EXETER, PA — Keystone Automotive Operations, Inc., a distributor and marketer of specialty automotive equipment and accessories in North America, has announced financial results for the second quarter ended June 30.
Net sales were a record $172.6 million, an increase of $3.4 million, or 2 percent, compared to $169.2 million for the same period in the prior year. The company said the sales increase was driven by an increased focus on customer service and greater inventory availability, and was achieved in spite of conservative consumer spending on discretionary items as a result of high gasoline prices and general economic uncertainty. The company believes the second quarter’s results represent a more accurate year-over-year comparison than the first quarter ended March 31, as customer attrition resulting from the acquisition of Reliable occurred primarily in last year’s second quarter. Nevertheless, sales growth in this year’s second quarter was still modestly suppressed by customer attrition that occurred throughout last year’s second quarter and the remainder of the year, Keystone Automotive Operations said.
Gross profit was $52.6 million versus $53.6 million in the prior year, a decrease of $1 million, or 1.9 percent. The decline was primarily attributable to lower product selling margins resulting from competitive pressures in the marketplace. Gross margin declined to 30.5 percent compared to 31.7 percent for the same period in the prior year.
Operating income was $10.6 million, a decrease of $2.2 million, compared to $12.8 million for the same period in the prior year. The decline was primarily due to the decrease in gross profit noted above and an increase in operating expenses in support of strategic investments.
The company recorded net income of $0.8 million versus net income of $2.7 million in the prior year, driven by lower product selling margins, an increase in selling, general and administrative expense and higher interest expense. These decreases to pretax income were partially offset by a corresponding decrease in income tax expense, the company said.
"This quarter’s results were a substantial improvement over last quarter and we are very encouraged by the positive sales trends versus the prior year. We believe we gained market share in most geographic areas as customers are valuing Keystone for the breadth and depth of our inventory investment and our timely delivery capability," said Ed Orzetti, chief executive officer of Keystone Automotive Operations. "Despite tough economic conditions, Keystone is in a much stronger competitive position than a year ago. We are beginning to reap the benefits of our focused efforts and investments over the past year, which was demonstrated by the positive results we delivered this quarter."
