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Companies
Watsco Sales Grow 7% in 2006

Watsco, Inc., distributor of air conditioning and heating products, reported sales of $1.8 billion in 2006, a 7% increase from 2005. Profit was $82.4 million.


Fourth-quarter sales were $388 million.


&nbsp ; “2006 was one of enormous change as virtually half the products we sell were transitioned to new families of higher-efficiency products. We expect these new products to provide a unique and sustainable sales opportunity for us given consumers’ high degree of sensitivity and focus on energy costs, President and CEO Albert H. Nahmad said.


The Watsco network expanded by 28 locations in 2006, including locations opened to enhance local service and locations acquired adding new customers, products and market share. Revenues contributed by new …

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Companies
HD to Evaluate Strategic Alternatives for HD Supply Business

The Home Depot, Atlanta, GA, has announced it will evaluate strategic alternatives” for its HD Supply business, including a possible sale, spin or initial public offering of the business.


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In a release, the company said a transaction is not definite. HD has retained Lehman Brothers as its financial advisor. HD said it would not disclose further developments with respect to HD Supply unless the board of directors has approved a definite transaction.


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“Today’s announcement is a continuation of the strategic review we did in November,” said CEO Frank Blake. “We are undertaking this action today because of our desire to increase our …

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Finance
Reports: St. Gobain May Sell Abrasives Unit

According to recent news reports, St. Gobain has put its abrasives unit up for sale. Forbes reported that AFX News carried the news, but St. Gobain would not comment on the possible sale.


St. Gobain’s abrasives unit had 2005 sales of 1.4 billion euro, 4% of the Group’s total.


More Breaking …

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Building Materials/Construction
Building Materials Holding Corp. Terminates Merger Agreement

Building Materials Holding Corporation, San Francisco, CA, provider of construction services and products to the homebuilding industry, announced that its wholly owned subsidiary, SelectBuild Construction, has terminated its letter of intent to acquire Willis Roof Consulting Inc.&nbsp ;


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In October of 2006, BMHC announced SelectBuild’s intention to acquire 100% of the assets and operations of Willis Roof Consulting, subject to completion of due diligence activities.



Related Links:


Building Materials Holding Corp.&nbsp ; to Acquire&nbsp ; Las Vegas Roofing Specialist

More Breaking …

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Building Materials/Construction
Bidding War for ElkCorp Ends

The bidding war between The Carlyle Group and Building Materials Corporation of America for ElkCorp has ended, with The Carlyle Group dropping its offer for the roofing and building products manufacturer.


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An affiliate of Building Materials Corporation of America (BMCA), a roofing manufacturer in North America, has agreed to buy ElkCorp for $43.50 a share in cash, or about $1.12 billion, including the assumption of about $173 million in debt.


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The offer represents a 73% premium over ElkCorp’s closing share price on Nov. 3, 2006, the last trading day before ElkCorp announced it was considering strategic alternatives.


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ElkCorp terminated its previous merger agreement with Carlyle.


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BMCA, …

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Electrical
International Sales Drive Emerson Growth

< Emerson, St. Louis, MO, sales for the first quarter ended Dec. 31, 2006,&nbsp ; were $5.1 billion, an increase of 11% over the $4.5 billion reported in the same period last year. Profit for the first &nbsp ; quarter increased 12% to $445 million.


Underlying international sales increased 11%, including strong growth in Europe, Asia and Latin America. This quarter marked the first time that international sales were over 50% of total&nbsp ; sales.&nbsp ; As expected, underlying growth in the U.S. was down 2% driven primarily by weakness in the&nbsp ; residential air-conditioning markets for the Climate Technologies segment, which experienced exceptionally strong growth last&nbsp ; year as the industry converted to 13-SEER …

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Research & Analytics
Trends in Distribution


Adam Fein, president of Pembroke Consulting, identifies four key trends in Facing the Forces of Change: Lead the Way in the Supply Chain, put together every three years by the National Association of Wholesaler-Distributors. He described these trends in a presentation at the NAW annual meeting in Washington, D.C., last month.


No. 1: Private Label
 Adam Fein, author of Facing the Forces of Change: Lead the Way in the Supply Chain, says the use of private-label products will expand substantially over the next few years.


Benefits of a private-label strategy include capturing the manufacturer’s margin, and the ability to control profit from the top to the bottom of the supply chain. Customer relationships often improve thanks to lower …

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Companies
Grainger Expands Catalog by 20%

W.W. Grainger, Chicago, IL, has released its updated 2007 catalog with more than 138,000 MRO products, an increase of 23,000 over last year.


Last year, the distributor increased its catalog by 40 percent, adding 39,000 new products.


This year Grainger has added more than 7,000 plumbing products, including high-grade pipes, valves and fittings; 4,000 material handling supplies such as conveyors, hoists and casters; 5,000 fasteners including nuts, bolts and screws; as well as 1,600 security products including locks and hinges.


The company expects incremental sales from its ongoing product expansion to account for 1 to 2 percentage points of its growth in 2007. The new catalog has more than 3,000 pages.


In addition, online Grainger has added new search and …

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Finance
RONA Buys Noble Trade

Hardware and renovation products distributor and retailer RONA, Boucherville, Quebec, has acquired Noble Trade Inc., a plumbing and heating supply wholesaler in Ontario with annual sales of about C$150 million. The purchase price was close to 7X EBITDA, RONA executives said in a conference call.


Noble Trade was created in 1998 with the merger of Trade Plumbing Supplies and Noble Plumbing Supplies. The company has posted average annual sales increases of 27 percent since 1998. Most of that growth was organic, with either new stores or sales growth at existing stores, said Noble President Michael Storfer.


