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9 years ago
Lawson Products Reports Fourth Quarter 2014 Results
Last update: 19/02/2015 7:30:00 am
Lawson Products Reports Fourth Quarter 2014 Results
Sales Increase 6.9% and Gross Profit Improves 8.3% for the Quarter
CHICAGO--(BUSINESS WIRE)--February 19, 2015--
Lawson Products, Inc. (NASDAQ: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, 2014.
Highlights
-- Net sales and average daily sales improved 6.9% over the fourth quarter
of 2013
-- Gross profit grew 8.3% and increased to 61.1% in the fourth quarter of
2014 as compared to 60.3% a year ago and 60.1% in the third quarter of
2014
-- Adjusted operating income improved $0.6 million for the quarter and $3.9
million for the year (See reconciliation in Table 1)
-- Generated $4.5 million of cash from operations for the quarter and ended
the year with $4.2 million of available cash and no bank debt
"We continue to see solid improvements in our sales and operating performance as a result of our recent infrastructure investments and growth in our sales force," said Michael DeCata, president and chief executive officer. "Growing sales has been and remains a primary focus for us. We delivered a 6.9% increase in net sales during the fourth quarter and 6.0% growth for 2014 fueled by strong performance of our strategic accounts and the Kent Automotive business. This growth demonstrates that we're beginning to see improved results from our current strategy. Additionally, our gross profit improved over a year ago and over the third quarter as we were able to lower our purchasing costs and gain leverage on our distribution center costs; each being an operational priority we have focused on.
"A main component of that strategy is continuing to increase coverage of our targeted marketplace by adding quality sales representatives. In the fourth quarter, we added 22 sales reps and 110 for all of 2014," continued Mr. DeCata. "Customers continue to value our services as evidenced through our higher customer retention, new customers gained and stable gross margins. This reinforces our belief in our growth strategy and provides us with the confidence to continue to invest in adding new sales reps, despite the upfront cost to the Company."
Fourth Quarter Results
Net sales for the fourth quarter of 2014 increased 6.9% to $70.3 million versus $65.7 million for the fourth quarter of 2013. Average daily sales were $1.152 million in the recent quarter compared with $1.078 million a year earlier. The sales increase was driven by 12% year-over-year sales growth in both our strategic accounts and our Kent Automotive division. Additionally, productivity improvements from both existing sales representatives and newer reps developing their new territories contributed to the increase in sales.
Gross profit percentage for the period was 61.1% compared to 60.3% in the fourth quarter of 2013 and 60.1% in the third quarter of 2014. The increase was primarily due to leveraging distribution center costs and lower purchasing costs.
Selling expenses increased as a percent of sales to 32.7% in the fourth quarter of 2014 compared to 31.6% in the fourth quarter of 2013. This increase reflects initial compensation expense associated with the expansion of the sales force as well as higher health insurance costs. General and administrative expenses increased to $21.8 million in the fourth quarter of 2014 from $19.3 million in the prior year quarter primarily attributable to a rise in stock-based compensation of $1.9 million resulting from the increase in our stock price over the past year.
Excluding non-recurring and non-operational items, adjusted non-GAAP operating income was $0.6 million in the fourth quarter of 2014 compared to break-even a year ago (see reconciliation in Table 1). GAAP operating loss improved to $2.2 million compared to a $3.0 million operating loss a year ago. The $3.3 million increase in gross profit was offset by added stock-based compensation expense, as required under current accounting standards, resulting from the increase in our stock price during the quarter. In addition, the planned incremental compensation costs of hiring new sales representatives and increased health insurance expense offset the additional gross profit.
Net loss for the fourth quarter of 2014 was $2.7 million, or $0.31 per diluted share, as compared to a net loss of $2.9 million, or $0.33 per diluted share, for the same period a year ago.
During the fourth quarter of 2014 we generated $4.5 million of cash from operating activities and ended 2014 with $4.2 million of cash and equivalents. The Company had no borrowings at the end of 2014 compared to $16.1 million at the end of 2013.
For the full year 2014, sales grew 6.0% to $285.7 million and adjusted non-GAAP operating income was $4.9 million, an improvement of $3.9 million over 2013. GAAP net loss per diluted share decreased to $0.50 from $0.59 in 2013.
Looking Forward
"As we begin 2015, the Company's initiatives will continue to focus on improving sales productivity from our existing and recently hired sales representatives while continuing to expand our sales force, enhancing customer service and remaining disciplined in managing our operating expenses," said Mr. DeCata.
Highlights of our 2015 plan include:
-- Continue our sales growth strategy by making investments in our existing
sales force to drive productivity and expand our sales force from 916 to
approximately 1,000 individuals by the end of 2015;
-- Invest approximately $4.0 million of capital expenditures into the
business to improve our customer service, support our distribution
capabilities and strengthen our technology infrastructure;
-- Conduct a 4-day national sales meeting in Chicago, Ill. during the first
quarter to further educate, develop and invest in our sales team. The
meeting will include active sales reps, sales management, and various
corporate functions with a focus on driving productivity and top-line
sales. Approximately 100 of our top suppliers will be in attendance to
provide training, product demonstrations and new product introductions to
our sales team;
-- Continue to utilize Lean/Six Sigma methodologies to drive efficiencies
throughout the business; and
-- Manage our general and administrative expenses to leverage our existing
infrastructure and fixed costs.
"Our 2014 results provide additional confirmation that spending on our infrastructure has enabled us to continue to improve our operational efficiencies. We have a strong foundation in place to continue to grow the business and drive improved performance in 2015 and beyond," concluded Mr. DeCata.
Conference Call
Lawson Products, Inc., will conduct a conference call with investors to discuss fourth quarter 2014 results at 9:00 a.m. Eastern Time on February 19, 2015. The conference call is available by direct dial at 888-349-0106 in the U.S. or 412-902-0131 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, 2015. Callers can access the replay by dialing 877-344-7529 in the U.S. or 412-317-0088 outside the U.S. The PIN access number for the replay is 10053973#. 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, 2015.
About Lawson Products, Inc.
Founded in 1952, Lawson Products (NASDAQ: LAWS) is an industrial distributor of approximately 300,000 maintenance and repair products. Lawson Products serves the industrial, commercial, institutional and government maintenance, repair and operations (MRO) market. The Company ships products to customers in all 50 states, Puerto Rico, Canada, Mexico and the Caribbean from five strategically located distribution centers in North America. Under its Kent Automotive brand, the Company supplies products to collision and mechanical repair shops as well as automotive OEMs. For additional information, please visit www.lawsonproducts.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, 2014, Form 10-K filed on February 19, 2015. 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.
(MORE TO FOLLOW) Dow Jones Newswires
February 19, 2015 07:30 ET (12:30 GMT)
Penny Roger$
12 years ago
Lawson Products, Inc. (Lawson) is a North American distributor of products and services to the industrial, commercial, institutional, and governmental maintenance, repair and operations (MRO) marketplace. The Company also manufactures and distributes production and specialized component parts to the original equipment marketplace (OEM) including the aerospace, off-road equipment, military and oil and gas exploration industries. During the year ended December 31, 2010, the Company discontinued operations of two of its subsidiaries, Assembly Component Systems, Inc. (ACS) and Rutland Tool & Supply Company (Rutland).
http://www.google.com/finance?q=LAWS
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