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Distribution Industry News Archives:
News from the week of Aug. 2, 2004

Factory orders increase in June
Airgas elects Richard Ill to board of directors
Aperum adds new partners to reseller channel
Kaman's industrial distribution segment performs well in Q2
Emerson sees sales increase in fiscal third quarter
Institute for Supply Management's PMI increases in July
Construction spending dips in June
PTDA releases membership directory
Parker Hannifin reports record sales in fiscal 2004
Kennametal posts fiscal Q4, full-year gains

Factory orders increase in June
New orders for manufactured goods increased $2.7 billion, or 0.7 percent, in June to $363.2 billion, according to the Commerce Department. This followed a 0.4 percent increase in May.

New orders for manufactured durable goods increased $1.8 billion, or 0.9 percent, in June to $192 billion, revised upward from the previously published $1.4 billion increase.

Durable goods are costly manufactured products designed to last three or more years.

Transportation equipment, up three of the last five months, had the largest increase, $2.4 billion, or 4.4 percent, to $55.7 billion. This was due in large part to defense aircraft and parts, which increased $2.2 billion. Fabricated metal products increased $800 million, or 3.4 percent, to $23.3 billion.

“Today’s report buttresses other recent indicators, as well as the general mood of our membership, that the manufacturing recovery remains on-track,” said National Association of Manufacturers executive vice president Michael Baroody. “This should offer some solace to those who fear that our economy is losing steam.”

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Airgas elects Richard Ill to board of directors
Airgas Inc. elected Richard C. Ill to a three-year term on its board of directors to fill the position previously held by Frank B. Foster, III, who reached the mandatory retirement age. Ill’s term began with the completion of Airgas’ annual meeting and will expire after the 2007 annual meeting.

“Rick Ill will offer another strong, independent voice on our board and I look forward to his contributions in the coming years,” said Airgas chairman and CEO Peter McCausland. “I also want to thank Frank Foster for his 18 years of service to Airgas. He has been a valued voice on our board.”

Ill has been president and CEO of Triumph Group Inc., a company that designs, manufactures, repairs and overhauls aircraft and industrial gas turbine components, since 1993. In addition to serving as a director of Triumph, he also serves as a director of P.H. Glatfelter Co. and is a member of the board of governors of the Aerospace Industry Association and the advisory board of Outward Bound, USA.

“Rick deals with CEO challenges every day and will be a great resource for Airgas and me personally," said McCausland. "His acquisition experience will also be very helpful. We welcome Rick to the Airgas board of directors.”

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Aperum adds new partners to reseller channel
Distribution software provider Aperum added four new solution partners as part of the ongoing expansion of its national reseller channel.

Aperum's new solution partners include:
• asplus, based in San Jose, Calif.;
• Tuttle Sullivan, based in Houston;
• ETA, based in Petaluma, Calif.; and,
• J.W. Wise Associates based in Atlanta.

All four of the new solution partners will be selling and supporting Aperum's TakeStock software.

"Our strategy of growth through broadening our reseller channel is further validated by the addition of these distinguished organizations," said Randy Keith, president of Aperum. "Each of these companies brings proven business success, technical expertise and quality customer service to the partnership."

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Kaman's industrial distribution segment performs well in Q2
Kaman Industrial Technologies Corp. reported second quarter sales of $145.3 million, compared to sales of $121.8 million during the second quarter of last year. Operating profit reached $5.8 million, up from $3.4 million the previous year.

For the first half of the year, Kaman Industrial Technologies reported sales of $290.9 million, up from sales of $242.1 million a year ago. The Kaman Corp. segment had operating profits of $10.8 million, compared to $6.2 million in the same period in 2003.

"The industrial distribution segment performed as expected in an improving market, taking advantage of better conditions and competitive successes to produce strong results for the quarter and six month periods," said Kaman chairman, president and CEO Paul R. Kuhn. "With the industrial production and capacity utilization indexes both indicating long-awaited vitality in the national economy, Kaman's customer base is benefiting with the result that sales increased to both MRO and OEM customer groups."

