FinishMaster Announces Third Quarter Financial Results
INDIANAPOLIS--Nov. 3, 2004--FinishMaster, Inc. (Pink Sheets:FMST) today reported that net income for the third quarter of 2004 was $3,495,000, or $0.45 per share, compared with net income of $3,615,000, or $0.47 per share, in the prior year period. The decrease in net income for the quarter compared to the prior year period resulted primarily from total expenses increasing at 13.2 percent while gross margin dollars increased at 8.6 percent.-- The increase in net sales for the quarter was due to positive same branch sales growth and acquisitions. The increase in same branch sales was attributable to the implementation of various sales and marketing initiatives designed to increase the Company's competitiveness and market presence. This same branch sales growth was accomplished despite a weakness in sales in our Florida region during the several weeks following severe weather in this area. Three acquisitions over the last year also had a significant impact on the Company's current quarter increase in sales.
-- Higher gross margin dollars resulted from increased sales volume, partially offset by a decline in the margin rate. The deterioration in margin rate was a result of increased discounts to attract and retain customers and the lower margin-rate fulfillment business representing a greater share of our overall sales in the current versus the prior year quarter.
-- Total expenses as a percentage of net sales increased 60 basis points to 22.8 percent in the third quarter as a result of expenses increasing at a higher rate than net sales. The increase in overall expense dollars was due to the selling and operating expenses associated with the ten branch locations acquired in the prior year from Automotive Refinish Technologies; higher wages and benefits associated with the Company's initiative to increase sales by expanding its sales force; higher health insurance costs; and increased selling related expenses associated with attracting and retaining customers.
-- Lower average outstanding borrowings and annualized effective interest rates resulted in the decrease in interest expense.
For the nine months ended September 30, 2004, net income was $9,940,000, or $1.28 per share, compared to net income of $9,359,000, or $1.19 per share, in the prior year period. The increase in net income for the year-to-date period compared to the prior year resulted from higher net sales and corresponding gross margin dollars, lower total expenses as a percentage of net sales, and lower interest expense.
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 four major distribution centers and 168 branches in 28 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 Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Net sales $ 98,375 $ 89,243 $290,610 $ 259,660
Gross margin 29,507 27,161 88,388 81,292
Gross margin % 30.0% 30.4% 30.4% 31.3%
Operating and SG&A expenses 22,056 19,497 66,033 60,056
Amortization of intangible
assets 387 331 1,166 927
Total expenses 22,443 19,828 67,199 60,983
Income from operations 7,064 7,333 21,189 20,309
Interest expense 1,306 1,562 4,415 4,888
Income tax expense 2,263 2,156 6,834 6,062
Net income $ 3,495 $ 3,615 $ 9,940 $ 9,359
Diluted earnings per share $ 0.45 $ 0.47 $ 1.28 $ 1.19
Diluted weighted average
shares outstanding 7,760 7,761 7,757 7,844
September 30, December 31,
2004 2003
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Cash $ 7,701 $ 2,022
Accounts receivable, net 34,130 30,329
Inventory 55,557 69,710
Goodwill and intangible assets, net 102,679 103,698
Property, equipment & all other assets 22,979 17,257
Total assets $ 223,046 $ 223,016
Accounts payable $ 27,182 $ 44,119
Current & long-term debt 78,681 73,972
Accrued expenses & all other liabilities 18,909 17,027
Shareholders' equity 98,274 87,898
Total liabilities & shareholders'
equity $ 223,046 $ 223,016