Good morning, ladies and gentlemen. Welcome to the Monro Muffler Brake Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded and may not be reproduced in whole or in part without permission from the company. I would now like to introduce Ms. Jennifer Milan of FTI Consulting. Please go ahead.

Thank you. Hello, everyone and thank you for joining us on this morning’s call. I would just like to remind you that on this morning’s call, management may reiterate forward-looking statements made in today’s release. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, I would like to call your attention to the risks and uncertainties related to these statements, which are more fully described in the press release in the company’s filings with the Securities and Exchange Commission. These risks and 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, and the need for and cost associated with store renovations and other capital expenditures. The company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this call does not constitute an admission by Monro or any other person that the events or circumstances described in such statements are material. Joining us for this morning’s call from management are Rob Gross, Chairman and Chief Executive Officer; John Van Heel, President; and Chief[ph] D’Amico, Chief Financial Officer. With these formalities out of the way, I’d like to turn the call over to Rob Gross. Rob, you may begin.

Thanks Jen. Good morning and thank you for joining us on today’s call. We are pleased that you are with us to discuss our fourth quarter and fiscal 2012 performance. After reviewing our quarterly and full year performance, I’ll provide you with an update on our business as well as our outlook for the first quarter and new fiscal year. I’ll then turn the call over to Cathy D’Amico, our Chief Financial Officer who will provide additional details on our financial results. Before we get into the details of the call, I want to spend a minute on our recent sales results in April and May. Fiscal 2012 was a tough enough year, but we were able to increase core EPS by a solid 15% excluding the 53rd week and comp store sales growth of less than 1% adjusted for days. While we aren’t happy with those results, we didn’t expect the sales trends that we have seen thus far in April and May, which has been the worst 7-week sales period since I have been with the company. However, I don’t think we got dumber overnight or in this case the last 7 weeks. And the favorable industry trends and our business model advantages haven’t changed. Actual results that we have from tire manufacturers and tire and service competitors, including the guys we are negotiating with to buy tell us that for the most part our recent performance is in line with if not better than industry trends. While weather was a negative factor for us in Q3 and Q4, it can be nothing, but as a positive for us this Q3 and Q4. We believe that overall pressure on the consumer is the overriding driver of our poor start to fiscal year 2013. We are continuing to execute…

Thanks, Rob. Good morning, everybody. As Rob stated, sales for the quarter increased 13.9%. New stores, which we define as stores opened after March 27, 2010, added $11.5 million in sales, partially offsetting these increases was a decrease in sales from closed stores of approximately a $1.5 million. Comparable store sales increased 7.4%. There were 97 selling days in the current fourth quarter and 91 in the prior year quarter, adjusting for days, comparable store sales increased 7/10 of a percent as compared to the prior-year quarter when we are at 3/10 of a percent. Year-to-date comparable store sales increased 2%. Additionally, there was a sales increase of $38.4 million related to new stores, partially offsetting this sales increase with a decrease of sales from closed stores amounting to $4.5 million. Fiscal 2012, as Rob stated was a 53-week year and therefore, there were 368 selling days, as compared to 361 selling days in fiscal year 2011, adjusting for days comparable store sales increased by 1/10 of a percent in fiscal year 2012. Moving on to March 31, 2012, the company had 803 company-operated stores as compared with 781 stores at March 2011. During the quarter ended March 2012, the company opened 2 stores and closed 2 stores. Year-to-date, the company added 36 locations including 23 Vespia and 7 Terry’s Tire Town stores and sold or closed 14 locations, which includes the sale of the Central Long Island stores earlier in the fiscal year. Gross profit for the quarter ended March 2012 was $66.5 million or 38.7% of sales as compared with $60.4 million or 40.1% of sales for the quarter ended March 2011. The decrease in gross profit for the quarter ended March 2012 as a percentage of sales is due to several factors. Total material cost increased as…

[Operator Instructions] And we will take our first question from Bret Jordan with BB&T Capital Markets.

A couple of quick questions and I guess one of them, as you look at the first quarter or the first quarter today, you talk about a minus 7 comp in the 7 weeks. You did give some color on the cadence of that, is that a trend that’s improving from something worse than that or is it generally flat April to May?

We are fairly consistent. May started out worse than April and for all our long-term investors the last 4 days have been a lot better.

