Monro : Third Quarter Fiscal 2020 Earnings Presentation

Monro, Inc.

Third Quarter Fiscal

2020

Earnings Call

January 30, 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. 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 8. 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

Third Quarter Fiscal 2020 Highlights

Achieved Record Sales of $329.3 Million, Up 6.2% Year-Over-Year

Quarterly Comps Trends

3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
3QFY191	4QFY191	1QFY20	2QFY20	3QFY20
-0.5%
-1.0%
-1.5%

3QFY20

Key Highlights

• Sales increased 6.2% to a record $329.3M
• Comparable store sales of-0.9% drove EPS decline year-over-year
• Sales from new stores added $22.7M, including sales from recent acquisitions of $20.7M

2-Year Stacked Quarterly Comps Trends

3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
3QFY191	4QFY191	1QFY20	2QFY20	3QFY20 1

3QFY20

Key Highlights

• Maintenance: Flat
• Tires:-1%
• Front End/Shocks:-1%
• Brakes:-3%
• Alignments:-3%

1Results are adjusted for days

3

Store Rebrand & Reimage Initiative

Moving Forward with Store Rebrand & Reimage Rollout Across Base

Improve Customer Experience

• Completed 74 stores and substantially completed 42 recently acquired California locations during the quarter
• Sustained performance of locationspost-transformation reinforces strength of strategy
• Modernized store layout and consolidated brand strategy on track to be rolled out across the Company's remaining markets and store formats over 3 to 5 years

4

Store Rebrand & Reimage Initiative

Making Strong Progress Through the Early Innings of a Strategic Transformation

Monro Store Footprint Prior to Rebrand

Service Brand Stores (~$600K in annual revenue/store): 555

• ~15% tires and ~85% service

Tire Brand Stores (~$1.2M in annual revenue/store): 734

• • ~60% tires and ~40% service
• Transitioning to higher mix of tire stores

Scope of Company Rebrand and Reimage

~900

134	~150
	69
Comp Stores	Non-comp Stores

Total Stores Substantially Completed Stores (as of 3QFY20)

1Note: CarX is our franchised brand

2Performance data only includes comp stores that have been reimaged/rebranded for at least one full quarter

Migrating Portfolio to Tire-Oriented Brands

Service

Tire

1

• Opportunity to consolidate brands and improve marketing efficiency

Store Comparable Store Sales Performance

post-Rebrand/Reimage2

Rebranded Stores	Reimaged Stores
(30 stores)	(30 stores)

+18%	-2%
➢Rebranded stores to	➢No retail brand change
Tire Choice or Mr. Tire

• 74 comparable stores completed in the quarter are excluded as they do not have a full quarter of salespost-rebrand/reimage

5

Monro.Forward Progress Update

Critical Investments In Technology On-Track to Support Broader Strategy

Improve Customer Experience

Enhance Customer- Centric Engagement

Optimize Product & Service Offering

Accelerate Productivity & Team Engagement

• Executing customer satisfaction and online reputation management program across
  Monro's store base
• Focus on thein-store experience is having significant impact on Company online reviews and has increased "Star Ratings" to 4.6All-time
• Investing in technology with the rollout of modernized store infrastructure, including new digital phone system, expected to be completed by 1QFY21
• Collaboration with Amazon.com at more than 800 stores supports omnichannel efforts
• Launching second phase ofomni-channel strategy in FY21
• Improving category management to drive margin improvement and optimize product portfolio with new pricing technology to be implemented by end of FY20
• Continued momentum ofGood-Better-Best product and service packages
• Data-drivenstore scheduling and staffing software to be piloted by 4QFY20
• Scaling Monro University across store base and implementing mandatory onboarding training to better support new hires

6

A Scalable Platform: Recent Acquisitions

Acquisitions Announced and Completed in Fiscal 2020 Represent $120M in Annualized Sales