Storfer said Noble sold to RONA because it had resources it needed to grow the business. We thought they were the most entrepreneurial, and would allow us to continue to …

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Economic Trends
Prices Rise 3.6% in Canada in 2006

Prices charged by manufacturers in Canada, as measured by the Industrial Product Price Index (IPPI), were up&nbsp ; 1.4 percent in December from the month before thanks to a significant increase in prices for petroleum and coal products, primary metal products, and motor vehicles. Higher prices were observed in the majority of product groups.


On a 12-month basis, the IPPI rose by&nbsp ; 3.6 percent, a higher rate of growth than the year-over-year increase recorded between September and November. The upward pressure came mainly from higher prices for primary metal products, pulp and paper products as well as fruit, vegetables and feed products.



Petroleum, Coal Drive Prices
 On a month-over-month basis, manufacturers’ prices were driven by …

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Free
MDM News Digest 3703

Home Depot will consider strategic alternatives for its HD Supply unit, including a sale, spinoff or initial public offering. Nothing is definite. Today’s announcement is a continuation of the strategic review we did in November,” said CEO Frank Blake. “We are undertaking this action today because of our desire to increase our focus on our retail business. With annual revenues of $12 billion, HD Supply is a healthy, growing and vibrant business and we are undertaking this evaluation to determine whether there are strategic alternatives with respect to HD Supply that would optimize shareholder value.” HD said it would not announce updates to its review unless the board of directors approves a definite transaction …

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Economic Trends
MDM Inflation Index: December 2006

Modern Distribution Management’s December Inflation Index, which measures a cross-section of industrial supplies, was up 0.23% from the previous month, and up 3.47% from December 2005.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:

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
May 2006 Index 262.1
April 2006 Index 262.1
March 2006 Index 262.1
Febuary 2006 Index 261.2
January 2006 Index 260.2
December 2005 Index 258.1


Please click below on Related Document to view a print-ready pdf of the&nbsp ; MDM Inflation Index for December 2006, listing the ten …

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Economic Trends
U.S. Market Analysis: Abrasives

Abrasives represented a market in 2006 of $2.76 billion, according to estimates by Industrial Market Information, Minneapolis.



These charts show the top ten industries, by SIC code, consuming these products; and the 2006 end-user consumption of these groups sorted by the nine government market regions.


Click on Related Document below to view a pdf of the chart and end-user consumption by region.

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Free
MDM Technology Survey

A&nbsp ; Purdue University research project by Steve Epner is trying to understand key reasons why distributors adopt technology. Please take this brief survey now — less than five minutes to complete. Your participation is completely confidential and makes a difference in the quality of the results. Only summary data will be published. Watch MDM for results in June! Please invite other distributors you know to participate by using the “Forward this e-mail link above. The more responses we have, the more we can learn. Thank you!

Take the survey …

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Subscriber Only
MDM February 10, 2007

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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Electrical
U.S. Electrical Services to Buy Max Goldman

U.S. Electrical Services, LLC, Exton, PA, has agreed to buy the electrical supply business of Max Goldman, Inc.


Max Goldman, Inc., New Rochelle, NY, has maintained a presence in the Westchester County market for more than 100 years, supplying electrical supplies and lighting fixtures.&nbsp ;


US Electrical Services, LLC a Delaware limited liability company with principal offices of operation in Exton, PA., a wholesaler-distributor of electrical products and related services.


Related Links:
US Electrical Services to Buy Hampden/Zimmerman Electric Supply
US Electrical …

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Building Materials/Construction
Beacon Sales Up 11.9% in 1Q 2007

Roofing and building product distributor Beacon Roofing Supply, Inc. reported sales in the first quarter 2007 increased 11.9% to $380.2 million in 2007 from the same period a year ago. Organic sales declined 5.5% in 2007 but increased 2.3% on a per business day basis.


The existing market growth rate was still below the high pace of recent quarters and can be attributed, in part, to a significant slowdown in new residential construction, a flattening of inflation and the prior-year extensive re-roofing and reconstruction activities in some of the company’s markets following Hurricanes Katrina and Rita. A negative sales trend continued into the first month of the second quarter of this year, which may not be reflective of the entire quarter’s sales results due to the …

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Building Materials/Construction
Stock Building Supply Announces Store Cuts

Home Channel News has reported that Stock Building Supply, the U.S. building materials distribution arm of Wolseley plc, has announced some specifics in its cost-cutting plans. The latest: It will close 22 stores in 12 states, reducing its work force by 200.


The locations are Norfolk, VA; Springfield, OH; Mundelein Yard, IL; Richmond, Fort Wayne and Indianapolis, IN; Reed City, Cadillac, Plainwell, Hillman, Kalkaska and North Oakland, MI; Lindstrom and Rush City, MN; Princeton and Janesville, WI; Temple Millwork and San Antonio Truss, TX; Manti, UT; Blackfoot, ID; Springs Stair, CO; and Signal Hill Sash/Door, CA.


The closed stores are in areas that can be serviced by larger Stock stores in the same market, according to Wolseley.


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Building Materials/Construction
84 Lumber Sales in 2006 Hold Steady from 2005

84 Lumber Company, Eighty Four, PA, a privately held supplier of building materials and services to professional contractors, posted $3.92 billion in sales for 2006, holding steady from 2005.


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“Despite a tough year in the housing market with starts dramatically down in the second half of the year and material prices depressed, we saw benefits from our three-year strategic growth plan launched in April of 2006. We increased market share and sold more product, which are positive signs as we move into 2007, said 84 Lumber Company President Maggie Hardy Magerko.


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The company is on track to add at least 23 new stores this year in high-growth markets, as well as 11 component manufacturing …

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