October 2007 - Modern Distribution Management

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October 2007

SPX Corp. to Buy APV for $510M

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

SPX Corp., Charlotte, NC, has agreed to buy APV, a global manufacturer of process equipment and engineered solutions primarily for the sanitary market, for 250 million British pounds (US$510 million). APV is a division of Invensys plc, an industrial automation, transportation and controls group based in London.
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APV will become a part of SPX’s flow technology segment. APV’s primary products include pumps, valves, heat exchangers and homogenizers for the food, dairy, beverage and pharmaceutical industries. Revenues for APV were $800 million for the fiscal year ended March 31, 2007.
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APV is a strong strategic fit with SPX and will expand our manufacturing, sales and distribution operations for process equipment in Europe, Asia Pacific and worldwide,” said Chris …

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Lawson Products Sales Up Slightly in 3Q

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

Lawson Products, Inc., Des Plaines, IL, a distributor of products to the maintenance, repair and operations and original equipment manufacturers, reported sales from continuing operations in the third quarter ended Sept. 30, 2007, were $127.9 million, up $0.6 million from the comparable prior-year period. Profit was $2.4 million.
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Third quarter 2007 results include severance costs of $3.7 million related to several executive departures and re-alignment of the company’s sales management.
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In April, 13 sales agents for Lawson were &nbsp ; indicted on federal fraud charges. The sales agents were accused of paying kickbacks totaling $140,000 to employees of some of their customers, including suburban municipalities, school districts, a federal agency, a non-profit …

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Rockwell Collins Sales Up 13% in Fiscal 2007

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

Rockwell Collins, Inc., Cedar Rapids, IA, reported profit for the fiscal year ended Sept. 30, 2007, of $585 million, an increase of 23% over fiscal year 2006. Fiscal year 2007 revenues increased 14%, to $4.42 billion. Organic revenue growth was 13%.
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For the fiscal year 2007 fourth quarter, profit increased 13% to $156 million. Revenues increased $165 million, or 16%, to $1.23 billion from revenues of $1.06 billion last year.
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Government Systems
Government Systems, which provides defense communications and defense electronics systems, products and services, including subsystems, displays, navigation equipment and simulation systems, to the U.S. Department of Defense, other government agencies, civil agencies, defense contractors and foreign …

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NAHB: Housing Market Should Stabilize in 2008

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

Though there is currently downward momentum" in the housing market right now, the downswing is poised to move back up again in 2008, economists at a recent National Association of Home Builders forecast conference said.

The economists gave these reasons:

  • The overall economy and job growth continue to move ahead at a decent pace;
  • Core inflation is under control;
  • The late-summer credit crunch in mortage markets is easing; and
  • And the supply-demand equation will balance out as builders "whittle down" excess inventory.

"Home sales should bottom out by …

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Advance Estimates Put 3Q GDP Growth at 3.9%

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 3.9% in the third quarter 2007, according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8%.
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The Bureau emphasized that the third-quarter advance” estimates are based on source data that are incomplete or subject to further revision by the source agency. The third-quarter “preliminary” estimates, based on more comprehensive data, will be released on Nov. 29, 2007.
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The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), exports, federal government spending, equipment and software, …

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September Construction Spending Slightly Below 2006

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

Construction spending in September 2007 was estimated at a seasonally adjusted annual rate of $1,162.8 billion, 0.3% above the revised August estimate. The September figure is 0.8% below the September 2006 estimate.
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During the first nine months of this year, construction spending was $872.2 billion, 3.2% below the same period in 2006.
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Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $869.0 billion, 0.2% below the revised August estimate. Residential construction was at a seasonally adjusted annual rate of $511.4 billion in September, 1.4% below the revised August estimate. Nonresidential construction was at a seasonally adjusted annual rate of $357.7 billion in September, 1.5% above the revised August …

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Industrial Distribution Group Sales Down 3% YTD

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Industrial Distribution Group, Inc., Atlanta, GA, reported sales fell 3% to $134.3 million in the third quarter ended Sept. 30, 2007. Profit was $1.3 million, compared with profit of $1.8 million in the prior-year period.
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Year-to-date, sales were $402 million, down 3% from the prior-year period. Profit for the nine-month period was $2.8 million, down from the $4.9 million in the prior-year period.
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Revenues from Flexible Procurement Solutions, IDG’s integrated supply offerings including storeroom management, comprised 61.9% of IDG’s total sales for the third quarter 2007, up from 60.3% of sales in the same period 2006. &nbsp ; Comparing ongoing activities unrelated to one-time 2006 inventory sales, FPS sales for the third quarter 2007 increased $1.4 million or …

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Kaydon Acquires Avon Bearings for $55M

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

Kaydon Corp., Ann Arbor, MI, has acquired Ohio-based Avon Bearings Corp. for $55 million in cash. Avon is expected to add $30 million to Kaydon’s fiscal 2008 sales.

