-- Net Sales Increase 4% -- CLEVELAND, Oct. 27
/PRNewswire-FirstCall/ -- LESCO, Inc. (NASDAQ:LSCO), a leading
provider of products for the professional green and pest control
industries, today announced third-quarter and nine-month results
for the period ending September 30, 2006. Third-Quarter 2006
Results Net sales for the quarter ending September 30, 2006, grew
4.1% to $165.4 million from $158.9 million in the comparable period
a year ago. Gross profit was 20.3% of net sales, or $33.6 million,
compared to 23.5% of net sales, or $37.3 million, in the third
quarter of 2005. The decline in gross profit was primarily due to
the following: a $1.8 million decrease in product margin from
higher raw material costs for urea used in blended fertilizers and
combination products; a $1.8 million decline in grass seed product
margin from cost increases that could not be passed through to
customers due to pricing commitments; and a $6.8 million increase
in indirect supply chain costs. Due to the outsourcing of
manufacturing, warehousing and distribution services completed in
2005, the Company anticipated $4.4 million of the third-quarter
increase in the indirect supply chain costs; however, the
additional $2.4 million reflects a de-leveraging effect on the
Company's supply chain agreements resulting from
lower-than-expected sales. The gross profit decline was partially
offset by $2.3 million of gross profit generated from incremental
sales on a quarter-over-quarter basis. Third-quarter 2005 gross
profit results included a $3.8 million charge for the Company's
supply chain transaction and parts distribution outsourcing. "The
environment has been challenging for LESCO as raw material cost
pressures have led to a significant decline in our gross profit,"
Jeffrey Rutherford, President and Chief Executive Officer stated.
"For 2006, the market cost of urea, a second derivative of natural
gas, has been significantly lower than our cost incurred under
contract, which has caused a more competitive pricing environment.
When our contract expires by the end of 2006, we anticipate
purchasing urea closer to market cost, which should allow us to
improve our competitive pricing position in the industry while
achieving more desirable product margins." The Company reported a
third-quarter 2006 net loss of $2.3 million, or $0.25 per diluted
share, versus a net loss of $16.2 million, or $1.82 per diluted
share, in the same period in 2005. Third-quarter 2005 operating
results were reduced by $19.0 million related to the sale of the
Company's supply chain assets and $3.8 million for a markdown
charge to restructure the parts sourcing model and product
offering. Nine-Months 2006 Results Net sales for the nine months
ending September 30, 2006, were $447.2 million versus $447.1
million in the comparable period a year ago. Gross profit was 22.6%
of net sales, or $101.2 million, in the first nine months of 2006,
compared to 24.9% of net sales, or $111.6 million, in the first
nine months of 2005. The Company reported a net loss of $4.0
million, or $0.44 per diluted share, for the first nine months of
2006 versus a net loss of $11.1 million, or $1.25 per diluted
share, in the same period in 2005. Results for the first nine
months of 2005 include $23.1 million for costs related to the sale
of the Company's supply chain assets and its outsourcing of parts
merchandise and $0.5 million for settlement costs related to a
vendor contract termination. Stores Segment Operating Results The
Stores Segment includes operating results of the Company's Service
Centers and Stores-on-Wheels(R) vehicles as well as field
management costs. The Stores Segment net sales for the quarter
ended September 30, 2006, increased 6.9% to $152.4 million from
$142.5 million in the same period a year ago. Service Center net
sales increased 10.8%, or $12.8 million, and Stores- on-Wheels net
sales decreased 11.6%, or $2.9 million. Comparable Service Center
sales increased 2.7%. The disbanding of LESCO's sales
representative program in 2005 continues to have a negative effect
on sales in 2006. Service Center sales to customers previously
called on by sales representatives declined $1.9 million, or 1.7%,
in the third quarter of 2006 from the same period in 2005.
