ROCHESTER, N.Y. — Monro Inc. has identified the U.S. Southwest as a high priority for growth, both in terms of acquisitions and greenfield stores, company executives told financial analysts during the firm's fiscal 2021 results conference call May 20.
Recently hired top executive Mike Broderick told analysts while Monro has had success in building its presence in the West — California, Idaho and Nevada — Monro is "missing a lot of space out in the Southwest. We don't have many stores [there], but where we have opportunities to fill in, we will."
Mr. Broderick also shared with the analysts that Monro is evaluating prospects for building stores as well.
"And I also like to introduce the fact that we are going to start looking at greenfields as an opportunity to move faster in the markets that, if we can't find viable M&A opportunities, we will start building our own stores," he said.
"If we can't find M&A activity that's actually affordable, then we would be looking to fill out our footprint across the nation," he added. "There is a lot of reasons for it. I mean we have a national warranty. We want to stay convenient to our customers. So where we can't find M&A, we would look at [greenfield development]."
Mr. Broderick, a former Advance Auto Parts and Canadian Tire Corp. executive, has been Monro's president and CEO since July 1. He fills positions vacant since August 2020, when then-CEO Brett Ponton resigned.
Monro at this time did not disclose any new acquisitions, but the Rochester-based company said it has a "robust acquisition pipeline" that includes 10-plus non-disclosure purchase agreements pending with companies that operated from five to 40 stores.
"We are well positioned to take advantage of the many opportunities for consolidation in our industry," Brian d'Ambrosio, chief financial office, said, adding that Monro expects to spend $40 million to $55 million this year on capital expenditures, "depending on the amount of store refresh activity that we undertake."
During fiscal 2021, Monro "substantially completed" the rebranding or reimaging of approximately 150 stores, bringing to roughly 360 the number of stores in key markets that have been rebranded. Included in that figure are 115 Monro-badged service-oriented stores that were converted to tire-branded stores.
During the quarter ended March 31, Monro completed its acquisition of Rancho Cucamonga, Calif.-based Mountain View Tire & Auto Service Inc., which includes 30 retail stores in the Los Angeles area.
The deal boosts Monro's growing footprint in California to 76 stores and nearly 1,300 nationwide. Monro is considered the largest independent tire retailer in the U.S., according to Tire Business calculations.
Monro is maintaining the Mountain View name on these stores for now, according to Mr. Broderick, who noted, "We are looking at the brand portfolio. We've obviously acquired the Mountain View brand, which is a strong brand out there. So we will look at the role that brand is going to play in the West Coast."
Monro has begun using its Tire Choice brand on other stores in the West, but has yet to rebrand the Allen Tire stores it acquired in late 2020.
"We have Allen Tire out there right now that we acquired that we will determine both that and the Mountain View brand in terms of what its role will be in our West Coast portfolio," Mr. Broderick said in response to an analyst's query about rebranding.
Mountain View Tire represents $45 million in annualized sales, Monro said, in a 70/30 auto service/tires revenue mix.