Okay, I guess if you look at price year-over-year, you typically took price in April and September although it looked like you took a couple of price increases, you said January and March this year. What’s the price strategy? Did you take price again in April on service and what was the impact of price versus traffic on that comp?

We took -- Bret, this is John. We did take price on tires and service in March at about that 2% that we typically take it. So, we -- obviously this year price was more influential than traffic. Our traffic was down slightly through the year so.

Okay. And I guess if we look at the fourth quarter that 2% tire comp, what was the unit comp? I guess, because it seems like a lot of that positive was in price as opposed to the units, you look feeling for the unit transactions?

Yes, that was -- units were down mid to high single-digits.

Okay, great. And I guess as you look at your guide on comp this year, the zero to 3, is that assuming a price increase coming in the September cycle as well?

Yes, absolutely.

We’ll take our next question from Scott Stember with Sidoti & Company.

Just talking to sales so far in the first 7 weeks, could you maybe talk about the individual higher ticket items, such as brakes, tires. Is there one that’s leading the path down or they are pretty much all down in that 7% range?

Yes, it consistently sucks. But given the last 4 days, Scott, are a lot better.

Could you talk about the competition, particularly on tires about what you are seeing fourth quarter into the first quarter? Have you seen any heightened competition and when you mentioned your comments about raising prices in September was that for tires as well?

Yes. In terms of competition, I can say the tire manufacturers have said that their units year-to-date, which is calendar year-to-date are down mid to high single-digits. So, we are basically in line with that. And all the guys that we are looking to buy are experiencing very similar sales trend to what we are. So, we don’t see that we are losing share. We just think it’s kind of shitty everywhere. And in terms of September and the price increases, we look for wherever opportunities we have to increase the tire prices, because the cost continues to rise. So, we will absolutely look at what we can do in September on service and tires.

So, almost to go to lower end of your guidance, but that probably assumed that you had some trouble putting through price on tires?

I’m sorry. Say that again Scott.

If we were looking at the lower end of your guidance, would that assume that you would have trouble putting through pricing?

No, I think don’t look at the lower end. You’re going to make me cry. I would think that like this year, our tire sales were certainly the unit decline was compensated by collecting more for every tire and I would expect that to continue going forward. I think there is more risk in the near-term on traffic and people continuing to defer.

Okay, good enough. And just last question, with oil prices going up and being a headwind for you guys, could you maybe just frame out the number of oil changes that you do per year. So, we can just get an idea of what you have to contend with?

About 2.5 million and approaching 4.5 million overall vehicles a year, 2.5 million oil changes Scott.

We’ll continue on to Peter Keith with Piper Jaffray.

Robert, I guess I am a little bit confused still on the deceleration here in the last few months. You are citing some inflationary pressures in oil and food, but the reality gas prices have been coming down the last few weeks. They are actually kind of spurning now flattish to even down year-on-year. So, it just doesn’t seem like there has been any sharp inflection in consumer pressure, I guess I’m wondering maybe, is there some sort of delayed effect from the mild winter that’s maybe cause less wear and tear and therefore, the less service work here in recent months?

Yes, it could be -- I certainly have a different view and I think we’ll see what other retailers and other categories say going forward. I think certainly they repeated a weaker April. I think things, irrespective of saying gas prices are flat with last year and down a little bit over the last 2 weeks that most consumers are stretched and are not in a very strong position, irrespective of what all the people that make $0.5 million a year say they are. I think they are making 50 to 100 grand that it’s not a question of whether gas prices are $4; it cost me $50 to fill up when 3 months ago it cost me $40 and I think that’s a big factor. More than happy to blame it on weather, but I think weather is going to benefit us the end of this year and I’m probably not going to give weather credit for our great numbers. Weather is going to occur. I think the economy is weak. I think it was weak last year to your point and it’s been weak for a while and I think retail in general is going to continue to be weak regardless of what all the brilliant pundits say.

Okay, fair enough. It sounds like you’ve addressed some of the share in tires and sounds like everyone is weak in the industry. How about with some of the other products and services, do you have any other competitive comparisons to suggest you’re maintaining share in those areas?

