StockSelector.com
  Research, Select, & Monitor Monday, July 23, 2018 1:31:53 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Lawson Products Inc.$24.85$.15.61%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Lawson Products Reports Fourth Quarter 2017 Results
   Thursday, February 22, 2018 7:30:03 AM ET

Lawson Products, Inc. (LAWS ) ("Lawson" or the "Company"), a distributor of products and services to the MRO marketplace, today announced results for the fourth quarter ended December 31, 2017.

"We finished 2017 with a 17.8% increase in average daily sales driven by both acquired revenue and a 6.1% growth within our Lawson business segment that helped drive our annual 2017 operating income to $9.9 million. The sales growth was driven by an 8.3% increase in sales per rep per day in the Lawson segment and the acquisition of The Bolt Supply House this past October. This acquisition, being our largest to date, was an important step in pursuing our growth strategy of acquiring companies that significantly add to our revenue and leverage our infrastructure to drive earnings," said Michael DeCata, president and chief executive officer.

Fourth Quarter Highlights

-- Acquired The Bolt Supply House ("Bolt Supply") which contributed $8.0 million to sales in the quarter and was accretive to earnings by $0.05 to fully diluted earnings per share.

-- Average daily sales increased 17.8% to $1.322 million during the fourth quarter of 2017 compared to $1.122 million in the fourth quarter of 2016. The Lawson business segment average daily sales increased 6.1% to $1.191 million versus a year ago.

-- Gross profit increased $6.5 million to $47.0 million from $40.5 million in the prior year quarter on increased sales. Bolt Supply contributed $3.4 million of gross profit to the quarter.

-- Recorded GAAP operating income of $0.2 million in the fourth quarter of 2017 compared to an operating loss of $5.0 million a year ago. Excluding stock-based compensation, severance expense and acquisition related costs, adjusted non-GAAP operating income in the fourth quarter increased $0.7 million over a year ago (see reconciliation in Table 1).

-- Recognized a $20.4 million net income tax benefit primarily as a result of re-establishing the majority of our U.S. deferred tax assets net of the impact of the Tax Cuts and Jobs Act.

Fourth Quarter Results

Net sales increased 19.8% to $80.6 million for the fourth quarter versus $67.3 million for the same period a year ago on one additional selling day in 2017. Sales per rep per day generated by the organic Lawson business increased 8.3% over the fourth quarter of 2016. Average daily sales grew 17.8% to $1.322 million in the recent quarter compared with $1.122 million a year earlier. Fourth quarter sales benefitted from the Bolt Supply acquisition in the amount of $8.0 million along with continued growth in strategic customers, Kent Automotive and core accounts.

Fourth quarter gross profit increased 16.0% to $47.0 million from $40.5 million a year ago. The gross margin was 58.3% compared to 60.2% a year ago primarily as a result of the Bolt Supply acquisition. Gross profit from the organic Lawson business was $43.6 million or 59.9% in the fourth quarter of 2017. The slight decrease from the year ago quarter was primarily driven by disproportionate growth to larger strategic national customers, who typically generate lower product margins. Bolt Supply generated gross margin dollars of $3.4 million representing 43.2% of their sales.

Selling expenses as a percent of sales decreased to 31.1% from 34.7% from a year ago as fixed selling costs were leveraged over a higher sales base combined with Bolt Supply’s lower selling expenses. Nominally, selling expenses increased to $25.1 million in the fourth quarter of 2017 from $23.4 million in the prior year quarter due primarily to the Bolt Supply acquisition and an increase in compensation costs resulting from higher sales.

General and administrative expenses decreased to $21.7 million in the fourth quarter of 2017 from $22.2 million in the prior year quarter. This decrease was primarily due to lower stock-based compensation of $3.4 million as a portion varies with the company stock price and lower severance expenses of $1.5 million partially offset by restoring incentive compensation accruals and reflecting the operating expenses of Bolt Supply.

Due to improving financial results and increased confidence in generating future earnings, in accordance with GAAP, the Company re-established the majority of its U.S. deferred tax assets. This benefit was partially offset by the reduction in the federal income tax rate from 35% to 21% resulting in a net tax benefit of these items of $21.2 million for the quarter.

Operating income in the fourth quarter of 2017 was $0.2 million compared to an operating loss of $5.0 million a year ago. Adjusted non-GAAP operating income, adjusted for stock-based compensation, severance and acquisition costs, was $1.2 million in the fourth quarter of 2017 compared to $0.5 million a year ago (see reconciliation in Table 1).

