Earnings Call: Q4 2021

May 20, 2021

Ladies and gentlemen, and welcome to Monro, Inc. Earnings Conference Call for the Q4 and Full Year Fiscal 2021. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. As a reminder, ladies and gentlemen, this conference call is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Maureen Mulholland, Executive Vice President and Chief Legal Officer at Monro. Please go ahead. Thank you. Hello, everyone, and thank you for joining us on this morning's call. Before we get started, please note that as part of this call, we will be referencing a presentation that is available on the Investors our website at corporate. Monroe.com/investors/investor Resources. If I could draw your attention to the Safe Harbor statement on Slide 2, I'd like to remind participants that our Please go ahead. Thank you, Steve. Thank you, Steve. Thank you, Steve. Good morning, everyone. The most significant factors that could affect future results are outlined in Monro's filings with the SEC and in our earnings release and include the significant uncertainty relating to the duration and scope of the COVID-nineteen pandemic and its impact on The company disclaims any intention or obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Additionally, on today's call, management's statements include a discussion of certain non GAAP financial measures, which are intended to supplement and not to be substitutes for comparable GAAP measures. Reconciliations of such supplemental information to the Rob Miller, Monro's Board Chairman Mike Broderick, President and Chief Executive Officer and Brian D'Ambrosia, Chief Financial Officer are joining us today. For the question and answer portion of the call, our Chief Operating Officer, Rob Rakowski, will also be available to take questions. With that, I'd like to turn the call over to Rob Miller. Rob? Thank you, Maureen, and good morning, everyone. Today, I'm pleased to formally welcome and announce Mike Broderick, our new President and CEO, to join Monro at the beginning of April. Mike knows this industry well having spent his entire career in the automotive aftermarket. Over the past 2 decades, Mike has led the development and the execution of business transformation strategies that have led to profitable growth in the organizations he has served, and we could not be more excited to leverage his extensive background and experience to position Monro for greater sustainable growth. I also want to acknowledge our senior leadership team For their great work and incredible partnership throughout my time as Interim CEO. During a challenging year, Our significant accomplishments were made possible due to the strong collaboration of the entire leadership team. Going forward, I will continue to serve as Chairman of the Board and look forward to assisting in a smooth transition. And with that, I'd like to turn the call over to Mike. Thank you, Rob, and good morning, everyone. It's an honor to be here on my first earnings call as Monro's CEO. Let me start by highlighting some of the reasons why I joined Monro and what I've learned over the past few weeks. Over the years, I have watched with Aberration Monro's remarkable journey in becoming a recognized national chain with coast to coast presence and a leading auto service and tire brands provider. With a scalable platform, Monro is uniquely positioned to continue to grow and take advantage of an aging vehicle fleet. Since joining Monro 7 weeks ago, I've been thoroughly impressed by the depth of talent across the organization and the commitment of our teammates. I also feel fortunate to be surrounded by an exceptionally strong and experienced senior leadership team. We share an ambition to realize the full potential of our business and take Monro to its next phase of growth together. Turning to Slide 3, I want to take this time to thank the entire Monro team for their great work over the past year. It was certainly an unprecedented year, but Monro has capitalized on opportunities to accelerate the company's transformation initiatives, including the implementation of several foundational technology tools. At the same time, our team was able to bolster our financial position while also expanding our presence in the attractive and dynamic Western Region. Monro has made remarkable progress in its transformation journey in fiscal 2021, and I believe these accomplishments will be instrumental to our success in the coming year and beyond. With the full support of our Board of Directors, I'm committed to ensuring the continuity of Monro's growth and transformation strategy. My goal is to bring our Monro Ford initiatives to life in every store for every guest and for every teammate. The past few weeks have been truly exciting. I've spent a lot of time visiting stores in different markets and engaging with our teammates in the field. Their feedback has been invaluable in understanding how some of the Monro Forward initiatives are being executed and ways we can further improve. Our go forward plan will be grounded in the work that has already been done with a key focus on our customers, Teammates and in store execution, I see tremendous opportunity for value creation through renewed focus on operational execution and a continued commitment to drive profitable growth and strong cash flow. I will have more to share in the coming quarters, but would like to provide some initial perspectives on my key