Monro : Investor Presentation – January 2021

Monro, Inc. Investor Presentation January 2021

Safe Harbor Statement and Non-GAAP Measures

Certain statements in this presentation, other than statements of historical fact, including estimates, projections, statements related to our business plans and operating results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Monro has identified some of these forward-looking statements with words such

as "anticipates," "believes," "expects," "estimates," "is likely," "predicts," "projects," "forecasts," "may," "will," "should," and

"intends" and the negative of these words or other comparable terminology. These forward-looking statements are based on Monro's current expectations, estimates, projections and assumptions as of the date such statements are made, and are subject to risks and uncertainties that may cause results to differ materially from those expressed or implied in the forward- looking statements, to include the significant uncertainty relating to the duration and scope of the COVID-19 pandemic and its impact on our customers, executive officers and employees. Additional information regarding these risks and uncertainties are described in the Company's filings with the Securities and Exchange Commission, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our most recently filed periodic reports on Forms 10-K and Form 10-Q, which are available on Monro's website at https://corporate.monro.com/investors/financial-information/. Monro assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

In addition to including references to diluted earnings per share ("EPS"), which is a generally accepted accounting principles ("GAAP") measure, this presentation includes references to adjusted diluted earnings per share, which is a non- GAAP financial measure. Monro has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS in Slide 9. Management views this non-GAAP financial measure as a way to better assess comparability between periods because management believes the non-GAAP financial measure shows the Company's core business operations while excluding certain non-recurring items and items related to our Monro.Forward or acquisition initiatives.

This non-GAAP financial measure is not intended to represent, and should not be considered more meaningful than, or as an alternative to, its most directly comparable GAAP measure. This non-GAAP financial measure may be different from similarly titled non-GAAP financial measures used by other companies.

2

Company Overview

A Leading Chain of Independently Owned and Operated Tire and Auto Service Locations

• Dominant in the Northeastern U.S. and expanding in Southern and Western markets
• Fiscal 2020 sales of $1,256.5 million
• 1,260 company operated stores in 32 states and 96 franchised locations as of January 25, 2021
• 39 acquisitions in the past 8 fiscal years, adding 518 locations, $710 million in revenue and entry into 13 new states
• Operating two store formats in key markets

−Service brand stores - 432 stores

• 75% maintenance service, 25% tires
• $675,000 a year in sales per store

−Tire brand stores - 828 stores (excluding wholesale)

• • 55% tires, 45% maintenance service
  • $1.0 million a year in sales per store
• 7 wholesale locations and 3 retread facilities

Store locations as of 1/25/21

3

A Unique Operating Model

Monro Has a Diversified Supply Chain, Sourcing High Quality, Low-Cost Parts Direct and a Strong Portfolio of Tire Brands

PARTS

Monro sources these parts from leading	Secondary parts distribution:
aftermarket parts suppliers:
 Brake Rotors and Pads
	Filters
	Steering and Suspension
	Wipers
	Belts

TIRES

Store locations as of 1/25/21

4

A Favorable Industry Backdrop

Favorable Industry Backdrop for Automotive Services with the

Vehicles in Operation Expected to Grow Significantly Over the Next Few Years

20U.S. Annual Light Vehicle Sales

18
16
14
12
10
8
6
4
2
0
04	05	06	07	08	09	10	11	12	13	14	15	16	17	18	19

Source: FRED Economic data, Light weight Vehicle Sales: Autos and Light Trucks

3,300,000						Total Miles Traveled in U.S.
3,225,000
3,150,000
3,075,000
3,000,000
2,925,000
2,850,000
2,775,000
04	05	06	07	08	09	10	11	12	13	14	15	16	17	18	19

Source: FRED Economic data, Moving 12-Month Total Vehicle Miles Traveled

U.S. Light Vehicles in Operation (VIO)

300

290

280

270

260

250

240

230

220

210

200 2012 2013 2014 2015 2016 2017 2018 2019 2020* 2021* 2022*

Source: Lang, IHS Markit. *2020 - 2022 are estimated figures

Key Highlights

• Growing total vehicle population related to consumers owning vehicles longer
• 270+ million vehicles on the road
• Increasing age of vehicles (average of ~12 years)
• Increasing complexity of vehicles
• Since March 2020, vehicle miles traveled has been negatively impacted due to the COVID-19 pandemic

5

A Favorable Industry Backdrop

Monro is Well-Positioned to Capitalize on Positive Industry Trends,

with Our Sweet Spot Experiencing the Fastest Growth in Vehicles in Operation

Vehicles in Operation - 0 to 5 Years

120				+6.56% CAGR						-.03% CAGR
110
100
90
80
70
60
50
2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Vehicles in Operation - 13+ Years