Completed Acquisitions

• Completed acquisitions of 18 stores, including 14 in Nevada and four in Idaho

▪Represents two new states and further expands the Company's geographic footprint into the Western United States ▪$20M in annualized sales, dilutive to EPS in FY20

• Sales mix of 75% service and 25% tires
• Completed acquisitions of nine stores in California
• Expanded market position in recently entered state
• $25M in annualized sales, dilutive to EPS in FY20
• Sales mix of 55% service and 45% tires

Greenfield Openings1

• Added one greenfield location during the third quarter

1Greenfield stores include new construction as well as the acquisition of one to four store operations	7

Third Quarter Fiscal 2020 Results

Achieved Record Sales of $329.3 Million, Up 6.2% Year-Over-Year

		3QFY20	3QFY19			FY20 YTD	FY19 YTD
Sales (millions)		$329.3	$310.1	6.2%		$970.5	$913.0	6.3%
Same Store Sales1	-0.9%	3.3%	(420 bps)		-0.1%	2.8%	(290 bps)
Gross Margin		37.8%	38.0%	(20 bps)		38.6%	38.9%	(30 bps)
Operating Margin	9.6%	9.9%	(30 bps)		10.4%	10.8%	(40 bps)
Diluted EPS		$.56	$.61	(8.2%)		$1.82	$1.87	(2.7%)
Excluded Costs2	$.04	$.02	-		$.09	$.07	-
One-time income tax benefit		-	($.06)	-		-	($.06)	-
Adjusted Diluted EPS3	$.60	$.57	5.3%		$1.91	$1.88	1.6%

13QFY19 and FY19 same store sales results are adjusted for days
2In 3QFY20 diluted earnings per share included $.03 per share of costs related to Monro.Forward initiatives and $.01 per share of costs related to acquisition due diligence and integration. In 3QFY19 diluted earnings per share included $.01 per share of costs related to Monro.Forward initiatives
and $.01 per share of non-recurring corporate and field management costs. In the first nine months of fiscal 2020, there was $.06 of costs related to Monro.Forward initiatives and $.03 of costs related to acquisition due diligence and integration, compared to $.05 of costs related to Monro.Forward
initiatives, $.01 per share of non-recurring corporate and field management realignment costs and $.01 per share of costs related to acquisition due diligence and integration in the first nine months of fiscal 2019.
3Adjusted 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	8
January 30, 2020.

Disciplined Capital Allocation

Executing on Growth Strategy While Maintaining a Disciplined Approach to Capital Allocation

Investing in the Business

• Capex of $42.2M in the first nine months of fiscal 2020
• Continue to expect ~$75M of incremental Capex over 5 years to invest in storere-image and technology

Executing on M&A Opportunities

• Spent $104.3M on acquisitions in the first nine months of fiscal 2020
• Acquisitions announced and completed in fiscal 2020 represent $120M in expected annualized sales

Returning Cash to Shareholders

• Paid $22.3M in dividends in the first nine months of fiscal 2020
• Currently $.22 per share quarterly, an increase of 10% from 3QFY19

Utilizing Strong Balance Sheet

• Generated $124.7M of operating cash flow in the first nine months of fiscal 2020
• Debt-to-EBITDAratio as of December 2019 of 2.3x provides significant flexibility to fund M&A strategy

9

Fiscal 2020 Outlook

Updates Fiscal 2020 Comparable Store Sales and EPS Guidance Ranges

Operating Margin

	FY20	FY19
Sales (millions)	$1,275 to	$1,200	6.2% to 7.5%
$1,290
Same Store Sales	-1% to flat	2.3%	-330 bps to
-230 bps
Diluted EPS	$2.25 to $2.35	$2.37	-5.1% to -0.8%
Adjusted Diluted EPS1	$2.35 to $2.45	$2.39	-1.7% to 2.5%

Stores

• Guidance includes recently completed acquisitions and excludes any additional potential acquisitions
• Guidance includes sevenground-up greenfield store openings in FY20

