# Dear Fellow Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NASDAQ_MNRO_2022/NASDAQ_MNRO_2022.mmd` · pages 6-12_

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Dear Fellow Shareholders

As I reflect upon my first year as Monro's CEO, I'd like to thank all of Monro's Teammates and customers for their contributions to our Company's growth and prosperity, and our shareholders for their continued support. Over the last year, I have enjoyed traveling to our stores and getting an even better understanding of our business with the support of all our Teammates. Without question, this is an exciting time to be part of Monro. The outstanding efforts of all of our Teammates and their unwavering dedication to our customers were key to advancing our business goals in fiscal 2022. The heart of our mission is to be a best-in-class, service first organization that prioritizes our customers and the communities we serve. Our go-forward plans will be deeply rooted in an operational focus on staffing and scheduling our stores to meet our customers' needs and training our people for productivity and success. Through our scalable platform, executing disciplined acquisitions will continue to be a major part of our strategy. Importantly, we remain committed to generating strong cash flow as the fuel for future growth as well as returning capital to our shareholders.

## Delivering Sales Growth and Earnings Expansion Through Our Critical Initiatives

We delivered double-digit comparable store sales growth in all of our regions and categories and expanded earnings through our critical staffing, scheduling, and training initiatives in fiscal 2022. We recruited, trained and deployed 650 new technicians to our stores to meet robust customer demand for our products and services.

## Responsibility Driving Monro.Forward

Over the past year, we made good progress on an array of ESG initiatives and recently published our second annual Corporate Responsibility Report on the Corporate Responsibility section of our corporate website. Among our accomplishments, we continued to invest in Teammate training and development, advanced our diversity and inclusion efforts, created a long-term community engagement strategy, and enhanced our data privacy and security practices to help keep our Teammates' and customers' information safe. As our business grows, so does our commitment to further integrating ESG factors into our strategy and operations. I'm pleased to report that working collaboratively with our Board of Directors, we established two specific ESG-related goals relating to employee safety and energy efficiency. These goals are a tangible example of how ESG factors are embedded in the everyday decisions we are making.

## Enhancing the Strength of Our Solid Financial Position

During fiscal 2022, we remained focused on strengthening our solid financial position and liquidity. The tremendous efforts of our team to drive variable margin improvement and our disciplined cost control led to operating cash flow generation of $174 million. We are firmly committed to driving strong cash flow that will provide us with ample flexibility to continue implementing our strategic growth initiatives, returning capital to shareholders and pursuing attractive acquisition opportunities to deliver long-term value.

## Expanding Geographic Presence in the Midwestern and Western Regions

Strategic acquisitions remain a key pillar of Monro's growth strategy. Over the past year, we continued to expand our geographic presence in the dynamic

## A Look Back at Fiscal 2022

![](images/6_0.jpg)

$1.36B

in sales

![](images/6_1.jpg)

$174M

Significant cash flow generation

![](images/6_2.jpg)

Acquisitions completed in fiscal 2022 represent a total of $73M

in annualized sales

![](images/6_3.jpg)

$35M

Returned in cash to shareholders through dividends

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Midwestern and Western regions, with the acquisition of 36 stores in California and 11 in Iowa. Combined, these acquisitions represent approximately $70 million in expected annualized sales. Over the last five years, Monro has successfully entered five new states, adding 225 store locations and approximately $314 million in annualized revenue. Looking forward, we are excited by our growth prospects in the Midwestern and Western regions and are well positioned to take advantage of the many attractive consolidation opportunities in our fragmented industry, while also maintaining strong financial discipline. In addition, we plan on continuing to evaluate the opening of selective greenfield locations to accelerate our growth in attractive markets.

## Benefitting from Our Non-Core Wholesale Tire and Distribution Assets Divestiture

The divestiture of our non-core wholesale and tire distribution assets to American Tire Distributors (ATD) for an estimated $105 million and our entry into a supply relationship for tire distribution directly to our stores is expected to give us better availability of tires, quicker delivery and better pricing. Our core strength as a business is to provide retail customers with superior automotive products and services. Beyond the financial benefits, this transaction will allow us to focus all of our energies and resources on our Retail operations. In addition, it is also expected to expand our category management initiatives and improve our working capital.

## Sharing Our Results Through Capital Return to Our Shareholders

Utilizing the proceeds from the transaction with ATD, along with the excess cash that our Retail operations are expected to generate will allow us to continue expanding our long-standing policy of sharing our results with our shareholders. Our Board of Directors has approved an increase in our cash dividend for the first quarter of fiscal 2023. We have increased our cash dividend 17 times during the 17 years since a cash dividend was first issued. In addition, our Board has authorized a share repurchase program for the repurchase of up to $150 million of Monro's common stock.

## Driving Long-term Shareholder Value

In closing, fiscal 2022 was a fantastic year for Monro. The Company continued to accelerate its strategic growth initiatives, strengthened its financial position, and returned $35 million to shareholders. I am confident in our path forward and believe our strong focus on operational execution will drive long-term value for our shareholders.

## Looking Ahead

Monro has made significant progress on our journey to transform this great organization during fiscal 2022, and I believe these accomplishments will be instrumental to our success in unleashing Monro's full potential in the coming year and beyond. As we head into fiscal 2023, we remain encouraged by favorable industry tailwinds and robust consumer demand for our products and services. We have a strong foundation to build upon and an exceptional team in place ensuring that we capitalize on the opportunities ahead. The continued dedication of our valued Teammates and our strong commitment to providing a five-star customer experience will remain critical to our success.

On behalf of the Board of Directors and the Senior Leadership Team, I would like to thank you for your continued support of Monro. I look forward to speaking with you at our annual meeting on August 16, 2022.

Sincerely,

![](images/7_0.jpg)

Michael T. Broderick

President and Chief Executive Officer

Monro, Inc.

![](images/7_1.jpg)