Stores-on-Wheels sales were negatively impacted $2.7 million, or
11.0%. Gross profit was $32.1 million, or 21.1% of net sales, in
the third quarter of 2006 compared to $38.7 million, or 27.1% of
net sales, in the same period in 2005. A $6.6 million decrease in
gross profit was due to a $2.9 million decline in product margins
of fertilizer and seed and an incremental $6.7 million of indirect
supply chain costs, which were partially offset by $3.0 million of
gross profit from increased sales. Indirect costs are allocated to
the segments based on cost of product sold; consequently, the
Stores Segment received a higher allocation due to its higher
percentage of total cost of product sold this quarter versus the
same period last year. Stores Segment selling expense increased
$2.1 million on a quarter-over- quarter basis to $23.3 million, or
15.3% of net sales, from $21.2 million, or 14.9% of net sales, in
2005. The increase in selling expense is primarily attributable to
the 48 new Service Centers and four new Stores-on-Wheels vehicles
opened since the end of second quarter 2005. Merchant discount fees
were $2.9 million, or 1.9% of net sales, during the quarter versus
$2.5 million, or 1.7% of net sales, in the same period in 2005.
This increase is primarily due to a continued shift in customer
credit usage from private label to national bank cards and a rise
in interest rates on a quarter-over-quarter basis for the private
label customer portfolio. Stores Segment earnings before interest
and taxes was $5.9 million in third quarter 2006 versus $15.0
million for the same period last year. Stores Segment net sales for
the nine months ended September 30, 2006, increased 5.3% to $403.9
million. Net sales increased 7.2% for Service Centers and declined
4.0% for the Stores-on-Wheels fleet. Comparable Service Center
sales increased 0.4% for the first nine months of 2006. Lawn and
landscape customer sales increased 8.5% while golf customer sales
declined 6.1% in this segment. Gross profit was $94.3 million, or
23.3% of net sales, for the first nine months of 2006 versus $106.1
million, or 27.7% of net sales, in the same period a year ago. The
$7.0 million increase in selling expense between comparable periods
is mainly attributable to an incremental $5.5 million for new
Service Center and Stores-on-Wheels vehicle openings in 2006 and
2005 as well as $1.3 million for expansion of the field management
team. Merchant discount fees increased by $1.5 million, or 30 basis
points, to $7.6 million and 1.9% of net sales, primarily due to a
shift in customer credit usage to national bank cards. For the
first nine months of 2006, earnings before interest and taxes was
$19.6 million versus $39.9 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 $13.1 million for the quarter ended September 30, 2006,
versus $16.4 million in the comparable period a year ago. The
decline in gross sales was due primarily to the elimination of bulk
product sales. In 2005, the Company sold $2.6 million in bulk
excess products from manufacturing operations. LESCO no longer
participates in this activity as the Company sold all of its
manufacturing facilities in the fourth quarter of 2005. Gross
profit was $1.5 million, or 11.6% of net sales, in the third
quarter of 2006 compared to $2.4 million, or 14.8% of net sales, in
the same period in 2005. The decline in gross profit was due to a
$0.7 million loss from lower sales, $0.1 million from product
margin decline and a $0.1 million increase of indirect supply chain
costs. Direct Segment selling expense during the third quarter of
2006 was $1.3 million, or 10.1% of net sales, compared to $0.8
million, or 5.0% of net sales, in the same period in 2005. This
increased cost is primarily a result of contractual marketing
expenses and the addition of direct sales representatives during
the third quarter of 2006. Merchant discount fees were flat at $0.3
million quarter-over-quarter, and increased 10 basis points to 2.2%
of net sales in the third quarter of 2006. Direct Segment loss
before interest and taxes was $0.1 million in the third quarter of
2006 versus earnings of $1.3 million in the comparable period of
2005. For the nine months ended September 30, 2006, Direct Segment
net sales declined to $43.3 million from $63.6 million for the
first nine months of 2005. Gross profit was $6.9 million, or 15.9%
of net sales, in 2006 versus $9.2 million, or 14.5% of net sales,
in 2005. Selling expense declined $2.1 million from the same period
in 2005, primarily attributable to the absence of direct sales
representatives in the first half of 2006. Merchant discount fees
decreased $0.3 million as sales declined from the same period in
2005, and increased 50 basis points to 2.9% of net sales due to the
write off of customer service charges and late fees. Year-to-date
earnings at September 30, 2006, before interest and taxes was $1.6
million versus $1.5 million for the same period in 2005. 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 third quarter of 2006 decreased to $8.2
million from $32.1 million for the same period in 2005. The third
quarter of 2005 reflects $22.8 million related to costs of the
supply chain transaction and the outsourcing of parts distribution.
