FinishMaster Announces Third Quarter Financial Results

INDIANAPOLIS — FinishMaster, Inc. (Pink Sheets: FMST) today reported net income for the quarter ended September 30, 2009 of $2,996,000, or $0.38 per diluted share, compared with net income of $4,754,000, or $0.60 per diluted share, in the prior year period. For the nine months ended September 30, 2009, net income was $9,300,000, or $1.18 per diluted share, compared to net income of $16,388,000, or $2.08 per diluted share, in the prior year period. Affecting the comparability of the Company’s year-to-date financial performance and favorably impacting 2008 results by $0.40 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 year-to-date net income declined from $1.68 per diluted share in 2008 to $1.18 per diluted share in 2009.

Net sales decreased 14.6% to $105,004,000 for the quarter and 14.1% to $324,384,000 for the year-to-date period 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-to-date period, gross margin dollars decreased by 14.0% to $31,515,000 and 15.1% to $97,949,000, respectively, due primarily to lower sales volume.

Total expenses as a percentage of net sales increased 170 basis points to 24.6% for the quarter and 90 basis points to 24.8% for the year-to-date period as a result of expenses decreasing at a slower rate than net sales. Despite the challenging operating environment, the Company was able to effectively reduce expenses by $2,366,000 for the quarter and $9,850,000 for the year-to-date period through an expense reduction plan. Higher bad debt expenses for the year-to-date period and increased intangible amortization for the quarter partially offset these lower expenses. Intangible amortization was lower than normal in the prior year quarter due to a favorable purchase accounting adjustment.

Reduced interest expense for the quarter and year-to-date period resulted from lower annualized effective interest rates and average outstanding borrowings.

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 167 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/.