Well, I mean, what we know certainly on brakes in Q3 and Q4 that was strong performance compared. As far as April and May, we don’t know I mean, there was a public company that was going private that, now we’ll see if they do came out with some indications that weren’t stellar, but until everyone reports we don’t know, I think some of the parts guys expressed similar concerns on replacement parts and wear and tear, but again we are focused, we don’t think we are losing share, we don’t think we are underperforming, and our job is irrespective of weather and irrespective of the consumer figuring out ways of making more money and the most important thing to us -- you might not want to hear it. If I can sign-up for a year like we are telling you this year is going to be and grow acquisitions 20%, it’s certainly served this company and its shareholders well for 3 years following us getting that kind of acquisition growth on, and the industry is strong and deferrals will come back and it will snow again in Rochester, New York. I’m a lot more concerned about whether our company can do to make the most of what’s going on out there and right now, I think John and his team are making the most out of, given a lot of acquisitions done at attractive prices that will be accretive quickly and that’s pretty good tradeoff for our business.

Okay, that’s helpful. One last question too on a related note, just on the gross margin, just thinking about the cadence on your gross margin through the year, I was having a little bit of difficulty getting to your Q1 EPS guidance, unless I’m crushing the gross margins. So, it looked like gross margin pressures to me quite heavy in the first half and then maybe kind of flatten out or get better in the second half?

Yes, that’s absolutely how we see the year. Tires and oil in the first part of the year will be a drag. And as we said, we would expect tires pending any other cost increases that come through to improve in the second half of the year and oil as well. In fact, we have some of the acquisitions that we gotten done have given us the opportunity to revisit our oil deal, which we are doing right now and we would expect any benefit from that to help the second half of the year.

We will continue on to Jon Greenbaum of Golden Tree.

I was wondering if you could please comment on the cadence that you see for same store sales performance throughout the year. So you provided guidance for Q1 and for the full year. Obviously, that implies some sort of ramp, some sort of improvement through -- in Q2 through Q4. I was hoping perhaps you could provide a little bit more detail there?

I think Q1 will be our worst, Q2 will be our second worst and Q3 and Q4 will be our best, tied to the fact that we are up against flat comps with absolutely no winner and ridiculously weak unit sales of tires as far as getting more specific. I don’t know what tomorrows sales are going to be.

Okay, and is it safe to say also following up on the previous question that margins will largely be tied to the cadence of the same store sales?

Sure. Obviously, we generate a lot of leverage in our business model and part of the weakness even though we got to 17% bottom line growth this year and relatively flat comp store sales was generated from all the operating margin improvements we’ve picked up through the acquisitions and the leverage of what occurred over the last 3 years. Comp store sales are the most profitable sale we can have and the acquisitions absolutely help sales, absolutely help operating dollars and gross margin dollars, but remember we have to sell through higher priced inventory, due diligence costs are now expensed every quarter and all of that is incorporated in our estimates all making this year -- having the sales line growth significantly while still being under pressure on the operating margin percentage with certainly, significantly increasing operating margin dollars.

Okay and then shifting gears, my last question is could you give us a sense of the type of tires that you guys are selling, the sort of ASPs that you’re generating, what brands you’re selling more than others, just I guess some additional details on the tire business?

Yes, sure. The average selling price is up this year, and we are seeing a shift to more private label tires as customers trade down and frankly as we push that as a part of increasing the direct import program. Coming into fiscal 2013, you will see us with the low cost radios or low cost tires that we import out to all of our service stores. Previously they were only in about half of our service stores and those were the Black Gold service stores and we are also bringing in -- that’s underway at the end of last fiscal year so March, April and into the first quarter timeframe. We are also bringing in another line of import tires that we expect to put into our product stream as the first step up and that would be taking away from larger manufacturers, associate brands and buy that for less sell it for the same and get that margin improvement. All of that -- that presents a value for the customer in a tough economic time for them and that’s -- so notwithstanding the cost benefits for us, we think that there is a greater opportunity to make sale there as well.

Okay. So just to be clear, you said that you’re seeing an increasing shift into private label but then you also said your ASPs are up. I would assume the private label tires carry a lower selling prices so does that mean that the sort of price increase you’re pushing through is overwhelming the negative mix shift. Am I understanding is the correctly?

Well, the mix shift is not huge. We saw about a 5% mix shift this year into the private label tires. So, our average selling price was up around $10 this year net of that shift in the mix.

[Operator Instructions] We’ll go onto Sachin Shah with Tullett Prebon.

So, I just -- I think I missed your comments on April and May, and how well that is going?

Lousy.

