Monro Inc. (MNRO) reported its financial results for the third quarter of fiscal year 2024, revealing a decline in both earnings per share (EPS) and revenue compared to forecasts. The company's EPS came in at $0.19, missing the forecast of $0.30, while revenue reached $305.8 million, slightly below the expected $311.33 million. Following the announcement, Monro's stock fell 10.95% in pre-market trading to $19.60. According to InvestingPro data, the company maintains a market capitalization of $588.21 million and has demonstrated its commitment to shareholder returns with a notable 5.7% dividend yield.
Key Takeaways
- Monro's Q3 2024 EPS of $0.19 missed the forecast by $0.11.
- Revenue decreased 3.7% year-over-year to $305.8 million.
- Stock price dropped 10.95% in pre-market trading.
- Gross margin decreased by 120 basis points to 3.3%.
- Company is focusing on operational improvements and cost management.
Company Performance
Monro Inc.'s performance in the third quarter of fiscal 2024 reflects ongoing challenges in the automotive service industry. The company reported a significant decline in net income to $4.6 million from $12.2 million in the same period last year. This downturn is attributed to a decrease in consumer spending and a shift toward lower-tier products, impacting both revenue and profitability. InvestingPro analysis reveals that while current challenges persist, the company has maintained dividend payments for 20 consecutive years, though its current ratio of 0.54 suggests tight liquidity management. InvestingPro subscribers have access to 12 additional key insights about Monro's financial health and market position.
Financial Highlights
- Revenue: $305.8 million, down 3.7% year-over-year.
- Earnings per share: $0.19, compared to $0.38 in Q3 2023.
- Gross margin: 3.3%, down 120 basis points.
- Net income: $4.6 million, down from $12.2 million.
Earnings vs. Forecast
Monro's actual EPS of $0.19 fell short of the forecasted $0.30, marking a surprise of -36.7%. This miss is notable compared to previous quarters, where the company had generally met or exceeded analyst expectations. Revenue also came in below the forecast, contributing to the negative market sentiment.
Market Reaction
The announcement led to a 10.95% drop in Monro's stock price during pre-market trading, bringing it to $19.60. This decline positions the stock closer to its 52-week low of $19.03, reflecting investor concerns over the company's financial health and future prospects. InvestingPro's Fair Value analysis suggests the stock is currently undervalued, with technical indicators showing oversold conditions. The stock's beta of 1.12 indicates slightly higher volatility than the broader market. For detailed valuation metrics and comprehensive analysis, investors can access the full Pro Research Report, available exclusively to InvestingPro subscribers.
Outlook & Guidance
Looking ahead, Monro expects to generate at least $120 million in operating cash flow for fiscal 2025, with capital expenditures projected between $25 million and $30 million. The company aims to restore gross margins to pre-COVID levels and is focusing on sales and unit growth, particularly through its Comfort Drive inspection process.
Executive Commentary
CEO Michael Broderick emphasized the company's strategic positioning, stating, "We are poised to win with our scale, strategic relationships, and our experienced management team." CFO Brian highlighted the commitment to growth, noting, "We remain committed to sales and unit growth and improving customer counts."
Risks and Challenges
- Consumer trade-down to lower-tier products is affecting revenue.
- Regional performance disparities, with weaker results in the Midwest, Northeast, and West.
- Margin pressures due to increased competition and cost management challenges.
- Economic uncertainty impacting consumer spending patterns.
Q&A
During the earnings call, analysts questioned the impact of consumer trade-down on gross margins and sought clarity on regional performance variations. Executives also addressed the benefits of the Comfort Drive inspection process and ongoing relationships with key vendors like ATD.
Monro Inc. faces a challenging environment but remains focused on operational improvements and strategic growth initiatives to navigate the current market dynamics.
