Airgas generates sales, earnings gain in first quarter
ISMA's New Order Index declines in June
Stanley Works records huge earnings increases
Brady Corp. raises guidance
Top PT distributors use different business models
Noland Co. records increased sales, income
ORS Nasco names VP of supply chain management
Wurth Service Supply generates record Q2 sales
New distributors, manufacturers join PTDA ranks
Wilson helps Smith International to higher sales in Q2
CE Franklin Ltd to purchase Wilson International
AMT predicts North American manufacturing surge
Sales, earnings increase for Cooper Industries

Airgas generates sales, earnings gain in first quarter
Airgas Inc. reported fiscal first quarter 2004 net sales of $544 million, up from net sales of $461.1 million during the first quarter of fiscal 2003. The company reported net earnings of $22.1 million, or 29 cents per share, up from net earnings of $18.5 million, or 25 cents per share, during fiscal Q1 2003.

“We expect to announce the closing of our acquisition of BOC’s U.S. packaged gas business on Friday, July 30, as planned," said Airgas chairman and CEO Peter McCausland. "The growth opportunities associated with this transaction, combined with a stronger industrial economy, gives us a sense of optimism as we move forward. We are on track to meet our full year earnings per share guidance of $1.21 to $1.27. We expect to earn 29 cents to 32 cents in our second quarter, excluding the impact of BOC integration expenses.”

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ISMA's New Order Index declines in June
The Industrial Supply Manufacturers Association's New Order Index slipped to 180.1 in June from 181.9 in May. However, the index is up substantially from 155.7 registered during June of last year.

The Federal Reserve Board's Durable Manufacturers Index held steady at 133.8 in June. Last year, the index registered 123.6.

Durable goods are defined as items with a normal life expectancy of three or more years, such as autos, furniture, appliances and mobile homes.

The Conference Board's U.S. leading index decreased 0.2 percent to 116.2 (1996-100) in June, the first decline since March 2003. Last month's increase was also revised down slightly.

June's weakness was not widespread, and some of the decline was from the average manufacturing workweek, which was most likely the result of many businesses being closed for President Reagan's funeral, according to the Conference Board.

Five of the 10 indicators that make up the leading index increased in June. The positive contributors – beginning with the largest positive contributor – were index of consumer expectations, stock prices, average weekly initial claims for unemployment insurance (inverted), manufacturers’ new orders for nondefense capital goods, and manufacturers’ new orders for consumer goods and materials.

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Stanley Works records huge earnings increases
The Stanley Works reported $794.7 million in sales for the second quarter of 2004, compared to sales of $652.6 million for the same quarter in 2003. The company generated net earnings of $61.4 million, or 73 cents per share, compared to net earnings of $12.4 million, or 14 cents per share, last year.

For the first two quarters of 2004, Stanley posted net sales of $1.6 billion, up from net sales of $1.3 billion in the prior-year period. Net earnings surged to $214.9 million, or $2.57 per share, compared to $31.6 million, or 36 cents per share, last year.

"Our team delivered another solid performance, executing our strategy and serving our customers well," said John F. Lundgren, Stanley Works chairman and CEO. "The company continues to generate double-digit percentage organic sales growth, supplemented with accretive acquisitions. Eight business units -- hand tools, consumer storage, home decor, assembly technologies, hydraulic tools, industrial mechanics tools, fastening systems and security solutions -- had double-digit percentage organic sales increases this quarter."

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Brady Corp. raises guidance
Brady Corp. increased its guidance for fiscal 2005 to $725 million to $745 million in sales with net income of $56 million to $59 million and earnings per share of $2.28 to $2.40.

These estimates include the company's acquisition of Emed Co. in the fiscal 2004 fourth quarter.

"In fiscal 2005, we plan to increase our investment in research and development by focusing on specific programs, which will provide new products and increased capability to support our organic growth plans," said Frank Jaehnert, Brady president and CEO. "We also intend to continue our focus on acquisitions and our cost control efforts, in particular relating to our selling, general and administrative costs."

"Now that we have completed our financing package and finalized the integration and operating plans for Emed, we can better estimate the impact this will have on our results. We expect Emed will add about $55 million in sales with accretion of between 25 cents to 30 cents per share in fiscal 2005," said David Mathieson, Brady vice president and chief financial officer. "In addition, in fiscal '04 we expect Emed to contribute approximately an additional $10 million to our previous top-line guidance of $645 million to $655 million, and we continue to estimate net income of $47 million to $49 million for fiscal '04."

Brady will announce its fiscal 2004 fourth quarter and year-end results Sept. 15.

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Top PT distributors use different business models
Typical PTDA distributors produce adequate profits, while the most successful firms use a business model that produces superior performance, according to the Power Transmission Distributors Association's (PTDA) 2004 PT Distributor Performance Report. Results are based on 2003 data.

With respect to the bottom line, the pre-tax profit margin for typical power transmission/motion control (PT/MC) distributors was 0.8 percent in 2003, compared to 0.6 percent in 2002. Meanwhile, high-profit firms recorded margins of 3.3 percent in 2003, compared to 3 percent in 2002.

