Good morning, ladies and gentlemen, and welcome to Monro, Inc.'s Earnings Conference Call for the Second Quarter Fiscal 2019. At the time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. And 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, Senior Vice President, General Counsel and Secretary 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 a part of the call this morning, we will be referencing a presentation that is available on the Investors section of our website at corporate.monro.com\investor\investor-resources. If I could draw your attention to the Safe Harbor statement on slide 2, I'd like to remind participants on this morning's call, that our presentation includes some forward looking statements about Monro's future performance. Actual results may differ materially from those suggested by our comments today. The most significant factors that could affect future results are outlined in Monro's filings with the SEC and in our earnings release. 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. Additionally, on today's call management's statements include a discussion of certain non-GAAP financial measures. Reconciliations of such supplemental information to the comparable GAAP measures will be included as part of today's presentation. With that, I'd like to turn the call over to Monro's; President and Chief Executive Officer, Brett Ponton.

Thank you, Maureen, and good morning, everyone. Thanks for joining us today. We are pleased with our performance during the second quarter as we delivered strong top line and bottom line growth, while continuing to invest in and execute our Monro.Forward strategy. We have seen sustained momentum in our business as our strategic initiatives have begun to take hold, reflecting our commitment to driving operational excellence and delivering a consistent 5-star experience for our customers. This is a testament to the tremendous work our teammates are doing throughout our organization. Importantly, the baseline capabilities we've established across our business over the past couple of quarters lay the foundation for long-term sustainable growth and position us well to capitalize on a variety of favorable trends in our industry. As shown on slide 3, comparable store sales grew 3.2% in the second quarter, representing the highest quarterly comparable store sales increase since the third quarter of fiscal 2011. We are also proud to have delivered three consecutive quarters of positive comparable store sales growth for the first time since fiscal 2011. Overall, our second quarter comparable store sales growth was driven by higher average ticket from improved in-store execution and notable strength in our brake and tire categories. Comparable store sales accelerated during the quarter and we are pleased to report that we have carried the strong momentum into October, with comparable store sales up approximately 7% month-to-date, driven by strength in our tire business. The sustained improvement in our two-year stacked comparable store sales performance over the past couple of quarters demonstrates the early success of the changes we are implementing across our organization to drive a scalable platform for sustainable long-term growth. We are very encouraged by these positive top line trends, which we expect to continue throughout the remainder…

Thank you, Brett, and good morning, everyone. Turning to slide 9, we delivered solid top line performance in the second quarter. Sales increased 10.5% year-over-year to $307.1 million, driven by a comparable store sales increase of 3.2% and sales from new stores of $19.9 million, including $15.6 million from recent acquisitions. This was offset by a decrease in sales from closed stores of approximately $1.5 million. The second quarter had 91 selling days, in line with the prior year period. As of September 29, 2018, the company had 1,178 company-operated stores in 97 franchised locations, as compared with 1,136 company-operated stores and 107 franchise locations as of September 23, 2017. During the second quarter, we added 17 company-operated stores and closed 3. Gross margin increase 30 basis points to 39.1% in the second quarter of fiscal 2019, up from 38.8% in the prior year period. This increase was partially due to a decrease in distribution and occupancy cost as a percentage of sales as we gained leverage on these largely fixed costs with higher comparable store sale. Also as Brett discussed earlier, store technician labor optimization and increased brake package pricing contributed to the year-over-year increase. The increase was partially offset by the impact of sales mix from the recent Free Service Tire acquisition. As we have previously noted, the commercial and wholesale locations we acquired as part of the Free Service Tire acquisition operate at a lower gross margin, primarily due to the higher sales mix of tires, and with respect to the wholesale business, a higher sales mix of tires without installation. On a comparable store sales basis, gross margins for the second quarter increased approximately 120 basis points from the prior year period. Operating expenses for the quarter increased to $11.3 million and were $85.4 million, or…

