Napa Auto Parts 2015 Annual Report Download - page 12

Effective February 1, 2015, Motion expanded its product and service offering in Alaska with the acquisition
of Oil & Gas Supply, located in Anchorage, Alaska. We expect this business to generate $2-3 million in annual
revenues.
Effective February 2, 2015, Motion acquired Miller Bearings, a regional industrial distributor of bearings,
power transmission products, industrial and safety supplies, hydraulic and pneumatic components. Headquartered
in Orlando, Florida, Miller operates 17 branch locations throughout the state and one distribution center. In addi-
tion, Miller has an export office providing industrial MRO products to Puerto Rico, the Dominican Republic and
other Caribbean customers. Miller generates approximately $40 million in annual revenues and is operated as
Miller Industrial Solutions, a division of Motion Industries.
In 2015, the Industrial Parts Group also acquired Lake Erie Abrasive and Tool (“LEAT”) and Moss Rubber.
LEAT was acquired on September 1, 2015, and is a distributor of abrasive tooling for the manufacturing
industry. Moss Rubber was acquired December 1, 2015, and is a distributor of industrial rubber products includ-
ing hose, belting, fittings and related products. LEAT and Moss Rubber are expected to generate annual revenues
of approximately $30 million and $8 million, respectively.
The Industrial Parts Group provides customers with supply chain efficiencies achieved through the compa-
ny’s Inventory Management Solutions offering. This service provides inventory management, asset repair and
tracking, vendor managed inventory commonly referred to as VMI, as well as RFID asset management of the
customer’s inventory. Motion’s Energy Services Team routinely performs in-plant surveys and assessments,
helping customers reduce their energy consumption and finding opportunities for improved sustainability, ulti-
mately helping customers operate more profitably. Motion also provides a wide range of services and repairs
such as: gearbox and fluid power assembly repair, process pump assembly and repair, hydraulic drive shaft
repair, electrical panel assembly and repair, hose and gasket manufacture and assembly, as well as many other
value-added services. A highly developed supply chain with vendor partnerships and connectivity are enhanced
by Motion’s leading e-business capabilities, such as MiSupplierConnect, which provides integration between the
Company’s information technology network and suppliers’ systems, creating numerous benefits for both the
supplier and customer. These services and supply chain efficiencies assist Motion in meeting the cost savings
that many of its customers require and expect.
Distribution System. In North America, the Industrial Parts Group operated 533 branches, 15 distribution
centers and 46 service centers as of December 31, 2015. The distribution centers stock and distribute more than
260,000 different items purchased from more than 1,025 different suppliers. The service centers provide
hydraulic, hose and mechanical repairs for customers. Approximately 33% of 2015 total industrial product pur-
chases were made from 10 major suppliers. Sales are generated from the Industrial Parts Group’s branches
located in 49 states, Puerto Rico, nine provinces in Canada, and Mexico. Each branch has warehouse facilities
that stock significant amounts of inventory representative of the products used by customers in the respective
market area served.
Products. The Industrial Parts Group distributes a wide variety of parts and products to its customers,
which are primarily industrial concerns. Products include such items as hoses, belts, bearings, pulleys, pumps,
valves, chains, gears, sprockets, speed reducers, electric motors, and industrial supplies. In recent years, Motion
expanded its offering to include systems and automation products in response to the increasing sophistication of
motion control and process automation for full systems integration of plant equipment. Manufacturing trends and
government policies have led to opportunities in the “green” and energy-efficient product markets, focusing on
product offerings such as energy-efficient motors and drives, recyclable and environmentally friendly parts and
supplies. The nature of this group’s business demands the maintenance of adequate inventories and the ability to
promptly meet demanding delivery requirements. Virtually all of the products distributed are installed by the
customer or used in plant and facility maintenance activities. Most orders are filled immediately from existing
stock and deliveries are normally made within 24 hours of receipt of order. The majority of all sales are on open
account. Motion has ongoing purchase agreements with existing customers that represent approximately 50% of
the annual sales volume.
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