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2007

MDM News Digest 3715

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Platinum Equity has agreed to acquire Ryerson Inc., Chicago, IL, for $2 billion, which includes the assumption of debt. The price represents a 15 percent premium over Ryerson’s closing share price on Feb. 31, 2007, the day Ryerson announced it was considering strategic alternatives. Ryerson is a distributor and processor of metals in North America, with 2006 revenues of $5.9 billion. More
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Ryerson reported second quarter sales of $1.6 billion, a 7.2 percent increase from the year-ago period. Profit was up 72 percent year-over-year. More&nbsp ;

Industrial Distribution Group, Inc.,

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McJunkin-Red Man’s Goal: Growth

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

PVF distributors McJunkin Corp. and Red Man Tool and Supply will merge to form a $3-plus billion company. Private equity has a controlling interest in McJunkin, meaning the deal, to be finalized in September, is probably just the first of many steps in the companies’plans for growth.
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The recently announced merger plan between leading pipe, valve and fittings (PVF) distributors McJunkin Corp. and Red Man Tool and Supply highlights the impact private equity is having in distribution. The deal would form a $3-plus billion company and largest U.S. PVF distributor.

Goldman Sachs owns a majority share of McJunkin, which was family-owned and -founded. One industry expert says the share is close to 60 percent, giving Goldman Sachs a controlling …

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Interview: The Impact of a Supplier Merger

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

In March 2006, Linde AG announced that The BOC Group had accepted its takeover offer.&nbsp ; The question of what the impact of this merger would be on the industry was of particular urgency to the companies’distributors. In the nine months since the acquisition, how have these two companies come together, and what have they done to ease the transition?

Bob Van Kirk, an 18-year BOC veteran who now serves as Linde’s head of key customers and distributors, and Scott Latta, vice president of the U.S. southern region for Linde, spoke with Laura Ferrel, editor of Welding & Gases Today magazine, about how Linde and BOC approached the merger from the perspective of their distributors. They reflected on the challenges, the opportunities for growth, and how one can never …

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U.S. Manufacturers’ International Sales to Grow

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PricewaterhouseCoopers second-quarter Manufacturing Barometer report showed that industrial manufacturing executives are optimistic about the international economy, but have lower expectations for the domestic economy’s performance over the next 12 months.

Industrial manufacturers have lowered their 12-month growth projections, citing oil/energy costs and competition from foreign markets among their top concerns, as well as the strength of the U.S. dollar and higher interest rates.

However, they remain optimistic that U.S. and global economies will grow and expect international sales to increase to 35 percent of total revenue over the next 12 months. This is an increase from 27 percent in the survey at the same time last year.

The majority plan to increase …

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Wholesale Revenues Rise 7.7% in First-Half 2007

Economic Trends, Research & Analytics, Subscriber Only /


Wholesaler-distributor revenues were $2.08 trillion in the first half of 2007, up 7.7% from the first half of 2006, unadjusted for seasonal variations. Wholesale revenues for durable goods were up 5.2%, and nondurable goods sales were up 9.6%. Here’s the breakdown in sales changes by sector for the first half of 2007:


Durable………………………………………….. Change&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Automotive………………………………………….. 2.7%&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Furniture…………………………………………… 11.7%&nbsp …

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Monthly Wholesale Trade – June 2007

Economic Trends, Research & Analytics, Subscriber Only /

June 2007 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $359.5, up 0.6 percent from the revised May level and were up 8.1 percent from the June 2006 level. The May preliminary estimate was revised upward $0.2 billion or 0.1 percent. June sales of durable goods were up 0.7 percent from last month and were up 4.9 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and supplies were up 5.4 percent.
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Inventories. Total inventories of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations but not for price changes, were $398.5 billion …

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MDM Inflation Index: June 2007

Economic Trends, Research & Analytics, Subscriber Only /

Modern Distribution Management’s June Inflation Index, which measures a cross-section of industrial supplies, was up 0.18% from the previous month, and up 3.32% from June 2006.

