Monro Announces Deal To Acquire 12 Shops In Louisiana
Monro Inc. (Rochester, NY) has signed a definitive agreement to acquire 12 retail shops in Louisiana — a new state for the company. Management anticipates that the shops will add roughly $15 million in annualized sales, representing a sales mix of 35 percent service and 65 percent tires. The deal is expected to close in the current quarter.
During the fiscal third quarter, which ended Dec. 29, 2018, Monro completed its previously announced acquisition of five retail shops in Ohio. Management expects these locations to add approximately $5 million in annualized sales, representing a sales mix of 70 percent service and 30 percent tires.
And, early in the current quarter, the company completed its previously announced acquisition of 13 retail shops in Florida. These locations are expected to add roughly $12 million in annualized sales, representing a sales mix of 65 percent service and 35 percent tires.
Both acquisitions fill in existing markets.
A previously announced acquisition of seven shops, representing $8 million in annualized sales, is not expected to close “as the company has decided to not pursue the acquisition following an extended due diligence period,” according to a Jan. 31 press release.
President and CEO Brett Ponton told analysts on the company’s Jan. 31 quarterly report conference call that acquisitions remain a key pillar of Monro’s growth strategy. “We have been encouraged by the significant opportunities for consolidation we continue to see in the marketplace,” Ponton said. “We have a robust M&A pipeline and currently have over 10 [non-disclosure agreements (NDAs)] signed with targets that have been between five and 40 stores each. We believe we are well positioned to execute on these targets.”
Monro operates a chain of 1,197 company-operated shops, 99 franchised locations, eight wholesale locations and three retread facilities across 28 states in the Mid-Atlantic, New England, Great Lakes, Midwest and Southeast regions.
Monro To Roll Out New Operating Procedures And Image, Chain-Wide
Monro Inc. president and CEO Brett Ponton told analysts on the company’s Jan. 31 earnings conference call that Monro reached a key milestone during the fiscal third quarter, which ended Dec. 29, 2018. The company was able to successfully implement new operating procedures, called the “Monro Playbook” — as well as a refreshed appearance — across 31 pilot shops in its hometown of Rochester, NY.
“Our ‘Monro Playbook’ is made up of standardized in-store operating procedures that include clearly defined roles and responsibilities for our teammates, with a focus on service quality,” Ponton explained. “Our goal is to position our teammates as expert advisers who can properly educate customers about their vehicle needs and provide them with clear options so they can choose the right services for their vehicles.
“We expect that this clear and consistent selling approach — coupled with our stronger merchandise strategy across good/better/best product options — will be instrumental in driving higher in-store conversion.”
To complement its “Monro Playbook,” the company is working to establish clear standards to align the appearance of its stores and drive consistency across all of its locations, which currently include a wide range of stores and formats.
“We started the implementation of our brand standards with the re-imaging of our 31 pilot stores completed during the third quarter. All of these renovated locations now have a more consistent and modernized appearance,” Ponton said. “They look more inviting and contemporary, and are more functional. So far, feedback from our teammates and customers has been overwhelmingly positive.”
He added that, after implementing the “Monro Playbook” and completing the stores’ re-imaging, the company has seen improved customer satisfaction and conversion at these stores.
“We are currently finalizing purchasing negotiations with our re-imaging suppliers to scale this initiative, and look forward to rolling out our brand operational standards across our store base and modernizing our store portfolio over the next three to five years,” he told analysts on the call.
In the near-term, management expects Monro to refresh the appearance of roughly 70 stores in its southern markets during the first quarter of fiscal 2020 (the three months ending in June 2019).
“We are determining the appropriate scope of refresh needed for each of our stores by examining their age, size and market demographics to ensure that we’re investing an appropriate amount of capital to achieve the highest possible returns,” Ponton said. “As part of the initiative rollout, we will prioritize our newly acquired stores, as we believe the implementation of our standardized in-store operating procedures and brand standards will benefit our integration process and increase the value we realize from these stores.”
