Monro, Inc.

Good morning, ladies and gentlemen, and welcome to Monroe, Inc.'s earnings conference call for the first quarter of fiscal 2027. At this time, all participants are now 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 the call, please press star zero on your touch-tone phone. 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 Veksler, 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.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 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 with you today. This morning, I'd like to start by acknowledging that this was an undeniably difficult fiscal first quarter for Monroe. The operating environment was challenging under the backdrop of extended geopolitical tensions in the Middle East, leading to higher oil prices, which impacted customer spending and traffic across our store network. We are not satisfied with these results and delivering improved performance is our top priority. That said, I want to be clear about what we're seeing beneath the surface. While the macro pressures on the consumer are real and significant, the operational improvements we've been implementing are gaining traction. We're building capabilities that are fundamentally changing how we serve customers How we deploy our resources and how we manage our business. These are structural improvements that position us to capture market share and drive profitability as conditions normalize. Since completing our store closure program over a year ago, we've been laser focused on the three remaining performance improvement initiatives, which are driving profitable customer acquisition and activation, improving our store-based customer experience and selling effectiveness, and increasing merchandising productivity, including mitigating the impacts of trade and supply disruptions. Each of these initiatives showed measurable progress during the quarter, even as the top-line environment remained under pressure. We're making the right investments, building the right capabilities, and positioning Monroe to emerge stronger when consumer spending stabilizes. We believe that the work we're doing now is further solidifying the foundation for sustainable, profitable growth. In a moment, I'll walk you through the specific progress we've made in each of these three areas. Then, I'll provide some context on our first quarter results and what we're seeing in the current environment as we execute our performance improvement plan to enhance operations, drive profitability, and increase total shareholder returns. Let's start with driving customer acquisition and activation on slide three. During the first quarter, we continued to strengthen our marketing capabilities by refining how we allocate media, customer outreach and promotional investments across our store network. We are increasingly tailoring our approach to the needs of individual markets, allowing us to deploy our marketing investments more effectively while supporting both guest acquisition and customer retention. Within our CRM platform, we continue to enhance our AI and machine learning capabilities to help determine the most relevant timing, messaging, and promotional offers to our existing customers. These ongoing refinements have improved the efficiency of our customer outreach and contributed to stronger campaign response rates. We also continued to evolve our promotional strategy through the expansion of specific marketing offers to the consumer to drive incremental traffic. One focus in the first quarter was the enhanced use of our CRM to drive incremental traffic of existing customers through specific offers for high volume services including oil changes and tire replacements. With regards to our digital marketing investment, we also expanded the use of pay-per-click to drive traffic in districts and regions where our analysis indicated that potential customers had an in-market need for some of our products and services. We also worked in close collaboration with our tire vendors on the development of promotional programs to meet specific customer needs in all tier tiers given the current environment. Collectively, these efforts are helping us deliver more relevant value to our guests while strengthening the data and capabilities that support more informed marketing decisions. They also provide greater insight into where and how our marketing investments can have the greatest impact. On previous earnings calls, Many of you have heard us talk about optimizing our marketing spend. During the spring, we continued to refine our process and, as a result, have redirected advertising dollars to customer profiles in different regions of our store network to address both near and longer-term business needs. Our goals are to ensure that we get the most out of our marketing spend by giving certain types of customers motivation to visit us now which we believe will allow us to add incremental sales. Now let's discuss the things we are doing to improve the customer experience and selling effectiveness in our stores. Our Confidrive inspection tool remains the cornerstone of our customer experience transformation. With each quarter, our team becomes increasingly skilled at conducting the inspection more efficiently and in presenting the results of our findings so that our customers can better understand their vehicle needs. We also intensified our training efforts with technicians to guarantee both the completion and accuracy of these critical inspections. Our goal is to help our guests identify and prioritize what they need to do to keep their vehicles safe. Our confi-drive process is designed to build trust with our customers through a quality diagnostic supported with pictures to truly show areas that require attention. Safety, trust, and confidence on the road is what we want to deliver for our customers. This transparency isn't just about building trust. It's about fundamentally changing how customers perceive automotive service. When customers can understand exactly what we're seeing through detailed