priorities as highlighted on Slide 4. First, Monro is a service oriented organization and my assessment of the business is focused on opportunities to enhance the customer experience and improve in store execution to achieve long term organic growth. I want to fully equip our teammates to deliver a best in class experience for every guest who comes to Monro. To support our teammates, we'll continue to enhance training Targeted reimage of our stores will continue to complement in store operational excellence initiatives. Secondly, Monro is well positioned to take advantage of attractive consolidation opportunities in our fragmented industry, and M and A will remain a key pillar of our growth strategy going forward. Our recently completed acquisition of Mountain View in California demonstrates that our Scale, customer centric approach and company values make Monro one of the preferred buyers of family owned businesses. I had the privilege to meet the Midso family and visit some Mountain View stores last month, and I'm excited by our prospects in this region. Thirdly, we'll remain steadfast on driving strong cash flow. The remarkable job of our team since the beginning of the pandemic led to record operating cash flows of $185,000,000 in fiscal 2021. Looking ahead, we will focus on implementing operational optimizing working capital to continue to enhance our cash flow performance. In summary, this is a business that I am passionate about. I feel confident about the opportunities we have in front of us as we enter an exciting inflection point in our transformation. With that, I'll now turn the call over to Brian, who will provide an overview of Monro's Q4 performance and discuss our outlook. Brian? Thank you, Mike, and good morning, everyone. I want to start first by echoing Mike's comments and expressing my gratitude To the entire Monro team for their exceptional hard work over the past year. Now turning to Slide 5, Let me take a few minutes to talk about our solid 4th quarter performance and the positive outlook for our business. Continued strength in tires, Our largest category and improvement in our key service categories led to strong performance in the 4th quarter. Sales increased 6.8% year over year to $305,500,000 primarily driven by a 9.4% increase in same store sales. Sales from new stores increased by $5,100,000 including $4,600,000 from recent acquisitions. This was partially offset by a decrease in sales from closed stores of $5,900,000 The quarter began with positive comparable store sales in January. It was followed by some softness in February due to extreme winter weather in our Southern and Mid Atlantic markets. Demand rebounded sharply in March with comps up 32% year over year. This reflects strengthening traffic as well as easier comparisons due to the COVID-nineteen related lockdowns that started mid March last year. For reference, comps were down 20% in March last year. Our strong momentum exiting the year has continued into our fiscal Q1 with comps up 53% quarter to date. This compares to comps in the same period last year of down 34%. We are encouraged to have comparable store sales levels in line with pre COVID performance. Turning to Slide 6, Gross margin decreased 60 basis points to 35.1% in the 4th quarter. Variable gross margin was positively impacted by a 7% increase year over year in gross profit per tire, reflecting the benefits of our tire category management and pricing tool. Variable gross margin was also positively impacted by lower technician labor costs as a percentage of sales, driven by increased labor productivity during the quarter. In addition, distribution and occupancy costs decreased as a percentage of sales from the prior year as we gained leverage with higher overall sales. These positive trends were more than offset by a higher sales mix of tires compared to service categories. Importantly, we continue to execute disciplined cost control. The year over year decrease in operating expenses resulted from our efforts to realign our marketing spend towards higher ROI digital channels and rightsized store management staffing. It also reflects lower expenses from 20 fewer retail stores as well as the $6,600,000 impairment charge we took in the prior year period. Higher comparable store sales enabled us to generate increased operating margin against our lower fixed cost structure. Net interest expense for the 4th Order decreased to $6,700,000 as compared to $7,100,000 in the same period last year. A decrease in our weighted average interest rate was partially offset by higher average debt outstanding. Income tax expense in the 4th quarter was $2,300,000 compared to an income tax benefit of $2,800,000 in the prior year period. Net income for the Q4 was $11,800,000 compared to a net loss of $3,800,000 in the prior year period. Diluted earnings per share for the Q4 was $0.35 compared to a diluted loss per share of $0.12 in the same period last year. Adjusted diluted earnings per share for the 4th quarter, a non GAAP measure, was $0.38 which excluded approximately $0.02 per share related to Monro Forward Initiatives and $0.01 per share of costs related to management transition and a distribution center closure. This compares to adjusted diluted earnings per share for the Q4 of fiscal 2020 of $0.08 which excluded $0.10 per Share of impairment costs related to planned store closures, dollars 0.05 per share of additional store impairment