MARKETING … In an attempt to invest in higher-ROI channels to meet current and future customers where they are, Monro is repurposing its marketing dollars to invest in data-driven customer relationship marketing (CRM) and customer acquisition campaigns. As a first step last quarter, the company rolled out a data analytics-based CRM platform focused on driving higher customer retention.
“While still in the early innings of our initiatives to optimize our marketing efforts, we’re very encouraged by the strong results of the pilot campaigns we launched in the third quarter,” Ponton said on the call. “Leveraging predictive analytics, we identified and targeted customers with a higher propensity to purchase our brake and tire offerings, which led to a notable increase in conversion.”
He said the next phase will consist of leveraging customer data and insights to deliver tailored messages and service recommendations to customers based on their specific vehicle needs. “Overall, we have been able to unlock key consumer insights and are confident that our data-driven marketing approach will allow us to develop long-term, one-to-one customer relationships,” Ponton stated. “As a next step, we plan on rolling out an initiative to drive new customer acquisitions in the [fiscal] fourth quarter.”
Monro also has worked with a customer analytics firm to provide market segmentation and demographic data specific to areas around its shops in order to identify high-value potential customers and to focus its marketing efforts on directly targeting these drivers. The company also plans to leverage this market segmentation and customer demographic information to assess its existing real estate portfolio, as well as to identify key markets for acquisitions and greenfield expansion.
OMNI-CHANNEL … Ponton said management is pleased with the effects of modernizing Monro’s retail website, which debuted last quarter. “Improved content and functionality are driving a better experience for our customers online while driving traffic to our stores, as evidenced by the 32-percent increase we experienced in online tire searches that led to appointments at our stores,” he told analysts on the call. “We’re also very encouraged to see that the upgrade to a mobile-capable architecture has led to an 80-percent increase in mobile phone conversion rates.
“Our website monetization lays a strong foundation for the final phase of our omni-channel build-out, which we expect to roll out in the second half of fiscal 2020. Once completed, our customers will be able to view and purchase tires online and seamlessly schedule an appointment for an in-store installation.”
In related news, Ponton said Monro plans to expand its tire offering with the introduction of new high-margin, branded tires in the current quarter to, among other things, capitalize on additional margin expansion opportunities.
“Tires are an important part of Monro’s business, given that they represent half of our sales,” Ponton explained. “And, we want to make sure we offer the right tires at the right price points for our customers.” — Marc Vincent
Monro Reports Highest Comp-Store Sales Increase Since Fiscal 2011
Despite mild weather during part of the quarter, Monro Inc. was able to deliver $310.11 million in net sales for the fiscal third quarter ended Dec. 29, 2018 — an increase of $24.38 million, or 8.5 percent, over the previous year. The total sales increase breaks down as …
• Roughly $19.80 million in sales from new stores, including approximately $14.30 million in sales from recent acquisitions.
• A comparable-store sales increase of 2.2 percent.
• A decrease in sales from closed stores of roughly $1.30 million.
When adjusted for one less selling day in the current-year quarter, comp-store sales increased 3.3 percent. This marks Monro’s fourth consecutive quarter of positive comp-store sales and represents its highest quarterly comp-store sales increase since the third quarter of fiscal 2011.
TIRES & BRAKES … Management attributed the company’s comp-store sales performance to a higher average ticket from improved in-store execution and strength in the tire and brake categories. Comp-store sales (adjusted for days) …
• Increased 12 percent for brakes.
• Increased 3 percent for tires.
• Increased 1 percent for alignments.
• Were flat for maintenance services.
• Decreased 4 percent for front end/shocks.
“We experienced notable strength in our tire business again this quarter, which represents half of our sales and our largest category,” President and CEO Brett Ponton told analysts on the company’s Jan. 31 quarterly report conference call. “Our optimized tire sales and pricing strategy continues to yield results and drove a 3-percent increase in tire comparable-store sales during the third quarter, making our fourth consecutive quarter of positive tire comp-sales growth.
“Our tire performance was driven by higher ticket and stable unit volume. In line with trends experienced in previous quarters, we also saw sustained momentum with our online tire pricing strategy since we unbundled the price of our tires and installation in the fourth quarter of fiscal 2018, which has continued to drive increased conversion in online service appointments.”
