FinishMaster Announces Second Quarter Financial Results
INDIANAPOLIS--Aug. 1, 20051, 2005--FinishMaster, Inc. (Pink Sheets:FMST) today reported net income for the quarter ended June 30, 2005 of $4,255,000, or $0.54 per share, compared with net income of $3,163,000, or $0.41 per share, in the prior year period. For the six months ended June 30, 2005, net income was $7,500,000, or $0.96 per share, compared to net income of $6,445,000, or $0.83 per share, in the prior year period. The improvement in net income for the quarter and year-to-date compared to the prior year periods was a result of higher net sales and decreased interest expense partially offset by higher operating and SG&A expenses.-- The increase in net sales of 11.0 percent and 9.1 percent for the quarter and six month period, respectively, was due primarily to positive same branch sales growth. Growth in same branch sales was realized in all of the Company's geographical regions for its traditional business. Factors contributing to this growth included improved market conditions, price increases earlier in the year compared to the prior year, and the success of various sales and marketing initiatives. Acquisitions and growth in the Company's fulfillment business also had an impact on the Company's increase in sales.
-- Higher gross margin dollars resulted primarily from increased sales volume. For the quarter, a 50 basis point improvement in margin rate as a result of price increases and lower inventory reserve requirements also contributed to higher gross margin dollars. For the year-to-date period, the 40 basis point deterioration in margin rate resulted from increased customer discounts to meet competitive market conditions and a one-time charge related to the write-off of a customer investment, partially offset by price increases and lower inventory reserve requirements.
-- Total expenses as a percentage of net sales decreased 50 basis points to 22.2 percent and 40 basis points to 22.3 percent for the quarter and six month period, respectively, as a result of expenses increasing at a lower rate than net sales. The increase in expenses was due to higher salary expense associated with the Company's initiative to increase the number of sales personnel and overall wage increases; increased commission expense associated with higher sales; higher IT expenditures related to the Company's investment in new technologies; higher bad debt expenses; and an overall increase in expenses related to current and prior year acquisitions.
-- Lower average outstanding borrowings was the primary contributor to the decrease in interest expense for the quarter and six month period.
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 173 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
(Unaudited)
(000's omitted, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
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2005 2004 2005 2004
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Net sales $108,217 $ 97,469 $209,749 $ 192,235
Gross margin 32,961 29,271 62,368 57,789
Gross margin % 30.5% 30.0% 29.7% 30.1%
Operating and SG&A expenses 23,653 21,711 45,975 42,885
Amortization of intangible
assets 380 388 767 779
Total expenses 24,033 22,099 46,742 43,664
Income from operations 8,928 7,172 15,626 14,125
Interest expense 1,356 1,564 2,759 3,109
Income tax expense 3,317 2,445 5,367 4,571
Net income $ 4,255 $ 3,163 $ 7,500 $ 6,445
Diluted earnings per share $ 0.54 $ 0.41 $ 0.96 $ 0.83
Diluted weighted average
shares outstanding 7,808 7,753 7,781 7,756
June 30, December 31,
2005 2004
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Cash $ 4,632 $ 2,482
Accounts receivable, net 38,216 33,020
Inventory 62,203 60,200
Goodwill and intangible assets, net 102,009 102,455
Property, equipment & all other assets 26,393 23,676
Total assets $ 233,453 $ 221,833
Accounts payable $ 41,721 $ 34,210
Current & long-term debt 59,778 67,114
Accrued expenses & all other liabilities 22,402 18,733
Shareholders' equity 109,552 101,776
Total liabilities & shareholders' equity $ 233,453 $ 221,833