FinishMaster Announces Financial Results for 2002
INDIANAPOLIS--Feb. 24, 2003--FinishMaster, Inc. reported today that net income for the year ended December 31, 2002 was $12,897,000, or $1.64 per share, compared to net income of $6,208,000, or $0.81 per share, in the prior year period. Assuming the adoption of SFAS No. 142 on January 1, 2001, net income in the prior year period would have been $9,352,000, or $1.22 per share.Net income for the year increased by $6,689,000 compared to the prior year period as a result of higher net sales and gross margin dollars, and lower amortization and interest expense. The increase in net sales was entirely due to acquisitions. Same store sales growth was flat for the year, however, during the last two quarters, same store sales growth was 1.4% per quarter. Higher gross margin dollars were driven by increased sales volume and improved margin rate. The improvement in margin rate was a result of lower shipping and handling costs as a percentage of net sales; price increases on two major product lines implemented one month earlier in the current year fourth quarter compared to the prior year; and higher volume rebates earned under normal vendor programs. Despite a growth in sales, operating, selling and G&A expenses as a percentage of net sales increased 20 basis points to 23.8%. Increased employee benefit costs, insurance costs, bad debt expense, and sales labor costs were the primary contributors to the 4.2% increase in operating, selling and G&A expenses. Lower amortization expense of $4,618,000 was due primarily to the adoption of SFAS No. 142, effective January 1, 2002, which eliminates the amortization of goodwill and intangible assets with indefinite useful lives. Lower effective interest rates and average outstanding borrowings resulted in the decrease in interest expense.
For the fourth quarter ended December 31, 2002, net income was $2,965,000, or $0.38 per share, compared to net income of $1,768,000, or $0.23 per share, in the prior year period. Assuming the adoption of SFAS No. 142 on January 1, 2001, net income in the prior year period would have been $2,621,000, or $0.34 per share.
Net income for the fourth quarter increased $1,197,000 due primarily to lower amortization expenses of $1,138,000 resulting from the adoption of SFAS No. 142 on January 1, 2002. Higher operating, selling and G&A expenses offset increased net sales, higher gross margin dollars and lower interest expense.
The change in year-end accounts payable and debt levels was due to differences in payment terms on large year-end inventory purchases. Less favorable payment terms in 2002 resulted in a lower accounts payable balance and higher debt levels at December 31, 2002.
FinishMaster also announced the acquisition of Caywood's Paint Supply, effective December 6, 2002, located in Anaheim, California. The acquisition strengthens the Company's existing presence in this growing market.
This release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ from those anticipated in such forward-looking statements. Please refer to the Company's cautionary statements contained in its most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2002.
FinishMaster is the leading national independent distributor of automotive paints, coatings, and related accessories to the automotive collision repair industry. The Company is headquartered in Indianapolis, Indiana and operates three major distribution centers and 158 branches in 25 of the 35 largest metropolitan areas in the country. For more information on FinishMaster via the Internet, visit FinishMaster's website at http://www.finishmaster.com/ or Corporate News on the Net page at http://www.businesswire.com/companyspecific/.
Selected Historical Financial Data
(000's omitted, except per share data)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------------------------
2002 2001 2002 2001
---- ---- ---- ----
Net sales $82,393 $79,840 $342,803 $332,154
Gross margin (1) 27,875 26,419 111,171 105,895
Gross margin % 33.8% 33.1% 32.4% 31.9%
Operating, selling, general &
administrative expenses 21,207 19,324 81,596 78,308
Amortization of intangible assets 352 1,490 1,274 5,892
Total expenses 21,559 20,814 82,870 84,200
Income from operations 6,316 5,605 28,301 21,695
Interest expense 1,622 2,088 6,923 8,547
Income tax expense 1,729 1,749 8,481 6,445
Net income before extraordinary loss 2,965 1,768 12,897 6,703
Extraordinary loss on early
extinguishment of debt,
net of income taxes - - - 495
Net income $2,965 $1,768 $12,897 $6,208
Diluted earnings per share before
extraordinary loss $0.38 $0.23 $1.64 $0.88
Diluted earnings per share $0.38 $0.23 $1.64 $0.81
Diluted weighted average shares
outstanding 7,884 7,702 7,857 7,648
EBITDA $7,668 $8,414 $33,400 $32,114
Note (1): Shipping and handling costs are now included in cost of
goods sold. Prior period reported results have been changed to conform
to this current year presentation.
Dec. 31, Dec. 31,
2002 2001
---- ----
Cash $2,070 $2,977
Accounts receivable, net 30,023 28,401
Inventory 55,566 50,096
Intangible assets, net 102,137 102,273
Property, equipment & all other assets 15,831 18,289
Total assets $205,627 $202,036
Accounts payable $15,744 $37,383
Current & long-term debt 96,297 85,475
Accrued expenses & all other liabilities 17,206 16,643
Shareholders' equity 76,380 62,535
Total liabilities & shareholders' equity $205,627 $202,036
A reconciliation of reported net income adjusted to reflect the
adoption of SFAS No. 142 is provided below:
Three Months Twelve Months
Ended Ended
December 31, December 31,
-----------------------------
2002 2001 2002 2001
---- ---- ---- ----
Reported net income $2,965 $1,768 $12,897 $6,208
Add-back goodwill and indefinite lived
intangible asset amortization, net of
tax - 853 - 3,144
Adjusted net income $2,965 $2,621 $12,897 $9,352
Reported diluted earnings per share $0.38 $0.23 $1.64 $0.81
Add-back goodwill and indefinite lived
intangible asset amortization, net of
tax - 0.11 - 0.41
Adjusted diluted earnings per share $0.38 $0.34 $1.64 $1.22