CLEVELAND, April 28 /PRNewswire-FirstCall/ -- LESCO, Inc.
(NASDAQ:LSCO), a leading provider of products for the professional
green and pest control industries, today announced first quarter
results for the period ending March 31, 2006. First Quarter 2006
Results Net sales for the three months ending March 31, 2006
increased 1.7% to $99.8 million from $98.1 million in the
comparable period a year ago. Gross profit on sales increased to
24.0% of net sales, or $23.9 million, compared to 23.8% of net
sales, or $23.4 million, in the first quarter of 2005. Gross profit
reflects the incremental cost of outsourcing the Company's
manufacturing, warehouse and distribution functions to Turf Care
Supply Corp. (TCS). Due to the seasonal nature of the green
industry, LESCO historically has recognized a loss in its first
quarter. The Company reported a 2006 GAAP- basis loss of $10.6
million, or $1.18 per diluted share, versus a loss of $10.7
million, or $1.21 per diluted share in 2005. The Company's GAAP
results do not reflect any tax benefit related to the Company's
first quarter 2006 and first quarter 2005 loss before income tax
because of the required accounting treatment for LESCO's deferred
tax assets. Assuming a 39% tax rate to realize the deferred tax
benefit, which LESCO typically utilizes to evaluate year-over-year
performance, the Company would have reported an adjusted loss of
$0.72 per diluted share in the first quarter 2006, and an adjusted
loss of $0.74 per diluted share in the first quarter 2005.
Management believes these adjusted results are useful to investors
to assess the Company's results from ongoing operations. A
reconciliation of our adjusted results to the most directly
comparable GAAP measure is set forth in the attached Consolidated
Statements of Operations GAAP to non-GAAP reconciliation. Stores
Segment Operating Results The Stores Segment includes the operating
results of the Company's Service Centers, Stores-on-Wheels(R)
vehicles and field management costs. Stores Segment net sales for
the three months ended March 31, 2006, increased 10.7% to $84.2
million from $76.1 million during the same period a year ago.
Service Center net sales increased 10.7% and Stores-on-Wheels net
sales increased 27.1%. Comparable Service Center sales (those
opened prior to 2005) increased 5.4%. Ice melt sales were lower
than prior year due to an unseasonably warm winter; however, this
decline was offset by strength in fertilizer and seed sales driven
by favorable early spring conditions. Gross profit as a percentage
of net sales was 24.5% compared to 26.2% in the same period in
2005, predominantly due to the incremental cost of outsourcing the
Company's manufacturing and distribution functions to TCS. Jeffrey
Rutherford, President and Chief Executive Officer, stated, "The
first quarter, our lowest sales volume quarter of the year,
benefited from relatively mild winter weather conditions as spring
product sales accelerated, offsetting the $2.5 million in lost ice
melt sales and lower-than anticipated equipment sales. Our
challenge in the second quarter is to achieve the same level of
sales growth while recognizing that some sales have accelerated
into the first quarter." Stores Segment selling expense increased
$2.8 million on a quarter-over- quarter basis to $21.1 million, or
25.1% of net sales, from $18.3 million, or 24.1% of net sales, in
2005. The increase in selling expense is primarily attributable to
the 35 net new Service Centers and 16 new Stores-on-Wheels opened
since the first quarter of 2005, along with the expansion of the
field management organization to support store growth. Merchant
discounts were $1.7 million, or 2.0% of net sales, during the
quarter versus $1.0 million, or 1.4% of net sales, in the same
period in 2005. This increase is primarily due to an increase in
discount rates on a year-over-year basis. Stores Segment loss
before interest and taxes was $2.2 million in first quarter 2006
versus earnings before interest and taxes of $0.6 million for the
same period last year. Direct Segment Operating Results The Direct
Segment includes the operating results of all non-store
transactions. Direct Segment net sales were $15.6 million for the
three months ended March 31, 2006, versus $22.0 million during the
comparable period a year ago. The decline is primarily attributable
to the Company's decision in the first half of 2005 to restructure
and redeploy its direct sales representatives. Gross profit as a
