to $288.9 million in the second quarter. This was primarily driven by a reduction in sales from the closure of 145 underperforming stores in the first quarter of fiscal 2026. partially offset by a 1.1% increase in comparable store sales from continuing store locations. For reference, comp sales were up 2% in July, up 3% in August, and we exited the quarter down 2% in September. And while tire units were down mid-single digits, we believe we outperformed the industry in the quarter. Gross margin increased 40 basis points compared to the prior year, This primarily resulted from lower occupancy costs and lower material costs as a percentage of sales. These were partially offset by higher technician labor costs as a percentage of sales, mostly due to wage inflation. Total operating expenses were $90.4 million or 31.3% of sales as compared to $93.2 million or 30.9% of sales in the prior year period. Importantly, The increase as a percentage of sales was affected by $8.3M of costs incurred in connection with consultants related to our operational improvement plan, partially offset by $7.6M of net gains from closed-store real estate dispositions. The second quarter of the prior year also included $2.8M of net gain on the sale of our corporate headquarters. Operating income for the second quarter was $12.8 million, or 4.4% of sales. This is compared to operating income of $13.2 million, or 4.4% of sales in the prior year period. Adjusted operating income, a non-GAAP measure, for the second quarter was $14 million, or 4.8% of sales, as compared to $12.6 million, or 4.2% of sales in the prior year period. Net interest expense decreased to $4.4 million as compared to $5.1 million in the same period last year. This was principally due to a decrease in weighted average debt. Income tax expense was $2.8 million, or an effective tax rate of 32.9%, which is compared to income tax expense of $2.5 million, or an effective tax rate of 30.9% in the prior year period. The year-over-year difference in effective tax rate is primarily related to the discrete tax impact related to share-based awards and other adjustments, none of which are significant. Net income was $5.7 million as compared to net income of $5.6 million in the same period last year. Diluted earnings per share was 18 cents. This is compared to diluted earnings per share of 18 cents for the same period last year. Adjusted diluted earnings per share, a non-GAAP measure, was 21 cents. This is compared to adjusted diluted earnings per share of 17 cents in the second quarter of fiscal 2025. Please refer to our reconciliation of adjusted operating income, adjusted net income, and adjusted diluted EPS in this morning's earnings press release and on slides 9, 10, and 11 in the appendix to our earnings presentation for further details regarding excluded items in the second quarter of both fiscal years. As highlighted on slide six, we continue to maintain a strong financial position. We generated $30 million of cash from operations during the first half of fiscal 2026. Our AP to inventory ratio was a 186% at the end of the second quarter versus 177% at the end of fiscal 2025. We received $7 million from the disposal of property and equipment and $3 million in divestiture proceeds, invested $13 million in capital expenditures, spent $19 million in principal payments for financing leases, and distributed $17 million in dividends. At the end of the second quarter, we had net bank debt of $50 million, availability under our credit facility of approximately $410 million, and cash and equivalents of approximately $10 million. Now, turning to our expectations for the full year of fiscal 2026 on slide 7. We continue to expect to deliver year-over-year comparable store sales growth in fiscal 2026, primarily driven by our improvement plan, as well as any tariff-related price adjustments to our customers. We continue to expect that the results of our store optimization plan will reduce total sales by approximately $45 million in fiscal 2026. Given baseline cost inflation, as well as our exposure to tariff-related cost increases, we expect that our gross margin for the full year of fiscal 2026 will be consistent with fiscal 2025. We continue to expect to partially offset some of this baseline cost inflation, as well as some of the tariff-related cost increases with benefits from our store closures and operational improvements from our improvement plan. We believe this will allow us to deliver a year-over-year improvement and our adjusted diluted earnings per share in fiscal 2026. We continue to expect to generate sufficient operating cash flow that will allow us to maintain a strong financial position and to fund all of our capital allocation priorities, including our dividend during fiscal 2026. Regarding our capital expenditures, we continue to expect to spend $25 million to $35 million. And with that, I will now turn the call back over to Peter for some closing remarks.

Thanks, Brian. As previously indicated, through our national retail network, economies of scale, and durable business model, we believe we can both provide our customers with the services they need and generate meaningful value for our shareholders in any economic environment. We have a compelling set of consumer offerings and more than 6,000 talented teammates. Our balance sheet is strong and our business generates healthy cash flow. We remain encouraged by the progress we've made, and we are keenly focused on executing our plan to improve operations, drive incremental profit, and enhance total shareholder returns in fiscal 2026. With that, I will now turn it over to the operator for questions.

