Lawson Products sales continue to fall
A decline in government sales and the loss of smaller customers are behind an 11.6% drop in sales for Lawson Products.
The company said net sales for the second quarter of 2012 were $74.3 million versus $84.2 million in the second quarter of 2011. The decrease was mainly driven by a decline of $3.8 million in government sales primarily due to military bases that support troop deployment, lower freight revenues, increased attrition among smaller customers and a decline in sales representatives from a year ago, the company said in a statement announcing the results. This decrease was partially offset by an increase in sales to strategic accounts. Average daily sales declined 2.1% sequentially from the first quarter of 2012 and 11.6% year-over-year.
“Over the past 18 months, we have undertaken a series of strategic initiatives to drive the future growth and profitability of our business including the recently announced restructuring to reduce our cost structure and improve our operating efficiency. During the quarter, we recorded approximately $40 million of non-recurring charges which significantly impacted our results. These actions are anticipated to produce annualized savings of approximately $20 million beginning in the third quarter of this year,” said Thomas Neri, president and chief executive officer.
“We have returned to pre-ERP implementation customer service levels despite challenging top-line growth. As we continue to improve upon our operations, we expect to begin realizing benefits from our strategic restructuring initiatives in the second half of 2012.”
Net loss for the second quarter of 2012 was $61.2 million, or $7.12 per diluted share.
As the company continues to focus on its long-term transformation, Lawson said it will continue to transition its independent agent model to an employee model. A redesigned website will be launched in a phased approach. The website will be fully integrated and allow orders to be placed directly on-line as well as enhancing the company’s visibility to a broader base of customers.
The company will consolidate distribution operations currently performed at three separate Illinois locations into a new leased facility in McCook, Illinois. This facility will become the hub of Lawson’s distribution network and is intended to improve the company’s operating efficiency. Lawson also entered into a new five year $40.0 million credit facility that provides the necessary liquidity to fund its future operations and continue its transformation.
“We continue to take the necessary steps to transform the company. We believe the recently completed restructuring and the implementation of our new ERP system, along with the initiatives scheduled to be completed in the near future, will enable us to better leverage our competitive advantages and reposition the company for long-term growth and profitability,” Neri said.
INDUSTRIAL SUPPLY MAGAZINE
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