Lawson Products Reports First Quarter 2013 Results
Financial Highlights
- Average daily sales increased 2.2% over the fourth quarter of 2012.
- Sales productivity improved 8.8% from a year ago and 3.2% compared to the fourth quarter of 2012 as measured by average sales per representative per day.
-
Adjusted non-GAAP operating income was
$2.4 million , an improvement of$2.9 million over a year ago and$0.4 million improvement from the fourth quarter of 2012.
First Quarter Results
Net sales for the first quarter of 2013 decreased 5.2% to
Gross profit for the first quarter of 2013 was
Selling, general and administrative expenses (“SG&A”) included a
Excluding the cost of the national sales meeting, stock based
compensation and payroll-related taxes, adjusted non-GAAP operating
income was
Net loss for the first quarter of 2013 was
Corporate Highlights
-
The Company completed its transition from an independent agent model
to an employee sales team in
the United States and continued to increase its emphasis on productivity per sales representative. Upon completion of the transition, Lawson entered 2013 with 757 sales representatives. During 2013, Lawson intends to expand the number of sales areas covered and improve the penetration of sales in existing territories. - Lawson launched its new e-commerce websites www.lawsonproducts.com and www.kent-automotive.com. These websites enable new and existing customers to perform product searches easily, obtain pricing and place orders directly via the Internet. These websites have been designed to improve cross-selling and up-selling activity, as well as enhance Lawson's visibility to customers when its sales team is not on-site with the customer.
- The Company conducted its first national sales meeting in six years. The meeting included training, a supplier trade show and updates on the Company's strategy. The event also provided the sales representatives an opportunity to network and share best practices.
-
The Company is on schedule to complete the transition of the
operations currently performed at its
Addison, Illinois distribution center to its new packaging and distribution center inMcCook, Illinois in the first half of 2013. As theMcCook facility becomes fully operational, the Company believes it will begin to realize further efficiencies in its operations and enhance customer service through reductions in order delivery times and increased order fulfillment rates to support sales growth.
“In 2013, we will focus on increasing sales through a combination of adding sales representatives in under-served areas and improving sales productivity. We will also continue to improve our operational efficiency and leverage past investments made in our infrastructure. Lawson is well positioned for the future and we are confident in our ability to grow sales and improve our operating performance while better serving our customers,” concluded Mr. DeCata.
Conference Call
About
Founded in 1952,
This Release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that
involve risks and uncertainties. The terms "may," "should," "could,"
"anticipate," "believe," "continues," "estimate," "expect," "intend,"
"objective," "plan," "potential," "project" and similar expressions are
intended to identify forward-looking statements. These statements are
not guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. These statements are
based on management's current expectations, intentions or beliefs and
are subject to a number of factors, assumptions and uncertainties that
could cause or contribute to such differences or that might otherwise
