Q4 2021 Monro Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to my role Inc, earning.
Earnings Conference call for the fourth quarter and full year fiscal 2021.
At this time all participants are in a listen only mode.
Later, we will conduct a question and answer session and instructions will be given at that time.
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As a reminder, ladies and gentlemen, this conference call is being recorded.
It may not be reproduced in whole or in part without permission from the company.
I would now like to introduce MS. Maureen Mulholland Executive Vice President and Chief Legal Officer at Monro. 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 investors section of our website at corporate Dot Monroe dotcom forward slash investors forwards.
Slash Investor Hyphen resources.
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 and include the significant uncertainty relating to the duration and scope of the COVID-19 pandemic and its impact on our customers' executive officers and employees.
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's statements include a discussion of certain non-GAAP financial measures, which are intended to supplement and not to be substitutes for comparable GAAP measures rec.
Reconciliations of such supplemental information to the comparable GAAP measures will be included as part of today's presentation and in our earnings release.
Rob Miller Monro as Board Chairman, Mike Broderick, President and Chief Executive Officer, and Brian <unk>, Chief Financial Officer are joining us today.
For the question and answer portion of the call our Chief operating Officer, Robert Koski will also be available to take questions.
With that I'd like to turn the call over to Rob Miller Rob.
Thank you Maureen and good morning, everyone today I'm pleased to formally.
Welcome and announce Mike Broderick, our new President and CEO joined Monroe at the beginning of April.
Mike knows this industry well, having spent his entire career in the automotive aftermarket.
Over the past 2 decades, Mike has led the development and Inc.
Execution.
Business transformation strategies that have led to profitable growth in the organizations. He has served and we could not be more excited to leverage his extensive background and experience to position Monroe for greater sustainable growth.
I also want to acknowledge our senior leadership team.
For their great work and incredible partnership throughout my time as interim CEO.
During a challenging year.
Our significant accomplishments were made possible due to the strong collaboration of the entire leadership team.
Going forward I will continue to serve as chairman of the board and look forward to assisting.
The transition.
And with that I'd like to turn the call over to Mike.
Thank you Rob and good morning, everyone. It's an honor to be here on my first earnings call as Monro CEO.
Let me start by highlighting some of the reasons why I joined Monro and what I've learned over the past few weeks.
Over the years I have watched with aberration Monro is remarkable journey and becoming a recognized national chain with coast to coast presence and a leading auto service and tire brands provider with a scalable platform Monro is uniquely positioned to continue to grow and take advantage of an aging vehicle.
Felipe.
Since joining monro 7 weeks ago I've been thoroughly impressed by the depth of talent across the organization and the commitment of our teammates.
I also feel fortunate to be surrounded by an exceptionally strong and experienced senior leadership team, we share an ambition to realize the full potential of our business and take monro to its next phase of growth together.
Turning to slide 3 I want to take this time to thank the entire monro team for their great work over the past year.
It was certainly an unprecedented year, but monro has capitalized on opportunities to accelerate the company's transformation initiatives, including the implementation of several foundational technology tools.
At the same time, our team was able to bolster our financial position, while also expanding our presence in the attractive and dynamic western region.
Monro has made remarkable progress in its transformation journey in fiscal 2021, and I believe these accomplishments will be instrumental to our success in the coming year and beyond.
Okay.
With the full support of our board of directors I'm committed to ensuring the continuity of Monro is growth and transformation strategy.
My goal is to bring our monro forward initiatives to life in every store for every guest and for every team right.
The past few weeks have been truly exciting I've spent a lot of time visiting stores in different markets and engaging with our teammates in the field their feedback has been invaluable and understanding how some of the monro forward initiatives are being executed and ways. We can can further improve.
Our go forward plan will be grounded in the work that has already been done with a key focus on our customers teammates and in store execution.
I see tremendous opportunity for value creation through renewed focus on operational execution and a continued commitment to drive profitable growth and strong cash flow.
I will have more to share in the coming quarters, but would like to provide some initial perspectives on my key priorities as highlighted on slide 4.
First Monro is a service oriented organization and my assessment of the business is focused on opportunities to enhance the customer experience and improved in store execution to achieve long term organic growth.
I want to fully equipped our teammates to deliver a best in class experience for every guest who comes to Monro.
To support our teammates will continue to enhance training opportunities and ensure the effective use of digital tools and all of our stores.
