Lawson Products Reports First Quarter 2017 Results
Sales Increase 7.0%, Operations Strengthen
“In the first quarter of 2017, we experienced a continuation of the
sales and operating improvement that started in late 2016. First quarter
average daily sales increased 7.0% year-over-year and also increased
sequentially over the preceding quarter. These higher sales led to
significantly improved adjusted operating results compared to a year
ago,” said
“Combined with the improving MRO marketplace, we are now beginning to
see the results of the hard work our team has done over the past few
years to grow our sales force, improve sales rep productivity, integrate
acquisitions and to become more efficient through our extended Lean
Six-Sigma process. We are taking deliberate actions to improve sales rep
productivity which will foster continued growth. With a stronger
industrial economy and the previously announced closure of the
“Our strong financial position provides us the flexibility to continue to invest in both sales rep development and acquisitions. We continue to provide our sales team with the training and tools they need to be successful. I believe that we are now starting to realize growth from these ongoing initiatives,” concluded Mr. DeCata.
First Quarter Highlights
-
Sales increased 7.0% to
$74.6 million , compared to$69.7 million a year ago - Sales rep productivity, measured as sales per rep per day, improved by 2.6% over a year ago and 5.7% over the immediately preceding quarter
-
GAAP operating income was
$0.7 million compared to$1.2 million in the first quarter of 2016. However, adjusted for stock-based compensation and severance costs primarily related to theFairfield closure, adjusted operating income improved$1.0 million over a year ago (see reconciliation in Table 1) -
The quarter ended with
$8.0 million of available cash and$34.0 million of availability on our revolving credit facility
First Quarter Results
Net sales were
Gross profit as a percentage of sales was 60.1% in the first quarter of
2017, compared to 60.9% in the first quarter of 2016 and in line with
60.2% realized in the fourth quarter of 2016. The decline in the gross
profit percentage from a year ago was primarily driven by higher sales
to strategic customers that typically have lower margins, the impact of
the 2016 acquisitions and non-recurring labor and freight costs
associated with the
Selling expenses increased to
General and administrative expenses increased to
Operating income in the first quarter of 2017 was
Net income for the first quarter of 2017 was
At
"We are encouraged by our performance of the past two quarters and continue to be optimistic for the remainder of 2017. We have the financial flexibility and infrastructure in place to continue our growth initiatives that have driven our improved results,” concluded Mr. DeCata.
Conference Call
About
Celebrating our 65th anniversary in 2017,
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, 2016, Form 10-K filed on February 23, 2017. The Company undertakes no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements whether as a result of new information, future events or otherwise.
-TABLES FOLLOW-
| Lawson Products, Inc. | |||||||||||
| Condensed Consolidated Statements of Income | |||||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
|
Three Months Ended
March 31, |
|||||||||||
| 2017 | 2016 | ||||||||||
| Net sales | $ | 74,617 | $ | 69,711 | |||||||
| Cost of goods sold | 29,738 | 27,252 | |||||||||
| Gross profit | 44,879 | 42,459 | |||||||||
| Operating expenses: | |||||||||||
| Selling expenses | 24,804 | 22,753 | |||||||||
| General & administrative expenses | 19,363 | 18,537 | |||||||||
| Operating expenses | 44,167 | 41,290 | |||||||||
| Operating income | 712 | 1,169 | |||||||||
| Interest expense | (94 | ) | (166 | ) | |||||||
| Other income, net | 225 | 123 | |||||||||
| Income before income taxes | 843 | 1,126 | |||||||||
| Income tax (benefit) expense | (14 | ) | 109 | ||||||||
| Net income | $ | 857 | $ | 1,017 | |||||||
| Basic income per share of common stock | $ | 0.10 | $ | 0.12 | |||||||
| Diluted income per share of common stock | $ | 0.09 | $ | 0.11 | |||||||
| Lawson Products, Inc. | |||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| March 31, | December 31, | ||||||||||
| 2017 | 2016 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 7,973 | $ | 10,421 | |||||||
| Restricted cash | 800 | 800 | |||||||||
| Accounts receivable, less allowance for doubtful accounts | 34,016 | 30,200 | |||||||||
| Inventories, net | 43,231 | 42,561 | |||||||||
| Property held for sale | 707 | — | |||||||||
| Miscellaneous receivables and prepaid expenses | 3,854 | 3,788 | |||||||||