Thanks, Brian. In conclusion, we are pleased with our performance this quarter and very encouraged to see our top-line momentum continue into October. We achieved several milestones in the execution of our Monro.Forward strategy, including the launch of our new websites and our data analytics-based CRM platform as well as the expanded collaboration with Amazon, which underscores our progress in building our true omni-channel presence. Additionally, we are excited about the launch of our operational excellence and store re-image pilot program and are looking forward to expanding these efforts across our store base. Importantly, we are continuing to execute our disciplined acquisition strategy and have a robust pipeline of opportunities that fit our target focus. Finally, based on our performance year-to-date and the underlying momentum of our Monro.Forward strategy, we feel even more confident in our outlook for full-year and beyond. With that, I will now turn the call over to the operator for questions.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Matt Fassler with Goldman Sachs. Please proceed with your question. Matthew J. Fassler - Goldman Sachs & Co. LLC: Thanks so much. Good morning, everyone. My first and primary question relates to the new found strength in tires and the unbundling, which seems to be working out well. Can you talk about what the unbundling does if anything to the margin profile of the category?

Good morning, Matt. This is Brett. As you know last fall, I guess it was, we made the decision to unbundle our pricing. We did that for a couple of reasons. One as we assessed the competitive landscape, we were somewhat unique in our approach of bundling the installation relative to our competitors. So, I think the first benefit we've seen so far is the fact that online, when consumer shops for tires, the perception of our competitiveness certainly has improved. Also it gives little bit more flexibility in-store and allow our team to execute on selling in-store the required attachments related to those services. And I think as I mentioned, or we talked about in Q1, we introduced two new installation packages as well to give consumers choice on the types of installation services. And also simplify the selling process for team in-store. So through that, I think we've seen the ability to drive more ability in our tire unit volume, but also I think Brian and I are encouraged by the margin profile that we're seeing on our tire system revenue as well as a result of that. Matthew J. Fassler - Goldman Sachs & Co. LLC: Great. And then a second quick question just as we think about the comp outlook for the fiscal year, so you're tracking about 2.5% I think same-store sales year-to-date. You're tracking ahead of that month-to-date, so that's obviously only the one month out of three. Just remind us, if you will, and Brian might have talked to this in his remarks. How the comparison with the extra week is reflected in your one to three annual guide and just your thought process on the same-store sales outlook within that one to three given the momentum you have sort of over the past seven months in the fiscal year?

Yeah, Matt, this is Brian. The one to three is on a 52-week basis. So we've normalized the prior year 52 weeks and reflects a 52-week year-over-year. As it relates to the comp sales trajectory, certainly we're encouraged by the October strength that we've seen. And as we move through the quarter here, we know that there's, obviously – it's a quarter in the back half filled with some weather dynamics as well, and also a Q4 that we know was a strong quarter for us last year. So, we've taken all of that into consideration, but certainly are happy to be able to guide to the top half of that one to three, you know, more of a two to three is our expectation. Matthew J. Fassler - Goldman Sachs & Co. LLC: Got you.

And, Matt, maybe just to add – Matt, to add a little color to that. I think from my experience, when you drive the amount of transformational change our team is currently doing, your results are rarely linear. So I think that we're extremely pleased with the momentum we are seeing coming out Q2. Again, as Brian said, feel good about seeing our way to the upper end of our comps sales guidance, but we've got a lot of transformational change we're driving here. We're very encouraged about how our team is responding to that, but also want to give ourselves little flexibility in the second half, mainly on the EPS side to look to accelerate some initiatives if we feel the need to do so. Matthew J. Fassler - Goldman Sachs & Co. LLC: Understood. Thank you.

Thank you. Our next question comes from the line of Brian Nagel with Oppenheimer & Company. Please proceed with your question. Brian Nagel - Oppenheimer & Co., Inc.: Hello. Good morning. Thanks for taking...

Good morning, Brian. Brian Nagel - Oppenheimer & Co., Inc.: ...so nice quarter. My first question, I guess, bigger picture in nature. Clearly, results have improved here, as you're undertaking a lot of initiatives. Is there way to for you as you look at results, maybe some market share or data out there that really separate, how much of what we're seeing in the improvement now is a result of the initiatives taking place versus what seems to be an overall improving demand dynamic within your space?

