FinishMaster Announces First Quarter Financial Results
INDIANAPOLIS--April 28, 2006--FinishMaster, Inc. (Pink Sheets:FMST) today reported net income for the three months ended March 31, 2006 of $4,331,000, or $0.55 per share (diluted), compared with net income of $3,245,000, or $0.42 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 selling, general & administrative expenses.-- The increase in net sales for the quarter was due primarily to positive same branch sales growth. This was the ninth consecutive quarter the Company has experienced same branch sales growth. Factors contributing to this growth in the first quarter of 2006 included improved market conditions, supplier price increases passed through to customers, and the success of various sales and marketing initiatives. All of the Company's geographical regions realized growth in same branch sales. Acquisitions completed in 2005 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 the margin rate for the quarter was the result of the non-recurrence of a charge in the prior year period related to a customer investment write-off.
-- Total expenses as a percentage of net sales decreased 30 basis points to 22.1 percent for the quarter as a result of expenses increasing at a lower rate than net sales. The increase in expense dollars was due primarily to higher salary expense associated with wage increases, headcount additions, and incentive plan costs; higher health insurance costs; increased commission expense associated with higher sales; and higher IT expenditures related to the Company's investment in new technologies.
-- Lower interest expense resulted from lower average outstanding borrowings. Average outstanding borrowings for the quarter were approximately $15,600,000 lower than the prior year period while the annualized effective interest rate on these borrowings was 35 basis points higher in the current year period.
Selected Historical Financial Data
(000's omitted, except per share data)
Three Months Ended
March 31,
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2006 2005
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Net sales $113,457 $101,532
Gross margin 33,479 29,407
Gross margin % 29.5% 29.0%
Operating and SG&A expenses 24,695 22,322
Amortization of intangible assets 412 387
Total expenses 25,107 22,709
Income from operations 8,372 6,698
Interest expense 1,143 1,403
Income tax expense 2,898 2,050
Net income $4,331 $3,245
Diluted earnings per share $0.55 $0.42
Diluted weighted average shares outstanding 7,816 7,752
March 31, December 31,
2006 2005
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Cash $4,096 $3,821
Accounts receivable, net 40,649 38,353
Inventories 55,602 52,045
Goodwill and intangible assets, net 101,834 101,978
Property, equipment & all other assets 35,050 35,575
Total assets $237,231 $231,772
Accounts payable $32,865 $37,204
Current & long-term debt 59,361 54,575
Accrued expenses & all other liabilities 22,735 22,055
Shareholders' equity 122,270 117,938
Total liabilities & shareholders' equity $237,231 $231,772
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 170 branches in 39 of the 50 largest metropolitan areas in the country. For more information on FinishMaster via the Internet, visit FinishMaster's website at http://www.finishmaster.com/.