Monro Inc (MNRO) 2019 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to Monro Inc.'s Earnings's Conference Call for the 2nd quarter fiscal 2019. (Operator Instructions) And as a reminder, ladies and gentlemen, this conference call is being recorded and may not -- reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Maureen Mullholland, 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 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 five-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 this 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 2-year stack 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 of fiscal 2019 and beyond.

Now I'd like to provide more detail on the strength we've seen in tires. Representing half of our sales in our largest category, we are pleased to report that our optimized tire sales and pricing strategy is driving results. We delivered an increase of 3% in tire comparable store sales in the second quarter, marking our third consecutive quarter of positive tire comp sales growth. Our performance was driven by higher ticket and stable unit volume.

As previously discussed, we have also seen good traction with our new online tire pricing strategy, since we unbundled the price of our tires and installation, which has continued to drive increased conversion and online service appointments.

In addition, our tire business has continued to improve in the beginning of the third quarter, with strength in tire units driving accelerated tire comparable sales growth month to date in October.

Turning to our service and repair categories, I would like to start with an update on our brake category, which has continued to experience high demand. Brake comparable store sales were up 12% this quarter and acceleration from the 7% comp sales growth we saw last quarter. As a reminder, we launched our good, better, best brake packages in the first quarter and raised our package prices late in the first quarter to correct suboptimal brake package pricing at launch. Despite higher prices, our brake transaction volume grew 6% in the second quarter compared to the prior-year period. We've been able to quickly identify opportunities to optimize our brake package pricing by leveraging data analytics, which contributed to gross margin expansion this quarter and positions us well to continue to capitalize on the strong demand in this category going forward. Moving onto our remaining categories, comparable store sales were flat for both maintenance and front end/shocks while alignments declined slightly year-over-year. Geographically, we saw strength in our northern markets, which outperformed our southern markets. Lastly, new stores added $19.9 million in revenue, including $15.6 million from recent acquisitions.

Turning to Slide 4. Acquisitions remain a cornerstone of our growth strategy. We operate in a very fragmented industry and continue to take advantage of accretive M&A opportunities. We are pleased to announce that we signed a definitive agreement to acquire 5 stores in our existing market of Ohio. These locations are expected to add approximately $5 million in annualized sales, representing a sales mix of 70% service and 30% tires. The acquisition is expected to close in the third quarter of fiscal 2019 and to be break-even to diluted earnings per share in fiscal 2019. Additionally, we signed a definitive agreement to acquire 13 retail locations in the southeast, filling in an existing market. Overall, these locations are expected to add approximately $12 million in annualized sales, representing a sales mix of 65% service and 35% tires and to be break-even to diluted earnings per share in fiscal 2019. The acquisition is expected to close in the fourth quarter of fiscal 2019.

Lastly, I would like to provide an update on the previously announced acquisition of 7 stores representing $8 million in annualized sales. As we noted in this morning's press release, the closing of this transaction initially planned for the second quarter has been delayed due to an extended due diligence period and the acquisition is now expected to close in the fourth quarter of fiscal 2019.

In total, acquisitions announced and completed thus far in fiscal 2019 collectively represent $80 million in annualized sales. We will continue to capitalize on consolidation opportunities in the marketplace and currently have a very robust M&A pipeline with over 10 NDAs signed with targets that have between 5 and 40 stores, which has been our traditional deal sweet spot.

Overall, the execution of our Monro Forward strategy makes us a better acquirer as the operational consistency we are driving across our store base will allow us to integrate our acquisitions into a more structured and efficient model and therefore, should lead to higher ROI.

Moving onto Slide 5, we are very pleased to have expanded our collaboration with Amazon.com to provide tire installation services to their customers across Eastern United States. As a reminder, we first launched this collaboration in July at 52 stores in the greater Baltimore area. We are pleased with the initial results of the launch and have now expanded this option for tire installation to customers who purchase tires online from Amazon.com and select the ship to store option at over 400 stores across 10 states. The expansion of this collaboration highlights the progress we've made in building out our online presence, a key pillar of our Omni channel strategy. While our preferred installer agreements with online tire retailers are a small part of our business, they help drive increased traffic to our stores, allowing us to add these newly acquired customers to our recently launched CRM database and build long-term one-to-one relationships. We look forward to making these services available to Amazon.com customers at all Monro retail locations across 28 states over the course of the next year.

