FinishMaster Announces Q1 Financial Results and New Credit Facility
INDIANAPOLIS--May 9, 2001--FinishMaster, Inc. , the leading national independent distributor of automotive paints and related accessories, reported today that net income for the quarter ended March 31, 2001 was $839,000 on net sales of $83,235,000, compared to net income of $904,000 on net sales of $84,670,000 in the prior year. Earnings per share were $0.11 compared to $0.12 in the prior year.The Company also announced that on March 29, 2001 it had entered into a new five year $100 million senior secured credit facility with a syndicate of banks and a new six year $20 million senior subordinated term credit facility with LDI, Ltd. The new credit facilities provide sufficient capital to allow the Company to execute its long-term business strategy. The proceeds from the new credit facilities were used to repay the Company's existing senior secured and senior subordinated credit facilities. An extraordinary loss on the early extinguishment of debt of $495,000, net of $324,000 in income tax benefit, resulted from the write-off of the unamortized debt issuance costs related to these expired facilities. Net income before extraordinary loss on early extinguishment of debt for the current year quarter was $1,334,000 or $0.18 per share.
The soft automotive paint aftermarket in the United States had an impact on the Company's net sales which declined 1.7% compared to the first quarter of 2000. Several factors contributing to this softening in demand included slower overall economic conditions; weather conditions in the Northeastern United States; ongoing drought conditions in Florida; and continued productivity improvements in the use of automotive paint by our customers. A reduction in vendor supported marketing programs used to attract and retain customers also impacted sales. "Based upon discussions with vendors and other distributors, the Company believes the weak market for automotive paint has affected the entire industry," said Wes Dearbaugh, President and Chief Operating Officer. "Sales growth is a key area of focus for the Company in 2001."
Despite the weakness in sales, net income before extraordinary loss improved 47.6% as a result of strong gross margins and lower interest expense. Gross margins as a percentage of net sales were 36.5% versus 35.4% in the prior year period. This improvement was primarily the result of large inventory purchases made prior to manufacturers' price increases. Lower overall debt levels were the major contributor to the decrease in interest expense.
Selected Historical Financial Data
(000's omitted, except per share data)
Three Months Ended
March 31,
2001 2000
---- ----
Net sales $ 83,235 $ 84,670
Gross margin 30,353 29,933
Gross margin % 36.5% 35.4%
Total expenses 25,558 25,290
Income from operations 4,795 4,643
Interest expense 2,308 2,888
Income tax expense 1,153 851
Net income before extraordinary loss 1,334 904
Extraordinary loss on early
extinguishment of debt, net of
income taxes 495 --
Net income $ 839 $ 904
Diluted earnings per share
before extraordinary loss $ 0.18 $ 0.12
Diluted earnings per share $ 0.11 $ 0.12
Diluted weighted average
shares outstanding 7,556 7,572
EBITDA $ 7,324 $ 7,076
March 31, December 31,
2001 2000
---- ----
Cash $ 8,958 $ 1,513
Accounts receivable, net 30,139 29,063
Inventory 57,129 63,346
Intangible assets, net 101,804 102,858
Property, equipment & all
other assets 19,521 21,537
Total assets $ 217,551 $ 218,317
Accounts payable $ 53,464 $ 46,470
Current & long-term debt 95,451 101,642
Accrued expenses & all
other liabilities 11,374 13,399
Shareholders' equity 57,262 56,806
Total liabilities &
shareholders' equity $ 217,551 $ 218,317