Net income for the fourth quarter of 2017 was $20.2 million, or $2.21 per diluted share compared to a net loss of $4.6 million, or $0.53 per diluted share, for the same period a year ago. The earnings per diluted share benefitted from re-establishing our U.S. deferred tax assets net of the impact of the Tax Cuts and Jobs Act.

"In 2017, our 65th year in business, we realized encouraging operating and financial results from our strategy. The fundamentals of our business continue to get stronger. Our improved financial performance has been driven by the investments that we’ve made over the past several years that have allowed us to take advantage of the improving MRO marketplace. As demonstrated by our 2017 results we have a scalable infrastructure in place to drive additional levels of profitability and a scalable plan to drive organic and acquired sales growth," concluded Mr. DeCata.

Conference Call

Lawson Products, Inc., will conduct a conference call with investors to discuss fourth quarter 2017 results at 9:00 a.m. Eastern Time on February 22, 2018. The conference call is available by direct dial at 1-877-737-7051 in the U.S. or 1-201-689-8878 from outside of the U.S. A replay of the conference call will be available approximately two hours after completion of the call through March 31, 2018. Callers can access the replay by dialing 1-877-481-4010 in the U.S. or 1-919-882-2331 outside the U.S. The PIN access number for the replay is 24005#. A streaming audio of the call and an archived replay will also be available on the investor relations page of Lawson’s website through March 31, 2018.

About Lawson Products

Founded in 1952, Lawson Products, Inc., headquartered in Chicago, IL, sells and distributes specialty products to the industrial, commercial, institutional and government maintenance, repair and operations market (MRO). The company is dedicated to helping customers in the U.S. and Canada lower their total cost of operation by increasing productivity and efficiency. The combination of Lawson Managed Inventory and the company’s problem solving professionals ensures customers always have the right parts to handle the job. Through The Bolt Supply House, customers in Western Canada have access to products at several retail branches. Under its Kent Automotive brand, the company provides collision and mechanical repair products to the automotive aftermarket.

Lawson Products ships from several strategically located distribution centers to customers in all 50 states, Puerto Rico, Canada, Mexico, and the Caribbean.

For additional information, visit https://www.lawsonproducts.com/ or https://www.kent-automotive.com/.

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, 2017, Form 10-K filed on February 22, 2018. 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 Operations
                                                                                                                     (Dollars in thousands, except per share data)
                                                                                                                                      (Unaudited)
                                                                                                                                                     
                                                                                                              Three Months Ended                                                                                                Twelve Months Ended
                                                                                                                 December 31,                                                                                                      December 31,
                                                                        -----------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------
                                                                                        2017                                   2016                                                    2017                                 2016
                                                                        -------------------------------------                     -------------------------------------                     ---------------------------------                     -------------------------------------
                                                                                                                                                                                                                                                   
Net sales                                                                     $  80,633                                                 $  67,315                                             $ 305,907                                                 $ 276,573
Cost of goods sold                                                               33,640                                 26,811                            122,889                                108,511  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
   Gross profit                                                                  46,993                                 40,504                            183,018                                168,062  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                   
Operating expenses:
   Selling expenses                                                              25,061                                                    23,383                                                98,025                                                    92,908
   General & administrative expenses                                             21,689                                 22,165                             80,479                                 76,611  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
       Total SG&A                                                                46,750                                                    45,548                                               178,504                                                   169,519
   Gain on sale of property                                              --                         --                             (5,422 )                                          --  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
       Operating expenses                                                        46,750                                 45,548                            173,082                                169,519  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                   
   Operating (loss) income                                                          243                                                    (5,044 )                                               9,936                                                    (1,457 )
                                                                                                                                                                                                                                                   
Interest expense                                                                   (229 )                                                     (10 )                                                (622 )                                                    (496 )
Other (expenses) income, net                                                       (173 )                                                     (17 )                                                 780                                    422  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                   
Income (loss) before income taxes                                                  (159 )                                                  (5,071 )                                              10,094                                                    (1,531 )
Income tax (benefit) expense                                                    (20,396 )                                                    (428 )                                             (19,594 )                                                      98  
                                                                        ------------------------------------                      ------------------------------------                      --------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                   
   Net income (loss)                                                          $  20,237                              $  (4,643 )                                           $  29,688                              $  (1,629 )
                                                                        ======= ======= ====================                      ======= ======= ====================                      === ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                   
   Basic (loss) income per share of common stock                              $    2.28                              $   (0.53 )                                           $    3.35                              $   (0.19 )
                                                                        ======= ======= ====================                      ======= ======= ====================                      === ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                   
   Diluted (loss) income per share of common stock                            $    2.21                              $   (0.53 )                                           $    3.25                              $   (0.19 )
                                                                        ======= ======= ====================                      ======= ======= ====================                      === ======= ====================                      ======= ======= ====================
                                                                                      Lawson Products, Inc.
                                                                              Condensed Consolidated Balance Sheets
                                                                       (Dollars in thousands, except unaudited share data)
                                                                                           (Unaudited)
                                                                                                                     