Ponton also pointed out that demand for brakes has been strong and that Monro came through with double-digit comp-sales growth in the category for the second consecutive quarter.
WEATHER IMPACT … “We saw accelerated topline growth in October and November, which was partially offset by a slowdown in comparable-store sales in December, resulting from mild winter weather conditions we experienced across our markets,” Ponton said on the call. “While we saw early snowfall above last year’s levels in November — which contributed to our topline strength during the month — it was partially offset by limited snowfall in our northern markets in December compared to last year, which negatively impacted comparable-store sales in that month.
“However, the softness we experienced around the holidays period was temporary, and we’re encouraged by the stronger topline trends we saw in the back half of January, which have led to comparable-store sales growth of approximately 2 percent so far in the fourth quarter.”
For the fiscal third quarter as a whole, the company’s northern markets outperformed its southern markets.
OTHER ITEMS OF INTEREST … Monro’s gross profit increased 10.3 percent to $117.97 million, and its gross margin expanded 60 basis points to 38 percent. Management pegged the improvement to benefits from initiatives to optimize the company’s product and service offerings (such as the introduction of good/better/best service packages), optimization of its store staffing model and leverage from higher comp-store sales.
During the quarter, Monro opened nine company-operated shops and closed one, ending the period with 1,186 company-operated shops, 99 franchised locations, eight wholesale locations and three retread facilities.
Management continues to expect Monro to generate fiscal 2019 sales between $1.185 billion and $1.215 billion, which would represent an increase of 5.1 percent to 7.7 percent when compared to fiscal 2018 sales. The fiscal 2019 sales guidance continues to assume a comp-store sales increase between 1 percent and 3 percent on a 52-week basis. — Marc Vincent
Icahn Auto. Expands In Southeast
The Icahn Automotive Group — parent company to Pep Boys, AAMCO and Precision Tune Auto Care, among others — has acquired Jacksonville, FL-based RPM Automotive. Financial terms of the transaction were not disclosed. The deal expands the group’s presence in the Southeast by 10 locations and more than 100 service bays. RPM Automotive will retain its name, long-time leadership and ASE-certified technicians.
Driven Brands Buys Super-Lube
Take 5 Oil Change, a part of Driven Brands, has acquired the Super-Lube network of quick-lube and automotive service centers, which has 48 shops in Florida, Wisconsin, Indiana, Illinois and Alabama. The acquisition expands Take 5’s network to more than 350 shops and expands its footprint to 19 states, including Take 5’s entry into Wisconsin. The acquired quick-lubes will be rebranded over time to Take 5 Oil Change.
Super-Lube marks Driven Brands’ 25th acquisition.
“The addition of this business continues our strategy of aggressively expanding Take 5 Oil Change’s differentiated and simple business model through both our company-owned and franchise platforms,” Driven Brands CEO Jonathan Fitzpatrick said in an announcement dated Feb. 11.
Strong Results For Valvoline’s Quick Lubes Unit
Valvoline Inc. saw its Quick Lubes segment sales increase by $35 million, or 22.7 percent, to $189 million in the fiscal first quarter ended Dec. 31, 2018. Same-store sales were up 9.8 percent overall, with company-owned shops up 9.9 percent and franchised shops up 9.8 percent.
According to management, the same-store sales growth came from an increase in both transactions and average ticket. Marketing investments made in customer acquisition and retention programs drove higher transactions, while pricing actions and premium mix led to higher average ticket, according to Valvoline.
Quick Lubes segment EBITDA rose 12.2 percent to $46 million, attributed to increased same-store sales and the addition of 162 net new shops compared to the prior year.
The Quick Lubes business ended the quarter with 1,301 total shops (both company-owned and franchised). For the fiscal year ending in September 2019, management is calling for 27 to 32 new company-owned shops and 60 to 70 new franchised locations.
Same-store sales are forecast to increase between 7 percent and 8 percent.
10th Jiffy Lube Group Joins Mighty Franchise System
The Mighty Distributing System has announced the addition of a new Jiffy Lube group: CiSA Lubes USA, doing business as Mighty of Charlotte, which is now the exclusive distributor of Mighty automotive products throughout the greater Charlotte area.