Yeah. Maybe, let me tackle this two ways, Brian. First, when I look at our performance and assess our performance, I'd like to take a step back just talk about what we started in Q4. And the fourth quarter of last year, we really started to build our foundation by providing our field operation teams, the tools and the visibility to help them to do their job. That included the introduction of tablets with dashboards and a new standardized store audit process we introduced. The second foundational tool was the reputation management system and program that also drives results or I should say drives or builds the foundation for us. In Q1, as you know we introduced a lot of focus around in-store execution, introduction of the Good-Better-Best packages across brakes and tires and oil changes. And we also changed the compensation plan if you'll recall. To be more balanced between store profitability, top line sales or comp sales as well as balancing customer satisfaction. So I want to give our team credit for the tremendous progress, I think, they have made in executing all the initiatives we've asked them to do. But the backdrop, I think certainly has been favorable. Coming out of the winter last year, certainly, we would explain it more as a normalized winter that drove strong spring selling season on the service side. That's continued to into Q2 with us. As evidenced with the strength in our brake category. We're pleased now as we roll out of the summer season into fall that we're seeing a more normalized pickup than the table of (37:49) demand for our tire business. So, we feel pretty good about the macro backdrop for us, our team's ability to execute. And then more longer term, as you know, starting at the end of FY 2019, the car park starts to skew a bit more in our favor with the average age of vehicles starting to show a bit more growth in our targeted segments. So, we're encouraged about where we're at, favorable backdrop, but also I want to give credit to our team for the way they've executed in Q2 as well. Brian Nagel - Oppenheimer & Co., Inc.: Great. That's very helpful. And the follow-up question I have just with regard to I think, comments both you and Brian made about – flexibility of investments through the second half of this fiscal year. Maybe help us understand what could – what shape, what form could that take? Either in size – actual numbers of – size of investment or where you could opt to allocate those incremental investment dollars, what key initiatives?

Yeah, Brian. I think that primarily as we look at the back half, where we would see opportunities would be primarily around technology and opportunities to maybe pull forward some of those technology spend items, which we think drive tremendous amount of value in return going forward, but that they require some upfront work and some upfront cost. So that would be the primary area where I think we got some flexibly. And certainly we're staying flexible on our capital side as well as we look at the progress of the Rochester pilot in the store refresh initiatives. Brian Nagel - Oppenheimer & Co., Inc.: Got it. Thank you. Congrats again. Nice quarter.

Thanks, Brian.

Thank you. Our next question comes from the line of Rick Nelson with Stephens, Inc. Please proceed with your question.

Thanks. Good morning. I'd like to follow-up on the Amazon partnership some of your early learnings are in fact are attracting new customers there and anything you could share on the economics would be helpful.

Thanks, Rick, and good morning. Well, as you might expect, we can't speak in detail about the level performance of our programs with Amazon, specifically. However, I can share that we're pleased with the performance of our – the initial 52 stores pilot we did with Amazon. And I'd say also the collaborative nature of the relationship we have with them. We collaborated with Amazon in determining the next phase of the stores that we have now rolled out. That takes us up to about 400 locations, but we're going to continue to monitor the performance of the program and continue to collaborate with them as we look to expand this to all of our locations across Monro. As it relates to the performance, specifically, and I'll just talk generally about online retailing or installation capability for our online retailers, okay. I think the performance that we see is still pretty consistent with what we shared historically. And also remind you that this still represents a very, very small part of our business. We're very committed to building out our omni-channel strategy and feel it's important to be relevant where consumers elect to buy tires. We still think that's an accretive value creating initiative for the company. Meanwhile, we're also building out our own omni-channel capability as well.

Thanks for that color, Brett. Also, I'd like to follow-up on the tire category, the 3% same-store sales number sounds like that was driven by price units flat. And then you saw this acceleration in October, if you could speak to the units there and what you think is happening from a market share standpoint in the quarter and if you could talk about the month for Monro versus the industry?

