February 2008 - Page 2 of 5 - Modern Distribution Management

February 2008

Distribution Financial Metrics and Trading Multiples

This table highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries up to Dec. 31, 2007. Download this data below. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

 

These materials, prepared by Robert W. Baird &Co. for MDM, are for informational purposes only.

“3/5/2008 176- Use this data to benchmark against 30 publicly traded distribution companies. …

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Grainger On Its Product Expansion, New Private Label

MDM spoke with Seth Erickson, vice president of product merchandising for Grainger, about the $6.4 billion facilities maintenance distributor’s product expansion and private label strategies.

Chicago-based Grainger continues to add product to its portfolio, a long-term strategy to provide one-stop shopping for its customers. The strategy, says Seth Erickson, vice president of product merchandising, is driven by customer requests. 

We have found that in MRO efficiency is king, and the more efficient we can make our customers, the more valuable we are to them,” Erickson says.

In fact, he says that as the economy slows, distributors and their customers must become more efficient and strategically reduce costs by consolidating purchases. “We …

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MDM February 25, 2008

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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MDM Interview: United Stationers On Private Label & Data-Sharing

MDM spoke with United Stationers CEO Dick Gochnauer recently about the company’s move into the industrial sector as well as the role it plays as a master distributor. In Part II of this interview, Gochnauer addresses private label, recruiting and retaining employees and data-sharing.
 
MDM: How is United Stationers preparing for a potential economic slowdown in the next year?
 
Dick Gochnauer: I have less concern over industrial, foodservice and JanSan. In the office products space, we are seeing a slowdown. We saw it starting to occur in 2007. We figured it was coming and it did. We are prepared if the economic slowdown continues in 2008. We are planning to get growth but know that it may be more challenging. The good news in the office …

MDM Interview: United Stationers On Private Label & Data-Sharing Read More »

Housing Starts Up Slightly From December

Building Permits
Privately-owned housing units authorized by building permits in January were at a seasonally adjusted annual rate of 1,048,000. This is 3.0 percent below the revised December rate of 1,080,000 and is 33.1 percent below the revised January 2007 estimate of 1,566,000.
 
Single-family authorizations in January were at a rate of 673,000; this is 4.1 percent below the December figure of 702,000. Authorizations of units in buildings with five units or more were at a rate of 336,000 in January.

Housing Starts

Privately-owned housing starts in January were at a seasonally adjusted annual rate of 1,012,000. This is 0.8 percent above the revised December estimate of 1,004,000, but is 27.9 percent below the revised January 2007 rate of …

Housing Starts Up Slightly From December Read More »

MDM Inflation Index: December 2007

Modern Distribution Management’s December Inflation Index, which measures a cross-section of industrial supplies, was up 0.4% from the previous month, and up 3.28% from December 2006.
 
Summary of MDM Inflation Index for the past 12 months:

December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3
July 2007 Index 272.4
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 267.1

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

MDM Inflation Index: December 2007 Read More »

Bunzl Sales Up 12% in 2007

Global distributor Bunzl plc announced its sales for the year ended Dec. 31, 2007, were £3,581.9 million (US$7,061 million at current exchange rates), up 12% at constant exchange rates.
 
Bunzl had a successful 2007 due to organic growth and strong performance from acquisitions and we are excited about recent developments, especially the entry into the promising Brazilian market,” said Chief Executive Michael Roney.  “The continued strengthening of the Group gives us confidence that our business will continue to grow successfully.”
 
Bunzl also announced it has completed three acquisitions. The company recently acquired Prot Cap Artigos para Proteção Industrial Ltda and its subsidiaries from Everaldo Baldin and Leonardo Baldin.  Based in …

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Border States Grows in Minnesota

Electrical distributor Border States, Fargo, ND, will open a branch in Rochester, MN, in April 2008. The new branch will operate out of a 15,000-square-foot facility and initially employ nine employees. The Rochester branch will serve the construction, industrial, utility, and data communications markets, and will be an authorized Square D distributor.

Our expansion into Southern Minnesota will help us to fully serve our customers and will provide opportunities to grow our business in Minnesota, Northern Iowa, and Western Wisconsin,”said CEO Tammy Miller.

Border States, an employee-owned company, has more than 1,200 employees and 51 branch operations in 11 states and …

Border States Grows in Minnesota Read More »

Lincoln Electric Sales Up 15.7% in 2007

Welding product manufacturer Lincoln Electric Holdings, Inc., Cleveland, OH, reported sales in 2007 increased 15.7% to $2.28 billion. Profit in 2007 was up 15.8% to $202.7 million.
 
