MDM Staff, Author at Modern Distribution Management

Bunzl plc has acquired the business of Tec Products Co. Inc., a private company based in New Jersey. Tec Products is a supplier of jan/san and associated products through redistributors. Revenue in the year ended Dec. 31, 2006, is estimated at $14 million.

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Bunzl has also purchased Westgate Sales Corporation and Westgate Canada Ltd., also based in New Jersey with facilities in Ontario and Alberta, Canada. Westgate supplies personal protection equipment through redistributors in the eastern U.S. and Canada. Revenue in the year ended Dec. 31, 2006, is estimated at US$18 million.

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Tec Products expands our jan/san business in the northeast region of the U.S. while Westgate adds further scale and geographical coverage to our personal …

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February 6, 2007

Companies

Home Depot Reaches Agreement With Activist Investor

The Home Depot, Atlanta, GA, has reached an agreement with Relational Investors LLC. The investment firm is headed by Ralph Whitworth, who has criticized HD’s executive strategy, including its HD Supply division, and has demanded a place on the board.

As part of the agreement, David Batchelder, a principal of Relational, will join HD’s board of directors on Feb. 22, 2007. Relational has agreed to drop its proxy contest – Batchelder will be appointed to the Leadership Development and Compensation Committee and to the Audit Committee.

Today’s agreement follows actions taken by Relational in December 2006 to solicit proxies for a resolution to be brought before The Home Depot’s annual meeting seeking an independent committee …

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February 6, 2007

Building Materials/Construction

Construction Spending Increases 4.8% in 2006

The value of construction spending put in place in 2006 was $1, 198.0 billion, 4.8% above the $1,143.7 billion spent in 2005.

The value of private construction in 2006 was $928.7 billion, 3.3% above the $899.0 billion spent in 2005. Residential construction in 2006 was down 1.9% …

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February 6, 2007

Building Materials/Construction

Huttig Building Products Records Loss for 2006

Huttig Building Products, Inc., St. Louis, MO, distributor of millwork, building materials and wood products, reported sales were $1.103 billion in 2006, up slightly from 2005. A 9% increase in the first half of the year offset the 7% decline in sales in the second half of the year when the housing market began to decline. Huttig had an operating loss of $4.1 million for the year.

For the fourth quarter ended Dec. 31, 2006, sales were $231.1 million, with an operating loss of $2.6 million. Sales were down 13% from the same period a year ago, reflecting the 24% drop in housing starts. Sales to national accounts for the quarter, which represented 34.8% of sales, declined by 7%.

Overall in 2006, sales to national accounts represented 33.4% of sales in 2006 as …

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February 6, 2007

Building Materials/Construction

Building Materials Holding Corp. 2006 Sales Up 11%

Building Materials Holding Corporation, San Francisco, CA, provider of construction services and building materials to professional residential builders and contractors, reported sales for the fourth quarter of 2006 decreased 26% to $608 million from $818 million in the same quarter a year ago. For the year ended Dec. 31, 2006, sales increased 11% to $3.2 billion from $2.9 billion in 2005.

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Net income for the fourth quarter of 2006 was $4.5 million compared to $33.5 million in the same quarter a year ago. For the year, net income was $102.1 million compared to $129.5 million in the same period of 2005.

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Robert E. Mellor, Chairman, President and CEO, said: Our fourth-quarter results reflect the ongoing correction of inventory levels …

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February 5, 2007

Economic Trends

Canadian Price Index Up 3.6% in 2006

Prices charged by manufacturers in Canada, as measured by the Industrial Product Price Index (IPPI), were up&nbsp ; 1.4% 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.

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On a 12-month basis, the IPPI rose by&nbsp ; 3.6%, 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.

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The Raw Materials Price Index (RMPI) was up by&nbsp ; 5.2% from November to December, closing the year …

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February 5, 2007

Free

Gates Corp. Launches Store at PTPlace

Gates Corporation’s Industrial Power Transmission division has launched an online store at PTPlace.com, an e-commerce Web site that offers authorized U.S. distributors the convenience of ordering the firm’s complete line of belt drive system products from one popular internet mall.

