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Monro Continues Growing Out West

Monro Inc. has signed definitive agreements to acquire three companies that will result in the addition of 14 shops in Las Vegas; four in Boise, ID; and nine in Northern California. The transactions are expected to close in the current quarter.

President and CEO Brett Ponton told analysts on Monro’s Oct. 24 financial results conference call that the purchase of these shops demonstrates management’s strategy to extend the company’s footprint in the West. “By solidifying our growing presence on the West Coast, we enhance our ability to service national accounts and also better position ourselves to capitalize on a high concentration of vehicles in this market and the potential long-term consumer shift to ride sharing,” Ponton said.

With the acquisitions in Nevada and Idaho, which are new states, Monro is expected to add approximately $20 million in annualized sales representing a sales mix of 75% service and 25% tires.

The additions in California complement the company’s relatively recent entrance into the state. These nine shops are expected to add roughly $25 million in annualized sales representing a sales mix of 55% service and 45% tires.

During the fiscal second quarter ended Sept. 28, 2019, Monro closed on its previously announced acquisition of eight shops in Louisiana. This gives the company 20 locations in the state, solidifying Monro’s position in a recently entered market and increasing its exposure in the South. These shops are expected to add approximately $12 million in annualized sales, representing a sales mix of 50% service and 50% tires.

“Overall, acquisitions announced and completed in fiscal 2020 collectively represent an expected $120 million in annualized sales,” Ponton said on the call. “We remain well-positioned to continue to execute on our robust pipeline of attractive M&A opportunities and currently we have over 10 [non-disclosure agreements] signed with opportunities ranging from five to 40 stores. We believe these opportunities will allow us to maintain our leadership position in the markets we serve, while continuing to expand our geographic footprint into attractive and under-developed regions.

“Importantly, we believe that the implementation of our ‘Monro Forward’ initiatives to standardize our in-store operating procedures and brand standards will position us to more effectively and efficiently integrate our acquisitions.”

Monro opened five greenfield locations during the fiscal second quarter ended Sept. 28, 2019, bringing its year-to-date greenfield store openings up to six locations. It’s worth remembering that Monro defines greenfields as new construction as well as the acquisition of one- to four-store operations.

During the quarter, Monro added 13 company-operated shops and closed two locations.

As of Sept. 28, 2019, Monro had 1,262 company-operated shops and 98 franchise locations — up from 1,178 company-operated shops and 97 franchise locations a year ago.