Deerfield, IL-based workplace essential products distributor Essendant — formerly United Stationers — reported its 2017 fourth quarter and full-year financials on Wednesday, while also announcing details of a restructuring program to support future growth after total sales fell 4.5 percent in Q4 year-over-year (YoY).
Essendant said the restructuring — which has already begun in Q1 this year and will go into 2020, includes facility consolidations and workforce reductions that will have an estimated cash cost of $30 to $40 million. The company did not provide details on the number of facility consolidations or jobs effected in its earnings release or conference call with analysts.
The plan also includes assortment refinements aimed to eliminate items that have limited availability and lower sales. "This is expected to improve service levels while having a minimal impact on sales," the company stated. The company's Q1 restructuring charges are an estimated $42 million to $48 million.
Essendant said the restructuring will achieve savings of more than $50 million by 2020, with more than half of that achieved in 2018.
Looking at Essendant's 2017 fourth quarter, total sales of $1.2 billion decreased 4.5 percent year-over-year, driven by lower sales in the national reseller channel. Here's how Q4 sales fared by product category YoY:
- JanSan: decreased 9.4 percent to $304 million
- Technology: decreased 8.5 percent to $285 million
- Traditional Office: decreased 4.8 percent to $175.4 million
- Industrial Supplies: increased 11.0 percent to $154.1 million
- Cut-sheet Paper Products: decreased 3.3 percent to $98.2 million
- Automotive: increased 12.1 percent to $87.4 million
- Office furniture: decreased 16.4 percent to $56.2 million
"We have seen growth in our key JanSan reseller channel and the Industrial reseller channel, though overall sales continued to be significantly pressured by changes in the sourcing strategies of the national resellers, as reflected in our product category sales results," said Essendent president and CEO Ric Phillips, who had his interim title removed last October.
Essendant had a Q4 net loss of $1.5 million, compared to a $2.3 million loss a year earlier. Q4 gross profit was $170.9 million, up from $165.1 millino a year earlier, while operating profit of $9.8 million rebounded from a $1.7 million loss a year earlier.
For the full year, Essendant's 2017 sales of $5.04 billion fell 6.2 percent from 2016, while the company's net loss was $267.0 million, compared to a $63.9 profit in 2016. Gross profit of $706.1 million in 2017 fell approximately $54 million, while an operating loss of $244 million was a major fall from 2016's $94.7 million profit.
Looking forward, Essendant expects full-year 2018 sales to decrease 3 to 6 percent from 2017.