costs, dollars 0.03 per share of costs related to Munro Forward Initiatives, a $0.01 per share related to litigation reserves and a $0.01 per share related to our headquarter expansion. As highlighted on Slide 7, we continue to have ample financial flexibility to support our operations and execute our growth strategy. We generated a record of $185,000,000 of cash from operations in fiscal 2021 compared to $121,000,000 for the prior year. We are maintaining our disciplined approach to capital allocation $52,000,000 in capital expenditures, primarily related to our ongoing store rebrand and reimage initiative and investments in technology. We paid $17,000,000 for acquisitions and $33,000,000 in principal for financing leases. We are also maintaining our strong commitment to returning cash to shareholders through our dividend program as evidenced by the 9% increase In the Q1 fiscal 2022 dividend announced today, we distributed $30,000,000 in dividends in fiscal 2021. We were able to reduce our bank debt net of cash by $61,000,000 during fiscal 2021. At the end of the 4th quarter, We had net bank debt of $160,000,000 and a net bank debt to EBITDA ratio of 1.1 times. As of May 15, 2021, we had cash and cash equivalents of $25,000,000 and availability on our revolving credit facility of $356,000,000 During fiscal 2021, we substantially completed the rebranding or reimaging of approximately 150 stores. To date, we have completed the transformation of approximately 360 stores in a number of key markets, including rebranding approximately 115 service stores to tire branded stores, and we continue to see outperformance of our rebranded and re imaged stores compared to our chain average. As we enter fiscal 2022, we remain committed to managing our business for maximum cash flow. First, we'll continue to make operational enhancements across our business to expand margins. These efforts combined with top line growth are These cost savings resulted from the optimization of store management staffing and the improvement of our marketing related efficiency and also general overhead cost reductions. In addition, our previously announced store closures benefit our operating income by $3,800,000 In fiscal 2022, we continue to expect $15,000,000 to $20,000,000 in structural cost savings, in addition to $5,000,000 in benefit from store closures, all this compared to fiscal 2020. We also remain focused on working capital improvement and believe we will have additional opportunities in this area. Moving on to Slide 8, I would now like to take a moment to provide an update on our acquisition strategy. We made great strides in solidifying our geographic footprint in the Western region over the past year and most recently completed the acquisition of Mountain View Tire and Service. This acquisition was completed on April 25, 2021 and includes 30 retail stores in the Los Angeles area and is expected to add $45,000,000 in annualized sales. We are particularly excited about our growth prospects in this attractive and dynamic market and are focused on seamlessly integrating the Mountain View acquisition in the Q1 of fiscal 2022. Despite the impact of the COVID-nineteen related lockdowns, We are pleased with the strong earnings contribution from our previously acquired California, Nevada and Idaho stores this year. Strategically located acquisitions at attractive valuations remain a cornerstone of our growth strategy. We have a robust acquisition pipeline, including over 10 NDAs currently signed for opportunities ranging from 5 to 40 stores. We are well positioned to take advantage of the many opportunities for consolidation in our industry. Turning to our outlook, The COVID-nineteen situation is still fluid, which makes it difficult to accurately forecast the impact of the ongoing pandemic on our future operations. While we are not providing formal fiscal 2022 guidance, we are almost 2 months into the Q1 and have ample reasons to be optimistic. In light of our comparable store sales momentum quarter to date, we are on track to achieve double digit comparable store sales growth in the Q1. As a reminder, Prior year June comps of down 14% are a less favorable comparison than the 1st year than the prior first year than the prior year Q1 to date comps. In addition, prior year second quarter through 4th quarter comps are a less favorable comparison than prior year Q1 comps. As such, we expect comparable store sales growth to moderate as compared to the 53% we achieved in the Q1 to date. Despite an expected favorable impact of sales mix year over year, We also anticipate that our Q1 gross margin performance will reflect the negative impact of a higher sales mix of tires compared to the Q1 of fiscal 2020. Lastly, you will find some financial assumptions for fiscal 2022 on Slide 9 to assist with your modeling. We expect higher and oil costs to increase year over year. Regarding capital expenditures, We expect a range of $40,000,000 to $55,000,000 in fiscal 2022 depending on the amount of store refresh activity that we undertake. And with that, I will turn the call back to Mike for some closing remarks. Mike? Thanks, Brian. It is important to note that the environment is still very dynamic And COVID-nineteen safety concerns remain top of mind for our teammates and customers. That being said, we're encouraged by our robust performance in the 1st fiscal quarter to date and optimistic about the outlook of