February 2008

Watsco Same-Store Sales Fall 7.6% in 2007

Companies, Free, HVACR, News, Plumbing Products & PVF Distribution, Subscriber Only, Top Distributor Sectors / MDM Staff

Watsco, Inc., Coconut Grove, FL, reported sales in 2007 of $1.76 billion, including $121 million from locations acquired or opened in the past 12 months. Revenues on a same-store basis fell 7.6%, reflecting a 5% decline in sales of HVAC equipment (45% of sales).

Watsco had a 10% increase in commercial refrigeration product sales and an 11% decline in other HVAC products.

From an end-market point of view, results include growth in the residential replacement market, growth in the commercial market and a decrease in sales to new housing.

Revenues for the fourth quarter increased 4.8% to $398 million, including $52 million from locations opened or acquired during the last 12 months, versus $380 million during the quarter a year ago. Revenues on a …

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A Tribute to Roy: Nearly 50 Years in Distribution

Free, Management, Strategy, Subscriber Only / Tom Gale

When one of my mentors in this industry emailed me in December to let me know that he had just left his office for the last time at the company he had been with for 48 years, it struck me how much impact he has had on so many people in this industry. Those who know him will appreciate that he included the exact minute of his departure, not because he couldn’t wait to bust out, but because of the well-known attention to detail he brought to running and growing his business over several decades.

I first met Roy Otto, former owner of Machine Tool Supply in Eagan, MN, about 25 years ago, when he was the chair of a publications committee for the state’s tooling and machining association. He has been a teacher without seeming like one to many people in this industry and beyond. He …

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Canadian Wholesale Revenues Up 4.7% in 2007

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

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, …

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Rexel Makes Acquisition in China

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

Rexel, distributor of electrical supplies, has acquired Suzhou Xidian in China. Rexel has been investing in China since 2000.

The acquisition is the second in China in the past 12 months.

Suzhou Xidian’s 2007 sales were €38 million (US$55.6 million). The electrical supplies distributor has 115 employees and seven branches, six of which are in the Shanghai area and one in Beijing. It mainly serves the commercial and industrial markets.

Under the terms of the transaction, Rexel will hold 73.5% of the firm, and will increase its stake to 100% in three years.

The acquisition of Suzhou Xidian follows that of Huazhang Electric Automation in March 2007. Rexel posted 2007 pro-forma sales of 120 million euros (US$175.7 million), and has 580 …

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ABC Supply Appoints New CEO

Building Materials/Construction, Free, Management, News, Strategy, Subscriber Only, Top Distributor Sectors / MDM Staff

ABC Supply Co. Inc., Beloit, WI, has appointed David A. Luck as CEO. He also will continue in his current role of company president.

Luck joined ABC Supply as president and COO in July 1998.

Ken Hendricks, founder of the national building materials distributor, served as CEO until his death in late December 2007.

ABC Supply is a $3 billion wholesale distributor of roofing in the U.S. and a distributor of siding, windows and other select exterior building products. The company operates nearly 380 branches in 46 states and the District of Columbia. …

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Illinois Tool Works Sales Up 16% in Quarter

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

Illinois Tool Works Inc. reported operating revenues increased 15.8% in the three months ended Jan. 31, 2008. Much of that growth was due to acquisitions.

On a segment basis:

Industrial Packaging: +10.2%
Power Systems and Electronics: +8.5%
Transportation: +13.8%
Construction Products: +5.8%
Food Equipment: +42.8%
Polymers and Fluids: +37.9%
Decorative Surfaces: +24.3%
All Other: +9.4%

ITW is a $16.2 billion diversified manufacturer of highly engineered components and industrial systems and consumables. The company has 825 business units in 52 countries.

More details here. …

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United Stationers Sales Up 2.2% in 2007

Companies, Free, News, Operations, Paper Products & Packaging Distribution, Subscriber Only, Top Distributor Sectors / MDM Staff

United Stationers Inc., Deerfield, IL, reported sales in 2007 grew 2.2% to $4.6 billion. This increase reflected continued strong growth in the janitorial and breakroom supplies category.

Sales for the fourth quarter were $1.1 billion, up 0.6% compared with the prior-year period. After adjusting for an additional workday in 2007, sales were down 1.1%.

First quarter organic sales to date are trending up approximately 1.6% over the same time last year, driven by strong revenues from janitorial and breakroom supplies,” said CEO Richard Gochnauer. “Office product sales remain soft. Including incremental sales related to ORS Nasco, reported revenues to date are up approximately 7.3%, compared to the prior year.”