• Assumes operating margin of ~10.2% at midpoint of FY20 sales guidance
• Expect relatively stable tire and oil costsyear-over-year
• Expect to generate earnings increase on a comparable store sales increase above ~1%

Additional Guidance Assumptions (at the midpoint)

• Interest expense of ~$29 million
• Depreciation and amortization of ~$65 million
• EBITDA of ~$196 million
• Tax rate of ~23.5%
• Capital expenditures of ~$60 million
• 34 million weighted average number of diluted shares outstanding

1Adjusted diluted EPS is a non-GAAP measure. FY20 adjusted diluted EPS guidance excludes estimated Monro.Forward initiative costs and acquisition due diligence and integration costs, compared to adjusted earnings per share in FY19, which excluded Monro.Forward initiative costs,	10
non-recurring corporate and field management realignment costs, acquisition due diligence and integration costs and benefit from a one-time income tax adjustment as shown in further detail on Slide 8.

Third Quarter Fiscal 2020 Key Takeaways

• Continued progression of store rebrand and reimage initiative with 203 stores substantially completed through 3QFY20
• Strong performance of transformed stores underscores strength of strategy
• Investing in technology to drivelong-term margin expansion
• Completed acquisitions of 27 stores, entering two new states and expanding presence in Western United States
• Updates fiscal 2020 comparable store sales guidance and EPS guidance ranges

11

Appendix

12

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

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

~17 WEEKS

13

Store Rebrand & Reimage Initiative

Store Refresh Program On Track To Be Rolled Out Across Base

Q3 FY19	Q4 FY19	Q1 FY20	Q2 FY20	Q3 FY20	Q4 FY20	Q1 FY21	Q2 FY21	Q3 FY21	Q4 FY21
Group 1
	44 stores

Group 2	43 stores

Group 3
	116 stores

Group 4	~80 stores

Group 5
	~70 stores

Group 6	~70 stores

14

Monro.Forward: Investments in Technology

Significant Investments in Technology to Support Monro.Forward Strategy

Area	Strategic Rationale	Timing

Business Intelligence

Monro University

Learning Management System

Store Network

Infrastructure Upgrade

Digital Phone and Customer

Communication System

Store Staffing Model &

Scheduling System

Tire Category Management & Pricing System

Cloud-Based Car Inspection

Scanning Tool

• KPI dashboards for stores and management
• Ensures consistent onboarding and teammate training
• Develop clear career paths
• Deliver standard operating procedure training
• Enable and support cloud based merchandising strategy
• Enablecustomer-facing technology
• Eliminate cost of analog phone system
• Simplify phone execution for store personnel
• Enablecustomer-centric call and text messaging management
• Eliminatepaper-based scheduling
• Optimizes store staffing and day part scheduling
• Improvespart-time scheduling capabilities
• Enterprise solution to dynamically manage pricing at the SKU level
• Partially automates optimization of tire volume/margins by providingreal-time elasticity
• State of the art technology for technicians to provide industry- leading service
• Provides efficient tool for actively managing customer needs

• Launched in Q4 FY18
• Ongoingcompany-wide expansion
• Launched in Q3 FY19
• Ongoing expansion across store base
• Installed in 140 stores
• To be implemented across base by Q1 FY21
• In 100 stores
• To be implemented across base by Q1 FY21
• Pilot in Q4 FY20
• To be launched across base in Q1 FY21
• On track to be operational by end of FY20
• In pilot stages
• To be implemented in FY21

15

Monro.Forward Strategic Initiatives

Q4 FY18

Improve Customer

Experience

Enhance Customer-

Centric Engagement

Optimize Product &

Service Offering

Accelerate

Productivity

& Team Engagement

Foundational

Technology & Tools

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

New store comp plans	Monro University pilot
(includes career path,
	LMS)
	Store staffing &
	scheduling system
	Store network
	infrastructure upgrade
Business intelligence	Tire category management
system
& pricing system
	Cloud based
	car inspection tool

= Completed Initiatives	16