our business. We expect vehicles miles driven to normalize as mobility increases and more consumers start to reengage in their daily activities. As we head into the summer driving We are already seeing more customers take to the road and higher average ticket trends indicate that they continue to invest in their vehicles. Overall, we remain well positioned to capitalize on the strengthening demand and have the financial flexibility to execute our growth strategy to deliver long term value for our shareholders. I would now like to provide an on our corporate responsibility efforts. We view our responsibility to our teammates, customers, the communities in which we operate and doing our part to take care of the environment as not only the right thing to do, but as an integral component of our long term planning and success. As part of our commitment to transparency and accountability in this area, we look forward to sharing accomplishments and steps being taken in our first Corporate Responsibility Report that will be published next month. I would like to especially recognize the efforts of Maureen Mulholland, our Chief Legal Officer, and taking the lead within the senior leadership team to formalize our strategy and vision and the Board for its strong support and oversight of this important component to our overall business. While Monro has a strong foundation of environmental and social stewardship, I recognize that the journey is ongoing, And I'm committed and excited to work with our senior leaders to build on the great work that has been done. With that, I will now turn the call over to the operator for questions. Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Jonathan Lamers from BMO Capital Markets. Your line is now live. Good morning. Good morning. First for Michael Broderick. So this is the first opportunity we've had to speak with you. Could you compare Monroe to Other service businesses you've been involved with, I'd be familiar with Canadian Tire, but Advance or any others would be great. Sure. It's a pleasure to be on the call and to be part of the Monro organization. Just to level set, I've been calling on Monro for over 20 years. So I am extremely knowledgeable about the people here and also the services that have performed. Very much so. This is a service business differently than the retailers. When I say service business, we're literally working on the customer's car. And that's our only job is working on the customer car. So all of our categories are very focused on all our categories, batteries, brakes, Under hood around the car. We really are the end of the supply chain and we are essentially the customer of the retailers. So, most of my focus and my equivalents, my understanding is either calling on customers similar to Monro Or actually, Mike, you mean the entire experience. I would say that we perform as well as any other service provider. It really is a war on Talent at the local level where we have great technicians, they perform great work and they have great Stores that satisfy the customers in their local communities. But it's very different than a retail And it's more consistent with the Firestones and the Canadian tires of the world. Great. Thanks. And you mentioned acquisitions as being A key focus for you and a real opportunity for growth. I know that tire distribution market is Huge and very fragmented. Are there any parts of the market that seem particularly attractive to you? And how are you As I stated in my opening comments, M and A is going to be very relevant. We have we're missing a lot of space out in the Southwest. We don't have many stores. So in order to fill out, that will be a focus, is the Southwest. But where we have opportunities to fill in, we will. And I'd also like to introduce the fact that we're going to start looking at greenfields as an opportunity to move faster in markets that if we can't find Viable M and A opportunities, we'll start building our own stores. Okay. Look forward to hearing more about that. Maybe a couple questions for Brian. So you were down 20 stores since last year at the end of the quarter. Are you continuing to reopen stores into Q1? Yes. It really wasn't related to any Closures or reopenings, if you remember, we did not close any stores during the pandemic. We significantly reduced Hours of operation, consistent with others in the industry, and we have reopened those hours of operation to be comparable to where we were pre pandemic. So the net 20 fewer store closures really relate to the 40 plus stores that we closed In Q1 of last year as part of our evaluation of the store portfolio and closing some of those underperforming stores, offset by the Allen Tire acquisition that we closed on last quarter. Okay. So just to be clear, do you believe that if demand returns to fiscal 2020 levels that you'd be able to service the same level of Sales from the reduced footprint and will the $15,000,000 to $20,000,000 of OpEx savings be permanent at that sales level? Yes, the $20,000,000 of sales I'm sorry, the 20 net fewer stores that we closed, Those the 40 plus stores are reflective in the $5,000,000 of annual operating income savings that we ascribed to the drag that those stores were providing before we closed them. So that's in that number. And our sales in FY 'twenty one are reflective of not having those stores in there. Certainly, the $15,000,000 to $20,000,000 that was coming out of those