About eight weeks after announcing it would form a combined holding company with two other firms, Lawson Products reported its 2021 fourth quarter and full year financial results on Feb. 24.
The results showed continued year-over-year sales growth for the MRO products distributor and a narrow net loss due to the inclusion of non-operating assets.
READ MORE: Lawson Products to Merge with TestEquity, Gexpro Services (Jan. 3)
Chicago-based Lawson — No. 32 on Industrial Distribution's 2021 Big 50 List — posted Q4 total sales of $102.1 million, up 4.0 percent year-over-year and trailing Q3's $105.6 million. Average daily net sales grew 5.7 percent, driven by core MRO sales and growth within the company's The Bolt Supply House unit.
Lawson's Q4 gross profit improved 3.6 percent year-over-year, with margin of 52.9 percent trailing the 53.1 percent of a year earlier. Lawson said rising supplier costs during the quarter were mostly offset by price increases instituted throughout 2021.
The company had a Q4 operating loss of $0.8 million, primarily due to $6.9 million of non-operating items. Lawson had a $0.7 operating loss a year earlier and a $4.6 million operating profit in Q3. Likewise, Lawson had a Q4 net loss of $0.8 million, compared to a $0.2 million profit a year earlier and $3.7 million profit in Q3.
Lawson ended Q4 with 1,037 sales reps, down from 1,090 a year earlier and 1,064 at the end of Q3.
For the full year, Lawson had 2021 total sales of $417.7 million, up 18.8 percent vs. 2020. The company's Q3 2020 acquisition of Partsmaster accounted for $57.8 million of those sales. Excluding Partsmaster, Lawson's 2021 organic sales jumped 9.4 percent. The company said that the slowly improving industrial environment vs. 2020 led to increased sales in all customer categories in the Lawson segment.
Lawson's 2021 gross profit improved 17.5 percent vs. 2020, though margin of 52.5 percent trailed 2020's 53.1 percent. The company said the lower 2021 gross margin was driven by establishing inventory reserves related to integrating Partsmaster, along with growing reserves of PPE inventory. Gross margin improved sequentially in both Q3 and Q4.
The company's 2021 operating profit was $12.0 million, excluding $15.5 million of non-operating items from the pending merger announced Dec. 29. Lawson's 2021 net profit was $9.4 million, trailing 2020's $15.1 million.
Lawson ended 2021 by announcing a merger with companies of private equity firm LKCM Headwater — TestEquity and Gexpro Services. All three niche industrial distribution companies will be brought under a holding company with all three companies operating independently with their existing management teams as separate divisions. The combination is expected to close during Q2.
