Monro, Inc. First Quarter Fiscal 2021 Earnings Call FIRST QUARTER FISCAL 2021 July 29, 2020 EARNINGS CALL JULY 29, 2020
Safe Harbor Statement and Non-GAAP Measures Certain statements in this presentation, other than statements of historical fact, including estimates, projections, statements related to our business plans and operating results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Monro has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “may,” “will,” “should,” and “intends” and the negative of these words or other comparable terminology. These forward-looking statements are based on Monro’s current expectations, estimates, projections and assumptions as of the date such statements are made, and are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward- looking statements, to 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. Additional information regarding these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed periodic reports on Forms 10-K and Form 10-Q, which are available on Monro’s website at https://corporate.monro.com/investors/financial-information/. Monro assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. In addition to including references to diluted earnings per share (“EPS”), which is a generally accepted accounting principles (“GAAP”) measure, this presentation includes references to adjusted diluted earnings per share, which is a non- GAAP financial measure. Monro has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS in Slide 6. Management views this non-GAAP financial measure as a way to better assess comparability between periods because management believes the non-GAAP financial measure shows the Company’s core business operations while excluding certain non-recurring items and items related to our Monro.Forward or acquisition initiatives. This non-GAAP financial measure is not intended to represent, and should not be considered more meaningful than, or as an alternative to, its most directly comparable GAAP measure. This non-GAAP financial measure may be different from similarly titled non-GAAP financial measures used by other companies. 2
COVID-19 Response Executing on Elements Within Our Control to Support Our Business Operations Prioritizing health & Ensuring business Key Emerging stronger post safety in all aspects of continuity to serve our Priorities COVID-19 crisis our business customers Operations Update Financial Update ▪ ▪ Enhanced cleaning and safety protocols to promote Maximizing financial flexibility to support business the well-being of our teammates and customers operations ▪ ▪ Stores gradually returning to normalized hours of Operating on a cash flow positive basis in current operation to support improving demand trends environment ▪ ▪ Streamlining cost structure and accelerating Resuming store rebrand and reimage initiative with transformation initiatives to support future growth a measured and moderated approach ▪ ▪ Leveraging diverse supply chain Evaluating attractive M&A targets that support our strategy while maintaining strong financial discipline 3
First Quarter Fiscal 2021 Highlights Navigating Uncertain Environment and Challenges Related to Ongoing COVID-19 Pandemic Monthly Comparable Store Sales Quarterly Comps Trends 5% 0% 0% 1 Apr-20 May-20 Jun-20 Jul-20 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 -5% -10% -10% -20% -15% -30% -20% -40% -25% -50% -30% Q1FY21 Q1FY21 Key Highlights Key Highlights ▪ ▪ Comparable store sales of -25.8% due to Tires: -14% significant impact of COVID-19 ▪ Alignments: -32% ▪ As expected, April represented a low point in sales ▪ Maintenance: -35% performance as government restrictions gradually ▪ Front End/Shocks: -36% abated through Q1 ▪ Brakes: -41% ▪ Sales from new stores added $12.7M, including sales from recent acquisitions of $11.1M 4 1 Preliminary results through July 25, 2020
