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Specialty Distribution Industry Update Q4 2023

Read more about M&A activity and trends in this sector

Specialty Distribution Industry Update

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U.S. Specialty Distribution Market Insights

The specialty distribution sector continues to be positively impacted by improved U.S. manufacturing activity, improved supply chain conditions and logistics activity, and a sustained increase in onshoring investment.

Current Trending Legend

POSITIVENEUTRALNEGATIVE

Logistics Activity

Current Trending:

  • Logistics Managers’ Index (LMI), which gauges the health of the logistics industry, slightly decreased to 49.4 in Nov-23 
  • The recent dip is attributed to a slowdown in warehousing and transportation utilization
  • Further, decreased inventory levels due to Q4 holiday sales and higher inventory costs contributed to the decline
  • The decline in Nov-23 is anticipated to be seasonal and temporary

Logistics Managers’ Index (LMI)

Manufacturing Activity

Current Trending:

  • U.S. manufacturing activity remained resilient over the last  year on account of new orders and backlog, and decreased prices
  • The ISM Purchasing Mangers’ Index (PMI), which measures the manufacturing sector performance, slightly decreased to 46.7 in Nov-23, though is relative unchanged since Nov-22
  • Stabilization of the PMI indicates positive momentum across  the sector

Purchasing Managers’ Index (PMI)

Onshoring Activity

Current Trending:

  • Onshoring investment is a leading indicator for distribution activity
  • Companies continue to drive onshoring efforts to enhance domestic U.S. production
  • Drivers of growth include supportive government initiatives and incentives (Inflation Reduction Act, CHIPS act, etc.) and uncertainties stemming from geopolitical tensions such as the Russia-Ukraine conflict and U.S.-China trade relations

Job Announcements (Reshoring & FDI)

Specialty Distribution Overview

Specialty distribution industry participants include distributors and suppliers of specialty products and parts covering a variety of end markets. Key public industry players are categorized by sub-sectors as follows:
Sub-sectorMean Public Trading Multiples(1) Description of Business PlatformKey Select Industry Leadership
AutomotiveTEV / LTM Rev: 2.26x
TEV / LTM EBITDA: 13.3x		Omni-channel suppliers of aftermarket parts and accessories
  • AutoZone
  • Dorman Products
  • Genuine Parts Company
  • LKQ Corporation
  • O’ Reilly Automotive
Building ProductsTEV / LTM Rev: 1.17x
TEV / LTM EBITDA: 10.8x		Providers of data, analytics, and business information services
  • Adentra
  • Beacon Roofing Supply
  • Boise Cascade
  • Builders FirstSource
  • CRH
  • Ferguson
  • GMS
  • SiteOne Landscape Supply
Consumer ProductsTEV / LTM Rev: 2.20x
TEV / LTM EBITDA: 15.3x		Distributors of specialty residential products
  • Central Garden & Pet Company
  • Fortune Brands Innovations
  • Pool Corporation
Food ServicesTEV / LTM Rev: 0.45x
TEV / LTM EBITDA: 11.6x		Suppliers of food and non-food products to restaurants, hospitals, and schools and universities
  • Bunzl
  • Performance Food Group
  • SpartanNash
  • Sysco Corporation
  • United Natural Foods
  • US Foods Holding
HealthcareTEV / LTM Rev: 0.50x
TEV / LTM EBITDA: 10.5x		Providers of pharmaceuticals, medical supplies, equipment, and devices
  • AdaptHealth
  • Cardinal Health
  • Cencora
  • Henry Schein
  • McKesson
  • Owens & Minor
  • Patterson Companies
IndustrialTEV / LTM Rev: 1.77x
TEV / LTM EBITDA: 12.3x		B2B distributors of products, equipment, and supplies across a range of industrial applications
  • Applied Industrial Technologies
  • DXP Enterprises
  • Fastenal
  • Global Industrial
  • Kaman Corporation
  • L’Air Liquide
  • MRC Global
  • MSC Industrial Direct 
  • NOV
  • NOW
  • Rexel
  • SPX Technologies
  • W.W. Grainger
  • Watsco
  • WESCO International
Speciality ChemicalTEV / LTM Rev: 3.41x
TEV / LTM EBITDA: 15.7x		Suppliers of smaller volume chemical products used in specialty applications
  • Air Products and Chemicals
  • Brenntag
  • Hawkins
  • IMCD
  • Linde
Source: Market statistics sourced from Capital IQ and based on 12/31/2023 Market statistics sourced from Capital IQ. Industry data sourced from publicly available information

Footnotes

Footnotes:

1. Valuation Multiples represent Enterprise Value to LTM Revenue and LTM EBITDA at 12/31/2023

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below

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Specialty Distribution Industry Update Q4 2023

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