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PTPlace is a key component of Gates equity investment in CoLinx, LLC, which took place in 2006. CoLinx provides e-business and logistics services and manages the PTplace.com e-commerce portal and PTbroker system-to-system connection. Through these programs, over eight million transactions are processed per year between manufacturers and their authorized distributors.

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At the PTPlace mall, Gates joins Rockwell Automation, The Schaeffer Group, SKF and …

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February 5, 2007

Companies

New Grainger Catalog: 20% More Products

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

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

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As planned, for 2007 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.

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The company expects incremental sales from its ongoing product expansion to account for 1 to 2 percentage points of its growth in …

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February 1, 2007

Companies

WESCO 2006 Sales Up 20.3%

WESCO International Inc., Pittsburgh, PA, reports sales increased 20.3% to $5.32 billion, compared with $4.4 billion in 2005. Profit for the year was $217 million, double the profit of last year.

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The electrical distributor reported sales of $1.37 billion for the fourth quarter 2006, an increase of 11.3% over the same period last year. Profit was $58 million versus $40 million in the prior-year quarter.

More Breaking …

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February 1, 2007

Companies

3M Acquires Rite-Lok Adhesives Line

3M, St. Paul, MN, has acquired the Rite-Lok global industrial adhesives product line from Chemence Inc., a specialty chemical company that manufactures consumer and industrial adhesives.

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The line includes anaerobic threadlockers, retaining compounds, gasket makers, thread sealants, structural adhesives, and specialty cyanoacrylate instant adhesives for industrial use such as metal bonding, plastics and rubber. The line also includes high-temperature, low-odor industrial adhesives and rubber-toughened flexible adhesives.

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More Breaking …

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February 1, 2007

Companies

Anixter Grows Sales to $4.94B in 2006

Anixter International Inc., Glenview, IL, distributor of communication products, electrical and electronic wire & cable and fasteners, reported sales of $4.94 billion in the year ended Dec. 29, 2006, up from $3.85 billion last year. Profit was $209.3 million in 2006.

Sales in 2006 were boosted by the acquisition of Infast in July 2005, IMS in May 2006 and MFU in October 2006.

Sales in the fourth quarter were $1.3 billion, including $23.5 million from acquisitions. Sales were up 27% from the same period a year ago. Profit increased 160% to $52.4 million. Organic growth was 22% in the fourth quarter.

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Anixter reported it saw strong large-project business, related to data center builds in the enterprise cabling market and energy and natural …

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February 1, 2007

Economic Trends

ISM: Manufacturing Contracts in January

Economic activity in the manufacturing sector contracted in January after a one-month expansion, while the overall economy grew for the 63^rd month, according to the latest manufacturing ISM Report on Business.

After a slight rebound in December, the manufacturing sector did not grow in January. New Orders remained positive, but little change has taken place as the PMI has averaged 50.5% in the past four months. In overall terms, manufacturing lost momentum in the second half of 2006 and is starting 2007 in a less than robust fashion, according to the Institute for Supply Management.

Results show a decline in the Inventories Index to the lowest level since February 2002, indicating a significant liquidation is taking place in many supply chains. …

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February 1, 2007

Companies

Grainger Sales Up 6% to $5.9B in 2006

W.W. Grainger reported sales of $5.9 billion for fiscal 2006, up 6% versus 2005, and 7% on a daily basis. Profit for the year increased 11% to $383 million, as compared with $346 million in 2005.

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Sales in the fourth quarter were $1.5 billion, up 5% from the prior-year fourth quarter. Daily sales increased 5% in October, 6% in November and 5% in December. Income was $99 million, down 5% from last year.

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In 2006, Grainger installed SAP across most of the U.S. branch-based business.

