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 this call, we will be referencing a that is available on the Investors section of our website at corporate.monroe.com/investors. If I could draw your attention to the Safe Harbor statement on Slide two, I'd like to remind participants 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 except as required by law. Additionally, on today's call, management statements include a discussion of certain non GAAP financial measures, which are in intended to supplement and not be substitutes for comparable GAAP measures. Reconciliations of such supplemental information to the comparable GAAP measures will be included as part of today's presentation and in our earnings release. Lastly, unless otherwise noted, all references to comparable store sales category sales and units on today's call will be made on an adjusted for days basis, which adjusts for six fewer selling days in the current year quarter due to an extra week of sales in fiscal twenty twenty four and a shift in the timing of the Christmas holiday from the fourth quarter in fiscal twenty twenty four to the third quarter in fiscal twenty twenty five.

With that, I'd like to turn the call over to Monro's President and Chief Executive Officer, Peter Fitzsimmons. Thank you, Felix, and thanks to everyone for joining us this morning. It's terrific to be part of the Monro team. As many of you already know, my primary objective is to work with the company's management team and board to develop and execute a performance improvement plan that will enhance Monro's operations drive profitability and increase operating income and total shareholder returns. I've successfully led similar improvement plans at other and I intend to leverage my extensive background and experience to do the same at Monro. I've now spent about eight weeks in Rochester at the company and have been fully immersed in our business. I've spent a lot of time with the senior leadership and also engaging with our talented teammates in the field. As well as visiting many stores. Both Monro stores and our competitors. This is all only confirmed the positive view I had about Monro before I decided to join the company. Let's start with Monro's strengths. First, this business has shown impressive durability through business cycles. We are positioned as one of the leading players in a highly fragmented Monro has significant scale that gives us important competitive advantages over smaller players in our industry, and we can leverage this scale in our financial position to make critical investments in our business, our people, and our technology to deliver an outstanding guest experience.

Second, certain fundamentals in our industry remain strong. These fundamentals include continued growth of vehicles on the road, which now exceeds $280,000,000 in The United States, vehicle miles traveled have returned to pre COVID levels. And importantly, the average vehicle life of cars on the road today is more than twelve and a half years. Further, an increase in the complexity of vehicles continues to drive a shift from do it yourself to do it for me with future technology advances expected to accelerate this shift. Third, and finally, our business is a consistent cash generator with ample liquidity, a solid balance sheet, and low leverage. All of this coupled with our compelling consumer offerings gives us confidence that we can successfully execute on and accelerate the pace of the company's improvement plan as well as better capitalize on positive industry trends to unlock Monro's full potential. Now I'd like to share my initial assessment of the business. Which highlights four key areas of focus that we've identified as opportunities for improvement and is shown on slide three of our presentation materials. These include closing unprofitable stores, improving our customer experience and selling effectiveness, driving profitable customer acquisition and activation, and increasing merchandising productivity which includes mitigating tariff risk.

Let's start with closing unprofitable stores. In the past few weeks, we conducted a comprehensive store portfolio review that identified 145 underperforming stores to prioritize for closure. Our review included an evaluation of store performance, as well as market segmentation and demographic data specific to the geographic areas of each location. We are now setting into motion a process to close these locations during the first quarter of fiscal twenty twenty six. The closure of these stores will have a limited impact on our total sales, but is expected to deliver meaningful improvement in profitability. The 145 stores generated approximately 5% of our total sales in fiscal twenty twenty five, and we're likely to recapture some of those sales in locations near the closing stores. Second, improving our customer experience and selling effectiveness. Reviewed stores across our portfolio, from low to high performers to understand the store experience from both the customer and teammate perspective. Our analysis indicates the customers have had an uneven experience in our stores, largely due to inconsistent teammate execution of core processes. Including scheduling and appointments, communication and quality of service. By breaking down the customer journey, we are developing an approach to address customer pain points that we believe will improve the customer experience and unlock value in our selling effectiveness.