Kuhn said a significant focus for the company was to increase penetration of the national account market. During the quarter, Kaman Industrial Technologies signed national account agreements with Tyco International (US) Inc. and Cadbury Schweppes' U.S. affiliates, which include Mott's LLP, Dr. Pepper/Seven Up Inc., Snapple Beverage Corp., and Cadbury Adams LLC.

"The company was also named a national distributor for the full line of IMI Norgren Inc.'s fluid power products, providing Kaman a major line to sell through its entire U.S. branch network," said Kuhn. "This addition to the catalog meaningfully broadens Kaman's product offerings in this important market sector."

Rising energy and steel prices have been a national concern, and the company is monitoring the impact that rising prices could have on its customer base and business, said Kuhn.

"To date, we have been successful working with both customers and suppliers to minimize the impact on our margins," he said.

As a whole, Kaman reported second quarter net sales of $247.2 million, up from net sales of $216.3 million in the prior-year period. The company posted a second quarter net loss of $1.8 million, or 8 cents per share, down from net earnings of $3.3 million, or 15 cents per share, during the same quarter last year.

For the first two quarters of the year, Kaman generated net sales of $492.8 million, up from net sales of $432.3 million during the same period last year. The company reported a net loss of $544,000, or 2 cents per share, compared to net earnings of $17.3 million, or 75 cents per share, last year.

"During the last several years, a period of recession that affected all of Kaman's businesses, there has been a company-wide focus on reducing costs and leaning the organization with the intent of posturing for a recovery," said Kuhn. "Now that the recovery is underway, the difficult actions that were taken are beginning to provide the anticipated payback."

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Emerson sees sales increase in fiscal third quarter
Emerson announced fiscal third quarter 2004 sales of $4 billion, an increase of 13 percent over net sales of $3.6 billion during the third quarter of 2003. Net earnings for the period were $341 million, or 81 cents per share, compared to net earnings of $360 million, or 85 cents per share, during Q3 2003.

For the first three quarters of 2004, Emerson generated net sales of $11.5 billion, up 12 percent vs. net sales of $10.3 billion during the prior-year period. Net earnings for the first nine months reached $903 million, or $2.14 per share, up from net earnings of $813 million, or $1.93 per share, last year.

Emerson's appliance and tools segment reported third quarter sales of $955 million, up from sales of $869 million during the previous year. Earnings for the segment reached $137 million, up from earnings of $115 million during Q3 2003.

The appliance and tools segment generated nine-month sales of $2.8 billion, up from $2.6 billion during the prior-year period. The segment reported earnings of $399 million during the first three quarters of 2004, compared to earnings of $354 last year.

“This was an outstanding quarter, with strong performance across all businesses and all geographies,” said Emerson CEO David N. Farr. “Emerson continued to outperform the competition with 13 percent sales growth, driven by the combination of strong market demand and the success of our growth initiatives."

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Institute for Supply Management's PMI increases in July
Economic activity in the manufacturing sector grew in July for the 14th consecutive month, while the overall economy grew for the 33rd consecutive month, according to the Manufacturing Report On Business from the Institute for Supply Management (ISM).

"The manufacturing sector continues to grow at a rapid rate as the PMI has now been above 60 percent for nine consecutive months," said Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. "This is the longest period of growth above 60 percent since the 12-month period of July 1972 through June 1973, when the index was over 60 percent each month and reached a high of 72.1 percent in January 1973."

The PMI indicates the manufacturing economy grew in July for the 14th consecutive month. The PMI for July registered 62 percent, an increase of 0.9 percentage point compared to the June reading of 61.1 percent.

Comments from respondents indicate that many consider their business to be "strong" with a number indicating significant year-over-year improvement. Others continue to indicate only minor improvement.

Energy prices remain a major concern for purchasers, as prices are at or near record highs. It appears the steel supply situation improved as there are fewer mentions of shortages.

"July represents a good start for the third quarter, and the outlook continues to be very encouraging as new orders and production accelerated during the month," said Ore.

