CLEVELAND - LESCO Inc. announced Feb. 8, 2001, that sales in the fourth quarter ended December 31, 2000, were a record $102.8 million, up 7.5 percent from $95.6 million in the fourth quarter of 1999. For the year, LESCO also reported record sales of $499.6 million, up 8.5 percent from 1999's sales of $460.4 million.
The company reported a loss for the 2000 fourth quarter of $5.6 million compared with a loss of $1.3 million in the 1999 quarter. For the 2000 fiscal year, the company reported net income of $7.4 million compared with $16.0 million in 1999. These preliminary results are subject to final audit.
On the revenue side, a slowing economy that gave impetus to highly competitive market conditions produced less than anticipated growth, according to a LESCO news release. Despite reaching record levels, fourth quarter revenues were approximately $7 million below expectations. The company said a cool summer and fall in the northern half of LESCO's market also stimulated some competitors to liquidate inventories at very low prices, resulting in soft demand during the fourth quarter. In addition, shipments on orders from certain customers, received in the fourth quarter, were delayed until this year's first quarter. These delayed shipments reduced revenues by about $2 million.
The company also experienced a number of unusual and unexpected costs that impacted fourth quarter and full year results. In the fourth quarter of 2000, LESCO absorbed the following unusual expenses:
- A 50 percent increase in the price of urea, driven by rapidly rising natural gas prices;
- A number of non-recurring costs, including inventory-related issues;
- Higher delivery costs; and
- Start-up expenses at the company's Novex™ new technology plant.
Commenting on LESCO’s outlook for 2001, William Foley, chairman and CEO, said, "Despite this temporary bump in the road, mostly related to macroeconomic conditions, I believe our business model is vigorous and our strategy is sound. LESCO will continue to build on its number one position in the professional turf care markets."
In response to rapidly increasing fertilizer raw materials prices, LESCO raised its fertilizer prices in August 2000. Highly competitive market conditions resulted in only a portion of these price increases being realized. LESCO raised fertilizer prices again in recent weeks. To date, the response in the market to these increases has been encouraging.
Novex production at the company's plant in Virginia increased to record levels during the fourth quarter. LESCO said demand for this technologically innovative fertilizer product continues to grow. As a result, the company anticipates that plant throughput in 2001 could more than triple the level of output in 2000, despite a planned shutdown in July 2001 to install new equipment to expand output. This increase in production has given LESCO the opportunity to accelerate its expansion into new markets.
For more information about LESCO visit the company’s web site at www.lesco.com.