“Our focus on profitable growth …

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Barnes Group Sales Up 14% in 2007

Companies, Facilities Maintenance (MRO), Free, News, Subscriber Only, Top Distributor Sectors / MDM Staff

Barnes Group Inc., Bristol, CT, aerospace and industrial components manufacturer and distributor, reported sales in 2007 grew 14% to $1.44 billion, and profit was up 37%.

Sales in the fourth quarter were $358.9 million, an increase of 9%. Sales increase reflected $19.4 million of organic sales growth at Barnes Aerospace. Profit for the quarter was down 5% to $17.6 million.

Barnes Distribution saw sales of $128.5 million in the fourth quarter of 2007, a decline of approximately 1% over the fourth quarter of 2006. Barnes Distribution’s organic sales decreased $5.7 million, or approximately 4%. The lower organic sales were due to softness in certain markets in North America, primarily the construction support and transportation related markets, and to the short-term …

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Air Liquide Sales Up 7.8% in 2007

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

Paris-based Air Liquide reported sales growth of 7.8% in 2007 to €11.8 billion, and profit up 12.1%. Growth was reported as particularly strong” in the fourth quarter 2007, with a 15.4% increase year on year.

This growth results from a combination of strong demand for hydrogen, new start-ups in Large Industries in the second half of the year, record sales in Electronics, continued growth in liquid volumes for our industrial customers, and sustained development in Healthcare.

More details here. …

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Wheeler’s Building Materials Files for Ch. 11 Bankruptcy Protection

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

Wheeler’s Building Materials, Rome, GA, has filed for Ch. 11 bankruptcy protection. The distributor and manufacturer, which serves the struggling residential sector, has 15 distribution facilities throughout Atlanta, North Georgia, Birmingham, AL, and Charlotte, NC.

The company also has three manufacturing facilities and a sales support center, according to its Web site.

According to court documents: The collapse of the residential real property building industry has resulted in the situation where sales have dropped precipitously and receivables have been rendered uncollectible.” The company initiated a “controlled liquidation” in October 2007 including the consolidation of locations, reduction of payroll, reduction of operations, sale of assets and reduction of …

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NAHB: Condo Market Showing Signs of Recovery

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

The condo market is showing some signs of a revival in some markets across the country and that uptick in sales is also benefiting the rental apartment market, according to multifamily housing developers speaking at the National Association of Home Builders'(NAHB) International Builders Show.

“We are definitely emerging from a difficult time and seeing some light in the condo market,”said Bill Donges, CEO of the Atlanta-based Lane Company, which has condominium developments in several cities, including Hollywood, FL. “The condo lifestyle — especially in urban areas — is very attractive, and with the interest rates low and the selection good, we are seeing buyers come back into the market.”

At the height of the housing boom, …

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Manufacturers Alliance Report: Economic Growth to Slow to 1.3% in ’08

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

The housing collapse and a consumer-based recession, particularly affecting the automobile, housing and most recently the services sectors, present significant short-term challenges to the U.S. economy, according to a new report.

The Manufacturers Alliance/MAPI Quarterly Economic Forecast predicts that inflation-adjusted GDP growth will slow to 1.3 percent in 2008 before improving to 2.5 percent in 2009. GDP growth will be down an average of 0.6 percent in the first two quarters before returning to growth in the second half of 2008.

By supplying major assumptions for the economy and running simulations through the Global Insight Macroeconomic Model, the Alliance generates macroeconomic and industry forecasts.

Recessions are caused by severe shocks,” …

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Rexel Sales Up 2.9% in 2007

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

France-based electrical distributor Rexel reported sales were up 15.1% in 2007, or 2.9% on an organic basis, to €10.7 billion (US$15.6 billion).

In North America, sales were down 1.6% in 2007. In the U.S., sales were down 2.4%, in part due to the ongoing decline in residential construction and residential-related commercial projects. At Gexpro (formerly GE Supply), double-digit growth with key accounts, notably related to large project management, was seen.

In Canada, sales were up 1.5%, driven by mining and building markets in the West, as well as commercial activity in Quebec.

In the U.S., Rexel strengthened its platform by integrating Gexpro ahead of schedule, and demonstrated its ability to adapt its cost base to a difficult economic …

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Atlas Copco Sees 18% Organic Growth in 4Q

Free, News, Subscriber Only, Top Distributor Sectors / MDM Staff

Swedish supplier Atlas Copco reported sales in the fourth quarter increased 18% on an organic basis and 29% overall.

While all business areas improved their results, it is worth highlighting the remarkable growth in both sales and profit at Construction and Mining Technique,” says President and CEO Gunnar Brock. That area reported order growth of 54% in the quarter, 30% of which was organic.

Demand from all geographical regions and most customer segments increased in the fourth quarter, with organic growth in emerging market accounting for more than 40% of the group’s orders in 2007.

