Well, thank you, everyone, for joining. I am Steven Shemesh, RBC's U.S. Hardlines, Broadlines, Food Retail, and E-commerce analyst. I am excited to be joined by Monro for our next fireside. We have CEO Mike Broderick, we have EVP and Chief Financial Officer and Treasurer Brian D'Ambrosia, and then we have Head of IR Felix Veksler. So I know you wanted to start off with some prepared remarks here, so I'll hand it over to you, and then we can get into it. Good morning. Good morning, everyone. Just to give you a quick overview of Monro, we're a full-service automotive service provider in the U.S. We have approximately 1,300 stores, 9,000 employees. When I say full service, we just don't do tires. We do brakes. We literally focus on the car. So that's pretty important when you look at some of the comparables that we have. There's really no public comparable in the marketplace. I would say coming off of Q4, we've talked a lot about tires and the fact that the tire industry has been very difficult right now. So that's been the big storyline. When the tire business is going to come back, it represents half of our business, so that's why we talk about tires. I would say a lot of the journey that we're on is obviously improving the value proposition to the consumer, focusing on our store execution. We talked about digitizing our organization, modernizing the service offering to our consumers, doing everything on tablets, really making it a better, more trustworthy service or experience for our customers. At this point in time, we're very much focused on the consumer getting back our more than our fair share of market. We're going heavy promotion, heavy value-driven, and really trying to drive that full-service experience to our consumers. I would say going forward, our number one focus is improving the store execution at our stores, holding our vendors accountable for their costs, and obviously driving costs down, as well as driving the value proposition to the organization. All that being said, when you talk about the digitizing of our business, the experience is absolutely changing in the automotive service business. Traditionally, people used to write chicken scratch or notes on a piece of paper and hand that to a consumer. Nobody used to read it, but that is literally the health report of your vehicle. All that business is being changed over to very much of a digital tablet. It started with the OE dealer. Now it's moving to the aftermarket. And I would say a lot of our focus at Monro is being the first with large scale, bringing that to the aftermarket. I think the challenges that we have are going to be. Eventually they're going to subside. Tires and brakes don't get better over time. They get worse. And I would say that we are. Scale does matter. We have significant scale in this industry, and we're going to take more than our fair share back. Excellent. I feel like a topical place to begin is with comp trends. Demand environment, obviously, obviously pretty challenging. The tire category in particular has been under some pressure for some time at this point. Your quarter-to-date comps felt like they maybe took a further step down. Can you maybe just talk us through that and help us understand if that is a result of heightened competitive pressures, or is that an overall market dynamic? Yeah, everything we see, and there's a lot of data around tires. That's why we talk so much about it. It doesn't just represent half of our revenue, but we have good information there, good syndicated data where it looks at the whole marketplace. The industry is down low- to mid-single digits in units so far this year to date. That doesn't make any sense. Vehicle miles traveled is a key indicator, and that's basically flat year-over-year, still healthy. And tire units should marry up to VMT. That's how it should work. It hasn't. And not only that, it's been exaggerated because the Tier One through Three, the manufacturers, most of those are in-country. They're actually significantly losing market share and it's putting even more pressure on the top-line sales. The slowdown, is that specific to tires, or are you seeing that more broadly across your service categories as well? Tires is such a gateway category. I'll give you an example. Tire units are down 11% in the fourth quarter. Brake units were down 11%. When you look at the same quarter, battery units were down 1%. The difference between those two categories is battery failure is catastrophic. If your battery is bad, your car doesn't drive. That's the dynamic. That's where we're talking about deferral. Consumers are really managing their personal balance sheet, and they're basically saying anything over $500, and they are wait and see type of attitude until something changes in the near future. Unfortunately, that's not good for their vehicle. It's not good for the consumer. That's why we're going heavy promo to incentivize the customers to make the decisions to fix their vehicles when they're walking into our shop or driving into our shop. Then just to get a better sense of your business specifically, any perspective you can provide around how much tire deferral is impacting your service categories? So I guess how many people are coming in for tires and then getting an attachment to that, which means if they're deferring their tire purchases, then your service categories are going to be down as well. Yes, I would once again. I'd go back to brakes. I would say that tire units should not be negative. So from my perspective, it won't be negative going forward. That's not what we're ever going to focus on, but I would say it shouldn't be negative. Brake units then should not be negative because there's strong correlation between those categories working really working together. Consumers overall deferring the purchases, but for those consumers who are still coming in, are attachment rates for other service categories still pretty similar, or are they maybe looking to reduce the overall check? Yeah, well, obviously when you look at the battery connection, it's 10% better than our tire performance. When you look