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September 2008

Wolseley on Potential Stock Sale: ‘Riding Out the Storm Not an Option’

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

Wolseley has confirmed at least one of the rumors floating around this past summer. It is considering a sale of Stock Building Supply, its building materials arm in the U.S. UK-based Wolseley, a global building materials/plumbing/HVAC distributor, also owns Ferguson.
 
Wolseley Chief Executive Chip Hornsby said in a Webcast Q&A this week that he expects the new residential market to get worse before it gets better, and that riding out the storm is not an option for us.” He also said that the company had done pretty much all it could do in cutting costs at Stock. “We must acknowledge that further large-scale reduction of Stock will inevitably eat into the infrastructure of the business,” he says.
 
Stock lost £123 million in the 2008 fiscal year. That’s about …

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FCX Performance Acquires North Coast Instruments

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

FCX Performance, Inc., Columbus, OH, has acquired North Coast Instruments, Cincinnati, OH, a distributor of electric actuators and related process equipment and provider of repair services.

Our combined resources in this important marketplace will provide an efficient outlet to market for our key vendors and provide our customers with one-stop shopping capabilities for an enhanced range of flow control products and services,”said Charles Simon, president and CEO of FCX.

FCX Performance distributes specialty flow control products with combined sales of $130 million, 14 offices serving 21 states and over 190 employees. …

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Survey: Health Care Premiums Rise 5% in 2008

Free, Human Resources in Wholesale Distribution, News, Operations, Subscriber Only /

Premiums for employer-sponsored health insurance rose to $12,680 annually for family coverage this year -with employees on average paying $3,354 out of their paychecks to cover their share of the cost -and the scope of that coverage has changed, with many more workers now enrolled in high-deductible plans, according to the 2008 Employer Health Benefits Survey by the Kaiser Family Foundation and the Health Research &Educational Trust (HRET).
 
Premiums rose a modest 5% this year, but they have more than doubled since 1999 when total family premiums stood at $5,791 (of which workers paid $1,543). During the same nine-year period, workers’wages increased 34% and general inflation rose 29%.
 
This year many workers are also facing higher deductibles in their plans, …

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Canadian Wholesale Revenues Up 2.3% in July

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

Canadian wholesale revenues rose 2.3% in July to $46.2 billion as increases across a number of sectors contributed to a fifth consecutive monthly gain. Price effects were minimal in July, as sales in volume terms rose 2.2%.

July’s gains were spread across six of the seven wholesale sectors, with food, beverages and tobacco products the only sector reporting lower sales.

The largest contribution came from the other products” sector, which rebounded from a 3.4% drop in June to post a 6.0% rise in July. Sales in this sector have increased significantly over the past year, mostly as a result of higher global demand for agricultural supplies. Exports of fertilizers and fertilizer material rose by more than 30% in July and have more …

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Canadian Wholesale Revenues Up 2.3% in July Read More »

Another Wage-Hour Case Rears Its Head

Free, Legal Issues in Wholesale Distribution, Operations, Subscriber Only /

Another wage-hour case has reared its head in distribution.
 
Building Materials Holding Corp. is the latest to be hit by a lawsuit, filed by employees in its construction unit, under the Fair Labor Standards Act. According to a report by the Los Angeles Times, 14 plaintiffs allege a number of violations, including that they were “coerced for years into working unpaid overtime.” Other allegations include being asked to sign blank time sheets, skip breaks and travel without compensation.
 
BMHC has denied the allegations.
 
Fastenal Company recently settled a wage-hour case. Read about that and more on the intricacies of this sticky law

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Some Wholesalers Go Retail Online

Free, Subscriber Only, Technology /

With already tight margins in a struggling economy, some distributors are looking for creative ways to survive, and hopefully make a dollar or two along the way. A recent article from the Wall Street Journal at WSJ.com (subscription required) highlighted how some wholesalers are taking on a virtual retailer role to expand their sales base. Companies like GlassTileStore.com, operated by glass and tile wholesaler Eli Mechlovitz in New York, are setting consumer-focused Web sites for direct orders to fill gaps left by retail and other commercial clients that are also struggling.
 
Any commitment to selling online, whether to a distributor’s traditional customers or direct-to-consumer, requires a …

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Worthington Industries Reports Sales Up 20% in 1Q

Free, Metals Service Centers, News, Subscriber Only, Top Distributor Sectors /

Worthington Industries, Inc., Columbus, OH, reported first quarter sales of $913.2 million, a increase of 20% over same period sales of $750 million a year ago. Profit improved 240% to $68.6 million.
 
While we benefited from a rising price environment, we have also been very focused on reducing costs, maximizing asset utilization and driving improvements in our operations,”said John McConnell, CEO. “Unfortunately, the record quarterly sales and net earnings are not sustainable given current market conditions, particularly in the Steel Processing and Metal Framing business segments.”
 
