Full-year results are down 16%, but distributor says it sees encouraging signs ahead
Victoria Fraza Kickham -- Industrial Distribution, 10/21/2009 10:18:18 AM
MRO distributor MSC Industrial Direct posted lower sales and earnings for the fourth quarter and fiscal year ended August 29, but says it sees encouraging signs in the marketplace as fiscal 2010 gets underway.
In its fiscal fourth quarter, MSC's sales fell 21 percent to $354.1 million, compared with $448.6 million in the prior-year period. Net income fell 49 percent to $26 million.
For the full year, sales fell 16 percent to $1.49 billion, compared with $1.78 billion in fiscal 2008. Net income for the year fell 36 percent to $125.1 million.
MSC's president and CEO David Sandler said the company ended 2009 with a solid performance in the fourth quarter and pointed to the opportunities ahead as the economy improves.
"While our visibility remains limited, we are seeing some encouraging signs in the marketplace," he said in statement announcing the results. "We look at the eventual economic recovery as a significant opportunity for MSC and will continue to focus our investment program on the opportunities that we believe will produce the greatest returns. As in the past, we will prudently balance our level of investment spending to maintain what we believe to be the right mix between short-term profitability and achieving our long-term growth objectives. Overall, we view this time as an extraordinary opportunity to gain market share, and we intend to take advantage of it."
Kevin Brown http://www.stardustspillproducts.com/
Thursday, October 22, 2009
Sales fall 16% at The Stanley Works
Manufacturer cites record gross margin rate and strong free cash flow performance
Industrial Distribution Staff -- Industrial Distribution, 10/21/2009 1:18:21 PM
Tool maker The Stanley Works reported lower sales and earnings for the third quarter of 2009 but pointed to gross margin and free cash flow improvements as key positives in a continued tough economy.
Sales in the quarter fell 16 percent to $936 million; the company posted a $60.4 million profit during the quarter compared to $163 million in profit in same period a year ago.
Sales in the company's industrial segment fell 31 percent compared to the third quarter of 2008 while sales in its construction and do-it-yourself category fell 23 percent compared to the year-ago period. Security segment sales increased 3 percent.
Gross margins improved to a record rate of 41.3 percent, the company said, due to continued execution of productivity projects, price carryover and improved mix due to relatively stable performance in the company's security segment.
In addition, the company generated free cash flow of $158 million in the third quarter, up 53 percent versus the 2008 third quarter.
"We are encouraged by the second consecutive quarter of record gross margins despite the market-driven volume headwinds we experienced through September," chairman and CEO John F. Lundgren said in a statement announcing the results. "Our ongoing success in tailoring our product and service offerings to best fit our customers' needs is producing market share gains within a majority of our businesses while positioning us to take full advantage of the mild stabilization we are experiencing in select end markets."
Industrial Distribution Staff -- Industrial Distribution, 10/21/2009 1:18:21 PM
Tool maker The Stanley Works reported lower sales and earnings for the third quarter of 2009 but pointed to gross margin and free cash flow improvements as key positives in a continued tough economy.
Sales in the quarter fell 16 percent to $936 million; the company posted a $60.4 million profit during the quarter compared to $163 million in profit in same period a year ago.
Sales in the company's industrial segment fell 31 percent compared to the third quarter of 2008 while sales in its construction and do-it-yourself category fell 23 percent compared to the year-ago period. Security segment sales increased 3 percent.
Gross margins improved to a record rate of 41.3 percent, the company said, due to continued execution of productivity projects, price carryover and improved mix due to relatively stable performance in the company's security segment.
In addition, the company generated free cash flow of $158 million in the third quarter, up 53 percent versus the 2008 third quarter.
"We are encouraged by the second consecutive quarter of record gross margins despite the market-driven volume headwinds we experienced through September," chairman and CEO John F. Lundgren said in a statement announcing the results. "Our ongoing success in tailoring our product and service offerings to best fit our customers' needs is producing market share gains within a majority of our businesses while positioning us to take full advantage of the mild stabilization we are experiencing in select end markets."
