Monro Muffler Brake, Inc. Announces Record Third Quarter Results

~ Third Quarter Net Income Increases 19.8% to a Record $4.9 Million ~

~ Third Quarter Sales Increase 15.1% to a Record $103.8 Million ~

~ Monro's Board Approves $30 Million Share Repurchase Program ~

    ROCHESTER, N.Y., Jan. 16 /PRNewswire-FirstCall/ -- Monro Muffler Brake,
 Inc. ( MNRO) a leading provider of automotive undercar repair and
 tire services, today announced record financial results for the third
 quarter and nine months ended December 23, 2006.
     Financial Results
     Third quarter sales increased 15.1% to a record $103.8 million from
 $90.2 million last year. Comparable store sales for the quarter increased
 2.9% on top of last year's third quarter gain of 4.7%. The Company's
 comparable store sales increase was led by major maintenance categories,
 such as shocks, brakes, and alignment, as well as the service and tire
 categories. Sales from new stores contributed $11.9 million of the sales
 increase during the third quarter, including $9.9 million related to the 75
 ProCare Automotive locations that were acquired on April 29, 2006. The
 Company opened one location and closed three during the quarter.
     Gross profit in the third quarter increased 15.7% to $40.4 million.
 Gross margin slightly improved to 38.9% versus 38.7% last year, as higher
 vendor rebates, which reduce cost of goods sold, were largely offset by
 cost increases in tires and oil as well as lower gross margin at the
 ProCare locations. The increased vendor rebates resulted from both new
 vendor agreements and a shift of these credits from SG&A expense to cost of
 goods sold as required by EITF 02-16. Selling, general, and administrative
 expenses improved to 29.2% of sales compared to 30.5% of sales last year.
 This improvement was due mainly to reduced benefits costs as a percent of
 sales, partially offset by the shifting of vendor rebates from SG&A to cost
 of goods sold. Interest expense was $1.8 million in the current year
 quarter versus $.8 million last year, reflecting the recording of 44
 ProCare locations as capital leases. This accounting had no impact on net
 income for the quarter as it was a reclassification of expenses between
 occupancy costs and interest expense.
     Third quarter net income increased 19.8% to a record $4.9 million
 compared to $4.1 million in the year-ago period. Diluted earnings per share
 increased 18.5% to $.32 versus $.27 last year.
     Robert G. Gross, President and Chief Executive Officer, commented, "As
 expected, consumers began to return to more normalized spending patterns
 after several soft quarters and we were pleased that our comparable store
 sales recovered, highlighted by a 6.5% increase in December. Specifically,
 the major repair purchases, which consumers had deferred earlier in the
 year due to rising gas prices and general macroeconomic concerns, rebounded
 in the quarter. In addition, store traffic and oil changes showed solid
 increases, which are key indicators of the overall health of our business."
     For the nine-month period, sales increased 10.4% to a record $310
 million from $280 million. Net income for the first nine months of fiscal
 2007 was $18.0 million, or $1.18 per diluted share, which includes a $1.7
 million impairment charge related to the Company's Strauss Discount Auto
 equity investment. Excluding the impairment charge, net income was $19.7
 million, or $1.29 per diluted share, versus $19.4 million, or $1.30 per
 diluted share, in the year-ago period.
     Mr. Gross continued, "The integration of ProCare continues to proceed
 as we outlined at the beginning of the year. We held Grand re-Opening
 events in November, which were well received by our consumers and drove
 traffic and sales increases. We continued to invest in store staffing and
 advertising to support the re-branding and build a platform for long-term
 growth. During the quarter, comparable store sales in these stores were
 down approximately 10%, a significant improvement from the 30% decline we
 inherited, and in line with our expectations. The business was dilutive by
 approximately $.02 to our earnings per share for the quarter. We expect
 continuing improvement from this group of stores and remain confident it
 will contribute at least $.10 to our bottom line in fiscal 2008."
     Company Outlook
     The Company currently expects comparable store sales growth for the
 fourth quarter (adjusted for days) to be in the range of 6% to 7%, and
 earnings per diluted share to be $.37 to $.40, including an approximate
 $.01 contribution from the ProCare stores, versus $.21 last year. As
 previously noted, Monro gets the benefit of an additional four days in the
 fourth quarter due to fiscal 2007 being a 53-week fiscal year. For the full
 year, the Company now anticipates earnings per diluted share in the range
 of $1.66 to $1.69, excluding the $.11 impact of the aforementioned one-time
 impairment charge, compared to $1.51 per diluted share in fiscal 2006.
     Mr. Gross continued, "Thus far, three weeks into January, our
 comparable store sales are up high single digits, and consumers continue to
 purchase major maintenance services and repairs. We remain focused on
 driving traffic and providing industry-leading customer service in order to
 retain and build our loyal customer base. In addition, we continue to
 actively evaluate acquisition opportunities that would grow our business at
 a reasonable price."
     Share Repurchase Program
     Earlier this month, the Company's Board of Directors approved a share
 repurchase program authorizing the Company to purchase up to $30 million of
 its common stock. The purchases may be made from time to time in the open
 market or through privately negotiated transactions at management's
 discretion, depending on market conditions and other factors, in accordance
 with Securities and Exchange Commission requirements. The share repurchase
 program has a term of 12 months.
     Mr. Gross concluded, "While our priority remains seeking attractively
 priced acquisitions, the stock buyback program gives us the flexibility to
 be strategic with our capital and take advantage of opportunities the
 market may present. We will evaluate purchasing our own stock the same way
 we assess acquisitions. That is, we will be opportunistic. The repurchase
 program provides us with more options for our capital, which in turn will
 allow us to provide the maximum value to our shareholders."
     Additionally, the Company extended its existing credit facility for 18
 months, from July 2010 to January 2012, and increased the accordion feature
 by $40 million to a total debt facility of $200 million. All other terms of
 the agreement are essentially the same.
     Conference Call Information
     Monro Muffler Brake will be hosting a conference call today, January
 16, 2007, at 11:00 a.m. Eastern to discuss the quarterly results. The call
 will be simultaneously broadcast over the Internet at www.vcall.com. An
 archive of the webcast will be available at this web site an hour after the
 live call through midnight January 30, 2007.
     Monro Muffler Brake operates a chain of stores providing automotive
 undercar repair and tire services in the United States, operating under the
 brand names of Monro Muffler Brake and Service, ProCare, Mr. Tire and Tread
 Quarters Discount Tires. The Company currently operates 699 stores and has
 16 dealer locations in New York, Pennsylvania, Ohio, Connecticut,
 Massachusetts, West Virginia, Virginia, Maryland, Vermont, New Hampshire,
 New Jersey, North Carolina, South Carolina, Indiana, Rhode Island,
 Delaware, Maine and Michigan. Monro's stores provide a full range of
 services for exhaust systems, brake systems, steering and suspension
 systems, tires and many vehicle maintenance services.
     Certain statements made above may be forward-looking and are made
 pursuant to the Safe Harbor provisions of the Private Securities Litigation
 Reform Act of 1995. Forward-looking statements involve uncertainties, which
 may cause the Company's actual results in future periods to differ
 materially from those expressed. These uncertainties include, but are not
 necessarily limited to, uncertainties affecting retail generally (such as
 consumer confidence and demand for auto repair); risks relating to leverage
 and debt service (including sensitivity to fluctuations in interest rates);
 dependence on, and competition within, the primary markets in which the
 Company's stores are located; the need for, and costs associated with,
 store renovations and other capital expenditures; and the risks described
 from time to time in the Company's SEC reports which include the report on
 Form 10K for the fiscal year ended March 25,2006.
                           MONRO MUFFLER BRAKE, INC.
                              Financial Highlights
                                  (Unaudited)
                (Amounts in thousands, except per share amounts)
 