percentage of sales increased 600 basis points to 21.4% from 15.4%
as a result of our continued focus on the profitability of direct
sales, rather than the sales volume. Direct Segment selling expense
decreased $2.1 million on a quarter-over- quarter basis to $1.4
million, or 9.1% of net sales, from $3.5 million, or 16.0% of net
sales, in 2005. This decrease is due to the significant reduction
of direct sales representatives. Merchant discounts decreased $0.2
million year-over-year to $0.5 million, but increased 10 basis
points to 3.1% of net sales. Earnings before interest and taxes
were $1.4 million in the current year versus a loss before interest
and taxes of $0.8 million in the prior year. Corporate The two
operating segments are supplemented by Corporate costs incurred for
support functions, including Corporate selling expenses,
promotional merchant discounts, general and administrative
expenses, and new store pre- opening costs. Total Corporate expense
for the first quarter of 2006 was $9.7 million, compared to $10.2
million for the first quarter of 2005. Corporate selling expense,
composed of customer service, bids processing, product
registration, and merchandising and marketing expenses, declined
$0.7 million to $2.7 million in the first quarter of 2006 as
compared to the same period in 2005. Corporate merchant discounts,
which are incurred for the extension of customer payment terms,
increased to $0.5 million from $0.3 million for the same period
last year as the Company guaranteed some promotional, early order
commitments in the fourth quarter of 2005 that were honored in the
first quarter of 2006. General and administrative expense was flat
at $6.4 million in the first quarter of 2005. Pre-opening expense
in the first quarter of 2006 was $0.3 million compared to $0.2
million for the same period last year. New Service Centers and
Stores-on-Wheels During the first quarter of 2006, the Company
opened six new Service Centers and closed one. On March 31, 2006,
there were 310 Service Centers in operation, versus 275 on March
31, 2005. The 85 Service Centers that were opened from 2003 through
the end of the first quarter of 2006 generated net sales of $11.6
million for the quarter and a pre-tax loss of $1.8 million. LESCO
added three new Stores-on-Wheels during the first quarter of 2006.
On March 31, 2006, there were 114 Stores-on-Wheels in operation,
versus 98 on March 31, 2005. Share Repurchase Program In October
2005, the Company's board of directors approved the repurchase of
up to 1.5 million common shares. During the first quarter of 2006,
the Company repurchased 17,160 common shares at a total cost of
$0.3 million. This is in addition to the approximately 336,000
stock options that were repurchased in 2005. Balance Sheet As of
March 31, 2006, LESCO's cash and cash equivalent balance was $8.4
million versus $9.2 million at the same time last year. The Company
had $5.2 million total debt at March 31, 2006, compared to $24.8
million as of March 31, 2005. Conference Call The Company will host
a conference call and audio webcast with investors, analysts and
other interested parties today at 8:30 a.m. (Eastern). Hosting the
call will be Jeffrey Rutherford, President and Chief Executive
Officer, and Michael Weisbarth, Chief Financial Officer and
Treasurer. The live call can be accessed by dialing 1-866-277-1182,
passcode 49434020. Participants should register at least 15 minutes
prior to the commencement of the call. The conference call will
also include a question and answer session. Additionally, a live
audio webcast will be available to interested parties at
http://www.lesco.com/. Participants should allow at least 15
minutes prior to the commencement of the call to register, download
and install necessary audio software. Questions can be submitted
either in advance or during the webcast via email to or through the
Company's corporate web site where a link will be provided on the
"Home" page. LESCO's culture demands the highest of ethical
standards and accountability manifested in full and fair financial
disclosure to our shareholders. LESCO management encourages the
participation of our shareholders and other interested parties in
our conference calls and live webcasts. For those who cannot
participate in the conference call or the live webcast, a replay
will be available beginning approximately one hour after the
conclusion of the event on LESCO's web site. About LESCO, Inc.