Lousy. Okay, and is it because of all these other conditions mild weather, gas prices still high, the weak consumer or is it some other reasons that you’re seeing this kind of follow through from the fiscal fourth quarter?

I don’t think there is anything fundamentally wrong with the industry or our offerings. I think, you can look to weather, you can look to a consumer that’s pulling back I think all of us in the category are seeing it. And I think you will, if you haven’t seen it already start to see it in retail in general. My view is that the consumers in more shape than we want to believe and that will run as course. The good news for us is you have to buy our stuff. You don’t want to buy our stuff, you don’t come and you’re excited about your new brakes, or your new tires, but you absolutely need them, if you want to run your vehicle and people or a certain group will move into buying new cars, most people go. If certain piece of the middleclass are now buying new cars, most people if they are going to start doing better are going to repair their older cars, which sits in our sweet spot. So, I think April and May at this juncture we’re worse than we expected and I commented as bad as start to a quarter as I’ve seen in my 12 years here. I do not expect it to continue, but it’s probably not like turning on a faucet, it will get progressively better and much more encouraged on the second half of the year, than we are certainly in the first quarter.

Okay. So and that’s the reason why you’ve kind of guided the low kind of consensus is -- consensus was expecting for fiscal 2013 is you’re expecting the second half to be stronger than the first half and the first half to be a little bit weaker than you expected or it seems like market was expecting before?

Well, I think as far as what we said to the market, we had our numbers for the fourth quarter and the full year. Certainly, I think the market as well as us being surprised in the beginning of April and May did not like those numbers. I think the reflection in our estimate for the year is totally encompassed in a first quarter that if you’re referring to consensus at a 5 in front of it. We did $0.48 last year and we said we’re going to do 35 to 40 in the first quarter with 6 weeks of information. There is the difference between everyone’s annual numbers and what we’re guiding to.

Okay. And you mentioned earlier about Midas and Midas was taken private you have another deal Pep Boys in the stages of going private itself, and when you said that price was higher than what you thought it was worth, I mean and that was based on specific valuation or the synergies you expected and just curious to find out like another transaction Pep Boys is going private, you know any comment on that. I mean, people see value and I was just kind of curious to see how you measure value and the fact that some of these companies are going private.

We measure value on what we can do with the business. I mean, no one has the parts distribution network we have the flexibility and ability to go overseas and start bringing products in. They distribute to their own stores that have our level of store density, they have the growth prospects to operate. As far as the Midas stores, no one has the breadth of experience running service stores the way we do. As far as how someone else comes up with value and justifies paying a given price, we certainly we are not involved in the Pep Boys deals, we said we were involved in the Midas deals and you could assume our assessment of value on the Midas deal was significantly different than the 11.50 that got it done.

We’ll take our next question from Bret Jordan with BB&T Capital Markets.

Rob. Couple of quick follow-ups and one is on the acquisition pipeline, you said you’ve got 7 non-disclosures signed now. So, that’s I guess net up one and you had called a couple out. What’s the environment looking like here, you have seen that Midas deal go off and is valuation expectation getting higher or lower given the fact that some of the M&A transactions are accelerating this year or -- and if you can talk sort of regionally, are you looking in different markets than you were previously and what kind of size range are we talking about amongst that 7?

Bret, this is John. In short, the acquisition pipeline is better than it ever has been. The 7 that we talked about -- the 7 NDAs that we talked about don’t include Colony and don’t include the LOI that we said we expect to close in August. So, if you want to do same numbers for same numbers that would be more like 9 if you include those. So, we have added 4 since January. And again, the pipeline has never been better. The reasons for that are these guys are getting older. They don’t have a succession plan. The business is getting more difficult again with the tire cost pressures that we have. These guys are all 45% to 60% tires, so even higher than we are and they don’t have the ability like we do to increase the direct imports. The business is tougher to run and they are very concerned and getting more and more concerned about taxes. The rest of this calendar year and certainly next calendar year, from an opportunity perspective, 5 of those 7 NDAs are within our footprint, 2 are adjacent to it. And so we are continuing to look within our footprint and adjacent as we always have to focus on that store density that Rob just talked about that’s key to operations and key to distribution. And from a valuation perspective, we are certainly not seeing that go up, that’s coming down, because these guys are earning less money and that’s one of the reasons that -- one of the ones we discontinued from January was Midas. The other one was because we couldn’t get to an agreement on valuation the earnings are down in nearly every case here. So…

How about range or sizes, some color or so?

