November 2007 - Modern Distribution Management

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November 2007

Zep Inc. Plans Sales Through Industrial Distribution

Chemicals & Plastics Distribution, Facilities Maintenance (MRO), Free, News, Subscriber Only, Top Distributor Sectors /

Atlanta-based Zep Inc. says it is looking for opportunities in independent distribution channels to grow its core business in industrial and institutional cleaning and maintenance chemicals. The company named HD Supply and Grainger as examples of distributors they could sell through.
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Zep had fiscal 2007 sales of more than $565 million. It is a producer of cleaning and maintenance products for commercial, industrial, institutional and consumer end-markets. Brand names includes Zep, Zep Commercial, Enforcer, National Chemical and …

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Report: HD Supply to Sell LBM Assets

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

The Home Channel News is reporting that HD Supply has agreed to sell its Lumber and Building Materials unit to Pro-Build Holdings Inc. The unit includes 19 lumberyards in the Atlanta area and 20 in Florida.

The assets are part of Williams Bros. Lumber and Cox Lumber, which HD Supply bought in 2005 and 2006, respectively. At the time of acquisition, Atlanta-based Williams Bros. had sales of $400 million, and the Florida-based Cox had sales of $396 million. The unit also includes Forest Products Supply in Sarasota, FL.

HD Supply was split off Home Depot in August and sold to a trio of private equity firms for $8.5 billion. This is the first news of a change in HD Supply’s makeup since the …

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Beacon Roofing Organic Sales Decline in 2007

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

Beacon Roofing Supply Inc., Peabody, MA, reported sales grew 9.7% to $1.65 billion in fiscal 2007, reflecting acquisitions made during the year. Existing market sales fell 4.8%, with decreases in residential roofing and complementary building product sales.

Existing market non-residential sales were up 2.7%.
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Profit was $25.3 million in 2007, down from $49.3 million in 2006.

In the fourth quarter 2007, sales were up 14.% to $493.8 million from the same period a year ago.
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The increase was due to the acquisitions completed since last year’s fourth quarter, including North Coast Commercial Roofing Systems. The positive impact from the acquisitions was offset by a decline of 8.3% in existing market sales caused by a 16.4% decline in …

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Suncoast Files for Ch. 11 Bankruptcy Protection

Building Materials/Construction, Free, Legal Issues in Wholesale Distribution, News, Operations, Subscriber Only, Top Distributor Sectors /

Suncoast Roofers Supply Inc., Tampa, FL, has filed for Ch. 11 bankruptcy protection. In its bankruptcy filings, the roofing supplies distributor reported a 57% decline in sales over 2006 due to the decline in housing and related markets.
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For the nine months ended Sept. 30, 2007, sales were about $100 million. By comparison, sales for the distributor during fiscal 2006 were $209.6 million.
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At the same time the distributor was hit with the housing slump, it embarked on an ambitious expansion campaign to vertically integrate” its manufacturing and distributing processes to improve product availability and delivery, and “capture a larger share of supply chain profits.”
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In 2006, Suncoast acquired 80% of American Concrete Tile Inc., a …

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3Q GDP Growth Stronger Than Advance Estimates Suggested

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 4.9% in the third quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis.&nbsp ; In the second quarter, real GDP increased 3.8%.
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These GDP estimates are based on more complete source data than were available for the advance estimates issued last month.&nbsp ; In the advance estimates, the increase in real GDP was 3.9%.
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The increase in real GDP in the third quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), private inventory investment, equipment and software, federal government spending, nonresidential structures, and state and …

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Redwood Plastics Acquires Canadian Supplier

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

Industrial rubber and elastomer product supplier Redwood Plastics Corp., a division of The Redco Group, has acquired BC Rubber Supply Ltd., Langley, BC.

Redwood Plastics has seven branches and two manufacturing facilities in the U.S. and in Canada. Redwood Plastics is also a partner of Prisma Plastics International Inc. with Warehoused Plastics Inc. and Plastics Alto/Polyfab …

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Wolseley to Lay Off 1,300 More Workers in U.S.

