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Articles 

Lawson Products Inc. Reports Operating Results (10-Q)

October 25, 2012 | About:

Lawson Products Inc. (NASDAQ:LAWS) filed Quarterly Report for the period ended 2012-09-30.

Lawson Products, Inc. has a market cap of $65.2 million; its shares were traded at around $6.585 with and P/S ratio of 0.2. The dividend yield of Lawson Products, Inc. stocks is 6.3%.

Highlight of Business Operations:

MRO net sales decreased 5.1% in the third quarter of 2012, to $67.9 million from $71.5 million in the prior year period. MRO average daily sales decreased to $1.077 million in the third quarter of 2012 compared to $1.117 million in the third quarter of 2011. Of the $3.6 million decrease in sales, approximately $1.9 million was due to an increase in the number of vacant sales territories from a year ago, $1.1 million was due to one less selling day in the third quarter of 2012 compared to 2011 and $0.6 million from lower freight revenue. Government sales decreased $0.7 million from the prior year quarter primarily from lower sales to state and local agencies. National accounts increased 5.0% or $0.4 million versus a year ago primarily due to additional sales to existing customers. Our automotive segment grew $0.7 million driven by growth in our larger accounts.

Selling expenses consist of commissions paid to our independent sales representatives, employee sales expenses and related expenses to support our sales efforts. Selling expenses decreased $0.9 million to $20.3 million in the third quarter of 2012 from $21.2 million in the prior year quarter, primarily due to lower sales. Selling expenses as a percent of sales increased slightly to 28.3% in the third quarter of 2012 compared to 28.2% in the third quarter of 2011 due to the impact of fixed selling costs on the decreased sales levels.

MRO net sales decreased 9.6% in the first nine months of 2012, to $209.1 million from $231.4 million in the prior year period. MRO average daily sales decreased to $1.095 million in the first nine months of 2012 compared to $1.211 million in the first nine months of 2011. Of the $22.3 million decrease in sales, approximately $20.1 million was due to an increase in the number of vacant sales territories from a year ago and $2.2 million due to lower freight revenue. Government sales decreased $8.8 million in the first nine months of 2012 compared to the first nine months of 2011 primarily as a result of 2011 benefitting from troop deployments. We anticipate that growth in the government segment may be limited given our past support to troop deployments which is not expected to increase in the near future. National accounts increased $1.5 million primarily due to growth of existing relationships while our automotive business grew $1.1 million primarily due to growth in our larger accounts.

MRO gross profit as a percent of net MRO sales decreased to 56.7% in the first nine months of 2012, compared to 59.9% achieved in the first nine months of 2011. This decrease was primarily due to an increase of $5.4 million of inventory reserves, a decrease of $1.0 million in outbound freight recoveries and a shift toward higher volume national customers with lower margins. These national accounts represented approximately 12.2% of MRO sales in the first nine months of 2012 compared to approximately 10.5% in the prior year period. We expect that our gross margin percentage will be under pressure in the future as we continue to increase the mix of national accounts in our customer base and continued competitive pressures.

Selling expenses decreased to $62.3 million in the first nine months of 2012 from $66.3 million in the prior year nine months primarily due to lower sales. Selling expenses increased as a percent of sales to 28.0% in 2012 from 27.4% in 2011 primarily due to the impact of fixed selling costs on the decreased sales levels.

Read the The complete Report

About the author:

10qk
Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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