Case Study 2: Industrial distribution · 2 years

EBITDA doubled in two years. Every division moved. Case Overview The company

A multi-division industrial distribution platform — four operating groups, roughly $700 million in revenue at the start of the period. This is a business Bill ran. The results below are his operating record, not an advisory engagement.

The situation

Four divisions, four cultures, four ways of pricing. Margin performance ranged from the high twenties to the low sixties depending on which business you looked at, and nobody could say how much of that spread was structural and how much was simply unmanaged.

Case Study 2: Industrial distribution · 2 years

What We Did .cls-1{fill:#f0bc4c;} Segmentation

The same system, run across all four divisions at once so the comparisons meant something. Segmentation identified the profitable core in each division, on the same basis, for the first time.

.cls-1{fill:#f0bc4c;} Pricing

Discipline was applied wherever margin had drifted — which turned out to be most places. Two-thirds of the total gross margin gain came from simply catching up on pricing that had been left alone for years.

.cls-1{fill:#f0bc4c;} The tail

Quad-based rules stopped the non-core tail from consuming resources the core needed, and the overhead that freed up was reallocated to growth rather than removed. The remaining third of the gross margin gain came from this work.

The result in 2 years​

The number that matters is not the total. It is that all four divisions moved within 50 basis points of each other. A single division improving is a good leader. Four improving together is an operating system.

$70M → $140M

EBITDA

$700M → $950M

Revenue

+600 bps

Gross margin overall

+303 bps

Total margin improvement

+307

Division 1 (bps)

+334

Division 2 (bps)

+339

Division 3 (bps)

+357

Division 4 (bps)

$16.8 million of overhead redeployed to support growth$9 million saved on indirect spend and process improvement$4 million of facility cost removed The pattern $700M → $950M

Revenue scale

2 years

Timeframe

+303 bps total

Margin movement

$70M → $140M

EBITDA movement

Pricing — two-thirds of GM gain

Dominant lever

Pricing is almost always the first and largest lever.
Three-quarters of the year-one gain in the first case. Two-thirds of the gross margin gain in the second. It is the fastest money in the business and it is nearly always sitting there unmanaged.The results scale with time, not with effort.
Twelve months produced 7.6%. Two years doubled EBITDA. Six years quadrupled the business. Same system, different horizons.It works across industries because it is not an industry insight.
Healthcare packaging, industrial distribution, transportation manufacturing. Different products, different customers, same arithmetic. Media Inquiries

For interviews with Bill Canady, expert commentary on profitable growth, private equity value creation, margin expansion, or 80/20 methodology, contact: bill@billcanady.com
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