MRO products distributor Lawson Products — No. 31 on Industrial Distribution’s Big 50 List — reported its 2020 third quarter financial results on Thursday, led by sales that were still modestly down year-over-year, but far improved sequentially.
Chicago-based Lawson reported total Q3 sales of $90.3 million, down 4.7 year-over-year (YoY), but up 25 percent from Q2. Average daily net sales in Q3 were also down 4.7 percent YoY. The company's Q3 operating profit of $2 million was less than one-third of the $6.4 million it had a year earlier, but up from the $0.6 million it had in Q2. Adjusted operating profit was $7.7 million in Q3, down 12.9 percent YoY and up from $4.8 million in Q2. Total Q3 profit of $1.7 million was far below the $4.8 million it had a year earlier, but up from $3.5 million in Q2.
"Our third quarter results confirm we are on the right path recovering from the impact of the pandemic-led economic downturn," said Michael DeCata, Lawson Products president and CEO. "Account collections and cash flows remain strong and our balance sheet has strengthened despite the economic uncertainty that still exists. Although we expect some challenges, Lawson is on the path to rebuild organic growth with better customer-facing business processes and more efficient operations that will benefit our customers, employees and shareholders."
DeCata said that the major sequential gain was driven by Lawson's responsiveness to customer needs as demand began to improve alongside partially withdrawn COVID-19 restrictions. He added that organic average daily sales improved sequentially each month of the quarter.
During the quarter on Sept. 1, Lawson announced the acquisition of Greenville, TX-based MRO parts distributor Partsmaster from NCH Corporation in a $35.3 million deal. It was Lawson's biggest bolt-on in five years.
"Less than 60 days since closing we are already acting on opportunities created by this combination," DeCata noted. "We are confident that we will produce value exceeding the sum-of-the-parts."
Q3 gross profit fell 6.7 percent YoY, but jumped 24.2 percent from Q2. The company's core MRO segment gross margin — excluding PartsMaster and service-related costs — was 58.8 percent in Q3, down from 60.9 percent a year earlier and 59.7 percent in Q2.