As we head into the second half of the year, we are very pleased with the progress we are making on our Monro Forward strategic initiatives. Our entire organization is embracing our commitment to drive operational excellence and deliver a consistent best-in-class experience to our customers. As outlined during our Investor Day earlier this year, our Monro Forward strategy centers around 4 key pillars, which are supported by a number of investments in technology and data-driven analytics across our business. The execution of our initiatives continues to progress on schedule and we achieved important new milestones during our second quarter.

Starting with our initiatives to improve the customer experience on Slide 6, we rolled out our customer satisfaction and online reputation management program across our entire store base in late February. Our investments in technology to solicit customer feedback have been instrumental in driving improved search traffic, which in turn should drive higher traffic to our stores. As we work to enhance customer satisfaction, we continue to leverage the feedback we collect from customer surveys and online reviews to improve in-store execution. This has led to a material improvement in our company star rating across online review sites in a short period of time. We are proud to report that our all-time average star rating has migrated from 3.6 stars just a year ago to 4.4 stars currently.

Onto Slide 7. As we focus on increasing the overall lifetime value of our customers, we launched our largest effort to improve our customers in-store experience in the beginning of the third quarter. This initiative is twofold and starts with the implementation of our standardized in-store operating procedures, which we call our Monro Playbook, followed by reimaging our stores to create a more consistent appearance. To achieve this, we established brand standards for how we operate across our 1179 locations. Following the launch of our standardized cloud-based store visit process in the fourth quarter of fiscal 2018, we are now rolling out our Monro playbook beginning with our 30 pilot stores in Rochester, New York. We have trained our teams at these stores on our in-store operating procedures, which take an educational approach to the customer selling process and include clearly defined roles and responsibilities for our teammates. Our objective is to empower our teammates as our expert advisers who can clearly and professionally advise our customers on their options based upon their specific vehicle needs.

We have also begun the implementation of brand standards to align the appearance of our stores. We are moving on track with our plans and now successfully refresh the appearance of 4 of the 30 pilot stores in Rochester thus far. An overview of our new layout at one of our pilot stores is presented on the slide and shows that our renovated stores are more inviting, contemporary and highly functional. So far, our store refresh initiative is showing encouraging signs of traction. I had the pleasure to visit our newly reimaged stores last week and got tremendous positive feedback from our team members and our customers. While we're still in the early stages of the refresh, the double-digit improvement in comparable store sales we have seen at these locations since launch reinforces our confidence in the rollout of this initiative across our store base. Once our pilot is complete, we plan to roll out our brand operational standards across our store base and modernize our portfolio of 1179 locations over the next 3 to 5 years, determining the appropriate scope of refresh needed for each of our stores by examining their age, size, and market demographics to ensure we are investing the appropriate amount of capital to achieve the highest possible returns.

Turning to Slide 8. As we make great strides in our customer centric engagement initiatives this quarter, as planned, we launched our data analytics based CRM platform which will enable us to leverage customer data and insights to deliver tailored messages and service recommendations to our customers based on their specific vehicle needs. Our new CRM platform is the core foundation of our data-driven marketing strategy and will be instrumental in the development of long-term one-to-one customer relationships to drive higher customer retention. Through this database, we are able to repurpose our marketing spend to invest in higher ROI channels and customer acquisition campaigns. During the quarter, we also successfully rolled out our modernized retail and corporate websites, the first phase of our Omni channel initiative and a major milestone in the development of our online presence. With responsive design for mobile users, a streamlined tire search and improved content and functionality, our new retail website better positions us to address our customers' needs. Importantly, it also better showcases the solutions we provide to our customers, including our good, better, best product and service packages. Only a month after the launch, we are encouraged to see that this new format is driving more traffic and keeping our customers engaged on our website longer. We are excited to report that we've experienced a double-digit increase in the number of new visitors and the average time spent on our site since launch. Additionally, the upgrade to a mobile capable architecture is translated into a 40% increase in mobile appointment conversion rates. We also invite you to visit our new easy-to-navigate corporate website that provides detailed information regarding our vision, values and financial performance.

Moving onto our initiatives to optimize our product and service offering, we are thrilled with the response to our good, better, best packages that launched across our store base in the first quarter. The significant increase in demand for brakes again this quarter is evidence of the success of the strategy. These assortments give our teammates the ability to provide customers with clearly defined options to choose the right services for their vehicle and the opportunity to trade customers up to higher value packages or increase attachment sales. As previously mentioned, we raised our brake package prices late in the first quarter, which has translated into positive margin tailwinds in the second quarter.

