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Lawson Products, Inc., Des Plaines, IL, reported net sales for 2004 were $419.7 million, an increase of 7.9% over 2003. Net income of $21.4 million was up 32% from 2003. Its MRO sales (80% of the business) were up 5.3% for the year, and up 9.8% for the 2004 fourth quarter. Its OEM sales were up 20.1% for the year and up 16.1% for the last quarter.
Lawson's operating income increased by 35.5% in 2004, as operating expenses increased at a much slower rate than the overall sales growth rate achieved for the year. The company said effective cost management provided significant operating income leverage on Lawson's sales growth, resulting in improved operating income as a percentage of sales at 7.3% in 2004 compared to 5.8% in 2003.
"The company's 2004 operating results demonstrate the operating leverage of our businesses, resulting in substantial earnings growth. In addition, Lawson's balance sheet continues its long history of excellence, with no long-term debt and approximately $29.0 million of cash and cash equivalents at Dec. 31, 2004," said Robert J. Washlow, chairman of the board and CEO.
Fourth quarter and year-end 2004 pre-tax earnings include the impact of $1.7 million and $2.6 million, respectively, for expenses related to stock appreciation rights. Those expenses reflect the accounting for the impact of the 51.8% increase in Lawson's common stock price from $33.07 at December 31, 2003 to $50.19 at December 31, 2004. Fourth quarter operating income increased 30.1% over last year to $4.2 million, driven by 10.9% quarterly sales growth over the prior year despite the increased expense for stock appreciation rights.
In the fourth quarter, sales in the Maintenance, Repair and Operations (MRO) segment grew by 9.8% and sales in the Original Equipment Manufacture (OEM) segment grew by 16.1%. In addition to enhanced account penetration and the development of new customers throughout 2004, both business segments benefited from an improved business climate.
"We are encouraged by the execution of our sales and marketing strategies, and intend to continue building on the positive momentum experienced as we moved through 2004," Washlow said.
Lawson Products is an international seller and distributor of systems, services and products to the industrial, commercial, governmental and institutional maintenance, repair and replacement marketplaces. The company also manufactures, sells and distributes production and specialized component parts and services.