LESCO currently serves more than 130,000 customers worldwide,
through 310 LESCO Service Center(R) locations, 114 LESCO
Stores-on-Wheels vehicles, the Internet, and other direct sales
efforts. Additional information about LESCO can be found on the
Internet at http://www.lesco.com/. Statements in this news release
relating to sales and earnings expectations, new Service Center
openings and profitability, and other statements that are not
historical information are forward-looking statements and, as such,
reflect only the Company's best assessment at this time. Investors
are cautioned that forward-looking statements involve risks and
uncertainties that may cause actual results to differ materially
from such statements and investors should not place undue reliance
on such statements. Factors that may cause actual results to differ
materially from those projected or implied in the forward-looking
statements include, but are not limited to, the final resolution of
certain contingencies relative to the collection of identified
accounts receivable; the Company's ability to add new Service
Centers in accordance with its plans, which can be affected by
local zoning and other governmental regulations and its ability to
find favorable store locations, to negotiate favorable leases, to
hire qualified individuals to operate the Service Centers, and to
integrate new Service Centers into the Company's systems; the
Company's ability to transition quickly and effectively from a golf
sales representative model to a Stores-on-Wheels model; competitive
factors in the Company's business, including pricing pressures;
lack of availability or instability in the cost of raw materials
which affects the costs of certain products; the successful and
uninterrupted performance of supply chain services by Turf Care
Supply Corp; the Company's ability to impose price increases on
customers without a significant loss in revenues; potential rate
increases by third-party carriers which affect the cost of delivery
of products; changes in existing law; the Company's ability to
effectively market and distribute new products; the success of the
Company's operating plans; any litigation or regulatory proceedings
against the Company; regional weather conditions; and the condition
of the industry and the economy. For a further discussion of risk
factors, investors should refer to the Company's Securities and
Exchange Commission reports, including but not limited to its Form
10-K for the year ended December 31, 2005. Michael Weisbarth Chief
Financial Officer and Treasurer LESCO, Inc. (216) 706-9250 LESCO,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands,
except per Three Months Ended March 31, share data) 2006 2005 Net
sales $99,837 $98,054 Cost of product (including distribution
costs) (75,906) (74,702) Gross profit on sales 23,931 23,352
Selling expense (25,212) (25,156) General & administrative
expense (6,399) (6,382) Merchant discounts and provision for
doubtful accounts (2,607) (2,050) Pre-opening expense (288) (197)
Other expense - (102) Other income 135 179 Loss before interest and
taxes (10,440) (10,356) Interest expense, net (175) (317) Loss
before taxes (10,615) (10,673) Income tax (provision) benefit:
Current - - Deferred 4,261 3,540 Change in valuation allowance
(4,261) (3,540) - - Net loss $(10,615) $(10,673) Loss per common
share: Diluted $(1.18) $(1.21) Basic $(1.18) $(1.21) Average number
of common shares and common share equivalents outstanding: Diluted
9,007,235 8,818,121 Basic 9,007,235 8,818,121 LESCO, INC.
CONSOLIDATED BALANCE SHEETS March 31, March 31, December 31,
(Dollars in thousands) 2006 2005 2005 CURRENT ASSETS: Cash and cash
equivalents $8,413 $9,150 $21,030 Accounts receivable, net 20,204
9,653 16,310 Inventories 99,139 130,146 80,346 Other 2,112 3,087
2,667 TOTAL CURRENT ASSETS 129,868 152,036 120,353 Property, plant
and equipment, net 9,253 25,506 9,624 Other 910 1,196 904 $140,031
