10/26/2012 3:34:00 PM
NEWS BRIEFS
Lawson Products Operating Income Improves
Lawson Products reported sales declined 4.5% to $72 million in the third quarter of 2012, driven by increased vacant sales territories and lower freight revenues.
Q3 operating income totaled $100,000 prior to severance – an improvement of $2.8 million over the prior year. The $1.4 million severance expense was primarily related to the retirement of former CEO Thomas Neri, who was replaced on October 1 by Michael DeCata.
Third quarter gross profit improved 0.2% to $43.4 million, with the gross margin percentage increasing to 60.2% from 56.5% for the year-ago quarter.
Net loss for the third quarter of 2012 was $1.3 million, or $0.15 per diluted share, compared to a net loss $2.2 million, or $0.25 per diluted share, in the prior year period.
Third quarter initiatives included the integration of the first of three Illinois facilities into its facility in McCook, IL. The Company expects to integrate the other two facilities over the next two quarters, making the McCook facility the hub of Lawson’s distribution network.
Lawson is also transitioning its independent agents in the U.S. to employees, a process that should be completed in the first quarter of 2013.
Mr. DeCata commented, “In the coming quarters, we will renew our emphasis on improving sales by building upon productivity enhancements, utilizing our new ERP system as our foundation for growth and restoring our sales force to a more effective level,” stated new CEO Michael DeCata.
Sales during the first nine months of 2012 declined 8.1% to $222.3 million, with gross profit dropping 13.7% to $121.5 million. Lawson reported an operating loss of $45.6 million for the nine-month period.
In late June Lawson Products announced plans to eliminate 100 jobs — 11% of its workforce — as part of restructuring efforts to stay competitive in what it called a “fragmented” MRO industry.
The cuts include elimination of several senior executive positions, including the open COO position, but will not reduce Lawson’s sales force.
Other cost-cutting measures include rationalizing inventory and reducing travel, marketing and outbound freight expenses.
Collectively the reductions are expected to save Lawson Products about $20 million annually. ©2012 GlobalFastenerNews.com
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