Corporate selling expense, composed of customer service, bids
processing, product registration, and merchandising and marketing
expenses, declined $0.6 million to $2.7 million in the third
quarter of 2006 from the same period in 2005. Corporate merchant
discounts expense was flat at $0.7 million. General and
administrative expense decreased $0.5 million to $4.3 million from
$4.8 million in the third quarter of 2005. Third-quarter 2006
general and administrative expense reflects a $0.4 million benefit
from a favorable arbitration judgment. Pre-opening expense for the
third quarters of 2006 and 2005 was flat at $0.5 million. Total
Corporate expense for the nine months ended September 30, 2006, was
$25.3 million versus $51.8 million for the comparable period in
2005. The 2006 results include a $0.5 million reimbursement of
previously overcharged fees incurred for the extension of customer
payment terms, net of certain customer service charges, and a $0.4
million benefit from a favorable arbitration judgment. The 2005
results include $23.1 million of supply chain and outsourcing
expenses and a $0.5 million settlement terminating a vendor
agreement. Direct Sales Representative Strategy As previously
announced, LESCO is reinstating its direct sales representative
model, which had been disbanded in the first half of 2005. In
fiscal year 2005, sales from customer accounts that were previously
called on by a sales representative declined $24 million, $16
million of which occurred in the first nine months of 2005. Those
same customer accounts declined another $15 million in the first
nine months of 2006. The Company estimates that, in 2006, these
accounts will recognize sales at a level that will be nearly $60
million less than what would have been expected if the sales
representative program would have remained in place. In response,
LESCO has placed 25 golf and nine lawn and landscape sales
representatives in key markets to enhance service levels to
existing customers and extend its reach to new customers. Mr.
Rutherford stated, "During the quarter, we made solid progress in
restoring our sales representative structure, and today we have 34
direct sales representatives. As we have communicated previously,
time is needed to rebuild relationships with golf and lawn and
landscape customers; however, it is very important to have sales
representatives proactively engaging and assisting customers as
they plan for their 2007 turf care needs. The re- establishment of
the sales representative structure is fundamental to strengthening
the performance of this Company as we move forward." New Service
Centers and Stores-on-Wheels During the third quarter of 2006, the
Company opened nine new LESCO Service Center(R) stores. On
September 30, 2006, there were 332 Service Centers in operation,
versus 294 at the end of September 2005. The 107 Service Centers
that were opened from 2003 through the end of the third quarter of
2006 generated net sales of $27.1 million and pre-tax earnings of
$1.6 million for the quarter. These 107 Service Centers generated
net sales of $65.7 million for the first nine months of 2006 and
pre-tax earnings of $3.3 million. The Company expects to have 35 to
40 new Service Centers opened by the end of fiscal 2006. In 2007,
the Company anticipates opening no fewer than 20 new Service
Centers. Over the long term, the Company remains committed to
increasing its Service Center base 10% to 15% annually. On
September 30, 2006, there were 114 Stores-on-Wheels vehicles in
operation, versus 111 at the end of September, 2005. Early Order
Sales Program Historically, the green industry and LESCO have
provided customers incentives to purchase products from October
through December for their needs the following spring. This
practice is known as an early order program (EOP). During its EOP
periods, the Company has offered incentives such as price discounts
for its customers to take product early, extended payment terms at
a cost to the Company, and, in some cases, further price discounts
to offset customers' costs for product storage. Based on market
research showing customers' preference to purchase products closer
to the date when needed for application combined with current
market conditions indicating no near-term increases to customers'
purchase price, LESCO believes that its customers will not be
purchasing as aggressively during EOP in 2006 as in previous years.
In order to meet customers' needs and potentially reduce its
extended payment term costs, LESCO, in conjunction with its vendor
partners, has extended its EOP period into 2007 and estimates that
$15 million in sales with related costs will shift from the fourth
quarter of 2006 into the first half of 2007. Share Repurchase
Program In the nine months ended September 30, 2006, the Company
repurchased 95,347 common shares at a total cost of $1.5 million.