Yes. So let's start with October. I think, in October, we certainly have seen accelerated unit volume in addition to favorable, I would call it, more price mix, Rick, versus just pure price. We've had a concerted effort as an organization here to be very focused on optimizing our product assortments and our product streams. We've seen some favorable mix improvement between our opening price point tires and our Tier 3 brands. And then within all the Tiers, I think, we've seen some favorable moment on mix as well, driven by, I think, stronger analytics in terms of how we build our assortments, but also tighter collaboration with our store personnel on selling those tires in-store. So we feel very encouraged by how the optimization effort is taking hold. As you stated, we did see improvement as we commented about in October on both, unit volume and our mix initiatives have helped as well. And I think we are starting to see a little bit more favorable backdrop there as well with more normalized these fall weather conditions that we're encouraged by as we roll into the second half of the year. As I assess our, call it, unit performance versus the market, probably the best proxy we get to measure performance is what we get from the tire manufacturers. And I think as we assess our performance, we would consider our unit volumes somewhat in line with what we've seen reported by the manufacturers. And certainly, improved over trends, but still have a lot of opportunities I think to still dial in the right pricing strategy coupled with the right in-store execution to really maximize unit volume, but also balance that against the right margin profile we expect for the category.

Great. Thanks a lot and good luck.

Thanks, Rick.

Thank you. Our next question comes from the line of Bret Jordan with Jefferies. Please proceed with your question.

Hi. Good morning, guys.

Good morning, Bret.

Good morning.

A quick question on what you're seeing with the Amazon installation referral program. And as far as ancillary sales, how that compares to your prior installation programs with customers that might have come through Tire Rack or ATD TireBuyer (44:16)?

As I mentioned, Bret, we can't speak in detail about the Amazon program. But I think generally speaking, we're pleased with progress that we've had with Amazon, and I think the expectations that we have, again, very early innings is the incremental business that we would pick up from the business at Amazon would be in line with what we have experienced over the 10-plus years of doing this for other online tire installers.

Okay. Yeah. I don't want to know the number – the volume you're getting from Amazon, just whether or not the – that I think you refused (44:54) to talked about $120 of revenue from a customer that came in for tire install, is it same ballpark?

Yeah. Generally speaking, I think, again, we're going to lump all these things into one category called online tire retail and we're encouraged by what we're seeing with the expansion of that related to the others in our portfolio, up until Amazon joined.

Okay. And then a quick follow-up. Obviously, a lot of volatility in distribution and ATD. Are you seeing any shift either picking up volume as some of those customers who might have bought from ATD previously don't have inventory access, and is there any disruption around that Goodyear, ATD breakup?

I think the tire manufacturers from what we see have done a really good job of kind of backfilling their distribution needs, given their relationship change there. So, it's been pretty – the exposure to us has been somewhat insulated, Bret, we really haven't seen any disruption there on our – we do have a couple of wholesale locations in our portfolio. And I think certainly that has – the news has created some opportunities in those locations to drive some incremental demand as well. But not as significant amount of change at this point given the way the tire manufacturers have supported us with alternative sources of distribution.

Okay, great. Thank you.

Thanks, Bret.

Thank you. Our next question comes from the line of James Albertine with Consumer Edge Research. Please proceed with your question.

Great. Thank you. Good morning and congratulations on the progress you show in the quarter.

Thank you, Jamie.

Wanted to ask first an operating question maybe second if I could sneak one in, a strategic question. The first on the operating side, we've been reading about and hearing from dealers and other employers of technicians across the space, this ongoing concern about technician shortages. And wanted to get your sense on kind of where you are in terms of the progress you're making on reducing labor turnover? And perhaps maybe getting into some initiatives to help promote your existing technicians to kind of stay on with Monro longer term and things of that nature. Thanks.