Companies, Free, News, Subscriber Only /

UK-based Wolseley plc will be laying off 1,300 more workers in the U.S. in its second quarter; the global building materials and plumbing distributor reduced headcount by 1,700 in the three months ended Oct. 31, 2007.
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In total to date, layoffs represent a third of Stock Building Supply workforce and 10% of the Ferguson work force.
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Globally, the company is also working to reduce indirect costs, is realigning its management structure and reestablishing priorities in the businesses for the current year.” The roles of Chief Business Development Officer and Chief Operations Officer are being eliminated.&nbsp ;
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North American revenue was down 10% (3% in constant currency), and profit was down 30% (25% in constant currency).
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Overall …

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Electroindustry Business Confidence Index Rebounds

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

The National Electrical Manufacturers Association’s Electroindustry Business Confidence Index for current North American conditions rebounded sharply in November, rising by more than 15 points from a month earlier.
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At 52.2, the index signaled the first month-to-month improvement in business conditions since April. By contrast, the future conditions index for North America lost ground on the month, slipping to 40 from 42.6 a month ago.
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The Electroindustry Business Confidence Index gauges the business confidence of the electroindustry in Asia, Europe, North America, and Latin America, and is based on the results of a monthly survey of senior managers at NEMA member companies. Those companies represent more than 80 percent of the …

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ERIKS Expands in the Netherlands

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

The ERIKS group has agreed to buy Wielens Beheer B.V. in Groningen, the Netherlands.
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Wielens sells electromechanical power transmission equipment parts and services. Wielens serves mainly the industrial maintenance market (MRO) and has annual sales of & euro; 22 million.
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ERIKS says that the acquisition fits in its strategy of aiming at the top three” position in each core activity in all countries in which ERIKS is present to grow local presence.
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With the acquisition, ERIKS gains nine branches including a central warehouse.


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U.S. PT/MC Sales Drop from Aug. to Sept.

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

U.S. distributors’sales of Power Transmission/Motion Control products continue to fluctuate, dropping 5.5 percent from August to September after a 9.9 percent increase in sales the prior month, according to the September 2007 month-end trend data from the Power Transmission Distributors Association. Year-to-year comparisons remain positive with sales in September 2007 coming in 1.8 percent higher than in September 2006. Accounts receivable collection days increased 9 percent over August 2007.&nbsp ; The September 2007 confidence index for U.S. distributors remained unchanged for the seventh month in a row at 6.6 (on a 10-point scale).
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Canadian distributors’sales in PT/MC products on a month-to-month comparison matched the performance of their U.S. counterparts. After last …

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Philips to Buy Genlyte for $2.7B

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

Philips Holding USA Inc., a subsidiary of Royal Philips Electronics, has agreed to acquire Genlyte Group Inc., a manufacturer of lighting fixtures, controls, and related products for the commercial, industrial and residential markets, for $2.7 billion in cash.

The acquisition allows Philips to expand in the green-lighting business in North America and to introduce Genlyte’s products to the international market. About 90% of Genly’tes 2006 revenues were in commercial and industrial applications in 2006. The rest are focused on high-end residential applications.

Genlyte sells to distributors and electrical wholesalers. The company’s products are also promoted through architects, engineers, contractors, and building owners.

Besides growing our …

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Rexel, Hagemeyer Reach Agreement for Sale

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

Rexel and Hagemeyer have reached an agreement on Rexel’s all-cash offer of & euro; 4.85 for Hagemeyer’s assets, valuing the company at & euro; 3.1 billion (US$4.5 billion).
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The offer was approved by the boards of Rexel, Sonepar and Hagemeyer.
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Rexel has secured committed debt financing.
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As previously announced, Rexel has agreed to sell Hagemeyer’s North American, Asian-Pacific and selected European businesses to Sonepar after completion of the sale.
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The overall transaction will combine the strengths of three major players in the distribution of electrical supplies. The transaction will broaden Rexel’s footprint across Europe, while significantly consolidating Sonepar’s positions in North America and Asia-Pacific.
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State of Construction Mixed

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

The Specialty Tools and Fasteners Distributors Association (www.stafda.org) had more than 5,600 participants at its November 2007 show in Nashville, TN, the second-largest turnout in the association’s history. As always, the show’s annual meeting included State of the Industry addresses from the association’s president, Greg Drouillard, president of Target Building Materials Ltd., Windsor, Ontario, and a representative from a manufacturer member, Tim Tevens, president and CEO of Columbus McKinnon Corp., Amherst, NY. Here are notes of interest from those speeches.
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State of Construction
In Canada, said Greg Drouillard, housing was 8 percent ahead in 2006 but the market has cooled in areas where heavy industry has experienced plant closures and subsequent job …