at alignments, that's 7% better than our unit performance on tires. So consumers are still investing, but it's just a much I mean, getting that consumer to make that decision is just very difficult right now. Understood. To offset some of the top line pressure and the associated gross margin pressures with that, you've really leaned into labor efficiency. Can you maybe walk us through what specific changes you've implemented and how that's impacted the business? Sure. As an organization, it's all about productivity. In our gross margins, we have labor, unlike some of the other retailers. So when you look at our technician pay, there's two different types of technicians that we have. We have journey people, flat rate. These are people that literally they make money with the products that they serve, right? So these are highly professional, long-term in many cases, and they're very efficient, very productive individuals. We also have an hourly technician that is generally a lesser experience. Their skills, knowledge, and ability is developing, generally new into the aftermarket, hourly with a small bonus. We've been very focused on our payroll, very focused on making sure we have the right technicians driving productivity, but very focused on that GST, the general service technician, making sure they get productive faster. If they don't, we're trying to help them with the necessary training, but ultimately there's certain expectations of their productivity. If they don't meet it, then obviously they have places to work at the same time. Do you have additional room going forward to pull that lever further if demand were to remain weak for longer than anticipated? Yeah, I'll take that one. We do. So what we've done is we've really, there's two aspects to our labor. First is staffing. So we are staffed. First of all, our current staffing is staffed for growth. We've really managed our reaction to the challenging demand environment through scheduling, and that's been hours reduction and minimizing overtime hours. So we feel as demand returns, we've got the adequate staffing to be able to grow into that and meet that demand. If we were to see a longer period of demand weakness or further demand weakness, we would then lean into staffing and objectively look at overall staffing levels for reductions. Understood. I guess while we're on the topic of labor, just anything new in terms of labor availability and inflation, I guess specific to the tech side? The technician community has been a constrained environment for decades. So what we're focused on very much is retaining and attracting the best technicians, especially the people that work on flat rate, and then developing the GSTs, talking about productivity. These are people who they need to commit to this career, and how do we help them commit to the career? But we operate always with the focus on our teammates first. How do we attract and retain our technicians in a very difficult environment? That's how we operate. That's the culture that we're trying to demonstrate to our new people coming on board and for those that are staying with us, really holding on to them, making sure they feel like they're that we like them. Great. And you spoke to this a little bit earlier, I think, in your prepared remarks, but the digital courtesy inspection. So you've implemented to kind of help offset that tire market weakness. You have made in-store efforts to convert your 32-point courtesy inspection from a paper-based process to more of a digital tablet-based system. So for anyone less familiar with what that actually means, can you give us a quick overview of the benefits of that? Yeah, sure. Let me give you an example. My worst customer complaints, my worst, this is probably just in the day in the life of what I deal with, is when a customer comes into my shop and then weeks later there's a problem with their vehicle. There's nothing worse than that. I'm completely at fault. That's kind of their perspective. You're the last one to touch the vehicle. You are the problem. So now that you understand the tone of what I'm trying to demonstrate here, in the past in our industry, trust is at a very low level. People just don't trust the automotive aftermarket. It's part of the they don't trust the dealership. They just don't trust our type of business. So when I talk about that digital tablet, we have now pictures and videos where we can show the fact that we reviewed that on that vehicle and we did that work and we recommended those services because of what we saw during a 32-point inspection. And they were literally presented that data and they were able to accept it or decline it. When you put that in front of a customer, that is trust. And that is enough data to make sure the customer understands, better understands, because that is critical of the communication in our industry. The customer needs to understand it, and pictures just tell the story. And it just makes it easier. The first thing I deal with when I have a customer complaint is I literally go back to that digital courtesy inspection. Now that's from a customer lens, but from a company lens now. I have now all the data in a format that I can review. I understand what customers are saying, "Hey, they declined that work." I can make price decisions based on the declined work. Everything now rolls up centrally. I can look at stores that are performing quality courtesy inspections and how long it's taking them to perform it. It takes anywhere between 12-15 minutes. If they're doing that in 5 minutes, they're not doing it properly. If they do it in 60 minutes, they're not doing it properly. This is all the data that really rolls up to me. In the past, we didn't have that data. It was very much isolated at the local level based on feedback from people writing on a piece of paper. Although it was a form, it was still very much filled out. Not all of us, including myself, have great penmanship. So we couldn't do a lot with that information, and we couldn't react in a timely manner. Does the more structured system and actual pictures help with actually converting