Chicago-based MRO products distributor Lawson Products — No. 37 on Industrial Distribution's Big 50 List — reported its 2018 second quarter financial results on Thursday for the period ended June 30, led by a major jump in year-over-year (YoY) sales, accompanied by strong organic growth.
Lawson posted total Q2 sales of $90.4 million, up 20.5 percent YoY, with daily sales up 5.3 percent sequentially from Q1. Lawson's October 2017 acquisition of The Bolt Supply House boosted Q2 sales by $9.8 million. Excluding that addition, Lawson's organic sales increased 7.5 percent, which the company says was driven by its sixth consecutive quarterly increase in sales rep productivity — which improved 9.1 percent in Q2. That far outpaces Q1's sales rep productivity increase of 6.4 percent.
Lawson's Q2 total profit was $3.2 million, compared to $7.3 million a year earlier, with Q2 2017 benefiting from the sale of a facility equal to $0.60 per diluted share. The company's Q2 operating profit of $5.6 million compared with $7.9 million from a year earlier, with Q2 2017 benefiting from a $5.4 million gain from that facility sale. The company's Q2 gross profit increased $4.0 million to $49.1 million, compared to $45.1 million a year earlier.
"Demand for our value-added MRO services remained robust in the second quarter as evidenced by the increase in our average daily sales," said Michael DeCata, Lawson Products president and CEO. "The 20.5 percent sales increase was largely driven by improved Lawson sales rep productivity as well as the inclusion of Bolt Supply. The 43 percent 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.
"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."
Of Lawson's total sales, 89.0 percent came from product sales, while the remainder came from service revenue.
Lawson ended Q2 with 968 active sales representatives, nearly identical to the 966 at the end of Q1.