Typical and high- profit PT/MC distributors differentiated themselves in terms of sales volume in 2003. While typical PTDA distributors experienced an increase of 3.2 percent in 2003, high- profit distributors reported an 8.1 percent gain in sales growth.

High-profit firms reported a pre-tax return on assets (ROA) of 9.6 percent, while the typical PT/MC distributor reported ROA of only 2.2 percent. Total operating expenses as a percent of net sales was 25.1 percent for high-profit firms, compared to 25.1 percent for typical firms.

The report, conducted annually by PTDA in partnership with an unbiased third-party vendor, is a compilation of operational statistics from 55 PTDA members throughout North America.

This valuable resource examines five-year distributor performance trends in return- on- investment, income statement, gross- margin-related expenses, balance sheet, financial ratios, asset- productivity ratios, growth- and cash-sufficiency ratios, operations profile and employee- productivity ratios.

Data is reported for typical PT/MC distributors and high-profit firms (top 25 percent of firms based on ROA). Data also is reported for five U.S. regions (Eastern, Southern, Midwest, South Central and Western) and Canada, and four sales volume categories, ranging from less than $5 million to $20 million or more. Additional breakouts include MRO emphasis vs. OEM emphasis and product mix (percentage of sales by bearings, power transmission and other).

The report is designed for distributors seeking information to benchmark their company’s performance against that of their competitors, as well as manufacturers looking to obtain insight into the operational and business needs of their distributors.

The report is available for purchase to PTDA members for $169.95, and to non-members for $299.95. For more information, contact PTDA at , or visit the PTDA Web site at www.ptda.org.

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Noland Co. records increased sales, income
Wholesaler-distributor Noland Co. reported second quarter sales of $145.6 million, up from sales of $122.5 million during the second quarter of 2003. Net income reached $7.7 million, or $2.32 per share, up from net income of $2.5 million, or 73 cents per share, during the prior-year period.

For the six months ended June 30, Noland Co. posted sales of $268.4 million, an increase over $232.7 million during the same period in 2003. Net income increased to $9.8 million, or $2.95 per share, compared to net income of $5.9 million, or $1.71 per share, last year.

Chairman Lloyd U. Noland III said the sales increase was fueled by continued strong construction activity and rising prices.

"We also benefited from good weather, in sharp contrast to the record rainfall a year ago that caused construction delays and adversely affected our second quarter 2003 sales," he said.

He added: "Customer orders for future delivery are only modestly higher than a year ago, but the current healthy level of housing construction suggests we will have ample opportunities in the short term."

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ORS Nasco names VP of supply chain management
Wholesaler distributor ORS Nasco added Gary Laudt to the company’s senior management team as vice president of supply chain management.

Laudt brings more than 38 years of experience in the welding business to ORS Nasco where he will be responsible for procurement efforts for the company. These will include the following areas: working capital management, inventory service levels and slow moving inventory disposition. In addition, Laudt will serve on the organization’s senior commercial team providing critical strategic input from his experience in the welding industry.

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Wurth Service Supply generates record Q2 sales
Fastener distributor Wurth Service Supply reported second quarter sales of $26.3 million, an increase of 102.3 percent over second quarter 2003 sales of $13 million.

The company’s six-month sales were $47.1 million, a 77.7 percent increase vs. sales of $26.5 million in the prior-year period. The first half of 2004 was exciting and the expectations for the second half of 2004 is continued record sales growth.

Marc Strandquist, president and CEO, was pleased with the company’s performance and credits its employees as the primary driver to this years improved results.

Wurth Service Supply was founded in 1948 and is a member of the Kunzelsau, Germany-based Wurth Group, which has more than 40,000 employees in 80 countries. Wurth Service Supply is headquartered in Indianapolis and has more than 28 service centers located throughout the U.S., Canada and Mexico.

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New distributors, manufacturers join PTDA ranks
The Power Transmission Distributors Association (PTDA) formally welcomed four new distributors to its membership roster. 

G&H Industrial Bearing Supply of Jackson, Tenn.; Kurz Electric Solutions of Kimberly, Wis.; Standard Bearings Co. of Cedar Rapids in Des Moines, Iowa; and SunSource Inc. of Addison, Ill., joined the association during the second quarter of 2004.

PTDA provides distributor members:
• solutions to grow their business;
• solutions to improve net profitability;
• solutions to strengthen business relationships;
• solutions to apply plant floor technologies; and,
• access to industry trends.

Also in the second quarter, the association welcomed two new manufacturer members, KWS Manufacturing Company Ltd. of Burleson, Texas, and Quantum Marketing Inc. of Lakeland, Fla.

PTDA offers manufacturer members:
• solutions to expand networks;
• solutions to strengthen business relationships;
• solutions to proactively shape the industry’s future;
• access to industry trends; and,
• a strong voice for manufacturers.

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Wilson helps Smith International to higher sales in Q2
Smith International's Wilson distribution business reported second quarter revenues of $276.6 million, up from revenues of $218.5 million during the second quarter of last year. The distribution business unit generated operating income of $6.5 million, up from a $478,000 loss during the prior-year period.

