Monro, Inc. (MNRO) Earnings Call Transcript & Summary

[indiscernible] Ms. Suzuki from the BofA Equity Research Management team, and I'm really pleased to have Brian D'Ambrosia and Felix Veksler from Monro here with me today. This is a story that I have followed from a long time as being an auto analyst and then a retail analyst and still now in management. I get to continue to follow your story, which is always really interesting for me. So Brian, I think you had some intro remarks you wanted to give just to get people more familiar with Monro if they don't know your story.

Yes. Thank you. Appreciate it. Great to be here with everyone this morning. My name is Brian D'Ambrosia, I'm the Chief Financial Officer of Monro, Inc. Monro is one of the largest automotive and service aftermarket providers in the country. We do services related to oil change and related to parts and tire installation and other services under the hood and under the car and around the wheel. We do that through our network of almost 1,300 stores in 32 states, and we do that through about 9,000 service days. In fiscal 2023 which ended this March a year ago, we did $1.3 billion in sales. We generated record operating cash flows of $215 million and we maintain a very strong balance sheet. Our net bank debt to EBITDA is only about 0.5x. As it relates to our strategy, we're really looking to deliver on 3 outcomes and the first of those outcomes is consistent comparable store sales growth. So we put in place and are continuing to put in place a lot of initiatives to support that sales growth. One of those is a focus on our underperforming 300 stores that we feel represent an outsized opportunity for comp store sales growth and they should achieve multiyear trend results above trend for the company. Also, we're really focused on a balanced approach between service and tires, that's important for our staffing model, that's important for our traffic driving activities, and it's also important for our margin profile. And finally, everything we're doing is to make investments in technology and in training to really deliver an elevated in-store experience for our guests. That's ultimately the way we win differentiate ourselves from those who are unable to make those investments. Second pillar is margin expansion. It goes hand-in-hand with the sales increases. We are looking to reposition our cost structure and our labor model to support top line growth, but also do that in a way that drives productivity. We're also using our scale with our manufacturers and our vendors to deliver cost advantages to our competition and then we opportunistically are taking pricing actions and trying to influence mix through our category offerings and we believe that, that all will help to support expanding gross margins over time. And then our third initiative is really in our outcome that we're looking to deliver with our strategy is really cash creation through improved profitability, but really in addition, through working capital optimization so that we can streamline inventory levels and expand payment terms with our most strategic vendors who are supporting us and delivering the product to our stores. Despite some of the challenges that we faced and particularly our tire category, I think it's pretty well known that the entire industry has been under some pressure for some time now. Despite that, we really feel like we're putting the right investments in place during this period of time to really organic growth and position us for further unit expansion down the road. And ultimately, our goal is to return our business to pre-COVID gross margins, but importantly, double-digit operating margins. And I'll just make one final comment before I turn it back for Q&A related to capital allocation. I did mention that we achieved record operating cash flow last year, and we've been able to deploy that across some pretty straightforward priorities. The first is maintaining that really rock-solid balance sheet. We think that's a prudent thing to do in this environment. The second thing is really investing in our business, so making sure we're allocating capital and operating expenses, making sure those investments are there for us to support the growth that we believe is there for us a little medium to long term. And then returning capital to shareholders, we've done that through a long history of dividend and dividend increases but more recently, we've also done it through our share repurchase program. We remain an opportunistic acquirer, there's a lot of fragmentation in the industry and a lot of opportunity to grow units. We've been a little more opportunistic during this period of time but ultimately, we feel that our cash flow and our balance sheet is going to really be a key tool for us as we look for unit expansion over the long term.

Great. So I want to spend a few minutes talking about the demand environment. But if we take a step back and just think about really what drives this category, is it as simple as number of cars on the road, the size and complexity of those cars and then how many miles are being put on them or is there more to the demand story?