$178,738 $130,881 CURRENT LIABILITIES: Accounts payable $78,698
$76,059 $61,381 Accrued liabilities 19,720 19,539 24,576 Revolving
credit facility 5,187 24,751 - TOTAL CURRENT LIABILITIES 103,605
120,349 85,957 Deferred - other 2,213 1,741 2,166 TOTAL LIABILITIES
105,818 122,090 88,123 SHAREHOLDERS' EQUITY: Common shares--without
par value-- 19,500,000 shares authorized; 9,171,084 shares issued
and 9,153,924 outstanding at March 31, 2006; 8,872,914 shares
issued and outstanding at March 31, 2005 and 8,949,921 shares
issued and outstanding at December 31, 2005 916 887 894 Paid-in
capital 39,906 37,235 38,051 Treasury shares; 17,160 at March 31,
2006; none in 2005 (255) - - Retained earnings (5,660) 20,964 4,955
Unearned compensation (694) (2,438) (1,142) TOTAL SHAREHOLDERS'
EQUITY 34,213 56,648 42,758 $140,031 $178,738 $130,881 LESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended
March 31, (Dollars in thousands) 2006 2005 OPERATING ACTIVITIES:
Net loss $(10,615) $(10,673) Adjustments to reconcile net loss to
net cash used in operating activities: Depreciation and
amortization 883 1,652 (Increase) decrease in accounts receivable
(3,392) 7,278 Loss on sale/disposal of property, plant and
equipment 55 66 Increase in inventories (18,793) (29,564) Increase
in accounts payable 17,198 19,526 Stock compensation (forfeiture)
(14) 192 Decrease in other items (4,249) (4,479) NET CASH USED IN
OPERATING ACTIVITIES (18,927) (16,002) INVESTING ACTIVITIES:
Proceeds on the sale of property, plant and equipment 1 1 Purchase
of property, plant and equipment Stores (329) (860) Other (250)
(306) NET CASH USED IN INVESTING ACTIVITIES (578) (1,165) FINANCING
ACTIVITIES: Increase in overdraft balances 119 162 Proceeds from
borrowings, net 5,187 17,448 Purchase of treasury shares (255) -
Exercised stock options 1,837 606 NET CASH PROVIDED BY FINANCING
ACTIVITIES 6,888 18,216 Net change in cash and cash equivalents
(12,617) 1,049 Cash and cash equivalents - Beginning of the period
21,030 8,101 CASH AND CASH EQUIVALENTS - END OF THE PERIOD $8,413
$9,150 Supplemental disclosure of cash flow information: Interest
paid, including letters of credit and unused facility fees $(126)
$(299) Income taxes (paid) refunded $(34) $(32) LESCO, INC. SEGMENT
INCOME STATEMENT Three Months Ended March 31, (Dollars in
thousands) Stores Direct Sales 2006 2005 2006 2005 Net sales
$84,196 $76,060 $15,641 $21,994 Cost of Product (including
distribution costs) (63,609) (56,100) (12,297) (18,602) Gross
profit on sales 20,587 19,960 3,344 3,392 % to Net Sales 24.5 %
26.2 % 21.4 % 15.4 % Selling expense (21,133) (18,305) (1,426)
(3,517) % to Net Sales (25.1) % (24.1) % (9.1)% (16.0)% Merchant
discounts (1,652) (1,048) (478) (657) % to Net Sales (2.0) % (1.4)
% (3.1)% (3.0)% Pre-opening expense - - - - % to Net Sales - - - -
General & administrative expense - - - - % to Net Sales - - - -
Other income (expense) - - - - % to Net Sales - - - - Earnings
(loss) before interest and taxes $(2,198) $607 $1,440 $(782) % to
Net Sales (2.6) % 0.8 % 9.2 % (3.6)% Three Months Ended March 31,
(Dollars in thousands) Corporate Total 2006 2005 2006 2005 Net
sales $- $- $99,837 $98,054 Cost of Product (including distribution
costs) - - (75,906) (74,702) Gross profit on sales - - 23,931
23,352 % to Net Sales 24.0 % 23.8 % Selling expense (2,653) (3,334)
(25,212) (25,156) % to Net Sales (25.3)% (25.7)% Merchant discounts
(477) (345) (2,607) (2,050) % to Net Sales (2.6)% (2.1)%
Pre-opening expense (288) (197) (288) (197) % to Net Sales (0.3)%
(0.2)% General & administrative expense (6,399) (6,382) (6,399)
(6,382) % to Net Sales (6.4)% (6.5)% Other income (expense) 135 77
135 77 % to Net Sales 0.1 % 0.1 % Earnings (loss) before interest
and taxes $(9,682) $(10,181) $(10,440) $(10,356) % to Net Sales
(10.5)% (10.6)% LESCO, INC. SALES BY CUSTOMER SECTOR AND
TRANSACTING SELLING LOCATIONS Three Months Ended March 31, 2006
Stores Service on (Dollars in millions) Centers Wheels Direct Total