Stores of sales is going to be reduced in 2022 compared to 2020 when those stores were But the profit is an incremental $5,000,000 by not having them down in front of us. The $15,000,000 to $20,000,000 is really related to the cost savings that we drove in FY 2021. Some of that, what we said it was $35,000,000 of Cost savings in 2021, we're adding back about $15,000,000 to $20,000,000 of that in 2022 for a net reduction of 15% to 20% versus the base year, which in this case would be FY 2020. That's clear. Thanks. And Michael mentioned an improved ability to well, actually ticket inflation as traffic is returning. Is there Any way to estimate how much the stimulus checks at the beginning of the quarter would have supported the strong comp you saw and The next round of strong comps you're seeing into the next quarter? To isolate on stimulus is difficult. I think there's The consumer has been well supported and continues to be well supported during this. The other probably more Sustainable improvement that we continue to see is improvements in vehicle miles traveled. I think that will continue to improve, particularly in light of some of the CDC guidance that was recently released related to mask mandates. So I think that all of that is really positive, especially as vaccination continues to roll out. So we look at the vehicle miles travel trend as one that should continue to improve and that's the longer term trend It will provide a nice backdrop for our business. In addition to the aging vehicle cohort, obviously, Elevated used car sales that we have seen is supportive of our sweet spot. So all of that we think really lines up well from a backdrop and for us to continue to execute our own initiatives to take advantage of that. I'll pass the line. Thanks for your comments. Thank you. Thank you. The next question is coming from Brian Nagel from Oppenheimer. Your line is now live. Hi, good morning. First off, Mike, I look forward to working with you. Thank you. First question I have, maybe a bit of a follow-up to that last question. But you clearly saw a nice sales spike here in the fiscal Q4, A lot going on out there, comparisons, stimulus, etcetera. But as you look at the demand, is there any way to kind of break it apart? How much of that, particularly in the tire category, Pent up versus more demand in real time? Well, And looking at the tire category, Brian, in particular, we feel really good about our tire category performance Throughout the pandemic, we've talked about it on the last couple of calls, about our ability to Sure. Increased average selling price, increased margin, all while driving volumes ahead of the tire industry in North America. So We saw very good demand in tires as we exited Q3 and into January. The plus 3% in January was led by tires and I think that was probably less affected by some of the stimulus that came out in March. So that's a pretty good quarter or a good month in my mind to see where the tire category is at, maybe a little less affected by external factors. And I think it drove a 3% comp versus pre pandemic levels. So I think that was a good proof point for us that we are our business is Turning to pre pandemic levels on a run rate basis, not necessarily due to extreme outside influences. Certainly, Stimulus is supportive of some of the outsized performance we saw in April, but we feel good that has subsided that our business is still In line with where we were pre pandemic. Also supporting this is a considerable improvement in our service categories, really leading That plus 53% quarter to date. So those categories are leading that number, which we would Given the step back they took last year during the pandemic, we're not all the way back in those categories to where we were pre pandemic, but we're getting there. And that certainly is going to help us from a margin standpoint. I think as it relates to margins, we will be better than we were last year on a gross margin line. We won't probably be back to where we were in FY 2020 and that's due to the tire mix of the business that occurred during the pandemic. And We'll start to move our way out of that as the service categories really start to contribute here. Got it. That's really helpful. I appreciate all the color there. A follow-up question, just with regard to and recognizing you're not giving official guidance here, but with regard to the commentary around Fiscal Q1. So as you said in your deck too, I mean, as of mid May, are you tracking above 50%. And then I think the kind of loose guidance or guidelines was double digits. Could you maybe Specify more in that double digits as we think about what type of fade we should expect from that 50%, 53% that you saw as of mid May? Yes, sure. So if you look at the 53% up Against the down 30 in the same period last year, that puts us roughly kind of in line with where we were running back in FY 2020. And so if you look at the June number of down 14, We would expect that we will perform against that number to keep us in line with where we were in FY 2020. So it means that the year over year comp Starts to fade, but the net of the 2 year stack in terms of dollars keeps us in line with FY 2020. Got it. Appreciate it. Thank you. Thanks, Mike. Thank you. Our next question is coming from Bret Jordan from Jefferies. Your line is now live. Hey, good morning guys. Good morning, Brian and Brett. Hey, Brian, just for housekeeping to get started. Did