FinishMaster Announces First Quarter Financial Results

Economic conditions throughout the United States continued to result in lower repairable automobile claim activity, impacting the Company's overall market opportunity for the sale of its products and services. In response to the current market conditions, the Company continues to reduce expense levels and net working capital, and remain focused on longer-term growth strategies. Cost reductions have been achieved through various initiatives including headcount reductions, reduced work hours, company-wide wage freeze, branch consolidations and heightened control over all discretionary spending.

2009 Reported Quarterly Results

For the first quarter of 2009, net sales decreased 12.1% to $110,760,000 due entirely to a same branch sales decline. All geographic sales regions of the Company experienced a decline in same branch sales.

Gross margin dollars decreased 11.4% for the quarter due to lower sales volume, partially offset by higher margin rate. The margin rate increased 20 basis points to 30.0% as a result of the timing of vendor price increases passed through to customers.

Total expenses as a percentage of net sales increased 110 basis points to 25.6% for the quarter as a result of expenses decreasing at a slower rate than net sales. Total expenses decreased $2,516,000 or 8.1% as a result of lower wages associated with reduced headcount, lower incentive plan costs related to reduced Company profitability, lower commission expense due to reduced sales, and lower intangible amortization. Higher bad debt expenses partially offset these lower expenses.

Reduced interest expense for the quarter resulted from lower annualized effective interest rates and average outstanding borrowings.

Lower income tax expense for the quarter was due primarily to lower pre-tax earnings. The Company's effective tax rate for the quarter was 40.4% compared to 40.6% in the prior year period.

Inventory and accounts payable levels have decreased from the prior year-end as management brings net working capital in line with historical levels.

Selected Historical Financial Data
(000's omitted, except per
share data)
                                              Three Months Ended
                                              March 31,
                                              2009              2008
Net sales                                     $   110,760       $   125,942
Gross margin                                      33,192            37,481
Gross margin %                                    30.0    %         29.8    %
Operating and SG&A expenses                       27,457            29,659
Amortization of intangible assets                 926               1,240
Total expenses                                    28,383            30,899
Income from operations                            4,809             6,582
Other income                                      -                 5,224
Interest expense                                  675               1,115
Income tax expense                                1,672             4,344
Net income                                    $   2,462         $   6,347
Diluted earnings per share                    $   0.31          $   0.80
Diluted weighted average shares outstanding       7,886             7,888

                                           March 31,      December 31,
                                           2009           2008
Cash                                       $    3,289     $      2,461
Accounts receivable, net                        40,354           39,969
Inventories                                     89,824           111,723
Goodwill and intangible assets, net             116,363          117,304
Property, equipment & all other assets          43,878           45,903
Total assets                               $    293,708   $      317,360
Accounts payable                           $    52,254    $      67,135
Current & long-term debt                        69,982           82,036
Accrued expenses & all other liabilities        26,484           25,697
Shareholders' equity                            144,988          142,492
Total liabilities & shareholders' equity   $    293,708   $      317,360

                                  Three Months Ended
                                  March 31,
                                  2009            2008
Net cash provided by (used in):
Operating activities              $  13,808       $  8,366
Investing activities                 (675    )       (1,832 )
Financing activities                 (12,305 )       (5,375 )
Increase in cash                  $  828          $  1,159
Cash at beginning of period       $  2,461        $  4,230
Cash at end of period             $  3,289        $  5,389

FinishMaster is the largest 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/.

SOURCE: FinishMaster, Inc.

FinishMaster, Inc. 
Robert R. Millard, 317-263-5200