This is in addition to the approximate 336,000 stock options that
were repurchased in 2005. Balance Sheet As of September 30, 2006,
LESCO's cash and cash equivalent balance was $16.8 million versus
$7.3 million at the same time last year. The Company had no
outstanding debt at September 30, 2006, compared to $13.5 million
of debt as of September 30, 2005. Revised 2006 Guidance Based on
current and expected business conditions, including pricing
pressures on fertilizer, combination products, and seed, an
anticipated shift in EOP sales from the fourth quarter of 2006 into
the first half of 2007, and a de-leveraging effect on the Company's
supply chain agreements resulting from lower-than-expected sales,
the Company is lowering its fiscal 2006 operating results guidance
to a loss of approximately $16 to $20 million. Prior guidance was
based on an expectation that urea market cost would increase to a
level closer to LESCO's 2006 contract cost. Instead, the market
cost of urea has remained significantly below LESCO's cost, and
urea futures suggest that this trend will continue through the
Company's contract expiration by the end of 2006. Therefore, this
higher raw material cost and correlating market pricing pressure
will impact the Company's gross profit rate for the remainder of
2006. Additionally, higher-than-anticipated seed costs due to a
soft harvest in fescue seed have resulted in reduced margins from
sales commitments in the second half of 2006. The estimated shift
of $15 million in EOP sales from the fourth quarter of 2006 into
the first half of 2007 will further reduce 2006 sales and gross
profit. The Company's revised expectations are dependent upon the
amount of EOP sales that shift into 2007. We currently anticipate
the following range of financial results for 2006: - Stores Segment
* Net revenue growth of 2.0% to 3.0% * Gross profit on sales rate
(including distribution costs) of 22.3% to 22.8% * Selling expense
at 17.3% of net sales * Merchant discount fees at 1.9% of net sales
- Direct Segment * Net revenue declining 32.0% to 33.0% * Gross
profit on sales rate (including distribution costs) of 14.1% to
14.9% * Selling expense at 9.2% of net sales * Merchant discount
fees at 2.9% of net sales - Corporate * Selling expense at 2.0% of
consolidated net sales * Corporate general and administrative
expense estimated to be $20 million * Merchant discount fees remain
at previous guidance of 0.7% of consolidated net sales -
Consolidated * Net loss, excluding a tax benefit, of approximately
$16 to $20 million Conference Call The Company will host a
conference call to discuss third-quarter 2006 financial results on
Friday, October 27, 2006, at 8:30 AM (Eastern). Hosting the call
will be Jeffrey Rutherford, President and Chief Executive Officer,
and Michael Weisbarth, Vice President, Chief Financial Officer. The
live call can be accessed by dialing 1-800-659-2037, passcode
15119276. Participants should register at least ten minutes prior
to the commencement of the call. The conference call will also
include a question and answer session. The call will be webcast
live over the Internet from the Company's website at
http://www.lesco.com/ under the webcast link located on the home
page. Webcast participants should similarly register at least ten
minutes prior to the commencement of the call, after they have
downloaded and installed any necessary audio software. Questions
can be submitted either in advance or during the webcast via email
to or through the Company's corporate website where a link will be
provided on the "Corporate Overview" page. For those who cannot
participate in the conference call or the live webcast, a replay
will be available beginning approximately one hour after the event
on LESCO's website. About LESCO, Inc. LESCO is a leading provider
of products for the professional green and pest control industries.