 
                                      Quarter Ended Fiscal December
                                   2006           2005          % Change
 
     Sales                       $103,787        $90,188          15.1%
 
     Cost of sales, including
      distribution and
      occupancy costs              63,436         55,300          14.7
 
     Gross profit                  40,351         34,888          15.7
 
     Operating, selling,
      general and administrative
      expenses                     30,282         27,463          10.3
 
     Operating income              10,069          7,425          35.6
 
     Interest expense, net          1,833            845         116.9
 
     Other expense, net               451             30
 
     Income before provision for
      income taxes                  7,785          6,550          18.9
 
     Provision for income taxes     2,919          2,489          17.3
 
     Net income                    $4,866         $4,061          19.8
 
     Diluted earnings per
      common share                   $.32           $.27          18.5
 
     Weighted average number of
      diluted shares outstanding   15,282         15,038
 
     Number of stores open
      (at end of quarter)             699            625
 
 
 
                           MONRO MUFFLER BRAKE, INC.
                              Financial Highlights
                                  (Unaudited)
                (Amounts in thousands, except per share amounts)
 
 
                                      Nine Months Ended Fiscal December
                                    2006          2005         % Change
 
     Sales                   $    309,518   $    280,454          10.4%
 
     Cost of sales, including
      distribution and
      occupancy costs             184,027        165,119          11.5
 
     Gross profit                 125,491        115,335           8.8
 
     Operating, selling,
      general and administrative
      expenses                     92,002         81,142          13.4
 
     Operating income              33,489         34,193          (2.1)
 
     Interest expense, net          3,364          2,537          32.6
 
     Other expense, net             1,972            333
 
     Income before provision
      for income taxes             28,153         31,323         (10.1)
 
     Provision for income
      taxes                        10,129         11,903         (14.9)
 
     Net income               $    18,024    $    19,420          (7.2)
 
     Diluted earnings
      per share               $      1.18    $      1.30          (9.2)
 
     Weighted average number
      of diluted shares
      outstanding                  15,236         14,970
 
 
 
                           MONRO MUFFLER BRAKE, INC.
                              Financial Highlights
                                  (Unaudited)
                             (Dollars in thousands)
 
 
                                    December 23,        March 25,
                                       2006               2006
     Assets
 
     Current assets
 
      Cash                           $    685        $    3,780
 
      Inventories                      63,373            60,378
 
      Other current assets             21,884            20,950
 
        Total current assets           85,942            85,108
 
     Property, plant and
      equipment, net                  181,964           163,625
 
     Other noncurrent assets           67,767            54,662
 
        Total assets             $    335,673      $    303,395
 
 
     Liabilities and
      Shareholders' Equity
 
        Current liabilities      $    53,622       $     53,716
 
        Long-term debt                56,558             46,327
 
        Other long-term
         liabilities                  11,419             10,362
 
           Total liabilities         121,599            110,405
 
     Total shareholders' equity      214,074            192,990
 
           Total liabilities
            and shareholders'
            equity               $   335,673       $    303,395
 
 

SOURCE Monro Muffler Brake, Inc.