Keystone Automotive Operations, Inc. Reports Third Quarter 2007 Results
EXETER, Pa., Nov. 13, 2007 -- Keystone Automotive Operations, Inc., the leading distributor and marketer of specialty automotive equipment and accessories in North America, today announced financial results for the third quarter ended September 29, 2007. Highlights include:
-- Net sales for the quarter ended September 29, 2007 were $154.3 million,
an increase of $1.8 million, or 1.2%, compared to $152.5 million for
the same period in the prior year. The sales increase was driven by
increased focus on customer service and greater inventory availability,
and was achieved in spite of continued conservative consumer spending
on discretionary items driven by higher gasoline prices as well as
general economic uncertainty.
-- Gross profit for the quarter ended September 29, 2007 was $46.5 million
versus $49.6 million in the same period in the prior year, a decrease
of $3.1 million or 6.3%. Gross margin declined to 30.1% in the quarter
ended September 29, 2007 from 32.5% in the prior year, driven by lower
product selling margins resulting from continued competitive pressures
in the marketplace and a $2.6 million charge in the quarter for
obsolete inventory. The charge for obsolete inventory was the result
of excess inventory from acquisition activity, the discontinuance of
certain parts by specific vendors, and the discontinuance of certain
vendors by the Company. Adjusting for the inventory charge, gross
margin for the quarter would have been 31.8% or a decline of
approximately 70 basis points compared to the same period in the prior
year.
-- Operating income for the quarter ended September 29, 2007 was $5.5
million, a decrease of $5.4 million, compared to $10.9 million for the
same period in the prior year. The decline was primarily due to the
decrease in gross profit noted above and an increase in operating
expenses driven by strategic investments designed to support future
growth.
-- The Company recorded a net loss of $3.0 million in the quarter ended
September 29, 2007 versus net income of $1.0 million in the same period
in the prior year. In addition to the decreases in gross profit and
operating income cited above, higher net interest expense also
negatively impacted our net income in the year over year comparison.
"We are pleased to report another quarter of positive sales momentum, which we believe was driven by the important investments we have made in the business over the last year and a half," said Ed Orzetti, Chief Executive Officer of Keystone Automotive Operations. "While general economic conditions remain somewhat uncertain, we believe that we have continued to gain market share in a tough economic environment by further penetrating our existing customers and delivering improved levels of service by providing a wide assortment of inventory and timely delivery availability. Customer and vendor feedback has been positive; in fact, at the industry's annual Specialty Equipment Market Association trade show two weeks ago Keystone was awarded Warehouse Distributor of the year, an honor of which we are incredibly proud."
Summary Financials (Unaudited)
Summary Income Statement
($ in millions)
Three Months Ended Three Months Ended
September 30, 2006 September 29, 2007
Net sales $152.5 $154.3
Gross profit 49.6 46.5
Operating income 10.9 5.5
Net income (loss) $1.0 ($3.0)
Summary Balance Sheet
($ in millions)
As of As of
December 30, 2006 September 29, 2007
Assets
Current assets $194.5 $216.8
Property, plant and equipment, net 52.4 49.8
Other non-current assets 441.6 430.7
Total Assets $688.5 $697.3
Liabilities and Stockholder's Equity
Current liabilities $64.6 $84.2
Long-term debt 372.9 371.5
Other long-term liabilities 63.3 62.7
Total Liabilities 500.8 518.4
Stockholder's Equity 187.7 178.9
Total Liabilities and Stockholder's Equity $688.5 $697.3
Conference Call Details
Keystone will hold a live conference call to discuss third quarter 2007 financial results on November 14, 2007 at 11:00 a.m. EST. To participate, please dial in to the conference call at (866) 600-0797, access code 22692011. The conference call topic is Keystone Automotive Operations, Inc. Third Quarter Earnings Conference Call.
A telephone replay of the call will be available from 12:00 p.m. EST on November 14, until 11:59 p.m. EST on November 21, 2007. The replay of the call may be accessed by dialing (800) 642-1687, access code 22692011.
About Keystone Automotive Operations
Keystone Automotive Operations, Inc. (www.ekeystone.com) is the leading distributor and marketer of specialty automotive equipment and accessories in North America, providing product lines to approximately 23,500 wholesale customers. The Company operates four distribution centers and 20 non- inventory stocking cross-docks in the U.S. and Canada, as well as a fleet of approximately 360 trucks that provide multi-day per week delivery and returns covering 42 states and parts of Canada.
Safe Harbor for Forward-Looking and Cautionary Statements
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including but not limited to: incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; technological changes; the Company's dependence upon third-party suppliers; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.