120				+4.27% CAGR								+1.47% CAGR
110
100
90
80
70
60
50
2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Source for all data: Lang, IHS Markit, 2018

Vehicles in Operation - 6 to 12 Years

120				-3.97% CAGR								+3.90% CAGR
110
100
90
80
70
60
50
2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022

Key Highlights

• Strong growth in new vehicles (0-5 years) between 2012 and 2017 is creating a significant tailwind for the 6-12 year old vehicle cohort for the next few years
• 6-12year cohort expected to grow the fastest at +3.9% CAGR for the period 2017-2022
• Monro's targeted market segment is the 6-12 year cohort

6

A Favorable Industry Backdrop

Monro Operates in the $246 Billion Do-It-For-Me* Segment of $308 Billion U.S. Automotive Aftermarket Industry

Automotive Aftermarket DIFM vs. DIY Sales

350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2012	2013	2014	2015	2016	2017	2018	2019
			DIFM	DIY
Source: Autocare Association Factbook			Census data for 2012; estimates for 2013-2019

DIFM vs. DIY Trends

• DIFM continues to account for a significant percentage of the automotive aftermarket
• Vehicle complexity continues to drive shift to DIFM from DIY
• Future technology advances expected to accelerate shift to
  DIFM
• DIFM is facing ongoing headwinds from the COVID-19 pandemic, while DIY has been quicker to recover

	2010	%	2019	%	CAGR
	(outlets)	(outlets)
Dealers	18,460	14.3%	16,741	12.7%	(1.1%)
General
Repair	76,108	58.8%	81,678	61.8%	0.8%
Garages
Tire Dealers	18,675	14.4%	20,299	15.4%	0.9%
Specialty	8,663	6.7%	6,150	4.7%	(3.7%)
Repair
Oil	7,518	5.8%	7,276	5.5%	(0.4%)
Change/Lube
Total	129,424	100.0%	132,144	100.0%

Source: Autocare Association Factbook

Key Highlights

• Industry still highly fragmented, with significant opportunities for further consolidation

* Includes Replacement Tire Segment

7

Third Quarter Fiscal 2021 Highlights

Well Positioned to Drive Higher Sales and Profitability After Ramping Up Store Staffing

Monthly Comparable Store Sales

5%

0%

Oct-20

Nov-20

Dec-20

Jan-211

-5%

-10%

-15%

-20%

Q3FY21

Category Summary

• Completed rollout of tire category management and pricing system, driving outperformance in our largest category
• • Tires: -8%
  • Alignments: -16%
  • Front End/Shocks: -17%
  • Maintenance: -19%
  • Brakes: -21%

1Preliminary results through fiscal January ended January 23, 2021

Q3FY21

Key Highlights

• Comparable store sales of -13.0% impacted by general market conditions and lower labor productivity in October and November, which improved through December and drove positive comps in fiscal January1
• Sales from new stores increased $2.2M, including sales from recent acquisitions of $1.5M
• $159M in operating cash flow in the first nine months of fiscal 2021 driven by profitability and strong working capital management
• Net bank debt-to-EBITDA ratio of 1.3x as of December 2020

8

Third Quarter Fiscal 2021 Results

Results Impacted by General Market Conditions and Lower Labor Productivity in October and November

		Q3FY21	Q3FY20			FY21 YTD	FY20 YTD
Sales (millions)		$284.6	$329.3	(13.6%)		$820.2	$970.5	(15.5%)
Same Store Sales	-13.0%	-0.9%	(1,210 bps)	-16.8%	-0.1%	(1,670 bps)
Gross Margin		33.8%	37.8%	(400 bps)		35.1%	38.6%	(350 bps)
Operating Margin	5.5%	9.6%	(410 bps)	6.3%	10.4%	(410 bps)
Diluted EPS		$.20	$.56	(64.3%)		$.67	$1.82	(63.2%)
Excluded Items1	$.02	$.04			$.09	$.09
Adjusted Diluted EPS2		$.22	$.60	(63.3%)		$.77	$1.91	(59.7%)

1Excluded costs in Q3FY21 include $.02 per share related to Monro.Forward initiatives and $0.01 per share of benefit related to a reserve for potential litigation that is no longer necessary. Excluded costs in Q3FY20 include $.03 of costs related to Monro.Forward initiatives and $.01 of costs related to acquisition due diligence and integration. Excluded costs in FY21 YTD include $.06 per share related to store closing costs, $.04 per share related to Monro.Forward initiatives and management transition costs and $0.01 per share of benefit related to a reserve for potential litigation that is no longer necessary. Excluded costs in FY20 YTD include $.06 of costs related to Monro.Forward initiatives and $.03 related to acquisition due diligence and integration.

