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Letter to the Editor
Tuesday May 29
Keystone Automotive Industries Reports Record Fiscal 2007 Year-End Results
Keystone Automotive Industries, Inc. has reported record earnings and sales for its fiscal 2007 fourth quarter and year ended March 30, 2007, supported by continued market share growth for quality alternative automotive replacement parts.Net income for the fiscal fourth quarter climbed 51.1 percent to $11.4 million, or $0.69 per diluted share, from $7.6 million, or $0.46 per diluted share, a year ago. Net income for the fiscal 2007 fourth quarter included one-time gains of approximately $886,000, or $0.05 per diluted share, related to insurance recoveries for prior-year property loss claims and the company's portion of an antitrust lawsuit settlement concerning automotive refinishing paint pricing between January 1, 1993 and December 31, 2000. Operating income increased 33.6 percent to $17.1 million from $12.8 million a year ago. Operating margin was 8.5 percent compared with 7.1 percent a year earlier. Net sales for the fiscal fourth quarter climbed 11.3 percent to $200.2 million from $179.9 million last year. Same store sales growth for the fourth quarter was 11.2 percent.
Net income for the full fiscal year climbed 36.2 percent to $30.3 million, or $1.84 per diluted share, from $22.3 million, or $1.38 per diluted share, a year ago. Operating income for the same period increased 33.9 percent to $47.6 million from $35.6 million a year ago, with operating margin 6.7 percent compared with 5.7 percent a year ago. Net sales for fiscal 2007 climbed 13.6 percent to $714.0 million from $628.3 million last year. Same store sales growth for the full fiscal year was 11.1 percent.
Gross margin for the fiscal fourth quarter was 45.2 percent compared with 45.6 percent last year. For the full fiscal year, gross margin was 44.6 percent compared with 44.9 percent. The company is continuing initiatives to enhance its in-stock availability of parts across the company's network through the implementation of a cross-dock logistics strategy. As a result of this strategic initiative, certain operating expenses have been shifted from selling and distribution costs on the income statement to cost of sales.
"The company's record financial performance for fiscal 2007 highlights the benefits of ongoing organizational and strategic initiatives our team is implementing to improve parts availability throughout the country," said Rick Keister, president and chief executive officer.
He noted that the company's start-up bumper remanufacturing operation in Mexico is proceeding on schedule, with an overall negative after-tax impact of approximately $128,000 for the quarter and $799,000 for the full-year.
Keister indicated that lights, bumpers, and crash parts contributed more than 69.0 percent of total sales for the fiscal year, with light sales climbing 21.6 percent, bumpers 13.9 percent and crash parts 14.2 percent compared with the prior year.
He noted that the continuing International Trade Commission investigation with respect to the importation and sale of certain aftermarket collision replacement parts for the Ford Motor Company's F-150 truck is progressing. Recent developments include a previously announced decision by the International Trade Commission to extend the target date to June 6, 2007 from May 4, 2007 for its decision on remedy, bonding, and the public interest. The Commission took this action to consider a motion from Keystone and the other respondents to review the initial determination of the administrative law judge in the investigation. The Commission's action was taken in light of a recent United States Supreme Court decision, KSR International Co. v. Teleflex Inc., which addressed claims of obviousness in patent law and which may have potential implications relative to the Ford ITC matter.
He noted that fiscal fourth quarter results were not significantly impacted by legal fees associated with the ongoing legal dispute discussed above. However, full-year results included approximately $1.3 million in additional legal fees, primarily due to costs associated with the ITC case.
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