October 2008 - Modern Distribution Management

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October 2008

United Stationers Sales Up 12% in 3Q

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

United Stationers Inc., Deerfield, IL, master distributor of business, janitorial/breakroom and industrial products, reported sales of $1.3 billion for the third quarter 2008, an increase of 12% over the prior year quarter. Profit increased 20% to $33.1 million.
 
The December 2007 acquisition of ORS Nasco contributed 7% to the growth rate. Product category sales were up nearly 15% in janitorial/breakroom, up 2% in technology, and down 10% in furniture. Traditional office products grew 3%, driven by a significant increase in cut sheet paper.
 
Sales for the nine months ended Sept. 30, 2008, were $3.8 billion, up 8.9% from the same period last year. Year-to-date profit declined 3.8% to $75.9 …

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Parker Hannifin Acquires EmiTherm Sdn Bhd

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

Parker Hannifin Corp., Cleveland, OH, a manufacture in motion and control technologies, has acquired Malaysia-based EmiTherm Sdn Bhd, a provider of electromagnetic interference (EMI) shielding and thermal management products. Terms of the transaction were not disclosed.
 
EmiTherm will be integrated into the Chomerics Asia-Pacific Division, a unit of Parker’s global Seal Group.
 
EmiTherm enjoys a strategic footprint in Malaysia, enabling us to effectively serve our customers throughout the region. The acquisition of EmiTherm provides us with strategic advantage in this vital electronics manufacturing region, offering global customers access to products and efficient supply chain management,” Heinz Droxner, president of Parker’s Seal Group, …

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DXP 3Q Sales Up 75.1%

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

DXP Enterprises, Inc., Houston, TX, reported third quarter sales were $186.9 million, up 75.1% from the third quarter 2007. Profit increased 56.9% to $7 million. Businesses acquired in 2007 and 2008 contributed $65.7 million to quarterly sales.
 
Profit for the nine months ended Sept. 30, 2008, was $18.8 million, up 62% from the prior year period. Sales increased 97.0% to $543.2 million.
 
DXP Enterprises, Inc. is a distributor of products focused on pumping, integrated supply and …

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Huttig Reports $7.7 million Loss for 3Q

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

Huttig Building Products, Inc., St. Louis, MO, a domestic distributor of millwork, building materials and wood products, reported sales for the third quarter ended Sept. 30, 2008, declined 22% to $182.8 million in a year-over-year comparison. The company reported a loss of $7.7 million, compared to a loss of $0.1 million in third quarter 2007.
 
Third quarter sales continued to be impacted by the 32% year-over-year decline in average annualized housing starts for the quarter, to approximately 0.88 million, from 1.30 million in the 2007 third quarter. Operating results reflected $2.0 million of branch shut down costs and related inventory write down and liquidation charges associated with the closing of the Springfield, MO and Fredericksburg, VA branches.
 
Despite …

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BlueLinx Reports Loss for 3Q

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

BlueLinx Holdings Inc., Atlanta, GA, a distributor of building products in North America, reported a net loss of $2.6 million for the third quarter ended Sept. 27, 2008, compared with profit of $0.9 million in the year-ago period. Sales declined 28.5% to $727 million.
 
The overall third-quarter unit volume decline of 33% was mainly due to lower unit volumes in both structural and specialty products driven predominately by a 33% decline in housing starts relative to year ago levels.
 
For the nine months ended Sept. 27, 2008, net loss totaled $6.6 million on revenues of $2.28 billion, compared with profit of $6.1 million on revenues of $3.06 billion a year ago. …

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Kaman Sales Up 21.9% for 3Q

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

Kaman Corp., Bloomfield, CT, reported sales of $335.1 million for the third quarter ended Sept. 26, 2008, an increase of 21.9% from the prior-year period. Profit from continuing operations was $13.5 million, an increase of 43.6% from the third quarter 2007.
 
For the first nine months of 2008, profit from continuing operations increased 3.6% to $28.5 million, as compared to the same period the prior year. Sales were $937.2 million, an increase of 15.2%.
 
The Industrial Distribution segment reported third quarter sales of $204.3 million, an increase of 14.7% from a year ago. Organic sales growth in the quarter was 7.1%, with the remaining growth coming from the acquisition of Industrial Supply Corp. during the second quarter. The Industrial Distribution segment’s …

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Grainger Taps New President of Grainger Industrial Supply

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

Chicago, IL-based W. W. Grainger, Inc. has appointed Michael A. Pulick, Senior Vice President for Customer Service, to Senior Vice President and President, Grainger Industrial Supply, effective Nov. 1, 2008.
 