2Adjusted diluted EPS is a non-GAAP measure that excludes certain non-recurring items and items related to our Monro.Forward or acquisition initiatives. A reconciliation of net income to adjusted net income and diluted EPS to adjusted diluted EPS is included in our earnings release dated	9
January 27, 2021.

Solid Financial Position

Maintaining Ample Financial Flexibility to Support Growth Strategy and Business Operations

Disciplined Capital Allocation

First Nine Months of Fiscal 2021

• Reduced bank debt, net of cash by $56M
• Capex of $39M
• Spent $18M on acquisitions
• Paid $22M in dividends
• Strategically reduced cost structure to drive a leaner, more-focused organization

Strong Balance Sheet and Liquidity

• Generated substantial $159M in operating cash flow during FY21 YTD
• Net bank debt of $165M as of December 2020
• Net bank debt-to-EBITDA ratio as of December 2020 of 1.3x
• Liquidity position of ~$400M as of January 23, 2021

10

Driving Long-Term Sustainable Growth

Improve Customer Experience	Optimize Product &
•	Online reputation management	Service Offering
•	Consistent in-store experience	•	Redefined selling approach
•	Consistent store appearance	•	Optimized tire assortment

	Scalable Platform to
Enhance Customer-Centric	Drive Sustainable
Engagement	Growth

• Customer retention
• Customer acquisition
• Omnichannel

Accelerate Productivity & Team Engagement

• Optimized store staffing model
• Clearly defined career path and enhanced training program
• Aligned compensation

Investments in Technology and Data-Driven Analytics to Support Strategic Initiatives

11

Monro.Forward Progress Update

Focused on Aspects of Business Within Our Control to Drive Profitable Growth and Operational Excellence

Improve Customer Experience

Enhance Customer- Centric Engagement

Optimize Product & Service Offering

Accelerate Productivity & Team Engagement

• Substantially completed the rebrand and reimage of 104 stores in attractive markets
• Outperformance of rebranded and reimaged stores reinforces strength of strategy
• On track to complete the transformation of ~150 stores during FY21
• Optimized marketing spend towards higher ROI channels to drive improved SEO performance in tires and key service categories
• Leveraged modernized store infrastructure and phone system to improve customer execution
• Completed rollout of tire pricing and category management tool in Q3 FY21
• Dynamically tracked demand trends to drive tire volume and margin expansion
• Focused on category management to capitalize on service attachment opportunities
• Completed rollout of cloud-based store staffing and scheduling software in Q3 FY21
• Well-positionedto capitalize on improving demand trends and drive labor efficiency with right-sized store staffing
• Focused on leveraging Monro University and in-store training to drive operational excellence and improved in-store execution

12

Store Rebrand & Reimage Initiative

Store Rebrand & Reimage Initiative is an Important Part of Our Company Transformation

Improve Customer Experience

• Our largest initiative, which focuses on creating a more consistent store appearance and implementing standardized in-store operating procedures
• Have completed the transformation of ~360 stores in key markets, including rebranding ~115 stores from service branded stores
• On track to complete the transformation of ~150 stores during FY21

13

Monro.Forward: Investments in Technology

Significant Investments in Technology to Support Monro.Forward Strategy

Area	Strategic Rationale	Timing

Business Intelligence	• KPI dashboards for stores and management
Monro University	• Ensures consistent onboarding and teammate training
• Develop clear career paths
Learning Management System
• Deliver standard operating procedure training
Store Network	• Enable and support cloud based merchandising strategy
Infrastructure Upgrade	• Enable customer-facing technology
Digital Phone and Customer	• Eliminate cost of analog phone system
• Simplify phone execution for store personnel
Communication System
• Enable customer-centric call and text messaging management

• Launched in Q4 FY18
• Ongoing company-wide expansion
• Launched in Q3 FY19
• Ongoing expansion across store base
• Completed installation across base in Q2 FY21
• Completed installation across base in Q2 FY21

Store Staffing Model &	• Eliminate paper-based scheduling	• Completed installation across base in Q3
• Optimizes store staffing and day part scheduling
Scheduling System	FY21
• Improves part-time scheduling capabilities
Tire Category Management &	• Enterprise solution to dynamically manage pricing at the SKU level	• Completed installation across base in Q3
• Partially automates optimization of tire volume/margins by providing
Pricing System	FY21
real-time elasticity
Cloud-Based Car Inspection	• State of the art technology for technicians to provide industry-
leading service	• In pilot stages
Scanning Tool
• Provides efficient tool for actively managing customer needs

