Our Latest Insights

Distribution Disruption: A Strong Industry Sees Change Ahead

For most industries experiencing strong revenue growth, disruptive change is off the agenda. That’s not the case for distributors, however.

The Harris Williams Specialty Distribution Group recently attended the National Association of Wholesaler-Distributors (NAW) 2019 Executive Summit, and came away with an impression of an industry eager to change things up despite ongoing success.

As Vice President Graham Gillam observes, many in attendance reported strong results in 2018 and aren’t seeing any signs of softness this year. In fact, wholesale distribution generated $5.7 trillion in revenue in 2018, showing the fastest year-over-year growth (7.6%) in more than five years.1

However, as he also notes: “That doesn’t mean there isn’t any trepidation about 2019.”

In particular, says Gillam, attendees expressed a growing awareness of the lateness of the current business cycle, as well as the potential changes wrought by continued and growing uncertainty emanating from Washington.

Read more from this article here.

What We’re Reading

2019 Distribution Insights: When Distribution Threatens…Differentiate!2

"For customers of distributors, the definition of value is fleeting. In the past, it meant simply fulfilling sales orders in a timely fashion, with relationships built on handshakes and trust. Not so in today’s digital realm, with information, resources and tools at customers’ fingertips. Value now means so much more: ease of ordering, efficient processes, immediate delivery; basically, being able to anticipate a customer’s need before they even place the order. Value goes beyond offering products through e-commerce channels. It extends to creating a unique customer experience that sets you, the distributor, apart from competitors."

Read more from this article here.

How Distributors Can Embrace the Adaptive Supply Chain3

"The fundamental outcomes of an adaptive supply chain are improved speed, cost, efficiency and customer experience. In its simplicity, an adaptive supply chain reduces the reaction time for a distributor to respond to market demand and satisfy the end-customer. This supply chain model will require both dynamic adaptability and structural adaptability."

Read more from this article here.

Public Comparables & Trading Valuations

Key Trading Stats

As of March 13, 2019
($ in millions, except per share amounts)

Specialty Distribution Public Comparables4

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Stock Prices

As of March 13, 2019

Trailing Twelve Months Stock Price Performance5

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M&A and Public Market Trends

Distribution Trends

LTM EBITDA as of February 28, 2019

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M&A Trends

Recent M&A And Private Equity Trends6

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  • Deal sizes have been increasing given high competitions for add-ons; median add-on deal size was up more than 157% in 2018 compared to 2017
  • More deals are being priced above 10x than ever before
  • PE backed IPOs make up the lowest proportion of total IPOs in over a decade
  • Number of exits has remained relatively flat versus 1Q 2018

M&A Transactions

Announced M&A Transactions4

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Source: Capital IQ, Modern Distribution Management, Industrial Distribution, NAW, and TEDMagazine.

Economic Update

A Snapshot of Key Economic Indicators

As of March 13, 2019

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Note: A Manufacturing Inventory Index figure greater than 50 indicates expansion;
A Backlog Index figure greater than 50 indicates expansion.

1. NAW 2018 State of the Industry
2. Industrial Distribution
3. Modern Distribution Management
4. Factset
5. FactSet Transcripts
6. Pitchbook
7. United States Census
8. U.S. Federal Reserve

 

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