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Genuine Parts Company (parent of Motion Industries)
President and CEO Tom Gallagher noted that Motion Industries, the industrial segment for Genuine Parts Company (NYSE: GPC), Atlanta, GA, has been progressively growing stronger through the third quarter of this year. Excluding the BC Bearing acquisition, industrial sales were up 23 percent in the third quarter. Looking at Motion's top 12 product categories, all were up double digits in the quarter. Each of the distributor's geographic regions had strong performances as well, he said.
"So we continue to feel good about our Industrial operations and with the external indices like industrial production and capacity utilization continuing to look favorable at the current levels, we feel that they are position and turn in another solid quarter over the final three months of the year," Gallagher said.
CFO Jerry Nix during the call gave an update on employee headcount. In 2009, Genuine Parts Company eliminated $75 million in operating costs. He said headcount was reduced by 12 percent in 2008 and 2009, and the distributor has added less than 1 percent of that headcount through September.
CEO Will Oberton highlighted the distributor's growing international business. He said that both the distributor's Canadian and Mexican businesses are growing above the company average. "They are both becoming larger and actually a meaningful part of our growth number at this point," he said. Asia and Europe are also strong for Fastenal (Nasdaq: FAST), Winona, MN.
In the U.S., growth is being driven by large manufacturing customers, Oberton said. "We are doing well with all sections and sizes and types of manufacturing businesses. But the large customers are driving our business; we're seeing the best growth out of that group of customers. But because of this we're also seeing pressure on our margin." He explained that traditionally large manufacturing customers are also Fastenal's lowest margin customers. "We also believe that over time our smaller customers and our construction business will pick back up, and the mix will change more positively for our growth going forward. "
CEO Peter McCausland said that conditions continue to improve in most of the Radnor, PA-based gases and hardgoods distributor's customer segments and geographies in the latest quarter. Manufacturing is also leading Airgas' segments.
Airgas (NYSE: ARG), an acquisitive distributor, is "encouraged by recent signs of increased activity" in its acquisition pipeline, according to McCausland. "Our acquisition activity has historically slowed during recessions and then accelerated during the recovery phase of the business cycle, as owners are more interested in selling their businesses during strong performance," he said. The distributor's primary focus will be on its domestic core businesses and related products.
Read the latest on Air Products' bid for Airgas at www.mdm.com/airgas.