FinishMaster Announces Third Quarter Financial Results
INDIANAPOLIS--Nov. 4, 2005--FinishMaster, Inc. (Pink Sheets:FMST) today reported net income for the quarter ended September 30, 2005 of $4,303,000, or $0.55 per share (diluted), compared with net income of $3,495,000, or $0.45 per share (diluted), in the prior year period. The improvement in net income for the quarter compared to the prior year period was a result of higher net sales and gross margin rate partially offset by higher operating and SG&A expenses.-- The increase in net sales of 11.2 percent for the quarter was due primarily to positive same branch sales growth. Factors contributing to this growth included improved market conditions, supplier price increases passed through to customers, 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. A 50 basis point improvement in margin rate resulted primarily from price increases.
-- Total expenses as a percentage of net sales decreased 10 basis points to 22.2 percent for the quarter as a result of expenses increasing at a lower rate than net sales. The increase in expense dollars was due to higher salary expenses 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; and an overall increase in expenses related to current and prior year acquisitions.
For the nine months ended September 30, 2005, net income was $11,803,000, or $1.52 per share (diluted), compared to net income of $9,940,000, or $1.28 per share (diluted), in the prior year period. The improvement in net income for the year-to-date period compared to the prior year period was a result of higher net sales and lower interest expense partially offset by higher operating and SG&A expenses.
-- The increase in year-to-date net sales of 9.8 percent resulted from positive same branch sales growth, acquisitions, and growth in the Company's fulfillment business.
-- Higher gross margin dollars resulted from increased sales volume. For the year-to-date period, the 10 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.
-- Total expenses as a percentage of net sales decreased 30 basis points to 22.3 percent for the year-to-date period as a result of expenses increasing at a lower rate than net sales. The increase in expense dollars for the year-to-date period resulted from similar reasons as presented in the above quarterly analysis.
-- Lower interest expense resulted from lower average outstanding borrowings.
Selected Historical Financial Data
(Unaudited)
(000's omitted, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
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2005 2004 2005 2004
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Net sales $109,345 $98,375 $319,094 $290,610
Gross margin 32,647 28,967 95,015 86,756
Gross margin % 29.9% 29.4% 29.8% 29.9%
Operating and SG&A expenses 23,870 21,516 69,845 64,401
Amortization of intangible
assets 404 387 1,171 1,166
Total expenses 24,274 21,903 71,016 65,567
Income from operations 8,373 7,064 23,999 21,189
Interest expense 1,306 1,306 4,065 4,415
Income tax expense 2,764 2,263 8,131 6,834
Net income $4,303 $3,495 $11,803 $9,940
Diluted earnings per share $0.55 $0.45 $1.52 $1.28
Diluted weighted average
shares outstanding 7,809 7,760 7,790 7,757
September 30, December 31,
2005 2004
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Cash $5,669 $2,482
Accounts receivable, net 38,037 33,020
Inventory 60,116 60,200
Goodwill and intangible assets, net 101,946 102,455
Property, equipment & all other assets 27,698 23,676
Total assets $233,466 $221,833
Accounts payable $41,553 $34,210
Current & long-term debt 55,584 67,114
Accrued expenses & all other liabilities 22,430 18,733
Shareholders' equity 113,899 101,776
Total liabilities & shareholders' equity $233,466 $221,833
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 171 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/.