Attached files
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| 8-K - FORM 8-K - LAWSON PRODUCTS INC/NEW/DE/ | c24475e8vk.htm |
Exhibit 99.1
| Investor Presentation November 2011 NASDAQ: LAWS www.lawsonproducts.com |
| Forward-Looking Statements "Safe Harbor" Statement under the Securities Litigation Reform Act of 1995:This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. The terms "may," "should," "could," "anticipate," "believe," "continues," "estimate," "expect," "intend," "objective," "plan," "potential," "project" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These statements are based on management's current expectations, intentions or beliefs and are subject to a number of factors, assumptions and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the effect of general economic and market conditions; increases in commodity prices; work stoppages and other disruptions at transportation centers or shipping ports; disruptions of the Company's information and communication systems; competition and competitive pricing pressures; changes in customer demand; the influence of controlling stockholders; the inability of management to successfully implement strategic initiatives and, all of the factors discussed in the Company's "Risk Factors" set forth in its Annual Report on Form 10-K for the year ended December 31, 2010 and updated in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.The Company undertakes no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events or otherwise. 2 |
| Agenda Lawson Products at a GlanceLeadership TeamMRO Industry OverviewBuilding an Efficient Platform to Drive Future GrowthFinancial HighlightsKey Take-Aways 3 |
| Lawson Products: At a Glance 4 Company OverviewFounded in 1952 by Sid Port who had an entrepreneurial visionListed on NASDAQ (Ticker: LAWS) since 1970; majority of stock was family held)Serves industrial, commercial, institutional & government markets in all 50 U.S. states, Canada & Puerto RicoSupplies 300,000+ products Fasteners, cutting tools, chemicals, abrasives, safety, welding, hydraulic & automotive productsHeadquartered in Des Plaines, IL6 distribution centers, 1 repackaging facility & 1 corporate HQ~2,000 employees & independent sales agents |
| 5 Legend: Sales PenetrationDistribution Center Des Plaines, IL HQ/DCAddison, IL DCVernon Hills, IL DCFairfield, NJ DCReno, NV DCSuwanee, GA DCMississauga, ON (Canada) DC Lawson Products - At a Glance Sales Coverage and Distribution Reach Across North America; |
| Strong Leadership Team in Place to Drive Growth 6 Leadership TeamTom Neri, President & Chief Executive OfficerJoined in March 2003 as CFO, became CEO in 2007Senior positions in publishing, including EVP of the Sun-Times Company and President & Publisher of Pioneer Newspapers, Inc.Harry Dochelli, Chief Operating OfficerJoined in March 2008 as EVP, Sales & Marketing25-year career with senior leadership positions in operations and sales, with profit and loss responsibility; depth of experience within distribution industry Previously served as EVP North America Contract Sales for Boise Cascade Office Products/OfficeMax, Inc. Ron Knutson, Chief Financial OfficerJoined in November 2009 as SVP & CFOSenior financial roles across many sectors, most recently serving as SVP & CFO of Frozen Food Express Industries and before that as VP of Finance of Ace Hardware Corp. |
| Vision, Mission, and Values Guide Lawson's Strategic Plan 7 |
| MRO Industry Overview: Key Trends 8 We see five key trends in the current MRO marketplace: Increased product commoditizationEasy and seamless customer / distributor interactionsIncreased pricing emphasis and transparencyHeightened demand for same day and next day deliveryMore value placed on distributors' technical services |
| MRO Industry Overview: Marketplace Dimensions MRO customers assess their suppliers based on two critical needs "Easy to do business with"Unplanned Purchases "Improves my operating performance"Planned Purchases Degree to which suppliers make it easy to get the right products quickly, effectively and efficiently:High availability and fast deliveryMultiple, coordinated channels that make interactions easy and efficient (e.g., branch, call center, field rep, web)Wide selection of productsWide geographic coverageAbility to capture unplanned purchases Degree to which suppliers help customers solve their technical problems in three areas to improve their operationsProblem identificationProduct selectionProduct application Serving each need requires a foundation of operational excellence 9 |
| Within This Market, Lawson is Uniquely Positioned for Growth Operate in a fragmented but resilient industryCommitted to evolving Lawson to become our customers' first choice for MRO solutionsHave identified our customers' needsBuilding an efficient platform to meet those needs and drive significant growth through:ERPNetwork OptimizationSales Transformation 10 |
| Lawson Has Clear Competitive Advantages & Opportunities 11 11 Strong financial position allows Lawson to gain market share |
| Customer Feedback Has Confirmed the Company's Strengths and Opportunities 12 Lawson actively seizing these opportunitiesLeveraging our core strengths + pursuing new initiatives focused on serving market with "unplanned" product needs Current Strength 75% prefer ordering through field sales representatives 82% say technical support very important Virtually all prefer domestic products and most willing to pay more for them Opportunities 88% also want web ordering option 73% of purchasing agents prefer to use multiple vendors to get the right expertise "Fast shipping" was rated as most important item among 20 MRO vendor dimensions Customer Feedback |
