FinishMaster Reports Second-Quarter Results
29 July 1998
FinishMaster Reports Second-Quarter Results Highlighted by Two-Fold Increase in Net Sales, Operating Income, EBITDA
INDIANAPOLIS--July 29, 1998--FinishMaster, Inc. today announced record sales and operating profitability in the second quarter ended June 30, 1998, as the Company continues to effectively assimilate its acquisition of Thompson PBE.The national distributor of automotive paints and related accessories reported a 147% increase in net sales to $76.8 million in the 1998 second quarter, compared with net sales of $31.0 million in the same period in 1997. Operating income increased to $4.1 million in the current quarter, versus $2.0 million in the prior year second quarter. In addition, EBITDA (earnings before interest, taxes, depreciation and amortization) grew to $6.3 million in the second quarter of 1998, compared with EBITDA of $3.0 million in the same period in 1997. FinishMaster said sales increases, its cost management efforts and synergies related to the consolidation of Thompson drove the operating income and EBITDA gains.
FinishMaster's net income in the most recent second quarter was $699,000, or $0.12 per share, compared with $1.0 million, or $0.17 per share, in the same period last year. The Company attributed the net income decline to increased intangible amortization and interest expense related to its acquisition of Thompson PBE. FinishMaster's interest expense increased $2.3 million in the 1998 second quarter compared with the prior year period. FinishMaster's historical 1997 results do not include the results of Thompson PBE.
"We are pleased with FinishMaster's performance in the second quarter as we continue to work through our consolidation plan and seek opportunities to capitalize on the efficiencies available to us as a larger, national player," said Thomas U. Young, president and chief operating officer of FinishMaster. "These efforts were evidenced by our strong improvement in operating income in the quarter and our ability to continually lower expenses."
FinishMaster continued its cost control efforts in the second quarter, reducing total operating expenses as a percentage of sales to 29.9%, compared with 30.4% in the first quarter of 1998 and 30.8% in the prior year second quarter. FinishMaster's gross margin percentage for the second quarter of 1998 was 35.2%, compared with 37.3% for the second quarter of 1997. The decrease was due to lower margins at Thompson primarily related to their sale of higher cost inventories.
For the six months ended June 30, 1998, FinishMaster's results were highlighted by a 150% increase in operating income on a 153% increase in net sales. In addition, EBITDA more than doubled to $12.6 million in the 1998 six-month period, compared with EBITDA of $5.2 million in the same period in 1997.
For the 1998 six-month period, FinishMaster reported net income of $1.2 million, or $0.21 per share, on net sales of $152.8 million, versus net income of $1.4 million, or $0.24 per share, on net sales of $60.3 million in the first six months of 1997. The decline in net income reflects increased intangible amortization and a $4.6 million increase in interest expense related to FinishMaster's acquisition of Thompson PBE.
"While our historical results portray key improvements, we believe FinishMaster's progress is best illustrated when comparing our year-over-year results inclusive of our acquisitions," said Young. "We have made great strides over the past six months since acquiring Thompson, and we see this trend continuing again with our acquisition of LDI AutoPaints."
FinishMaster shareholders approved the acquisition of Florida auto paint distributor LDI AutoPaints, Inc. on June 30, 1998, bolstering FinishMaster's already well-established Southeastern presence. Assuming the acquisitions of Thompson PBE and LDI AutoPaints, Inc. occurred as of January 1, 1997, the Company would have reported pro forma net income of $846,000, or $0.11 per share, on net sales of $82.8 million for the three months ended June 30, 1998, compared with a net loss of $2.3 million, or $0.31 per share, on net sales of $89.0 million for the same period in 1997.
For the six months ended June 30, 1998, FinishMaster's pro forma results would have included net income of $1.7 million, or $0.23 per share, on net sales of $164.5 million, versus a net loss of $2.9 million, or $0.39 per share, on net sales of $175.4 million in the same six-month period in 1997.
"FinishMaster's improvements in profitability on a pro forma basis when combining Thompson and LDI AutoPaints, despite lower sales and soft market conditions in the paint distribution business, give a true indication of the potential of these acquisitions," FinishMaster Chairman and CEO Andre Lacy said. "Our pro forma results also confirm the management team's ability to follow through on our commitment to make these investments key contributors to shareholder value. We remain optimistic about what the future holds for the consolidated FinishMaster operation."
FinishMaster is the leading national distributor of automotive paints, coatings, and related accessories to the automotive collision repair industry. The Company and its wholly owned subsidiaries, Thompson PBE and LDI AutoPaints, have a combined 153 sales outlets and three distribution centers in 22 states, including stores in 25 of the 35 largest metropolitan areas in the country.
EBITDA represents income (loss) before interest, taxes, charge in connection with the sale, consolidation or closure of certain sites, depreciation and amortization. EBITDA is included because management understands that such information is considered to be an additional basis on which to evaluate the Company's ability to pay interest, repay debt and provide funds for acquisitions and growth. EBITDA is not intended to represent and should not be considered more meaningful than, or an alternative to, measures of operating performance as determined in accordance with generally accepted accounting principles.