On Sept. 23, 2008, U.S. Steel and Worthington Industries announced a plan to expand their existing Worthington Specialty Processing joint venture. Under the terms of the agreement, …

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NEMA Electroindustry Business Index Up Slightly

Economic Trends, Electrical, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors /

The National Electrical Manufacturers Association’s Electroindustry Business Confidence Index for current North American conditions clawed slightly higher in September, rising to 37.5 points from 37 in August -the second small increase in as many months.
 
Still, the index -which has remained firmly within the low 30- to high 40-point range over most of the last year and a half -continued to lag the 50-point breakeven”mark, signaling a weakening business environment.
 
By contrast, the EBCI for future North American conditions tumbled, dropping 11.6 points to 29.2. The decline brought the future conditions index to its lowest level in two years.
 
The Electroindustry Business Confidence Index gauges the business confidence of the electroindustry in Asia, …

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ProBuild to Close Plant in Texas

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

Building materials distributor and manufacturer ProBuild Holdings, Denver, CO, is closing its manufacturing plant in Jarrell, TX, and plans to lay off about half its workers there, according to the Austin Business Journal.
 
The publication cited a notification letter from ProBuild to the Texas Workforce Commission.
 
ProBuild operates more than 550 lumber and building product distribution, manufacturing and assembly centers for customers in 41 …

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Wolseley Starts ‘Fundamental Review’ of Stock Building Supply – UPDATED

Building Materials/Construction, Companies, Finance, Free, HVACR, Mergers & Acquisitions, News, Plumbing Products & PVF Distribution, Subscriber Only, Top Distributor Sectors /

UK-based Wolseley plc has started a fundamental review” of Stock Building Supply’s impact on its overall results, which continued to suffer due to the struggling housing market in the U.S. The company may sell the unit.

In the year ended July 31, 2008, Wolseley, a global building materials and plumbing/HVAC distributor, closed 270 branches and reduced headcount by 7,100. Of those 270, 36 were at Stock and 123 were from Ferguson. Of the 7,100, 3,150 were from Stock, and 2,250 from Ferguson.
 
Since July 31, the company has reduced headcount by an additional 600.
 
“Financial discipline in terms of cost reduction and cash flow enhancement remains our primary focus to ensure the group remains compliant with our banking covenants and is well positioned for any …

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Wolseley Starts ‘Fundamental Review’ of Stock Building Supply – UPDATED Read More »

Reinhart Foodservice Buys IJ Company

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

Reinhart Foodservice, La Crosse, WI, is buying The IJ Company, based in Tennessee. The IJ Company has about $564 million in 2007 sales.
 
IJ and Reinhart are both in the top 10 foodservice distributors in the U.S., according to industry reports. According to one report, the two together will have sales of about $4 billion.
 
The company will operate as Reinhart Foodservice IJ …

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Sonepar Taps New President of U.S. Operations

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

Global electrical distributor Sonepar Group, Paris, France, has appointed Paul Klasing as president of Sonepar USA, effective Jan. 1, 2009. Klasing succeeds Tony Burr who has been appointed to a new global role focusing on strategic initiatives for the Sonepar Group.
 
Partnering with Hagemeyer North America CEO Dave Gabriel in the U.S. market and enjoying the ongoing support of Tony Burr, I am confident that the Sonepar USA operations will continue to thrive under Paul’s leadership,”said Sonepar Group COO Frank Lakerveld.

Sonepar bought Hagemeyer’s North American operations earlier this year.
 
Klasing joined Sonepar on Sept. 1, 2008. Before Sonepar, Klasing was executive vice president, Stores, at Advance Auto Parts, where he worked for 13 years, leading …

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Timken Invests $14M in Capacity

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

The Timken Company, Canton, OH, has invested $14 million in a new thermal treatment facility at its steel plant in Canton, OH. The investment will increase Timken’s capacity to produce heat-treated steel bars and tubes primarily suited for use in the energy and industrial market sectors.
 
The new 34,000-square-foot facility will begin operations in December 2008 and is expected to reach a capacity of 45,000 tons per year by mid-2009.
 
The primary operation at the new facility will be the quenching and tempering of steel bars and tubes that range from 4 inches to 9 inches in diameter and 12 feet to 40 feet in length. This process prepares steel for use in harsh environments such as those found in the oil and gas industry. The new facility will also …

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Actuant Agrees to Buy Cortland Companies

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

Actuant Corp., Milwaukee, WI, has agreed to acquire Cortland Companies, Cortland, NY, from an investor group lead by Cortec Group for about $230 million.
 
Cortland is a global designer, manufacturer and distributor of custom-engineered electro-mechanical cables and umbilicals, high performance synthetic ropes and value-added steel cable and assemblies. Cortland’s products are used in offshore oil and gas, marine geophysical survey, commercial diving, marine transport, medical, security, defense and aerospace end-markets.
 