It is pretty that simple. I think the only thing I would add in there is age of vehicle as well. So we continue to see more vehicles on the road, there's 280 million vehicles on the road today in the auto aftermarket and that continues to expand every year we see more and more vehicles on the road. We've seen the average age of those vehicles increase about over 12 years now, 12.2 years. So they're getting older, which is good for the aftermarket. And complexity, while I think complexity has been around for a while and it's baked into most of the aftermarket, it continues to get more complex, which is good for the do-it-for-me providers like Monro, who have the skills, training equipment needed to do the work versus maybe something that could have been done in the past by a do-it-yourself person in their driveway. So that all tends to lead to some outsized growth in the DIFM category is seen. In vehicle miles traveled, once you have those other pieces in place, vehicle miles travel becomes I think the more volatile of the factors. Those other ones are multiyear cycles where VMT can be impacted as we saw during COVID very quickly. And we are almost back to pre-COVID levels in terms of vehicle miles travel. But with more vehicles on the road, you're seeing less vehicle miles traveled per vehicle, if you look at it that way. And it's important for us to really look at that number because ultimately, in our services, miles create wear both in fluids and brakes and tires, and that wear creates the replacement cycle.

Got it. Okay. So the need for auto maintenance should certainly increase as each of those factors picks up, but the consumers', I guess, willingness and ability to pay for service is also a variable. So I guess how would you characterize the current demand environment and that willingness and ability for the customer to pay?

That's right. I think that what we just talked about creates the need for the purchase. Now the actual ability or willingness for the consumer to make that purchase is affected a lot by more of the consumers' own budgetary constraints. And so what we've seen in periods of compression or expansion of unemployment or expansion of inflation, what we've seen is that the consumer tends to defer because you can get a little bit more out of each of those worn parts or worn tires and that creates an elongation of the purchase cycle. And that, I think, is what we've seen most recently in our tire category. Tires has been an area where both trade down and deferral has affected the purchase cycle and it's probably lasted a little bit longer than most would have thought.

So then as you think about it or can charge taking into account the differentiation of your service, the convenience, et cetera, how has that changed over time as Monro has evolved as a company? And then what do you think are Monro's biggest competitive advantages?

Yes. Related to pricing, I would say that it really -- let's look at the difference between the service and the tire category, we'll start with tire. I think what you've seen is a really rational tire category in terms of passing along cost increases to the consumer. Certainly, input costs have gone up, shipping costs have gone up, and that has been passed on from the manufacturers through distribution and ultimately to the installers and finally to the consumer. The consumers responded in a trade down way. They've looked at Tier 1 through 3 tires and they've started to really prioritize maybe a Tier 4 tire that maybe doesn't have all of the warranty, all of the quality or all of the life the long life of a Tier 1 through 3 but for now, it's the best tire that they want to put on their vehicles. So we've seen that in trade down and so I think some of the pricing actions in the tire category have been offset by a disinflationary trade down, so that average tire ticket is actually under pressure because of that trade down. And certainly, margin would go along with that, and this is commenting from an industry standpoint. On the service side, I think we've seen the most pressure there on cost of labor and those labor increases haven't really fully been passed on to the consumer. So I think that the installers have taken a little bit more of that than they've passed on in order to maintain competitiveness against the fragmented service category.

Got it. And then some of those trends that you mentioned in trade down, is that happening really across the country or are there certain regions where you're seeing it more acutely [indiscernible]?

No, it's a national phenomenon. I think what we've seen in the industry data was the tire units were pretty well supported in the center of the country for a while and they were more pressured on the coasts. And that was largely due to weather dynamics coming off of not this winter, but last winter, lot of snow in the Rockies, a lot of heat in the Texas area, so that was supportive. What we've seen more recently is that the entire country has seen units come under pressure pretty consistently across regions.

And what's the demographic of your average customer, if we think about who this customer is, what their family income looks like?

Yes. The first piece of that will be to talk about the vehicle they drive, and they typically a 6-plus year old vehicle, 6 to 2 years is where we have most of the vehicles that we see. And that's the prime age for a vehicle that's being maintained, but really they maintain outside of the dealer network, but before it maybe becomes a vehicle that gets less invested in when it gets older. So that's the most important part, is the age of the vehicle. Now who drives those vehicles tends to be households making $100,000 or less. Unless it's a multi-vehicle household, you've got 2 or 3 vehicles, sometimes a couple of those cars will go back to the dealer, they're newer but maybe the third vehicle that is older in their fleet, they'll choose to use the aftermarket.

Got it. Okay. So just turning to the competitive environment. You mentioned some of the investments that you've been making in technology, I mean, how are you utilizing customer data then? Like if we think about who this customer is and maybe they probably have a phone, and they probably are connected and want to utilize an app if that's available and so how are you staying engaged with that customer in a business where, generally, you don't want to have to go in for auto service. So like you don't want to push too much of that. But how are you there for the customer when they need you?