14

Omnichannel: Amazon.com Collaboration

Collaboration With Amazon.com Supports Monro's Online Tire Retailers Installation Strategy

Amazon.com Collaboration

• Monro's tire installation services available to customers who purchase tires online from Amazon.com and select the Ship-to-Store option
• Amazon tire installation services are now offered at all of Monro's more than 1,200 locations in 32 states
• Enhances customer-centric engagement efforts and omni-channel service offerings, delivering a best-in-class customer experience and building a scalable platform for sustainable growth

15

A Proven Acquisition Strategy

Monro's Acquisition Strategy Has Delivered Significant Growth Over the Years

A Proven Track Record

• 39 acquisitions in the past 8 fiscal years, adding 518 locations and $710 million in revenue
• Entered 13 new states, expanding our presence in the Southern and Western markets
• Average acquisition size:
• • 13 stores
  • ~$20 million in annualized sales growth

Recently Completed Acquisitions

• Completed acquisition of 17 stores in Southern California
• Further expands the Company's geographic footprint in the Western United States
• Represents $20M in annualized sales, slightly dilutive to EPS in FY21
• Sales mix of 60% tires and 40% service

Fiscal 2021 Acquisition Outlook

• Strategically located acquisitions with attractive valuations remain a pillar of our growth and we are committed to executing on attractive opportunities in our highly fragmented industry
• Actively evaluating acquisition targets and capitalizing on robust pipeline

16

Investment Highlights

• Leading chain of Company-operated undercar care facilities in the U.S. with a wide breadth of product and service offerings
• Strong position in Northeast, Great Lakes and Mid-Atlantic and expanding into Southern and Western markets with a presence in 32 states
• 19 years of consecutive annual sales growth
• Low cost operator with solid operating margins
• Well-positionedto capitalize on a favorable industry backdrop
• Monro.Forward strategy creating a scalable platform to drive sustainable growth, with a focus on operational excellence to increase overall customer lifetime value
• Significant growth opportunity to execute disciplined acquisition strategy in a highly fragmented industry
• Strong balance sheet and cash flow
• Delivering consistent shareholder returns through dividend program

17

Appendix

18

Fiscal 2021 Outlook - Financial Assumptions

Financial Assumptions as of January 27, 2021

Tire and Oil Costs	Slight increase
Interest Expense	~$28M to ~$30M
Depreciation and Amortization	~$76M to ~$80M
Tax Rate	~24%
Capital Expenditures	~$45M to ~$50M
Weighted Average Number of Diluted	~34M
Shares Outstanding
Store Closure Operating Income Benefit	~$3.8M
Cost Reductions	~$35M

Additional Assumptions

• CapEx range accounting for rebrand and reimage of ~150 stores in FY21
• Realized ~$10M in cost savings in Q3 FY21 and expect additional savings of ~$5M in Q4 FY21

19

Store Refresh Transformation Timeline

7 Stage Transformation Process from Beginning to End Takes ~17 Weeks

BEFORE	AFTER

Store Readiness	Parts Inventory	Store Inventory Storage	Inventory Assortment	Store Team Trained	Store Interior Remodel	Store Exterior Painted
on New Operating	and Technology	and New Signage
for Change	Rebalanced1	Configured for Tires1	Reset for Tire Focus1
Procedures	Installed	Installed

~17 WEEKS

1Steps are only required for stores that are being rebranded from service format to tire format

20

Monro.Forward Strategic Initiatives

Improve

Customer

Experience

Enhance

Customer-Centric

Engagement

Optimize

Product &

Service

Offering

Accelerate

Productivity

• Team Engagement

Foundational

Technology &

Tools

FY19	Q2	Q3	Q4	FY20	Q2	Q3	Q4	FY21	Q2	Q3	Q4
FY19	FY19	FY19	FY20	FY20	FY20	FY21	FY21	FY21
			Pilot store refresh &	Scale store refresh & operational
			operational excellence	excellence
				Scheduled maintenance
				in-store selling
		Data-driven CRM	Digital phone and customer
				communication system
		New websites		Data-driven "new customer"
				marketing
	New in-store sales			Optimize tire assortment
	packages

New store 'comp	Monro University (includes
career path, LMS)
plans

Store staffing & scheduling system

Store network infrastructure upgrade

Tire category management & pricing system

Cloud based car inspection tool

= Completed Initiatives	21