Lastly, I want to provide an update on our store staffing optimization, a key component of our productivity and team engagement initiatives. As a reminder, we added technicians to our understaffed stores to support improved traffic trends and sustain sales momentum in the first quarter. In the second quarter, we were able to return to a flat staffing model by rightsizing overstaffed stores, offsetting the labor we deployed to our understaffed stores last quarter. Our store technician labor optimization translated into a gross margin tailwind this quarter and will allow us to achieve overall greater store efficiency going forward. Additionally, we remain on track to implement a cloud-based data-driven store staffing and scheduling system in the first quarter of fiscal 2020 to drive further staffing efficiency by rebalancing the level of technical skills in each store, ensuring our stores are staffed with technicians that have the appropriate skill level for the services needed.

Before passing the call over to Brian, I would like to take a moment to thank our entire team for their hard work and continued commitment to the execution of our Monro Forward strategy. I would also like to recognize Deborah Brundage, who was recently appointed Senior Vice President, Chief Marketing Officer; and Avi Dasgupta, who was recently promoted to Senior Vice President, Chief Information Officer, for their outstanding contributions since they joined Monro earlier this year. I am very proud of what we've accomplished as an organization during the first half of this year and I look forward to continuing collaboration with our senior leadership team to build upon our strong business momentum. With that, I'll turn the call over to Brian, who will provide additional detail on our quarterly financial performance and full year outlook.

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 and 97 franchise 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 increased 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 costs as a percentage of sales as we gained leverage on these largely fixed costs with higher comparable store sales. 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 margin for the second quarter increased approximately 120 basis points from the prior year period. Operating expenses for the quarter increased $11.3 million and were $85.4 million or 27.8% of sales as compared with $74.1 million or 26% -- 26.7% of sales for the prior-year period. The year-over-year dollar increase includes $1.8 million in costs related to Monro Forward initiatives, including $1 million in one-time cost. Expenses related to our Monro Forward initiatives were in line with our plan for the quarter and we have now essentially completed our one-time investments. The year-over-year increase also reflects expenses from 42 net new stores and higher incentive-based pay related to improved current year financial performance. Our operating income for the second quarter was $34.5 million, which increased by 2% as compared to operating income of $33.8 million for the same quarter last year. And decreased as a percentage of sales from 12.2% to 11.2%. On a comparable store basis and excluding the one-time Monro Forward costs in the quarter, operating margin for the second quarter declined approximately 20 basis points from the prior-year period. Net interest expense for the second quarter increased $0.7 million as compared to the same period last year. The weighted average debt outstanding for the second quarter of fiscal 2019 increased by approximately $20 million as compared to the prior-year period. This increase in weighted average debt is due to higher capital lease debt reported in connection with our fiscal 2018 and fiscal 2019 acquisitions and Greenfield expansion. The weighted average interest rate for the second quarter increased by approximately 30 basis points year-over-year, largely due to higher LIBOR and prime interest rates. The effective tax rate was 22.2% for the second quarter compared to 38.2% for the same period last year. The year-over-year decrease in our effective tax rate was a result of the Tax Cuts and Jobs Act, which reduced the federal U.S. corporate income tax from 35% to 21 -- from 35% to 21%. As well as a variety of other factors, none of which was individually significant. Net income for the second quarter of $21.8 million increased 26% year-over-year. Diluted earnings per share increased 25% year-over-year to a record $0.65 including $0.02 per share of nonrecurring costs related to Monro Forward investments. This compares to $0.52 in the prior-year period, which included $0.01 per share of management transition costs. Excluding these one-time items, diluted earnings per share was $0.67 for the second quarter of fiscal 2019 compared to $0.53 in the prior-year period, representing a 26% increase year-over-year. Please note, diluted earnings per share in the second quarter of fiscal 2019 included $0.01 of net impacts from Hurricane Florence compared to $0.02 of net impact from Hurricane Irma in the second quarter of fiscal 2018.