Thursday, October 15, 2009
Grainger's sales drop 14 percent for 3rd quarter
Jack Keough -- Industrial Distribution, 10/14/2009 9:25:35 AM
Grainger today reported third quarter sales of $1.6 billion, which were down 14 percent versus third quarter 2008. Net earnings for the quarter increased 3 percent to $145 million versus $140 million in 2008. The 2009 third quarter included a one-time $47 million pre-tax or $0.37 per share gain from the step-up of its investment in MonotaRO Co. Ltd., after Grainger became a majority owner in September.
"Despite the effects of the sluggish economy, we are pleased with our results," said Grainger Chairman and CEO James T. Ryan in a statement. . "Our execution has been solid. In particular, our relentless focus on providing exceptional customer service is paying off. We continue to see evidence that we are capturing market share. Now more than ever, our customers are depending on Grainger's product breadth, unmatched local availability and customer service to help them cost effectively maintain their facilities."
Ryan added, "While daily sales remain stable, we are not yet seeing a catalyst for a sustained economic turnaround in any of our major end markets. We expect comparisons to improve as sales fell in the fourth quarter last year. We will continue to focus on what we can control. With the investments we have made, we remain in a great position as the economy recovers."
Sales for the company decreased 14 percent for the quarter; down 14 percent in July, down 13 percent in August and down 13 percent in September. Price contributed a positive 4 percent while volume was down 17 percent. Sales were negatively affected by 1 percent related to foreign exchange. There were 64 selling days in the quarter, the same as the 2008 third quarter.
Operating earnings for the company were down 19 percent. The operating earnings decrease was the result of expenses decreasing at a slower rate than sales, partially offset by a higher gross profit margin.
Effective with the first quarter of 2009, the company has two reportable business segments, the United States and Canada, which represent approximately 98 percent of company sales. This new reporting reflects the integration of Lab Safety Supply with Grainger's U.S. branch-based business.
The remaining operating units (Mexico, India, Puerto Rico, China, and Panama) are included in other businesses and are not considered a segment. The company acquired Asia Pacific Brands India Private Limited in June 2009 resulting in the inclusion of the India operations in other businesses in the third quarter. The company obtained a majority ownership of MonotaRO in September, consolidated its balance sheet as of the end of the third quarter and will consolidate its income statement beginning in the fourth quarter.
Sales for the United States segment decreased 14 percent in the 2009 third quarter. Sales declined by 14 percent in July, August and September.
As a result of integrating Lab Safety Supply with the Grainger Industrial Supply business starting late in 2008, the company had said that it expected to deliver $70-$100 million in incremental revenue and $20-$30 million in cost savings. To date, the project has generated $24 million of the additional revenue and $15 million of the savings, with the company on track to deliver within the range of the projected sales and cost benefits by mid-2010.
Sales declined in all customer end-markets in the United States. Grainger continues to add more products to its offering that will result in having almost 300,000 products in the 2010 catalog. Product line expansion contributed $251 million in sales for the third quarter versus $196 million in the third quarter 2008.
Operating earnings for the quarter were down 15 percent in the United States. The operating earnings decrease was the result of operating expenses decreasing at a slower rate than sales, partially offset by a higher gross profit margin. Payroll-related expenses were down due to lower headcount, reduced commissions and no bonus accruals.
Around one third of the decrease in operating expenses is expected to be permanent. Gross profit margins were up due to sales price increases exceeding product cost inflation and a $10 million reduction in the LIFO inventory reserve due to lower inflation on inventory purchases and lower inventory levels than previously estimated.
Sales for the Acklands-Grainger business in Canada for the quarter were down 13 percent versus the 2008 third quarter. In local currency, sales were down 8 percent. Sales in local currency declined 10 percent in July, 5 percent in August and 9 percent in September. T
The Canadian economy remained weak, particularly the forestry and natural gas industries. Growth in the oil and utilities sectors remained favorable in the quarter.Operating earnings decreased 41 percent for the 2009 third quarter (38 percent in local currency), primarily due to the sales decline and a 260 basis point decline in gross margin.
The decline in gross margin was primarily the result of higher product costs due to unfavorable foreign exchange rates and an increase in the mix of lower margin business, particularly large customers.
