Essendant's Industrial Supplies Sales Jump, Profit Dives In Q3

The former United Stationers company had a large industrial supplies sales boost from its acquisitions of MEDCO and Nestor, but an office supplies sales drop will lead it to take additional cost-reduction steps throughout Q4.

Deerfield, IL-based Essendant – formerly United Stationers – reported its 2015 third quarter financial earnings on Tuesday for the period ended Sept. 30.

The company – which rebranded as Essendant effective June 1 of 2015 – posted sales of $1.39 billion, down 2 percent year-over-year. Excluding the impact of acquisitions, sales were down 7.7 percent. The company's profit decrease was much larger, as Q3's $27.7 million was a 31.2 percent drop from last year. This follows a 9.2 percent profit decline in Q2.

Essendant's industrial supplies sales jumped 37.3 percent in Q3 to $223.5 million, including $81.2 million of sales from its acquisitions of MEDCO and Nestor made in October 2014 and August 2015, respectively. The company said weakness in the energy and industrial sectors drove a $20.5 million sales decline in the organic industrial business.

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Essendant's janitorial and breakroom supplies sales decreased 1.8 percent to $375.5 million, while total office products sales were down 9.5 percent to $752 million.

Through the first nine months of 2015, the company had sales of $4.07 billion, up from 2014's $3.99 billion. Profit of $51.5 million, however, is a 42.8 percent drop from last year.

"Additional steps must be taken to reduce cost through management de-layering in order to achieve broader functional alignment of the organization, and to counteract headwinds in the industrial and energy markets," the company said in a release.

The company said that in Q4, it plans to implement new workforce reductions as it transitions to a "channel-based organization more closely aligned with its customers.


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