In addition, I believe the targeted re image of our stores will continue to complement in store operational excellence initiatives.
Secondly, monro is well positioned to take advantage of a track of attractive consolidation opportunities in our fragmented industry and M&A will remain a key pillar of our growth strategy going forward. Our recently completed acquisition of mountain view in California demonstrates that our scale customer centric approach.
Company values make monro wanted the preferred buyers are family owned businesses I had the privilege to meet the Mitchell family and visits from Mountain view stores last month and I'm excited by our prospects in this region.
Thirdly, we will remain steadfast on driving strong cash flow the remarkable job of our team since the beginning of the pandemic led to a record operating cash flows of $185 million in fiscal 2020..1 looking ahead, we will focus on implementing operational improvements and optimizing working capital.
<unk> to continue to enhance our cash flow performance.
In summary, this is a business that I am passionate about I feel confident about the opportunities we have in front of us as we enter an exciting inflection point in our transformation with that I'll now turn the call over to Brian who will provide an overview of monro as fourth quarter performance and discuss our outlook Brian.
Thank you, Mike and good morning, everyone.
I want to start first by echoing Mike's comments in expressing my gratitude to the entire monro team for their exceptional hard work over the past year.
Now turning to slide 5 let me take a few minutes to talk about our solid fourth quarter performance and the positive outlook for our business.
Continued strength in tires, our largest category and improvement in our key service categories led to strong performance in the fourth quarter sales increased 6.8% year over year to $305.5 million, primarily driven by a 9.4% increase in same store sales.
Sales from new stores increased by $5.1 million, including $4.6 million from recent acquisitions. This was partially offset by a decrease in sales from closed stores of $5.9 million.
The quarter began with positive comparable store sales in January there was followed by some softness in February due to extreme winter weather in our southern and mid Atlantic markets.
Demand rebounded sharply in March with comps up 32% year over year.
This reflects strengthening traffic as well as easier comparisons due to the COVID-19 related lockdowns.
<unk> mid March last year for.
For reference comps were down 20% in March last year.
Our strong momentum exiting the year has continued into our fiscal first quarter with comps up 53% quarter today.
This compares to comps in the same period last year of down 34%.
We are encouraged to have comparable store sales levels in line with pre Covid performance.
Turning to slide 6 gross margin decreased 60 basis points to 35, 1% in the fourth quarter.
Variable gross margin was positively impacted by a 7% increase year over year and gross profit per tire, reflecting the benefits of our tire category management and pricing tool <unk>.
Variable gross margin was also positively impacted by lower technician labor costs as a percentage of sales driven by increased labor productivity during the quarter.
In addition distribution and occupancy costs decreased as a percentage of sales from the prior year as we gained leverage with higher overall sales.
These positive trends were more than offset by a higher sales mix of tires compared to service categories.
Importantly, we continue to execute disciplined cost control the year over year decrease in operating expenses resulted from our efforts to realign our marketing spend towards higher ROI digital channels and rightsize store management staffing it.
It also reflects lower expenses from 20 fewer retail stores as well as the $6.6 million impairment charge, we took in the prior year period.
Higher comparable store sales enabled us to generate increased operating margin against our lower fixed cost structure.
Net interest expense for the fourth quarter decreased to $6.7 million as compared to $7.1 million in the same period last year a decrease in our weighted average interest rate was partially offset by higher average debt outstanding.
Income tax expense in the fourth quarter was $2.3 million compared to an income tax benefit of $2.8 million in the prior year period.
Net income for the fourth quarter was $11.8 million compared to a net loss of $3.8 million in the prior year period diluted earnings per share for the fourth quarter was 35 cents.
Compared to a diluted loss per share of <unk> 12.
In the same period last year adjusted.
Diluted earnings per share for the fourth quarter, our non-GAAP measure was 38 cents, which excluded approximately <unk> <unk> per share related to monro forward initiatives and <unk> <unk> per share of costs related to management transition and a distribution center closure.
This compares to adjusted diluted earnings per share for the fourth quarter of fiscal 2020 of asos, which excluded <unk> <unk> per share of impairment costs related to planned store closures <unk> per share of additional store impairment costs <unk> <unk> per share of costs related to monro forward initiatives, a penny per share related to litigation reserves.
And a penny per share related to our headquarter expansion.