CiSA Lubes USA, owned by Commercial Importadora SA de CV (CiSA Mexico), operates 11 Jiffy Lube shops in North Carolina and eight in South Carolina. CiSA Mexico is a Mexico City-based lubricants distributor that is the exclusive blender and distributor for Quaker State– and Pennzoil-branded lubricants throughout Mexico, as well as several Central American and Caribbean countries.
Wrench Picks Chris Jacobs As Mobile Service Spokesman
New Wrench Inc. has selected TV host and actor Chris Jacobs of the MotorTrend Network as the spokesman for Wrench, its mobile car service. Jacobs is known for hosting the automotive makeover show Overhaulin.’
Venture capital investments have allowed the company to expand into 20 markets nationwide. Customers schedule services for their cars or small trucks online or via the Wrench app. Work is done at a customer’s home or office by a Wrench mechanic, the majority of which are full-time company employees.
Wrench CEO Edward Petersen said the company chose Jacobs for his credibility as a car enthusiast as well as his personality, as showcased on various TV programs, including Entertainment Tonight, The Insider and, recently, Discovery Channel‘s Chopper Live, Gold Rush Live and Skywire Live.
Petersen and four other co-founders with tech company venture experience in Seattle started Wrench in 2016 with input from ASE-certified master mechanics and shop managers. The company is backed by the Madrona Venture Group, Tenaya Capital, Vulcan Capital and the Alumni Venture Group, and has raised over $18 million in funding to date.
Wrench recently expanded into the following cities: Atlanta, Charlotte, Tampa, Orlando and Jacksonville. Other service areas include Seattle; Portland, OR; San Diego; Sacramento; Los Angeles; Oakland, CA; Inland Empire, CA; Orange County, CA; Phoenix; Chicago; Las Vegas; San Antonio; Austin, TX; Dallas; and Houston.
ARC Smart Quoter Expanding In Midwest
Auto Repair Compare (ARC) plans to expand its automatic repair shop quote service, ARC Smart Quoter, to 800 shops in the Midwest starting this month. Shops can use the software to quote auto repairs in a minute or less using their own labor rates, parts pricing from local distributors, markup and shop supplies.
ARC of Fort Myers, FL created an early version of the quoting system in 2011. The current version debuted last November, and is being used by 125 independent and franchised auto shops, including several Tuffy franchisees, throughout the South and Midwest, according to the company.
Smart Quoter is both a website and a service writer program, powered by Motor, with Nexpart from WHI Solutions as an e-commerce partner, ARC executive vice president Rick Goodwin explained.
“The days of manual quotes and ballpark estimates are long gone,” Goodwin said. “There is a major distinction between an estimate and a quote. Today’s customers are comparing quotes, so shops must be competitive. At the same time, the quote must be accurate and profitable.”
Younger customers, primarily millennials, are frequent online shoppers and want an instant quote, he said.
ARC has primarily used shop management software and tire distributors to get the word out to shop owners about Smart Quoter.
“Our software reps already have relationships with shops throughout the country, so they were the natural choice to help sell our product,” Goodwin said. “The reps are able to come into shops and demonstrate the benefits of the ARC Smart Quoter to help increase car counts and provide transparency to the consumer.”
The roots of ARC grew from the experience of a group of investor/partners who have owned and operated their own shops. ARC first tested the product in the Fort Myers area, with a second test in the Tampa area covering 170 repair shops. The partners used Google AdWords, TV and radio advertising, and social media to drive business.
The company is now preparing to launch another product that works alongside Smart Quoter. ARC Tech Tab is an electronic inspection form designed to help expedite vehicle inspections. The service writer enters a customer’s license plate number in an electronic tablet that pulls up vehicle data provided by Carfax.
SimpleTire Adds VP Of Sales
SimpleTire has added Mike Ferguson as its vice president of sales. Ferguson is tasked with leading the company’s business development team, which works to help retailers and automotive industry partners grow their share of the consumer tire market.