Full transcript - Monro Muffler Brake Inc (NASDAQ:MNRO) Q3 2025:
Conference Operator: Good morning, ladies and gentlemen, and welcome to Monro Inc. Earnings Conference Call for the Q3 of Fiscal 2025. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. 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 Wexler, Senior Director of Investor Relations
: at
Conference Operator: Monro. Please go ahead.
Felix Wexler, Senior Director of Investor Relations, Monro Inc.: 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. Monro.com /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 Monro'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 Monro'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 will be included as part of today's presentation and in our earnings release.
Lastly, unless otherwise noted, all references to comparable store sales, category sales and units on today's call will be made on an adjusted for days basis, which adjusts for 1 fewer selling day in the current year quarter due to a shift in the timing of the Christmas holiday from the Q4 in fiscal 2024 to the Q3 in fiscal 2025. With that, I'd like to turn the call over to Monro's President and Chief Executive Officer, Michael Broderick.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Thank you, Felix, and good morning, everyone. This morning, I'd like to share an update with you on our Q3 accomplishments. After that, I'll outline several objectives that we plan to achieve in the Q4. Before I begin, I'd like to recognize and thank all of our teammates for their dedication to Monro and our customers. Turning to Slide 3, starting with our accomplishments in the Q3.
We drove a sequential improvement in our year over year comp store sales percentage change from the 2nd quarter and returned our business to year over year comp store sales growth in the month of December. We believe that our initiatives provide the foundation for continued momentum in our top line performance. Importantly, the year over year comp store sales percentage change in both our tire dollar and unit sales improved sequentially from the Q2 and our tire category sales comp positive in the month of December with year over year growth in units in the quarter. We continue to leverage the strength of our manufacturer funded promotions, which allowed us to meet the needs of a value oriented consumer. And now that we've completed the rollout of our Comfort Drive digital courtesy inspection process, we've continued to improve communications and educational selling that has built trust and further solidified relationships with our customers.
Confidrive and our oil change offer, as shown on slide 4, allowed us to drive sequential improvement in our year over year service category comp store sales percentage change from the Q2. We drove year over year growth in both units and sales dollars for batteries, alignment and front end shocks. And while we drove sequential improvement from the Q2 in our brake category, we continue to focus on returning this high margin category to unit and sales growth. Consistent with general industry trade down dynamics, our gross margin in the 3rd quarter continued to be impacted by a value oriented consumer that traded down more of their tire purchases to our Tier 3 offerings. We also increased our level of self funded promotions to attract value oriented consumers into our stores.
And while this pressured material margins in the quarter, we continue to drive labor optimization and efficiencies through productivity improvements, including scheduling, training and our attachment selling initiatives. We remain committed to sales and unit growth and improving customer counts, and we are willing to make the necessary price and promotional investments even if it puts pressure on our profitability in the near term. Now, on to our objectives for the Q4. Our preliminary fiscal January comp store sales are down 1%, adjusted for one additional selling day in the month. This is driven by weakness in tire category sales that were impacted by extreme weather, which resulted in temporary store closures and lower store traffic, partially offset by strength in our service categories, including breaks.
We believe the extreme weather in January will benefit us in the coming months. We expect to leverage our initiatives to achieve our 4th quarter objectives, which include improving store traffic trends driven by our value oriented oil change offerings as well as continued growth in tire units accelerating the performance of our key service categories, utilizing the benefits from Compadrive and optimizing labor and efficiencies through continued improvements in productivity and maintaining prudent cost control. In summary, our initiatives are driving an improvement in our top line results. Our comp store sales trends improved sequentially from the Q2 and we exited the quarter with year over year comp store sales growth in the month of December. This was led by our tire category sales, which comped positive in December with year over year unit growth in the quarter.