                                                                                                              December 31,                                              December 31,
                                                                                                                  2017                                                      2016
                                                                                                  -------------------------------------                     -------------------------------------
                                   ASSETS
Current assets:
Cash and cash equivalents                                                                               $   4,416                                                 $  10,421
Restricted cash                                                                                               800                                                       800
Accounts receivable, less allowance for doubtful accounts                                                  38,575                                                    30,200
Inventories, net                                                                                           50,928                                                    42,561
Miscellaneous receivables and prepaid expenses                                                              3,728                                  3,788  
                                                                                                  ------------------------------------                      ------------------------------------
   Total current assets                                                                                    98,447                                                    87,770
                                                                                                                                                             
Property, plant and equipment, net                                                                         27,333                                                    30,907
Cash value of life insurance                                                                               11,964                                                    10,051
Goodwill                                                                                                   19,614                                                     5,520
Intangible assets                                                                                          11,813                                                       844
Deferred income taxes                                                                                      21,248                                                        20
Other assets                                                                                                  248                                    195  
                                                                                                  ------------------------------------                      ------------------------------------
   Total assets                                                                                         $ 190,667                              $ 135,307  
                                                                                                  ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                             
       LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Revolving line of credit                                                                                $  14,543                                                 $     841
Accounts payable                                                                                           12,394                                                    11,307
Accrued expenses and other liabilities                                                                     33,040                                 27,289  
                                                                                                  ------------------------------------                      ------------------------------------
   Total current liabilities                                                                               59,977                                                    39,437
                                                                                                                                                             
Security bonus plan                                                                                        12,981                                                    14,216
Financing lease obligation                                                                                  6,420                                                     7,543
Deferred compensation                                                                                       5,476                                                     4,830
Deferred rent liability                                                                                     3,512                                                     3,676
Deferred tax liability                                                                                      3,115                                            --
Other liabilities                                                                                           5,696                                  4,472  
                                                                                                  ------------------------------------                      ------------------------------------
   Total liabilities                                                                                       97,177                                 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                                                                           8,921                                                     8,865
   Issued - 8,921,302 and 8,864,929
   shares, respectively
   Outstanding - 8,888,028 and 8,832,623
   shares, respectively
Capital in excess of par value                                                                             13,005                                                    11,055
Retained earnings                                                                                          71,453                                                    41,943
Treasury stock - 33,274 and 32,306 shares held, respectively                                    (711 )                                                    (691 )
Accumulated other comprehensive income (loss)                                                                 822                                    (39 )
                                                                                                  ------------------------------------                      ------------------------------------
   Total stockholders’ equity                                                   93,490                                 61,133  
                                                                                                  ------------------------------------                      ------------------------------------
       Total liabilities and stockholders’ equity                            $ 190,667                              $ 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 infrequently occurring, seasonal or non-operational items
that impact the overall comparability. See Table 1 below for
supplemental financial data and corresponding reconciliations to
GAAP financial measures for the three months ended December 31,
2017 and 2016. Non-GAAP financial measures should be viewed in
addition to, and not as an alternative for, the Company’s reported
results prepared in accordance with GAAP.
                                                  Table 1 - Reconciliation of GAAP to Adjusted Non-GAAP Operating
                                                                           Income (Loss)
                                                                      (Dollars in thousands)
                                                                            (Unaudited)
                                                                                      
                                                                                                         Three Months Ended
                                                                                                            December 31,
                                                                   -----------------------------------------------------------------------------------------------
                                                                                   2017                                                      2016
                                                                   -------------------------------------                     -------------------------------------
                                                                                                                              
Operating income (loss), as reported per GAAP                            $     243                                                 $  (5,044 )
                                                                                                                              
 Stock-based compensation (1)                                                  384                                                     3,801
 Severance expense                                                             144                                                     1,662
 Acquisition related costs                                                     425                                    120  
                                                                   ------------------------------------                      ------------------------------------
Adjusted non-GAAP operating Income                                       $   1,196                              $     539  
                                                                   ======= ======= ====================                      ======= ======= ====================