Ferguson has 20 years of experience in the tire business. He has spent the last nine years with Sears Auto Centers in a variety of leadership roles, including district manager, regional vice president, tire division leader and, most recently, director of commercial sales and operations. His background also includes time with TBC Corp. and Conrad’s Total Car Care.
Mitchell 1 Integrates SureTrack Community With ProDemand Info
Mitchell 1 has upgraded the search engine in its auto repair information system, ProDemand, to deliver information from its interactive community of users, along with OEM-sourced content and SureTrack real-world insights.
When a user types in a code, component or symptom into ProDemand, the software’s 1Search Plus feature now delivers related community trends to the search results screen, along with OEM information and SureTrack fixes for the selected vehicle. The trends include posted questions with answers or posted fixes based on discussion threads in the SureTrack Community module in ProDemand.
In addition, the Community module has a new default filter that allows techs to view only the community threads that are related to the current vehicle. Users can then toggle to “All Vehicles” to get a view of community threads for all years/makes/models.
NASTF Announces Availability Of Nissan CVT Files
NASTF has announced that Nissan CVT transmission calibration files are now available at nissan-techinfo.com. They are for use when replacing a reman. or used transaxle in Nissan products. According to NASTF, there are several open Service Information Requests that will now be satisfied.
NASTF Announces Elections Results
NASTF has announced the results of its 2019 board elections. For director terms expiring Dec. 31, 2021 …
• OEM: Steve Douglas of The Auto Alliance.
• Dealer: Bradley Miller of NADA.
• Independent Tech/Shop Owner: Bill Moss of EuroService Automotive.
• Trainer: Chris Chesney of Carquest Technical Institute.
• At-Large: Scott Brown of Diag.net.
For officer terms expiring Dec. 31, 2019 …
• Chair: Mark Saxonberg of SCS Consulting.
• Vice Chair: John Lypen of Motor Information Services.
• Treasurer/Secretary: Greg Potter of the Equipment & Tool Institute (ETI).
AASP Elects New Leadership
The Alliance of Automotive Service Providers (AASP) has elected its executive committee for 2019-’20. Bill Adams, representing the AASP affiliate New York State Association of Service Stations & Repair Shops, is president. Fellow executive committee members are …
• Tom Elder of Compact Kars in Clarksburg, NJ.
• Molly Brodeur of Al Brodeur’s Auto Body in Marlborough, MA.
• Bob Pulverenti of IGO-NC in Raleigh, NC.
• Bruce Tschida of Lake Marion Collision in Lakeville, MN.
AASP is a coalition of associations that serve more than 8,500 members of the automotive service industry. Participants commit to sharing information, knowledge and resources for the benefit of the members they serve.
Dana Launches New Training Academy For Commercial Vehicle Aftermarket
Dana Inc. has launched a new training resource for the commercial vehicle aftermarket at Training.Dana.com. The Dana Aftermarket Training Academy is billed as a learning management system that helps users better understand the company’s products through interactive slideshows and videos.
Modules are composed of short chapters on such topics as function, design composition, and disassembly and installation basics. Courses are followed by a quiz to aid in content retention. A personalized certificate of completion is available for download and printing upon conclusion of a module.
Caliber Collision Centers Combines With Abra Auto Body Repair
Caliber Collision Centers and Abra Auto Body Repair of America have closed on their merger, which unites the companies’ teams, brands and operations across 37 states and the District of Columbia. The new combined company will have more than 1,000 shops and operate under the Caliber brand name. Steve Grimshaw, Caliber’s CEO, who now serves as the chief executive of the combined company, said management plans on maintaining all existing shops from both companies.
Terms of the transaction were not disclosed. Private equity firm Hellman & Friedman, Abra’s majority shareholder since 2014, is the majority shareholder of the combined company. Caliber’s two largest shareholders, OMERS and Leonard Green & Partners (LGP), are minority shareholders in the combined company.
Bank of America Merrill Lynch and Deutsche Bank Securities Inc. were financial advisor to Hellman & Friedman. Simpson Thacher & Bartlett LLP provided legal counsel to Hellman & Friedman and Abra.