While we have more work to do to improve the performance of our high margin brake category, we drove a sequential improvement in our year over year service category comp, store sales percentage change from the Q2 and year over year growth in batteries, alignment and front end shocks in the quarter. And although our gross margin took a step back in the quarter, we continue to be focused on sales and unit growth and improving customer counts and are willing to make necessary investments even if it puts pressure on our profitability in the near term. We are confident we remain on a path to restore our gross margins back to pre COVID levels with double digit operating margins over the longer term as we return to top line growth. The traction from our initiatives will enable us to achieve our Q4 objectives. And with that, I'll now turn it over to Brian, who will provide an overview of Monro's 3rd quarter performance, strong financial position and additional color regarding the remainder of fiscal 2025.
Brian?
Brian, Chief Financial Officer, Monro Inc.: Thank you, Mike, and good morning, everyone. Turning to Slide 5. Our year over year comparable store sales percentage change improved 500 basis points sequentially from the Q2 of fiscal 2025. Sales of $305,800,000 decreased 3.7% year over year, which was primarily driven by a 1.9% decline in comparable store sales unadjusted for days. Com store sales decreased 0.8% when adjusted for days.
As Mike just walked through, we returned our business to year over year comp store sales growth in the
Felix Wexler, Senior Director of Investor Relations, Monro Inc.: month of
Brian, Chief Financial Officer, Monro Inc.: December. For reference, comps were down 1% in October and down 2% in November. We exited the quarter, up 1% in December. Tire units were up low single digits in the 3rd quarter, driven by mid single digit growth in units during the month of December. We also gained higher market share in our higher margin tiers in the quarter.
Comp (WA:CMP) store sales in approximately 300 of our small or underperforming stores were about 2 50 basis points higher than our overall comp in the quarter. Turning to Slide 6. Gross margin decreased 120 basis points compared to the prior year, primarily resulting from higher material costs due to mix within tires and an increased level of self funded promotions to attract value oriented consumers into our stores, which was partially offset by lower technician labor costs as a percentage of sales. Total (EPA:TTEF) operating expenses were $94,800,000 or 31 percent of sales as compared to $91,300,000 or 28.7 percent of sales in the prior year period. The increase on a dollar basis was principally due to higher store direct and departmental costs to support our stores.
Operating income for the Q3 declined to $10,000,000 or 3.3 percent of sales. This is compared to $21,400,000 or 6.7 percent of sales in the prior year period. Net interest expense decreased to $4,200,000 as compared to $5,000,000 in the same period last year. This was principally due to a decrease in weighted average debt. Income tax expense was $1,200,000 or an effective tax rate of 21.2 percent, which is compared to $4,200,000 or an effective tax rate of 25.8% in the prior year period.
The year over year difference in effective tax rate is primarily due to state taxes, discrete tax impacts related to share based awards and an audit settlement of certain prior year state income tax returns. Net income was $4,600,000 as compared to $12,200,000 in the same period last year. Diluted earnings per share was $0.15 This is compared to $0.38 for the same period last year. Adjusted diluted earnings per share, a non GAAP measure, was $0.19 And this is compared to adjusted diluted earnings per share of $0.39 in the Q3 of fiscal 2024. Please note that the Christmas holiday shift negatively impacted both diluted EPS and adjusted diluted EPS by approximately $0.05 in the Q3 of fiscal 2025.
Please refer to our reconciliation of adjusted diluted EPS in this morning's earnings press release and on Slide 10 in the appendix to our earnings presentation for further details regarding excluded items in the Q3 of both fiscal years. As highlighted on slide 7, we continue to maintain a strong financial position. We generated $103,000,000 of cash from operations, including $27,000,000 of working capital reductions during the 1st 9 months of fiscal 2025. Our AP to inventory ratio improved to 179% at the end of the 3rd quarter versus 164% at the end of fiscal 2024. We received $9,000,000 in divestiture proceeds as well as $9,000,000 from the sale of our corporate headquarters.