That's a great question. It's a low-interest category, it's not something that people shop when they're not in the market for our services. So it's really important to meet them with the right message or offer the right channel, but the most important thing is at the right time. And so we have a robust CRM, customer relationship management system that our marketing team uses. And what they're really doing is they're looking at our customer and seeing what services they had done, looking at time intervals to see when they may be in market again for those services, but also, they'll be looking at recent decline services. When a guest comes into our store we will obviously do the work that they came in for, but we also provide them a full courtesy inspection of their vehicle. And we'll make recommendations and help them prioritize on things that need to be done now or later. Oftentimes, because of financial constraints, the guests may decide not to do work that day or we may prioritize it for a later date with them. Our CRM will then market back to them that decline service so that we could get back in front of them knowing that it's not likely still squeaking or still swelling and they're still not satisfied with that part of their vehicle.

And then you touched on this a little bit in your prepared remarks. How are you thinking about growth? I mean, it seems like the focus is really on consistent comparable sales growth but then where do you think unit growth comes into that strategy?

Yes. It's an important part of our long-term strategy. So we've over the last couple of years really used it as an opportunity to make the investments and focus in our platform of 1,300 stores. And we've grown through acquisition over the years so there was a lot of opportunity to standardize processes, implement technology that we can leverage across multiple stores to gain common systems, visibility and management tools for all layers of our organization. So we've spent a lot of time doing that, getting in place what we feel are the right national programs to really create a single operating model for Monro. We believe that makes us a better platform for our next round of growth. And so ultimately, with the fragmentation of the industry, our financial ability to complete acquisitions and our improving capabilities as an operator, we believe that we're going to have a good opportunity to continue to consolidate the industry moving forward.

Great. And so I wanted to talk a little bit about pricing. We've gone through this dramatic inflationary period, which was arguably good for a nondiscretionary category like auto service, but often the message that we get from companies in various parts of the auto value chain is that pricing should hold. But we've seen in prior periods like 2013 through 2017, pricing didn't hold for 4 years. So from your seat, what do you think is a realistic scenario for auto service pricing over the next 12 months?

Yes. I will, again, take that in the 2 halves of our business, first in tires. I think that there is some pressure on tires because of the trade down. I think we're seeing enough trade down where we'll see how manufacturers, distributors and the installers respond from a pricing standpoint to try to preserve some of the Tier 1 through 3 volume and make sure that if we are seeing that trade down, what is the price point that needs to be achieved to step back up into some of the Tier 1 through 3 branded tires. So I think that, that Tier 4 could put pressure on some tire pricing, I think that, that may be, we'll call it, disinflationary to deflationary on the tire side. On the service side, I think there's still enough wage pressure in terms of what we're seeing in technician market wages. Monro has done a really good job of walking back those wage increases through productivity gains, through leveraging our improved scheduling process as well as rooting out any on productivity or over time that it's not productive in our stores, but still overall, the market pressure and labor is there in the technician category. I think that's going to prevent retailers and service providers from being able to deflate prices over the consumer. So I think that's that you'll see less pressure or less disinflationary pressure on the service side.

And on that point, on the labor cost and other costs like rent, et cetera, are you seeing any moderation in the inflation that you've seen there?

Yes. I think that we've seen it in some parts of our business but the technician, there's still some stickiness in wage inflation from a technician standpoint. We saw, let's call it, mid- to high single-digit inflation all in inflation, including materials. That's pulled back, but mostly because of the material side, though the technician and inflation is still running mid-single digits and I think that from a planning standpoint we're planning on that. So that just puts a lot more emphasis on making sure that we've got -- achieving our productivity levels that we are inspecting every vehicle, building tickets and making sure that we're getting compensated from the guests for the services we're providing.

Right. And just for the category broadly, I mean how much pricing power do you think auto parts and service has and how rational has that competitive environment been?

Yes. I think from the auto parts side, I think you've seen obviously a good amount of inflation built in over time. We tend to pass on that inflation to our guests when we buy a part from a retailer and then install it for the guest, we get the value for the inflation in the part. I think that, that and I think you're starting to see it in some of the more recent announcements, there isn't as much inflation being built into the overall top line comp. So we've always said that over time we're going to really need to support our top line comp with a strong balance between traffic and ticket and that's why we're focused on all the things we're doing around our digital courtesy inspection to support ticket once we see the vehicle, but really looking at our offerings and our staffing levels to make sure we can accept traffic because we know that it's going to be a balance there that ultimately, the inflationary boost to top line is starting to dissipate as we move forward.

