REFILE-UPDATE 2-Monro Muffler Q2 beats; to buy tire co by yr end

(Fixes typo in company name in paragraph 5)

* Q2 EPS $0.63 vs est $0.61

* Sees Q3 EPS of $0.44-$0.50

* Sees FY 2011 EPS of $2.00-$2.06

* Says to buy more tire cos

(Adds CEO comments, conference call details; updates share
movement)

By Soham Chatterjee and Fareha Khan

BANGALORE, Oct 21 (BestGrowthStock) – Auto-repair chains operator
Monro Muffler Brake Inc (MNRO.O: ) posted second-quarter results
above analysts’ estimates helped by acquisitions, raised its
full-year earnings outlook, and said it plans to buy one more
company before Dec. 31.

Monro, which is on the lookout for more tire companies,
said it plans to buy a company with annual sales of $10-$15
million before year end.

“We will build about 6-7 brand new stores a year on
average, but its cheaper to buy locations than build them,”
Chief Executive Robert Gross told Reuters by phone.

“We will continue to focus the lion’s share of our growth
on acquisitions.”

“Uncertainty with potential tax increases on sellers can
lead to excellent acquisition opportunities for Monro,” Chief
Executive said in a conference call with analysts.

Monro Muffler said it bought Courthouse Tire in
Fredericksburg, Virginia for $3 million – its fifth
acquisition of a tire company since Sept. 24 last year.

“We had absorbed three cost increases from tire
manufacturers in the past 15 months. However, we have been able
to partially offset the increases through the increase
purchasing power…and our ability to pass price increases
along to the consumer,” the CEO added on the conference call.

We have raised our prices every year for the past 11 years,
Gross said, adding that though the company raised prices by
2-2.5 percent in September, he did not see another price
increase until April next year as long as store traffic was
positive.

An 8 percent rise in same-store maintenance services sales
and 6 percent for exhaust sales in the second quarter also
indicated that customers are holding on to their vehicles
starting from four-twelve years old, which the company said
would help its sales in the near future.

The company said its gross margin fell to 40.9 percent from
43.1 percent last year as a result of continued shift in sales
mix towards the lower-margin tire segment due to the addition
of 79 acquired tire stores and increased tire material costs.

RAISES OUTLOOK

The company forecast third-quarter earnings in the range of
44-50 cents a share, largely above analysts’ estimates of 45
cents a share, according to Thomson Reuters I/B/E/S.

It also raised its full-year EPS outlook to $2.00-$2.06
from $1.94-$2.01 on anticipation of a 4-6 percent comparable
store sales growth.

Q2 BEATS ESTIMATES

For the second quarter ended Sept. 26, the company earned
$13.3 million, or 63 cents a share, compared with $10 million,
or 49 cents a share, a year ago.

The company posted 19 percent rise in sales at $162.1
million.

The company, which operates 783 stores across U.S. under
the names of Monro Muffler Brake & Service and Mr. Tire among
others, saw same-store sales for the quarter rise 6.4 percent.

Analysts, on average, were expecting earnings of 61 cents a
share on revenue of $159.7 million.

Shares of the Rochester, New York-based company were
trading down 1.6 percent at $46.63 Thursday on Nasdaq. They had
touched a 52-week high of $50.81 on Oct. 15.
(Reporting by Soham Chatterjee and Fareha Khan in Bangalore;
Editing by Prem Udayabhanu, Vyas Mohan)

REFILE-UPDATE 2-Monro Muffler Q2 beats; to buy tire co by yr end