Sales for the other businesses, which include Mexico, India, Puerto Rico, China, and Panama, were up 11 percent versus prior year. The sales increase was due primarily to the acquisition of the business in India in June 2009, along with contributions from China and Panama. Mexico represents approximately 50 percent of sales within this group.
Sales in Mexico were down 21 percent in the quarter versus the same period in 2008 due to unfavorable foreign exchange. In local currency, sales in Mexico increased 2 percent for the quarter. Operating losses for other businesses were $2 million for the quarter compared to $3 million a year ago.
Grainger today reported third quarter sales of $1.6 billion, which were down 14 percent versus third quarter 2008. Net earnings for the quarter increased 3 percent to $145 million versus $140 million in 2008. The 2009 third quarter included a one-time $47 million pre-tax or $0.37 per share gain from the step-up of its investment in MonotaRO Co. Ltd., after Grainger became a majority owner in September.
"Despite the effects of the sluggish economy, we are pleased with our results," said Grainger Chairman and CEO James T. Ryan in a statement. . "Our execution has been solid. In particular, our relentless focus on providing exceptional customer service is paying off. We continue to see evidence that we are capturing market share. Now more than ever, our customers are depending on Grainger's product breadth, unmatched local availability and customer service to help them cost effectively maintain their facilities."
Ryan added, "While daily sales remain stable, we are not yet seeing a catalyst for a sustained economic turnaround in any of our major end markets. We expect comparisons to improve as sales fell in the fourth quarter last year. We will continue to focus on what we can control. With the investments we have made, we remain in a great position as the economy recovers."
Sales for the company decreased 14 percent for the quarter; down 14 percent in July, down 13 percent in August and down 13 percent in September. Price contributed a positive 4 percent while volume was down 17 percent. Sales were negatively affected by 1 percent related to foreign exchange. There were 64 selling days in the quarter, the same as the 2008 third quarter.
Operating earnings for the company were down 19 percent. The operating earnings decrease was the result of expenses decreasing at a slower rate than sales, partially offset by a higher gross profit margin.
Effective with the first quarter of 2009, the company has two reportable business segments, the United States and Canada, which represent approximately 98 percent of company sales. This new reporting reflects the integration of Lab Safety Supply with Grainger's U.S. branch-based business.
The remaining operating units (Mexico, India, Puerto Rico, China, and Panama) are included in other businesses and are not considered a segment. The company acquired Asia Pacific Brands India Private Limited in June 2009 resulting in the inclusion of the India operations in other businesses in the third quarter. The company obtained a majority ownership of MonotaRO in September, consolidated its balance sheet as of the end of the third quarter and will consolidate its income statement beginning in the fourth quarter.
Sales for the United States segment decreased 14 percent in the 2009 third quarter. Sales declined by 14 percent in July, August and September.
As a result of integrating Lab Safety Supply with the Grainger Industrial Supply business starting late in 2008, the company had said that it expected to deliver $70-$100 million in incremental revenue and $20-$30 million in cost savings. To date, the project has generated $24 million of the additional revenue and $15 million of the savings, with the company on track to deliver within the range of the projected sales and cost benefits by mid-2010.
Sales declined in all customer end-markets in the United States. Grainger continues to add more products to its offering that will result in having almost 300,000 products in the 2010 catalog. Product line expansion contributed $251 million in sales for the third quarter versus $196 million in the third quarter 2008.
Operating earnings for the quarter were down 15 percent in the United States. The operating earnings decrease was the result of operating expenses decreasing at a slower rate than sales, partially offset by a higher gross profit margin. Payroll-related expenses were down due to lower headcount, reduced commissions and no bonus accruals.
Around one third of the decrease in operating expenses is expected to be permanent. Gross profit margins were up due to sales price increases exceeding product cost inflation and a $10 million reduction in the LIFO inventory reserve due to lower inflation on inventory purchases and lower inventory levels than previously estimated.