We invested $21,000,000 in capital expenditures, spent $30,000,000 in principal payments for financing leases and distributed $26,000,000 in dividends. At the end of the Q3, we had net bank debt of $49,000,000 a net bank debt to EBITDA ratio of 0.4 times and total liquidity of $521,000,000 As we have commented earlier and on recent earnings calls, we have made significant progress in several foundational areas including gross margin expansion in the 1st 9 months of fiscal 2025, inventory optimization by leveraging strong vendor partnerships and our solid financial position. These foundational improvements coupled with our market facing initiatives including our Comfort Drive digital courtesy inspection process, our oil change offer and focus on approximately 300 of our small or underperforming stores as well as our relentless focus on improving the guest experience are setting us up for improved financial performance. Now turning to our expectations for the remainder of full year fiscal 2025 on Slide 8. Please note that fiscal 2025 is a 52 week year, while fiscal 2024 was a 53 week year that benefited from an extra week of sales in the Q4.
We remain focused on sales and unit growth and improving our customer counts, while making the necessary price and promotional investments to do so. We expect to generate at least $120,000,000 of operating cash flow inclusive of continued working capital reductions in fiscal 2025. The strength of our financial position including our cash flow, positions us to fund all of our capital allocation priorities, including our dividend during the remainder of fiscal 2025. Regarding our capital expenditures, we expect to spend $25,000,000 to $30,000,000 in fiscal 2025. And with that, I will now turn the call back over to Mike for some closing remarks.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Thanks, Brian. Our business has long term durability in an industry that remains fundamentally strong. Our initiatives are driving an improvement in our top line results. This, along with our cash flow generation, will enable Munro to reap benefits as tire volumes continue to recover. We are poised to win with our scale, strategic relationships and our experienced management team.
With that, I'll now turn it over to the operator for questions.
Conference Operator: Thank you. We will now begin the Q and A session. Our first question comes from Seth Basham from Wedbush Securities. Seth, please go ahead.
Seth Basham, Analyst, Wedbush Securities: Thanks a lot and good morning. Nice to see the progress on comps and gross profit comps. And we're wondering whether or not we'll continue to see improvement in gross profit comps going forward or you plan on accelerating investments in price and promotion and seeing mix deterioration such that will not be the case. What's the framework to work through?
Brian, Chief Financial Officer, Monro Inc.: Yes, related to gross margin in the quarter, our gross margin declined 120 basis points. That was driven by material costs of 150 basis points, partially offset by a decrease in technician pay of 30 basis points. So the increase in the material costs, as you mentioned, was related to the continued trade down of consumers to our Tier 3 tires as well as our increase of self funded tire promotions. Going forward then, we expect similar pressure related to those material costs, given that consumer trade down and higher levels of promotional activity. So we remain committed to sales unit growth and improving our customer counts and we're going to continue to make necessary price and promotional investments which we believe this current environment requires.
Seth Basham, Analyst, Wedbush Securities: Got it. Good to hear. And my follow-up question is just around the weather. You mentioned pressure in January because of the weather. Looking back at the full fiscal Q3, do you think weather was a net benefit or a drag or neutral?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Seth, good morning. It's Mike. I would say the Q3 was neutral. And I would say what we experienced in January, the extreme weather, I think it's a good setup going forward, just like it has been. I've been looking for a winter and we got it.
Although we had some disruptions with closed stores, that affected our January results, mostly focused on tire. We had momentum coming out of December, and our service categories. All our major service categories, including brakes, were actually up and stayed up. So I would say that we have a good setup with winter and a good setup really the sequential improvement of our sales our team's performance is obviously will take us through Q4 and beyond.
Seth Basham, Analyst, Wedbush Securities: Got it. Thanks a lot and great to see the progress.
: Thanks, Ted. Thank you.
Conference Operator: Thank you. Our next question comes from David Lark from Wells Fargo (NYSE:WFC). David, please go ahead.