impact the business and include the risk factors set forth in Item 1A of
the December 31, 2012, Form 10-K filed on
-TABLES FOLLOW-
| Lawson Products, Inc. | |||||||||
| Condensed Consolidated Statements of Operations | |||||||||
| (Dollars in thousands, except per share data) | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended March 31, | |||||||||
| 2013 | 2012 | ||||||||
| Net sales | $ | 71,995 | $ | 75,962 | |||||
| Cost of goods sold | 31,001 | 34,628 | |||||||
| Gross profit | 40,994 | 41,334 | |||||||
| Operating expenses: | |||||||||
| Selling, general and administrative expenses | 43,857 | 43,982 | |||||||
| Severance expenses | — | 185 | |||||||
| 43,857 | 44,167 | ||||||||
| Operating loss | (2,863 | ) | (2,833 | ) | |||||
| Interest expense | (213 | ) | (82 | ) | |||||
| Other expenses, net | (61 | ) | (7 | ) | |||||
| Loss from continuing operations before income taxes | (3,137 | ) | (2,922 | ) | |||||
| Income tax expense (benefit) | 57 | (1,137 | ) | ||||||
| Loss from continuing operations | (3,194 | ) | (1,785 | ) | |||||
| Discontinued operations, net of income taxes | (29 | ) | (13 | ) | |||||
| Net loss | $ | (3,223 | ) | $ | (1,798 | ) | |||
| Basic and diluted loss per share of common stock: | |||||||||
| Continuing operations | $ | (0.37 | ) | $ | (0.21 | ) | |||
| Discontinued operations | — | — | |||||||
| Net loss per share | $ | (0.37 | ) | $ | (0.21 | ) | |||
| Basic weighted average shares outstanding | 8,606 | 8,574 | |||||||
| Dilutive effect of stock based compensation | — | — | |||||||
| Diluted weighted average shares outstanding | 8,606 | 8,574 | |||||||
| Cash dividends declared per share of common stock | $ | — | $ | 0.12 | |||||
| Lawson Products, Inc. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (Dollars in thousands, except per share data) | ||||||||
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,335 | $ | 1,640 | ||||
| Accounts receivable, less allowance for doubtful accounts | 36,063 | 31,387 | ||||||
| Inventories | 54,526 | 51,484 | ||||||
| Miscellaneous receivables and prepaid expenses | 6,350 | 5,451 | ||||||
| Deferred income taxes | 17 | 17 | ||||||
| Discontinued operations | 342 | 350 | ||||||
| Total current assets | 98,633 | 90,329 | ||||||
| Property, plant and equipment, net | 66,425 | 67,155 | ||||||
| Cash value of life insurance | 12,701 | 14,943 | ||||||
| Deferred income taxes | 55 | 55 | ||||||
| Other assets | 458 | 449 | ||||||
| Total assets | $ | 178,272 | $ | 172,931 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Revolving line of credit | $ | 19,842 | $ | 16,127 | ||||
| Accounts payable | 16,364 | 11,833 | ||||||
| Accrued expenses and other liabilities | 33,898 | 31,762 | ||||||
| Discontinued operations | 106 | 106 | ||||||
| Total current liabilities | 70,210 | 59,828 | ||||||
| Security bonus plan | 17,224 | 18,837 | ||||||
| Deferred compensation | 5,779 | 5,868 | ||||||
| Financing lease obligation | 10,789 | 10,786 | ||||||
| Deferred rent liability | 4,780 | 4,621 | ||||||
| Other liabilities | 1,882 | 2,258 | ||||||
| 40,454 | 42,370 | |||||||
| Total Stockholders’ equity | 67,608 | 70,733 | ||||||
| Total liabilities and stockholders’ equity | $ | 178,272 | $ | 172,931 | ||||
REGULATION G GAAP RECONCILIATIONS
The Company reports its financial results in accordance with U.S.
generally accepted accounting principles (GAAP). However, the Company's
management believes that certain non-GAAP financial measures may provide
users of this financial information additional meaningful comparisons
between current results and results in prior operating periods.