| Total current assets | 90,581 | 87,770 | |||||||||
| Property, plant and equipment, net | 28,784 | 30,907 | |||||||||
| Cash value of life insurance | 10,277 | 10,051 | |||||||||
| Goodwill | 5,560 | 5,520 | |||||||||
| Deferred income taxes | 20 | 20 | |||||||||
| Other assets | 996 | 1,039 | |||||||||
| Total assets | $ | 136,218 | $ | 135,307 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Revolving line of credit | $ | 1,798 | $ | 841 | |||||||
| Accounts payable | 13,452 | 11,307 | |||||||||
| Accrued expenses and other liabilities | 24,754 | 27,289 | |||||||||
| Total current liabilities | 40,004 | 39,437 | |||||||||
| Security bonus plan | 13,790 | 14,216 | |||||||||
| Financing lease obligation | 7,271 | 7,543 | |||||||||
| Deferred compensation | 4,937 | 4,830 | |||||||||
| Deferred rent liability | 3,689 | 3,676 | |||||||||
| Other liabilities | 4,214 | 4,472 | |||||||||
| Total liabilities | 73,905 | 74,174 | |||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, $1 par value: | |||||||||||
| Authorized - 500,000 shares, issued and outstanding — None | — | — | |||||||||
| Common stock, $1 par value: | |||||||||||
| Authorized - 35,000,000 shares | |||||||||||
| Issued - 8,868,116 and 8,864,929 shares, respectively | |||||||||||
| Outstanding - 8,835,810 and 8,832,623 shares, respectively | 8,868 | 8,865 | |||||||||
| Capital in excess of par value | 11,480 | 11,055 | |||||||||
| Retained earnings | 42,622 | 41,943 | |||||||||
| Treasury stock – 32,306 shares | (691 | ) | (691 | ) | |||||||
| Accumulated other comprehensive income (loss) | 34 | (39 | ) | ||||||||
| Total stockholders’ equity | 62,313 | 61,133 | |||||||||
| Total liabilities and stockholders’ equity | $ | 136,218 | $ | 135,307 | |||||||
| LAWSON PRODUCTS, INC. |
| 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 with 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 non-operational items that impact the overall
comparability.
| TABLE 1 - RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP OPERATING INCOME | |||||||||||
| (Amounts in thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| Operating income, as reported per GAAP | $ | 712 | $ | 1,169 | |||||||
| Stock-based compensation (1) | (30 | ) | (1,217 | ) | |||||||
| Severance expense | 465 | 204 | |||||||||
| Adjusted non-GAAP operating income | $ | 1,147 | $ | 156 | |||||||
|
(1) Benefit for stock-based compensation, of which a portion varies with the Company's stock price |
|||||||||||
| TABLE 2 - RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP G&A EXPENSE | |||||||||||
| (Amounts in thousands) | |||||||||||
| (Unaudited) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2017 | 2016 | ||||||||||
| G&A expenses, as reported per GAAP | $ | 19,363 | $ | 18,537 | |||||||
| Stock-based compensation (1) | 30 | 1,217 | |||||||||
| Severance expense | (465 | ) | (204 | ) | |||||||
| Adjusted non-GAAP G&A expenses | $ | 18,928 | $ | 19,550 | |||||||
|
(1) Benefit for stock-based compensation, of which a portion varies with the Company's stock price |
|||||||||||
| LAWSON PRODUCTS, INC. | |||||||||||||||||||||
| TABLE 3 - QUARTERLY RESULTS (UNAUDITED) | |||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | |||||||||||||||||
| 2017 | 2016 | 2016 | 2016 | 2016 | |||||||||||||||||
| Number of business days | 64 | 60 | 64 | 64 | 64 | ||||||||||||||||
| Average daily net sales | $ | 1,166 | $ | 1,122 | $ | 1,097 | $ | 1,084 | $ | 1,089 | |||||||||||
| Sequential quarter increase (decrease) | 3.9 | % | 2.3 | % | 1.2 | % | (0.5 | )% | 2.3 | % | |||||||||||
| Average active sales rep. count (1) | 990 | 1,007 | 1,007 | 981 | 949 | ||||||||||||||||
| Period-end active sales rep. count | 979 | 1,009 | 1,006 | 1,020 | 960 | ||||||||||||||||
| Sales per rep. per day | $ | 1.178 | $ | 1.114 | $ | 1.089 | $ | 1.105 | $ | 1.148 | |||||||||||
| Sequential quarter increase (decrease) | 5.7 | % | 2.3 | % | (1.4 | )% | (3.7 | )% | 0.3 | % | |||||||||||
| Net sales | $ | 74,617 | $ | 67,315 | $ | 70,199 | $ | 69,348 | $ | 69,711 | |||||||||||
| Gross profit | 44,879 | 40,504 | 42,573 | 42,526 | 42,459 | ||||||||||||||||
| Gross profit percentage | 60.1 | % | 60.2 | % | 60.6 | % | 61.3 | % | 60.9 | % | |||||||||||
| Selling, general & administrative expenses | $ | 44,167 | $ | 45,548 | $ | 40,184 | $ | 42,497 | $ | 41,290 | |||||||||||
| Operating income (loss) | $ | 712 | $ | (5,044 | ) | $ | 2,389 | $ | 29 | $ | 1,169 | ||||||||||
|
(1) Average active sales rep. count represents the average of the month-ends |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170420005198/en/
Source:
Investor Relations:
Lawson Products, Inc.
Ronald J.
Knutson
Executive Vice President and Chief Financial Officer
773-304-5665