Good afternoon, everybody. I am Michael Lasser, the hardline, broadline, and food retail analyst from UBS, and I could not be more excited to have the team from Monro with us today. To my immediate left is Brian D'Ambrosia, who's become a regular staple at the UBS Consumer Conference. I think this is maybe your fifth or sixth time here, so we are gonna start handing out medals, and Brian is going to be leading for that count, so we're greatly appreciative of that. He is the company's chief financial officer, and next to him is Felix Veksler, who runs the investor relations effort. Monro's a super interesting company 'cause it operates in a very interesting sector of our economy, which is the auto services sector. So, Brian, where I wanna start, I wanna set the table, is give us an overview of the market that Monro serves and how does Monro fit into the marketplace? Yeah, absolutely. Thank you, first of all, for having me back, and thanks for everyone's time this afternoon. Monro operates in the auto services aftermarket. The auto services aftermarket, inclusive of tires, is about almost a $400 billion category. That is comprised of just over $300 billion in the do-it-for-me segment. So do-it-for-me is about 75% of the entire auto services aftermarket. DIY is about $100 billion or 25% of that. Through the auto services aftermarket, the DIFM side of it, there's about a little over 100,000 independently operated locations that serve the car park, the car park being about 300 million vehicles. One of the drivers of the DIFM category, as well as growth in the DIFM category, is related to vehicle complexity. So, vehicles have been complex for a while. They continue to get more complex, and those lend themselves for service and maintenance, needing a professional mechanic to perform those maintenance services and keep you on the road safely. I don't think that's gonna change. I think that that shift has been made, and it continues with every new model year that comes out to become more and more difficult to work on your own vehicle. Important about the auto aftermarket is the car park itself. Car park itself is, like I said, about 300 million vehicles. It is the drivers of Monro and demand in the do-it-for-me category really come down to the number of vehicles on the road, which is large and growing, the age of those vehicles, which is up to over 12 years, up 2 years since I've been in the industry, just over 10 years ago, so continues to age pretty consistently. Then the third piece is really how many miles are being driven on those vehicles. We are back to pre-pandemic levels, in terms of miles driven. We're probably foregone about 4 years of growth in vehicle miles traveled over the last 4 years. The constitution of those vehicle miles traveled is a little different from commuter miles and things like that. and also, if you take the higher number of cars on the road and divide it into the vehicle miles traveled, you're seeing a little bit less travel per vehicle, on the road. So, those dynamics are important as we think about long-term trends in the industry, which are very supportive of, of the auto aftermarket and the services the auto aftermarket provides. I would say that for Monro, we are one of the top, in terms of top locations. We have 1,300 locations in 32 states. That puts us in top five, of the largest providers in, in the country. Just to give you a sense, the top 15, or the top 10 have about 15% market share, so there's a significant amount of fragmentation in the service providers. You can actually own only about 10 stores and be a top 100 tire dealer in the U.S. So it's a lot of fragmentation and opportunity for consolidation in the industry. I would say, as it relates to kind of the short term, right now, I think the biggest thing that is putting some pressure on the auto aftermarket is in particular in the tire category. It's the highest one of the highest-ticket services you can have in our list of services, which include oil change, brakes, tires, alignment. But tires are the most expensive, and they're the most kinda economically sensitive. And our low-to-middle-income consumer is, we're seeing them defer and trade down, at this particular time as they're looking for basically not value, but really just price point, in a lot of cases. There's a lot of difference in behavior as you move up and down the household income chain, but for most of our consumers, we're seeing that a lower value tire has become a real option and maybe their only option. So we try to support them with secondary financing and other things that can help them to really keep their car safe and ultimately put the right vehicle the right tires on their vehicle. Man, I could unpack that for days. So there is a lot though, there is a lot to get into. Number one, what type of customer, in general, tends to gravitate to a Monro versus going to the dealer? So presumably, is a lower-income consumer who's a little bit more value-conscious, and then within that, you're seeing a little bit weaker, softer trends on within the even lower end, end of this demographic? Yeah, that's correct. So really, the decision to go to the dealer versus the aftermarket is driven by the vehicle and the age. Mm-hmm. Age of vehicle. You know, when we say age, it's almost age/value because rational economic behavior is kind of as the value of the asset that you own goes down, the amount you're willing to spend to maintain it also goes down. And so where that then causes the consumer to flip from the dealership to the aftermarket is the aftermarket is a value value is really delivering value versus