Summary of&nbsp ; MDM Inflation Index for the past 12 months:
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June 2007 Index 271.7
May 2007 Index 271.2
April 2007 Index 270.8
March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7
December 2006 Index&nbsp ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2
July 2006 Index 264.0
June 2006 Index 263.0

Please click below to view a print-ready pdf of the&nbsp ; MDM Inflation Index for June 2007, listing the ten individual product categories …

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First-Half 2007 Construction Spending

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

Total construction spending in the first half of 2007 was down 3.5% from the first half of 2006. Click below to download a pdf of private and public construction spending in the first …

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MDM August 10, 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 [email protected] to …

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Applied Industrial Sales Up 6% in Fiscal 2007

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

Applied Industrial Technologies, Cleveland, OH, reported sales for its fiscal year ended June 30, 2007, increased 6% to $2 billion. Profit for the year rose 19% to $86 million, versus $72 million in the prior year.
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Sales for the fourth quarter were up 4.7% to $528 million from the prior-year period. Profit increased 22.2% to $24.6 million.
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Applied reported that the housing industry slump has had an impact on some of its related markets; the sluggish performance” by the automobile manufacturing sector also negatively impacted the distributor’s performance.
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Applied Industrial Technologies is an industrial distributor to MRO and OEM customers in virtually every …

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Home Depot in Talks to Restructure HD Supply Deal

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

The Home Depot, Atlanta, GA, announced it is in discussions with Bain Capital Partners, The Carlyle Group and Clayton, Dubilier & Rice with the aim of restructuring their agreement for the sale of HD Supply.
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These discussions could result, among other things, in a reduction in the $10.3 billion purchase price. The announcement&nbsp ; may be a result of tightening credit markets,&nbsp ; which would make it more difficult to raise the cash needed to buy the unit.

No other details on the discussions were released.
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In mid-June, Home Depot announced it would sell its wholesale division, a $12 billion unit, to the trio of private equity firms for roughly 10X-12X EBITDA. Read the original article here. …

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Marriages of Manufacturers, Distributors a Difficult Balancing Act

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A few events do not make a trend. But I’ve noticed a few instances lately where manufacturers have bought up distribution in select markets. Examples: In July, a Swedish manufacturer of seals, Trelleborg, acquired AFM in Portland, OR, a $13-million distributor. HVAC manufacturer Carrier Corp. announced in June it was buying a $150-million distributor serving northern California and Nevada, E.B. Ward and Valair, with 140 employees.

It stirs memories of the difficult balancing act and sometimes rocky road cutting tool manufacturer Kennametal found when it operated an industrial distribution division while also managing independent distribution networks. It finally spun off its distribution units.

The reason given by Carrier for its purchase of distribution: The …

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Beacon Roofing Supply Organic Sales Down 2.1%

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

Beacon Roofing Supply, Inc., Peabody, MA, reported sales increased 19.1% to $484.9 million in the third quarter 2007 from the same period a year ago. The increase was primarily due to acquisitions.
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Organic growth was down 2.1% due to an 8.1% decline in residential roofing sales. There have been continued lower levels of new home construction activities in most markets and flat-to-declining prices. In addition, there has been a significant slowdown in reconstruction and reroofing activities in the markets that experienced damages from Hurricanes Katrina and Rita.
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Non-residential roofing and complementary product sales in existing markets increased 5.2% and 1.7%, respectively. There have been continued high levels of commercial construction activities in most …

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Motion Industries Buys Gerrish Bearing Co.

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

Motion Industries, distributor of industrial maintenance, repair and operation replacement parts, has acquired Gerrish Bearing Company. Gerrish has locations in Seattle and Tacoma, WA, and is a distributor of bearings, power transmission and industrial products.

The acquisition of Gerrish Bearing Company will allow Motion Industries to continue our penetration of the market with bearings and power transmission products as well as industrial products throughout the area,” said Bill Stevens, Motion Industries president and CEO.