As highlighted on slide 7 we continue to have ample financial flexibility to support our operations and execute our growth strategy, we generated a record of $185 million of cash from operations in fiscal 2021 compared to $121 million for the prior year, we are maintaining.
Our disciplined approach to capital allocation and invested $52 million in capital expenditures, primarily related to our ongoing store rebrand and re image initiatives and investments in technology, we paid $17 million for acquisitions and $33 million in principal for financing leases.
We are also maintaining our strong commitment to returning cash to shareholders through our dividend program as evidenced by the 9% increase in the first quarter of fiscal 2022 dividend announced today, we distributed $30 million in dividends in fiscal 2021.
We were able to reduce our bank debt net of cash by $61 million during fiscal 2021 at the end of the fourth quarter, We had net bank debt of $160 million and a net bank debt to EBITDA ratio of 1.1 times.
As of May 15, 2021, we had cash and cash equivalents of $25 million and availability on our revolving credit facility of $356 million.
During fiscal 2021, we substantially completed the rebranding or re imaging of approximately 150 stores to date, we have completed the transformation of approximately 360 stores and a number of key markets, including rebranding approximately 115 service stores to tire branded stores.
And we continue to see outperformance of our rebranded and re image doors compared to our chain average.
As we enter fiscal 2022, we remain committed to managing our business from maximum cash flow first we will continue to make operational enhancements across our business to expand margins. These efforts combined with top line growth are expected to drive EBITDA growth and increased cash flow generation.
In fiscal 2021, we realized $35 million in cost savings.
These cost savings resulted from the optimization of store management staffing and the improvement of our marketing related efficiency.
And also general overhead cost reductions in.
In addition, our previously announced store closures benefit our operating income by $3.8 million.
In fiscal 2022, we continue to expect $15 million to $20 million in structural cost savings. In addition to $5 million in benefit from store closures all of this compared to fiscal 2020.
We also remain focused on working capital improvement and believe we will have additional opportunities in this area.
Moving on to slide 8.
I would now like to take a moment to provide an update on our acquisition strategy. We made great strides in solidifying our geographic footprint in the western region over the past year and most recently completed the acquisition of mountain view tire and service.
This acquisition was completed on April 25, 2021, and includes 30 retail stores in the Los Angeles area and is expected to add $45 million in annualized sales.
We are particularly excited about our growth prospects in this attractive and dynamic market and are focused on seamlessly integrating the mountain view acquisition in the first quarter of fiscal 2022, despite the.
The impact of the COVID-19 related Lockdowns. We are pleased with the strong earnings contribution from our previously acquired California, Nevada in Idaho stores this year.
Strategically located acquisitions at attractive valuations remain a cornerstone of our growth strategy, we have a robust acquisition pipeline, including over 10 NDA is currently signed for opportunities ranging from 5 to 40 stores, we are well positioned to take advantage of the many opportunities for consolidation in our industry.
Turning to our outlook. The COVID-19 situation is still fluid, which makes it difficult to accurately forecast the impact of the ongoing pandemic on our future operations. While we are not providing formal fiscal 2022 guidance. We're almost 2 months into the first quarter and have ample reasons to be optimistic.
In light of our comparable store sales momentum quarter. Today, we are on track to achieve double digit comparable store sales growth in the first quarter.
As a reminder, prior year June comps of down 14% or a less favorable comparison than the first year price than the prior first year.
Me than the prior year first quarter to date comps.
In addition, prior year second quarter through fourth quarter comps are a less favorable comparison than prior year first quarter comps.
As such we expect comparable store sales growth to moderate as compared to the 53% we achieved in the first quarter to date.
Despite an expected favorable impact of sales mix year over year. We also anticipate that our first quarter gross margin performance will reflect the negative impact of a higher sales mix of tires compared with the first quarter of fiscal 2020.
Lastly, you will find some financial assumptions for fiscal 2022 on slide 9 to assist with your modeling.
We expect tire and oil cost to increase year over year.
Regarding capital expenditures, we expect a range of $40 million to $55 million in fiscal 2022, depending on the amount of store refresh activity that we undertake.
And with that I will turn the call back to Mike for some closing remarks, Mike.
Thanks, Brian and it is important to note that the environment is still very dynamic and COVID-19 safety concerns remain top of mind for our teammates and customers.
