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FinishMaster Announces Year-End Financial Results

Posted by Dana in March 8th 2010

FinishMaster, Inc. (Pink Sheets: FMST) reported net income for the quarter ended December 31, 2009 of $1,646,000, or $0.21 per diluted share, compared with net income of $1,672,000, or $0.21 per diluted share, in the prior year period. For the twelve months ended December 31, 2009, net income was $10,946,000, or $1.39 per diluted share, compared to net income of $18,060,000, or $2.29 per diluted share, in the prior year. Affecting the comparability of the Company’s financial performance for the year and favorably impacting 2008 results by $0.39 per diluted share was the receipt of $5,224,000 in proceeds from the settlement of a lawsuit. After considering the impact of this item, comparable net income for the year declined from $1.90 per diluted share in 2008 to $1.39 per diluted share in 2009.

Net sales decreased 10.3% to $97,007,000 for the quarter and 13.3% to $421,391,000 for the year due to a decline in same branch sales. Lower repairable automobile claim activity throughout the United States impacted the Company’s overall market opportunity for the sale of its products and services. The sales decline was greater in the Company’s industrial and fulfillment businesses relative to its traditional business with collision repair centers.

For the quarter and year, gross margin dollars decreased by 12.9% to $28,606,000 and 14.6% to $126,555,000, respectively, due primarily to lower sales volume. The decrease in margin rate of 80 basis points for the quarter and 50 basis points for the year resulted from fewer price increases in 2009, increased discounting to attract and retain customers, and lower vendor growth incentives.

Total expenses as a percentage of net sales decreased 60 basis points to 26.2% for the quarter as a result of expenses decreasing at a faster rate than net sales. For the year, total expenses as a percentage of net sales increased 60 basis points to 25.2%. Despite the challenging operating environment, the Company was able to effectively reduce expenses by $3,546,000 for the quarter and $13,396,000 for the year through an expense reduction plan. Higher bad debt expense for the year partially offset these lower expenses.