Pulick is replacing Y.C. Chen, 61, who will stay on in a special advisory role with the company. Pulick joined Grainger in 1999 from General Electric.
 
Grainger will also establish a global supply chain function under Senior Vice President D.G. Macpherson, effective immediately. This new function will provide global planning, coordination and specialized expertise to the supply chain organizations in all of Grainger’s business units. The initial focus will be on global supply chain architecture, procurement and supply chain talent management. Reporting to …

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United Rentals Sales, Profit Drop in 3Q

Free, News, Subscriber Only, Top Distributor Sectors /

United Rentals, Inc., Greenwich, CT, reported third quarter sales of $873 million, down 11.8% from the third quarter 2007. Rental revenue accounted for $677 million. Profit declined 33.9% to $74 million. Continued softness in the company’s end market were the primary factor in the decline.
 
For the first nine months, the company reported sales of $2.5 billion, down 11.3% from the prior year. Profit was down 28.7% to $149 million. The decline primarily reflects a softening construction environment as well as the previously announced second quarter $14 million after-tax charge in anticipation of the September SEC settlement. …

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HD Supply Facilities Maintenance: Switch to a New Technology Platform

Companies, Free, Subscriber Only, Technology /

What happens when a company operating on a customized legacy system sells part of the business?
 
HD Supply Facilities Maintenance learned the answer quickly after being sold by The Home Depot last year. In a recent article from Supply Chain Management Review, HD Supply Facilities Maintenance’s director of e-business Mark Linder writes about how the company had six months to set up its own system and transition customers to the new format.
 
The HD Supply case study shows how having the right partners -in this case, technology company Hubspan -can help foster success in such a transition. The two companies worked together to identify HD Supply’s needs and how Hubspan could meet those needs in …

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Praxair Sales Increase 16%

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

Industrial gases provider Praxair, Inc., Danbury, CT, reported third quarter profit of $355 million, an increase of 16% over the third quarter of 2007. Sales were $2.9 billion, up 20% from the prior-year quarter.
 
Year-to-date, the company reported sales of $8.4 billion, up 22% from the same period a year ago. Profit improved 17.4% to $1 billion.
 
Praxair achieved strong sales growth in every geographic region, led by South America and Asia.
 
In North America, third-quarter sales were $1.6 billion, 19% above the prior year. Excluding the effect of higher natural gas prices passed through to customers in hydrogen prices, sales growth was 14%. Acquisitions of U.S. packaged gas distributors contributed 4% to sales growth.
 
In Europe, sales …

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Translating New Sales Incentive Plans Into Practice

Free, Sales & Marketing, Subscriber Only /

In this era of uncertainty, how to best incentivize a sales force is likely top of mind for many distributors. A recent article at inc.com talks about the sins of commissions,” and how sometimes, incentive plans devised in the corporate office don’t always translate on the ground floor level.
 
Here’s the link to that article.
 
The author quotes Harvard Business School professor Robert Austin, author of Measuring and Managing Performance in Organizations. He says that when you try to measure people’s performance, you must take into account how they will react. A quote from …

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Cardinal Health Sales Up 11% in 1Q

Free, News, Pharmaceutical & Health Care, Subscriber Only, Top Distributor Sectors /

Cardinal Health, Dublin, OH, drug and medical products distributor, reported an 11% increase in revenue to $24 billion for the quarter ended Sept. 30, 2008, driven by strong sales in the Healthcare Supply Chain Services segment and continued growth within Clinical and Medical Products.
 
The Healthcare Supply Chain Services segment achieved double-digit revenue growth, which helped partially offset the expected year-over-year profit decline from previously disclosed contract re-pricings and anti-diversion efforts for controlled substances.
 
The company performed as expected with double-digit revenue and profit performance from Clinical and Medical Products, and I am encouraged by continued signs of early progress in the pharmaceutical supply chain business,”said …

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Sealed Air Sales Up 5% in 3Q

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

Sealed Air Corp., Elmwood Park, NJ, sales for the third quarter of 2008 increased 5% to $1.22 billion. Sales for the nine-month period increased 8% to $3.68 billion, compared with $3.4 billion for the same period in 2007.
 
In the third quarter, resin costs peaked and the North American and European economic environment deteriorated,” said William V. Hickey, president and CEO. “Despite these conditions, our food packaging and medical businesses continued to show stable sales performance in the third quarter and year-to-date. Our protective packaging business was more affected by the economy, and unit volumes declined in the quarter, consistent with manufacturing output, shipments and retail sales.
 