Lawn care $69.7 $0.6 $15.1 $85.4 Golf 5.9 8.9 0.6 15.4 Gross sales
75.6 9.5 15.7 100.8 Net sales adjustments (a) (0.3) (0.6) (0.1)
(1.0) Net sales $75.3 $8.9 $15.6 $99.8 Three Months Ended March 31,
2005 Stores Service on (Dollars in millions) Centers Wheels Other
Direct Total Lawn care $62.7 $0.2 $0.9 $18.3 $82.1 Golf 6.4 7.3 0.2
3.8 17.7 Gross sales 69.1 7.5 1.1 22.1 99.8 Net sales adjustments
(a) (1.1) (0.5) - (0.1) (1.7) Net sales $68.0 $7.0 $1.1 $22.0 $98.1
% Change Service Stores on (Dollars in millions) Centers Wheels
Other Direct Total Lawn care 11.2 % 200.0 % (100.0)% (17.5)% 4.0 %
Golf (7.8) 21.9 (100.0) (84.2) (13.0) Gross sales 9.4 26.7 (100.0)
(29.0) 1.0 Net sales adjustments (a) 72.7 (20.0) - - 41.2 Net sales
10.7 % 27.1 % (100.0)% 29.1 % 1.7 % (a) Net sales adjustments
include freight revenue reduced by agency sales, customer
discounts, and rebates. LESCO, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS GAAP to Non-GAAP Reconciliation Three Months Ended March
31, 2006 Results GAAP (a) Including Results Adjustments Adjustments
(Dollars in thousands, (Non-GAAP) except per share data) Net sales
$99,837 $- $99,837 Cost of product (including distribution costs)
(75,906) - (75,906) Gross profit on sales 23,931 - 23,931 Selling
expense (25,212) - (25,212) General & administrative expense
(6,399) - (6,399) Merchant discounts and provision for doubtful
accounts (2,607) - (2,607) Pre-opening expense (288) - (288) Other
expense - - - Other income 135 - 135 Loss before interest and taxes
(10,440) - (10,440) Interest expense, net (175) - (175) Loss before
taxes (10,615) - (10,615) Income tax (provision) benefit: Current
4,140 4,140 Deferred 4,261 - 4,261 Change in valuation allowance
(4,261) - (4,261) - - 4,140 Net loss $(10,615) $4,140 $(6,475) Loss
per common share: Diluted $(1.18) $0.46 $(0.72) Basic $(1.18)
$(0.72) Average number of common shares and common share
equivalents outstanding: Diluted 9,007,235 9,007,235 Basic
9,007,235 9,007,235 Three Months Ended March 31, 2005 Results GAAP
(a) Including Results Adjustments Adjustments (Dollars in
thousands, (Non-GAAP) except per share data) Net sales $98,054 $-
$98,054 Cost of product (including distribution costs) (74,702) -
(74,702) Gross profit on sales 23,352 - 23,352 Selling expense
(25,156) - (25,156) General & administrative expense (6,382) -
(6,382) Merchant discounts and provision for doubtful accounts
(2,050) - (2,050) Pre-opening expense (197) - (197) Other expense
(102) - (102) Other income 179 - 179 Loss before interest and taxes
(10,356) - (10,356) Interest expense, net (317) - (317) Loss before
taxes (10,673) - (10,673) Income tax (provision) benefit: Current -
4,162 4,162 Deferred 3,540 - 3,540 Change in valuation allowance
(3,540) - (3,540) - - - Net loss $(10,673) $4,162 $(6,511) Loss per
common share: Diluted $(1.21) $0.47 $(0.74) Basic $(1.21) $(0.74)
Average number of common shares and common share equivalents
outstanding: Diluted 8,818,121 8,818,121 Basic 8,818,121 8,818,121
(a) On a generally accepted accounting principles (GAAP) basis,
LESCO cannot recognize the benefit of establishing a deferred tax
asset to be realized in a future period because of the required
accounting treatment for its current tax position. Management
believes that in order to present a meaningful comparison to
historical Company results, a tax benefit should be reflected based
on the operating loss recorded in the first quarter of 2006 and
2005. This assumes that LESCO will realize benefits in the future
from its deferred tax assets. The adjusted results reflect a tax
benefit calculated assuming a tax rate of 39%. DATASOURCE: LESCO,
Inc. CONTACT: Michael Weisbarth, Chief Financial Officer and
Treasurer of LESCO, Inc., +1-216-706-9250 Web site:
http://www.lesco.com/
Copyright
Lesco (NASDAQ:LSCO)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Lesco (NASDAQ:LSCO)
Historical Stock Chart
Von Jun 2023 bis Jun 2024