That being said, we're encouraged by a robust performance in the first.
Quarter to date and optimistic about the outlook of our business.
We expect vehicles miles driven to normalize as mobility increases and more consumers start to reengage in their daily activities.
As we head into the summer driving season, we are already seeing more customers take to the road and higher average ticket trends indicate that they continue to invest in their vehicles.
Overall, we remain well positioned to capitalize on the strengthening demand and have the financial flexibility to execute our growth strategy to deliver long term value for our shareholders.
I would now like to provide an update on our corporate responsibility efforts, we view our responsibility to our teammates customers and the communities in which we operate and doing our part to take care of the environment is not only the right thing to do but as an integral component of our long term planning and success.
As part of our commitment to transparency and accountability in this area, we look forward to sharing our accomplishments and steps being taken in our first corporate responsibility report that will be published next month.
Like to especially recognize the efforts of Maureen Mulholland, our chief legal officer, and taking the lead within the senior leadership team to formalize our strategy envision and the board for its strong support and oversight of this important component to our overall business wall Monro has a strong foundation of environmental and social stewardship.
I recognize that the journey is ongoing and I am committed and excited to work with our senior leaders to build on the great work that has been done.
With that I will now turn the call over to the operator for questions.
Thank you would now be conducting a question and answer session if you'd like to be placed in the question queue. Please press star 1 on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
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Our first question today is coming from Jonathan Lamers from BMO capital markets. Your line is now live.
Good morning.
Good morning for Mike.
First from Michael Broderick. So this is the first opportunity we've had to speak with you.
Could you compare Monroe to other service businesses, you've been involved with I'd be familiar with Canadian tire, but oh advance or any others would be great.
Sure, it's a pleasure to be on the call and to be part of the Monro organization just.
Just to level set I've been calling on monro for over 20 years. So I am extremely knowledgeable about the people here and also the services that are performed.
Very much. So this is a service business differently than the retailers from when I say service business, we're literally working on the customer's car.
And that's our only job is working on the customer car. So all of our categories are very focused on.
All of our categories batteries breaks under hood around the car, we're really at the end of the supply chain and we are essentially the customer of the retailers. So most of my focus and my equivalent.
My understanding is either calling on customers similar to monro or actually my Canadian entire experience I would say that we perform as well as any other service provider. It really is a war a war on talent at the local level, where we have great technicians. They performed great work.
Great.
Stores that satisfy the low satisfy the customers moving to local communities.
But it's very different than a retail distribution business and it's more consistent with the.
The Firestone.
And the Canadian tires of the World.
Great Thanks and.
You mentioned acquisitions as being.
A key focus for you and a real opportunity for growth.
No that tire distribution market is huge and very fragmented are there any parts of the market debt.
Seem particularly attractive to you and how are you thinking about.
Evaluating acquisition opportunities going forward.
As I stated in my opening comments M&A is going to be very relevant we have we're missing a lot of space out in the southwest we don't have many store so in order to fill out that will be a focus.
Is the southwest, but where we have opportunities to fill in and we will and I also like to introduce the fact that we're going to start looking at Greenfields as an opportunity to move faster in markets that if we can't find viable M&A opportunities, we will start building your own stores.
Okay look forward to hearing more about that.
Yeah.
Maybe a couple.
Questions for Brian.
So you were down 20 stores since last year at the end of the quarter.
Are you continuing to reopen stores into Q1.
Yes, it really wasn't related to any temporary closures are reopening if you. If you remember we did not close any stores during the pandemic, we significantly reduced the hours of operation.
Consistent with others in the industry.
And we have reopened those hours of operation to be comparable to where we were pre pandemic. So the net 20 fewer store closures are really relate to the 40 plus stores that we closed in Q1 of last year as part of our evaluation of the store portfolio and closing some of those <unk>.
They're performing stores offset by the Allens higher acquisition that we closed on last quarter.
Okay. So just to be clear do you believe that if demand returns to fiscal 2020 levels that you'd be able to service. The same level of sales from the reduced footprint and growth of 15% to $20 million of opex savings be permanent debt that sales level.
Yes, the $20 million of of sales.
I'm sorry, the 20 net fewer stores that we closed are those the.
40, plus stores are reflective in the $5 million of annual operating income savings that we ascribe to the drag that those stores were providing before we close them. So that's in that number.