the dealer who is typically delivering a little bit more experience, for meaning, meaning the experience within the dealership, but also, you're a little bit more willing to make more of an investment and pay a little bit higher because you are investing in a newer vehicle. And the reason why we're able in the aftermarket to offer cost advantages and price advantages to the consumer is because our technicians really perform that limited amount of maintenance services, oil, brakes, tires, alignment. They're not doing a tremendous amount of heavy engine repair, transmission work. All of that is really left for the dealer, that factory-certified, factory-trained technician who needs to do everything from replace a wiper blade to rebuild the head gasket or put a new head gasket on. So I think that we just have a different labor model, and we also can use aftermarket parts, and aftermarket tires, and that allows us to have a value offering when it comes to materials as well. So as the consumer trades, you know, starts to age out in their vehicle, they move from typically a consumer, a customer of the dealer to the customer of the aftermarket. Then to your point, within the aftermarket, we're starting to see pressure on that consumer as well who is looking at their vehicle. Typically, when you see consumer pressure, the first, quote-unquote, "trade down" is from buying a new car to maintaining the one that's in your driveway. And the second trade down comes from, "Okay, maintaining the one in my driveway is expensive as well. I need to trade down and be a little bit more value-oriented there." And that's where we've seen some of the trade down and some of the deferral in the tire category in particular. I've been covering this industry, studying it for 20 years. You just put it in some terms that are new and fresh. Thank you. Good. So you just provided a little bit of context for what was happening in 2023. The consumer was under pressure. Car counts for Monro, I think, were down 8% in 3Q, down 4%. Is that a sign that the consumer has been deferring some maintenance? Is it more so a reflection of some of the weakness in the tire category where you don't do tires, you may not do alignment? How do you diagnose some of those dynamics? Yeah, it's a great question. If you look at our Q3 in particular that you referenced, our overall comps were down 6.25, but when you look at tires being down 9 and then our brake and service categories down 3, down 1, much healthier than the overall comp and certainly much healthier than the tire category. So what that shows us is we still have really good organic demand for our brakes and services, meaning the people that are coming to our shops are coming in for those services still. Why they're still slightly negative is there is a kind of a halo effect or negative halo in this case of the tire category 'cause we do sell brakes and service off of tire visits. So when you have a tire customer coming in, who's buying fewer tires or trading down into a more value-oriented tire, their propensity to spend and add on to other categories goes down. So, I think that that's where some of the negative weakness in those categories has come from. But the actual brakes and service as a visit, as that's the reason the guest is coming in, we're still seeing very good trends in our business. That all kinda leads me to conclude that it really is this overarching weakness in tires, which I'll just emphasize, is not specific to Monro. This is an industry kinda air pocket that we're in. It really is a consumer-sensitive-to-price; the category is a high-price category, and we're seeing the dynamics I explained earlier. In from October through the end of the year, the comps were down around 6%. There was some encouraging signs in January where trends improved. What do you think drove that improvement? And is that a sign that the industry is now starting to normalize and stabilize, or, hey, that might have been just one isolated data point and still have a guarded view from here? Yeah, I think the data from the industry is pretty clear. There was softness in the early part of January. There was some weather-related tailwinds related to the three named storms that came across the country in pretty quick order and delivered a lot of winter weather to geographies that hadn't seen winter yet. That created definitely a stimulus for the industry as when you have tires that need replacement, there's nothing that can make you aware of that, like slick conditions. So we saw an immediate, as you would expect, improvement in tire sales as an industry. I wish that was more durable, but definitely, post-weather, the industry has reverted and still feels similar pressure to before the weather. So I think that ultimately, you know, what we expect and is what we think is that, you know, the nondiscretionary nature of tires can be deferred over short periods of time, or even trade it down over short periods of time. But over longer periods of time, mix tends to normalize to the appropriate fitments on vehicles, meaning that certain vehicles, even though you can buy a lower-cost tire or lower-price-value tire on them, you shouldn't. So that tends to normalize over time, as well as tire volumes tend to normalize over time because of the lack of permanent deferability of that purchase. So it's one of the reasons why the auto aftermarket is such an attractive investment is because of that ultimate nondiscretionary nature of it. And with tires tend to stabilize over time. I've got one of those EVs, and my tires go so quick. I, from what I understand, what someone tells