The 2020 Mid-Year Economic Update_long

Day: January 25, 2008

Wholesale Prices Skyrocket in 2007

This is an overview of wholesale price inflation trends in the past year for commodities in industrial and construction channels. Overall, inflation was 6.3 percent in 2007, a significantly larger jump than in 2006.

Inflation by Commodity Group: 44 product groups - 4Q and Full Year 2007

Wholesale prices jumped 6.3 percent in 2007, due to a surge in fuel and food prices. Without fuel and food, core inflation saw a more moderate 2-percent increase, the Bureau of Labor Statistics reported.

The government attributed the faster overall rate of increase to the index of finished energy goods, which rose 18.4 percent in 2007 after a much shorter climb of 2 percent a year earlier. Finished ...

Inflation by Commodity Group: Fourth Quarter and Full Year 2007

These select product groups provide a snapshot of inflation trends. Fourth quarter 2006 is compared with fourth quarter 2007, and the third quarter 2007 with the fourth quarter 2007. Trend from 2006 to 2007 also presented. Graphs depict trends from January 2006. Download complete file below.
 
Abrasives
Adhesives &Sealants
Cutting Tools &Accessories
Hand &Edge Tools
 
Fasteners
Power-Driven Hand Tools
Ball &Roller Bearings
Mechanical Power Transmission Equipment

Electrical Machinery/Equipment
Industrial Material Handling Equipment
Industrial Gases
Welding Machinery/Equipment

Valves, Except Fluid Power
Pumps, Compressors &Equipment
Fluid Power Equipment
Plumbing Fixtures ...

Mind the Gap

Wholesaler-distributors in varied sectors have been seeing strong double-digit top-line revenue growth. While the economic expansion increased unit sales, recognize that unusually high commodity prices have made revenue growth easier to achieve in recent years. In Adam Fein's recent MDM Webcast, Wholesale Distribution Economic Outlook,"he addressed this issue.

Fein, president of Pembroke Consulting, presented as example the hardware, plumbing, heating and cooling distribution sector, which has seen flat growth year-over-year. But once adjusted for inflation, unit growth was negative.

"I call that the growth gap,"he says. In this case, the gap was 5.3 percent. "I can't predict commodity prices any better than anyone else can. But what it does say is there has been ...

Value Drivers in Distribution

As the M&A marketplace for wholesale distribution companies continues to be active, an increasing number of distribution company owners have begun to contemplate selling their business.

While the sale of a company is equal parts art and science, one thing is clear -owners and operators who properly prepare for a sale and take into consideration the main criteria buyers use in assessing an acquisition, consistently achieve more favorable outcomes.

Here is a synopsis of criteria buyers of businesses consider in an acquisition and what I focused on while executing acquisitions for HD Supply and Hughes Supply.
 
Preparing for a Sale
Once owners determine their desire to sell the company, it is necessary to follow a core set of steps to best position the ...

Monthly Wholesale Trade: Sales and Inventories for November 2007

Sales. November 2007 sales of merchant wholesalers, except manufacturers'sales branches and offices, were $380.4 billion, up 2.2 percent from the revised October level and were up 14 percent from November 2006. Sales of durable goods were up 0.9 percent from last month and up 6.1 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and software were up 3.9 percent and sales of electrical and electronic goods, up 3.1 percent. Sales of nondurable goods were up 3.3 percent from last month and up 21.7 percent from last year. Sales of farm product raw materials were up 9.7 percent from last month and sales of petroleum and petroleum products were up 8.9 percent.
 
Inventories. Total inventories of merchant wholesalers ...

Commentary: Tougher Numbers in 2008

Home Depot bought Hughes Supply in January 2006 with an EBITDA valuation above 12X, a number still ringing in the ears of many distributors. A scant year later HD announced its intentions to focus on retail and explore alternatives for its $12-billion distribution unit. It sold the unit this past June.

As distributors ring in this year, the competitive landscape looks vastly different than even six months ago. While there is still a lot of private equity money searching for deals in distribution, debt markets have tightened.

As a result, valuations are dropping fast, and the level of deal-making activity dropped significantly in the last quarter of 2007. In 2008, we will likely see strategic buyers execute smaller add-ons, rather than the blockbuster deals spawned ...

MDM News Digest 3802

Rexel, global distributor of electrical supplies, has made Chris Hartmann the CEO of IESC, the holding company of Rexel's U.S. activities, effective Jan. 21. He takes over from Dick Waterman, who is retiring but will stay on as an advisor to Rexel and will serve as chairman of the National Association of Electrical Distributors. More
WinWholesale, Dayton, OH, has opened Tampa Winnelson Company to provide plumbing and mechanical contractors in the Tampa Bay area. It is the first WinWholesale company in the Tampa Bay area and serves Hillsborough, Pasco, Pinellas and Polk counties. More
Employee-owned Windsor Factory ...

MDM January 25, 2008

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 info@mdm.com to ...

Grainger Hits $6.4B in 2007

Grainger, Chicago, IL, reported sales of $6.4 billion in the year ended Dec. 31, 2007, up 9% from 2006. Profit was $420 million, up 10%.
 
Market expansion contributed $402 million in sales in 2007. The company added 90,000 products in 2006 and 2007 in plumbing, fastener, material handling and security product lines. Product line expansion contributed about 3 percentage points to the quarterly growth. Products added over the past two years have added $349 million in sales in 2007.
 
In the 2007 fourth quarter, sales of $1.6 billion were up 10% from the prior-year period. Daily sales increased 10% in October, 10% in November and 6% in December.
 
Lower sales to integrated supply customers reduced sales growth in the fourth quarter.
 
Profit for ...