LESCO serves customers worldwide, through 332 LESCO Service Center
locations, 114 LESCO Stores-on-Wheels vehicles, 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 attract quickly and
retain direct sales representatives who are respected in the
industry and engender customer loyalty; the Company's ability to
satisfy minimum purchase requirements to meet contractual
commitments and/or maximize supplier rebates; the Company's ability
to increase sales volume, particularly through its Service Centers,
to leverage its capital investment and its direct and indirect
supply contracts; 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; the timing and volume of customer purchases made during
the Company's EOP; 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. Contact: Michael Weisbarth Chief
Financial Officer and Treasurer LESCO, Inc. (216) 706-9250 LESCO,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED Three Months
Ended Nine Months Ended September 30, September 30, (Dollars in
thousands, except per share data) 2006 2005 2006 2005 Net sales
$165,445 $158,867 $447,233 $447,122 Cost of product (including
distribution costs) (131,854) (121,581) (346,060) (335,568) Gross
profit on sales 33,591 37,286 101,173 111,554 Selling expense
(27,265) (25,327) (79,413) (76,073) General & administrative
expense (4,301) (4,776) (14,661) (15,812) Merchant discounts and
provision for doubtful accounts (3,952) (3,458) (10,069) (9,311)
Pre-opening expense (472) (534) (1,282) (1,264) Supply chain
transaction - (19,041) - (19,323) Vendor contract termination -
(11) - (474) Other expense (1) (168) (31) (114) Other income 19 139
186 444 Loss before interest and taxes (2,381) (15,890) (4,097)
(10,373) Interest income/(expense), net 70 (301) 72 (741) Loss
before taxes (2,311) (16,191) (4,025) (11,114) Income tax benefit:
Current - - - - Deferred 708 7,294 1,917 6,520 Change in valuation
allowance (708) (7,294) (1,917) (6,520) - - - - Net loss $(2,311)
$(16,191) $(4,025) $(11,114) Loss per common share: Diluted $(0.25)
$(1.82) $(0.44) $(1.25) Basic $(0.25) $(1.82) $(0.44) $(1.25)
Average number of common shares and common share equivalents
outstanding: Diluted 9,147,068 8,901,528 9,113,044 8,869,198 Basic
9,147,068 8,901,528 9,113,044 8,869,198 LESCO, INC. CONSOLIDATED
BALANCE SHEETS September 30, September 30, December 31, (Dollars in
thousands) 2006 2005 2005 (UNAUDITED) (UNAUDITED) CURRENT ASSETS:
Cash and cash equivalents $16,780 $7,286 $21,030 Accounts
receivable, net 20,574 15,082 16,310 Inventories 101,624 126,915
80,346 Other 2,341 3,305 2,667 TOTAL CURRENT ASSETS 141,319 152,588
120,353 Property, plant and equipment, net 9,029 10,409 9,624 Other
1,280 1,138 904 $151,628 $164,135 $130,881 CURRENT LIABILITIES:
Accounts payable $86,905 $66,825 $61,381 Accrued liabilities 21,777
24,422 24,576 Revolving credit facility - 13,454 - TOTAL CURRENT
LIABILITIES 108,682 104,701 85,957 Deferred - other 2,121 1,881
2,166 TOTAL LIABILITIES 110,803 106,582 88,123 SHAREHOLDERS'
EQUITY: Common shares--without par value-- 19,500,000 shares
authorized; 9,242,415 shares issued and 9,147,068 outstanding at
September 30, 2006; 8,925,844 shares issued and outstanding at
September 30, 2005 and 8,949,921 shares issued and outstanding at
December 31, 2005 924 892 894 Paid-in capital 40,448 37,957 38,051
Treasury shares; 95,347 at September 30, 2006; none in 2005 (1,477)
- - Retained earnings 930 20,523 4,955 Unearned compensation -
(1,819) (1,142) TOTAL SHAREHOLDERS' EQUITY 40,825 57,553 42,758
$151,628 $164,135 $130,881 LESCO, INC. CONSOLIDATED STATEMENTS OF
CASH FLOWS - UNAUDITED For the Nine Months Ended September 30,
(Dollars in thousands) 2006 2005 OPERATING ACTIVITIES: Net loss
$(4,025) $(11,114) Adjustments to reconcile net loss to net cash
used in operating activities: Depreciation and amortization 2,632
5,137 (Increase) decrease in accounts receivable (4,264) 1,849
