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Industrial Distribution Group, Inc., Atlanta, GA, reported revenues for the first quarter ended Mar. 31, 2005 were $137.9 million, up $11.8 million or 9.4% compared to the $126.1 million corrected amount for the comparable period of 2004. Additionally, daily sales revenue rose 11.1% over the prior year quarter. The company's net income for the first quarter of 2005 increased 20.9% to $1.2 million, compared to net income of $1.0 million as corrected for the comparable period of the prior year.
For the first quarter, FPS revenues were $74.8 million, an increase of $7.2 million or 10.6% as compared the comparable quarter in 2004. Revenues from Flexible Procurement Solutionsﾙ (FPS), IDG's services-based supply offerings including storeroom management, comprised 54.2% of IDG's total sales for the first quarter of 2005 compared to 53.6% for the comparable period in 2004. As of March 31, 2005, the company had 342 total FPS sites, including 95 storeroom management arrangements, a net increase of 17 FPS sites since Mar. 31, 2004.
General MROP sales increased $4.6 million or 8.0% to $63.1 million for the first quarter over the prior year quarter due primarily to increased manufacturing levels and market share at existing accounts.
During the first quarter, we posted solid sales growth, as the company achieved core objectives in its products and services businesses," said Andrew B. Shearer, IDG's president and CEO. "We are particularly pleased with the double-digit growth in our service business, which was fuelled by the continuing demand for IDG's FPS and mid-market solutions. This important accomplishment, combined with the sales improvement in our general MROP product-oriented business, as well as our continued focus on operating efficiencies, enabled the company to once again provide shareholders with earnings growth," noted Shearer.
Gross margins for the first quarter of 2005 were 21.0% compared to 22.1% for the comparable period of 2004. Gross margins, during the first quarter, reflected a shift in customer and product mix, as well as continued competitive pricing pressures.
IDG continued to realize progress in its ongoing efforts to reduce the operating expense structure of its business. Selling, general and administrative expenses increased to $26.6 million in the first quarter compared to $25.9 million in the prior year period. This represented only a 2.5% increase over the prior year first quarter, on total revenue growth of 9.4%. Accordingly, as a percentage of net sales, selling, general and administrative expenses improved significantly to 19.2% in the first quarter from 20.5% in the comparable period of 2004. The dollar increase in expense was primarily due to higher sales volume related to the sales activity. Salaries, commissions, and incentives increased $0.8 million, while freight, delivery, and travel increased $0.4 million. These increases in expense were partially offset by a $0.4 million gain on the sale of a property.
"We are pleased to have once again reduced SG&A as a percentage of sales, underscoring IDG's proactive approach of managing its expenses and the cost advantages of its service offering," commented Shearer. "Even with our current success, we have not yet realized the full operating benefits that are inherent in our business model. Our business model remains strong and the company's goal of improving operating performance continues to be a top priority. Going forward, IDG will maintain an intense focus on accomplishing its operating goals as well as an unwavering commitment to create sustainable value for our shareholders."
As of March 31, 2005, long-term debt declined to $21.4 million compared to $30.0 million one year ago.
"IDG remains well positioned to continue to provide customers with value-added services," said Shearer. "In growing our FPS business, IDG will continue concentrating on enabling new and existing customers to meet core objectives related to maximizing cost saving opportunities and optimizing manufacturing capacity at their facilities. At the same time, we will continue to maintain a steadfast commitment towards meeting our internal profitability objectives, as we strive to further enhance shareholder value."