The company’s North American operations had sales of $1.4 billion in 2007, an increase of 7.3%. U.S. export sales increased 26.2% to $194.5 million. Lincoln operations outside of North America had sales of $879.4 million, an increase of 32%. In local currencies, sales for the company’s international operations increased 18.8%.
 
In the fourth quarter, sales were up 14.7% to $580.3 million. Profit was down 4.4% to $49.5 million. Sales for the company’s North American operations were $345.1 million in the quarter, an increase of 8.1%. U.S. export sales in the quarter increased 11.2% to …

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European Commission Approves Acquisition of Hagemeyer

The European Commission has authorized Rexel’s proposed acquisition of Hagemeyer’s European assets, finalizing antitrust approvals sought by both Rexel and Sonepar in their acquisition of Hagemeyer.
 
The commission is requiring Rexel divest Hagemeyer’s electrical wholesale business in Ireland, representing €40 million in sales.
 
In November 2007, Rexel and Hagemeyer reached an agreement for Rexel to buy the Dutch electrical distributor for roughly US$4.5 billion. Rexel will then sell Hagemeyer’s North American, Asian-Pacific and selected European businesses to Sonepar.
 
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 …

European Commission Approves Acquisition of Hagemeyer Read More »

Pool Corp. Agrees to Buy National Pool Tile

Pool Corporation has agreed to acquire National Pool Tile Group, Inc. from Pentair Water Pool and Spa, Inc., a division of Pentair, Inc. National Pool Tile is a wholesale distributor of pool tile and composite pool finishes serving professional contractors in the swimming pool refurbish and construction markets through 15 distribution sales centers.

NPT has annual sales of more than $60 million, with the majority of their sales in the refurbish market.

The transaction is expected to close in March 2008.

Pool Corporation is a wholesale distributor of swimming pool and related backyard products. POOL operates 281 sales centers in North America and Europe, through which it distributes more than 100,000 national brand and private label products …

Pool Corp. Agrees to Buy National Pool Tile Read More »

Reliance Steel Sales Up 26% in 2007

Reliance Steel &Aluminum Co., Los Angeles, CA, reported profit in the year ended Dec. 31, 2007, was up 15% to $408 million. Sales were $7.26 billion, an increase of 26% compared with 2006.
 
The five acquisitions completed during 2007 contributed to the results: Encore Group Limited; Crest Steel Corporation; Industrial Metals and Surplus, Inc.; Clayton Metals, Inc. and Metalweb Limited. Full-year operating results from the 2006 acquisitions of Earle M. Jorgensen Company and Yarde Metals, Inc. further contributed to 2007.
 
For the fourth quarter, profit was $79.9 million, up 7%. Sales for the 2007 fourth quarter were $1.71 billion, an increase of 9%.
 
Reliance Steel &Aluminum is a metals service center in the U.S. Through a network of more than 185 …

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Builders FirstSource Sales Fall 29% in 2007

Builders FirstSource, Inc., Dallas, TX, supplier and manufacturer of structural and related building products for residential new construction, reported sales in 2007 were $1.59 billion, down 28.9%, due to a 24.6% sales volume decline and a 2.7 percent fall in commodity prices.

The company has decreased general and administrative expenses by 14.6%, and headcount by 36% since March 2006, when the housing correction began, according to Builders …

Builders FirstSource Sales Fall 29% in 2007 Read More »

Interline Brands Sales Up 16% in 2007

Interline Brands Inc., Jacksonville, FL, reported sales for 2007 were $1.24 billion, up 16%. The acquisition of AmSan added $131.6 million in sales. Average organic daily sales growth was 3.7% in 2007. Profit was $51 million.
 
Solid execution in our facilities maintenance markets, which now represent 67% of Interline’s sales, offset weakness in our pro-contractor and specialty distributor markets which resulted from deteriorating conditions in the housing industry,” said President and COO William Sanford.
 
Sales in the fourth quarter were $330.2 million. Average organic daily sales growth was 2.3%. Interline’s facilities maintenance market grew 12% on an average daily sales basis. The pro-contractor market, representing 21% of sales, declined 12.5% in the quarter. …

Interline Brands Sales Up 16% in 2007 Read More »

Platinum Equity to Buy Industrial Distribution Group for $113M

Platinum Equity has agreed to buy Industrial Distribution Group, Inc., Atlanta, GA, distributor of maintenance, repair, operating and production (MROP) products and integrated supply services to manufacturers and other industrial users, for about $113 million. With the acquisition, IDG will go private.
 