David Lark, Analyst, Wells Fargo: Hey, good morning guys and thanks for taking my questions. So it seems like you're seeing the digital courtesy inspection drive some improvement in service categories. I was curious if you could parse out some of the benefits in a bit more detail and how we should think about the drivers going forward?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: David, good morning. It's Mike. I've been asked on this call in the past talking about the compadrive and what would be some of the results that we should be looking for. When I look at what compadrive has driven and I just look at very objectively what the results are, Our traffic was down, but our average ticket was up and our average ticket was up driven by our service categories. And so when I look at what we're doing, we're attaching really well.
We need more customers and that's what I'm committed to is driving our customer count, getting low single digit growth in customers. But what the team is driving is strong attachment. I see it in batteries. I see it in alignments. I see it in ride control.
This is the first time I've talked about this in that specific area. I absolutely in Q3 was disappointed in my brake results, but January it actually went positive. So all my major service categories are going positive. So from walking away, the compadrive is absolutely delivering what I expected. It's a good process for our customers.
It's a good process for Monro and our shareholders.
David Lark, Analyst, Wells Fargo: Got it. That's helpful. And then it seems like similar gross margin pressures could continue here near term. Curious if you could help give some color around how we should think about SG and A in the Q4 and if there's any early guardrails for next year?
Brian, Chief Financial Officer, Monro Inc.: Yes. As it relates to SG and A, as you saw, we had an increase in SG and A versus the prior year. And the driver of that really was our front shop labor costs, which we also refer to as store manager pay. And the primary driver behind that was just an investment in front shop labor to support that compra drive inspection process. It's really important as part of the inspection process to have the right resources at the front counter to deliver the Comfort Drive educational selling process and that guest experience.
So we believe we're seeing obviously as Mike just commented on the benefits of these investments in our service category sales. But going forward, we expect that our G and A expenses will continue to reflect this investment. Of course, we'll continue to find ways to drive productivity improvements in other areas of our G and A spend, but the investment in the front counter will remain.
: Got it. That's helpful. Thank you. Thank you, David. Thank you.
Conference Operator: Our next question comes from Thomas Wendler from Stephens Inc. Thomas, please go ahead.
Thomas Wendler, Analyst, Stephens Inc.: Hey, good morning, everyone.
Brian, Chief Financial Officer, Monro Inc.: Good morning, Thomas.
Thomas Wendler, Analyst, Stephens Inc.: You guys saw some continued growth in the Tier 3 tires during the quarter. What does that mix look like now? And then are you still purposely steering customers towards the Tier 3 category with some of the promotions? And is that where your self funded promotions is focused?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Yes. Tom, this is Mike. The mix is in the high 20s on Tier 3, and I would say that we are absolutely driving the customers so they just don't go to Tier 4. There are definitely attributes of Tier 1 through 3 tires that we want to make sure that we are presenting to the customer. Just going to cheap tires doesn't feel like the right thing to do for Munro and its customers.
What we are what I continually emphasize is the fact that when we recommend and we provide strong promotions, the customers see the benefit in that. And if they're happy with the tires, they live with it for 3 years, then they come back to us for come back to us for other services, which are very important to me.
Thomas Wendler, Analyst, Stephens Inc.: Perfect. And then for my follow-up, is there go ahead.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: It's about when I said high 20s, it's about 30%, just so I on the Tier 3.
Thomas Wendler, Analyst, Stephens Inc.: Okay, perfect. And then for my follow-up, has there been any kind of slowdown in the manufacturer funded promotions?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Not at this point in time. I would say there's nothing changing in the consumer environment and we have we're very focused on making sure the manufacturers come along for this journey, making sure that the industry
: doesn't get to your point. All right.
Thomas Wendler, Analyst, Stephens Inc.: Thank you for answering my questions, guys.
: Thank you, sir. Thank you.
Conference Operator: Our next question comes from Brett Jordan from Jefferies. Brett, please go ahead.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Hey, good morning, guys. Good morning, Brett. Could you give us the
Brett Jordan, Analyst, Jefferies: breakout of traffic comp versus price and the comp in the quarter?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Brett, it's Mike. Low single digits down and up, middle single digits, basically up in down traffic, mid single digits up in ASP, mid single digits.