Turning to Slide 10, we are executing our strategy while maintaining a disciplined approach to capital allocation. First, we will continue to invest for sustainable long-term growth. Our Monro Forward strategy is progressing on track and we are still expecting an incremental $75 million in capital expenditures above our normal run rate over the next 5 years to support investments in store reimaging and technology. Our capital expenditures were $21.7 million during the first 6 months of fiscal 2019, of which $1.1 million was related to investments in our Monro Forward initiatives. Secondly, executing at accretive acquisition opportunities remains a pillar of our growth strategy. And during the first 6 months of fiscal 2019, we spent approximately $39.1 million on acquisition, including one to four store acquisitions completed as part of our Greenfield expansion strategy. We are also committed to returning capital to shareholders through our dividend program and paid about $13.4 million in dividends during the first 6 months of fiscal 2019. Finally, we remain focused on maintaining a solid balance sheet with ample flexibility to support our growth and profitability initiatives. We entered the second quarter with strong leverage ratios and have ample room under our financial covenants. We generated approximately $76 million of cash flows from operating activities during the first 6 months of fiscal 2019. Debt under our revolver increased by approximately $3.3 million during the first 6 months of fiscal 2019.

Now turning to our outlook for fiscal 2019, on slide 11. Based on current sales, business, and economic trends and recently announced and completed acquisitions, we now anticipate fiscal 2019 sales to be in the range of $1,185,000,000 to $1,215,000,000, an increase of 5.1% to 7.7% as compared to fiscal 2018 sales. This compares to the previous sales guidance range of $1,180,000,000 to $1,210,000,000. Fiscal 2019 sales guidance continues to assume a comparable store sales increase of 1% to 3% on a 52-week basis. Please note that fiscal 2019 is a 52-week year, while fiscal 2018 was a 53-week year and benefited from an extra week of sales in the fourth quarter. While we are maintaining our comparable store sales guidance range, we believe that our strong year-to-date performance and the continued traction of our Monro Forward initiative position us well to achieve the high end of the range, likely between 2% to 3% on a comparable store sales increase, assuming normal winter weather conditions. Similarly, we believe we are well positioned to achieve our diluted earnings per share guidance range. In light of the early successes of our Monro Forward strategy, we would like to maintain flexibly to accelerate our investments in the second half of the fiscal year when it makes sense to do so. We are therefore reiterating our guidance range of $2.30 to $2.40, representing earnings growth of 20% to 25%. This guidance includes approximately $0.01 to $0.03 in accretion from fiscal 2018 acquisitions. Acquisitions made in fiscal 2019 are expected to be break-even to diluted earnings per share this year.

Our guidance continues to assume stable overall tire and oil costs compared to fiscal 2018. In the face of global tariffs and other material cost pressures, our vertically integrated and diversified supply chain continues to drive our cost leadership position and remains a key differentiator in our industry. Any tire and oil cost increases not mitigated by our differentiated supply-chain are expected to be passed on to consumers; however, any such cost and related consumer price increases are not assumed in our fiscal 2019 guidance. Given these assumptions, we continue to expect to generate earnings growth on a comparable store sales increase above 1%.

At the midpoint of our guidance range, we expect an operating margin of 11.1%, interest expense to be approximately $29 million, depreciation and amortization to be approximately $55 million and EBITDA to be approximately $187 million. This guidance reflects an effective tax rate of approximately 23% and is based on $33.6 million diluted weighted average shares outstanding. As always, our guidance does not assume any future acquisitions or Greenfield store openings. I'll now turn the call over to Brett to provide some closing remarks before we move to Q&A.

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 a true Omni channel presence. Additionally, we are excited about the launch of our operational excellence and store reimage 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.

(Operator Instructions) Our first question comes from the line of Matt Fassler with Goldman Sachs.

My first and primary question relates to the newfound 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?

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 is, we assess the competitive landscape, we were somewhat unique in our approach of bundling the installation relative to our competitors. 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 2 new installation packages as well to give consumers choice on the types of installation services and also simplify the selling process for our team in store. So through that, I think we've have seen the ability to drive more stability 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 a result of that.

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 but that's obviously only 1 month out of 3. 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 1 to 3 annual guide and just your thought process on the same-store sales outlook within that 1 to 3 given the momentum you have sort of over the past seven months of the fiscal year?

Matt, this is Brian. The 1 to 3 is on a 52-week basis. So we've normalized the prior year for 52 weeks and reflects a 52-week year-over-year. As it relates to the comp sales trajectory, certainly we are 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 a back half filled with some other 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 1 to 3, more of a 2 to 3 is our expectation.

