Lawson Products, Inc. Announces Second Quarter 2007 Results
Lawson Products, Inc. Announces Second Quarter 2007 Results
Lawson Products, Inc. (Nasdaq: LAWS) (the "Company"), a distributor of services, systems and products to the MRO and OEM marketplaces, today announced financial results for its second quarter ended June 30, 2007. For the second quarter 2007, net sales from continuing operations were $129.2 million, which was comparable to the prior year quarter. As a result of severance charges recorded during the quarter, the Company reported a net loss of $0.3 million, compared to net income of $3.2 million in the second quarter of 2006. Diluted net loss per share was $(0.04) for the quarter, compared to net income of $0.36 per share a year ago.
Second quarter 2007 results include severance costs of $5.5 million related to several executive departures. As a result of the severance charges recorded, the Company reported an operating loss of $0.2 million for the quarter compared to operating income of $5.1 million in the prior year.
Gross profit margins for the second quarter 2007 of 59.4 percent were comparable to 59.5 percent gross profit margins in the second quarter of 2006, reflecting comparable sales mix over the periods. In addition, the Company's pricing management activities in 2007 have compensated for certain higher commodity and product cost increases, resulting in consistent gross profit margin trends in 2007 compared to 2006. Selling, general and administrative expenses increased by $0.5 million, or less than one percent, for the second quarter 2007, primarily as a result of a $2.4 million increase in legal costs and professional fees compared to the prior year quarter. The Company implemented several cost management initiatives in 2007, and positive results from those initiatives offset increases in legal costs for the second quarter.
Share repurchase activities that occurred primarily in 2006 reduced the outstanding shares of stock by approximately five percent, and have had a favorable impact on net income per share amounts when compared to the prior year.
Thomas Neri, President and Chief Executive Officer said, "I see significant opportunities ahead for the Lawson Family of Businesses. I am very enthusiastic about building on the Company's sales, marketing and productivity initiatives, as well as continuing our efforts to drive customer satisfaction."
About Lawson Products, Inc.
Lawson Products, Inc. is a leader in selling and distributing services, systems and products to the industrial, commercial and institutional maintenance, repair and operations (MRO) market. The Company also manufacturers, sells and distributes production and specialized component parts to the original equipment marketplace (OEM) including the automotive, appliance, aerospace, construction and transportation industries.
This release contains certain forward-looking statements 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. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from the expectations. These risks include, but are not limited to: the impact of governmental investigations, such as the ongoing investigation by U.S. Attorney's office for the Northern District of Illinois; excess and obsolete inventory; disruptions of the Company's information systems; risks of rescheduled or cancelled orders; increases in commodity prices; the influence of controlling stockholders; competition and competitive pricing pressures; the effect of general economic conditions and market conditions in the markets and industries the Company serves; the risks of war, terrorism, and similar hostilities; and, all of the factors discussed in the Company's "Risk Factors" set forth in its Annual Report on Form 10-K for the year ended December 31, 2006. The Company undertakes no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Net sales $129,178 $129,226 $258,847 $259,392
Cost of goods sold 52,481 52,401 106,323 106,188
Gross profit 76,697 76,825 152,524 153,204
Operating expenses:
Selling, general and
administrative expenses 71,449 70,912 137,689 138,880
Severance and other
charges 5,470 --- 6,912 ---
Loss on sale of equipment --- 806 --- 806
Operating income/(loss) (222) 5,107 7,923 13,518
Investment and other income 293 387 395 941
Interest expense (286) --- (367) ---
Income/(loss) from continuing
operations before income
taxes and cumulative effect
of accounting change (215) 5,494 7,951 14,459
Provision for income taxes (195) 2,273 3,245 5,819
Income/(loss) from continuing
operations before cumulative
effect of accounting change (20) 3,221 4,706 8,640
Loss from discontinued
operations, net of income
taxes (329) (16) (485) (86)
Income/(loss) before cumulative
effect of accounting change (349) 3,205 4,221 8,554
Cumulative effect of accounting