visual documentation, it eliminates the skepticism that has historically plagued our industry. Additionally, on our previous earnings call in May, we talked about the recent rollout of our enhanced district manager toolkit, which has enabled us to address suboptimal operating performance through a focus on gross margin opportunities at about 150 underperforming locations. Utilizing both the results as well as our learnings from the first 150 stores, we've now expanded the rollout of this toolkit to approximately 340 locations and broadened our scope from gross margins to overall store profit improvement opportunities. We continue to be encouraged by the profit improvement we've seen in some of these store locations. We expect this process to improve store profitability across the network as we roll this initiative out further. Now let's turn to merchandising, including mitigating the impacts of trade and supply disruptions. After the reset of our tire assortment in the fourth quarter of fiscal 2026, with the support of our vendors, we delivered a more attractive assortment to the consumer in the current environment. We succeeded in two important ways. In the first quarter, We believe that our updated tire assortment in Tier 1 helped us gain market share versus the industry in this higher margin tier. This comes at a time when some consumers also migrated to lower tier tire products. And in Tier 4, we believe that our decision to add an opening price point tire enabled us to provide our most price conscious customers with a better set of options. As it relates to parts and service, we saw year-over-year comparable store sales growth in batteries, alignments, and front-end shops. While the use of our confi-drive inspection tools certainly helped us to better educate our customers on their vehicle needs, we believe the improvements we've implemented in both our in-store stocking programs as well as our front-of-shop presentation enabled us to drive 8% growth in our battery comps in the quarter. and as it relates to trade, our supply has been largely uninterrupted by the extended geopolitical tensions in the Middle East, at least so far. We continue to partner with our vendors to understand and manage costs in what continues to be a dynamic environment. We expect to continue to strike the right balance between potential pricing adjustments to protect gross margins while also remaining competitive and delivering value to our customers. Now let me briefly touch on 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, our first quarter comparable store sales declined 1.7%. This reflects an operating environment which continued to challenge the full service auto aftermarket during the quarter. Our comp store sales decline was driven by lower store traffic as well as consumers that continued to defer higher ticket spending decisions in tires and brakes and traded down to lower cost alternatives in our tire category. However, and importantly, in an environment where traffic was down and consumers were cautious, we were able to hold our tire unit volumes flat, and we believe this allowed us to take market share both in our Tier 1 tires as well as in our overall tire category. We believe that this is a direct result of our promotional effectiveness and the timely expansion of our Tier 4 tire offerings, which allowed us to meet the needs of our customers across the price spectrum. And while traffic and sales were under pressure, the effectiveness of our confi-drive courtesy inspection process helped us drive average repair order growth in this quarter. This was driven by meaningful improvements in certain of our higher margin service categories, including batteries, alignments, and front end shocks. This performance reinforces that we continue to deliver genuine value to our full service customers. We're not just a tire shop. We're a comprehensive vehicle service provider and customers are responding to our value proposition, even in a difficult spending environment. Importantly, we maintained our marketing investment during the quarter, despite the sales headwinds we faced. When traffic is down and sales are under pressure, there's an obvious temptation to pull back on marketing spend to protect margins in the short term. We deliberately chose not to do that. We continued investing in customer acquisition, in CRM campaigns, in promotional programs, and in building our marketing capabilities. Here's our reasoning. The capabilities we're building in marketing and customer acquisition are critical to our long-term growth trajectory. The market share opportunities in front of us require sustained investment and consistent presence in the market. If we pull back when conditions are challenging, We risk losing momentum in customer acquisition, we risk ceding market share to competitors who maintain their investment, and we risk undermining the progress we've made in building a more sophisticated marketing engine. We're playing a longer game here, and that requires maintaining investment even when the immediate return is pressured by macro headwinds. And while our preliminary July comp store sales are down approximately 1%, as certain consumers continue to feel increased pocketbook pressure as a result of recent increases in gas prices as well as other related costs. We believe that the operational progress we've made is building the foundation for improved performance as consumer spending stabilizes. We're not satisfied with where we are, but we remain confident in the direction we're heading and the capabilities we're building to get there. Before I hand the call over to Brian, I'd like to take a moment to once again thank all of our teammates for their commitment to meeting the service needs of our customers across 1,115 stores in 32 states and for their dedication to achieving our business objectives. And with that, I'll now turn it over to Brian who will provide an overview of Monroe's first quarter performance, Financial Position, and additional color regarding the remainder of fiscal 2027. Brian?