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APS Holding Reports 32 Percent Increase In Third Quarter EBIT; ISW Same-Store Sales Grow 35 Percent

HOUSTON, Nov. 26 /PRNewswire/ -- APS Holding Corporation (APS) (Nasdaq: APSI) today reported that it achieved higher sales and earnings before interest and taxes (EBIT) for the third quarter ended October 25, 1996. Management stated that the third quarter sales increase was principally due to the Parts, Inc. (PI) acquisition as well as the continued growth of the Installers' Service Warehouse(R) (ISW(R)) division. The EBIT increase resulted primarily from the sales increase and from PI acquisition-related vendor incentives that helped reduce the impact of expenses related to the integration of PI into APS. Gains from asset sales also contributed to the earnings results. Net income for the quarter increased at a lower rate than EBIT, due mainly to the impact of higher interest expense related to the PI acquisition financing, when compared to last year.

Sales for the quarter rose 36% to $217.6 million from $160.3 million in last year's comparable third quarter period. EBIT increased 32% to $16.5 million, compared to $12.5 million last year. Net income for the quarter was $6.1 million, or $0.44 per share, versus $5.4 million, or $0.39 per share a year ago.

For the nine months ended October 25, 1996, sales rose 48% to $669.5 million from $453.3 million last year. EBIT rose 16% to $41.8 million as compared to $36.0 million last year. Net income for the nine months was $13.4 million, or $0.97 per share, while last year's net income was $15.2 million, or $1.10 per share.

"While we are pleased to be able to report higher sales and earnings for the quarter, the nationwide softness in product demand experienced during the period negatively impacted our core business and caused results to fall short of our original expectations," stated Mark S. Hoffman, President and Chief Executive Officer. "We do believe that, as we complete the process of consolidating PI into APS, the company will be well-positioned to take advantage of growth opportunities when underlying business conditions in the automotive aftermarket improve."

PI Integration on Track

According to Hoffman, the company completed the closure of nine of PI's 14 original distribution centers in September, and is in the process of product line changeovers at the five remaining distribution centers. "While the integration initiatives have placed substantial demands on our organization, and involve significant general and administrative expenses, the consolidation effort continues to run fully on schedule and within budget. Helping to reduce the impact of these changeover and consolidation related expenses on this quarter's results are vendor incentives that were negotiated prior to the acquisition. Our entire team has put forth an outstanding effort on this complex initiative, and we have met every project milestone up to this point," Hoffman said.

ISW Division Reports Unit Growth and Strong Sales

APS continued with its rollout of ISW facilities during the third quarter, as 9 net new units were added. These additions bring the total number in operation to 275. Same-store sales during the quarter for all units opened prior to the third quarter of fiscal 1996 increased by 35%. "We are encouraged that this division was able to report such strong same-store sales, but believe we should have done a better job of controlling expenses during a period of market softness," Hoffman added. "As I have stated previously, consistent and excellent execution remain both our greatest challenge and opportunity, which we are addressing through the ongoing strengthening of the management team and the development of new systems to improve the implementation of our business strategy, with a particular focus on expense control and working capital management."

Glendale Brake Acquisition Completed; Company-Owned Stores Sold

On October 23, 1996, APS completed its purchase of Glendale Brake, a five-unit, two-step undercar operation located in and around Burbank, California. Glendale Brake, which sells primarily to professional installers, will be consolidated into the ISW division. During the quarter, APS also completed the sale of five company-owned stores and one ISW located in and around Ocala and Orlando, Florida to The Parts Source and sold its 12-store Jackson, Mississippi chain to Rankin Automotive. "We believe that the Glendale acquisition will significantly strengthen our position in the important Southern California market," Hoffman continued, "while the sale of the company-owned stores to The Parts Source and Rankin Automotive, our two largest customers, will enhance their positions in their respective markets." Hoffman noted that both companies recently completed initial public offerings.

Outlook

"Regarding the fourth quarter, at this point we prefer to remain cautious in our outlook. While we did see some strengthening in market conditions towards the end of the third quarter, I believe it is too early to predict whether or not this trend will be sustained. Recognizing the environment which we are in, we will continue to look diligently for ways to control costs, build sales and improve operations," Hoffman concluded.

APS Holding Corporation is a nationally recognized distributor of Big A(R) brand and manufacturers' branded automotive replacement parts, as well as tools, equipment, supplies and accessories. It sells to approximately 1,870 associated auto parts stores through its 28 distribution centers and operates 300 company-owned stores and 275 Installers' Service Warehouse units.
 APS Holding Corporation
 Consolidated Statements of Operations
 (UNAUDITED)
 In Thousands Except Per Share Amounts
 For the Periods Ended October 25, 1996 and 1995
 Nine Months Ended Three Months Ended
 Oct. 25, Oct. 25, Oct. 25, Oct. 25,
 Net Sales $669,463 $453,258 $217,592 $160,329
 Cost of Goods Sold 433,730 294,975 139,350 103,643
 Gross Profit 235,733 158,283 78,242 56,686


Selling, General &
 Administrative Expense 199,546 127,334 64,233 45,881
 Operating Income 36,187 30,949 14,009 10,805
 Interest Income 4,253 3,888 1,441 1,301
 Other Income 1,408 1,150 1,085 383


Earnings Before
 Interest & Taxes 41,848 35,987 16,535 12,489
 Interest Expense 20,529 11,755 6,846 4,053
 Earnings Before Taxes 21,319 24,232 9,689 8,436
 Income Taxes 7,901 8,990 3,589 3,013
 Net Income $13,418 $15,242 $6,100 $5,423
 Earnings Per Share $0.97 $1.10 $0.44 $0.39


Average Shares
 Outstanding 13,904 13,909 13,941 13,906


SOURCE APS Holding Corporation
 -0- 11/26/96


/NOTE TO EDITORS: For more information on APS Holding Corporation via facsimile at no additional cost, simply dial 1-800-PRO-INFO and enter the company code APS./

/CONTACT: John Hendrix of APS Holding Corporation, 713-507-1100, or Bill Murphy or Leslie Hunziker of The Financial Relations Board, 312-266-7800/

(APSI)

CO: APS Holding Corporation ST: Texas IN: AUT SU: ERN

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Date:Nov 26, 1996
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