me 'cause I am what they call not a very sophisticated auto person, I just pretend like I am. Yeah. It's either because of the torque and the weight, and that means that you're running through your tires a little bit faster than with a conventional motor vehicle. So, is that right? And isn't that a good news story for, you know, the market that you serve over the long term? Yeah, absolutely. So first of all, I'm gonna add you to my informal survey that I'm doing. There you go. On tires and EVs. But it's not how I drive. I don't drive that fast. They're like, "It's. I've talked to plenty of EV drivers, rideshare, and the like, and they all, I always ask, "How are the tires holding up? Yeah. Make the same comment. If I feather it, and baby it, I can get this much out of it. If I drive it like I want to, it's less. And both of those numbers are below what you would expect given the range of a tire on an ICE vehicle. Below meaning the time that you have those tires is. That's right. Is lower than. Yeah, it is. It is. And so. And Felix has with this on a chord. That's right. That's right. And so what we've seen is that the weight and the torque are part of it. And that does bode well for us because as we look at the current technology on tires, which is not, you know, hasn't dramatically changed in terms of range, quality, if you want a good ride, you're gonna have softer tires. If you want long life, you're gonna have a harder ride. And so there's a trade-off. There's a give and take over range and comfort and performance. That technology has not changed that at all. So the EV is gonna continue to likely burn up tires a little bit more. That creates tires as a high-ticket item but a little bit more of a frequency item, which I think is just another way that we see the 15% or so of oil that we have that may be at risk in an EV world, you know, kind of that gap closing through tires and other categories that we'll introduce to replace that. But ultimately, it's a long move to get to that point given the amount of installed base of combustion engines in the aftermarket. I will say, though, as a good example of the fact that we are seeing EVs already in our bays and doing all the needed work on them, you know. I often hear that, you know, "Oh, EV owners won't bring it to the aftermarket. They'll go to the only the dealer." Well, I was in Raleigh last week at a at one of our shops that does, you know, a normal mix of business, and we had 3 Teslas in there, 1 getting a state inspection, 1 getting new tires, and 1 getting brakes. It's a pretty good cross-section of our services, and you can see that in a lot of a lot of markets that have EV penetration. You'll see that in our bays. My teammate, Henry Carr, has done some work showing that by 2030, 5% of the vehicle population will be EVs, but it seems like the benefit that Monro can get could be even greater than that, just because it is expensive to replace tires, especially through the OE channel. That's right. We look at it as definitely a net opportunity for us. Yeah. We're planning for that in that way. Speaking of planning, how are you thinking about the next couple of quarters from a ticket and traffic? I know you haven't provided formal guidance, so I'm not putting you on the spot. Sure. From that perspective. But just conceptually speaking, it's been a super interesting time for the auto services business because there's so much inflation that's been passed through, you know, what on the surface. What, how would you expect the dynamic to unfold for the sector? Yeah, absolutely. I think that when you look at auto services, particularly the services that we provide, they're. We've said it publicly before that we probably were taking mid- to high-single digits at the peak of inflation but only passing on kinda low- to mid-single digits. And part of that was, as you continued to pass cost onto the consumer, you saw the deferral and the trade down, right? So you had to—you really, I think, there was a point where the industry was very rational and decided, you know, to take and make some investments in price versus taking price and passing it onto the consumer. So I would just say that because, you know, ticket has not been and inflation has not been as big of a supporter of our top line as maybe other parts of the aftermarket, it has been, and who's taking a little bit more price. That being said, we know that to grow going forward, we need a balanced mix of traffic and ticket. And we're aligning all of our internal initiatives, whether it's the launch of our Digital Courtesy Inspection, which is just deliberately designed to deliver and build a better way to sell in-store and identify needed work for the guest and present that work to build ticket, or it's the way we have, you know, positioned our categories from a price and offering standpoint, to be able to make sure that we're relevant and competitive to be able to attract traffic. Both of those things are, you know, we feel really well-positioned going into FY25. And ultimately, how much of all of that work, and the benefit we get to see in absolute terms, I think it's gonna be, in a large way dependent on how quickly some of these challenges in the tire category resolve themselves. I wanna get to that in a sec, but how does the digital inspection work for those who are a little less familiar with the story? Yeah, so right now or not even right now because we only have 200 stores left to implement this in. So if you would say six months ago, you'd go into one of our stores, and our technician would perform a courtesy 32-point inspection on your vehicle. If