This press release contains forward-looking statements pertaining to, among other things, the Company's future results of operations, cash flows and liquidity, operating efficiencies and acquisitions. Those statements are based largely on the Company's current expectations and are subject to a number of risks and uncertainties, including, among other things, the Company's ability to rapidly and successfully integrate its acquired operations. Actual results may differ. Additional information concerning factors that could cause results to differ is contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1998.
HISTORICAL
FINISHMASTER, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
_____________________ _____________________
6/30/98 6/30/97 6/30/98 6/30/97
_____________________ _____________________
(in thousands, except (in thousands, except
per share data) per share data)
NET SALES $ 76,758 $ 31,034 $152,782 $60,273
COST OF SALES 49,731 19,462 98,810 38,072
____________________ ___________________
GROSS MARGIN 27,027 11,572 53,972 22,201
EXPENSES
Operating 11,529 4,593 23,243 9,258
Selling, general and
administrative 9,240 3,942 18,178 7,744
Depreciation 580 284 1,500 562
Amortization 1,602 742 3,176 1,482
___________________ __________________
TOTAL EXPENSES 22,951 9,561 46,097 19,046
___________________ __________________
INCOME FROM OPERATIONS 4,076 2,011 7,875 3,155
Interest Expense, net 2,747 411 5,539 899
INCOME BEFORE INCOME
TAXES 1,329 1,600 2,336 2,256
Income tax expense 630 595 1,109 846
___________________ __________________
NET INCOME $ 699 $ 1,005 $ 1,227 $ 1,410
___________________ __________________
___________________ __________________
NET INCOME PER SHARE $ 0.12 $ 0.17 $ 0.21 $ 0.24
___________________ __________________
___________________ __________________
WEIGHTED AVERAGE NUMBER
OF SHARES OF COMMON
STOCK OUTSTANDING 5,993 5,993 5,993 5,993
___________________ __________________
___________________ __________________
EBITDA 6,258 3,037 12,551 5,199
PRO FORMA
FINISHMASTER, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
______________________ _____________________
6/30/98 6/30/97 6/30/98 6/30/97
______________________ _____________________
(in thousands, except (in thousands,except
per share data) per share data)
NET SALES $ 82,803 $ 89,007 $164,546 $175,363
COST OF SALES 53,620 56,715 106,053 112,564
___________________ __________________
GROSS MARGIN 29,183 32,292 58,493 62,799
EXPENSES
Operating 11,740 13,075 23,657 26,457
Selling, general and
administrative 10,548 11,546 20,738 23,055
Depreciation 697 911 1,732 1,749
Amortization 1,862 1,844 3,696 3,659
___________________ __________________
TOTAL EXPENSES 24,847 27,376 49,823 54,920
___________________ __________________
INCOME FROM OPERATIONS 4,336 4,916 8,670 7,879
Interest Expense, net 2,760 3,257 5,568 6,828
Charge in connection
with the sale,
consolidation or
closure of certain
sites -- 3,616 -- 3,616
___________________ __________________
2,760 6,873 5,568 10,444
INCOME (LOSS) BEFORE
INCOME TAXES 1,576 (1,957) 3,102 (2,565)
Income tax expense 730 390 1,404 366
___________________ __________________
NET INCOME (LOSS) $ 846 $ (2,347) $ 1,698 $ (2,931)
___________________ __________________
___________________ __________________
NET INCOME (LOSS)
PER SHARE $ 0.11 $ (0.31) $ 0.23 $ (0.39)
___________________ __________________
___________________ __________________
WEIGHTED AVERAGE NUMBER
OF SHARES OF COMMON
STOCK OUTSTANDING 7,535 7,535 7,535 7,535
___________________ __________________
___________________ __________________
EBITDA 6,895 7,671 14,098 13,287
FINISHMASTER, INC.
SELECTED BALANCE SHEET HIGHLIGHTS
June 30, December 31,
1998 1997
(unaudited)
______________________________
(in thousands)
(unaudited)
CURRENT ASSETS $ 89,884 $ 90,444
PROPERTY AND EQUIPMENT 10,811 10,296
INTANGIBLE AND OTHER
ASSETS 119,941 114,678
________ ________
TOTAL ASSETS $220,636 $215,418
________ ________
________ ________
CURRENT LIABILITIES $ 44,598 $ 48,351
LONG-TERM OBLIGATIONS,
NET 127,458 $134,135
STOCKHOLDERS' EQUITY 48,580 32,932
________ ________
LIABILITIES AND
STOCKHOLDERS' EQUITY $220,636 $215,418
________ ________
________ ________
For more information on FinishMaster via the Internet, visit our Corporate News on the Net page at http://www.businesswire.com/cnn/fmst.htm or via fax through our NewsOnDemand service, call 800/411-3989.