They are within 5 to 40. So, similar in sizes, more deals out there, one or 2 more at the higher end of that.

Okay. And I guess you’re looking over revisiting the Ashland the oil contract, how much room is there to move? What has oil done in the terms since you renegotiated that contract last?

Yes. Well, I guess our view of it is that there is more room to move than the nascent there is, but we think that to be a 7 figure improvement for us, but we’ll let you know when we get there.

Okay. And then one last question, as you look at inventory this strategy you are going through right now, rolling tires out to all the stores. Is that going to materially increase the inventory, since you get to hold more rubber at the store level?

It will have some increase -- impact on inventory, but not material. And don’t forget, we buy or let 100 basis points over LIBOR. So, you got an awful lot of capability there to borrow inexpensively and get significant cost improvement.

And that’s going to be a private label tire strategy that you are going to put into the stores?

Yes. It’s not a Monro Muffler Brake branded tire, but…

Right. But it’s something you are direct sourcing?

Yes.

And from whom?

From a high quality manufacturer over there, I don’t want to give everybody all the answers.

And we’ll continue on to Rob Straus with Gilford Securities.

Regarding the acquisition front, if you think about the specific valuations for those smaller chains and importantly whether or not you are seeing incremental bidders for those smaller chains. Can you give us some details there and then as a follow-up and related to that question, can you discuss a little bit of your thought process on your capital structure and how you are willing to flex that for acquisitions in the future?

Sure. With regard to competition for the deals that we’re in, we haven’t seen any increase in competition on deals and over the 18, 19 deals that we’ve done, in nearly every single case we have been -- the only competition we’ve had is the sellers expectations. In the process for us to see if we can bridge that gap. So, we haven’t seen that and we are in exclusive discussions with most of these guys.

Yes, as far as the capital structure Rob, obviously, we believe in a dividend to give money back to shareholders. That being said, we are a growth company. We think the prospects for growth especially over the next couple of years are massive especially based on how small we still are and we certainly over the years if you remember around cash conquered time whenever the stock gets ridiculously stupid, we’ve stepped into the market twice to do a stock buyback, if we think the value to our shareholders is there. If you back out our capital leases, which 5 years ago wouldn’t even beyond the books, we have, what, $5 million of debt on a $300 million base or debt to caps like 2%, 14% if you include all the capital leases. So, we have plenty of room to do what we need to do. The most attractive thing for us to do today is to continue to buy companies at the right price, plug them entire business model, improve their operating model by 800 to 1,500 basis points. In every case, improve our size, improve our operating margin, improve our store density and our position within the market and remember right now with the Kramer deal, I think we are at 820 stores. We can still get 3x bigger and not leave the footprint we are in. That is the most attractive use for capital.

We will go to David Levy with Synvest [ph].

So, I just wanted to know if it’s always been company policy to include deals that haven’t closed yet in the annual guidance or if that something new that you guys are doing?

The only deals that were shared are going to close.

Okay. And you said the timing of the deal that haven’t closed yet is for August.

Second quarter.

And have you told us how large that deal is supposed to be in terms of revenue contribution.

We said it was a similar size of the 2 we announced.

So around $25 million, annualized.

That would be a similar size.

[Operator Instructions] And we will hear from Matthew Dodson [ph] with Edmunds White Partners.

I just have one quick question for you. It seems like your guidance is based on customers who were deferring tire purchases actually coming into stores and sequentially, actually needing to get their tire change. But can you help us understand why that’s going to happen, and why can’t they push that out maybe to like the winter season?

They can. I mean, we certainly have said we wouldn’t have predicted what April and May did. That being said prior to this year, we didn’t predict 3 straight years of 6% comps under the same guys of -- people during that whole period. Probably we are up against profit numbers and people weren’t going to be able to buy year-over-year at that rate. We were on a minus 3 comp, we are on and we don’t hit our numbers.

We have no additional questions. I would like to turn the conference back over to management for any additional or closing remarks.

Great. Thank you everybody for your time. I know that the call ran a little bit long, but it’s important to fill you in with everything we know and appreciate your continued support and look forward to giving you better results in the future. So, with that have a great weekend and Memorial Day. Bye.

Thank you. Again ladies and gentlemen, that does conclude today’s presentation. Thank you for your participation. You may now disconnect.