Right. I want to make sure we have enough time to dedicate towards capital allocation. So we feel like this is a subject that's been coming up a lot lately. I mean, in the consumer sector there's all these near-term debt maturities that everyone's really focused on. Companies are going to have to refinance debt at higher rates and pay down debt at the expense of growth initiatives and other shareholder-friendly actions. So could you just talk about the state of Monro's balance sheet and then your approach to leverage and the potential competitive advantage of having some dry powder?

Absolutely. So at our last quarter end we only had about $94 million outstanding on our revolver. Our net bank debt, if you exclude cash, it was only about $70 million. Like I said, that's about 0.5x EBITDA, so a very conservative leverage profile, so debt service is not a major concern of ours. We do have a revolving credit facility that we have that outstanding on that matures in 2027. So we don't have a significant maturity wall or refinancing event anytime soon. But we do pay variable interest on that, so we are mindful of interest rates but nothing that has prevented us and our free cash flow is a great opportunity for us to continue to invest in our business and manage our debt levels at conservative levels. So there's nothing on the horizon that I think changes that. We always are looking -- as we look at opportunities to deploy capital and looking at the balance between putting a little more debt on the balance sheet and doing shareholder-friendly actions or doing acquisition growth. But right now, I think we're pretty well capitalized in terms of our debt profile and we'll continue to manage that while we deploy free cash flow against those capital priorities I talked about earlier.

Great. So I guess I had a question also just about -- you talked about some of the pillars and your top priorities for this year, but how are you thinking about the longer term and what you're investing in as a company?

Yes, it's a great question. We're investing all of our initiatives behind that sales margin cash flow, and I'll just maybe highlight a couple or one opportunity we have in each one of those categories. From a sales standpoint, I mentioned a minute ago, the digital courtesy inspection. So we've invested in our stores to take all of our inspections of a vehicle. It comes in, we do a 32-point inspection, can quip red, yellow, green, take brake measurements, take tire measurements and then are able to present that back to the guest for potential other services that they may need. We are translating all of that into a digital inspection. So it will be tablet-based, we will complete the rollout within the next 1.5 months to all of our stores. It's in close to 1,000 stores currently. And it will basically take that and make it a much more engaging experience for the guests. If they're not waiting in the store, we'll be able to e-mail it to them, have notes, pictures of the part that we're actually seeing. And any time you can build trust with the guests to prove that it's their vehicle that needs the service, and it's a low trust relationship between a high information technician who has a lot of -- guest who doesn't know everything about a vehicle. And so there's always a level of this trust, so the more you can show them in real pictures and in real time through a digital way we believe that's a better experience. It also allows us to capture a lot more structured data about the guest interaction. So now we can see exactly centrally what was found. When it's on a piece of paper, you don't know but now we can build all that data and see what technicians are finding on guest vehicles, making sure that it's in line with industry standards. And if we know that the 2 out of every 10 cars on the road need a battery, what's our percentage of when we do a battery test to make sure we're doing the test effectively. And then we can also make sure that guest inspections are being done on every vehicle, because as shops get busy you want to make sure that your technicians aren't cutting corners and skipping steps on the inspection because that's an important value that we provide. So it creates a lot more control over one of our key ticket building exercises. That's on the sales side. On the margin side, you may have seen that we committed to our relationship with Valvoline as an oil provider. So, that's an example of us really having a category focus to optimize and deliver improved performance in our oil category. We're not just doing that in oil but we're doing it across our key categories, tires and brakes. And I think that our category management team has done a great job of putting an assortment in offerings and they are going to resonate with the consumer, but also be margin opportunities for us. And then finally, on the cash side, we continue to leverage our supply chain finance program. So our strategic partnerships have allowed us to extend our payment terms with a lot of our strategic suppliers and leverage a supply chain finance facility that's really providing us working capital benefits. So all of those are going to be, we believe, meaningful continued benefit for us as we go into '25.

Okay. Just wanted to touch a little bit on industry consolidation to the extent that you feel like that's happening. I mean this has historically always been this very fragmented industry with a lot of very small mom-and-pop players. Wondering if you think that, that is sustainable and what the reasons are for having this like ongoing fragmentation or if you think it's going to be a slow consolidation trend that just continue this data becomes more prevalent?

