FinishMaster Announces Year End Financial Results
INDIANAPOLIS--March 3, 2005--FinishMaster, Inc. (PINK SHEETS:FMST) today reported net income for the year ended December 31, 2004 was $13,304,000, or $1.71 per share, compared with net income of $11,852,000, or $1.52 per share, in the prior year period. For the three months ended December 31, 2004, net income was $3,364,000, or $0.43 per share, compared to net income of $2,493,000, or $0.32 per share, in the prior year period.The improvement in net income for the quarter and year compared to the prior year periods was a result of higher net sales and decreased interest expense. A lower effective income tax rate also contributed to the improved financial performance.
-- The increase in net sales for the quarter and year was due to positive same branch sales growth and acquisitions. The increase in same branch sales was attributable to various sales and marketing initiatives designed to increase the Company's competitiveness and market presence. All of the Company's geographical regions realized growth in same branch sales. Acquisitions, principally Automotive Refinish Technologies, also had an impact on the Company's increase in sales.
-- Higher gross margin dollars resulted from increased sales volume, partially offset by a decline in the margin rate. The 90 basis point deterioration in margin rate was a result of higher shipping and handling costs; greater share of overall sales in the lower margin rate fulfillment business; and increased discounts to meet competitive market conditions. Favorable inventory reserve adjustments positively impacted margins for the quarter and year.
-- Total expenses as a percentage of net sales decreased 40 basis points to 23.6 percent for the quarter and to 23.2 percent for the year as a result of expenses increasing at a lower rate than net sales. The increase in overall expense dollars was due to the 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 personnel; increased selling related expenses associated with attracting and retaining customers; and increased bonus expense associated with the Company's improved performance.
-- Lower average outstanding borrowings and annualized effective interest rates resulted in the decrease in interest expense for the year while lower average borrowings was the primary contributor for the decrease in interest expense for the quarter.
-- A lower effective income tax rate resulted from a release of tax reserves associated with tax asset realization.
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 169 branches in 27 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 Year Ended
December 31, December 31,
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2004 2003 2004 2003
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Net sales $ 95,805 $ 87,352 $386,415 $347,012
Gross margin 29,120 27,270 117,508 108,562
Gross margin % 30.4% 31.2% 30.4% 31.3%
Operating and SG&A expenses 22,217 20,568 88,250 80,624
Amortization of
intangible assets 390 389 1,556 1,316
Total expenses 22,607 20,957 89,806 81,940
Income from operations 6,513 6,313 27,702 26,622
Interest expense 1,546 1,598 5,961 6,486
Income tax expense 1,603 2,222 8,437 8,284
Net income $ 3,364 $ 2,493 $ 13,304 $ 11,852
Diluted earnings per share $ 0.43 $ 0.32 $ 1.71 $ 1.52
Diluted weighted average
shares outstanding 7,774 7,748 7,759 7,820
December 31, December 31,
2004 2003
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Cash $ 2,482 $ 2,022
Accounts receivable, net 33,020 30,329
Inventory 60,200 69,710
Goodwill and intangible assets, net 102,455 103,698
Property, equipment & all other assets 23,676 17,257
Total assets $ 221,833 $ 223,016
Accounts payable $ 34,210 $ 44,119
Current & long-term debt 67,114 73,972
Accrued expenses & all other liabilities 18,733 17,027
Shareholders' equity 101,776 87,898
Total liabilities & shareholders' equity $ 221,833 $ 223,016