CLEVELAND, Ohio – LESCO today announced first quarter results for the period ending March 31. According to the company, net sales for the first three months of 2005 were $98.1 million vs. $102 million in the comparable period a year ago. Lawn care gross sales were $84.3 million compared to $85.7 million in the first quarter of 2004, while golf gross sales were $15.5 million versus $17.2 million in the same quarter last year. Total Service Center gross sales increased 0.3 percent to $69.1 million from $68.9 million, while same-store Service Center sales fell 4.1 percent.
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"We are encouraged by the performance of our class of 2003 stores that produced growth of 22 percent in the first quarter, demonstrating that our new Service Center growth model is working,” said LESCO President and CEO Michael Dimino. “Unfortunately, total sales were impacted by late season snowfall, combined with colder temperatures in the Northeast and Midwest, which delayed sales of pre-emergent combination fertilizer to the second quarter. Since the beginning of April, we have seen the expected rebound in sales, and are confident in our ability to recoup the early softness as the year progresses."
Gross profit (defined as product margin less distribution costs) increased to 23.8 percent of net sales, or $23.4 million, compared to 23.1 percent of net sales, or $23.6 million, in the first quarter of 2004. Product margin was $33 million, or 33.7 percent of net sales, vs. $33.1 million, or 32.4 percent of net sales, in the same quarter last year. Distribution expense rose to $9.7 million, or 9.9 percent of net sales, from $9.5 million, or 9.3 percent of net sales, in the comparable period in 2004.
Selling expense was $23.8 million vs. $21.8 million in the first quarter of 2004. Approximately $1.2 million is attributable to incremental operating costs for Service Centers opened in 2003 through 2005, and $800,000 related to ongoing training and incentive initiatives. General and administrative expense was $7.8 million, up half a million from the same quarter last year.
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For the first quarter of 2005, the company reported on a generally accepted accounting principles (GAAP) basis a loss of $1.21 per diluted share, versus a loss of $0.92 per diluted share for the same period in 2004. Assuming a tax provision at a 39-percent rate, the company would have reported first quarter 2005 adjusted net loss of $0.74 per diluted share, compared to an adjusted net loss of $0.54 per diluted share in the first quarter of 2004, as reconciled in the attached financial statements. LESCO's results on a GAAP basis do not reflect a tax provision due to the required accounting treatment of LESCO's deferred tax assets.
LESCO opened one new Service Center during the first quarter of 2005 in Upland, Calif. On March 31, 2005, there were 275 Service Centers in operation, versus 256 at the end of the first quarter of 2004. The 49 Service Centers opened from 2003 through the first quarter of 2005 generated net sales of $7.1 million and a four-wall, pre-tax loss of $800,000
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The company reiterated guidance for 2005 of full-year revenue growth between 7 and 8 percent, including a 3- to 4-percent increase in same-store sales. By customer sector, lawn care sales are expected to increase 8 to 10 percent, while golf is anticipated to be flat to down slightly. For the full year, the LESCO estimates a diluted EPS range of $0.60 to $0.70.
As part of the Company's refined strategy of opening new Service Centers throughout the entire year, the Company expects to open approximately 30 to 35 in 2005, with 14 to 17 opening by the end of the second quarter 2005.