you came in for any service, you'd get that. That is a value add. But it would be done in paper form. So the first problem with paper form is, as a multi-unit manager, like a district manager and a regional vice president, on any given day, they wouldn't know that process is happening in-store, right? There's no way to check, but you know, trust but verify. So now that we've got it in a tablet, which is, you know, why we're using typical industry-level or commercial-grade tablets, they're doing that same checklist on a tablet. In addition, they have the ability to take pictures, make notes. When they hand it to the guest, it doesn't have dirty fingerprints all over it and chicken scratch from a technician who's writing it. There's nothing called chicken scratch, by the way. Yeah. But you'd like the guest to understand the numbers that they're seeing. Yeah. So this really presents a much more, first of all, benefit to the guest in terms of much more professional presentation. It builds a lot of trust with the guest because it's a low-trust industry where you have a knowledge imbalance. The technician and the store manager know a lot more about cars traditionally than the customer and a lot of our customers, not all of them. And with that knowledge imbalance creates, you know, either defensiveness or lack of trust. And so by showing pictures, showing industry data on there 'cause it's all gone to industry all done to industry guidance, we can explain to the guest what their current needs are and what their future needs might be. But the most important thing is that we're making sure that that is done on every single vehicle, so we have that data. We also have the data to be able to say, "How well was it done?" We can see we know that, you know, if X number of vehicles out of 10 require a certain service, how well is that tech identifying approximately that number of vehicles? If he's never identifying that on a vehicle, obviously, that is impossible given we know that, X number of vehicles on the road require that service. Or vice versa, if he's over-identifying, we have a correction opportunity. We also can see what was found and then what ultimately our store manager was able to sell. So we can see how effective the store manager is at taking what was found on the vehicle and being able to communicate to that to the guest and translate that into an additional service on that ticket. Then we can also identify how many times that was presented but declined by the guest because then we can move that over into our CRM and market back to the customer for that service in the future knowing that they declined it that day. So it's the visibility created by that one piece of paper turning into a tablet really changes our control over what's arguably our most important ticket driver in the company, which is a Digital Courtesy Inspection. What have you seen from this so far? Well, the fact that we've moved it out into 1,100 stores showed that we saw success in the early phases. We've rolled it out in about five or six phases. And in each phase, we've seen what we would expect to see. And we would see that based on versus the control group, we've seen attachment of items that are traditionally sold through inspection. You're not gonna sell a lot of oil changes through inspection, but you are gonna see more brake sales, more alignments, more batteries. Those are the things that typically kind of show themselves in a traditional individual inspection. And because of that, you know, we really feel like it's an opportunity for us to support our service category through that process. At the very least, if they're not selling more that day, we've created a better relationship with the guest after they leave our store. Meanwhile, Felix has been going through a paperless annual report, so now you can talk about this across your organization. That's correct. I wanna talk about another initiative that Monro's been putting in place, which is managing some of the labor hours within. Yeah. Within the stores. You know, what has been prompting this, and where does it stand today? Yeah, I would say the most important thing I would say, first of all, before we talk about the managing of the hours, is that we're staffed for growth. Yep. So, I mentioned we were down 6 in Q3. But at the same time, if we were up to, which is obviously, you know, aspirational when you're running down 6, we would have had very little incremental labor investment. So we feel like that we have a significant amount of leverage on our pool. That originally, at post-COVID, after we'd had to run a lot of zero-dollar schedules and furlough some employees to react to the decrease in vehicle miles traveled, it took a while for us to get back. And our whole premise was that we had demand that was outsized above our capacity. We really did a good job of hiring into and building that capacity of technicians to meet the demand. We have seen some softening in that demand as we've been talking about. But the good news is we haven't had to really downsize our staffing. We've really managed that through schedule. And that's getting the teammates scheduled appropriately so that we're not running unproductive overtime. We're not running a lot of unproductive time at any point in, you know, during the workweek. We're scheduling the right days and the right day parts. And we're moving labor around to the stores that have the most need for it. So I think we've done a really good job there, which allowed us, despite being down 6%, to leverage the previous year and expand labor margins by 40 basis points. So I think what