Insight

Specialty Distribution Sector Update

Specialty Distribution Overview

Global specialty distribution industry participants include distributors and suppliers of various specialty products and parts covering a variety of end-markets. Key public industry players are categorized by sub-sectors as follows:

Sub-Sector	Public Revenue / EBITDA Multiple(1)	Description	Key Select Industry Leadership
Automotive	2.18x / 12.4x	Omni-channel suppliers of aftermarket parts and accessories	AutoZone Dorman Products Genuine Parts Company	LKQ Corporation O’ Reilly Automotive
Building Products	0.75x / 6.0x	Suppliers of products used in residential and commercial construction applications	Beacon Roofing Supply Boise Cascade Builders FirstSource CRH	Ferguson GMS Hardwoods Distribution SiteOneLandscape Supply
Consumer Products	1.50x / 10.0x	Distributors of specialty residential products	Central Garden & Pet Company Fortune Brands Home & Security	Pool Corporation
Food Service	0.43x / 11.9x	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
Healthcare	0.56x / 10.2x	Providers of pharmaceuticals, medical supplies, equipment and devices	AdaptHealth AmeriSourceBergen Cardinal Health Henry Schein	McKesson Owens & Minor Patterson Companies
Industrial	1.31x / 11.6x	B2B distributors of products, equipment, and supplies to a range of industrial applications	Applied Industrial Technologies DXP Enterprises Fastenal Global Industrial Kaman Corporation L’AirLiquide MRC Global MSC Industrial Direct Co.	NOV NOW Rexel SPX Corporation Veritiv Corporation W.W. Grainger Watsco WESCO International
Specialty Chemicals	2.23x / 11.4x	Suppliers of smaller volume chemical formulations used in specific applications	Air Products and Chemicals Brenntag Hawkins	IMCD Linde Univar Solutions

Sector Perspectives: Supply Chain Issues Affecting Specialty Distribution

In September 2022, the ISM Manufacturing Supplier Deliveries Index stood at 52.4%, indicating delays and slowdowns in the supply chain, as a result of continued transportation delays and labor shortages
- This figure measures how quickly shipments are reaching customers. The higher the number, the slower the deliveries

To mitigate the impact of supply chain disruption, distributors such as MRC Global, MSC Industrial, and other major industry players are building inventory buffers to cushion the impact of price increases, long lead times, and lack of product availability
Further, many distributors have relied on technological initiatives to navigate through continued supply chain issues, by adopting systems for logistics planning, inventory management, and general automation
- Per Holden Lewis, CFO of Fastenal Company: “Our market place continues to experience tight supply chains and labor shortages. To address these, we will continue to lean on technology and branch initiatives to improve productivity and an organizational culture that empowers local leaders to sustain high service levels.”
Supplier relationships have been a critical part of managing challenging supply chain dynamics, with companies maintaining constant communication and securing long term agreements, that foster deeper relations with suppliers to ensure timely deliveries and adequate supply

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.