Thank you. To ask a question, please press star followed by 1 on your telephone keypad now. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your device is unmuted locally. Please note that we request you ask one question and limit to one or two follow-up questions. Our first question comes from Brett Jordan from Jefferies. Your line is now open. Please go ahead.

Yes. Could you talk about within the comp the price contribution versus car accounts, and I guess what are you expecting a lot of noise around tariffs.

Why doesn't Brian take the comp, and then why don't I expand a little bit on our thoughts there?

Yeah, Brett, in the quarter, we were down mid-single digits in traffic, up mid-single digits in ticket, netting out to the up one overall comp.

So just a couple comments from me on the comps. Remember that in the second quarter, we were up 1.1%, so it's the third consecutive quarter quarter of positive comps. And I think we did see some consumer demand softness in September and October. But I would say from experience in performance improvement assignments, working with aftermarket and retail companies, you usually expect some unevenness in comp store sales. And the things that we've been doing in the last four months to implement the digital marketing in half our stores now, which ramped up steadily through the second quarter and still hasn't touched more than half of our stores, makes us think that in the next couple of quarters, we're going to see some real benefits from our marketing efforts. And I would say same for the efforts in improving performance in the stores. So we remain pretty comfortable that we're going to see positive comps for the fiscal year.

Okay. And a question on working capital. Obviously, you benefit from the payables program, and there's been a lot of noise around that recently. Have you seen any changes as far as the risk spread that is being expected by the banks participating in your working capital program?

Nothing related to the risk spread. We did have a pricing adjustment back when we did our amendment to the credit facility. for this period of time over the next five quarters. Our current spread is 225 basis points over SOFR. That's reflected in our supply chain finance facility, but no changes outside of that change.

Okay, so nothing recently with all the noise around a particular event?

No, none at all.

Okay, great. Thank you. Thanks, Brett.

Thanks. Thank you. Our next question comes from Thomas Wendla from Stevens. Your line is now open. Please go ahead.

Hey, good morning, everyone. Hi, Tom. Morning. Hey, we saw some nice improvement in gross margins this quarter. The expectation is kind of flat, gross margins year over year now. Just digging into the 50 bps improvement from material costs, can you maybe speak to the drivers there? What kind of wins are you seeing with vendors? How is this kind of being impacted by changing product assortment?

Yeah, I'll take the overall gross margin question and let Peter answer any color that he wants to add on the vendor question. As you said, gross margins increased 40 basis points in the quarter. That was driven 70 basis point improvement with higher comp sales and benefit from store closures that improved our occupancy costs as a percent of sales. Material cost was 50 basis points improvement as a percent of sales. And that is primarily due to better service category margins that we saw in the quarter. And then partially offsetting those was an 80 bps increase in tech pay as it relates to wage inflation year over year. As we look out for the rest of the year regarding gross margin expectations, we expect gross margin for the full year, as you said, to be consistent with 2025. And importantly, this means that we expect higher gross margins in the second half of 26 compared to the prior year period. All of this dependent on comp sales levels, of course, and our ability to continue to manage price adjustments with our cost increases, both for material and labor. And we continue to expect to see a benefit from our store closures in the second half as it affects gross margin.

And Tom, maybe a couple of comments on vendors. One of the great things about our particular business is we have 8 to 12 vendors that matter, and we have good relationships with all of them, tires and parts. The vendors are happy about the things that they've heard from us, and they really like the things that we're doing with our marketing program. So in the second quarter, together with the strengthening of our merchandising department with the joining of Katie Chang, we've gotten more marketing support from more vendors for the things that we're putting into place. So I think we're gonna continue to feel pretty good about the marketing support we get from all of our vendors.

Perfect, thank you. And then you mentioned some softness in the consumer you were seeing. Is there any kind of distinct consumer that's having some more troubles than others? Are you guys seeing any more trade downs? Are you still drawing the line at Tier 3 tires?

I think that the lower income consumer is probably feeling a fair amount of pressure right now. I think it's reflected in what you read in the papers and see elsewhere. But I want to remind everybody that what we offer is a service that's non-discretionary and that everybody needs. We have... customers at all economic levels, and we have products for everyone that wants to shop at our stores. So I think that over time, the services that we're providing are going to enable us to capture good market share and comp store growth, as we've said before, in any economy.

Perfect. I appreciate the color, guys. Thank you.

Thank you. Our next question comes from David Lance from Wells Fargo. Your line is now open, David. Please go ahead.

