Monro, Inc. Fourth Quarter Fiscal 2020 Earnings Call May 28, 2020 - PowerPoint PPT Presentation

Monro, Inc. Fourth Quarter Fiscal 2020 Earnings Call May 28, 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 8. 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 Key Priorities During This Critical Period Prioritizing health & Ensuring business Emerging stronger post safety in all aspects of continuity to serve our COVID-19 crisis our business customers    Protecting the well-being of our Providing essential services to Executing strategic support customers’ needs and teammates Monro.Forward initiatives delivering a consistent 5-star   Promoting the safety of our Streamlining costs and rapidly experience customers and communities adjusting plans to strengthen  Maximizing financial flexibility operating performance and operating on a cash flow positive basis in COVID-19 environment 3

COVID-19 Response Prioritizing Health and Safety in All Aspects of Our Business Protecting the Health and Well-being of Our Teammates and Customers:  Enhanced daily cleaning procedures and rigorous hygiene protocols  Offering key drop and contact-less services  Following CDC social distancing and PPE guidelines  Reduced operating schedule in stores and remote working where feasible  Extending expiration of vacation days for teammates impacted by COVID-19 4

COVID-19 Response Ensuring Business Continuity to Serve Our Customers Operations Update Financial Update   Stores remain open to provide essential services Solid balance sheet and strong liquidity providing ample flexibility to support business operations  Reducing store hours and aligning labor to match  demand levels Operating on a cash flow positive basis in current environment  Opportunity to flex cost structure and accelerate  transformation initiatives Deferring store reimage and rebrand initiative, as well as other non-essential investments  Leveraging diverse supply chain  Pausing M&A during this uncertain time  Ready to capitalize on the improving sales environment 5

Monro.Forward Progress Update Monro.Forward Progress Positions Us Well to Emerge Stronger Post COVID-19 Crisis  Strong performance of rebranded stores prior to COVID-19  Substantially completed transformation of 42 recently acquired California stores in Improve Customer Q4FY20 Experience  Pre-COVID plan to close 42 stores, six in Q4FY20 and 36 in Q1FY21, to streamline portfolio supported by data analytics  Modernized store infrastructure, including new digital phone system, progressing as planned Enhance Customer-  Expanded Amazon.com collaboration at more than 1,000 stores, supporting Centric Engagement omnichannel efforts  New pricing and category management technology to drive margin improvement and Optimize Product & optimize product portfolio in pilot stages, rollout to be completed by end of Q2FY21 Service Offering  Data-driven store scheduling and staffing software in pilot stages with full rollout Accelerate Productivity expected to be completed by Q2FY21 & Team Engagement  Optimizing staffing schedules during COVID-19 crisis and beyond 6

Fourth Quarter Fiscal 2020 Highlights Navigating Uncertain Environment and Challenges Related to COVID-19 Monthly Comparable Store Sales Quarterly Comps Trends 3.5% 0.0% 1.5% Jan-20 Feb-20 Mar-20 Apr-20 May-20 -0.5% -10.0% 1 MTD 2 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 -2.5% -20.0% -4.5% -30.0% -6.5% -40.0% -8.5% -50.0% -10.5% Q4FY20 Q4FY20 Key Highlights Key Highlights   Comparable store sales of -9.5% driven by a Maintenance: -8% substantial decrease in traffic since mid-March due  Tires: -9% to COVID-19 restrictions, as well as soft winter  Front End/Shocks: -10% weather conditions in January and February  Brakes: -11%  Sales from new stores added $23.5M, including sales from recent acquisitions of $21.9M  Alignments: -11% 1 Results are adjusted for days 7 2 Through 5/26/2020

Fourth Quarter Fiscal 2020 Results Results Impacted by COVID-19 Crisis and Soft Winter Weather Conditions Δ Δ Q4FY20 Q4FY19 FY20 FY19 Sales (millions) $286.1 $287.2 (0.4%) $1,256.5 $1,200.2 4.7% Same Store Sales 1 -9.5% 0.5% (1,000 bps) -2.3% 2.3% (460 bps) Gross Margin 35.7% 38.3% (260 bps) 37.9% 38.8% (90 bps) 0.1% 9.9% (980 bps) 8.1% 10.6% (250 bps) Operating Margin ($.12) $.50 (124.0%) $1.71 $2.37 (27.8%) Diluted EPS Excluded Costs 2 $.20 $.02 $.29 $.09 One-time income tax benefit - - - ($.06) Adjusted Diluted EPS 3 $.08 $.52 (84.6%) $2.00 $2.40 (16.7%) 1 Q4FY19 and FY19 same store sales results are adjusted for days. 2 Excluded costs in Q4FY20 include $.10 per share of impairment costs related to planned store closures, $.05 per share of additional store impairment costs, $.03 per share of costs related to Monro.Forward initiatives, $.01 per share of costs related to litigation settlements and $.01 per share of one- time costs related to the Company’s headquarters expansion. Excluded costs in Q4FY19 include $.01 per share of costs related to Monro.Forward initiatives and $.01 per share of costs related to acquisition due diligence and integration. Excluded costs in FY20 include $.15 per share of store impairment costs, $.09 per share of costs related to Monro.Forward initiatives, $.03 per share of costs related to acquisition due diligence and integration and $.02 per share of additional one- time costs related to litigation settlements and the Company’s headquarters expansion. Excluded costs in FY19 include $.06 per share in costs related to Monro.Forward initiatives, $.01 per share of non-recurring corporate and field management realignment costs and $.02 per share of costs related to acquisition due diligence and integration. 3 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 May 8 28, 2020.

Fourth Quarter Fiscal 2020 EPS Bridge $0.60 $0.50 ($0.30) $0.50 $0.40 $0.30 ($0.12) $0.20 $0.10 $0.08 ($0.10) $0.00 -$0.10 ($0.10) ($0.12) -$0.20 Q4 FY19 Diluted Impact of -9.5% Comp COVID-19 Business Q4 FY20 Adjusted Planned Store Other N/G Q4 FY20 Diluted 1 Earnings Per Share - Sales Impact Diluted Earnings Per Closures Adjustments Earnings Per Share - GAAP Share GAAP 9 1 Other N/G Adjustments includes $.05 related to store impairment charges, $.03 of one-time costs related to the store rebrand and reimage initiative, $.01 in provisions for legal settlements and $.01 in one-time costs related to the HQ expansion.