“To offset peak resin costs, we continued to implement price …

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Owens & Minor 3Q Sales Improve 7.3%

Free, News, Pharmaceutical & Health Care, Subscriber Only, Top Distributor Sectors /

Owens & Minor, Richmond, VA, reported sales of $1.81 billion for the third quarter ended Sept. 30, 2008, up 7.3% from the third quarter of 2007. Profit increased 19.4% to $25.3 million.
 
For the nine months ended Sept. 30, sales were $5.36 billion, an increase of 6.1% in a year-over-year comparison. Profit improves 45.5% to $73.1 million.
 
Owens &Minor, Inc., is a distributor of national name-brand medical and surgical supplies and a healthcare supply-chain management company. …

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Year-End Incentive Programs Hit by Weak Earnings

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

Deloitte recently released a survey about how decreased earnings and falling stock prices are eating into companies’ annual incentive and long-term incentive plans.
 
This at a time when it’s more important than ever to make your employees feel valued and motivated.
 
The survey found that 59% expect their annual incentive plans to pay out below target, while 11% believed they would be no pay out at all. And among those companies offering stock options, 63% report that all or most of their stock options granted within the past five years are currently underwater.”(That is, the exercise price is above the current stock price.)
 
Among the companies that have implemented or plan to implement retention programs, 33% will create a stand-alone program for …

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McKesson Sales Grow 9% in 2Q

Free, News, Pharmaceutical & Health Care, Subscriber Only, Top Distributor Sectors /

Drug distributor McKesson Corp., San Francisco, CA, reported sales for the second quarter ended Sept. 30, 2008, were $26.6 billion, a 9% increase over the prior year. Profit improved 32% to $327 million.
 
Year-to-date, sales increased 9% in a year-over-year comparison to $53.3 billion. The company reported profit for the period of $562 million, an increase of 17%.
 
In the Distribution Solutions segment, sales grew 9%. U.S. pharmaceutical direct distribution and services revenues grew 16% for the quarter, while warehouse sales were down 7%. Canadian revenues increased 15% due to new and expanded distribution agreements, market growth rates, and one additional day of sales. Medical-Surgical distribution revenues were up 9% for the quarter.
 
In Technology …

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Crane Co. 3Q Sales Down 3%

Free, News, Subscriber Only, Top Distributor Sectors /

Crane Co., Stamford, CT, a diversified manufacturer of highly engineered industrial products, reported third quarter 2008 profit of $36.1 million compared with third quarter 2007 net loss of $196.9 million.
 
Third quarter 2008 sales decreased $21.4 million, or 3%, including core business decline of $27.9 million (4%) partially offset by an increase of sales from acquired businesses of $3.8 million and favorable foreign currency translation of $2.7 million. Order backlog at Sept. 30, 2008 was $779 million, which is 3% lower than the backlog of $805 million at June 30, 2008 and 8% higher than $720 million at December 31, 2007.
 
The third quarter 2008 sales increase of $0.7 million reflected a sales increase of $3.8 million in the Aerospace Group and a decrease of …

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Housing Starts Down 31.1% from Sept. 2007

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 jointly announced the following new residential construction statistics for September 2008:
 
Building Permits
Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 786,000. This is 8.3 percent below the revised August rate of 857,000 and is 38.4 percent below the revised September 2007 estimate of 1,277,000.
 
Single-family authorizations in September were at a rate of 532,000; this is 3.8 percent below the August figure of 553,000. Authorizations of units in buildings with five units or more were at a rate of 225,000 in September.
 
Housing Starts
Privately-owned housing starts in September …

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Search for Capital Grows More Difficult

Finance, Free, Mergers & Acquisitions, Subscriber Only /

In   the recent MDM Reader Survey, about three-fourths of readers said they are concerned with current credit markets as it pertains to their day-to-day operations and growth plans.”
 
Credit has been virtually frozen in the past month or so and has rippled through the economy. Lending standards have tightened and scrutiny from banks has increased. Chris Coetzee, managing director at Robert W. Baird &Co. and head of the firm’s Financial Sponsor Group, told MDM for a recent article that bankers will also increase focus on the end markets companies sell into. (Read Credit Crunch in the Channel.)
 
The magazine

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U.S. Dollar Reversing Course

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

Here’s an interesting look at the dollar by Reuters, which it says has risen to a two-year high versus the Euro and five-year high to the British pound. The greenback is up about 18% since July against a basket of currencies.
 
The result: Multinationals are predicting that earnings will fall. Companies that source from Europe or other places where the dollar was weak may see a positive benefit in lowered costs.

One gas measurement and control equipment distributor, Equipment Controls Co.,Norcross, GA , is one of those benefiting from lower sourcing costs. The distributor sources …

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