The move complement’s Platinum Equity’s other recent distribution investment: Strategic Distribution. Platinum Equity said it would look for synergies with IDG. Both companies have integrated supply operations.
 
We are very enthused about this transaction with Platinum Equity, which we believe will provide excellent value to our stockholders,” said Richard M. Seigel, chairman of the Board of the Company, who also chaired the special committee.
 
Seigel …

Platinum Equity to Buy Industrial Distribution Group for $113M Read More »

Raw Materials, Energy Costs Top Concerns in Survey

Raw material and energy costs topped the list of cost pressure concerns in 2008, according to a recent survey by Prime Advantage, a buying consortium for small and mid-sized manufacturers, focused on the top economic concerns in 2008. Respondents to the Group Outlook Survey included business owners, vice presidents of procurement and purchasing directors.
 
More than 46 percent of respondents agreed that raw materials (including stainless steel, nickel, copper and other metals and plastics) were a major concern in 2008. Energy costs were the second biggest concern, with 17.5 percent and logistics and supply chain costs followed closely at 16.4 percent in agreement.
 
Inflation (8 percent), labor (4 percent), foreign competition (3.4 percent), overhead costs (2.8 …

Raw Materials, Energy Costs Top Concerns in Survey Read More »

Hagemeyer Organic Growth of 4.3% in 2007

Electrical distributor and integrator Hagemeyer NV reported sales of €6.4 billion in 2007 (US$9.4 billion at current exchange rates). Organic revenue growth was 4.3% for the year, decreasing from 5.7% in the first half to 3.1% in the second half.
 
About 75% of the organic revenue growth for the year can be attributed to price increases.
 
In 2007, revenue for the Professional Products and Services business was €6 billion, compared to €5.8 billion in 2006. Organic growth was 4% in 2007. Copper price fluctuations did not have a noticeable impact on Hagemeyer’s revenue, unlike in 2006 when they accounted for a revenue increase of 7%. Organic growth is almost exclusively attributable to price increases, of which the largest part was …

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Lakeland Industries Expands in Brazil

Lakeland Industries, Inc., manufacturer of protective apparel, has agreed to acquire Brazilian protective apparel supplier Qualytextil S.A. Qualytextil, based in Salvador Bahia, Brazil, was founded in 1999 and serves the Brazil Protective Clothing market in the following areas: firemen’s turnout gear, conductive and electric arc garments, chemical protective garments, occupational, multilayer and waterproof operational garments, aluminized and molten metal lines of protective clothing.
 
The purchase price is USD$12.5 million. Qualytextil sales for 2007 were US$9.8 million.
 
Qualytextil is in the northeastern part of the country, where the State provides tax incentives, labor rates are favorable and is conveniently located to transport garments economically …

Lakeland Industries Expands in Brazil Read More »

Canadian Wholesale Revenues Up 4.7% in 2007

Canadian wholesalers reported a sharp decline in sales in December, erasing all of the gains made over the previous months. Despite the drop in December, preliminary figures indicate that wholesalers put in another solid performance in 2007.
 
Sales fell 2.9% in December to $42.7 billion, ending a string of three consecutive monthly increases. The decline was the largest since April and brought monthly sales to their lowest level since November 2006.

Overall, five out of seven wholesale sectors reported weaker sales in December. The automotive products sector accounted for around half of the overall decline, dropping 8.1% during the month.

Wholesalers outside of the automotive products sector fared little better, …

Canadian Wholesale Revenues Up 4.7% in 2007 Read More »

Motion Industries Sales Up 8% in 2007

Genuine Parts Company reported sales in 2007 were $10.84 billion, up 4% compared with 2006. Profit for the year was $506.3 million, up 7%.
 
The company’s strongest sales gains came from its two business segments serving the manufacturing sector.
 
Industrial distributor Motion Industries reported sales were up 8% in 2007, and EIS, GPC’s Electrical/Electronic Group, reported a 7% increase in sales.
 
The Automotive Group saw saws increase 2%, and S.P. Richards, the office products group, had a decrease of 1% for the year.
 
In the fourth quarter ended Dec. 31, 2007, overall group sales increased 3% to $2.63 billion.
 
Automotive Group sales were up 2%, Industrial Group increased sales by 7%, Electrical/Electronics Group was up 6% …

Motion Industries Sales Up 8% in 2007 Read More »

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