change, net of income taxes --- --- --- (361)
Net income/(loss) $(349) $3,205 $4,221 8,193
Basic income/(loss) per share
of common stock:
Continuing operations before
cumulative effect of
accounting change $(0.00) $0.36 $0.55 $0.96
Discontinued operations (0.04) (0.00) (0.06) (0.01)
Cumulative effect of
accounting change --- --- --- (0.04)
$(0.04) $0.36 $0.50 $0.91
Diluted income/(loss) per share
of common stock:
Continuing operations before
cumulative effect of
accounting change $(0.00) $0.36 $0.55 $0.96
Discontinued operations (0.04) (0.00) (0.06) (0.01)
Cumulative effect of
accounting change --- --- --- (0.04)
$(0.04) $0.36 $0.50 0.91
Cash dividends declared
per share of common stock $0.20 $0.20 $0.40 $0.40
Weighted average shares
outstanding:
Basic 8,521 8,989 8,521 8,982
Diluted 8,521 8,995 8,523 8,989
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
(in thousands) 2007 2006
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $1,861 $3,391
Accounts receivable, less
allowance for doubtful accounts 60,644 60,411
Inventories 90,457 90,272
Miscellaneous receivables and
prepaid expenses 7,743 5,529
Deferred income taxes 3,200 3,538
Discontinued current assets 1,750 2,056
Total Current Assets 165,655 165,197
Property, plant and equipment, less
allowances for depreciation and
amortization 49,339 42,664
Deferred income taxes 22,979 20,341
Goodwill 27,999 27,999
Other assets 24,854 22,679
Discontinued non-current assets 3 3
Total Assets $290,829 $278,883
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolving line of credit $16,000 $---
Accounts payable 13,829 14,055
Accrued expenses and other
liabilities 41,617 46,746
Income taxes --- 855
Discontinued current liabilities 1,720 1,770
Total Current Liabilities 73,166 63,426
Accrued liability under security
bonus plans 26,478 25,522
Other 20,787 19,618
47,265 45,140
Total Stockholders' Equity 170,398 170,317
Total Liabilities and
Stockholders' Equity $290,829 $278,883
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Lawson Products, Inc. Announces Second Quarter 2007 Results
Lawson Products, Inc. (Nasdaq: LAWS) (the "Company"), a distributor of services, systems and products to the MRO and OEM marketplaces, today announced financial results for its second quarter ended June 30, 2007. For the second quarter 2007, net sales from continuing operations were $129.2 million, which was comparable to the prior year quarter. As a result of severance charges recorded during the quarter, the Company reported a net loss of $0.3 million, compared to net income of $3.2 million in the second quarter of 2006. Diluted net loss per share was $(0.04) for the quarter, compared to net income of $0.36 per share a year ago.
Second quarter 2007 results include severance costs of $5.5 million related to several executive departures. As a result of the severance charges recorded, the Company reported an operating loss of $0.2 million for the quarter compared to operating income of $5.1 million in the prior year.
Gross profit margins for the second quarter 2007 of 59.4 percent were comparable to 59.5 percent gross profit margins in the second quarter of 2006, reflecting comparable sales mix over the periods. In addition, the Company's pricing management activities in 2007 have compensated for certain higher commodity and product cost increases, resulting in consistent gross profit margin trends in 2007 compared to 2006. Selling, general and administrative expenses increased by $0.5 million, or less than one percent, for the second quarter 2007, primarily as a result of a $2.4 million increase in legal costs and professional fees compared to the prior year quarter. The Company implemented several cost management initiatives in 2007, and positive results from those initiatives offset increases in legal costs for the second quarter.
Share repurchase activities that occurred primarily in 2006 reduced the outstanding shares of stock by approximately five percent, and have had a favorable impact on net income per share amounts when compared to the prior year.
Thomas Neri, President and Chief Executive Officer said, "I see significant opportunities ahead for the Lawson Family of Businesses. I am very enthusiastic about building on the Company's sales, marketing and productivity initiatives, as well as continuing our efforts to drive customer satisfaction."
About Lawson Products, Inc.
Lawson Products, Inc. is a leader in selling and distributing services, systems and products to the industrial, commercial and institutional maintenance, repair and operations (MRO) market. The Company also manufacturers, sells and distributes production and specialized component parts to the original equipment marketplace (OEM) including the automotive, appliance, aerospace, construction and transportation industries.