And Matthew, just 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, we're extremely pleased with the momentum we are seeing coming out of Q2. As Brian said, we feel good about seeing our way to the upper end of our comp sales guidance. But we've got a lot of transformational change we're driving here. We're very encouraged about how our team's 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.

Our next question comes from the line of Brian Nagel with Oppenheimer and Company.

My -- the first question I guess, bigger picture in nature. Clearly, your results have improved here as you've undertaken a lot of these initiatives. Is there a way for you as you look at the results, maybe some market share data out there to 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?

Yes, maybe let me tackle this 2 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. In the fourth quarter of last year, we really started to build our foundation by providing our field operation teams, the tools and the visibility that helped them 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've 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 a 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 are pleased now as we roll out of summer season into fall that we are seeing more normalized pickup than the table demand for 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 '19, the car park starts to skew up a bit more in our favor with the average age of vehicles starting to show a bit more growth in our targeted segment. 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.

Great. That's very helpful. And as the follow-up question I have, just with regard to I think -- comments both you and Brian made, the flexibility of investment during the second half of this fiscal year. Maybe help us understand what shape -- what form could that take? Either in size -- actual number size of investment or where you could opt to allocate those incremental investment dollars? What are the key initiatives?

Yes, 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 a tremendous amount of value in return going forward. But they do require some upfront work and some upfront cost. So that would be the primary area where I think we've got some flexibility. And certainly, we're staying flexible on the capital side as well as we look at the progress of the Rochester pilot and the store refresh initiative.

Our next question comes from the line of Rick Nelson with Stephens Inc.

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

As you might expect, we can't speak in detail about the level performance of our program with Amazon specifically. However, I can share that we're pleased with the performance of our -- the initial 52 store pilot we did with Amazon. And I'd say, also with the collaborative nature of the relationship we have with them. We collaborated with Amazon in determining the next phase of the stores that we've now rolled out. It 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, I'll just talk generally about online retailing or installation capabilities for online retailers. I think the performance that we see is still pretty consistent with what we shared historically. And also, remind you that this bill represents a very small part of our business. We are 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 are also building out our own omnichannel capability as well.

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 those 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 can talk about the month for Monro versus the industry?

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. Now within all of the tiers, I think we've seen some favorable movement on mix as well, driven by like stronger analytics in terms of how we build out 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 efforts 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 at least 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 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.

Our next question comes from the line of Bret Jordan with Jefferies.

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 a TireRack or an AT TireBuyer.

As I mentioned, Bret, we can't speak in detail about the Amazon program but I think generally speaking, we are pleased with progress 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've experienced, over the 10 plus years of doing this for other online tire installers.

Okay. I don't want to know the number -- the volume you're getting from Amazon, just whether or not the -- I think you used to talk about $120 of revenue from a customer that came in for a tire install. Is it same ballpark?

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

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? 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 the relationship change there. So it's been pretty -- the exposure less 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. I think certainly that has -- the news has created some opportunities in those locations to drive some incremental demand as well. But not a significant amount of change at this point, given the way the tire manufacturers have supported us with alternative sources of distribution.

Our next question come from the line of James Albertine with Consumer Edge Research.

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 for the question, Jamie. Let me start by taking a step back and if you look at the Monro business model, we are very focused on tires, scheduled maintenance services and other under-car 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. 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 we have a clearly defined career path for those technicians to grow both personally and professionally. How they grow professionally is, we still have planned for late Q3 end of Q4, the launch of our Monro University training platform, which is clearly geared on helping build their technical acumen and expand their skillset. And I think the investments that we are 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 leads us to be pretty confident that we can keep the right technicians with the right skillset in our format going forward.

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

Sure, Jamie. As we made in our prepared comments, we talked about the 2 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 strong activity on the M&A front. And I'm encouraged that we're able to maintain our focus on growth through acquisition while also transforming our underlying stores through the Monro Forward initiative. 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 through a consumer's home and installing tires on their vehicles. Certainly, I think as a company we see some merit in that strategy from a consumer point of view. I think there are some questions around making certain you 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 3-year plan here, which is very much committed to building out our omnichannel presence and building an infrastructure of technology that supports I think a tremendous amount of flexibility for us in the future to handle opportunities like that. So 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 and 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 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 omnichannel technology going forward.

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