Management believes that these non-GAAP financial measures can provide
additional meaningful reflection of underlying trends of the business
because they provide a comparison of historical information that
excludes certain infrequently occurring, seasonal or non-operational
items that impact the overall comparability. See the two tables below
for supplemental financial data and corresponding reconciliations to
GAAP financial measures for the three months ended
| TABLE 1 - RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP OPERATING INCOME (LOSS) | |||||||||||||
| (Amounts in thousands) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended | |||||||||||||
| March 31, 2013 | December 31, 2012 | March 31, 2012 | |||||||||||
| Operating income (loss), as reported per GAAP | $ | (2,863 | ) | $ | 2,471 | $ | (2,833 | ) | |||||
| Severance (benefit) expense | — | (159 | ) | 185 | |||||||||
| Gain on sale of assets (1) | — | (1,588 | ) | — | |||||||||
| Stock based compensation (2) | 1,596 | 434 | 198 | ||||||||||
| Payroll-related taxes (3) | 2,429 | 842 | 1,943 | ||||||||||
| National sales meeting | 1,225 | — | — | ||||||||||
| Adjusted non-GAAP operating income (loss) | $ | 2,387 | $ | 2,000 | $ | (507 | ) | ||||||
| (1) | Gain on the sale of the Des Plaines, Illinois headquarters and packaging facility | ||
| (2) | Expense for stock based compensation of which a portion varies with the Company's stock price | ||
| (3) | Includes employer related payroll taxes for which the majority is incurred in the first two quarters |
| TABLE 2 - RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP NET LOSS PER DILUTED SHARE | |||||
| (Unaudited) | |||||
|
Three Months Ended
March 31, 2013 |
|||||
| Net loss per diluted share, as reported per GAAP | $ | (0.37 | ) | ||
| Stock based compensation (1) | 0.18 | ||||
| National sales meeting | 0.14 | ||||
| Adjusted non-GAAP net loss per diluted share | $ | (0.05 | ) | ||
|
(1) Expense for stock based compensation of which a portion varies with the Company's stock price |
|||||
| LAWSON PRODUCTS, INC. | |||||||||||||||||||||||||||
| TABLE 3 - QUARTERLY RESULTS | |||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||
|
Mar. 31, |
Dec. 31, |
Sep. 30, |
Jun. 30, |
Mar. 31, |
|||||||||||||||||||||||
| Number of business days | 63 | 61 | 63 | 64 | 64 | ||||||||||||||||||||||
| Average daily net sales | $ | 1,143 | $ | 1,118 | $ | 1,143 | $ | 1,162 | $ | 1,187 | |||||||||||||||||
| Sequential quarter increase (decrease) | 2.2 | % | (2.2 | )% | (1.6 | )% | (2.1 | )% | (2.3 | )% | |||||||||||||||||
| Average active sales rep. count | 762 | (1) | 769 | 773 | 807 | 861 | |||||||||||||||||||||
| Sales per rep. per day | $ | 1.500 | $ | 1.454 | $ | 1.478 | $ | 1.440 | $ | 1.379 | |||||||||||||||||
| Sequential quarter increase (decrease) | 3.2 | % | (1.6 | )% | 2.7 | % | 4.4 | % | 1.3 | % | |||||||||||||||||
| Net sales | $ | 71,995 | $ | 68,193 | $ | 71,984 | $ | 74,348 | $ | 75,962 | |||||||||||||||||
| Gross profit | 40,994 | 39,672 | 43,360 | 36,816 | (2) | 41,334 | |||||||||||||||||||||
| Gross profit percentage | 56.9 | % | 58.2 | % | 60.2 | % | 49.5 | % | 54.4 | % | |||||||||||||||||
|
Operating expenses |
|||||||||||||||||||||||||||
| Selling, general & administrative expenses | 43,857 | 38,948 | 43,311 | 45,484 | 43,982 | ||||||||||||||||||||||
| Severance (benefit) expense | — | (159 | ) | 1,410 | 6,585 | 185 | |||||||||||||||||||||
| Gain on sale of assets | — | (1,588 | ) | (11 | ) | (2,122 | ) | — | |||||||||||||||||||
| Goodwill impairment | — | — | — | 28,306 | — | ||||||||||||||||||||||
| 43,857 | 37,201 | 44,710 | 78,253 | 44,167 | |||||||||||||||||||||||
| Operating income (loss) | $ | (2,863 | ) | $ | 2,471 | $ | (1,350 | ) | $ | (41,437 | ) | $ | (2,833 | ) | |||||||||||||
| (1) | Following the transition of the U.S. independent agents to employee status, the Company began January 1, 2013 with 757 sales representatives | ||
| (2) | Gross profit for the three months ended June 30, 2012 includes a $3.9 million charge for discontinuing certain stocked products |
Source:
Investor Relations:
Lawson Products, Inc.
Ronald J.
Knutson
Executive Vice President and Chief Financial Officer
773-304-5665