July 2007 - Modern Distribution Management

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July 2007

EnPro Buys Compressor Products International

Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

EnPro Industries Inc., Charlotte, NC, manufacturer of engineered industrial products, has acquired Compressor Products International, a privately-held company that designs, manufactures and services sealing components for reciprocating compressors.
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CPI, Hungerford, Berkshire, England, manufactures critical sealing components for reciprocating compressors and related equipment for both compressor manufacturers and for the oil, gas and petrochemical industries.
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It will be combined with EnPro’s France Compressor Products business to create the world’s largest manufacturer of reciprocating compressor sealing components.
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This acquisition is a very positive step for FCP and CPI, as well as for EnPro,” said Ernie Schaub, EnPro president and chief …

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Construction Spending Down Slightly in June

Building Materials/Construction, Economic Trends, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors /

Construction spending in June 2007 was estimated at a seasonally adjusted annual rate of $1,175.4 billion, 0.3% below the revised May estimate of $1,178.4 billion. The June figure is 2.4% below the June 2006 estimate of $1,204.0 billion.
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During the first six months of the year, construction spending amounted to $550 billion, 3.5% below the $570.1 billion for the same period in 2006.
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Spending on private construction was at a seasonally adjusted annual rate of $890.9 billion, 0.3% below the revised May estimate. Residential construction was at a seasonally adjusted annual rate of $544.4 billion in June, 0.7% below the revised May estimate of $548.3 billion. Nonresidential construction was at a rate of $346.6 billion in June, 0.3% above the revised May …

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Timken Sales Grow 3% in First Half

Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

The Timken Company, Canton, OH, reported sales of $1.35 billion in the second quarter of 2007, an increase of 4% over the same period a year ago. Strong sales in industrial markets were partially offset by the divestment of the company’s automotive steering and European steel operations.
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During the quarter, the company:

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Air Liquide Expands in Serbia

Free, Gases & Welding Equipment, News, Subscriber Only, Top Distributor Sectors /

Global industrial gases company Air Liquide has increased its presence in Southeastern Europe by creating a subsidiary in Serbia.
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Over the past three years, Serbia has been one of Europe’s fastest growing economies with an average annual GDP growth of 7.3%. It is the most industrialized country in ex-Yugoslavia. Its major growth drivers are telecommunications, construction and transport, with a recent upswing of industrial production. Its strategic position allows good access to transportation corridors between Western and South-Eastern Europe and Turkey.

The move is part of Air Liquide’s goal to establish a stronger presence in the region. Since the end of last year, Air Liquide has operated an Air Separation Unit in Romania and is supplying cylinder and …

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DXP Enterprises Sales Up 22.3% in 2Q

Companies, Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

DXP Enterprises, Inc. reported profit of $3.4 million for the second quarter ending June 30, 2007, compared with profit of $2.9 million in the second quarter 2006.
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Sales increased 22.3% to $85.3 million from $69.8 million in the prior-year period. Sales by the businesses acquired in 2006 and 2007 accounted for $13.3 million of the sales increase. Excluding sales by the acquired businesses, sales for the second quarter of 2007 increased 3.2% from the prior-year period.
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Year-to-date profit for the six months ended June 30, 2007, increased 31% to $7.1 million. Sales increased 27.7% to $169 million from $132.3 million for the first six months of 2006. Sales by the businesses acquired in 2006 and 2007 accounted for $23.5 million of the sales increase. Excluding …

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Industrial Distribution Group Considers Strategic Alternatives

Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

Industrial Distribution Group, Inc. announced it has formed a committee of independent directors to review strategic alternatives for the industrial distributor, which has about $500 million in annual sales. It also announced it expects revenue for the second quarter to be $132.6 million, down from last year.
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In addition, the company preannounced announced a cost-reduction program and related changes to its executive team.
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The independent committee will be led by the company’s non-executive chairman of the board, Richard M. Seigel.
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IDG needs to consistently grow revenues at a higher level while also seeking a strategic way to reduce its cost profile, both of which have been a source of concern,” Seigel said. “It is imperative that we take …

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SKF to Buy Bearings Supplier

Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

SKF has agreed to buy S2M, a subsidiary of British company Edwards Limited, a manufacturer of magnetic bearings, for 55 million euros (US$75.04 million).
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S2M has annual sales of 40 million euros (US$54.5 million). It is headquartered in Vernon, France.
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S2M focuses mainly on the European markets, with end-user segments in vacuum pumps, small air and gas compressors, turbo expanders and compressors in the oil and gas industry.
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S2M will be part of SKF’s Industrial …

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Advance GDP Estimate: Growth of 3.4% in 2Q

Economic Trends, Free, News, Research & Analytics, Subscriber Only /

Real gross domestic product -the output of goods and services produced by labor and property in the U.S. -increased at an annual rate of 3.4% in the second quarter of 2007, according to advance estimates released by the Bureau of Economic Analysis.&nbsp ; In the first quarter, real GDP increased 0.6%.
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The Bureau emphasized that the second-quarter advance” estimates are based on source data that are incomplete or subject to further revision by the source.&nbsp ; The second-quarter “preliminary” estimates, based on more comprehensive data, will be released on Aug. 30, …

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Industrial Manufacturers to Grow International Sales

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Pricewaterhouse Coopers released the results of its quarterly survey of industrial manufacturers, who have downgraded their growth expectations for the next 12 months, citing oil and energy costs and competition from foreign markets, as well as high interest rates and unfavorable exchange rates. On the U.S. side, 62% expect growth in the domestic economy.
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However, manufacturers are quite optimistic about the global economy, with 78% of respondents expecting growth over the next 12 months. This is not surprising based on earnings reports I see on a day-to-day basis; respondents expect their international sales to increase, on average, to 35% of total revenue …

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Kaman Opens Four Branches

Companies, Free, News, Subscriber Only, Top Distributor Sectors /

Kaman Industrial Technologies, Windsor, CT, distributor of bearings, power transmission, electrical, and motion control products, has opened new branches in Lathrop, CA, Bradenton and Port St. Lucie, FL, and Danville, IL.
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Kaman Industrial Technologies is a subsidiary of Kaman Corp. of Bloomfield, CT., which conducts business in the aerospace, industrial distribution and music markets. Kaman Industrial Technologies has 200 …

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RBC Bearings Acquires Coastal Bearing Services

Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

RBC Bearings Inc., Oxford, CT, an international manufacturer of precision plain, roller and ball bearings, has acquired CBS/Coastal Bearing Services, Houston, TX, for $3.7 million in cash.
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CBS manufactures, inspects and refurbishes large bearings for the oil and mining industries, as well as other general industrial applications with sizes ranging up to 124 inches in diameter. CBS has sales of $3.1 million for the year ended Dec. 31, 2006.

RBC said that CBS represents another step in our strategy to expand our presence in the large bearing segment.”

RBC operates 17 manufacturing facilities in four …

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Wolseley Appoints VP of Acquisitions for NA

Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only /

UK-based Wolseley plc has appointed Dan Parr to vice president of Acquisitions and Business Integration for Wolseley’s North American Division, comprised of Ferguson, Stock Building Supply and Wolseley Canada.
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He will oversee acquisitions, and coordinate business integration and installation into Wolseley’s systems and processes.

Parr began his career with Ferguson in 1988 as an Internal Auditor. He was promoted two years later to internal audit manager and transferred to Atlanta, Ga., in 1993 to become the integration manager for our Hub, Inc. acquisition. Parr returned to headquarters in 1995 as manager of Acquisitions and Installations, and was promoted to director in 2003 and to vice president in …

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Valley National Gases Acquires Mitchell Industrial

Finance, Free, Gases & Welding Equipment, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

Valley National Gases Inc., Washington, PA, has acquired Mitchell Industrial Supply Inc, an industrial gases and welding supply distributor in Elkhart, IN. Mitchell serves customers throughout Northern Indiana and Southwest Michigan.
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Valley National Gases is a packager and distributor of industrial, medical and specialty gases, welding equipment and supplies, propane and fire protection equipment. Valley National Gases operates 75 locations in 14 states, with eight production and distribution centers in the eastern …

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Europe Offsets Fall in Saint-Gobain U.S. Sales

Building Materials/Construction, Free, News, Subscriber Only, Top Distributor Sectors /