that means for us is if that down 6 was higher, let's say, even the up 2 I mentioned, you see significant leverage. That's another 100 basis points of leverage because we will not be adding costs back in as fast as the sales will leverage. Got you. Yeah. And what is the market for techs right now? Has it? It's a, you know, this has been a challenge for the whole industry for the last several years. Where does it stand right now? Yeah, I would say it's been a challenge for the industry, for a decade. Yeah. I think it was, you know, these are highly trained when you look at the technicians, the highly trained technicians, they're in high demand. There's a shortage that started before COVID related to the amount coming through trade schools. And it's something that, you know, we've, I think, as an organization done a really good job of replenishing and replacing a lot of the technicians that we were forced to, you know, separate with during COVID. That being said, it's highly competitive. But our technician turnover is at a place where we can really feel good about the growth opportunities that it provides 'cause a stable technician base is important. Where we've seen higher levels of turnover is in our entry-level technicians, which you would expect. They're technicians that are less wedded to the industry. They could see themselves going to, you know, either being, you know, going to Target, going into other parts of retail. But our job is to bring them in, try to invest in them, and put them on a career path and develop our technicians of the future. It doesn't always work. It's more of a turnover in those entry-level technicians. But, you know, at the same time, it's not as kinda penalizing as when you lose one of those higher-level techs. Maybe as we need less outside research analysts, we could repurpose some of those to be techs. As is, how are you thinking about wage pressure associated with the technicians across the market? And if you could put that in the context, and then what's the ability to pass that along in terms of, you know, and retail prices? Yeah, that's a great question. We've seen that mid- to high single-digit number I talked about, that we saw in inflation earlier, that included labor and materials. Labor was leading that higher. Now, probably from a technician wage prospective, we're seeing mid-single digits, low mid-single digits of wage increases. So that inflationary pressure is still there. And that's where we've done a really good job of what we call walking back the rate, meaning attacking time and a half, unproductive time and a half, unproductive premium pay, unproductive time in general. It's helped us to manage that rate down to something that's more productive and below. It allowed us to bend the 4%-5% inflation trend to something lower. Passing price onto the consumer, I think we feel good where we're priced now, and we're really, I think, keeping our eye on competitive dynamics and making sure that we're priced where we wanna be relative to our competition. Going into this inflationary period, we really used it as a way to kinda reset our pricing, and get, you know, relative in every category to where we wanna be from our competitors. We do that regularly. We scrape all 100 of our DMAs, and we look at our primary competitors in every market, and we make sure that our pricing is, you know, it has the right distance that we want between competition. What are you seeing on the raw materials, on the parts front? Is it stable, or are you still seeing some inflation there, and how is that filtering through? I would say stable. Stable. I would say stable, yes. We haven't, you know, I would say it's not significantly inflationary. It's not deflationary. It's probably stable to disinflationary at this point. Disinflationary. Yeah. You know, the industry's always passed along modest increases. Would it be reasonable to expect that that's the go-forward, you know, very, you know, typical type inflationary pressure? Yeah, I think that's how we plan for. We definitely expect that labor will be our biggest cost increases that we need to contend with will be in the labor side. Yeah. You know, we're looking across our material costs and planning for a more muted inflation environment. Felix always does a great job of educating us of what's happening around each quarter to give us the inside scoop. One of the things that we've talked about quite a bit is just making some changes around the pricing strategy associated with the tires as a way to motivate people to come in. You know, how do you think about how far Monro can push that strategy, you know, to appeal to the entry price point on the tire side and then potentially have a more full-service experience with that customer? Yeah, it's something we've talked a lot about internally and externally is kind of Tier 1 through 3 tires versus Tier 4. Tier 1 through 3 considered to be the branded tires, the ones you'd recognize from Michelin and Goodyear too, you know, Pirelli. The fancy tires that sound like people in this. Yeah. This audience might buy. That's right. And then you think of Tier 4 as the private-label tires. Guys like me. That's more of a price point. And so what we've seen is, that the industry has definitely, like we talked about, seen that trade down. And we feel good about the mix of tires we have. We don't have any intention of kind of, racing to the bottom and over-indexing in the opening price point tire, partly because there's significant, you know, margin profile differences there, partly because as you have higher-priced labor installing lower-priced tires, you