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Construction spending dips in June
Construction spending fell 0.3 percent in June to a seasonally adjusted annual rate of $985.2 billion, down from the revised May estimate of $987.8 billion, according to the Commerce Department.

The June figure is 8.6 percent above the June 2003 estimate of $906.8 billion.

During the first six months of the year, construction spending amounted to $458.6 billion, 8.9 percent above the $421.2 billion for the same period in 2003.

Spending on total commercial construction reached a seasonally adjusted annual rate of $64.7 billion in June, up from $63.7 billion during May and up from $64.1 billion during June of last year.

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PTDA releases membership directory
The Power Transmission Distributors Association recently released the its 2004-2005 Membership Directory.

The 2004-2005 Membership Directory is an excellent resource for locating providers of all types of power transmission/motion control (PT/MC) systems, products and support.

The directory is updated annually to include the most recent contact information for PTDA’s almost 220 distributor members and almost 190 manufacturers of PT/MC products. The compact and easy-to-use format includes fold-out tabs to allow quick access to the three major sections.

A comprehensive alphabetical distributor listing including complete address, phone, fax, e-mail and Web site; top executive contacts; number and location of branches; manufacturers' lines represented by the firm; and an alphabetical index of distributor members.

The directory also includes manufacturer’s section including complete address, phone, fax, e-mail and Web site; top-level management contacts; product categories the firm manufactures; and a quick-reference index of manufacturers by product.

Also included in the directory is an associate member listing with complete contact information and company description; overviews of PTDA, the PTDA Educational & Scholastic Foundation; phone and e-mail contact information for key executives and PTDA volunteer leaders; and an advertiser index.

The 2004-2005 Membership Directory is available to PTDA members for only $25 per copy, and to non-members for $250 per copy. The directory is also available on diskette or via e-mail in Microsoft Excel or ASCII, comma-delimited format or in a format suitable for importing into Microsoft Outlook or another contact management database ($90 for members, not available to non-members).

The directory may be ordered by contacting PTDA at , or by visiting PTDA’s online shopping cart at www.ptda.org/catalog.

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Parker Hannifin reports record sales in fiscal 2004
Parker Hannifin Corp. generated fiscal fourth quarter sales of $2 billion, up from sales of $1.7 billion during its fiscal fourth quarter of 2003. The company reported net income of $125.5 million, or $1.05 per share, during Q4, up from net income of $49.1 million, or 42 cents per share, the year before.

For its entire fiscal year, Parker Hannifin posted sales of $7.1 billion, up from sales of $6.4 billion in fiscal 2003. Full-year net income reached $345.8 million ,or $2.91 per share, an increase over $196.3 million, or $1.68 per share, during fiscal 2003.

"With the broad-based recovery of all our industrial markets, and aerospace at the beginning of a rebound, our growth engine is firing on all cylinders," said Parker CEO Don Washkewicz. "The recovery didn't really start to pick up until January, so we've only had the wind at our backs for half a year. Yet our margins are up dramatically, inventories remain lean and cash flow has never been stronger. We are executing our Win Strategy, and as long as this recovery is sustained, we see a lot more growth potential in our business."

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Kennametal posts fiscal Q4, full-year gains
Kennametal Inc. reported fiscal fourth quarter sales of $541.9 million, an increase over sales of $463.8 million during the same quarter last year. The company generated net income of $29.9 million, or 81 cents per share, during the fourth quarter, up from a net loss of $4.9 million, or 14 cents per share, during Q4 2003.

For the full year, Kennametal posted sales of $2 billion, up from sales of $1.8 billion during fiscal 2003. Net income reached $73.6 million, or $2.02 per share, during fiscal 2004, an increase over net income of $18.1 million, or 51 cents per share, the year before.

"We were very pleased with our performance in fiscal 2004, and the outlook for our end markets remains good," said Kennametal chairman, president and CEO Markos I. Tambakeras. "We will remain focused on growing market share and offsetting challenges such as high raw material costs by consistently finding new ways to add value for our customers and to continue to benefit from the skills and commitment of our employees."

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