to higher attachment rate levels? We've been working on this for two years. We wouldn't have continued rolling that out if we didn't feel very strongly about the attachment. I look forward to sharing the results moving forward on exactly how that's coming to life. Understood. The other initiatives you have in place to help offset the tire pressure are a series of promotions. So you have some deals on tires, buy 3, get 1 free. I think you mentioned buy 1, get 1 free before. You're offering $200 off future service with the purchase of brake pads or rotors, and then you have an offer for $10 back on specific oil changes. So how specifically are you making customers aware of these promotions, and I guess how different are those from what your competitors are offering at the moment? We feel like our—let's just walk that question back. We feel like our offerings are extremely competitive compared to the—in the marketplace. From a Monro perspective, that's as promotional as we've ever been. A lot of that is literally asking our Tier One through Three manufacturers. Just to remind everybody, those are the ones that are conceding a significant amount of market share. When I look at the tire assortment, you're supposed to have a healthy assortment between a Tier Four, four tiers, 25% a tier. And I would argue to say that the Tier Four has disproportionately taken market share. And I would say part of it is a Monro issue. Part of it is actually our manufacturers who have let that happen. They've put a lot of price in the marketplace, and I'm asking for them to really come back and invest in costs as well as promotional. It doesn't matter to me how they invest, but they have to get their costs and price in line so that we can be relevant with our customers who are absolutely looking for value right now, especially in our customer base, which is $100,000 or less family income. I mean, these people are really managing their personal pocketbooks very tightly right now. Sounds like you maybe just answered this, but just to clarify, are you sharing the cost with the suppliers, or is it totally on them? There are some sharing, of course, from a partnership perspective, but that's not been the focus. The focus is, we want to, skills do matter right now. They need to get behind a company like Monro based on how many doors that we have and how many shops that we operate. And then just opening price point tires, you've been vocal about your belief that there's an oversupply in the market right now. I guess just what is informing that view, and do you have any visibility into when that begins to normalize? Yeah, I would say from a common sense perspective, let's start there. Tier Four tires are ordered on a 90-day lead time. All of that's coming from containers overseas. So you start that process anywhere between August and then again in January, December, January time to get through the winter selling season. When you look at the Tier Four, we had a soft winter. That oversupply was nothing more than those containers coming in, our warehouse distributors actually holding those tires at the expense of Tier One through Three because Tier One through Three is more just in time. So that has to get weaned out as the distributors are making decisions around what they're stocking. From a consumer lens, it's not good just to move all the assortment into Tier Four. It's not the right thing to do. Those are tires that have generally poor characteristics for that vehicle. A little louder, not great stopping. These are all characteristics that are not good for consumer, but in a lot of ways, they're looking for value, and what's on the shelf is Tier Four. That That has to be worked through. Now, from a Monro perspective, we don't have warehouses. We divested all of our distribution centers two years ago. We are uniquely positioned to be extremely flexible. So if vendors don't step up, within 10 days, I can put new product in my stores. We can react that fast to it. So really right now, what I'm looking at is who's going to support Monro in a very difficult consumer environment. And who does, they win their business, win our business. And that's what those promotions represent. It seems like that kind of more just-in-time inventory management system and your balance sheet relative to some of the peers in the marketplace are a significant competitive advantage. So I guess, is it wrong to think that this over-inventory situation could cause some of your competitors to maybe shut their doors and have some sort of market share opportunity for you guys, especially if it ends up being, let's call it like a mild winter? Yeah, I made a call to action that we're not happy with our results, and we feel like very much it's in our control. We have a lot of flexibility to go get it done. We talked about down 12 quarter to date, and we feel very strongly that's in our control to reverse those trends. As I speak to investors on this space, one topic that has come up a couple of times that I think is pretty interesting is the potential for, I guess we could call it a tire supercycle. So if you have more consumers trading down to these opening price point tires, and correct me if I'm wrong here, but they're a different composite. They're a little bit thinner. If you have your branded tires that maybe last and are under warranty for, call it 75,000 miles, these are maybe 40 or 50. So given the market's been weak for some time at this point, if the consumer drives, call it 15,000 miles a year, in three years, do we have a significant tire trade-up cycle? Yeah. So 2-3 years, that makes sense to me what you're saying. I'm very focused on today right now, so just to be abundantly clear, I'm not happy with our results today. And 2-3 years from now, we'll deal with that. And of course, we'll identify that that could be part of the tailwinds in the industry. Bottom line, right now, tire units shouldn't be down in the industry, period. They should be flat to VMT or a little bit better, and that's kind of how we're operating. Got it. To switch gears, you've had an initiative for a little bit to really