FinishMaster Announces Second Quarter Financial Performance
INDIANAPOLIS--Aug. 5, 2003--FinishMaster, Inc. today reported that net income for the second quarter of 2003 decreased 18.9 percent, to $2,971,000, or $0.38 per share, compared with net income of $3,664,000, or $0.46 per share, in the prior year period. For the six months ended June 30, 2003, net income was $5,744,000, or $0.73 per share, compared to net income of $6,788,000, or $0.87 per share, in the prior year period."Industry-wide declines in demand resulting from a reduction in the number of repairable vehicles continued throughout the second quarter," stated J. A. Lacy, President and Chief Operating Officer. "Factors leading to the reduction in repairable vehicles included slow overall economic conditions, lower accident rates and a higher incident of vehicular totals."
The decrease in net income for the second quarter and year-to-date period compared to the prior year periods was a result of lower net sales and gross margin dollars and higher overall expense levels.
-- The decline in net sales was due to reduced demand throughout the distribution network.
-- Lower gross margin dollars resulted from decreased sales volume and a decline in the margin rate. The deterioration in margin rate was a result of higher shipping and handling costs as a percentage of net sales and increased customer discounts.
-- Operating, selling and G&A expenses as a percentage of net sales increased 90 basis points to 23.6 percent for the quarter, and 70 basis points to 23.8 percent for the year-to-date period. Higher costs related to wages and benefits, bad debts and insurance, and the lack of fixed-cost overhead recovery due to lower sales were the primary contributors to the increased expense levels.
-- Lower effective interest rates resulted in a decrease in interest expense.
Increased cash generated from operating activities, principally from favorable net working capital changes, resulted in a $22,733,000 reduction in debt since the prior year-end.
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/.
Selected Historical Financial Data
(000's omitted, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
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2003 2002 2003 2002
--------- --------- ---------- ----------
Net sales $ 86,922 $ 87,788 $ 170,417 $ 172,049
Gross margin (1) 27,424 28,227 54,131 55,443
Gross margin % 31.6% 32.2% 31.8% 32.2%
Operating and SG&A expenses 20,536 19,892 40,559 39,718
Amortization of
intangible assets 288 243 595 489
Total expenses 20,824 20,135 41,154 40,207
Income from operations 6,600 8,092 12,977 15,236
Interest expense 1,609 1,875 3,327 3,712
Income tax expense 2,020 2,553 3,906 4,736
Net income $ 2,971 $ 3,664 $ 5,744 $ 6,788
Diluted earnings per share $ 0.38 $ 0.46 $ 0.73 $ 0.87
Diluted weighted average
shares outstanding 7,866 7,906 7,885 7,834
Note (1): Shipping and handling costs are now included in cost of
goods sold. Prior period reported results have been revised to conform
to the current year presentation.
June 30, December 31,
2003 2002
----------- ------------
Cash $ 3,310 $ 2,070
Accounts receivable, net 30,228 30,023
Inventory 48,155 55,566
Intangible assets, net 102,565 102,137
Property, equipment & all other assets 14,740 15,831
Total assets $ 198,998 $ 205,627
Accounts payable $ 24,209 $ 15,744
Current & long-term debt 73,565 96,297
Accrued expenses & all other liabilities 18,901 17,206
Shareholders' equity 82,323 76,380
Total liabilities & shareholders' equity $ 198,998 $ 205,627