This strategic acquisition represents an important step for Kaydon in accelerating growth in our market-leading bearings business,” said James O’Leary, Kaydon president and CEO. “It will add immediate capacity to our growing wind energy platform while both strengthening existing customer relationships and adding others. In addition, Avon will broaden our presence in important offshore crane, construction and steel markets for very large diameter bearings, while also providing access to the refurbishment market where Avon has built a leadership position over many years.
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Avon is a manufacturer …

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Simpson Manufacturing Sales Fall 4.2% in 3Q

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

Simpson Manufacturing Co., Inc., Pleasanton, CA, reported sales in the third quarter 2007 fell 4.2% to $217.3 million from the prior-year period. &nbsp ; Profit decreased 16.4% to $22.6 million for the third quarter 2007.
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In the first nine months of 2007, sales decreased 6.1% to $641.7 million and profit fell 18.6% to $68.3 million.
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In the third quarter of 2007, sales declined throughout most regions of the U.S. The decline was sharpest in the southeastern region and in California. Sales during the quarter in Canada increased significantly while sales in Europe were up slightly.
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Simpson Strong-Tie s third-quarter sales decreased 2.5% from the same quarter last year, while Simpson Dura-Vent sales decreased 17.3%. Simpson Strong-Tie sales to …

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Illinois Tools Works to Buy Cement Materials Supplier

Building Materials/Construction, Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

FLSmidth of Denmark has agreed to sell Densit A/S to Illinois Tool Works Inc.

FLSmidth wants to refocus its operations on Cement and Minerals. Densit was one of the Group’s final remaining non-core units.

Densit employs 68 people, and its turnover in 2006 amounted to DKK 144m (EUR 19m/US$27 million). Densit produces cement-based special-purpose materials used in the security industry, for wear protection, for industrial flooring and for reinforcement of offshore drilling rigs and offshore wind turbine foundations. The company also produces wear-resistant components for the cement and power-generating industries.

ITW, a $14 billion diversified manufacturer, produces engineered fasteners and components, equipment and consumables as well as specialty products. …

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Kaman to Shed Music Business

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

Kaman Corp., Bloomfield, CT, is sharpening its focus on the aerospace and industrial distribution segments by selling its wholly owned subsidiary Kaman Music Corp. to Fender Musical Instruments Corp., Scottsdale, AZ, for $117 million in cash.
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KMC, which comprises the company’s entire Music segment, owns Ovation Guitars, LP and Toca hand percussion products, Gibraltar Hardware, Genz Benz Amplification, Hamer Guitars, and is the U.S. sales representative for Sabian Cymbals, and worldwide distributor of Takamine Guitars and Gretsch Drums. &nbsp ;
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Privately held Fender is an electric guitar manufacturer. In addition to owning the world-renowned Fender brand name, FMIC also owns Guild guitars, Charvel Guitars, Jackson Guitars, SWR Bass Amplification, Tacoma …

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Building Materials Suppliers Hit in 3Q

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

Building Materials Holding Corporation, San Francisco, CA, a provider of construction services and building materials to residential builders and contractors, reported sales for the third quarter 2007 fell 24% to $618 million from $818 million in the same quarter a year ago. For the nine months, sales decreased 28% to $1.9 billion from the same period a year ago.
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Profit for the third quarter 2007 decreased to $4.2 million from $35.3 million in the same quarter a year ago. Year-to-date, profit decreased to $18.6 million from $97.6 million in the same period a year ago.
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Our third quarter results reflect the continued deterioration of the homebuilding market.&nbsp ; Throughout the quarter, negative macroeconomic factors such as declining housing permits, ongoing …

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Sequa Sales Up 3% in 3Q

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Sequa Corp., New York, NY, reported sales of $572.1 million in the third quarter ended Sept. 30, 2007, up 3.1%. For the first nine months of 2007, Sequa’s sales increased 1% to $1.7 billion. Profit for the nine-month period was $44.3 million, compared with $42.1 million in the same period a year ago.
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Aerospace: Sales at Chromalloy Gas Turbine Corporation -Sequa’s largest business unit and the sole component of its aerospace segment -were on par with the third quarter of 2006, as increased sales to commercial airlines and the military substantially offset lower sales to marine and industrial turbine customers. Increased sales to airlines resulted from new product introductions and sales from long-term contracts with airline customers.
&nbsp ; …