Monro.Forward Progress Update Progress on Monro.Forward Initiatives Positioning Us Well to Emerge Stronger Post-Crisis ❑ Completed pre-COVID plan to streamline real estate portfolio with closure of 42 underperforming stores, including six in Q4FY20 and 36 in Q1FY21 Improve Customer ❑ Outperformance of rebranded stores reinforces strength of strategy Experience ❑ Gradually resuming store rebrand and reimage initiative in Q2FY21 ❑ Tightened and redirected marketing spend to higher ROI digital channels ❑ Substantially completed rollout of modernized store infrastructure and digital phone Enhance Customer- system to drive better customer execution Centric Engagement ❑ Completed rollout of Amazon.com collaboration across entire store base, furthering broader omnichannel strategy ❑ Rollout of new pricing and category management technology progressing as planned Optimize Product & ❑ Leveraging price elasticity analytics to dynamically respond to demand trends Service Offering ❑ Leveraging technology-based labor model to effectively ramp up staffing in stores ❑ Data-driven store staffing and scheduling software rollout progressing as planned and Accelerate Productivity expected to be completed by Q3FY21 & Team Engagement ❑ Utilizing Monro University to support rollout of initiatives, while continuing to facilitate career development and continuous learning opportunities 5
First Quarter Fiscal 2021 Results The COVID-19 Related Drop in Traffic Significantly Impacted Our First Quarter Performance Δ Q1FY21 Q1FY20 Sales (millions) $247.1 $317.1 (22.1%) (25.8%) 0.8% (2,660 bps) Same Store Sales Gross Margin 35.4% 40.4% (500 bps) 4.6% 11.5% (690 bps) Operating Margin Diluted EPS $.09 $.67 (86.6%) Excluded Costs 1 $.06 $.02 Adjusted Diluted EPS 2 $.15 $.69 (78.3%) 1 Excluded costs in Q1FY21 include $.06 per share in planned store closing costs. Excluded costs in Q1FY20 include $.01 per share of costs related to Monro.Forward initiatives and $.01 per share of costs related to acquisition due diligence and integration. 2 Adjusted diluted EPS is a non-GAAP measure that excludes certain non-recurring items and items related to our Monro.Forward or acquisition initiatives. A reconciliation of net income to adjusted net income and diluted EPS to adjusted diluted EPS is included in our earnings release dated July 6 29, 2020.
First Quarter Fiscal 2021 EPS Bridge $0.80 ($0.77) $0.67 $0.60 $0.40 $0.20 ($0.06) $0.45 $0.15 $0.09 $0.00 ($0.20) -$0.20 -$0.40 1 Q1FY20 Diluted Impact of -25.8% Impact of Gross Other Q1FY21 Adjusted Planned Store Q1FY21 Diluted Earnings Per Share - Comp Sales Margin Decline Diluted Earnings Per Closures Earnings Per Share - GAAP Share - Non-GAAP GAAP 7 1 Other includes net benefit of cost savings and lower expenses due to a reduction in the number of stores compared to the prior year period.
Maximizing Financial Flexibility We Have Taken Proactive Measures to Operate on a Cash Flow Positive Basis During COVID-19 Pandemic Disciplined Capital Allocation First Quarter Fiscal 2021 Near-term Priorities ▪ ▪ Paid down $240.2M of bank debt Maintaining rigorous capital management ▪ ▪ Capex of $15.3M Bolstering working capital position ▪ ▪ Paid $7.4M in dividends Resuming store rebrand and reimage initiative with a measured and moderated approach ▪ Strategically realigned cost structure to protect ▪ Evaluating attractive M&A targets that support our financial strength strategy while maintaining strong financial ▪ Amended covenants of revolving credit facility in discipline June 2020 to enhance financial flexibility ▪ Paying quarterly dividend 8
Strong Balance Sheet and Liquidity Healthy Balance Sheet and Ample Liquidity to Support Ongoing Business Operations ▪ Generated $73M of operating cash flow during Q1FY21 ▪ Net bank debt of $179M as of June 2020 ▪ Net debt-to-EBITDA ratio as of June 2020 of 3.86x ▪ Strong liquidity position of ~$400M as of July 25, 2020 9
Fiscal 2021 Outlook – Financial Assumptions Financial Assumptions as of July 29, 2020 Additional Assumptions Stable to slight decrease y/y Tire and Oil Costs ▪ Capex range accounts for rebrand of ~60 to ~120 stores as we resume this initiative Interest Expense ~$28M to ~$30M with a measured pace ~$74M to ~$80M Depreciation and Amortization ▪ Realized ~$15M in cost savings in Q1 and expect additional savings of ~$5M to Tax Rate ~24% ~$10M through the remainder of FY21 ~$30M to ~$50M Capital Expenditures ▪ Anticipate lower cost savings in Q2 when redirecting portion of marketing spend to Weighted Average Number of Diluted enhance recruiting initiatives ~34M Shares Outstanding Store Closure Operating Income Benefit ~$3.8M ~$20M to ~$25M Cost Reductions 10
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