Sales for the Acklands-Grainger business in Canada for the quarter were down 13 percent versus the 2008 third quarter. In local currency, sales were down 8 percent. Sales in local currency declined 10 percent in July, 5 percent in August and 9 percent in September. T
The Canadian economy remained weak, particularly the forestry and natural gas industries. Growth in the oil and utilities sectors remained favorable in the quarter.Operating earnings decreased 41 percent for the 2009 third quarter (38 percent in local currency), primarily due to the sales decline and a 260 basis point decline in gross margin.
The decline in gross margin was primarily the result of higher product costs due to unfavorable foreign exchange rates and an increase in the mix of lower margin business, particularly large customers.
Sales for the other businesses, which include Mexico, India, Puerto Rico, China, and Panama, were up 11 percent versus prior year. The sales increase was due primarily to the acquisition of the business in India in June 2009, along with contributions from China and Panama. Mexico represents approximately 50 percent of sales within this group.
Sales in Mexico were down 21 percent in the quarter versus the same period in 2008 due to unfavorable foreign exchange. In local currency, sales in Mexico increased 2 percent for the quarter. Operating losses for other businesses were $2 million for the quarter compared to $3 million a year ago.
Grainger acquires Imperial Supplies
Jack Keough -- Industrial Distribution, 10/14/2009 8:44:48 AM
Grainger, a leading broad line distributor of facilities maintenance products, today announced it has signed and closed an all cash acquisition of Imperial Supplies, LLC from American Capital, Ltd. No other terms of the agreement were disclosed. Grainger anticipates the transaction should be accretive to earnings by $.03-$.05 a share in 2010 including product and transportation cost savings.
Imperial, headquartered in Green Bay, Wisc., is a national distributor of maintenance products and aftermarket components for the vehicle and fleet industry. The company has built its reputation by offering customers highly efficient methods to order and monitor their purchases, serving the fleet market since 1958. In 2008, Imperial had sales of $67 million.
"Imperial Supplies is a leading player in the $4 billion fleet maintenance industry and we are excited to begin working together," said Mike Pulick, President of Grainger's U.S. Businesses. "In addition to the financial benefits for our shareholders, we anticipate cross selling opportunities by offering Imperial customers access to Grainger's broad product offering and national distribution scale and Grainger customers access to the 20,000 fleet maintenance products Imperial carries."
The business will continue to operate as Imperial Supplies, LLC under Grainger's Specialty Brands business and will be led by Rob Gilson, Imperial's CEO. Gilson will report to Ralph Howard, Vice President, Specialty Brands, and together they will leverage Grainger's expertise and resources to profitably grow market share.
"We share common values that focus on serving customers with the utmost integrity," said Gilson. "Going forward, this is a big win for Imperial customers because they have our ongoing commitment to superior service combined with the scale of Grainger's industry leading network."
Grainger, a leading broad line distributor of facilities maintenance products, today announced it has signed and closed an all cash acquisition of Imperial Supplies, LLC from American Capital, Ltd. No other terms of the agreement were disclosed. Grainger anticipates the transaction should be accretive to earnings by $.03-$.05 a share in 2010 including product and transportation cost savings.
Imperial, headquartered in Green Bay, Wisc., is a national distributor of maintenance products and aftermarket components for the vehicle and fleet industry. The company has built its reputation by offering customers highly efficient methods to order and monitor their purchases, serving the fleet market since 1958. In 2008, Imperial had sales of $67 million.
"Imperial Supplies is a leading player in the $4 billion fleet maintenance industry and we are excited to begin working together," said Mike Pulick, President of Grainger's U.S. Businesses. "In addition to the financial benefits for our shareholders, we anticipate cross selling opportunities by offering Imperial customers access to Grainger's broad product offering and national distribution scale and Grainger customers access to the 20,000 fleet maintenance products Imperial carries."
The business will continue to operate as Imperial Supplies, LLC under Grainger's Specialty Brands business and will be led by Rob Gilson, Imperial's CEO. Gilson will report to Ralph Howard, Vice President, Specialty Brands, and together they will leverage Grainger's expertise and resources to profitably grow market share.
"We share common values that focus on serving customers with the utmost integrity," said Gilson. "Going forward, this is a big win for Imperial customers because they have our ongoing commitment to superior service combined with the scale of Grainger's industry leading network."
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