April 25, 2008 - Modern Distribution Management

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April 25, 2008

MDM Interview: Busting Profit Myths in Distribution

Al Bates, founder and chairman of Profit Planning Group, Boulder, CO, wants to change how distribution executives think about their business. In this interview, he addresses dysfunctional behavior, alternatives to typical mindsets and ways that distributors can manage better in a turbulent economy. Based on his experience as a corporate financial planner and decades of data analysis, he's not afraid to buck conventional wisdom. In fact, he enjoys it.
Bates has studied financial performance across dozens of wholesale distribution sectors for more than 25 years. His firm conducts the annual benchmarking report series, PAR reports, for more than 40 wholesale distribution associations. This interview discusses key themes from his new book, Profit Myths in Wholesale Distribution: ...

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Bidding War for IDG Continues

The bidding war for industrial distributor Industrial Distribution Group Inc., Atlanta, GA, continues, but WESCO Distribution Inc., Pittsburgh, PA, has bowed out. At press time (early April 25, 2008), Luther King Capital Management, Fort Worth, TX, had the highest bid with $12.10 per share in cash, or close to $134 million.

Luther King Capital current owns 15 percent of IDG's stock. The firm presented IDG with an equity financing commitment letter from an LKCM investment fund.

Platinum Equity, the original victor with its offer of $10.30 per share for the distributor, had upped its bid to $11.80 per share in cash in response to WESCO Distribution's bid of $11.75, or $130 million.

The back and forth comes after IDG agreed in February 2008 to be purchased ...

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Commentary: A Little Context on the Fight for IDG

Why have three investors been raising the price for Industrial Distribution Group (IDG), the traditional whipping post of the investment community?

Last year, when IDG's board pursued an exit strategy to free itself from the constraints of public ownership, the M&A market in distribution was still near its peak. In a year's time, we have shifted dramatically from a financial frenzy to a quieter, more strategic buyer's market. In today's risk-averse debt markets, show me the money has taken on new meaning in the bidding war for IDG.

The three bidders active in this deal -Platinum Equity (owns Strategic Distribution), Luther King Capital Management (owns 15 percent of IDG stock), and WESCO (owns Bruckner Supply) -know the strengths and weaknesses in IDG. Based on ...

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Inflation by Commodity Group: First Quarter 2008

These 24 select product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. First quarter 2008 is compared with first quarter 2007, and fourth quarter 2007 with first quarter 2008. Download the full document below.
The product groups in this report:

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Product Mix & Growth for MSC Industrial

MSC Industrial Direct's latest Safety Products Catalog launch is part of its strategy to further penetrate existing customer accounts, according to Erik Gershwind, MSC's senior vice president of product management, marketing and strategy.

The interest in safety products has been building in our customer base for the past few years,"Gershwind said. "We definitely saw a demarcation point after 9/11. Our customer base has a heightened sense of awareness of keeping the workplace safe and protecting the well-being of their employees."

Gershwind said that penetration of existing accounts was a key growth strategy for the industrial distributor, based in Melville, NY. The company is also working to sell more MRO and safety products to customers acquired when it bought J&L ...

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MDM News Digest 3808

Crawford Electric Supply, Dallas, TX, a subsidiary of Sonepar USA, has opened a new branch in New Orleans, LA. The facility includes a 48,000-square-foot warehouse, with a full-service counter area focused on the pipe, wire, lighting, and electrical business. More

PrimeSource Building Products Inc., Carrollton, TX, will buy Miami, FL-based Coast to Coast Building Products Inc., according to news reports. The acquisition expands PrimeSource's network into the Southeast as well as the Caribbean and Central America. More

HD Supply, Atlanta, GA, has launched its two new proprietary brands, Seasons and Brigade. The ...

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MDM Inflation Index: March 2008

Modern Distribution Management's March Inflation Index, which measures a cross-section of industrial supplies, was up 0.74% from the previous month, and up 4.24% from March 2007.
Summary of MDM Inflation Index for the past 12 months:
March 2008 Index 281.1
February 2008 Index 279.0
January 2008 Index 277.2
December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3
July 2007 Index 272.4
June 2007 Index 271.7
May 2007 Index 271.2
April 2007 Index 270.8
March 2007 Index 269.6

Please click below to view a print-ready pdf of the MDM Inflation Index for March 2008, listing the ten individual product categories that make up the ...

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WESCO Organic Growth at 2% in 1Q

WESCO International, Inc., Pittsburgh, PA, provider of electrical MRO products, construction materials and integrated supply services, reported sales for the first quarter 2008 were $1.46 billion, up 2.9% after adjusting for a divestiture.
Sales for the quarter from acquisitions were $12 million.
Net income in the first quarter was $44.8 million versus $48.2 million in the comparable 2007 quarter.
Mr. Roy W. Haley, WESCO's Chairman and Chief Executive Officer said: We have seen some deterioration in certain markets related to residential construction activity. We are cognizant of the near-term risks of a slowing economy, and we are balancing the increased investment in business development initiatives with cost containment actions in other areas of ...

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