And.
Our our sales in FY 'twenty, 1 are reflective of not having those stores and theyre certainly.
The $15 million to $20 million that was coming out of those stores of sales is going to is going to be reduced in 2022 compared to 2020. When those stores were in operation, but the profit is an incremental $5 million by not having them John Mccluskey.
The $15 million to $20 million is really related to the cost savings that we drove in FY 'twenty 1.
Some of that with what we said it was $35 million of cost savings in 2021, we're adding back about $15 million to $20 million of that in 2022 for a net reduction of 15 to 20 versus the base year, which in this case would be FY 'twenty.
That's clear, thanks, and Michael mentioned, an improved ability to.
Ah well actually ticket inflation as Traffics returning is there any way to estimate how much the stimulus checks at the beginning of the quarter would have supported the strong comp you saw in the.
The next round of strong comps youre seeing a into the next quarter.
To isolate on stimulus is difficult I think there is a you know that the consumer has been well supported and continues to be well supported during this.
There are probably more sustainable improvement that we continue to see us improvements in vehicle miles traveled I think that will continue to improve particularly in light of some of the CDC guidance that was recently.
Uh huh.
Released related to mass mandates. So I think that all of that is really positive, especially as vaccination continues to rollout. So we look at the vehicle miles traveled trend is 1 that should continue to improve and that's the longer term trend that will provide a nice backdrop for our business. In addition to the the aging vehicle.
Cohort, obviously elevated used car sales that we have seen is supportive of our sweet spot. So all of that we think really lines up well from a backdrop.
For us to continue to execute our own initiatives to take advantage of that.
I'll pass the line thanks for your comments.
Thank you.
Thank you. The next question is coming from Brian Nagel from Oppenheimer. Your line is now live.
Good morning.
First off Mike look.
I look forward to working with you.
Yeah.
Thanks for the question first question I have I could maybe a bit of a follow up to that last question, but you clearly saw a nice sales spike here in the fiscal fourth quarter.
A lot going on out there you know comparisons stimulus et cetera, but as you look at that as you look at the demand is there any way to kind of break it apart how much of that particularly in the tire category was pent up versus more demand in real time.
Okay.
Well.
Looking at the tire category, Brian in particular.
We feel really good about our tire category performance throughout the pandemic, we've talked about it on the last couple of calls about our ability to.
Capture increased average selling price increased margin all while driving volumes ahead of the tire industry in North America. So we.
We saw it.
Very good demand in tires as we exited Q3 and into January the plus 3% in January was led by tires and I think that was probably less affected by some of the stimulus that came out in March so thats, a pretty good quarter. Good months in my mind to see where the tire category is at maybe a little.
Less affected by external factors and I think it drove a 3% comp versus pre pandemic levels. So I think debt that was.
A good proof point for US that we are you know our business is returning to pre pandemic levels on a on a run rate basis, not necessarily due to extreme outside influences certainly stimulus is supportive of some of the outsized performance we saw in April.
But we feel good as debt has subsided that our business is still in line with where we were pre pandemic also supporting vs.
A considerable improvement in our service categories, really leading that plus 53% quarter to date.
So those categories are leading that number which we would expect given the step back they took last year during the pandemic.
Not all the way back in those categories to where we were pre pandemic, but we're getting there and that certainly is going to help us from a margin standpoint, I think as it relates to margins, we will be better than we were last year on a gross margin line, we won't probably be back to where we were in FY 'twenty and that's due to the tire mix of the business that occurred during the.
The pandemic and will start to move our way out of that is the service categories really start to contribute here.
Okay. That's really helpful. I appreciate the color there.
A follow up question, just with regard to <unk> and recognizing you're not giving official guidance here, but with regard to the commentary around fiscal Q1. So as you said in your junior debt as of mid May you're you're tracking above 50% and then I think the kind of a loose.
Guidance or guidelines it was double digits could you.
Could you maybe specify born that double digits as we think about what type of fade. We should expect from the debt that 50, 53% that you saw as of mid May.
Yeah sure. So if you if you look at the 53% up.
Against the down 30 in the same period last year.
That puts us roughly kind of in line with where we were running back in FY 'twenty and so if you if you look at.
The.
June number of down 14.