Brett Jordan, Analyst, Jefferies: Okay, great. And then could you give
Thomas Wendler, Analyst, Stephens Inc.: us an update on where
Brett Jordan, Analyst, Jefferies: you stand with ATD? You picked up $9,000,000 of divestiture proceeds. Are they still paying that? I guess what's left to collect? And how is their situation just given liquidity challenges?
Brian, Chief Financial Officer, Monro Inc.: Yes, related to ATD, nothing's changed in terms of our commentary on the last call. We still have $6,800,000 of our receivable, the earn out receivable owed to us. That is going on as part of the current process that they're going through. And we currently have no reserve against that as our expectation is to collect the full amount. And I would also say that our relationship with ATD remains strong during the restructuring process and business as usual in terms of operations and deliveries to our stores.
Brett Jordan, Analyst, Jefferies: Okay, great. And then could you talk about regional performance? Obviously, weather has been different across the country, but your West, Southeast, Northeast and Mid Atlantic, any big dispersion or anything to call out there?
Brian, Chief Financial Officer, Monro Inc.: Yes. We were stronger in the South than our consolidated comp. And then in the Midwest, Northeast and the West were all a little bit weaker than the consolidated comp in the quarter.
Brett Jordan, Analyst, Jefferies: Okay, great. And I guess oil promotion trends, I think you called out self funded promotion. I think talked about oil promotion in the Q3 going into the Q4. How do you see the broader market there? Is that category becoming more promotional as peers are trying to drive traffic as well?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: I would say that the promotions have always been in place. Most of it has been focused on Monro. We've just gotten more aggressive using our vendor partners, Valvoline (NYSE:VVV), making sure that we are very competitive in the marketplace. And that's what we've been focused on starting at the end of really when we announced it in the Q1 of this year.
Conference Operator: Thank you. Our next question comes from Brian Nagel from Oppenheimer. Brian, please go ahead.
: Hey, guys. Good morning.
: Good morning, Brian. Good morning.
: So my question is maybe a bit repetitive, but I just want to it's on I want to focus on gross margin. So I think this goes back to the question Seth asked initially. But if you look at the progression in gross margin from the fiscal Q2, the fiscal Q2, fiscal Q3, the trend turned more negative or worse. So the question out there, I mean, what changed? Was it just a more of an emphasis on this serving this value customer?
Or is there something else at play that caused that sort of say incremental weakness Q2 to Q3? And then I have a follow-up.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Brian, what changed was the fact that in May, Monroe and I declared on that we were going to get our tires back. Going into that May quarter, we were losing, we were ceding market share Tier 1, Tier 3 and 4. The customers were shifting down to Tier 4. And we have a strong Tier 4 offering. So it's not about availability, it's really about price.
And we really leaned into our vendor partners along the way. And it's just a difficult consumer environment. We do see that setup improving, absolutely improving and we made sure to get the tire business back. And that's a lot of the drag on the gross margin. At the same time, I was not seeing some of our service categories coming to life.
And I would say now we're starting to see those service categories coming to life. So between the vendors helping us, leaning in, protecting their brands and Monro driving a quality inspection process and offering and selling additional services, that's how we're going to restore our margin. And we have that trajectory going back in a healthy place.
: Okay. So with that, Mike, then and I recognize that you haven't really given guidance, but should from a gross margin perspective, recognize there's a lot of moving pieces here, but so should is fiscal Q3 the worst of it? I mean, do you perceive things getting better from here?
Michael Broderick, President and Chief Executive Officer, Monro Inc.: I would say at this point in time, I like where we came out of our service categories in January, but I don't have a crystal ball, Brian. I would say we're very focused on getting a balanced approach, very focused on getting our vendor partners on board, making sure they protect their brands, making sure that we're growing all our categories and getting our business back, getting our customers back. And I really do like to see what our brakes are doing right now and our other the attachment strategy that we've put in place with Compadrive is starting to come to life. Now as how that plays out in Q4, I look forward to talking about that in a couple of months.