you give the February month comp? I think we have plus 3 in January And I believe you said March was +32, but could we get the February? Yes, February was down too. Okay, great. And then a question on the greenfield that you brought up. I think if we go back 10 or 15 years, there used to be a lot of talk about how Buying existing units as either a discount to asset value or as a percentage of revenues was attractive. Do you see a different economics In Greenfield Development, is it more expensive to build sort of a ground up store? And is that offset maybe by the traffic you can pick up in these Well, I mentioned that, Brett, good morning. If we can't find M and A activity that's actually Affordable, then we would be looking to fill out our footprint across the nation. There's a lot of reasons for it. I mean, we have a national warranty. We want to stay convenient to our customers. So where we can't find M and A, we would look at it. Now looking at the financials, obviously, we're going to be stewards of the P and L And we're going to be putting stores where we can get the best return for the investment. And we do see a lot of when you look at the Southwest, There seems to be some open space for us to efficiently do greenfield. Okay, great. And then a question, I guess, you've talked a bit about the margin impact from tires. And have there been any Movement in tire pricing on a like for like basis or is this just purely driven by mix? We've seen our ability to win on through optimization of price with our category management tool. And I would say that there's been that real price has been price increase and price decrease because we Are really using that tool to optimize our price levels to optimize that mix and make sure we have the right step ups and that we're sharp on price on Those tire sizes and applications that are most shopped and that we are able to price in the corners for those that are converted in stores and Are less price sensitive. So it's both. We have seen some price, some cost increases from the tire manufacturers, As you know, Brett, that they've announced and that will continue to, we think increase price at to the consumer across all price points. Okay, great. And then the last question, I guess, on regional performance. Any big spreads between the Southern, Northeast, Mid Atlantic and Western Markets? It was really a pretty even bag in the quarter. As we got into April And in the May, the Northeast really started to outperform, but that's largely because they had the easiest compares in the prior year as they locked down quicker than the rest of the country. Okay, great. All right. Thanks a lot guys. Nice to meet you, Mike. Likewise. Thank you. Thank you. Our next question is coming from Rick Nelson from Stephens. Your line is now live. Welcome to Good. Nice. It's Timit Shrivialik. So question about the strategies here. It sounds like you're going to follow the Monroe forward plan. Curious if there's any tweaks, How do you see to that plan? And you mentioned digital initiatives, curious if You're going to move toward online tires sales and installation. Thanks Rick for the question. I will take it. When you look at Munro forward, the strategy literally touched every aspect of retail. And there was a journey that we were on and by just good retail hygiene, we actually really put things in place. When you look at the people part of retail, we introduced new staffing and payroll management system and training. When we talked about product, we talked about category management, assortment of tires and pricing. We're going to continue to evolve that into service categories. When we talked about promotion, as you illustrated, how do we drive additional foot traffic in our connection to the customer, we are really relying on very Efficient marketing mechanisms and digital is top of mind. And our customers are going online to check prices, Check availability, make appointments and the convenience of our digital experience is paramount. And then on top of it, When you look at Monro Forward, we added technology at our store level. We revamped our phone systems. And last but not least, and something we talked about is The rebranding and the reimaging of our stores. So when you talk about all five of the things I just mentioned, my job right now, it's really bringing these puzzle pieces together So that we can actually get maximize the profitability from these investments. It's all about execution at this point in time. The strategy is sound. The execution is really what's going to separate us from being successful or not. Thanks for that. Also curious in terms of acquisitions, if You could speak to the competitive environment there and the multiples that you're looking Tepe, maybe Mountain View is a good example. And do you plan to rebrand those stores? I'll take that one, Rick. The multiples as we've talked on the last couple of calls have been largely in line with what we Historically, we don't quote them specifically for competitive reasons, but we do feel like those have been pretty much in line And the acquisitions that we bolted on to our initial certified deal out in California and on the West Coast has been in line with our expectations out there of what we paid originally in the certified deal. As it relates to the second part of your question, Could you just repeat the second part of your question, Rick? Do you plan to rebrand That Mountain