Increase in inventories (21,278) (26,333) Impairment of property,
plant and equipment - 14,118 Increase (decrease) in accounts
payable 19,042 (1,838) Decrease in accrued expenses (2,727) (540)
Other items 98 607 NET CASH USED IN OPERATING ACTIVITIES (10,522)
(18,114) INVESTING ACTIVITIES: Proceeds on the sale of property,
plant and equipment 6 255 Purchase of property, plant and equipment
Stores (1,623) (2,792) Other (352) (882) NET CASH USED IN INVESTING
ACTIVITIES (1,969) (3,419) FINANCING ACTIVITIES: Increase in
overdraft balances 6,482 12,292 Proceeds from borrowings, net -
6,901 Purchase of treasury shares (1,477) - Exercised stock options
3,236 1,525 NET CASH PROVIDED BY FINANCING ACTIVITIES 8,241 20,718
Net change in cash and cash equivalents (4,250) (815) Cash and cash
equivalents - Beginning of the period 21,030 8,101 CASH AND CASH
EQUIVALENTS - END OF THE PERIOD $16,780 $7,286 Supplemental
disclosure of cash flow information: Interest paid, including
letters of credit and unused facility fees $(325) $(761) Income
taxes paid $(59) $(98) LESCO, INC. SEGMENT INCOME STATEMENT Three
Months Ended September 30, (Dollars in thousands) Stores Direct
Sales 2006 2005 2006 2005 Net sales $152,368 $142,474 $13,077
$16,393 Direct cost of product (including direct distribution
costs) (106,840) (97,092) (10,365) (12,873) % to Net Sales (70.1%)
(68.2%) (79.3%) (78.5%) Indirect supply chain costs (13,451)
(6,720) (1,198) (1,103) % to Net Sales (8.8%) (4.7%) (9.1%) (6.7%)
Gross profit on sales 32,077 38,662 1,514 2,417 % to Net Sales
21.1% 27.1% 11.6% 14.8% Selling expense (23,287) (21,214) (1,318)
(818) % to Net Sales (15.3%) (14.9%) (10.1%) (5.0%) Merchant
discounts (2,924) (2,457) (291) (340) % to Net Sales (1.9%) (1.7%)
(2.2%) (2.1%) Pre-opening expense - - - - % to Net Sales - - - -
General & administrative expense - - - - % to Net Sales - - - -
Supply chain transaction % to Net Sales - - - - Vendor contract
termination - - - - % of Net Sales - - - - Other income (expense),
net - - - - % to Net Sales - - - - Earnings (loss) before interest
and taxes $5,866 $14,991 $(95) $1,259 % to Net Sales 3.9% 10.5%
(0.7%) 7.7% Three Months Ended September 30, (Dollars in thousands)
Corporate Total 2006 2005 2006 2005 Net sales $- $- $165,445
$158,867 Direct cost of product (including direct distribution
costs) - (3,793) (117,205) (113,758) % to Net Sales (70.8%) (71.6%)
Indirect supply chain costs - - (14,649) (7,823) % to Net Sales
(8.9%) (4.9%) Gross profit on sales - (3,793) 33,591 37,286 % to
Net Sales 20.3% 23.5% Selling expense (2,660) (3,295) (27,265)
(25,327) % to Net Sales (16.5%) (16.0%) Merchant discounts (737)
(661) (3,952) (3,458) % to Net Sales (2.4%) (2.2%) Pre-opening
expense (472) (534) (472) (534) % to Net Sales (0.3%) (0.3%)
General & administrative expense (4,301) (4,776) (4,301)
(4,776) % to Net Sales (2.6%) (3.0%) Supply chain transaction -
(19,041) - (19,041) % to Net Sales (12.0%) Vendor contract
termination - (11) - (11) % of Net Sales - (0.0%) Other income
(expense), net 18 (29) 18 (29) % to Net Sales 0.0% (0.0%) Earnings
(loss) before interest and taxes $(8,152) $(32,140) $(2,381)
$(15,890) % to Net Sales (1.5%) (10.0%) LESCO, INC. SEGMENT INCOME
STATEMENT Nine Months Ended September 30, (Dollars in thousands)
Stores Direct Sales 2006 2005 2006 2005 Net sales $403,935 $383,567
$43,298 $63,555 Direct cost of product (including direct
distribution costs) (279,722) (260,047) (33,649) (48,510) % to Net
Sales (69.3%) (67.8%) (77.7%) (76.3%) Indirect supply chain costs
(29,928) (17,393) (2,761) (5,825) % to Net Sales (7.4%) (4.5%)
(6.4%) (9.2%) Gross profit on sales 94,285 106,127 6,888 9,220 % to
Net Sales 23.3% 27.7% 15.9% 14.5% Selling expense (67,146) (60,102)
(4,010) (6,142) % to Net Sales (16.6%) (15.7%) (9.3%) (9.7%)
Merchant discounts (7,579) (6,116) (1,277) (1,533) % to Net Sales