Yes, I think it's a continued consolidation trend. I mean when you look at how we've gotten to the fragmentation we have, which every year, we become a little less fragmented as an industry, there's consolidation happening at all levels. The 1s and 2s are being consolidated, and then 10s and 15s store chains and then those get pulled into larger platforms. So I think that there is -- we started out with that fragmentation because a technician could start their own shop with relatively low cost to get a couple of bays. The investment in technology and in tools and in machinery wasn't all that great, it was primarily hand tools and you move on. But as the industry has gotten more complicated, the investments have become higher and the barriers to entry have gotten larger and the guest expectations have gotten higher. So you've seen some really good chains that have good customer bases consolidating the larger chains that can afford to make the investments and what the next generation of cars is going to require. I don't think that changes, I think if anything, it accelerates and I think you'll continue to see consolidation at all levels.

Great. I'm going to open it up to the room. If anyone has questions here and then I still have a couple of more myself still.

Can you help maybe frame the tire category that's been weak. If this is well below historical averages coming off of elevated levels, just so we can understand, even if there's a trade down, is there a recapture opportunity in the coming years as the macro gets better?

Yes, it's a great question. What we've seen in the tire category is we've seen pressure on tire units overall. And I'm speaking for the industry now, not necessarily for Monro, and you've seen a trade down to Tier 4. I think trade down has been exacerbated by a lot of supply that was stuck overseas during COVID that ultimately landed in the U.S. shores. So you've seen a healthy supply of Tier 4 and you've seen pricing decisions in the Tier 4 category by some to try to work through that inventory. And we talked about Monro doing that even a year ago, where we really leaned into Tier 4 because we had adequate supply, and we were looking to move units and we certainly did that. I think we're seeing the industry still deal with that, Monro, not at all, because of what we did a year ago, but the end industry is still dealing with that tire supply difference in terms of Tier 4. At the same time, the consumer is stretched so they're really taking 2 of the Tier 4 category which has ample supply in it. I think that, that dynamic fades as the supply side fades. I think it fades but the consumer is still going to be value-conscious. So that's where I said before, we'll see what happens with Tier 1 through 3 pricing in response to that consumer clearly showing a desire for a lower-priced tire. I think that, that dynamic has exacerbated the deferral trade down cycle for a longer period of time than maybe we've seen historically and why it's lasted a little bit longer than most have thought. I believe that because of the nature of the tire we're going to see units recover. And I believe that there could be outsized growth, to your point, for the industry as we require. I don't think this is a fact that anything was pulled forward and this is the air pocket. I think that this is the air pocket that is going to be filled in the future.

Has anything changed materially in terms of tire durability? Like I don't know if there's like an argument to me the tires remain to last longer or is that complicated?

No, there hasn't been any significant change in technology that creates a longer wearing tire. I think, if anything, with some of the standards that there are around fuel efficiency, you actually might have seen the opposite because really, the amount of rollout is the most important thing and that's particularly true in the electric vehicles. With range anxiety, you want to be able to demonstrate that your electric vehicle has a good amount of range and to do that, you have to put tires on that enable that range and that tends to be a little bit softer of a composite tire. In addition, the size and weight of electric vehicles tends to wear them out significantly faster, at least what we've seen. And there hasn't been many studies done on it but there's a lot of anecdotal evidence around it. So I think that if anything, we're probably seeing a tire replacement cycle that could become compressed going forward versus elongated because of any technology changes.

Yes. I can support that anecdote personally with my own that I have an electrical or I have an internal combustion engine, I replace the tires twice as often on the electric because they do on [indiscernible].

Good. That's consistent with what we've heard.

Yes. I'm supporting that data. Okay. And then I guess just turning to -- sorry, I'll open it back up again, but that just led me into another question I had, which was about EVs. And if you feel like that's an ultimate opportunity for your business or if there's a disruptive element to it, like on the service end, do EVs actually require less service because that seems to be the going assumption, but I don't know if that's a correct assumption? So I was curious.

