ROCHESTER, NY– Monro Muffler Brake has announced financial results for its second quarter ended Sept. 29.

In other company news, Monro has renewed its employment agreement with Robert Gross, chairman, president and chief executive officer. The contract has a term of five years.

Due to the company’s three-for-two stock split which was distributed to shareholders on Oct. 1, per share data for all periods is presented on a split-adjusted basis.

Sales for the second quarter of fiscal 2008 increased 4.4 percent to a record $112 million from $107.3 million in the second quarter of fiscal 2007. Comparable store sales increased 2 percent, exceeding the company’s revised estimate of 1 percent as provided in its business update. The company said sales for the quarter were impacted by a challenging economy and weak consumer confidence which caused slow-downs in the purchases of certain higher ticket items such as tires and brakes. However, purchases in these product categories improved late in the quarter, driving up comparable store sales growth. Second quarter comparable store sales for tires, brakes and the maintenance service category increased approximately 5 percent, 2 percent and 4 percent, respectively. Additionally, alignments showed a strong sales increase of approximately 20 percent during the quarter primarily due to continued operational focus on this category.

The total sales increase for the quarter of $4.7 million included an increase in sales from new stores of $4.1 million, of which $3.5 million came from the 18 former Craven and Valley Forge stores acquired in July 2007. For the quarter, comparable sales in ProCare were up .4 percent versus the same period of the prior year.

Gross margin was 40.6 percent in the second quarter compared to 41.1 percent in the prior year quarter due in part to shifts in mix and increases in product costs such as oil and tires. SG&A expenses were $33.8 million, or 30.1 percent as a percentage of sales compared with 29.9 percent for the same period of the prior year, primarily as a result of decreased operating leverage.

Operating income for the quarter was $11.8 million compared with $12 million in the prior year’s second quarter. Interest expense increased to $1.3 million from $.9 million in the prior year’s second quarter, largely due to increased borrowings used to fund the company’s stock repurchases and recent acquisitions.

Net income for the quarter was $6.5 million compared to $5.6 million in the prior year period. Diluted earnings per share were 29 cents compared to 25 cents in the second quarter of the prior fiscal year, at the high end of the company’s revised expectations as provided in its business update. The earnings for the second quarter of the prior fiscal year included a one-time after-tax impairment charge of $1.7 million, or 8 cents per share, related to the company’s Strauss Discount Auto equity investment.

During the quarter, the company added 20 locations, including the acquired Craven and Valley Forge stores, and closed two locations, ending second quarter fiscal 2008 with 714 stores.

For the six-month period, net sales increased 6.8 percent to $219.7 million from $205.7 million in the same period of the prior year. Net income for the first six months of fiscal 2008 was $14.7 million, or 64 cents per diluted share, compared with $13.2 million, or 58 cents per share in the comparable period of fiscal 2007. Net income for the first six months of fiscal 2007 included the aforementioned $1.7 million, or 8 cents per share, after-tax impairment charge partially offset by an unrelated 2 cent one time tax benefit that occurred in the first quarter of the prior fiscal year.

Robert Gross, president and chief executive officer, stated, "While I am not satisfied with our second quarter performance, our results were impacted by a challenging economy and weak consumer confidence which had the effect of delaying big ticket purchases. However, we are pleased that as the external environment improved late in the quarter, we saw our results improve and begin to resume to normalized patterns. We have continued to experience some consistency thus far into the month of October, with comparable store sales growing approximately 2 percent through last Saturday."

Gross continued, "We continue to reap the benefits of our low-cost operating model and our two-store format, both of which enable us to provide our loyal customers with products and services across a breadth of categories. As such, we are doubling our Black Gold tire roll-out program to include a total of 120 service format stores by the end of this fiscal year, up from the current level of 60, with specific focus in Philadelphia, Baltimore, and Pittsburgh where we operate both tire and service stores. We expect that the expansion of this program will assist us in driving store traffic and in growing sales of tires and related services. In addition, while the former ProCare stores broke even in the quarter, the integration of the recently acquired Craven and Valley Forge stores is on track, with these stores operating at breakeven for the two months since they were acquired."

Based on year-to-date results and current business trends, the company continues to expect full year comparable store sales growth of 2 percent to 4 percent and total sales to be between $440 million and $445 million. The company’s revised estimated range for earnings per diluted share for the full fiscal year is $1.08 to $1.11, as compared with 97 cents in fiscal 2007. The full year estimated earnings per share range includes an approximate 3 cent non-cash charge related to options granted on the renewal of Gross’s employment agreement. The company anticipates a charge of less than 2 cents (non-cash) related to these options in fiscal year 2009.

For the third quarter, the company expects diluted earnings per share to be between 25 cents and 27 cents versus 21 cents last year, with an anticipated comparable store sales increase of 2 percent to 4 percent. The third quarter estimated earnings per share range includes a 2 cent charge (primarily non-cash) related to the renewal of Gross’s employment agreement.

The revised expectations for the quarter and the year include the effects of the Craven and Valley Forge acquisitions. The earnings estimates are based upon 22.8 million weighted average shares outstanding.

Gross concluded, "I am very pleased to have renewed my employment agreement for an additional five years and am excited about the many opportunities that lay ahead. We have great confidence in Monro’s sustainable low-cost business model and see significant long-term growth potential for our business. In the near-term, we are assessing several acquisition opportunities and expect to announce at least one small acquisition by the end of the third quarter."

At Sept. 29, the company had 20,737,017 of common shares outstanding on a split-adjusted basis. The company has repurchased 889,256 shares of its common stock for approximately $20.4 million, at the weighted average price of $22.94 in the period from Jan. 1 through Oct. 19. Under the share repurchase plan authorized in January 2007, the company is authorized to purchase up to $30 million of its common stock until January 2008.

For more information about Monroe, go to: www.monro.com