The company's Confidrive digital courtesy inspection, which you're all familiar with, will continue to be a key component of our in store experience. We have many stores, serve our customers very well. Unfortunately, we have others that don't always live up to customer expectations. Addressing this is a high priority item that we will be working hard to improve and with a high sense of urgency. Third, driving profitable customer acquisition and activation. As all of you are aware, Monro sales have declined sequentially for the past three fiscal years. Driven largely by declines in store traffic. Our work indicates that recently there also been a decline in the quality and retention of new customers. We believe this has been driven by suboptimal marketing insufficient clarity on who Monro's target customers are, what these customers value, and how we fulfill their needs. Our analysis also uncovered that Monro's highest value 25 times more profit than our lowest tier of customers. As a result, we are in the process of converting our market testing into a reallocation of marketing dollars aimed at higher value and more profitable customers. The early results from our tests are encouraging. We expect that our approach to improvement in this area will include testing of marketing, which will touch such things as messaging, type of media, and promotional offers.

We will then scale the tests that deliver the most value across all of our stores. Fourth and finally, increasing merchandising productivity as well as mitigating tariff risk. The company has a broad tire assortment. Our work on the company's current merchandising shows that this broad assortment may not be aligned with what our really wants. We expect to narrow the breadth of our core tire assortment which will simplify the in store selling process. For both our customers and our Monro teammates. Of course, we will continue to get any tire the customer wants through our many distribution channels. But our core in store offering will likely be simplified. This will allow us to lean into stronger strategic partnerships with important tire manufacturers. In addition, we are reviewing our pricing and promotions across tires and services to ensure we deliver value to our customers while also achieving appropriate levels of profitability. A word about tariffs. No company today, especially in the automotive sector, can look at the current landscape without considering tariffs. While it is still an obviously uncertain environment, tariffs are expected to drive cost increases across almost all of our major product categories. Have mobilized an internal team for fact based negotiations with top suppliers to mitigate as much of that anticipated tariff as possible.

We expect that we may need to adjust prices to our consumers to counter the impact of tariff related cost increases. We are currently evaluating the full impact. To conclude, as I reflect on my first eight weeks at Monro, think we've conducted a very detailed preliminary assessment of the business and I believe the opportunities that we've uncovered plans that we're putting into place will accelerate the pace of the company's performance improvement and unlock Monro's full potential. We don't expect to see improvement overnight. But I feel pretty confident that we will drive enhanced profitability and increase operating income along with total shareholder returns, during fiscal twenty twenty six. Before I hand the call over to Brian, I'd like to thank our dedicated teammates for their commitment to our customers. Thanks also to our shareholders, and our suppliers for their continued support. And with that, I'll turn the call over to Brian.

Thank you, Peter, and good morning, everyone. Before I get into more specific details, I'd like to briefly touch upon just a few highlights from our fourth quarter performance While our results are far from where we want them to be, we drove positive comparable store sales growth for the full quarter sequential improvement in comp sales and gross margin as the months of the quarter progressed Comp sales and unit growth in our tire category and our high margin service categories including front end shocks, batteries, brakes, and maintenance service and a year over year store traffic increase in March. Our overall gross margin and profitability in the quarter was negatively impacted by extreme weather in the first half of the quarter which resulted in temporary store closures, and lower store traffic primarily in January. The second half of the quarter saw better operating profitability.

Now turning to Slide four for more specific details. Sales decreased 4.9% to $295,000,000 in the fourth quarter. Primarily driven by six fewer selling days compared to the fourth quarter of fiscal twenty twenty four. Resulting in a sales decrease of $18,900,000 Comp store sales increased 2.8% and decreased 3.6% unadjusted for days. For reference, comps were down 2% in January and rebounded to up 2% in February. And we exited the quarter up 8% in March. Tire units were up mid single digits in the fourth quarter driven by growth in units above 10% during the month of March. We also gained higher market share in our higher margin tiers in the quarter.