Hey, guys. Good morning, and thanks for taking my questions. I guess tire units declined mid-single digits in the quarter, so curious how you're thinking about the overall tire backdrop as we enter peak selling season here over the next couple months.

Yeah, I think as we're looking at tire units, we're encouraged by what we believe is relative outperformance to the industry. A lot of the dynamics that have been in place regarding tires are still in place, being a high ticket category. It is an area of sensitivity for our consumers and customers' wallets. As we look forward, we believe, as Peter just said, that even in a tough backdrop, which we clearly think that we're in relative to the consumer, We're doing a lot of things that are going to move the needle for us in terms of units and overall tire sales, which is obviously 50% of our overall sales. And that's really driven by the marketing, merchandising, and in-store execution that Peter talked about in his prepared remarks. So we feel that we've got a lot of momentum as we're scaling those initiatives into the back half of this year. and think that that helps to support our business against that soft macro backdrop.

Welcome to another question. I think Brian answered it well.

Perfect. Yeah. So I guess the next one would be just expectations on OSG&A for the second half, considering softer comps in September and October, and if there's been any change to the expectation that that should be flat on a dollar basis.

Yeah, great question. So we talked about in our remarks, we've demonstrated good cost control in the quarter. SG&A was $2.8 million lower than the prior year quarter. And if you adjust for non-operating items, such as our net store closing costs or impairment charges, consulting costs related to the operational improvement plan, we were actually $4.7 million lower than the prior year in Q2. and the decrease largely being driven by the reduction in SG&A for the store closures. So regarding our expectations for all of 2026, we continue to control expenses, but we do expect to further invest in our marketing initiatives, which will partially offset the savings that we did see in Q2 from the store closures. So as such, we expect G&A in Q3 and Q4, excluding any of the non-operating items, to be running above where we were in Q2 and closer to that flat compared to prior year, not necessarily running consistent with what we just saw in this past quarter.

Hey, David, I want to go back to your question about tires for just a second as I reflect on that. One of the things that we did in September was promote on the website and in the dropdowns that we have tires for everyone. And as I mentioned just a few minutes ago, we've had excellent support from all of our tire vendors. I think as we move into, to your good point, the selling season as the weather turns cold in the north, we've got the right tires for everybody. And I think having the right Tier 1, Tier 2, Tier 3, and Tier 4 tire is going to matter in increasing our ability to sell units in the next couple of quarters. So we feel good about where our tire positioning is, and we emphasize that we have tires for everyone in the promotions in the fall. Back to you.

Thank you. Our next question comes from Brian Nagel. Your line is now open. Please go ahead.

Hey, guys. Good morning. brian the first question i want to ask hey the first question i want to ask and i apologize it's repetitive but just looking at the trajectory in cops so here you stayed positive in the current in the quarter weeks reported but it was moderated from you know basically mid single digit type games you know a couple of quarters ago but as you mentioned i mean there's you know there's pressures on the consumer that's well documented i mean is there a better way to explain what's happening here i mean how much of that how much of that deceleration is a tougher environment versus maybe something more internal at Monroe?

I think it's a pause in the market, to be honest with you. And I think that the value that we're going to get from the incremental marketing and the store performance initiatives is going to show up in this quarter. Time will tell, but I don't think that there's anything in any of the data that we've seen as we've implemented more digital marketing and more stores that suggest we're not going to get positive growth going forward. For example, in every single tranche of stores that we've added, and we started adding stores to digital marketing in July and increased it 100 to 150 stores a month, we've seen positive calls compared to the rest of the chain, positive comp store sales across the board. Every time we've added more stores to the mix, and positive gross margin dollars. So for every dollar of advertising investment, we're getting more than that back in gross margin dollars. One of the reasons that you're seeing pretty positive results in our gross margin rate. And if you think about where we are at the moment, in the second quarter, we were probably a quarter to a third in terms of marketing support. That's gonna change. further in the next couple of months. As we said early on, we're going to add more stores to digital marketing effort. Final thing I would mention that encourages us about our ability to generate incremental comp store sales positive is we have focused our efforts on the digital marketing in the second quarter. And now we're adding another 350 stores to our call center. So we will have more stores in the call center in another week. and we'll have more stores that are supported with digital marketing. All of the data dating back to the summer says, as you do these things, comp store sales increase.