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Branch-Based Segment
Sales in this segment in the U.S., Mexico and China, increased 5% in the fourth quarter. Of the 5% growth, an estimated 3 percentage points came from the company’s two growth initiatives in the U.S., market …

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January 26, 2007

Free

Danaher Sales Grow 20% in 2006

Danaher Corporation, Washington, D.C., reported sales for 2006 were $9.5 billion compared to $7.98 billion in 2005, an increase of 20%. Profit was $1.1 billion for fiscal 2006, up 25% over last year.

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Sales in the fourth quarter was $2.6 billion, an increase of 17.5% from fourth quarter 2005. Profit for the fourth quarter was $323.7 million, a 28.5% increase.

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The company also announced it has expanded its reporting to four segments. The four segments are Medical Technologies, Professional Instrumentation, Industrial Technologies and Tools and Components. The Medical Technologies business, previously included within the Professional Instrumentation segment, will now stand alone as its own reporting segment. Professional …

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January 26, 2007

Management

Case Study: Preempting Problems

Company Snapshot

One distribution center and five branches, based in Livonia, MI.
Number of employees: 58
Key products: Bearings and power transmission

We strive to be problem-solvers in the marketplace by providing end-user training. It's a service the customer values and one that our competition can't easily duplicate. It adds real value to what we offer and helps us build stronger relationships with our end users.

More than eight years ago we began receiving requests from customers for maintenance-related training. We viewed these requests as opportunities for us to grow our business.

We sat down with those customers to determine the specific areas where they needed …

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January 25, 2007

Companies

Letter to the Editor: What’s Home Depot’s Growth Strategy?

Dear Editor:

I would like to disagree with MDM’s editorial on Home Depot (MDM Jan. 10, 2007) – on several levels.

1) The job of company management, within certain limits, is to maximize shareholder value. HD stock was over $43 in 2000. According to the inflation calculator provided (on the Web) by the Bureau of Labor Statistics, that adjusts (for inflation) to about $50 in 2006. I would guess it will adjust another dollar higher in 2007 money, so make it $51.

Essentially, HD paid Bob Nardelli more than $450 million over six years to go backwards. The spending power of the money invested in HD stock by shareholders who bought the stock the day he was named Big Cheese DECLINED. You cite Nardelli’s accomplishments. If he’s not responsible for …

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January 25, 2007

Economic Trends

Monthly Wholesale Trade: November 2006

Sales. November 2006 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $331.3 billion, up 1.0% from the revised October level and were up 7.9% from the November 2005 level. November sales of durable goods increased 1.2% from last month and were up 7.7% from a year ago. Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were up 5.0% and sales of electrical and electronic goods increased 2.9 %. November sales of nondurable goods were up 0.7% (+/-0.7%) …

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January 25, 2007

Free

MDM News Digest 3702

Apollo Management, which also recently invested in Rexnord, has made an investment in Bradco Supply Corp., a roofing distributor based in Avenel, NJ. Bradco has more than 150 branches in the U.S. Bradco founder Barry Segal says the investment is a great opportunity to significantly grow the company.” More …

Global fastener distributor The Wurth Group, based in Germany, recorded 12 percent sales growth in fiscal 2006 to 7.74 billion euro, or US$9.9 billion. Outside of Germany, sales increased by 11.8 percent to 4.62 billion euro, or US$5.96 billion. Profit grew by 16.5 percent overall. <a href="/pub/1_1/breaking-news/3616-1.html" ...

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January 25, 2007

Economic Trends

Inflation Softens in 2006

Click here for charts showing inflation by product group – 16 products, including tools, fasteners, machinery/equipment, fluid power, and others, are displayed in this document.

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This is an overview of wholesale price inflation trends in the past year for commodities in industrial and construction channels. Overall, core inflation rose 1.1 percent in 2006 -a significant slowdown from 2005. But the Federal Reserve still sees inflation as a potential threat in the next year, albeit at lower levels.

Thanks to a slowdown in energy price increases, wholesale prices rose 1.1 percent in 2006, in contrast to the 5.4 percent rise in 2005, the Bureau of …

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January 25, 2007

Economic Trends

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. Download the pdf in this article to see the data. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

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

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January 25, 2007

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