| There Are Clear Opportunities for Future Growth 13 Core Business Today Products for "Unplanned" Needs "Planned" Products for Inventory Management Customers with unplanned needs buy products from sales reps, phone, catalogs or the web for next-day delivery Future Opportunities Customers have the need for products and want to outsource replenishment and inventory management |
| Three Strategic Initiatives Will Help Us Realize the Business Potential 14 14 ERP Implementation Network Optimization Sales Transformation Through these initiatives, we will deliver an enhanced customer experience, support sales growth and improve operating performance |
| ERP Transformation: Building an Efficient Platform to Drive Future Growth ERP Transformation 15 Timing Key Benefits Costs/Savings Significant implementation took place in Q3, 2011. Now running business on SAP.2012 = benefit year Facilitates easier ordering Enables improved customer servicing Consistent data to guide management decisions Enables Lawson to implement centralized market-based pricing strategy Enables Lawson to build a new E Commerce site, customers will have a new channel for ordering Implementation costs incurred of ~$24 million 10-year IRR forecast of ~20% with anticipated 5-6 yr payback |
| Network Optimization: Building an Efficient Platform to Drive Future Growth Network Optimization 16 Timing Key Benefits Costs/Savings Ongoing initiative Reduces overall fixed-cost baseDrives efficiencies in inventory and materials handlingEnsures presence in the best locations for costs and efficienciesImproves customer experience and supports "unplanned needs" by supporting next-day and same-day delivery options Potential for cost savings through efficienciesPotential expense for new facilities to meet business needs |
| Network Optimization: Building an Efficient Platform to Drive Future Growth 17 Our research tells us between 10-13% of our current customers' MRO spend comes from "unplanned" and/or on-demand buyingProviding same-day shipping & next-day delivery ensures LAWS can capture a greater share of this marketSame-day shipping currently being rolled out in stages (web, phone, agents)Unplanned market currently represents <1% of LAWS sales, but provides significant future growth opportunities Network Optimization - Same-Day Shipping & Next-Day Delivery |
| Sales Transformation is Comprised of Two Key Strategies 18 18 Channel Strategy Segment Strategy |
| Sales Transformation: Building an Efficient Platform to Drive Future Growth Improve Customer ExperienceImprove executionMeet changing customer expectationsGrow Sales Increase sales effectivenessRealize leverage in our modelAchieve sustainable resultsAttract and retain talent for long-term growthReduce costs as a percent of salesTransition began in 2011 Channel Strategy: Agent to Employee Transition 19 |
| Sales Transformation: Building an Efficient Platform to Drive Future Growth New eCommerce Website launches in first half, 2012Creates a new sales channelCaptures new types of sales and customersAccommodates customers' unplanned purchasing needsBoosts sales productivity: Provides channel for smaller customers and enables sales force to focus on larger accountsStart of the build out of our channel strategyAnticipate approximately $3 million initial investment with anticipated payback in 2 years 20 Channel Strategy: eCommerce Presence 88% of our customers want to order over the web based upon our research |
| Sales Transformation: Building an Efficient Platform to Drive Future Growth 21 Opportunity to generate significant value by developing specialized segment strategies where Lawson is already strong, including:Strategic AccountsGovernmentAutomotiveSegmentation in areas where Lawson already has strong penetration will enable the Company to:Capture greater market share of chosen segmentsDrive greater value from customers in these segmentsPromote opportunities for applying centralized knowledge base in other territories over the long-termFuture segments will be developed Segment Strategy |
| Business Transformation Summary Lawson's business transformation is aligned with the Company's vision, mission and values; key characteristics underscore our plan:Leverages current assets and base business, not acquisitions.Re-positions Company to be more competitive in a changing environment, expanding Lawson's addressable market.Re-balances the customer portfolio more purposefully.Grows revenue to enhance operating leverage. 22 |
| Financial Highlights Growing Average Daily Sales (ADS) with diverse revenue streamsADS of $1,268,000 YTD Sept. 30, 2011 vs. $1,240,000 YTD Sept. 30, 2010 Improving average order size and daily orders per agent2011 impacted by significant investments for future growthQ3 impacted by cut-over to new ERP systemStrong Balance SheetSignificant cash on handNo outstanding borrowingsSolid dividend yieldQuarterly dividend of $0.12 representing a yield of ~3.0%* 23 * As of October 2011 closing price |
| Financial Highlights - Income Statement 24 |
| Financial Highlights - Balance Sheet 25 |
| Key Take-Aways and Financial Considerations 26 Consistent growth in average daily sales with enhanced relationships with existing customersStrong balance sheet, margins & cash resources enable significant investment in growthBuilding the right platform to support future growth with a researched based strategyExperienced leadership team with track record of successful executionStrong dividend yieldLawson Products: Evolving, Growing, Leading |
| Questions? |
| Appendix |
| Appendix: Financial Highlights - 5 Year Income Statement 29 |