Monro : Investor Presentation – November 2020

Monro, Inc. Investor Presentation November 2020

Safe Harbor Statement and Non-GAAP Measures

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

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

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

In addition to including references to diluted earnings per share ("EPS"), which is a generally accepted accounting principles ("GAAP") measure, this presentation includes references to adjusted diluted earnings per share, which is a non- GAAP financial measure. Monro has included a reconciliation from adjusted diluted EPS to its most directly comparable GAAP measure, diluted EPS in Slide 11. 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
• 1,242 company operated stores in 32 states and 97 franchised locations as of November 2, 2020
• 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 - 443 stores

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

−Tire brand stores - 799 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 11/2/2020

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 11/2/2020

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

• Since March 2020, vehicle miles traveled has been negatively impacted due to the COVID-19 pandemic
• Growing total vehicle population related to consumers owning vehicles longer
• 270+ million vehicles on the road
• Increasing age of vehicles (average of ~12 years)
• 2019 total annual miles driven up ~0.9% y/y
• Increasing complexity of vehicles
• Favorable demographics

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	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

Second Quarter Fiscal 2021 Overview

Executing Our Strategy To Position Monro For Long-Term Success

Given continued challenges in the operating environment, focused on profit and cash flow

			Driving variable margin		Executing targeted cost
Right-sizing the business to
match demand:			improvement:		reductions:
 Store hours of operation			Tire category		Store management staffing
 Store staffing levels			Service labor productivity		Marketing efficiency
					Overhead reductions

Generated strong cash flow to support business operations and growth strategy

Resumed store rebrand and reimage initiative with the transformation of approximately 40 stores Executed M&A strategy with definitive agreement to acquire 17 stores

8

Second Quarter Fiscal 2021 Sales Highlights

Focused on Aspects of The Business Within Our Control as Demand Remains Soft

Quarterly Comps Trends

5%
0%
	Q2FY20		Q3FY20		Q4FY20		Q1FY21		Q2FY21
-5%
-10%
-15%
-20%
-25%
-30%

Q2FY21

Key Highlights

• Comparable store sales of -11.4% due to ongoing COVID-19 headwinds
• Sales from new stores added $9.4M, including sales from recent acquisitions of $8.4M
• Generated strong operating cash flow of ~$126M in the first half of fiscal 2021 driven by profitability and strong working capital management

1Preliminary results through fiscal October ended October 24, 2020

Monthly Comparable Store Sales

0%
-2%		Jul-20		Aug-20		Sep-20		Oct-201
-4%
-6%
-8%
-10%
-12%
-14%

Q2FY21

Key Highlights

• Sequential comps improvement in all product and service categories, with tires outperforming all other categories
• • Tires: -3%
  • Alignments: -16%
  • Maintenance: -19%
  • Front End/Shocks: -19%
  • Brakes: -24%

9

Recent Market Backdrop

Monro Recent Comp Sales and Tire Units Have Correlated with VMT as Well as U.S. Tire Retail Industry (Units)

15%	Monro Comp Sales	Monro Tire Units	Veh. Miles Traveled (U.S.)	U.S. Tire Retail Industry (Units)

5%

-5%

-15%

-25%

7/11

7/18

7/25

8/1

8/8

8/15

8/22

8/29

9/5

9/12

9/19

9/26

10/3

10/10

Week Ending

Data Sources:

	Vehicle Miles Traveled - Arity	10
	U.S. Tire Retail Industry (Units) - GfK

Second Quarter Fiscal 2021 Results

Managing Business For Profit in a Challenging Demand Environment

		Q2FY21	Q2FY20			1HFY21	1HFY20
Sales (millions)		$288.6	$324.1	(11.0%)		$535.6	$641.2	(16.5%)
Same Store Sales	-11.4%	0.0%	(1,140 bps)		-18.7%	0.4%	(1,910 bps)
Gross Margin		36.2%	37.7%	(150 bps)		35.8%	39.0%	(320 bps)
Operating Margin	8.5%	10.3%	(180 bps)	6.7%	10.9%	(420 bps)
Diluted EPS		$.38	$.60	(36.7%)		$.47	$1.26	(62.7%)
Excluded Costs1	$.01	$.02			$.07	$.05
Adjusted Diluted EPS2		$.39	$.62	(37.1%)		$.54	$1.31	(58.8%)

1Excluded costs in Q2FY21 include $.01 per share in Monro.Forward initiatives and management transition costs. Excluded costs in Q2FY20 include $.02 per share of costs related to Monro.Forward initiatives and acquisition due diligence and integration costs. Excluded costs in 1HFY21 include $.06
per share related to store closing costs and approximately $.01 related to management transition and Monro.Forward costs. Excluded costs in 1HFY20 include $.03 per share of costs related to Monro.Forward initiatives and $.02 per share of costs 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 October	11
28, 2020.