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Commentary: Look Beyond the Headlines

Economic Trends, Free, Management, Perspective, Research & Analytics, Strategy, Subscriber Only /

Many sources are predicting a more significant slowdown in 2008 than previously thought, as several articles in this issue address. Perhaps the only predictable certainty for 2008 is that the attention deficit disorder the mainstream media suffers from will be epidemic. Not only is it an election year, but the credit crunch and residential construction downturn will give most reporters severe whiplash. It will be even harder to get an accurate read on the real shifts taking place in the economy.

We don’t predict the future, but we do try to offer observations and insight from our coverage of diverse distribution sectors inNorth America and abroad so our readers can plan and react quickly. Our lead …

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Hagemeyer Accepts Buyout Terms

Companies, Electrical, Finance, Mergers & Acquisitions, Subscriber Only, Top Distributor Sectors /

Electrical distributors Rexel and Hagemeyer have reached an agreement on Rexel’s all-cash offer of & euro; 4.85 for Hagemeyer’s assets, valuing the company at & euro; 3.1 billion (US$4.5 billion).

The offer was approved by the boards of Rexel, Sonepar and Hagemeyer. Rexel has secured committed debt financing for the all-cash offer.

As previously announced, Rexel has agreed to sell Hagemeyer’s North American, Asian-Pacific and selected European businesses to Sonepar after completion of the sale.

The overall transaction will combine the strengths of three major players in the distribution of electrical supplies. The transaction will broaden Rexel’s footprint across Europe, while significantly consolidating Sonepar’s position in North America and …

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News Digest 3722

Free, Subscriber Only /

United Stationers Supply Co., Deerfield, IL, has agreed to acquire ORS Nasco Holding Inc., an affiliate of Brazos Private Equity Partners, LLC, for $180 million. ORS Nasco, Muskagee, OK, is a master distributor of industrial supplies, selling exclusively to independent distributors. The company has annual sales of $285 million. Acquiring ORS Nasco will diversify our product offering and provide us entry into the estimated $22 billion wholesale industrial supplies market,” said Richard W. Gochnauer, president and CEO of United Stationers. United Stationers is a $4.5 billion master distributor of office, technology, janitorial and breakroom supplies. More

Philips Holding USA Inc., a subsidiary of …

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MDM Interview: New Firm Invests in Distribution

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

Sensing a need for outside investors with a firm grasp of distribution businesses, a group of industry veterans, as well as consultants Adam Fein and Brent Grover,&nbsp ; has formed the first private equity firm that will invest exclusively in distribution companies. The goal is to use the principals’and investors’experience, expertise and networks in the industry to help management maximize the growth and profitability of portfolio companies, says Jim Miller, a principal in the firm.


MDM: Where did you come up with the concept for Supply Chain Equity Partners?
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Jim Miller: The idea actually came from the distribution industry itself. Supply Chain Equity was created to fill a void in the distribution sector that was expressed by …

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MDM November 25, 2007

Subscriber Only /

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to …

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Preparing for Uncertainty in 2008

Economic Trends, Management, Research & Analytics, Strategy, Subscriber Only /

The economy and the decline of the dollar top the concerns of many (though not all) distributors and manufacturers, according to the latest MDM survey. Here are the key issues that surfaced in the November poll.

As in the past few years, distributors are paying close attention to consolidation trends among suppliers, competitors, end-users and ERP providers, materials costs, sales force development, supplier relationships, recruiting and retaining talent and controlling benefits costs. Private label, foreign competition and global sourcing have also moved front and center.

We also asked consultants in wholesale distribution to share what they see developing. Here are starting points to help plan for 2008.

1. Plan for …

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Atlantis Plastics Sales Down in 3Q

Chemicals & Plastics Distribution, Free, News, Subscriber Only, Top Distributor Sectors /

Atlantis Plastics, Inc., Atlanta, GA, reported sales for the third quarter 2007 were $103.5 million, compared with $108.3 million for the third quarter of 2006. Net loss for the third quarter of 2007 was $13.9 million.
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Sales for the first nine months of 2007 were $308.4 million, compared with $328.6 million for the comparable period of 2006. Net loss for the first nine months was $16.6 million.
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