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Airgas Same-Store Sales Up 6% in 2Q

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

Airgas, Inc., Radnor, PA, distributor of industrial, medical, and specialty gases, and welding, safety, and related products, reported sales in its second quarter 2007 ended Sept. 30, were up 27% to $1 billion. One quarter of the acquisition of Linde’s packaged gas operations accounted for up to half of that increase.
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Total same-store sales were up 6%, with hardgoods up 7% and gas and rent up 5%.
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Profit was up 28% to $51 million.
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&nbsp ; …

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Report: Industrial Manufacturing Optimism Index Falls

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The following findings from PricewaterhouseCoopers’Manufacturing Barometer, a quarterly survey, are based on interviews conducted between August 1, 2007, and October 12, 2007, with 60 senior executives of large, multinational U.S. industrial manufacturing companies.

Optimism Falls Sharply Among Industrial Manufacturing Executives
Optimism in the U.S. economy dropped significantly among industrial manufacturers during the third quarter of this year according to PricewaterhouseCoopers’Manufacturing Barometer. Less than half of those surveyed, 45%, are optimistic about the domestic economy, a 17-point drop from the 62% level of optimism reported last quarter.

Higher Energy Costs, Lack of Demand Lead Concerns
Consistent with …

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DXP Enterprises 3Q Organic Growth at 14.5%

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

DXP Enterprises, Inc., Houston, TX, reported profit of $4.5 million for the third quarter ending Sept. 30, 2007, compared with profit of $2.9 million in the third quarter 2006. Sales increased 56.6% to $106.8 million from $68.2 million for the third quarter of 2006. Sales by the businesses acquired since July 1, 2006, accounted for $28.7 million of the sales increase.
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Excluding sales by the acquired businesses, sales for the third quarter of 2007 increased 14.5% from the third quarter 2006.
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Year-to-date profit increased 37.8% to $11.6 million. Sales increased 37.5% to $275.7 million. Sales by the businesses acquired since July 1, 2007, accounted for $52.2 million of the sales increase. Excluding sales of the acquired businesses, sales for the first nine …

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Trelleborg 3Q Organic Growth at 12%

Free, News, Subscriber Only /

Swedish industrial supplier Trelleborg AB reported organic growth of 12% in the third quarter 2007. Operating profit was up by 49%.

Overall sales were up 18% to SEK7.5 billion (US$1.17 billion), and to SEK23.2 billion (US$3.6 billion) for the first nine months of 2007.
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Profit in the third quarter was SEK217 million (US$33.9 million), and for the first nine months, SEK698 million (US$109 million).
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View the full report here or here.

Exchange rates as of Oct. 26, …

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Teaming Up for Hagemeyer

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

A bidding war has possibly been avoided in the fight for Dutch electrical/industrial distributor Hagemeyer’s global assets. Rexel just bid nearly $4.3 billion for the company, but plans to only keep a little over half of Hagemeyer when all is said and done. Sonepar has agreed to buy the rest.
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In an interesting twist, French-based distributor Rexel has made an offer to acquire Hagemeyer, and has agreed to sell certain assets of Hagemeyer to Sonepar if its offer is accepted.
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The move eliminates the possibility of a bidding war between the two electrical distribution giants. It also plays down the risk of buying the entire company.
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Rexel’s offer was made for & euro; 4.60 euro a share in cash, valuing Hagemeyer at & euro; 3 …

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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 up to September 30, 2007. 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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Third Quarter Inflation by Commodity Group

Economic Trends, Research & Analytics, Subscriber Only /

These select product groups provide a snapshot of inflation trends. Third quarter 2006 is compared with third quarter 2007, and the second quarter 2007 with the third quarter 2007. Graphs depict trends from January 2006. Download complete&nbsp ; file below.
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Abrasives
Adhesives & Sealants
Cutting Tools & Accessories
Hand & Edge Tools
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Fasteners
Power-Driven Hand Tools
Ball & Roller Bearings
Mechanical Power Transmission Equipment

Electrical Machinery/Equipment
Industrial Material Handling Equipment
Industrial Gases
Welding Machinery/Equipment

Valves, Except Fluid Power
Pumps, Compressors & Equipment
Fluid Power Equipment
Plumbing Fixtures & Fittings

Hardware
Sanitary …

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