Turning to Slide five, gross margin decreased two fifty basis points compared to the prior year. Primarily resulting from higher material costs due to mix within tires from a value oriented consumer that traded down more of their tire purchases to our Tier three offerings and an increased level of self funded promotions. Technician labor costs also increased as a percentage of sales, primarily due to wage inflation. Total operating expenses were $121,100,000 or 41.1% of sales as compared to $99,700,000 or 32.2% of sales in the prior year period. Importantly, the increase was principally due to an increase of $20,900,000 in store impairment costs related to certain owned and leased assets.

Operating loss for the fourth quarter was $23,800,000 or negative 8.1% of sales and was negatively impacted by the store impairment costs just discussed. This is compared to operating income of $10,300,000 or 3.3% of sales in the prior year period. Net interest expense decreased to $4,400,000 as compared to $5,000,000 in the same period last year. This was principally due to a decrease in weighted average debt. Income tax benefit was $6,800,000 or an effective tax rate of 24.3% is compared to income tax expense of $2,000,000 or an effective tax rate of 35% in the prior year period. The year over year difference in effective tax rate is primarily related to an increase in valuation allowances as well as the impact from other adjustments none of which are significant on the change in pre tax loss or income. Net loss was $21,300,000 as compared to net income of $3,700,000 in the same period last year. Diluted loss per share was $0.72 This is compared to diluted earnings per share of $0.12 for the same period last year. Adjusted diluted loss per share a non GAAP measure, was $0.9 This is compared to adjusted diluted earnings per share of $0.21 in the fourth quarter of fiscal twenty twenty four.

Please refer to our reconciliation of adjusted diluted EPS in this morning's earnings press release and on Slide nine the appendix to our earnings presentation for further details regarding excluded items in the fourth quarter of both fiscal years. As highlighted on Slide six, we continue to maintain a strong financial position. We generated $132,000,000 of cash from operations including $43,000,000 of working capital reductions during fiscal twenty twenty five.

Our AP to inventory ratio improved to 177% at the end of fiscal twenty twenty five versus 164% at the end of fiscal twenty twenty four. We received $12,000,000 in divestiture proceeds as well as $9,000,000 from the sale of our corporate headquarters. We invested $26,000,000 in capital expenditures spent $40,000,000 in principal payments for financing leases and distributed $35,000,000 in dividends. At the end of the fourth quarter, we had net bank debt of $40,000,000 availability under our credit facility of approximately $5.00 $9,000,000 and cash and cash equivalents of approximately $21,000,000 Now turning to our expectations, for the full year of fiscal twenty twenty six on Slide seven. Given the uncertainties surrounding a fluid tariff situation, we are not providing guidance for fiscal twenty twenty six at this time. However, we are providing the following assumptions to assist in your modeling. We expect to deliver year over year comparable store sales growth in fiscal twenty twenty six primarily driven by the improvement plan that Peter discussed earlier as well as any tariff related price increases to our customers. Encouragingly, our sales momentum has continued into the first eight weeks of our fiscal first quarter with preliminary quarter to date comps that are up approximately 7%.

We expect the results of our store optimization plan to reduce total sales by approximately $45,000,000 in fiscal twenty twenty six. Given expected baseline cost inflation, as well as our exposure to tariff related cost increases, we expect that our gross margin for the full year of fiscal twenty twenty six will continue to remain pressured. Particularly as it relates to a tough gross margin comparison in the first quarter of the prior year period. We expect to partially offset some of this baseline cost inflation as well as some of the tariff related cost increases with benefits from closing stores and operational improvements from our improvement plan.

We believe this will allow us to deliver a year over year improvement in our adjusted diluted earnings per share in fiscal twenty twenty six. As a result of our store portfolio optimization plan, we expect to incur store closure costs of approximately 10,000,000 to $15,000,000 primarily during the first quarter of fiscal twenty twenty six. We expect to generate sufficient operating cash flow that will allow us to maintain a strong financial position and to fund all of our capital allocation priorities. Including our dividend during fiscal twenty twenty six. Regarding our capital expenditures, we expect to spend $25,000,000 to $35,000,000 And with that, I will now turn the call back over to Peter for some closing remarks.