focus on 300 smaller or underperforming stores that you've kind of identified as an opportunity. Can you just provide an update there? What you're seeing? Is there really anything you can do at this point in time given the current macro? Yeah, sure. Those tires are basically those stores, excuse me, I'm talking so much about tires. Those stores, one third of them are doing extremely well. One third are basically meeting expectations, and one third are still not meeting my expectations, or they're not performing. So it's very much of a people problem in our business. We fix cars. All of it's about people. We either have a problem with the right technicians in the back shop, or we have a problem with the front shop. That's what we're addressing. There's really not much more to say other than I do feel like that's a big growth opportunity for our company is to address and fix those stores permanently, getting the right team, right process in those stores so that we get our customers back. Because I don't think it's a real estate problem. I think it's a people problem. That was actually the next question is I would assume you've gone through the analysis to understand, is it a real estate issue? Is there competitive concerns in those marketplaces? You're confident that all of these stores actually can be turned around? Yeah, I think when we go through that evaluation, obviously, and we have the ability to know when based on real estate dynamics, when markets have maybe moved away, also to know when maybe real estate terms aren't as favorable as they are because of lease escalation clauses. So that's typically when we will look at lease renewal dates or lease option dates and make plans for exiting at those key dates in the lease. And that's what you saw in Q4. We closed 8 stores. Those were all lease end dates where those were either in the underperforming group that we felt was the right time to move on from those stores or the lease renewal terms weren't going to allow that store to be successful going forward. Excellent. I feel obligated to ask on electric vehicles and impacts. So obviously, EVs have taken a step back. How is that going to affect your business? We're prepared either way. It's not coming fast. We do expect it to come along. These are heavy vehicles, high torque. They're just great. They just tear apart a lot of things that we fix. So. Our shops. Great. A couple of final questions here as we're coming up on time. Brian, for you, on the call, you shared a comp earnings sensitivity. So for every 1 point comp change from the current run rate, that would move EPS by $0.03 for one Q. And then same deal, I think you had $0.14 for the full year. So can you just expand on what is embedded in those assumptions? Absolutely. So both of those assumptions are looking at our fixed cost structure, first of all. That includes the occupancy costs, the residing cost of goods, as well as our G&A as flattish year-over-year. We've done a really good job of pulling costs out of the business through back office optimization. And so we feel that those fixed costs will be largely flat year-over-year. So what you're really left with is the sensitivity on the margin, which we expect our margin to be supported by continued improvements in technician labor as a percent of sales, particularly in the first half of the year. And then ultimately on improving sales trends to mitigate the impact of any deleverage on the fixed costs. On the variable side, we would say the technician as well as material costs could be under a little bit of pressure as we talk about some of the promotional activity that we are partnering with our vendors on to support top line. That's all factored in. What you're left with is really just the flow-through on those variable costs. Similar variable margin year-over-year, and then a 1% change gives you the flow-through on that. Got it. Very helpful. And then just capital allocation from here, remind us of the priorities? Yeah. We called out that we thought we were going to believe that we're going to do at least $100 million of operating cash flow. And the importance of calling out that that's really our floor regardless of our operating scenario is that it's supportive of our capital allocation priorities. So first of all, $25 million-$35 million of CapEx to continue to make the improvements and investments in our stores and technology to move our guest experience forward and to do the things that Mike described around electric vehicles and other changes in the aftermarket. The other piece is to continue to pay down about the $40 million of obligations we have under our financing leases on our balance sheet. And then, of course, that allows us plenty of cash flow to continue to support our dividend. Anything above that $100 million, and then we'll start talking about other secondary allocation priorities, whether that's unit growth or other shareholder-friendly activities. One question we've been asking to all of our companies, I think you have largely answered it at this point, but I'm going to ask it anyway. Based on what we know today, would you expect consumer demand to improve, stay the same, or get worse going forward? Yeah. So this is the number one question. I don't have a crystal ball. Don't know if I care to at this point in time. There's plenty of tires being serviced right now, replaced, and I feel like very much it's a Monro issue. We're focused on just going to get the consumers that are in the marketplace. And if the consumer does come back, that's a tailwind to what we believe is a very healthy tire business. Fantastic. And just anything, is there anything you'd like to leave investors with? Well, I think that Monro is extremely well positioned to weather out the storm and come out of it. We have scale. We have a team, very tenured management team. We know how to manage expenses, and we have shown in the past that we can grow, and we look forward to showing that again in the very near future. That's excellent. We are about at time here. Thank you all for joining us this afternoon. Thank you. Appreciate it. Thank you.