Well, they're going to require more tires. So we just talked about that. And that is going to create a couple of opportunities for us. One, obviously, the ability to sell more tires and these are typically fitments that are higher-value tires. They're not an opening price point tire, not many sizes are available in opening price points for an EV consumer. And currently, with the type of consumer buying EV at that price point, they're not interested in putting a value offering on their car, they want a branded offering. So they're higher value and they're going to be in more frequently. It also gives us a chance to inspect the vehicle. And I had the chance, I was in Raleigh, North Carolina last week and was in one of our shops that had 3 customers in there. One was getting a state inspection, one was getting brakes and one was getting tires. So the one that was getting brakes had come in for 4 tires and tires were fine, we found, but it needed brakes. So we were able to replace the brakes on them. So you can see that's our full complement of services in action with the vehicle. The only thing that doesn't parlay over to electric vehicles is going to be the fluid exchange. And for us, that's only about 15% of our business and so it's a much smaller part of our business to pivot. And again, it's a pivot because you still have 300 million vehicles on the road that require fluid exchange so we will continue to evolve our offering to make up for that as the EVs come in.

Great. Sorry for hijacking. I'll let it back out to the audience if there are more questions in the room? I'll take it back is actually that raised another question that I had, which was really about, as you talked about that, like evolution or the pivot. And I mean, in the past, there have been changes to vehicle technology and the company has pivoted. I'm trying to think of some examples, I don't know, carburetors, which aren't really in modern cars, so what are some of the ways that historically Monro has been able to pivot along with the change in vehicle technology?

Yes. I can point to a couple. The first is just the original pivot where we've Monro-Muffler. And so as you got mufflers that became stainless steel, you used to replace your muffler, now no one really replaces their muffler unless there's like physical damage to it because they don't grow old, they don't wear out. But historically, and I remember growing up, you'd hear cars pull up the next to you and the mufflers hanging off and rusted out. That doesn't happen anymore. The company pivoted into under car repair like brakes and front end and shocks. So that's how Monro-Muffler became Monro-Muffler Brake. So, that was the original pivot and it was based on a technology improvement in the exhaust. But also, we pivoted our exhaust into really doing more catalytic converters than we do pipes and other undercar services and exhaust. The other one I would say is, if you look at our oil category, and the reason why we got more into tires as well is that we saw the elongation of the oil change cycle. It used to be 3 months, 3,000 miles, and now you've got manufacturers of cars where when the light comes on you get your oil changed and that light can be anywhere from 6,000 miles to 10,000 miles between oil changes. So we knew that the elongation of the oil cycle was going to require a diversification into other areas, and that's when Monro when I joined was probably 20%, 25% tires and now we're 50% as we looked at a tire category that was going to be a good way to maintain some of the traffic that we knew we might lose with the oil category.

Yes. And I guess there's really nothing that can disrupt tires that we know of today and we never...

[indiscernible] and all of that but for now the tire is the common denominator no matter what vehicle we're talking about.

Got it. Okay. Great. And actually, just a follow-up on tires, which is you mentioned that there's been this trade down to Tier 4. For you as the retailer, what's the difference usage besides just a lower unit cost to the customer, so lower same-store sales for you? Is there a margin difference as well?

There is. There's margin pressure on our Tier 4 offering and that is why when we looked at our performance from Q3 and Q4 a year ago in FY '23, our comp store sales were mid-single digits, but a lot of that was in the Tier 4 tire category and you saw that pressure or flow through. Now we had our labor, we were still in the process of getting productivity in our labor that we have just invested in as well. So that exacerbated it a little bit. But basically, as you see labor costs go up and tighter pricing come down, that is a tough mix to have. We can't have expensive, highly trained labor installing low-margin tires, particularly when the low-margin tires tend to have a consumer that isn't attaching as much to it. So they're not buying the road hazard protection, they're not necessarily buying an alignment to protect it. If we do find other work, they're not necessarily purchasing the brakes that they also need. So it becomes a low attachment, low-margin ticket and we'd made a decision to really slow down that and even if we lost overall tire share because of it, entire units, we were going to really focus on our Tier 1 through 3 offerings because that had the best P&L impact for us.

Yes. Makes sense. All right. Any other questions in the room? Otherwise, I'll ask my last one. Last question is just what are you most excited about for 2024?

Yes, a lot of things. But really, we've laid the foundation for future growth, I think, are coming through and weathering through a tough tire kit for our teammates to see the success of a lot of the hard work that we put in place because I think some of that has been masked by the overall macro entire category environment. But I do believe that the growth initiatives that we've installed will ultimately shine through and I think that's going to be a rewarding time for our teammates.

Great. Well, thank you so much. Appreciate having you here.