GPC & Motion Industries Stay On Acquisition Trail, Add OBBCO Safety

Motion Industries will expand further with the addition of Chesapeake, VA-based OBBCO Safety & Supply, a distributor with estimated revenues of about $20 million. It's the latest in a run of acquisitions by Genuine Parts Company across its automotive, industrial and office operations.

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Genuine Parts Company, (GPC), through its distribution arm Motion Industries and other business units, is continuing to grow by acquiring companies.

Paul Donahue, president and CEO of GPC, told analysts Tuesday that the company will acquire OBBCO Safety & Supply, a regional industrial safety products distributor with estimated revenues of about $20 million. The deal is expected to close Aug. 1.

Chesapeake, VA-based OBBCO Safety & Supply provides products from more than 100 safety supply manufacturers, with offerings including a wide range of PPE equipment, as well as hazardous storage units, first aid supplies and gas detection equipment. Founded in 1985, OBBCO will continue to operate under its existing management team.

"This will provide OBBCO with the ability to expand our footprint in the Mid-Atlantic region and beyond, combining over 30 years of safety solution expertise with the national distribution footprint of Motion Industries," OBBCO owner Mike Bryant said.

Through July 1 of this year, GPC has added a number of new businesses across its Automotive, Industrial and Office operations.

“These are excellent strategic fit for us and collectively, we expect these acquisitions to generate approximately $450 million in annual revenues,” Donahue said in an Q2 earnings call.

He said GPC expects to close other acquisitions this year, according to a transcript of the call as provided by Seeking Alpha

The company is targeting bolt-on acquisitions of companies with annual revenues in the $25 million to $150 million range but says it is also open to new, complementary distribution businesses of all sizes.

In the past few months, GPC entered into definitive agreements to acquire Auto-Camping, Ltd., a distributor of original equipment import parts in Canada and select assets within the janitorial and sanitation business of Rochester Midland Corporation. Combined, the two businesses generate approximately $70 million in annual revenues.

“Some of the new  product category focus that we have gotten into in recent years, products like industrial supply, safety supply, material handling equipment, are performing well and are generating increases year-over-year,” Donahue said. “We’re seeing some pressure on the traditional industrial products, hydraulics, bearings, power transmission. But I think that much like our strategy in our Office Products business, as we segue into new categories, growth categories, that's certainly helping our numbers."

Sales for GPC’s second quarter ended June 30 were $3.90 billion compared to $3.94 billion for the same period in 2015. 

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Motion Industries’ sales were down 1.7 percent, for the quarter, including a 3 percent underlying sales decrease and an approximate 0.5 percent currency headwind, offset by a 2 percent benefit from acquisitions. Sales at EIS, its Electrical/Electronic Group, were down approximately 5 percent, including a 1 percent negative impact of copper pricing.

Motion Industries and EIS were Nos. 10 and 23 on Industrial Distribution's 2015 Big 50 List.

Sales for S. P. Richards, GPC’s Office Products Group, were up 1 percent, consisting of a 5 percent contribution from acquisitions offset by a 4 percent underlying sales decrease.

S.P. Richards reported a 1 percent increase in sales for the second quarter, which was driven by a 5 percent contribution from acquisitions, primarily from The Safety Zone, a business that was acquired June 1

The Safety Zone, a direct importer and distributor of supplies and devices for safety, janitorial, medical, food service and food processing applications, is expected to bring in annual revenues of about $180 million.

“We are pleased to report that the integration of this business is progressing very well,” Donahue said.

But the company is lowering its Industrial sales outlook to flat to up 1 percent from the previous plus 1 to 2 percent, and also reduced its Electrical sales outlook to down 2 to 3 percent from the previous up 1 to 2 percent based on the “choppy” business climate.

“We have been operating in this type of difficult and choppy environment since the first quarter of 2015, and we believe we are seeing at least some early signs of a stabilized industrial economy. This would certainly bode well for a stronger cycle ahead,” he said. 

Donahue was named CEO and president of GPC in April.  He has served as president of GPC since 2012 and also was president of the company’s U.S. Automotive Parts Group from 2009 to 2015. He is only the fifth CEO in the 88-year-old history of GPC.

Tom Gallagher, who had been CEO, will remain part of the company by continuing his role as board chairman.

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