EXETER, Pa. — Keystone Automotive Operations, Inc., a North American distributor and marketer of automotive aftermarket accessories and equipment, has announced financial results for the fourth quarter and fiscal year ended Dec. 29, 2007.
Net sales for the fourth quarter were $141.7 million, an increase of $3 million, or 2.1 percent, compared to $138.7 million for the fourth quarter of the prior fiscal year. The sales increase was driven by an increased focus on customer service and inventory availability, and was achieved despite continued conservative consumer spending on discretionary items.
Gross profit for the fourth quarter was $43.7 million versus $42.3 million for the same period in the prior year, an increase of $1.4 million, or 3.2 percent. Gross margin, as a percentage of sales, increased to 30.8 percent for the fourth quarter from 30.5 percent for the fourth quarter of the prior fiscal year.
Operating income for the fourth quarter was a loss of $8.2 million, compared to a profit of $0.4 million for the same period a year ago, driven primarily by a $9.6 million impairment charge related to the goodwill assigned to the company’s retail segment. The company recorded a net loss of $16.4 million in the fourth quarter, versus a loss of $4.3 million for the fourth quarter of fiscal 2006.
For the fiscal year ended Dec. 29, 2007, sales were $614.9 million, a decrease of $3.8 million, or 0.6 percent, compared to $618.7 million in the prior fiscal year. The year-over-year revenue decline was driven primarily by customer attrition following the integration of Reliable Automotive, acquired in late 2005. Despite the decline in full year revenue, the company experienced sales growth in each of the last three quarters of 2007.
Gross profit for fiscal year 2007 was $187.7 million, an $8.9 million, or 4.6 percent, decrease from the prior fiscal year’s $196.6 million. Gross margin decreased to 30.5 percent from 31.8 percent in the prior fiscal year, driven by lower product selling margins resulting from competitive pressures in the marketplace, primarily during the first three quarters of the 2007 fiscal year, and a $3.4 million charge for obsolete inventory.
Operating income for the 2007 fiscal year was $10 million, a decrease of $23.4 million, compared to $33.4 million in the prior year period. In addition to the lower selling margins and obsolete inventory charge noted above, the decrease in operating income was driven by the $9.6 million goodwill impairment charge previously mentioned as well as investments made to improve and expand existing service/distribution capabilities, including the full year cost of a new distribution center in the southeastern United States and a new cross-dock in Arizona.
The company recorded a net loss of $27.1 million for the fiscal year, versus a net loss of $0.1 million in the prior fiscal year. In addition to the decrease in operating income cited above and moderately higher net interest expense, the full year results were further impacted by a $6.1 million write-off of deferred financing costs associated with the company’s January 2007 refinancing. For the 2007 fiscal year, net cash provided by operating activities improved to $21.3 million, compared to a use of $9.9 million dollars for the prior fiscal year. Cash at Dec. 29, 2007, grew by $7.2 million to $9.9 million, compared to the 2006 year end balance of $2.7 million.
“We made a tremendous amount of progress over the course of fiscal 2007 as evidenced by three consecutive quarters of sales increases and the improvements we saw in gross margins over the last half of the year,” said Ed Orzetti, chief executive officer of Keystone Automotive Operations. “Despite the challenging operational environment, we believe we are gaining market share due in large part to our investments in the business. Additionally, our external relationships are much stronger today than a year ago because we have focused on improving the way we do business so that we are the right partner for both our customers and our vendors.”
For more information about Keystone Automotive Operations, go to: www.ekeystone.com.