(1.9%) (1.6%) (2.9%) (2.4%) Pre-opening expense - - - - % to Net
Sales - - - - General & administrative expense - - - - % to Net
Sales - - - - Supply chain transaction - - - - % to Net Sales - - -
- Vendor contract termination - - - - % of Net Sales - - - - Other
income, net - - - - % to Net Sales - - - - Earnings (loss) before
interest and taxes $19,560 $39,909 $1,601 $1,545 % to Net Sales
4.8% 10.4% 3.7% 2.4% Nine Months Ended September 30, (Dollars in
thousands) Corporate Total 2006 2005 2006 2005 Net sales $- $-
$447,233 $447,122 Direct cost of product (including direct
distribution costs) - (3,793) (313,371) (312,350) % to Net Sales
(70.1%) (69.9%) Indirect supply chain costs - - (32,689) (23,218) %
to Net Sales (7.3%) (5.2%) Gross profit on sales - (3,793) 101,173
111,554 % to Net Sales 22.6% 24.9% Selling expense (8,257) (9,829)
(79,413) (76,073) % to Net Sales (17.7%) (17.0%) Merchant discounts
(1,213) (1,662) (10,069) (9,311) % to Net Sales (2.2%) (2.1%)
Pre-opening expense (1,282) (1,264) (1,282) (1,264) % to Net Sales
(0.3%) (0.3%) General & administrative expense (14,661)
(15,812) (14,661) (15,812) % to Net Sales (3.3%) (3.5%) Supply
chain transaction - (19,323) - (19,323) % to Net Sales - (4.3%)
Vendor contract termination - (474) - (474) % of Net Sales - (0.1%)
Other income, net 155 330 155 330 % to Net Sales 0.0% 0.1% Earnings
(loss) before interest and taxes $(25,258) $(51,827) $(4,097)
$(10,373) % to Net Sales (0.9%) (2.3%) LESCO, INC. SALES BY
CUSTOMER SECTOR AND TRANSACTING SELLING LOCATIONS Three Months
Ended September 30, 2006 Stores Service on Stores (Dollars in
millions) Centers Wheels Total Direct Total Lawn & landscape
$116.1 $1.0 $117.1 $11.2 $128.3 Golf 14.2 22.3 36.5 2.0 38.5 Gross
sales 130.3 23.3 153.6 13.2 166.8 Net sales adjustments (a) (0.2)
(1.1) (1.3) (0.1) (1.4) Net sales $130.1 $22.2 $152.3 $13.1 $165.4
Three Months Ended September 30, 2005 Stores Service on Stores
(Dollars in millions) Centers Wheels Other Total Direct Total Lawn
& landscape $103.0 $1.1 $- $104.1 $15.0 $119.1 Golf 15.1 24.7 -
39.8 1.5 41.3 Gross sales 118.1 25.8 - 143.9 16.5 160.4 Net sales
adjustments (a) (0.7) (0.7) - (1.4) (0.1) (1.5) Net sales $117.4
$25.1 $- $142.5 $16.4 $158.9 Three Months Ended September 30, %
Change Stores Service on Stores (Dollars in millions) Centers
Wheels Other Total Direct Total Lawn & landscape 12.7% (9.1%) -
12.5% (25.3%) 7.7% Golf (6.0%) (9.7%) - (8.3%) 33.3% (6.8%) Gross
sales 10.3% (9.7%) - 6.7% (20.0%) 4.0% Net sales adjustments (a)
71.4% (57.1%) - 7.1% 0.0% 6.7% Net sales 10.8% (11.6%) - 6.9%
(20.1%) 4.1% Nine Months Ended September 30, 2006 Stores Service on
Stores (Dollars in millions) Centers Wheels Total Direct Total Lawn
& landscape $319.2 $2.3 $321.5 $40.3 $361.8 Golf 33.5 52.8 86.3
3.3 89.6 Gross sales 352.7 55.1 407.8 43.6 451.4 Net sales
adjustments (a) (1.6) (2.3) (3.9) (0.3) (4.2) Net sales $351.1
$52.8 $403.9 $43.3 $447.2 Nine Months Ended September 30, 2005
Stores Service on Stores (Dollars in millions) Centers Wheels Other
Total Direct Total Lawn & landscape $293.2 $2.1 $0.9 $296.2
$56.2 $352.4 Golf 37.0 54.7 0.2 91.9 8.1 100.0 Gross sales 330.2
56.8 1.1 388.1 64.3 452.4 Net sales adjustments (a) (2.7) (1.8) -
(4.5) (0.8) (5.3) Net sales $327.5 $55.0 $1.1 $383.6 $63.5 $447.1
Nine Months Ended September 30, % Change Stores Service on Stores
(Dollars in millions) Centers Wheels Other Total Direct Total Lawn
& landscape 8.9% 9.5% (100%) 8.5% (28.3%) 2.7% Golf (9.5%)
(3.5%) (100%) (6.1%) (59.3%) (10.4%) Gross sales 6.8% (3.0%) (100%)
5.1% (32.2%) (0.2%) Net sales adjustments (a) 40.7% (27.8%) - 13.3%
62.5% 20.8% Net sales 7.2% (4.0%) (100%) 5.3% (31.8%) 0.0% (a) Net
sales adjustments include freight revenue reduced by agency sales,
customer discounts, and rebates. 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
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