Second Quarter Fiscal 2021 EPS Bridge

$0.70			Other includes the benefit of cost
			reductions and lower expenses due
	$.60	($.34)	to a year-over-year reduction in the
$0.60	number of stores as well as the
		positive impact of non-comp stores,
			partially offset by higher recruiting
			expenses
$0.50
$0.40			$.13	$.39	($.01)	$.38
$0.30
$0.20
$0.10
$0.00

Q2FY20 Diluted Earnings	Impact of -11.4%	Other	Q2FY21 Adjusted Diluted	Non-GAAP Adjustments 1 Q2FY21 Diluted Earnings
Per Share - GAAP	Comp Sales		Earnings Per Share - Non-	Per Share - GAAP
			GAAP

1Non-GAAP adjustments in Q2FY21 include $.01 per share in Monro.Forward initiatives and management transition costs.

12

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

13

Monro.Forward Progress Update

Demonstrated Progress on Monro.Forward Initiatives Will Position Us Well to Emerge Stronger Post-Crisis

Improve Customer Experience

Enhance Customer- Centric Engagement

Optimize Product & Service Offering

Accelerate Productivity & Team Engagement

• Resumed store rebrand and reimage initiative and substantially completed the transformation of approximately 40 stores in attractive markets in Q2FY21
• Outperformance of rebranded stores reinforces strength of strategy
• Modernized store infrastructure and digital phone system driving better customer execution
• Higher ROI marketing spend contributing to improved store traffic trends
• Rollout of new tire pricing and category management technology progressing as planned and on track to be completed by end of Q3FY21
• Leveraging price elasticity analytics to dynamically respond to demand trends
• Ramped store staffing with the right mix of skills to drive top line and labor efficiency
• Leveraging Monro University to facilitate onboarding and training of new teammates
• Utilizing technology-based labor model, with data-drivencloud-based store staffing and scheduling software rollout progressing as planned and expected to be completed by end of Q3FY21

14

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 more than 250 stores in key markets, including rebranding ~85 stores from service branded stores
• On track to complete the transformation of ~100 to ~150 stores during FY21

15

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	• Installed in more than 1,050 stores
• Optimizes store staffing and day part scheduling	• To be implemented across base by Q3
Scheduling System
• Improves part-time scheduling capabilities	FY21
Tire Category Management &	• Enterprise solution to dynamically manage pricing at the SKU level	• Installed in more than 800 stores
• Partially automates optimization of tire volume/margins by providing	• To be implemented across base by Q3
Pricing System
real-time elasticity	FY21
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

16

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

17

A Proven M&A 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 Announced Acquisitions

• Announced definitive agreement to acquire 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

• Resumed acquisition activity as M&A remains a critical pillar of Monro's growth strategy
• Evaluating a robust pipeline of attractive M&A opportunities that support our strategy while maintaining strong financial discipline in the face of an uncertain environment

18

Solid Financial Position and Flexibility

We Remain Well Positioned to Support Our Ongoing Business Operations and Growth Strategy

Disciplined Capital Allocation

First Half of Fiscal 2021

• Reduced bank debt, net of cash by $71M
• Capex of $24M
• Paid $15M in dividends
• Strategically reduced cost structure

Strong Balance Sheet and Liquidity

• Generated strong $126M of operating cash flow during 1HFY21
• Net bank debt of $150M as of September 2020
• Net bank debt-to-EBITDA ratio as of September 2020 of 1.1x
• Liquidity position of ~$420M as of October 24, 2020

19

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

20

Appendix

21

Fiscal 2021 Outlook - Financial Assumptions

Financial Assumptions as of October 28, 2020

Tire and Oil Costs	Stable y/y
Interest Expense	~$28M to ~$30M
Depreciation and Amortization	~$76M to ~$80M
Tax Rate	~24%
Capital Expenditures	~$40M to ~$50M
Weighted Average Number of Diluted	~34M
Shares Outstanding
Store Closure Operating Income Benefit	~$3.8M
Cost Reductions	~$25M to $30M

Additional Assumptions

• CapEx range accounting for rebrand of ~100 to 150 stores
• Realized ~$5M in cost savings in Q2 and expect additional savings of ~$5M to $10M in 2HFY21
• Anticipate lower cost savings in 2HFY21 when reinvesting portion of savings to drive top line growth

22

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

23

Monro.Forward Strategic Initiatives

FY19

Q2 FY19

Q3 FY19

Q4 FY19

FY20

Q2 FY20

Q3 FY20

Q4 FY20

FY21

Q2FY21

Q3FY21

Improve

Customer

Experience

Enhance

Customer-Centric

Engagement

Optimize

Product &

Service Offering

Accelerate

Productivity

• Team Engagement

Foundational

Technology &

Tools

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 plans	Monro University (includes
career path, LMS)

Store staffing & scheduling system

Store network infrastructure upgrade

Tire category management & pricing system

Cloud based car inspection tool

= Completed Initiatives	24