Thanks, Brian. We believe our business is durable. Monro has a solid balance sheet and cash flow profile and the fundamentals of our industry are strong. We believe that we can capitalize on positive industry trends through the four key areas of our improvement plan, to unlock Monro's full potential as we enhance operations drive profitability and increase operating income. And total shareholder returns. With that, I will now turn it over to the operator for questions.

Thank you. We will now begin the question and answer session. And we do ask that you please limit yourself to one question and one or two follow-up questions. And if you did have any more, you will need to rejoin the queue. And as a final reminder, is star one to register for a question.

We have a question from Thomas Welder with Stephens. Please go ahead.

Hey, good morning everyone. Good morning, Thomas. Hi, Tom.

Nice to Nice comps this quarter. Lots of moving pieces here. I'm going kick things off maybe with the gross margins. You're running some self funded [indiscernible] Are these the additional savings I see as an offering from the use of the drive card? And then with these, promotions and the wage inflation, is there any additional color you can provide as we're thinking about gross margins moving forward?

Thanks for the question, Tom. This is Brian. I'll take that. So the gross margin impact related to the self funded promotions is really our our tire promotions and it includes some of the drive car promotions that you're seeing, but it also includes everyday offers on buy three get one certain brands buy one get one of other brands. These have been in place for a good portion of our FY 2025 and have been a consistent impact of year over year gross margins during the fiscal year. There's been no real change in the use of those self funded promotions sequentially, but year over year we are we do have more self promotion self funded promotions running than we had in the prior year. Related to gross margins going forward, as we said, we expect them to remain pressured primarily due to the baseline cost increases and potential tariff impacts. Those are going to be offset somewhat by the impact of closing the 145 underperforming stores as well as some of the benefits of our improvement plan. But as a reminder, Q1s are particularly tough gross margin comp, but we expect that the comp related to gross margin year over year will continue to be pressured.

Perfect. I appreciate that. And then maybe shifting gears a bit to customer acquisition and the Monro experience, can you provide any color on like who these higher value targets are and kind of what you're doing on the marketing front to convert them to customers? And then maybe some color on your approach towards the customer experience changes moving forward.

Sure. Thanks for that question. This is Peter. One thing we've done in the last couple of months is look very closely at where we generate the most revenue and profit by customer. And it's very clear that what we're looking for are repeat customers who appreciate that we provide a range of services. When you look at a three year period, you see as we've suggested on this call, that there's dramatically higher sales and profitability for those customers. Now I think one of the things that the Alex Partners team can bring to the table is a full understanding of the range of marketing and advertising that we can undertake in order to meet the needs of those customers that are proven to be the best customers for us. And so what you're going to see over the next couple of quarters is a reallocation of our marketing investment. Towards targeting new customers that fit the profile that we're really looking for. I'm pretty confident we're gonna be able to find a much better targeted way of attracting incremental customer traffic. So we haven't completed all of the analysis. This is something that takes a couple of months to fully understand, but it's very clear that there are customers in all of our markets that are preferred and we're going to chase them.

Perfect. I appreciate you answering my questions.

Sure. Thank you for the questions.

Thank you. We now have David Lance with Wells Fargo on the line. Please go ahead.

Hey, good morning, guys, and thanks for taking my questions. Brian, I was curious if you could parse out the two fifty basis point decline in gross margin in a bit more detail between material cost, distribution and occupancy. And then technician labor cost as well? Good morning, David. Absolutely. Related to the gross margin, two fifty basis points quarter over quarter from the prior year.

There was 160 basis points of the two fifty million related to material costs. And that due to trade down within the tire category as well as as well as the self funded tire promotions we discussed earlier. About 80 basis points of technician labor costs primarily driven by year over year wage inflation. And then the balance is just a little bit of deleverage on the fixed occupancy costs given the loss of the extra week in the prior year.

Got it. That's helpful. And then I understand the gross margins will be down or pressured for twenty six. But curious if you can help through kind of the trajectory in a bit more detail. I recognize compares get a lot easier when you go through the year. So is it fair to assume that there could be some expansion later in the year, but still for the full year there's pressure?

