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Letter to the Editor
Monday May 9
FinishMaster Announces Q1 Net Sales Up 7%
FinishMaster, Inc. has reported net income for the quarter ended March 31, 2005 was $3,245,000, or $0.42 per share, compared with net income of $3,282,000, or $0.42 per share, in the prior year period. The minor change in net income for the quarter compared to the prior year period was a result of higher net sales and decreased interest expense offset by higher expenses.The 7.1 percent increase in net sales for the quarter was due primarily to positive same branch sales growth. Growth in same branch sales was realized in all of the company's geographical regions for its traditional business. Acquisitions and growth in the company's fulfillment business also had an impact on the increase in sales.
Higher gross margin dollars resulted from increased sales volume, partially offset by a decline in the margin rate. The 110 basis point deterioration in margin rate was a result of higher product costs; increased customer discounts to meet competitive market conditions; a one-time charge related to the write-off of a customer investment; and lower prompt payment discounts associated with working capital improvements. Lower shipping and handling costs positively impacted margins for the quarter.
Total expenses as a percentage of net sales decreased 40 basis points to 22.4 percent for the quarter as a result of expenses increasing at a lower rate than net sales. The increase in expenses was due to higher salary expense and increased bad debt expense.
FinishMaster is a 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 169 branches in 27 of the 35 largest metropolitan areas in the country.
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