Lawson Q3 Sales Down, Profit Gains As Sales Hiring Continues

For a second-straight quarter the company had a year-over-year sales decline and a profit gain, while CEO Michael DeCata commented on a recent acquisition in Canada and a sales rep hiring push.

Chicago-based Lawson Products – No. 39 on Industrial Distribution's 2015 Big 50 List – reported its 2015 third quarter financial earnings on Thursday for the period ending Sept. 30.

For a second straight quarter, the company had a year-over-year sales decline, while profit rose. The report was highlighted by total sales of $70.2 million, a 5.2 percent decrease from last year, while profit of $2.4 million was up from last year's $460,000. 

Lawson said that 70 percent of Q3's year-over-year sales decline was driven by a $1.5 million decrease in sales to direct oil and gas customers and a $1.2 million negative impact from the decline in the Canadian dollar.

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"Like the rest of the MRO industry and the broader manufacturing sector of the U.S. economy, our sales continue to be affected by challenges in the macro-economic environment, ongoing weakness in the oil and gas sector, and the negative impact of exchange rates," said Michael DeCata, Lawson president and CEO. "However, we were able to significantly increase our operating income from a year ago driven in large part by our improving gross margins along with our continued expense management and Lean/Six Sigma efforts."

Sequentially, sales were nearly identical to Q2's sales of $70.7 million, while Q2's profit was larger at $2.8 million.

DeCata said Lawson will continue to grow its sales base by expanding its sales rep count, which now stands at 925. He also said the company on Sept. 30 completed an acquisition of a small, family-owned auto body parts distributor to complement Lawson's Kent Automotive business, and that the addition increases Lawson's presence in Western Canada.

"This acquisition is a small, but important first step as we continue to explore additional acquisition opportunities that fit our business model and grow our total sales representative count," DeCata said.

For the first 9 months of 2015, Lawson's sales of $210.9 million were down 2.1 percent from last year, while profit of $3.99 million was up from last year's net loss of $1.7 million.