Cortland is expected to generate $100 million in revenue this calendar year.
 
Actuant is a diversified industrial company with operations in more than 30 countries. The Actuant businesses are market leaders in highly engineered …

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Thanks to Exports, Manufacturing Still ‘Humming Along’ Despite Recent Market Turmoil

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

Recent events in the financial industry -Lehman Brothers filing for bankruptcy protection, Bank of America buying Merrill Lynch, the government stepping in to shore up AIG -have left many wondering how these events together with other factors dampening the economy could affect individual sectors.
 
Don Norman, an economist for the Manufacturers Alliance/MAPI, tells MDM that’s a good question to be considering but not one that manufacturers and those supplying manufacturers should necessarily panic about, thanks to a solid export market. The reality is that strength in the overall manufacturing sector may be keeping the current economic situation from being a lot worse than it already is. According to Norman, except for companies closely linked to the housing or automotive …

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Thanks to Exports, Manufacturing Still ‘Humming Along’ Despite Recent Market Turmoil Read More »

Housing Starts Fall to Lowest Level in 17 Years

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

The U.S. Census Bureau and the Department of Housing and Urban Development announced new residential construction statistics for August 2008:
 
Building Permits
Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 854,000.
 
This is 8.9% below the revised July rate of 937,000 and is 36.4% below the revised August 2007 estimate of 1,343,000.
 
Single-family authorizations in August were at a rate of 554,000; this is 5.1% (±1.3%) below the July figure of 584,000. Authorizations of units in buildings with five units or more were at a rate of 271,000 in August.
 
Housing Starts
Privately-owned housing starts in August were at a seasonally adjusted annual rate …

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MDM Survey: More Readers Expect Economy to Stabilize in the Next 6 Months

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

Click here to download a pdf of the results.

Concern over the state of the U.S. economy has grown among MDM readers over the past six months even as more believe conditions may soon stabilize, according to the twice yearly MDM Survey on the Economy conducted in August. A similar survey was conducted in February.
 
Manufacturers who responded to the survey expressed the most concern over the current state of the economy, with 85.1% saying they were “very concerned”or “concerned.”Distributors showed slightly less concern, with 80.3% being “very concerned”or “concerned”in the August survey. Readers who believe the economy will worsen dropped to 28.6% from 46.5% in February. More than 13% …

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MDM Survey: More Readers Expect Economy to Stabilize in the Next 6 Months Read More »

Brady Corp. Sales Up 12% in Fiscal 2008

Free, News, Safety Products, Subscriber Only, Top Distributor Sectors /

Milwaukee, WI-based Brady Corporation reported sales were up 9% to $396.8 for its fiscal 2008 fourth quarter compared with the same quarter a year ago. Profit increased 33% to $34.8 million.
 
For the fiscal year ended July 31, 2008, sales rose 12% to $1.5 billion, compared to sales of $1.4 billion in fiscal 2008. Profit for fiscal year 2008 improved 21% to $132.2 million.

The increase in fourth quarter sales was comprised of acquisition growth adding 3 percent and foreign currency translation contributing 6 percent to sales growth. Organic growth was flat. Regionally, sales were up 16 percent in Europe and 20 percent in Asia/Pacific; sales in the Americas region were flat.
 
Brady Corporation is a manufacturer and marketer of high-performance labels and …

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Brady Corp. Sales Up 12% in Fiscal 2008 Read More »

Reliance Steel & Aluminum Acquires Singapore Business

Free, Metals Service Centers, News, Subscriber Only, Top Distributor Sectors /

Reliance Steel &Aluminum Co., Los Angeles, CA, has acquired the Singapore operation of HLN Metal Centre Pte. Ltd. Singapore-based HLN Metal processes and distributes custom machined materials and the sawing of metal products and components. The purchase price was $2.6 million.
 
The business will operate as Reliance Metalcenter Asia Pacific Pte. Ltd., focusing on supplying the electronics, semiconductor, and solar energy markets. This acquisition represents an expansion of Reliance Steel &Aluminum Co.’s presence in …

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Current Financial Market Turmoil: The Potential Impact on Deals & Lending

Finance, Free, Mergers & Acquisitions, Subscriber Only /

Bad news in the financial markets started the week off. Lehman Brothers Holdings Inc. is filing for bankruptcy protection after the Fed would not financially guarantee a buyout of the 158-year-old firm, and Merrill Lynch was sold to the Bank of America. AIG, the global insurance giant, is in big trouble. Stocks tumbled on Monday. The market was flat today until an announcement by the Fed that it would leave interest rates unchanged. That prompted, according to the Wall Street Journal, booing on the floor of the New York Stock Exchange.”
 
So what does the latest not-so-great news from Wall Street mean for deal-making and business lending? I spoke to industry veteran Jon Skelly of PCE Investment Bankers today to gain some perspective on current conditions. Skelly works with …

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