Keystone Automotive Operations, Inc. announced record sales of $172.6 million for the second quarter ended June 30, 2007. This represents an increase of $3.4 million, or 2 percent, compared to $169.2 million for the same period in 2006.
According to a company spokesperson, the sales increase was driven by 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 also released a statement saying that 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 during last year's second quarter. Still, company represntatives feel that sales growth in this year's second quarter was modestly suppressed by customer attrition from last year's second quarter and the remainder of the year.
Keystone's gross profit for the quarter ended June 30, 2007 was $52.6 million versus $53.6 million in the prior year, a decrease of $1.0 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 in the quarter ended June 30, 2007 compared to 31.7 percent for the same period in the prior year.
The company's operating income for the quarter ended June 30, 2007 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 in the quarter ended June 30, 2007 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.
"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," says Ed Orzetti, the company's chief executive officer. "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."
The company will hold a conference call to discuss the financial results for the second quarter ended June 30, 2007 on Aug. 22, 2007, at 11:00 a.m. EDT, and will make a replay of the call available later that same day. For more information about Keystone Automotive Operations, Inc. visit the company's Web site.