View stores and I guess that's right. That's right. We're looking at the brand portfolio. We've obviously The Mountain View brand, which is a strong brand out there. So we'll look at the role that that brand is going to play in the West Coast. We have the tire choice out there currently, which is what we rebranded some of our previous acquisitions with. We have Allen Tire out there right now that we acquired that we will determine both that and the Mountain View brand in terms of what its role will be in our West Coast portfolio. Great. Thanks and good luck. Thanks, Rick. Thanks. Thanks. Our next question today is coming from Stephanie Benjamin from Tuohy. Your line is now live. Hi, good morning and nice to meet you, Mike, over the phone. Thank you, Stephanie. Nice meeting you virtually. I wanted to touch a bit on the inflationary environment. In the couple of questions ago, you talked a bit about what you're seeing just Hire, but I'd love for you to discuss a little bit more just on base oil and any other commodity inflation Inflationary pressures you're going to be seeing and then also more importantly on labor, just what you are having to do to attract technician talent, if anything, How easy it is for you to find technicians as you are reopening as your stores are reopening and you're seeing higher demand levels? Are Are you happy to implement wage increases, just overall just on the cost side of operations? Thank you. Yes, Stephanie, this is Brian. I'll take that to start with and then let Mike get any color since I made the comment about the tires. And so we've seen that on the tire side. On the parts side, we haven't really seen much there To begin to start with here, but obviously everything that you see, we see and there are expectations that that will start and has the potential to Now we are a large buyer of those categories and we have significant scale and we feel that No matter the environment, we will buy better than our smaller competitors and that will provide us with a cost advantage. And ultimately, any of the inflationary pressures that the materials would put on the P and L will ultimately be able because of our industry and be able to be passed on to the consumer. And we feel good about that if we're buying better and the market is moving up that we'll be able Support our margins during that inflationary period. I would say related to labor, Mike used the words we're on talent earlier and I think that's really what it is and we continue to understand what we need to do to be competitive to make We've got the right people in our stores. So I'll pass it to Mike for additional color. Stephanie, when it's not by coincidence, when I talk about Monroe Forward, our strategy, it starts The good news is we're able to pass along wage inflation into our labor rate, But there really is how do we become a best in class employer and that is everything that we're trying to do right now with our incredible focus on training, Our capacity planning, really making it easier for our teammates to do their job. I think these are the things that people as people come back to work and as our employees Are looking to stay with making decisions around their careers. That's what they're looking for from an employer, and that's what I'm focusing on. Great. Really helpful there. And then I guess just a follow-up question. I think we've seen Some good success from just the pricing tool that was implemented across Tire. I'd love to hear as we kind of think through Fiscal 2022 and this return to normalcy, what we have in store in terms of other initiatives, Whether it's along the good, better, best pricing strategy or maybe just dig in a little bit deeper as you kind of move forward Monroe Forester, you obviously commented on the continuation of the store refreshes, but what else should we expect as we kind of look through the next year? That's so this is I'll take it. This is Mike. We made 2 significant acquisitions out west. We need to invest And bring them use the what we've learned in our Monroev Board and invest and bring both Mountain View and Allen Tires basically customer And teammate focused and invest in those stores so that we can finish the acquisition. That's number 1. Number 2 is what we've learned in our category management tool For tires, it's best in class. I've been doing this for a long time, applying the learnings that we've had with tires and now moving into the service categories And introducing just traditional category management, partnering with our suppliers and really making ourselves relevant to our customers and offering our teammates, giving them an opportunity to offer to our customers' choices, so it's easier for them to close the sale. But very much Going back to the Monroe forward, the work that we've done with tires is just gives me a lot of confidence that we can do that across the service categories. Got it. Thank you so much. Thank you. Thank you. We've reached the end of our question and answer session. I'd like to turn the back over to management for any further or closing comments. Thank you for joining us today. This is an Exciting time to be part of Monro. We have a strong foundation to build upon to create long term value for our stakeholders. I look forward to updating you on the progress in the future and getting to know all of you in the weeks months ahead. Have a great day. Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.