: Okay. Then my follow-up I guess my follow-up question. You and Brian, you mentioned this a lot as well. I mean, just over time, taking those gross margins back to pre COVID level. So the math right now is you're tracking 3, maybe 5 percentage points below pre COVID or historic peaks.
What are the building blocks to get back there from where we are right now? We talked about this. I mean, and there's clearly a cyclical nature with the pressures on the consumer, at least we hope it's cyclical. But as you think about the builder, the bigger building blocks to get back to those historic gross margins?
Brian, Chief Financial Officer, Monro Inc.: Yes, I'll take that Brian. I think the first thing that we need to see happen is we need to see the pressure on our material costs start to abate. And I think the environment needs to improve for that to occur. So we need to see the trade down impact, the level of promotional activity needs to improve. So that's first.
The second piece is we need top line growth because really the next leg up in both our technician pay as a percent of sales as well as occupancy cost percent of sales is really related to leverage, fixed cost leverage against the fixed components of both of those lines. So top line growth with some help from the consumer environment on the material costs, it would allow us to pull back on promotions or start to see a reversal of the trade down are really if we get a healthy dose of those two dynamics, we will see our way back to the levels you described.
: Got it. Okay. I appreciate all the color. Thanks guys.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Thanks, Craig.
Conference Operator: Thank you. Our final question today comes from John Healy from Northcoast Research. John, please go ahead.
0: Thanks for taking my question. Just wanted to ask a little bit about SG and A levels in the business. I know they poked up a little bit here in Q3, but honestly you guys have kept those pretty stable over a long period of time. So I was just kind of wondering where we're at in that kind of cycle. And as you drive same store sales hopefully in fiscal 2026, where do you think SG and A grows relative to just that comp store sales number?
Thanks.
Brian, Chief Financial Officer, Monro Inc.: Thanks for the question, John. Yes, we've talked about the flattish SG and A as you mentioned over the last few years, really driven by our back office optimization initiatives, which allowed us to completely offset the effects that inflation had on our G and A costs. They did delever on the lower sales levels, but on an absolute dollar basis, they remain relatively flat. On a previous question, I talked about the current quarter dynamics really driven by the front shop labor that we've invested in to support the compadrive process and our expectation for that front shop labor to continue to be in place in order to continue to deliver the benefits that we're seeing in our service category top line. I think that's the biggest item that would take G and A up off of a normal inflationary year over year growth next year.
So ultimately our goal is to make sure that that inflation growth plus the investment we're making in that front shop, it's obviously growing at a lower pace than our top line. And that's how we're we would plan the business going forward.
0: Got it. Makes sense. And then I just wanted to ask a little bit about kind of your reference earlier to some of the entire category tiers. You used the phrase Tier 4 a little bit. I was just trying to understand maybe if you looked at the different tiers Tier 1 through 4, maybe what's the difference in price point kind of high to low?
And how does the margin profile from high to low kind of compare for you guys? Thanks.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: I'll take that. John, I would say the in very simple terms, it's about $20 difference $20 to $30 difference between every tier. But there's a lot of just use that as kind of a barometer. And you make the margin is stronger generally in Tier 1 through 3.
: Got it. Thank you, guys. Thank you, Doug. Thanks.
Conference Operator: Thank you. That is now the end of the Q and A session. So I'll hand back over to Michael Bodrich for closing remarks.
Michael Broderick, President and Chief Executive Officer, Monro Inc.: Thank you for joining us today. This continues to be an exciting time to be part of Munro. We have a strong foundation to build upon to create long term value for all our stakeholders. I look forward to keeping you updated on our progress. Have a great day.
Conference Operator: This concludes today's call. Thank you for joining everyone. You may now disconnect your lines.
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