Lawson Products Reports Increases in Sales and Net Income for 2002
DES PLAINES, Ill., Feb. 26 /PRNewswire-FirstCall/ -- Lawson Products, Inc. (Nasdaq: LAWS) reported net income for 2002 increased 41.6% to $12.4 million. Net income per share was $1.30 for the year, an increase of 42.9%. Fourth quarter net income for 2002 was $.2 million compared to a loss of $1.8 million in the similar period of 2001. Net income per share was $.02 for the fourth quarter of 2002 as compared to a $.18 loss per share for the fourth quarter of 2001. The Company's share repurchase program favorably affected net income per share.
Net sales in 2002 were $387.5 million, an increase of 2.1% over the prior year, which included nine months of the Premier acquisition, establishing a new high in sales volume. The increased sales level for the year is principally attributable to increased sales generated by our OEM business segment and our international business segment. In the fourth quarter of 2002, net sales decreased 3.5% to $93.3 million, reflecting the effects of difficult market conditions and a planned reduction in the number of domestic MRO sales agents.
In the fourth quarter of 2002, the Company recorded after-tax charges of $2.5 million. These charges reflected an inventory write-off by our United Kingdom subsidiary to better reflect the product needs of its current customer base, and restructuring costs to reduce manpower, principally at our Mexican subsidiary. Full year and fourth quarter results for 2001 included after-tax charges of $7.2 million and $5.4 million, respectively, primarily for the write-off of an enterprise software system and for a one-time promotional program.
Inventories and cost of goods sold for the first three quarters of the year are determined through the use of estimated gross profit rates. In the fourth quarter of 2002, the difference between actual and estimated gross profit rates is determined. That adjustment increased net income by approximately $2.0 million and $2.1 million in 2002 and 2001, respectively.
Robert J. Washlow, Chairman of the Board and CEO, reported,
"Full year sales grew $5.6 million and $2.5 million in the OEM and MRO
segments, respectively. Improvement in the gross margin of the MRO
segment was able to partially offset the effect of the typically lower
gross margin of the growing OEM segment. Results were impacted by market
conditions, the elimination of under-performing sales agents, and
investments in the business to benefit future periods. These investments
included the expanded national accounts program, the inside sales group,
the e-commerce program, and the expanded sales education program. These
channels of marketing and selling products and the enhanced education
program are being pursued to enable the Company to be more competitive in
the marketplace and are anticipated to provide additional revenue in the
future.
"We remain focused on growing sales and long-term net income. Lawson
Products, Inc. is strong financially and debt-free. We intend to continue
to provide our sales organizations with the tools necessary to stimulate
profitable growth."
Lawson Products is an international seller and distributor of systems, services and products to the industrial, commercial and institutional maintenance, repair and replacement marketplace. The Company also manufactures, sells and distributes production and specialized component parts to the original equipment marketplace, including the automotive, appliance, aerospace, construction and transportation industries.
This press release, including Mr. Washlow's statements, contain historical
information and forward-looking statements and opinions. Statements looking
forward in time are included in this press release pursuant to the "safe
harbor" provision of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations or beliefs and
are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. The factors that could cause actual results to differ materially
from those described in the forward-looking statements include increased
competition, seasonality, effectiveness of our sales and marketing programs,
or an economic downturn.
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED SUMMARY OF OPERATIONS
Three Months Ended December 31,
2002 2001 % Change
Net Sales $93,345,702 $96,777,552 -3.5%
Income (Loss) Before Taxes (a) 2,094,711 (1,447,593) 244.7%
Provision for Income Taxes (b) 1,935,000 304,000
Net Income (Loss) 159,711 (1,751,593) 109.1%
Net Income (Loss) per share of Common
Stock:
Basic $0.02 ($0.18) 111.1%
Diluted $0.02 ($0.18) 111.1%
Weighted Average Shares Outstanding:
Basic 9,497,961 9,633,882
Diluted 9,526,304 9,651,858
Twelve Months Ended December 31,
2002 2001 % Change
Net Sales $387,455,899 $379,407,075 2.1%
Income (Loss) Before Taxes (a) 23,188,915 17,142,193 35.3%
Provision for Income Taxes (b) 10,742,000 8,355,000
Net Income (Loss) 12,446,915 8,787,193 41.6%
Net Income (Loss) per share of Common
Stock:
Basic $1.30 $0.91 42.9%
Diluted $1.30 $0.91 42.9%
Weighted Average Shares Outstanding:
Basic 9,569,947 9,684,510
Diluted 9,595,945 9,708,299
(a) Inventories and cost of goods sold during interim periods are
determined through the use of estimated gross profit rates.
The difference between actual and estimated gross profit rates used
for the interim periods is adjusted in the fourth quarter. This
adjustment increased pre-tax income by approximately $3,244,000 and
$3,411,000 in 2002 and 2001, respectively.
Full year and fourth quarter pre-tax income results for 2002 were
adversely impacted by a $2,080,000 inventory write-off incurred
by our U.K. subsidiary and $568,000 of restructuring charges for
compensation arrangements related to management personnel
reductions.
Full year and fourth quarter results for 2001 were adversely impacted
by a non-recurring charge as a result of a decision to discontinue an
enterprise project and write off the software and implementation
costs. This charge reduced pre-tax income by $8,527,000.
(b) The provision for income taxes was adversely impacted by the U.K.
inventory write-off in the fourth quarter of 2002 for which the
Company was unable to provide tax benefit.
In the fourth quarter of 2001, the tax expense was unfavorable
primarily due to increases in nondeductible expenses as well as
losses in the U.K. and Mexico for which no tax benefit was provided.
SOURCE Lawson Products, Inc.