Lawson Products (LAWS) Tops Q3 EPS by 17c, Revenues Miss

Lawson Products (NASDAQ: LAWS) reported Q3 EPS of $0.54, $0.17 better than the analyst estimate of $0.37. Revenue for the quarter came in at $88.5 million versus the consensus estimate of $89.54 million.

• Sales of $88.5 million, up 17.0%. Average daily sales ("ADS") increased to $1.405 million during the third quarter of 2018 compared to $1.201 million in the third quarter of 2017
• Lawson segment ADS increased 4.0%, excluding The Bolt Supply House ("Bolt Supply"), primarily due to a 6.6% improvement in sales rep productivity
• Operating loss of $2.3 million, including $7.6 million in stock-based compensation expense due to a 39% increase in the market price of the Company\'s stock price, compared to operating income of $1.1 million in the third quarter of 2017. Non-GAAP adjusted operating income of $5.6 million compared to $3.9 million a year ago, up 44.6%. Adjusted EBITDA of $7.3 million which exceeded the $5.4 million from a year ago, up 34.6% (See reconciliation in Table 2)
• Net loss of $0.8 million or $0.09 per diluted share. Adjusted net income, excluding stock-based compensation, acquisition costs and severance, was $5.0 million or $0.54 per diluted share
• Borrowings, net of cash, were $2.3 million at September 30, 2018, a reduction of $7.8 million during the quarter, driven by strong cash flows from operations
• Continued to be active with acquisitions by acquiring Dallas-based Screw Products, Inc. on October 1, 2018

“The third quarter results evidenced strong demand, solid execution on our growth strategy and a continuation of our favorable 2018 performance. We delivered a 17.0% sales increase driven by improved Lawson sales rep productivity as well as the inclusion of Bolt Supply. In addition, our adjusted operating income grew by nearly 45% demonstrating our ability to leverage our existing infrastructure," said Michael DeCata, president and chief executive officer.

“Subsequent to the quarter, we announced the acquisition of Dallas-based Screw Products, Inc., a $3.0 million dollar customized fastener and component distributor that will expand our customer base in the job shop/manufacturing market segment. We will continue to make strategically-focused and disciplined investments. We remain confident that we will achieve continued earnings growth fueled by both organic sales and accretive acquisitions,” said DeCata.

For earnings history and earnings-related data on Lawson Products (LAWS) click here.

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