Yeah. Thanks for the question, Jamie. Let me start by taking a step back. And if you look at the Monro business model, we're very focused on tires, scheduled maintenance services and other undercar services. So, I think we are uniquely positioned relative to the car dealer, in the sense that we don't focus on, I would say, the real technical challenges that a new car dealer would have to solve for their consumer. As a result of that strategic positioning, our requirement for, say, real technical labor is not as great as the car dealer. I think, that's where, I think, we see a bit more shortage from a technician point of view is at the higher end of the labor market, as you've read about – and commented about. Having said that, I think our turnover trends have been improving over time. We still have significant opportunity to improve. The key initiatives that we have planned to enhance, what I refer to as our employer value proposition here. Number one is, making certain that have a clearly defined clear path for those technicians to grow both, personally and professionally. How they grow professionally is, we still have plan for late Q3 and Q4, the launch of our Monro University, training platform, which is clearly geared on helping build their technical acumen and expand their skills set. And I think the investments that we're making in store around appearance, certainly makes Monro a more attractive employer. And also, I believe, the strides that we made this year and closing some gaps around benefits also has enhanced the value preposition as well. So, our team seems to be responding pretty well to the level of support that we've been giving them. And I'm encouraged, because we're in the very early innings of what they're going to see from us as a store support center going forward. That leaves us – to be pretty confident that we can keep the right technicians with the right skill set in our format going forward.

I appreciate that color. Thanks for that. And as well, I apologize if I missed it in the prepared remarks, dialed in a little bit late. But on the strategic side, just wanted to get your view and update on the sort of the landscape for M&A, particularly with the news that Sears going into bankruptcy and restructuring. And we've also heard there's been quite a bit of consolidation going on in the space. We also heard about some tire distributors may be testing home installation things of that nature. Just wanted to get kind of roundup of what you see as sort of the key opportunities and potential key threats that you're seeing on strategic side?

Sure Jamie. As we made – in our prepared comments, we talked about the two deals that we announced in the quarter that takes our total revenue that we acquired this year to $80 million, so I think that's evidence that the pipeline remains robust. And as we commented, our NDAs still are plentiful in our pipeline. So, we see a strong activity on the M&A front. And I'm encouraged that we're able to maintain our focus on grow through acquisition, while also transforming our underlying stores through the Monro.Forward initiatives. So, we feel pretty confident that we're going to be able to maintain that on a go-forward basis. As it relates to some of the commentary on mobile services, look, there are a number of players out there that are piloting the efforts of basically going to the consumers' home and installing tires on their vehicles. Certainly I think as a company, we see some merits in that strategy from a consumer point of view, like there are some questions around making certain that we have the right equipment, the ability to do that in a very safe environment. And I think the ultimate question is around scalability, of course. We remain as a company very focused on our three-year plan here, which is very much committed to building out our omni-channel presence and building an infrastructure of technology that it supports like a tremendous amount of flexibility for us in the future to handle opportunities like that. But as you can tell, we're also very focused on our brick-and-mortar, which we still think in our industry having a strong brick-and-mortar presence, where you have the right investments in the equipment, the technology to handle consumers not only tire needs, but service needs is paramount in our space and we feel like we're well positioned to do that. But look, we're building capability from a technology point of view that gives us a tremendous amount of flexibility going forward to introduce mobile services to the consumers if we felt the need to do that. And I would remind everybody that we do have few commercial locations today in our portfolio, where we do mobile services. We do mobile services, but more geared towards commercial fleets and large heavy trucks, so we have the competency and the capability to do it. We just remain focused on our core right now, which is brick-and-mortar and building out our omni-channel technology going forward.

Make sense. Thank you so much for the detail. Congrats on the progress and best of luck for the next quarter.

Thanks, Jamie.

Thank you.

Thank you. There are no further questions at this time. I would like to turn the call back over to Mr. Ponton for any closing remarks.

Thank you all for joining us today and for your continued support of Monro. We have had a tremendous first half of the year, largely reflecting the traction of our Monro.Forward initiatives and we are very excited about our path forward. We look forward to updating you all on our progress next quarter. Have a great day.

Thank you. This concludes today's conference. Thank you for participation. You may now disconnect your lines and have a nice day.