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Letter to the Editor
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This article originally appeared in the August 2003 Issue of INSIGHT

Drifting Upstream in the Summertime

While it does not seem possible, the Market does appear to be drifting upstream.

The Dow has recovered much of its early year gains and our collision repair related stocks have on balance shown some reasonable growth.

Major news this month is FinishMaster's decision to remove its stock from the NASDAQ exchange through delisting by filing form 15.

FinishMaster stock has been closely held with its principles, through their holdings, owning 71 percent of the common stock.

While delisting on the NASDAQ, the stock will be traded on the over-the-counter market.

FinishMaster will no longer have to prepare 10Qs or 10Ks for the SEC, thus both saving money and no longer having to share financial data with either competitors or suppliers.

FinishMaster has had four primary suppliers - DuPont, BASF, PPG, and 3M. However, in most recent periods, it would appear that DuPont is number one, followed by PPG and BASF.

Reflecting the state of the industry, FinishMaster same store sales for the last fiscal year were down approximately three percent. Not bad when you consider that our industry in total was down between six and eight percent, with some areas of the country down well over ten percent.

While the economy does seem to be recovering, our industry still seems to be in a recession with 57 percent of our TrendLine shop respondents showing a decrease in business. However, the east coast and the plains were up eight and ten percent respectively.

July and August historically are slow months for collision repair and this year is proving to be no exception, with parts sales reported to be off as well as sale of refinish materials.

Looking at our stock chart on a year-to-date basis, the only major supplier having an increase in stock value over last year is BASF, and I am quite confident that automotive refinish is quite a small factor in BASF's overall sales.

If our Collision Repair Industry stocks are drifting upstream with the rest of the Market, it looks as though our insurers have motorboats on the river. Progressive’s price per share of stock is up almost 50 percent from January 1. Allstate, although up only a hair, reported a net income of $588 million, for the Second Quarter, a 75 percent increase in net income EPS, and a 33 percent increase in operating income EPS. Travelers reported net income up 33 percent in the last quarter.

-Charles Baker-



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