know, you can get yourself upside down. And third, that we feel that, you know, those lower-priced tires tend to come with a lot less attachment from the consumer. Mm-hmm. It's a lower-value tire lower-value customer. But there is a healthy amount, call it 25%, that you really wanna have of that Tier 4 tire in your mix. And we're really focused on maintaining that mix and not losing it, not growing it, regardless of what the market does, in Tier 4. But one of the opportunities we have is to really have a good offering there at the right price point and then differentiate ourselves in Tier 3 or Tier 2 or Tier 1 with really good offers backed by our manufacturers that we can offer the guest. We did a promotion in the fall, and in the late early winter related to buy three, get one in one of our tire brands. And that was supported by our manufacturer. ’Cause no one’s gonna buy you three tires. That's right. Let's be real. That's right. So but the manufacturers have done a good job, and the industry's done a great job of enforcing and following MAP pricing. Mm-hmm. There's minimum advertised pricing. Really, the way you can present op value in branded tires to the consumer is through manufacturer promotions. I think that we've seen supportive manufacturers. Certainly, I think there is. I don't expect any of them to go away quietly in terms of, you know, ceding share to Tier 4. We're very supportive of the brands that we offer and really excited about those offerings and looking forward to being able to give that value to our guest, enabling us to keep our mix where we want it. So you talked about managing your labor. You talked about the better customer experience in part through the tablet and the digital experience. You talked about, you know, making sure you have the right value message. What other initiatives are in place right now to ensure that Monro is stabilizing its market share on the way to gaining share within the industry? Yeah, I think that one of the things that we have talked, not all that much about is, you know, demand generation, right? Mm-hmm. So we've talked about a little bit today on our customer relationship management software that helps us market back to guests after they decline services. But really, in terms of going out and attracting new customers, we've been very targeted in that. We haven't placed a lot of big bets in this environment. What we've found is, in a lot of the tests that we have done, is that you're spending more to get less in this environment, that promotions backed by the manufacturers and other partners has been the most effective way to attract new customers. But I do think as we, you know, can move through this softer period of time for the tire industry, there is an unlock in our marketing strategy, and it's something that we'll be looking forward to talking about in the future when we think, you know, the macro environment's more supportive of that type of investment. Got you. Why is the auto services industry so fragmented? You talked about 15% held by the top 10 players. It's been that way for a while. Why is this not more consolidated, especially given the degree of consolidation we're starting to see in other areas of the auto service business, whether it's the oil change market or the wash industry? What is unique about the auto industry that the segment that you serve that has meant it's been fragmented for a period of time? Yeah, I think that when we look at the industry, there are a number of platforms that are rolling up the industry. And those are everything from, you know, financial sponsors, to strategics. So I think that we'll continue to see that. I think we'll continue to see consolidation at the very bottom all the way up to the very top of the industry. I think that as you look at what's going on maybe lower down, you're seeing some smaller private equity firms take the 1s and 2s, roll them up into 15s and 20s. I think that's what's needed because as you move up, you know, the being a 1,300-store chain, there's just as much, if you know, maybe not all the way as much, but a lot of energy that goes into acquiring a 1 or 2-store chain as there is a 10- or 12-store chain. So you appreciate and I appreciate the level of consolidation that's starting to happen, you know, in the smaller parts of the aftermarket. But at the same time, you know, there's a lot of locations out there, and it's gonna take time. And it's gonna take a good capital environment and cost of capital to really, I think, see another acceleration. Right now, currently in M&A, I think what you're still seeing is a little bit of a bid-ask spread between sellers and buyers. Sellers have an expectation of their business. Buyers have financial constraints as it relates to cost of capital and leverage and other priorities during this period of time. But ultimately, I think over the long term, you will see, you know, significant consolidation in the industry. But it just takes time given the amount of fragmentation. You're a young man, so you still have. Yeah. A lot of time left in the industry. Would you expect by the end of your time in the industry, we will see this be a much more consolidated sector? And what are the synergies? Where do they come from, from having a player with many more locations than just a single location or two? Yeah, I think there definitely will be a much more consolidated industry. I mean, I've entered the industry 11 years ago with Monro, and there's been a. When you were 14, go ahead. Oh, yeah, that's right. When, and there's been a lot of consolidation since then. It's, sometimes it's not noticeable