Jefferies LLC was a financial advisor to both OMERS and LGP. Fried, Frank, Harris, Shriver & Jacobson LLP provided legal counsel to OMERS and Caliber. Latham & Watkins LLP provided legal counsel to LGP.
Large Dealership Group Adds Premium-Free Healthcare For Its Techs
The Asbury Automotive Group (Duluth, GA) — a Fortune 500 company and one of the largest automotive retailers in the United States, with more than 80 dealerships — is rolling out new healthcare and stock ownership programs to attract and retain frontline people in its fixed operations and sales operations.
Starting this year, Asbury will pay the weekly employee healthcare premium for the base health plan option on behalf of eligible A-level and B-level technicians, body shop technicians, painters and foremen. The company’s base health plan payment can be applied toward other health plans that the company offers. Eligible sales advisors, service advisors and body shop estimators are offered the same opportunity.
Additionally, A-level and B-level technicians, sales and service advisors, body shop technicians, painters and estimators — with at least one year of tenure — are eligible to earn an equity grant if they reach individual performance targets. The awards are expected to be made in the form of restricted stock units and will vest on a three-year schedule.
Asbury common stock is publicly traded on the New York Stock Exchange.
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AAA: Icy Temperatures Cut Electric Vehicle Range Nearly In Half
In freezing temperatures, electric vehicle owners may experience a decrease in driving range, which is compounded by the use of the vehicle’s interior climate control, according to new research from AAA.
AAA warns that — when temperatures drop to 20°F and the HVAC system is used to heat the inside of the vehicle — the average driving range is decreased by 41 percent. So, for every 100 miles of combined urban/highway driving, the range at 20°F is reduced to 59 miles.
When colder temperatures hit, AAA advises electric vehicle owners to be aware of a reduction in range and the need to charge more often to minimize the chance of being stranded by a dead battery.
Cold weather is not the only factor that can influence driving range. AAA’s research shows that — when outside temperatures heat up to 95°F and air-conditioning is used inside the vehicle — driving range decreases by 17 percent. The motoring club warns that, while extreme temperatures play a role in diminishing driving range, it’s the use of HVAC in these conditions that has the greatest effect.
AAA says it tested five electric vehicles — all with a minimum EPA estimated driving range of 100 miles — in partnership with the Automotive Club of Southern California’s Automotive Research Center. Driving conditions were simulated using a dynamometer in a closed testing cell where ambient temperature could be controlled. To determine the effects on driving range, scenarios for cold and hot weather conditions — both when using HVAC and not — were compared to those of driving with an outside temperature of 75°F.
News Briefs 2/19/19
• Anthony Iaboni, owner of Toronto-based Collision 360, has received the 2018 “Distributor of the Year” award from Spanesi Americas.
• Mobitech International, parent company of Mobile Tech RX, has acquired the technician staffing app HailGo, which, similar to Mobile Tech RX, caters to the paintless dent repair market. Mobitech has dissolved the HailGo app in order to focus on integrating its features into Mobile Tech RX.
• Firestone will continue to be the sole tire supplier and “official tire” of the NTT IndyCar Series through 2025. The five-year partnership extension includes continued rights for Firestone to be the “official tire” of the Indianapolis 500.
• Bridgestone/Firestone plans to build a new manufacturing facility in Akron, OH to serve as the home of Firestone race tire manufacturing. The Bridgestone Advanced Tire Production Center (ATPC) will be located across the street from the Bridgestone Americas Technical Center and less than a mile from the Bridgestone Advanced Technology Workshop, where race tires are currently produced.
• TBC Brands has launched a commercial tire website, TBCCommercialTires.com, which consolidates all of the tires featured in the Power King and Harvest King commercial programs, allowing customers to access both brands in one site.
Event & Trade Show Briefs 2/19/19
• The NASTF Spring General Meeting will be co-locating with ETI ToolTech at the Hilton Charlotte University Place in Charlotte. The NASTF meeting will go from 9:00 am to noon on May 2. The NASTF meeting is free and open to all.
• Snap-on Inc. will livestream Intelligent Diagnostics training at 8:00 p.m. (EST) on Tuesday, Feb. 19 and Wednesday, March 20.