(1) Expense for stock-based compensation, of which a portion varies with the Company’s stock price

                                                                                                Lawson Products Core Business
                                                                                            Table 2 - Quarterly Data (Unaudited)
                                                                               Historical Lawson Segment Sales Representative and Productivity
                                                                                                         Information
                                        
                                                                                                                                 (Dollars in thousands)
                                                                                                                                   Three Months Ended
                                                            -----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Dec. 31,        Sep. 30,        Jun. 30,        Mar. 31,           Dec. 31,
                                                                 2017                               2017                               2017                               2017                                  2016
                                                            --------------                     --------------                     --------------                     --------------                     ---------------------
                                                                                                                                                                                                         
Number of business days                                            61                                 63                                 64                                 64                                     60
                                                                                                                                                                                                         
Average daily net sales                                       $ 1,191                            $ 1,201                            $ 1,172                            $ 1,166                               $  1,122
Year over year increase                                           6.1 %                              9.5   %                            8.1   %                            7.1   %                                5.4 %
Sequential quarter (decrease) increase                           (0.8 )%                             2.5   %                            0.5   %                            3.9   %                                2.3 %
                                                                                                                                                                                                         
Average active sales rep count (1)                                987                                991                                981                                990                                  1,007
Period-end active sales rep count                                 983                                988                                987                                979                                  1,009
                                                                                                                                                                                                         
Sales per rep per day                                         $ 1.207                            $ 1.212                            $ 1.195                            $ 1.178                               $  1.114
Year over year increase (decrease)                                8.3 %                             11.3   %                            8.1 %                              2.6 %                                 (2.6 )%
Sequential quarter (decrease) increase                           (0.4 )%                             1.4   %                            1.4 %                              5.7 %                                  2.3 %

(1) Average active sales representative count represents the average of the month-end sales representative counts

                                                                                                                                                          Lawson Products, Inc.
                                                                                                                                                 Table 3 - Quarterly Results (Unaudited)
                                                                                                                                                                                                   
                                                                                                                                                                                         (Dollars in thousands)
                                                                                                                                                                                           Three Months Ended
                                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Dec. 31,                                                  Sep. 30,                                                Jun. 30,                                               Mar. 31,                                                  Dec. 31,
                                                                                2017                                                      2017                                                    2017                                                   2017                                                      2016
                                                                -------------------------------------                     -------------------------------------                     --------------------------------                     -------------------------------------                     -------------------------------------
                                                                                                                                                                                                                                                                                                    
Average daily net sales                                               $   1,322                                                 $   1,201                                             $  1,172                                                 $   1,166                                                 $   1,122
                                                                                                                                                                                                                                                                                                    
Net sales                                                             $  80,633                                                 $  75,651                                             $ 75,006                                                 $  74,617                                                 $  67,315
Gross profit                                                             46,993                                                    46,005                                               45,141                                                    44,879                                                    40,504
                                                                                                                                                                                                                                                                                                    
Gross profit percentage                                                    58.3 %                                                    60.8 %                                               60.2 %                                                    60.1 %                                                    60.2 %
                                                                                                                                                                                                                                                                                                    
Operating expenses
------------------------------------------
Selling, general & administrative expenses                            $  46,750                                                 $  44,915                                             $ 42,672                                                 $  44,167                                                 $  45,548
Gain on sale of property (1)                                     --                         --                            (5,422 )                                          --                         --  
                                                                ------------------------------------                      ------------------------------------                      -------------------------------                      ------------------------------------                      ------------------------------------
                                                                         46,750                                 44,915                            37,250                                 44,167                                 45,548  
                                                                ------------------------------------                      ------------------------------------                      -------------------------------                      ------------------------------------                      ------------------------------------
                                                                                                                                                                                                                                                                                                    
Operating income (loss)                                               $     243                              $   1,090                          $  7,891                              $     712                              $  (5,044 )
                                                                ======= ======= ====================                      ======= ======= ====================                      === ====== ====================                      ======= ======= ====================                      ======= ======= ====================

(1) The three months ended June 30, 2017 includes $5.4 million related to the sale of the Fairfield, New Jersey distribution center

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180222005148r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180222005148/en/

SOURCE: Lawson Products, Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@Lawson_Products

Investor Relations: 
Lawson Products, Inc. 
Ronald J. Knutson 
Executive Vice President, Chief Financial Officer 
773-304-5665


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2018 StockSelector.com. All rights reserved.