as you're living through it, but you look back and think about the landscape back then. Yeah. Even Monro's size and scale, and there's a lot of consolidation that's occurred. The benefits of that consolidation, you know, it used to be that it really was a lot of the importance of leverage of marketing, leverage of distribution, for us. But as we've really partnered on distribution and marketing has become much more digital in nature, and you're not buying a lot of TV ads and radio that needs to be leveraged across a lot of stores, it's taken away some of the leverage you get there. But as we've gotten larger, the scale of our buying programs has really added to our cost advantages, and the advantage of having partners for distribution and much more digital marketing is the MAP has really opened up. If you can find 10 stores to support a market, you can go anywhere on the map. You don't need to be as worried about contiguous or infill because you have a lot more flexibility to get product to your store anywhere on the map and to reach your customers anywhere on the map. 'Cause you're gonna have supply partners that are local to that community. You should be able to benefit from some of the brand awareness in that local market. Is there a customer perception issue in the auto care industry about, "Hey, if I go to my local player, maybe I'll have a more personalized experience where if I'm going to a national player, I have to be a little bit more apprehensive or concerned"? If that's true, how does the industry address that? Is it simply by providing a good experience every, you know, opportunity it can get? Yeah, I think the real advantages of. I'll speak for Monro are our scale. Yeah. So the scale provides, like I said, an opportunity for us to provide a differentiated experience for our guest. We're able to make investments in technology like the tablets, in assortment like the amount of tire, tire manufacturers that we work with, in quality and, and speed of parts because of our relationships with, with our national parts providers, and also in training. Ultimately, though, that has to translate into a better guest experience in the store. And that's really when you say, "I'm gonna go to my guy 'cause I have the relationship," that's really what we want them to have. We want them to have a relationship with Monro. Sure. But also, we wanna have teammates in the store that make it feel like a local experience. Our convenience, number of locations, our hours, weekend hours, Sundays, those are differentiators to the guest. But really, what makes them come back and spend their hard-earned money is to know that, you know, they've got somebody who cares about getting them on the road. And that's the customer focus that, you know, we strive to have with all of our teams. Monro's spent the last few years putting getting its house in order, making some changes that have been necessary. You know, is it starting to think more about, how it can have a larger footprint? What's the right size? How fast can Monro grow over time? Yeah, when we talk about what we've been kinda doing for the last few years, it really, we've grown through acquisitions. Of the 1,300 locations, the majority of them have been acquired through acquisition over the years. And when you do that, you have to take. There's certain seasons where you have to take a step back and kinda consolidate your gains, make sure you have a strong platform for your next round of growth. And we've certainly done that. During that period of time, though, it's been really labor-intensive for us to do that. It's required a lot of focus and energy, but it hasn't required a tremendous amount of capital. So, while we're continuing to throw off cash flow, we've been able to take some shareholder-friendly actions during that period of time. We've supported our dividend, and we've introduced more recently our share repurchase program, which we bought about 10% of our shares back for about $140 million over the last couple of years. And, you know, that's what we've done that all while maintaining a balance sheet that's only got as of our last quarter, $94 million in debt on it and only 0.5x net bank debt to EBITDA. And that $94 million is bank debt only. It doesn't include our leases. So for us, we have a really financially flexible position that's really flexible, having returned some good amount of cash to shareholders while also positioning our business operationally for the future. That, to me, sounds like a really good opportunity to take that and grow it across more units. As you look at more M&A opportunities, how important is location in assessing the quality or desirability of a business? Yeah, we have opportunities in our 32 states for infill. And we also have a tremendous amount of white space on the map that are really attractive markets, markets where car registrations are increasing, you know, at a really good rate, like Texas, like Colorado, like Arizona. So we've got our East Coast presence. We've got our West Coast presence. And we have an opportunity to kinda fill in in between. And because of the flexibility I talked about earlier, you know, we're able to look at acquisitions across the board. Now, we have not been in as we've been more of an opportunistic acquirer recently, for the reasons I just described. I would say we haven't missed out on anything that we would have wanted to have done. So it's been a good time to be somewhat slower in our approach. but we still have all the core competencies of that Monro that grew through acquisition. And we expect that competency will be put to good use in