We would expect that we would perform against that number to keep us in line with where we were in FY 'twenty. So it means that the year over year comp starts to fade, but the net of the 2 year stack in terms of dollars keeps us in line with FY 'twenty.
Got it I appreciate it thank you.
Right right.
Thank you. Your next question is coming from Bret Jordan from Jefferies. Your line is now live.
Hey, good morning, guys.
Good morning, Brian Brett Hey, Brian just just for housekeeping to get started did you give the February month comp I think we had plus 3 in January and.
I believe you said March was plus 32, but could we get the fed yeah yeah.
February was down too.
Okay, Great and then a question on the on the Greenfield that you brought up I think if we go back 10 or 15 years, there used to be a lot of talk about how buying existing unit size, either a discount to asset value or as a percentage of revenues was attractive do you see a different economics in Greenfield development is.
It is it more expensive to build.
Sort of a ground up store and is that offset maybe by the traffic you can pick up in these new markets.
Well I mentioned that our growth good morning.
If we can't find M&A activity, that's actually affordable than where you would be looking to fill out our footprint across the nation. There is a lot of reasons for it I mean, we have a national warranty we want to stay convenient to our customers. So where we can't find M&A. We would look at it now looking at the financials, obviously, we're going to be stewards of the P&L.
And we're going to be putting stores, where we can get the best return for their investment.
And we do see a lot of when you look at the southwestern there seems to be some open space for us to efficiently do Greenfield.
Okay, Great and then a question I guess, you've talked a bit about the margin impact from tires and.
Have there been any.
Movement entire pricing on a like for like basis or is this just purely driven by mix.
We've seen.
Our ability to too.
Went on.
Through optimization of price with our category management tool and I would say that theres been debt real price has been price increase and price decrease because we are really using that tool to optimize our price levels to optimize that mix. It make sure we have the right step ups.
And net were sharp on price on those those those tire sizes and applications that are most shops and net we are able to price in the corners for those that are converted and stores and are are less price sensitive. So it's both.
<unk> seen some price some cost increases from the from the tire manufacturers as you know breath of day of announced and that will continue to we think increase price at active to the consumer across all price points.
Okay, Great and then last question I guess on regional performance any big spreads between the southern northeast mid Atlantic and Western markets.
You know it was really a pretty even bag in the quarter as we got into April and into May the northeast really started to outperform but that's largely because they had the easiest comparison in the prior year as they locked down quicker than the rest of the country.
Okay, Great all right. Thanks, a lot guys nice to meet you.
Thank you.
Thank you. The next question is coming from Rick Nelson Nelson from Stephens. Your line is now live.
Okay.
Kevin.
Good day.
Kermit traverse.
No question.
Uh huh.
Strategy is there.
Sounds like you're going to have a follow up with Monroe forward plan.
Or just any tweaks to that plan.
Sure.
Did you at all.
Just curios.
You're going to move toward online tire sales and Ensco ours.
Yeah.
Oh, Thanks, Rick for the question I will take it.
When you look at Monro forward strategy literally touched every aspect of retail.
And there was a journey that we're on and buy just good retail hygiene, we actually literally put things in place. When you look at the people part of retail we introduced new staffing and payroll management system and training when we talked about product, we talked about category management assortment of tires in pricing.
We're going to continue to evolve that into service categories. When we talked about promotion as you illustrated how do we drive additional foot traffic and our connection to the customer we are really relying on very efficient marketing mechanisms and digital is top of mind and our customers are going online to check prices Chuck.
Bill ability make appointments and the convenience of our digital experience is paramount.
And then on top of it when you look at Monro forward, we added technology at our store level, we revamped our.
Phone systems, and last but not least and something we talked about is the rebranding and the re imaging of our stores. So when you talk about all 5 of the things I just mentioned my job right now, it's really bringing these puzzle pieces together so that we can actually get maximize the profitability from these investments it's all about execution.
And at this point in time the strategy is sound the execution is really whats going to separate us from being successful or not.
Great.
Thanks for that also.
Curious in terms of Mac repairs from.
You could speak to the competitive environment, there and the multiples are that you're looking.
It might be about <unk>.
A good example.
And do you plan to rebrand those stores.
I'll take that 1 Rick.
The multiples as we've talked on the last couple of call. It calls had been largely in line with what we paid historically, we don't quote them specifically for competitive reasons, but we.
We do feel like those have been pretty much in line.
