Lawson Products Inc. (LAWS: Quote) announced Thursday a strategic restructuring, which includes elimination of about 100 positions or 11 percent from its current workforce. The company expects to record pre-tax charges of around $40 million in the second quarter, of which $33 million will be non-cash. The restructuring actions are expected to generate net annualized savings of nearly $20 million.
Lawson Products said it will eliminate several senior executive positions, including the open chief operating officer position. The workforce reduction, which does not include a reduction in its sales force, is expected to result in a one-time severance charge of about $7.0 million for the second quarter of 2012.
The one-time non-cash charges of $33 million mainly consist of an impairment of goodwill of $28 million and additional inventory reserves of nearly $5.0 million.
Lawson Products noted that the restructuring is aimed at reducing its cost structure, improve operating efficiency, enhance revenues and improve its liquidity position.
Thomas Neri, president and chief executive officer of the company said, "We have made significant progress over the past 18 months in the transformation of the Company, including the implementation of our ERP system, commencing the sales-channel transformation and optimizing our distribution network."
As part of improving its operating efficiency, the company is consolidating three Illinois locations into a single operation in McCook, Illinois, which will be the hub for the Midwest.
The company also said it has received a commitment letter from its lender to replace its existing credit facility with a new five-year, $40 million facility. According to Lawson, this will provide additional flexibility to meet its financial covenants going forward.
"Looking to the future, we believe this restructuring will enable the Company to better leverage its clear competitive advantages and enhance its operating results," Neri added.
LAWS is currently trading at $9.17, up 2.46 percent, on a volume of 7 thousand shares on the Nasdaq.
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by RTT Staff Writer
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