the future. As the industry does become more consolidated, what is that happening to the competitive intensity? Are you starting to see, you know, whether it's tires or other elements, more price competition among the different players? Yeah, I don't think we've really seen the consolidation because you still have such fragmentation outside the large players. I don't think we've seen that the price competition become a major part of it. We've really seen a rational pricing environment, like I said, on the tire side because of MAP. On the service side, because I think of the pressures that labor has seen, there hasn't been a lot of opportunity to really, you know, try to really get really aggressive in price. So it's been pretty rational, and I don't think the consolidation has had a material impact on pricing or competitive pricing. Just a couple more, and then we'll. Yeah. You'll be relieved from the dentist. Oh, number one, have you seen anything different from the dealers? Yeah, the dealers, you know, we talked and I can't forget if it was here or in one-on-one earlier, but so I'll repeat myself. I apologize. Please. Everything is fresh here. 1-4-year-old cars tend to, you know, have a really good dealer return visit. Whether it's because of warranty or service periods and the higher cost to the vehicle lends itself to being invested in. 6+ is really where the aftermarket comes in. Is your battleground kinda that 4, 5, 6, right? There's a little bit of a tug-of-war where they wanna keep the car longer. We wanna get it earlier. But it really is on the margins of our respective markets. Yeah. And I would say it's marginal in terms of the share we really go after. That being said, the dealers have done a really good job of investing in service. They've done a good job of investing in service bays. But I don't think there's anything that really changes our differentiation as a value player in the aftermarket versus something that the dealer, you know, they provide a different level of care at a different price point. The base case for the market is that new car sales remain pretty consistent. If we were to see a real spike up, how do you think that would impact the aftermarket service industry? Would it mean that people instead of working on this existing vehicle would trade into a new car, and that would act as a headwind? Yeah, we've seen, even when new car sales have gone up, we've still seen scrappage rates going down. So, like, cars are getting newer and older at the same time. So and that's why the amount of cars on the road. Like the website research, right? Cars are getting older. That's why there's more cars on the road now. We'd like to see a stable new car sales because ultimately, today's new car sales in 6 years are entering into our sweet spot. You know, we've seen in the past post-Great Recession where 10 million, 9 million, sorry, years, they ultimately vintage into our. Yeah. Into our sweet spot. It creates a little bit of an air pocket, in terms of our addressable market. So, that being said, it's such a fragmented industry that you should be able to offset that with share gains. And so I think that our market will be fine, you know, despite what the dealers do. With that being said, we're starting to get questions, and I'm sure you are too, about the vintages, smaller vintages from 2020 and some of the supply constraints as they enter the sweet spot of the industry. Is there a repeat of what happened back then? Or alternatively, is that so brief, such unlike the last time, which was more elongated in nature. Yeah. So it wouldn't have as much of an impact. I think it's more brief. We're not as focused on that. I think the thing that we're really focused on is that vehicle miles traveled number. And if we can continue to see annual year-over-year growth in that, I think that's gonna be the most healthy indicator for the aftermarket. Gotcha. Lastly, and then we'll let you go, when we're here a year from now, the three of us are on stage again and Felix has that same smile. What are gonna be the biggest risks that you're gonna be mindful of in the 12 months ahead, that I can ask you about again? What do you see on the horizon that gives you pause or, you know, conversely, the opportunity from? Yeah, as I look over the medium to long term, I think there's actually, you know, I can see that clearly, you know, as soon as we get past some of the shorter-term risks, which to us really is just the tire category dynamics we talked about earlier, that'll so many of the tools and things that we've installed over the last two years, I think, will be really and demonstrably bearing fruit and showing that our consistent goals of achieving consistent comp store sales, expanding margins, and particularly operating margins to double digits, and generating cash through working capital and through appropriate capital allocation, I think all of that is gonna demonstrate, you know, clearly that we have a really good path to delivering shareholder value. I think the risks over the long term for the industry are really, I think, minimized by, I think, what are really bullish long-term trends, which, as I talked about, is the aging vehicle, the complexity of that vehicle, the vehicle miles traveled, and the size of the car park. All of that, for us, makes us feel like we continue to invest in our people, in our tools and technology. You know, we'll be we'll be, just, you know, we'll have a pretty bright future. Well, we look forward to seeing you make progress towards that. Yeah. Please join me in thanking both Brian and Felix for a wonderful conversation here.