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Distribution Industry News Archives:
News from the week of Sept. 20, 2004

Distribution software reduces operational error
Gojo Industries joins IBC IndustrialSupplyPlus
Airgas reports second quarter sales growth
Barnes Group acquires DE-STA-CO Manufacturing
Applied raises fiscal first quarter guidance
Emerson CEO takes on chairman responsibilities
Brady posts record sales, income in fiscal Q4, 2004

Distribution software reduces operational error
Universal Accounting Software Inc. (UAS), developer of mid-range accounting software for retail, equipment rental and wholesale distribution companies, released its version 9.0 product line.

The new version is integrated with PCCharge Payment Server, payment processing software from Savannah, Ga.-based GO Software Inc.

The integrated system significantly reduces opportunities for operator error. It automatically reads the amount due from Universal Accounting Software’s point-of-sale (POS) and rental operations modules, and users no longer need to manually key in payment amounts.

After beta testing, Universal Accounting Software’s first installation of the PCCharge 5.7 integration was with The New York Police Department’s Equipment Section, a UAS client since 1997.

“We considered many credit card software solutions before selecting PCCharge as the package to integrate with our software,” said Raza Malik, chief technology officer for UAS. “PCCharge met all the criteria that we were searching for: reliability, first and foremost, as well as quick processing speed, easy set-up and affordability for our clients.”

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Gojo Industries joins IBC IndustrialSupplyPlus
IBC added Gojo Industries Inc. as a preferred supplier to the IndustrialSupplyPlus division of IBC.

Gojo manufactures hand hygiene and skin care products for the healthcare, manufacturing, education, food service and automotive markets. Gojo is a privately held company that manufactures Purell, Provon and Gojo brand professional skin care products.

Gojo programs demonstrated improved skin health and well being through proper hand hygiene regimens. For nearly 60 years, this has been the company's focus, especially in environments where workers are increasingly concerned about reducing the spread of germs while improving skin condition.

"Healthcare is on everyone's mind and Gojo provides our membership with an outstanding solution provider to this complex problem," said Rich Poole, vice president of marketing for IBC. "Gojo innovation and product development is just another example on how we help keep our members on the leading edge."

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Airgas reports second quarter sales growth
Airgas Inc. senior vice president and chief financial officer Roger Millay said Airgas is on track to report 8 percent to 10 percent same store sales growth for its second quarter ending Sept. 30. Milay made his report at the Banc of America Securities Conference in San Francisco.

Total same-store sales improved sequentially through the quarter, Millay said. Gas sales improved during the first quarter, but lower-margin product sales continue to lead total growth.

As a result of these sales trends, the company expects second quarter earnings per share to be at the higher end of its previously announced range of 29 cents to 32 cents. The earnings estimate excludes 2 cents to 3 cents of integration expenses, which are mostly comprised of systems-related costs, for the recent acquisition of The BOC Group’s U.S. packaged gas business.

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Barnes Group acquires DE-STA-CO Manufacturing
Barnes Group Inc. acquired DE-STA-CO Manufacturing of Troy, Mich., a designer and manufacturer of reed valves and shock discs. DE-STA-CO was formerly an operating division of Dover Resources Inc., a subsidiary of Dover Corporation.

The acquisition, which closed today, adds approximately $28 million in annualized sales to Barnes Group Inc.'s Associated Spring unit. DE-STA-CO has a total of five manufacturing locations, three in Michigan, and one each in Thailand and the United Kingdom. Barnes Group paid $16.9 million in cash for DE-STA-CO.

"This is a great bolt-on acquisition. DE-STA-CO will lead Associated Spring's expanded presence in the growing reed valve marketplace, while increasing our international manufacturing footprint for these products, including Asia," said Edmund M. Carpenter, president and CEO. "At the same time, DE-STA-CO will bring to Associated Spring industry-leading engineering expertise and a number of proprietary manufacturing capabilities. We believe that this acquisition will be slightly accretive to our 2005 earnings."

Reed valves are custom-engineered critical components used in compressors which are, in turn, used in residential and industrial air conditioning and refrigeration applications, as well as air conditioners in automobiles. Shock discs are spring-like components used in vehicle ride control systems.