More details here. …

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Machine Tool Consumption Up 8% in 2007

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

December U.S. manufacturing technology consumption totaled $400.31 million, according to AMT – the Association For Manufacturing Technology and AMTDA, the American Machine Tool Distributors’Association. This total, as reported by companies participating in the USMTC program, was up 7.5% from November, and up 20.9% from the total of $331.23 million reported for December 2006. With a year-end total of $4,261.47 million, 2007 was up 8.0% compared with 2006.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.

Exceptionally strong December results have driven 2007 manufacturing technology orders to a level 8% above 2006,” said John B. Byrd III, AMT President. “This is the fourth …

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Distributors Stay Focused Despite Economic Turbulence

Economic Trends, Free, Research & Analytics, Subscriber Only / Tom Gale

The recent National Association of Wholesaler-Distributors Executive Summit in Washington drew one of the largest audiences of wholesale distribution executives together in years. I have attended nearly every annual NAW meeting since 1993, and this one can best be summed up by one word: Focus.

My key takeaways from sessions and conversations: The executives at this conference weren’t obsessed with economic news they can’t control. Rather, they were focused on collecting great ideas on how to get leaner, improve profitability and finetune strategies. They were benchmarking their performance against the case studies they heard, and probing to find ways to improve internal processes.

Economist Alan Beaulieu got everyone’s attention as the first speaker when he …

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Grainger on Its New Product Lines, Private Label

Companies, Facilities Maintenance (MRO), Free, News, Subscriber Only, Top Distributor Sectors / Lindsay Young

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 want to be in a …

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BlueLinx Reports Net Loss for 2007

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

BlueLinx Holdings Inc., Atlanta, GA, distributor of building products in North America, today reported a net loss for the fourth quarter and full year ended Dec. 29, 2007. In the full year, the net loss was $27.9 million, compared with profit of $15.8 million in the prior year.

Sales for the year totaled $3.8 billion, down 21.7%, reflecting lower unit volume and lower underlying prices for both structural and specialty products versus the comparable prior year period.

We continue to pursue our strategy while also taking proactive measures to adjust our cost structure to the current business climate,” said CEO Stephen Macadam. “The actions we took during the fourth quarter demonstrate our commitment to aggressively managing costs and working capital in this …

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Bearings Specialty Acquires Machine Parts Corp.

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

Bearings Specialty Company, Canton, MA, has purchased Machine Parts Corp., Providence, RI, and Machine Drives, Hartford, CT. Machine Parts and Machine Drives will operate as divions of Bearings Specialty Company.

Bearings Specialty has six branches servicing all of the New England states.

Machine Parts and Machine Drives was founded in 1929 as an independent distributor of Power Transmission equipment. In 1972, a division was created to engineer and build custom electrical control panels and systems that include motion control, data acquisition process control and PLC …

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Grainger Responds to Allegations of Overcharging the Government

Companies, Facilities Maintenance (MRO), Free, Legal Issues in Wholesale Distribution, News, Operations, Subscriber Only, Top Distributor Sectors / Lindsay Young

Chicago-based Grainger responded to a complaint filed in U.S. District Court in Eastern Wisconsin alleging the distributor had overcharged the U.S. government as well as illegally relabeled products manufactured in non-trade agreement countries so they could be sold to the U.S. government.

Grainger said in a press release that it will meet with the Justice Department to address the issues brought up in the complaint, which was recently unsealed by the U.S. Department of Justice. “The company takes this allegation seriously,” Grainger said. “Although Grainger believes the company has fully complied with its contract, it intends to carefully review the allegations to ensure it meets its obligations to its …

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February 2008

Watsco Same-Store Sales Fall 7.6% in 2007

A Tribute to Roy: Nearly 50 Years in Distribution

Canadian Wholesale Revenues Up 4.7% in 2007

Rexel Makes Acquisition in China

ABC Supply Appoints New CEO

Illinois Tool Works Sales Up 16% in Quarter

United Stationers Sales Up 2.2% in 2007

Barnes Group Sales Up 14% in 2007

Air Liquide Sales Up 7.8% in 2007

Wheeler’s Building Materials Files for Ch. 11 Bankruptcy Protection

NAHB: Condo Market Showing Signs of Recovery

Manufacturers Alliance Report: Economic Growth to Slow to 1.3% in ’08

Rexel Sales Up 2.9% in 2007

Atlas Copco Sees 18% Organic Growth in 4Q

Machine Tool Consumption Up 8% in 2007

Distributors Stay Focused Despite Economic Turbulence

Grainger on Its New Product Lines, Private Label

BlueLinx Reports Net Loss for 2007

Bearings Specialty Acquires Machine Parts Corp.

Grainger Responds to Allegations of Overcharging the Government

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