Saint-Gobain overall sales were up 6% in the first half of 2007 to US$29.8 billion (21.7 billion euros).
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All the group’s sectors saw a rise in sales, with organic growth overall at 6.9%.
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Construction markets in Europe, bolstered by the impact of regulations promoting energy efficiency, offset the downturn in the U.S. housing market. Sales were strong in Asia and emerging countries (organic growth of 19%).
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Construction Products posted a 4.1% organic growth rate. About three-fourths of sales in this sector come from Europe and emerging countries. Only a quarter is in the U.S.
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The Building Distribution sector posted a 13.3% rise in sales, buoyed by acquisitions, and organic growth of 8.7%. Strong sales were seen in France, …

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Huttig Building Products Sales Down 20% YTD

Building Materials/Construction, Free, News, Subscriber Only, Top Distributor Sectors /

Huttig Building Products, Inc., distributor of millwork, building materials and wood products, reported sales in the second quarter were $239.6 million, down 19% from the prior-year period.
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Sales to national accounts, or 35% of sales in the second quarter, declined by only 17%.
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Jon P. Vrabely, president and CEO, said: This quarter represents the first profitable quarter for Huttig since a year ago, just before the significant downturn in the housing market.”

Sales for the first six months of 2007 were $461.9 million, a 20% decrease over the prior-year period. This decrease is primarily attributable to the 27% drop in housing …

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MDM News Digest 3714

Free, Subscriber Only /

Two major distributors of industrial and oilfield PVF supplies, McJunkin Corporation, with nearly $2 billion in annual revenues,&nbsp ; and Red Man Pipe and Supply Company, nearly $1 billion in annual sales, have announced a merger of equals.” Charleston, WV, and Tulsa, OK , will serve as co-headquarters for the new company. McJunkin Corporation CEO and President H.B. Wehrle III and Red Man Pipe and Supply Company President and CEO Craig Ketchum will serve as Co-CEOs for the new company.&nbsp ; More …

Wolseley plc has reported it will close 24 more Stock Building Supply branches, primarily in the Midwest. The closures include a 370 headcount reduction. The announcement comes after …

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Get Paid for the Value You Add

Management, Sales & Marketing, Strategy, Subscriber Only /

The last five years have been rough for distributors. Price pressure and intense competition have eliminated razor-thin margins, pushing many distributors to the brink. In addition, distributors have gotten into the habit of "giving away" value-added services in hope of winning deals, driving costs to historic heights. The solution: Revamp pricing based on the value you provide in each segment.

Many distributors believed that a resurgent economy would allow them to raise prices, but customers have been resistant. For most distributors, attempts at price increases are simply not taking hold.

Fortunately, there is a better, more profitable approach. The solution is to develop products and services that target unique segments with very specific offers. For most …

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Distribution Financial Metrics and Trading Multiples

Subscriber Only /

This table highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries. Download this data below. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

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<These materials,&nbsp ; prepared by Robert W. Baird & Co. for MDM,&nbsp ; are for informational purposes …

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Praxair Sales Grow 12% in 2Q

Companies, Free, Gases & Welding Equipment, News, Subscriber Only, Top Distributor Sectors /

Praxair, Inc., Danbury, CT, reported sales in the second quarter 2007 increased to $2.3 billion, 12% above the same period a year ago. Sales growth was led by significant new business coming on-stream in the energy sector and new business in Asia and South America.
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Profit was up 18% to $291 million.
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In North America, second-quarter sales reached $1.3 billion, 12% above the prior-year quarter. Sales growth came primarily from higher sales to energy and general manufacturing markets, followed by electronics, healthcare and food and beverage.
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In Europe, sales in the quarter of $336 million grew 14%, and increased 6% excluding currency effects, as compared to the prior year. Underlying sales growth was broad-based across Europe and most major end …

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Commentary: It’s Time to Shed Your Unprofitable Business

Free, Management, Perspective, Strategy, Subscriber Only /

Despite pressures from commodity price increases the past few years, many distributors are finding it hard to raise prices. The traditional method of price increases has too often been to throw five percent (or another guesstimate) against the wall to see if it sticks.

The authors of the article in this issue argue that there is a better, more profitable approach. The solution is to develop products and services that target unique segments with very specific offers. For most distributors, this involves developing a range of offers from the high end (with all the bells and whistles) to the low end (no frills).

The key, the authors say, is to segment the market and build specific offers based on your unique ability to drive economic value (e.g. revenue growth or cost …

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