CHICAGO — Lawson Products, Inc. today announced results for the second quarter ended June 30, 2018.
- Total sales of $90.4 million, up 20.5%. Average daily sales (“ADS”) increased to $1.412 million during the second quarter of 2018 compared to $1.172 million in the second quarter of 2017 and increased 5.3% sequentially over the first quarter
- Organic Lawson segment ADS, excluding The Bolt Supply House (“Bolt Supply”), increased 7.5% compared to the prior year quarter driven by the sixth consecutive quarterly increase in sales rep productivity which increased 9.1% for the quarter
- Bolt Supply, which was acquired in October of 2017, added $9.8 million of sales and $0.9 million of adjusted EBITDA in the second quarter 2018, in line with the Company’s expectations
- Operating income was $5.6 million compared to $7.9 million in the second quarter of 2017 which included a $5.4 million non-recurring gain on the sale of a facility. Non-GAAP adjusted EBITDA was $7.7 million compared to $4.5 million a year ago, up 71%. The Lawson segment adjusted EBITDA was $6.8 million, up 50% over the year ago quarter
- Borrowings, net of cash, ended at $10.1 million representing a decline of $3.5 million during the quarter
“Demand for our value-added MRO services remained robust in the second quarter as evidenced by the increase in our average daily sales. The 20.5% sales increase was largely driven by improved Lawson sales rep productivity as well as the inclusion of Bolt Supply. The 43% growth in our adjusted EBITDA percentage, which is over twice the sales gain, demonstrates the strengthening of our business and our ability to leverage our existing infrastructure,” said Michael DeCata, president and chief executive officer. “Additionally, we increased our Lawson segment gross profit to 60.4% prior to the selling expense reclassification while driving adjusted EBITDA as a percent of sales to 8.6% from 6.0% a year ago.”
Second Quarter Results
Net sales increased 20.5% to $90.4 million for the second quarter of 2018 compared to $75.0 million in 2017. Both quarters had 64 selling days. Average daily sales grew to $1.412 million compared to $1.172 million in the previous year quarter. Sales were positively impacted by $9.8 million from the inclusion of the Bolt Supply acquisition completed in the beginning of the fourth quarter of 2017 and a 9.1% improvement in Lawson’s sales per rep per day productivity compared to the second quarter 2017.
Second quarter gross profit increased $4.0 million to $49.1 million compared to $45.1 million in 2017, primarily due to increased sales and the acquisition of Bolt Supply, offset by $3.4 million due to the adoption of the new revenue recognition accounting standard. On a like-for-like basis, gross profit of the Lawson segment improved to 60.4% from 60.2% the year ago quarter. Reported gross profit as a percentage of sales was 54.4% for the second quarter. Prior to the adoption of the new revenue recognition standard, consolidated gross profit as a percent of sales was 58.0% including Bolt Supply.
Selling expenses decreased as a percentage of sales to 24.3% from 31.7% in the second quarter of 2017 due to increasing organic sales, the adoption of the new revenue recognition standard, and the inclusion of Bolt Supply, which has lower selling expenses. The Lawson segment selling expenses decreased as a percent of sales to 30.5% from 31.7% on increasing organic sales. Reported selling expenses of $22.0 million in the second quarter compared to $23.8 million a year ago reflect the inclusion of $0.8 million of Bolt Supply expenses offset by $3.1 million of selling expenses now reported within gross profit.
General and administrative expenses decreased as a percentage of sales to 23.9% from 25.2%, primarily from leveraging our costs on growing sales. Total general and administrative expenses of $21.6 million in the second quarter of 2018 compared to $18.9 million a year ago quarter reflect the inclusion of $2.1 million for Bolt Supply and $0.5 million for a discontinued operation accrual.
Operating income in the second quarter of 2018 was $5.6 million compared to $7.9 million a year ago which included a non-recurring gain of $5.4 million from the sale of a distribution facility. Adjusted non-GAAP EBITDA increased to $7.7 million in the second quarter of 2018 compared to $4.5 million in the year ago quarter (see reconciliation in Table 2). The growth in adjusted non-GAAP EBITDA from a year ago was generated by an improvement of $2.3 million in the Lawson segment and the contribution of $0.9 million from Bolt Supply.
Net income for the second quarter of 2018 was $3.2 million, or $0.35 per diluted share compared to net income of $7.3 million, or $0.80 per diluted share, for the same period a year ago. The second quarter of 2017 benefited by $0.60 per diluted share from a non-recurring gain on the sale of a facility. Excluding this non-recurring gain, net income per diluted share increased to $0.35 from $0.20 in the year ago quarter.
“Excluding last year’s benefit from the sale of a facility, our results significantly improved this quarter as a result of our acquisition strategy, improving the productivity of our sales team, and the ability to leverage our infrastructure on strong organic sales growth. The continued improvement in our financial performance is a result of investments that we have made over the past several years. We are encouraged by our performance to date and are confident that we will achieve increased earnings through growth in organic sales and accretive acquisitions,” concluded DeCata.Tagged with financial, lawson products