The acquisitions that we've bolted onto our initial certified deal out in California, and the West coast have been in line with our expectations out there from what we paid.
Originally and certified deal.
As it relates to the second part of your question.
Could you just repeat the second part of your question.
Tara loans do you plan to rebrand.
Interviews stores and I guess its retro you know at the time.
Emlen.
That's right.
Looking at the brand portfolio, we've obviously acquired the mountain <unk> brand, which is a strong brand out there. So we will look at the.
The roll the debt brand is going to play out in the West Coast, we have the tire choice out there currently which is what we've rebranded some of our previous acquisitions wed we have Alan tire out there right now that we acquired that we will determine both that and the mountain Dew brand in terms of what what its role will be in our west coast portfolio.
Great Thanks, and good luck.
Thanks.
Okay question. Our next question today is coming from Stephanie Benjamin from Jewish reminders that life.
Hi, Good morning, nice to meet you Mike over the phone.
Thank you Stephanie.
Virtually.
I wanted to touch a bit on the inflationary environment.
Couple of questions ago, you talked a bit about what youre, saying, if it's higher it's bad love for you to discuss a little bit more I guess on base oil and any other commodity inflation inflationary pressures you might be seeing and then also more importantly on labor.
But you are having to do to attract technician talent if anything.
So easy to find technicians as you are.
Our reopening stores reopening and youre seeing higher demand level Tim.
Tim from a wage increases overall at the cost side of fab operations. Thank you.
Stephanie This is Brian I'll take that to start with and then let Mike get any any color since I made the comment about the the tires and so we've seen net debt on the tire side on the parts side, we haven't.
<unk> really seen much there to begin to start with here, but obviously everything that you see we see and there are expectations that that will start and has the potential to start to build in now we are.
A large buyer of those categories and we have significant scale and we feel that no matter the environment, we will buy better than than our smaller competitors and that will provide us with a with a cost advantage and ultimately any of the inflationary pressures that debt the materials would put on the P&L will ultimately be able.
Because of our industry and be able to be passed onto the consumer.
We feel good about that if were buying better and the market is moving up that we'll be able to support our margins during that inflationary period.
I would say are related to 2 labor.
Mike used the words were on talent earlier, and I think that's really what it is and we continue to understand what we need to do to be competitive to make sure. We've got the right people in our store. So I'll pass the mic from additional color Stephanie it's not by coincidence that when I talk about Monro forward our strategy it starts with people.
It's <unk>.
The good news is we're able to pass along wage inflation into our labor rate, but there really is how do we become a best in class employer and that is everything that we're trying to do right now with our incredible focus on training our capacity planning really making it easier for our teammates to do.
Their job I think these are the things that people as people come back to work and as our employers are looking to stay with making decisions around their careers. That's what they're looking for from an employer and that's what I'm focusing on.
Great really helpful. There and then I.
I guess just a follow up question.
I think we've seen.
Some good access from.
From just the way the.
The pricing tool that was implemented across tire I'd love to hear kind of think through fiscal 2022 and.
And this return to normalcy, what we have in store in terms of other initiatives.
Whether it's a lot of good better best pricing strategy or maybe just dig in a little bit deeper as you kind of knew Barbara Munroe Foreign day, you've obviously commented on the continuation of the store refreshes, but what else should we expect as we kind of look through the next year.
So this is I'll take it this is Mike.
We have made 2 significant acquisitions out west we need to invest and bring them use the what we've learned in our monro aboard and invest and bring both mountain view and Alan tires.
Basically customer.
Teammate focused and invest in those stores. So that we can finish the acquisition.
Number 1 number 2 is what we've learned in our category management tool for tires at best in class I've been doing this for a long time applying the learnings that we've had with tires and now moving into the service categories and introducing just traditional category management partnering with our suppliers and really making ourselves relevant to our.
<unk> and offering our teammates giving them an opportunity to offer our customers choices. So it's easier for them to close the sale, but very much.
Going back to the Monro forward the work that we've done with tires is just gives me a lot of confidence that we can do that across the service categories.
Got it thank you so much.
Thank you.
Thank you we reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.
Thank you for joining US today. This is an exciting time to be part of Monro, we have a strong foundation to build upon them to create long term value for our stakeholders I look forward to updating you on the progress in the future and getting to know all of you in the weeks and months ahead have a great day.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.