That's very helpful. Thank you. I guess my follow-up is somewhat related. So you started your prepared comments talking about, I think, what you referred to as kind of high-value customers, and then I think you referred to better-performing stores within the, you know, the Monroe network. So the question I have is if you, is there a way to quantify, you know, to the extent that those customers, those stores are some type of roadmap for the total companies. Can you quantify the outperformance, the sales or comp outperformance of those cohorts versus the chain?

So I don't want to say too much about this for competitive reasons, but one of the things that we've done in the last three months is a customer segmentation that's very revealing. It further supports our view that a minority of our current customers are really, really good customers, and they're customers that I would describe as value-oriented. They're looking for a bundle of services, not just tires, not just oil changes, but a number of things. And so one of the things we're doing with our content in marketing is reaching out to those customers and potential customers. So now not only in customer acquisition, but also in CRM to reach back to our good customers from the past. And we are offering those bundles of services that we think all the data says they're interested in. Another important segment is a wealthier, newer vehicle owner. And those folks want good service. And so in the content that we're providing there online, we're appealing as a trusted advisor to that type of customer. And so the customer segmentation now enables us to share different types of messages with the customers depending on what their needs are. Again, I don't want to go on too much about this. We're still developing the customer segmentation, but our advertising is now reflecting what we've learned.

Much appreciated. Thanks. You bet.

Thank you. Our next question comes from John Healy from North Coast Research. Your line is now open. Please go ahead.

Thanks for the question. Peter, can you put your consulting hat on a little bit here? maybe help us understand how you get to the conclusion that, you know, things are slowing down kind of across the industry. I mean, there's a lot of mixed data points. We don't see kind of negative same store sales at the parts and service side on the franchise dealers. And I, and I get that the mix and the repair work is different, but would love to see how you benchmark Monroe, what you benchmark it to, and, you know, maybe any sort of data series or just, um, opinions on kind of how you would look at it from a consulting lens to kind of evaluate the comp performance kind of year to date.

Thanks. Sure. Well, one of the things I love about Monroe is it's a service business. It provides tires and it provides parts, and the parts have to be attached in all of our locations. And so the skill of our technicians really is part of the value that the customer sees. Again and again, when we talk to customers and our own labor, we hear that. So I would compare us less to the part sellers and more to other service providers. And there aren't a whole lot of public comps that match up exactly with us. That's one thing that's frustrated me a little bit when people look at the market and say, oh, you compare well to this particular set. We're a little bit different. We're just more of a service business than we are a retailer. But it's the combination of those things that really drives what we can deliver to the customer. And another thing I just want to emphasize is we have scale across the country with 1,116 stores that enables us to provide services on a local level that are needed. So think of us more as a service business than a part seller. It's a real difference.

The only thing I would add there, John, is we on the tire side, we have syndicated data that we subscribe to. A couple of different sources for us and some publicly available, some more proprietary. But our comparisons on the tire side are against that data set. On the service side, as Peter said, there's a lot less transparency there for us to be able to compare against. But highlighting the fact that we did have significant outperformance in a couple of our large service categories, including breaks and front-end shocks in the quarter, we feel pretty good. And we talked earlier in the margin commentary that those also drove some of the margin outperformance in the quarter as well.

Got it. And then just one question on cash flow and kind of capital allocation. Any thoughts on just kind of any perspective you could provide on just the safety of the dividend here? I think you guys paid out with 17 million kind of year to date, but not sure we're tracking there on a kind of an earnings basis to this point this year. So just your ability and willingness to keep the dividend maybe ahead of what potentially could be just the underlying earnings of the company.

Yeah, when we look at the dividend, we're looking at our ability to fund the dividend as well as all of our capital allocation priorities. including our scheduled debt repayments on finance leases, our CapEx program, investing in our business, and of course, maintaining a conservative balance sheet in this operating environment. And our cash flows support all of our capital allocation priorities. And we believe that to be true for the balance of FY26 and beyond that. So, you know, we don't view it as much on a net payout ratio against income because we generate a lot of cash flow relative to our net income. So that payout ratio still makes sense to us. Understood. Thank you. You're welcome. Thanks very much.

Thank you. As a reminder, to ask a question, please press star followed by 1 on your telephone keypad now. We currently have no further questions, so I'll hand back to Peter for any closing remarks.

Thanks, Claire. And thanks again, everyone, for joining us today. I'm optimistic about the opportunities in front of us, and I believe Monroe is well positioned to capitalize on positive industry trends as we focus on driving profitable growth. Having said this, we still have a lot of work to do. But with our recent progress, we now have a stronger foundation to create long-term value for all shareholders. I look forward to keeping you updated on progress in the quarters to come. Have a great day.

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