Wilson reported six-month revenues of $538.9 million, compared to $423.8 million the year before. Operating income reached $9.5 million on a six-month basis, compared to a net loss of $4.6 million a year ago.

As a whole, Smith International recorded revenues of $1.1 billion during the second quarter, compared to $877.7 million during the same quarter last year. Net income reached $27.4 million, or 27 cents per share, down from net income of $29.9 million, or 30 cents per share, last year.

For the first two quarters of the year, the company posted revenues of $2.1 billion, up from revenues of $1.7 billion last year. Net income reached $72.3 million, or 70 cents per share, vs. net income of $50.5 million, or 50 cents per share, during the prior-year period.

“We’re pleased with the results for the quarter influenced, in part, by a significant improvement in our U.S. distribution operations," said Loren Carroll, Smith International executive vice president.

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CE Franklin Ltd to purchase Wilson International
CE Franklin Ltd. will acquire the Wilson International business of Smith International Inc. in exchange for common shares of CE Franklin issued from treasury. CE Franklin, which is based in Calgary, Alberta, will issue shares with an estimated value of between $245 million and $250 million.

The transaction is expected to close on or about Sept. 30.

Houston-based Wilson is a distributor of pipe, valves, fittings and mill, safety and other maintenance products to energy and industrial markets through an extensive network of supply branches in the United States and internationally.

Wilson generated sales of $730.4 million in 2003. If combined, sales of CE Franklin and Wilson for the 12 months ended March 31, 2004, would have approached $1 billion.

"The transaction will create a leading North American distributor of products and services to energy and industrial markets, and would provide a solid platform for international revenue growth," said Michael West, president and CEO of CE Franklin, who will manage the combined entity. "The combination and integration of the extensive distribution networks and talented employees of both companies would present a number of opportunities to improve efficiency and enhance our product offering, thereby creating value for all of our key stakeholders: customers, employees vendors and shareholders."

He added: "CE Franklin and Wilson have been successful in joint marketing initiatives in the past, most recently winning a major North America maintenance, repair and operating supply agreement with a North American exploration and production company and is expected to generate annual revenue of $15 million in Canada and $15 million in the U.S."

Smith would own approximately 90 percent of the common shares of CE Franklin as a result of the transaction. Smith advised CE Franklin its intent is to reduce their ownership interest to the 55 percent level held today, the timing of which will be dependent on the market conditions and other factors.

The transaction is subject to negotiation of a definitive agreement, applicable regulatory approvals and approval of a majority of CE Franklin shareholders (excluding Smith) at a meeting to be held in September 2004.

“After several quarters of steadily improving distribution results, including the second quarter of 2004, we felt that now is the time to combine these two businesses into a single publicly-traded entity," said Doug Rock, chairman and CEO of Smith International. "The improved operational and financial profile of the new company will enable Wilson to accelerate revenue and earnings growth both organically and by acquisition.”

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AMT predicts North American manufacturing surge
A combination of external forces will place domestic manufacturers in a position to bid competitively against manufacturers overseas for contracts, according to John B. Byrd III, president of the Association for Manufacturing Technology (AMT).

Byrd predicts this will result in a major upswing in North American manufacturing production within the next 12 months.

Rising international shipping rates, continually improving North American productivity, changes in currency values and the escalating demand for raw materials will result in a restructured international manufacturing landscape.

While some pundits predict more outsourcing of manufacturing, indisputable factual evidence points in the opposite direction, said Byrd.

"Shipping costs and the availability of affordable raw materials will reduce the ability of overseas manufacturers to continue domination of U.S. and European manufacturing in many categories," said Byrd. "As these market forces converge, they will create upheaval in the international manufacturing sector. The result of which will be a boom in the North American manufacturing sector unlike anything we have seen in the last quarter century."

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Sales, earnings increase for Cooper Industries 
Cooper Industries' Tools and Hardware segment finished the second quarter with revenues of $180.4 million, compared to revenues of $171.9 million during the same period a year ago. Operating earnings increased to $12.6 million, compared to $7 million last year.

For the six months ended June 30, the Tools and Hardware segment reported revenues of $354.3 million, compared to $325.5 million in 2003. Segment operating earnings increased to $24.4 million from $13.5 million last year.

As a whole, Copper Industries saw second quarter net revenues grow to $1.1 billion from $1 billion last year. Net income was $83.9 million, or 89 cents per share, in the quarter, vs. $72.4 million, or 78 cents per share, last year.

For the six-month period, revenues equaled $2.2 billion, up from $2 billion the year before. Net income rose to $161.6 million, or $1.70 per share, compared to $129 million, or $1.39 per share.

"We are encouraged by the improvement that we have seen in several of our key market sectors," said H. John Riley Jr., Cooper Industries chairman, president and CEO. "That said, over the first half of 2004, we, like others, have experienced commodity price pressures. While we expect this pressure to continue, we are confident that our actions to increase prices and accelerate cost control and productivity programs will mitigate most of the impact of these rising costs. Consequently, we are raising our outlook for 2004 earnings to a range of $3.40 to $3.55 per share."

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