Lawson Products, Inc. (NASDAQ:LAWS) (“Lawson” or the "Company"), a distributor of products and services to the MRO marketplace, today announced its 2011 fourth quarter and full-year results.
Thomas Neri, president and chief executive officer commented, “2011 was a transformational year for Lawson as we made substantial progress on the strategic initiatives that are critical to our long-term success. Specifically, we replaced our outdated legacy systems with a state-of-the-art ERP solution and have made progress toward optimizing our distribution network and transforming our organization to allow our customers to conduct business with us through multiple sales channels.”
Mr. Neri added: “Although operational issues related to our August 2011 ERP implementation impacted our financial performance during the second half of 2011, we continue to make progress on resolving many of these issues and improving our service levels. The new ERP system will enhance our ability to respond to our customers’ needs and lead to increased customer satisfaction. The system is critical to provide the platform for our new website, to support the technology requirements of our new distribution center and to enable enhanced sales solutions.”
Fourth Quarter Results
Net sales for the fourth quarter of 2011 were $72.9 million compared to $80.0 million in the prior year quarter, with one less selling day in the 2011 period. The decrease was largely due to challenges the Company encountered following the launch of its ERP system, which caused delays in its supply chain and fulfillment processes, leading to a build-up of backorders and lost sales in the quarter. Average daily sales were $1.214 million in the fourth quarter of 2011, an increase of 3.1% over the third quarter of 2011 and reflect the start of a recovery from the ERP-related issues.
Gross profit was $39.0 million in the fourth quarter of 2011, compared to $49.8 million in the prior year period. As a percent of net sales, gross profit for the fourth quarter of 2011 was 53.5% compared to 56.5% in the third quarter of 2011 and 62.2% in the fourth quarter of 2010. The decline was primarily driven by an increase in outbound freight and labor costs following the ERP conversion as well as the ongoing strategy to pursue larger customers with lower margins.