With 2006 sales of $3.1 billion, Motion Industries is a distributor of bearings, power transmission, electrical and industrial automation, hydraulic and industrial hose, hydraulic and pneumatic components, industrial supply products, and …

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Rexnord Sales Up in 1Q

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

Rexnord LLC reported sales for the first quarter ended June 30, 2007, were $448.2 million, an increase of 55.2% thanks to acquisitions over the same period a year ago. Power Transmission sales were $309.8 million, up 7.4%, and Water Management sales were $138.4 million.
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Core sales growth was 9.2% on a pro-forma basis.
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Rexnord reported that the end markets in both Power Transmission and Water Management have held up well in the first quarter.
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Rexnord ended the quarter with a backlog in Power Transmission of $430 million, an increase of 7% from March 2007, and 23% compared with a year ago. In the Water Management platform, Rexnord saw strength in the end-markets of commercial construction as well as civil/municipal …

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Powers Fasteners Indicted in Big Dig Tunnel Collapse

Fasteners, Free, Legal Issues in Wholesale Distribution, News, Operations, Subscriber Only, Top Distributor Sectors /

Power Fasteners Inc., Brewster, NY, a global fasteners manufacturer, has been indicted by a Grand Jury in connection with the July 10, 2006, ceiling panel collapse that killed one person in the I-90 Connector Tunnel (Big Dig tunnel) in Boston, MA. Powers has been charged with one count of involuntary manslaughter.
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Milena Del Valle died when a suspended concrete ceiling panel collapsed on the vehicle she and her husband were traveling in. After a 13-month investigation, authorities determined that Powers’ epoxy was used to suspend the concrete ceiling in that section of the tunnel.

Federal authorities allege that the cause of the ceiling collapse was the use of Power-Fast Fast Set epoxy product in the anchor system. They say the type of epoxy used was found to be …

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June Wholesale Revenues Up 0.6% from May

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

June 2007 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $359.5, up 0.6 percent from the revised May level and were up 8.1 percent from the June 2006 level. The May preliminary estimate was revised upward $0.2 billion or 0.1 percent. June sales of durable goods were up 0.7 percent from last month and were up 4.9 percent from a year ago.
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Compared to last month, sales of computer and computer peripheral equipment and supplies were up 5.4 percent. June sales of nondurable goods were up 0.5 percent from last month and were up 11.1 percent from last year.
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Total inventories of merchant wholesalers were $398.5 billion at the end of …

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Kaman Taps Former Hughes COO as New President

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

Kaman Corp., Bloomfield, CT, has tapped Neal J. Keating as the next president and chief operating officer of the company, effective Sept. 17, 2007. Keating will assume the additional role of CEO on or before Jan. 1, 2008.
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Keating, 51, will succeed Paul R. Kuhn, currently chairman, president and CEO. He is scheduled to retire on Feb. 21, 2008. Kuhn will retain the title of chairman until the date of his retirement.
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Keating was recently COO of Hughes Supply, a $5.4 billion industrial distributor that was sold to HD Supply in January 2006. He started his career with Rockwell Automation, rising over a 24-year period to executive vice president and COO of Rockwell Collins Commercial …

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BlueLinx Sales Fall 21.5% in 2Q

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

BlueLinx Holdings Inc., Atlanta, GA, distributor of building products in North America, reported profit in the second quarter ended June 30, 2007, of $5.4 million, compared with profit of $9.6 million in the prior-year period.
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Sales fell 21.5% to $1.08 billion in the second quarter. The decline reflects a 25.1% drop in structural product sales and a 17% sales decline in specialty products. About two-thirds of the sales decline in structural products resulted from unit volume, which fell 17.1% from a year ago. The specialty products sales decrease was largely due to unit volume, which declined 15.3%.
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Overall second-quarter unit volume for the company’s estimated weighted end-use markets fell 12.8% from the prior year, driven by a 21.8% decline in housing …

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Milacron Reports 2Q Results (Corrected)

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Milacron Inc., Cincinnati, OH, supplier of plastics-processing technologies and industrial fluids, reported a net loss for the second quarter ended June 30, 2007, of $0.1 million. Sales were $197 million.

CEO Ronald D. Brown said: We continue to achieve positive results from our key sales growth initiatives: expanding our presence in emerging markets, while focusing more attention on aftermarket services in our traditional markets of North America and Western Europe. Milacron’s orders from emerging markets are up 23% over last year and now constitute nearly one-quarter of our total business.&nbsp ; And our aftermarket sales have grown another 6% so far this year.”
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Sales and earnings growth in overseas markets continued to offset the ongoing weakness in the …

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