Industrial Distribution Group Inc., Atlanta, GA, reported a 2% sales increase to $538.8 million in 2005 from $529.2 million the year before. For the year, profit was $5.4 million, compared with $7.3 million the year before, a 26% drop.
‘The 2005 results clearly did not meet our expectations,’ said President and CEO Charles A. Lingenfelter. ‘Improving upon our revenue growth rate from continuing activities, which was 2.5% for 2005, will be my main focus until we achieve acceptable results. At the very least, we need to be taking market share from our competition.’
For the fourth quarter ended Dec. 31, 2005, IDG saw a 3% drop in revenue to $130.1 million from $134.6 million in the same period in 2004. The company’s profit for the fourth quarter was $1.5 million, compared with $1.4 million in the same period the year before.
Fourth quarter 2004 results include $3.3 million of revenue for the company’s previously owned Cardinal Machinery business unit, which was sold in September 2005. Cardinal Machinery revenue is included in the company’s 2005 results through its sale during the third quarter and for the full year of 2004. Its contribution to profit was immaterial for both 2004 and 2005.
Said Lingenfelter: ‘It is important to note that we made positive strides in 2005 in a number of areas, including the reduction of our long-term debt by more than $9.3 million, or more than 40%. … Among our most important steps in 2005, we hired a CIO, and he and a team of IDG associates guided our identification of the software solution that will become the platform upon which IDG will consolidate operations during 2006. This platform is a critical part of the plan to enable IDG to achieve higher revenue growth rates, further reduce our internal costs and achieve higher fill rates on customers’ orders.’
Gross margins for the fourth quarter 2005 were 22.4% compared to 22.3% for the comparable period of 2004, representing a 140 basis point improvement from the first quarter 2005. For the full year 2005, gross margins were 21.8% compared to the 21.9% for 2004. The company’s gross margin performance in 2005 reflects the ongoing growth of the company’s services offerings, which typically have lower product pricing and other features that yield lower gross margins, but most of those same features yield higher operating margins because certain fixed costs are paid directly by the customer.
The company’s board of directors promoted Jack P. Healey, currently senior vice president and CFO, to the position of executive vice president. He retains the position of CFO.
Industrial Distribution Group Inc. is a nationwide products and services company that distributes a full line of maintenance, repair, operating and production (MROP) products, specializing in cutting tools, abrasives, hand and power tools, coolants, lubricants, adhesives, maintenance equipment, machine tools and safety products, and other MROP products.