This release contains certain forward-looking statements 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. Such statements speak only as of the date of the news release and are subject to a variety of risks and uncertainties, many of which are beyond the Company's control, which could cause actual results to differ materially from the expectations. These risks include, but are not limited to: the impact of governmental investigations, such as the ongoing investigation by U.S. Attorney's office for the Northern District of Illinois; excess and obsolete inventory; disruptions of the Company's information systems; risks of rescheduled or cancelled orders; increases in commodity prices; the influence of controlling stockholders; competition and competitive pricing pressures; the effect of general economic conditions and market conditions in the markets and industries the Company serves; the risks of war, terrorism, and similar hostilities; and, all of the factors discussed in the Company's "Risk Factors" set forth in its Annual Report on Form 10-K for the year ended December 31, 2006. The Company undertakes no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise.
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Net sales $129,178 $129,226 $258,847 $259,392
Cost of goods sold 52,481 52,401 106,323 106,188
Gross profit 76,697 76,825 152,524 153,204
Operating expenses:
Selling, general and
administrative expenses 71,449 70,912 137,689 138,880
Severance and other
charges 5,470 --- 6,912 ---
Loss on sale of equipment --- 806 --- 806
Operating income/(loss) (222) 5,107 7,923 13,518
Investment and other income 293 387 395 941
Interest expense (286) --- (367) ---
Income/(loss) from continuing
operations before income
taxes and cumulative effect
of accounting change (215) 5,494 7,951 14,459
Provision for income taxes (195) 2,273 3,245 5,819
Income/(loss) from continuing
operations before cumulative
effect of accounting change (20) 3,221 4,706 8,640
Loss from discontinued
operations, net of income
taxes (329) (16) (485) (86)
Income/(loss) before cumulative
effect of accounting change (349) 3,205 4,221 8,554
Cumulative effect of accounting
change, net of income taxes --- --- --- (361)
Net income/(loss) $(349) $3,205 $4,221 8,193
Basic income/(loss) per share
of common stock:
Continuing operations before
cumulative effect of
accounting change $(0.00) $0.36 $0.55 $0.96
Discontinued operations (0.04) (0.00) (0.06) (0.01)
Cumulative effect of
accounting change --- --- --- (0.04)
$(0.04) $0.36 $0.50 $0.91
Diluted income/(loss) per share
of common stock:
Continuing operations before
cumulative effect of
accounting change $(0.00) $0.36 $0.55 $0.96
Discontinued operations (0.04) (0.00) (0.06) (0.01)
Cumulative effect of
accounting change --- --- --- (0.04)
$(0.04) $0.36 $0.50 0.91
Cash dividends declared
per share of common stock $0.20 $0.20 $0.40 $0.40
Weighted average shares
outstanding:
Basic 8,521 8,989 8,521 8,982
Diluted 8,521 8,995 8,523 8,989
LAWSON PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
(in thousands) 2007 2006
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents $1,861 $3,391
Accounts receivable, less
allowance for doubtful accounts 60,644 60,411
Inventories 90,457 90,272
Miscellaneous receivables and
prepaid expenses 7,743 5,529
Deferred income taxes 3,200 3,538
Discontinued current assets 1,750 2,056
Total Current Assets 165,655 165,197
Property, plant and equipment, less
allowances for depreciation and
amortization 49,339 42,664
Deferred income taxes 22,979 20,341
Goodwill 27,999 27,999
Other assets 24,854 22,679
Discontinued non-current assets 3 3
Total Assets $290,829 $278,883
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Revolving line of credit $16,000 $---
Accounts payable 13,829 14,055
Accrued expenses and other
liabilities 41,617 46,746
Income taxes --- 855
Discontinued current liabilities 1,720 1,770
Total Current Liabilities 73,166 63,426
Accrued liability under security
bonus plans 26,478 25,522
Other 20,787 19,618
47,265 45,140
Total Stockholders' Equity 170,398 170,317
Total Liabilities and
Stockholders' Equity $290,829 $278,883
SOURCE Lawson Products, Inc.
Scott F. Stephens of Lawson Products, Inc.,
847-827-9666, ext. 2269
http://www.prnewswire.com