Kingdom Capital

I think what ppl miss here and why the value will end up higher than what ppl think is the following: I see $MNRO as 5 buckets - 1) 330 owned RE stores 2) California ops (and other western states) 3) Tire Choice 300 stores 4) Monro banner 300 5) Mr. Tire banner + other banners 400. 1,2, and 3 are "A" assets imo. The owned RE is A asset bc this stuff trades for 6s/low 7s cap rates, this is a 13-14x segment ebitda asset. North of $350M gross and $300M net value there 2) CA locations are in good shape and are a strategic asset, this is a good market and tough to break into due to cost, entitlement, etc. This would be a strategic asset for someone like Mavis who is set on breaking into the CA market so they can build a very strong national business. So CA ops is clearly an A asset, probably worth 12-15x 4 wall EBITDA, probably $200M in value there. Tire Choice looks like an A to A- asset to me, these are nice looking stores in good markets such as FL. I think this Tire Choice bucket should be worth 10-12x 4-wall EBITDA, we could be talking $300M or close to it as the true value of Tire Choice. and then the 4/5 buckets which are Monro banner and Mr. Tire plus other indy banners are 700 stores these are more along the lines of B- assets, these are dense MSO brands and i would categorize these assets as on par with Pep Boys (no EBITDA Pep Boys just went for 600k a box equivalent when using P/S) i see these as worth no less than 400-450k a box so that is $300M of value. So when you peel back the onion, $MNRO's assets are better than ppl appreciate. When you add this up you get - RE $350M gross, CA $200M gross, Tire Choice $300M gross, Monro/Mr. Tire/other $300M = 1.15B in gross value, haircut this by 20% to be conservative and you get 920M in value, subtract out the $90M net debt and you get 830M in equity value, across 31.3M shares is $26.50 per share. Perhaps it isn't a coincidence that the CEOs PSU incentives (struck less than a yr ago) start at $25 per share. Mavis rolling up the space has been a massive success, there are many many PE firms that will want to try and replicate that success. $MNRO is the last asset on the board with scale that is going to be for sale anytime soon at a reasonable price. Discount Tire's only whole is in the NE which is where MNRO has a strong presence, imagine how long and how costly it would be to build out that footprint on your own... why did Discount Tire buy Dunn Tire literally right on top of MNRO's HQ in Western NY? moderntiredealer.com/retail/…

why do they think that? the closest peer Pep Boys just sold for $700M 3 months ago (opco alone) and $MNRO is in better shape than Pep, like for like on the opco plus conservative owned RE value get you to $28/sh for MNRO, sure discount that some. PE loves rolling up this space and this is the last scaled asset on the board. Mavis has made equity investors fortunes, PE seeking to replicate that success.