Yes, think that's right. I think as you think about gross margins, this past year, it's been kind of a quarter over quarter to kind of sequential decline. And I think next year, the gross margins, while still little bit pressured versus the overall gross margin percent for FY 2025, that the cadence of that gross margin will be much more even throughout the year where we'll likely underperform in Q1 because of the tough compare but make up for that in the back half of the year.

Got it. That's helpful. And then with respect to comps in the quarter, can you talk about the dynamics between traffic and ticket as well and what you're kind of embedding for the improvements in '26?

Yes. For the quarter, traffic was down low single digits. Ticket was up mid single digits to blend out to the adjusted comp of up about 3%, 2.8%. Encouragingly, we saw positive store traffic in March and our comps in April and May are supported by better traffic trends as well. So I think we feel a little bit encouraged there in terms of the bending of the traffic trends in the recent months.

Thank you.

You're welcome. Thank you. We now have a question from Bret Jordan with Jefferies.

Good morning guys. Hey, Brent.

On the ATD relationship, did the economics of that change with their final payment of the earn out? Seemed in that press release, they talked about like commercially reasonable support efforts. Is there anything that either either promotions or supply fill that has changed with them or pricing?

Brett, is Brian. There's nothing material that's changed in our relationship with them. There was a couple of things that we just clarified from the original agreement. Related to service levels. Just given current operating environments, but nothing that materially impacts our business or our relationship with ATD going forward.

Okay, great. And then when you think about the store closures, what's the common denominator? Is there a specific region or a class of stores? [indiscernible] Cleanup? Or is it sort of spaced throughout the network?

So Brett, it's Peter. It's space throughout the network. We haven't produced a list of those stores, and, obviously, we need to communicate with our teammates before we do that. I would say that when you build a brand over decades, in the retail and auto aftermarket industry, you always have places that are gaining in momentum and other locations that probably aren't as strong. And so what we've chosen to do in the last two months is look very closely at those stores that we don't think can ever really produce the earnings profile that we're looking for. And those are the ones that we addressed in the 145 store closings. I think that there will continue to be evaluation of stores over every year, but I don't anticipate any other store closings this year. And I'm very confident that the remaining stores are well positioned to improve their performance as time passes.

Okay. And then a quick final question. I guess, significant improvement in performance recently. And I guess, what do you attribute that to? Has there been have you been more promotional? Has the broader market getting a lift? I mean, obviously, not having been there a long time to make big operational changes, but how do you see the backdrop on the industry relative to the comp lift you've seen recently?

Well, I think that the economic environment favors our type of service. For example, I would be surprised if there isn't downward pressure on people buying new and used cars. And for automotive aftermarket service companies like ourselves, there's going to continue to be a need to replace tires and provide other services. So I think the industry dynamics are quite positive for what we do, even if we have some slowdown in the economy, which I think we saw in the first quarter. I think that over a longer period of time, the things that we're putting into place that will improve our performance means that we can increase our operating income this year without significant improvement in the economy. And I think that the need for the company right now is to focus on the continuing stores. And produce the sort of results that we can I think, ultimately appreciate with time during this year by quarter to see the improvement actions that we're putting into place now take effect?

Great. Thank you.

Thanks, Brett. Thank you. Can confirm that does conclude the Q and A session today. And I would now like to hand it back to our CEO, Peter Fitzsimon, for some final closing comments.

So thanks again for joining us today. I think we're all very optimistic about the opportunities in front of us. And I'm confident that Monro is well positioned to capitalize on some of the strong industry trends for a company like ours as we go forward. I know we have significant room for improvement, as we implement our performance improvement plan I know we have a lot of work to do, but I really do think that there's a solid foundation for us to create long term value for all of our shareholders. We look forward to keeping you updated on our progress in the quarters to come. And thanks again for joining today.

Thank you all for joining today's conference call with Monro. I can confirm today's call has now concluded. Thank you all for your participation and you may now disconnect.