"The addition of DE-STA-CO to Associated Spring creates a leading supplier of highly engineered reed valves, and will complement our existing reed valve business in Brazil," said Richard P. McCorry, president of Associated Spring. "We will blend the strengths of both operations, including a broadened product line and deepened engineering resources, to service our global customer base from our combined manufacturing operations worldwide."

"With the DE-STA-CO transaction, Barnes Group has now completed nine acquisitions in the last five years, adding approximately $370 million in sales to our company. We will continue to seek opportunities that will create sustainable, profitable growth and help build lasting value for our stockholders," said Carpenter.

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Applied raises fiscal first quarter guidance
After posting record earnings for its last quarter and 2004 year, Applied Industrial Technologies raised sales and earnings guidance for its fiscal 2005 first quarter, ending Sept. 30, as well as for the fiscal year as a whole.

First quarter sales are now expected to total $409 million to $413 million, an increase of approximately 13 percent to 14 percent over the first quarter of fiscal 2004. The company's previous guidance, issued Aug. 6, estimated first quarter sales would be up by 9 percent to 11 percent.

The company raised earnings expectations for the 2005 first quarter to a range of 60 cents to 70 cents per share. Previous guidance estimated first quarter earnings at 40 cents to 50 cents per share. Current guidance includes expected non-recurring gains of 5 cents per share that were not in the earlier forecast.

For all of fiscal 2005, Applied is now projecting earnings of $2.15 to $2.35 per share on sales between $1.63 billion and $1.66 billion. Previous guidance was earnings of $1.80 to $2 per share on sales between $1.57 billion and $1.61 billion.

"In our initial first quarter forecast, we anticipated a strong sales improvement," said Applied chairman and CEO David L. Pugh. "The actual sales trend accelerated through July and August beyond our expectations. Thus far, September sales appear more in line with our original forecast.

"For the remainder of the year, we expect to see year-over-year sales increases that will moderate compared to our first quarter, but will still provide for healthy earnings increases," he continued. "For our second quarter ending Dec. 31, we expect to see growth between 7 percent to 9 percent from the prior year. Overall sales in our second quarter will be lower than our first quarter due to three fewer selling days. We also expect a somewhat higher level of expense. For our third and fourth quarters, we foresee sales growth of only 5 percent to 8 percent vs. year-ago quarters due to tougher comparisons."

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Emerson CEO takes on chairman responsibilities
Emerson CEO David N. Farr was elected to the additional position of chairman of the board for Emerson. Farr, 49, replaces Charles F. Knight, 68, who served as chairman since 1974.

Knight also announced his retirement from the Emerson board of directors. He was named to the honorary position of chairman emeritus.

"David and his management team have met and overcome significant challenges during the recent global economic downturn," Knight said. "I could not be more proud of their performance and the way in which our succession process has worked."

Farr thanked the board for its confidence and for the additional responsibilities of chairman.

"I am extremely proud of our management team, which has remained intact throughout the transition and has been highly focused and effective over the past four challenging years," Farr said. "We are all committed to building on the momentum the company has created."

Knight joined Emerson in 1972 as vice chairman, and became CEO in 1973 and chairman in 1974. He retired as CEO in 2000. Farr was elected CEO in October 2000 when Knight stepped down from that position. Farr joined Emerson in 1981.

Farr said no additional management changes are expected.

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Brady posts record sales, income in fiscal Q4, 2004
Brady Corp. reported fiscal fourth quarter sales of $185.5 million, up 28 percent from sales of $144.7 million during the fourth quarter of 2003. Net income reached $16.1 million, or 66 cents per share, up from net income of $1.8 million, or 8 cents per share, in the prior-year period.

For all of fiscal 2004, Brady generated sales of $671.2 million, up 21 percent from sales of $554.9 million in 2003. The company saw net income rise 137 percent to $50.9 million, or $2.13 per share, from net income of $21.4 million, or 91 cents per share, in 2003.

"We are increasing our guidance for fiscal 2005 to reflect a continued positive trend in growth in our base business, along with the recent acquisition of ID Technologies," said Brady vice president and chief financial officer David Mathieson. "We now expect fiscal 2005 sales to be in the range of $770 million to $790 million and net income of $59 million to $62 million with earnings per diluted share of $2.41 to $2.53."

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