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Monro Expanding Again In Louisiana, California

During the first quarter of fiscal 2020 (the three months ended June 29, 2019), Rochester, NY-based Monro Inc. completed its acquisition of California-based Certified Tire & Service Centers. The deal included 40 retail shops in the San Francisco, San Diego and Los Angeles markets, as well as a distribution center in the southern California city of Riverside.

The acquisition marked the company’s entry into California, expanding its geographic footprint to the West Coast. The transaction is expected to add roughly $45 million in annualized sales, with a sales mix of 70% service and 30% tires.

As part of its broader consolidation effort, Monro plans to rebrand these 40 shops under its Tire Choice Auto Service Centers banner.

Monro President and CEO Brett Ponton emphasized on the company’s July 25 quarterly report conference call that Monro now has a solid platform and the proper corporate infrastructure for further expansion in the region. “In this regard, we are pleased to announce that we completed the acquisition of two additional stores in California during the first quarter, which are expected to add approximately $3 million in annualized sales, further solidifying our strong foundation on the West Coast,” he said.

“Similarly, we continue to diversify our store footprint in southern markets and completed the previously announced acquisition of 12 stores in Louisiana, another new state for Monro, early in the first quarter. These locations are expected to add approximately $15 million in annualized sales, representing a sales mix of 35% service and 65% tires.”

Monro also has signed definitive agreements to acquire eight additional locations, filling in the recently entered market of Louisiana. These shops are expected to add roughly $12 million in annualized sales, representing a sales mix of 50% service and 50% tires.

On a combined basis, acquisitions completed and announced in fiscal 2020 represent an expected total of $75 million in annualized sales.

“Looking ahead, we are well positioned to continue to execute on our robust pipeline of attractive M&A opportunities and currently have over 10 [non-disclosure agreements (NDAs)] signed with opportunities ranging from five to 40 stores,” Ponton said.

He told analysts on the call: “This is the most robust pipeline that I’ve seen since I have been at Monro.” Part of that is related to opening up new geography, such as pushing deeper into the South and establishing operations on the West Coast.       — Marc Vincent

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