Your AI Startup Lost Money. This Screw Distributor Made Millions.
How a Parts Middleman Crushed the Market While No One Was Watching
The company I’m writing about today isn’t a sexy exciting company that’s developing some new technology or making breakthroughs in the medical field. Many investors might let out a yawn as they scroll past this ticker on any screener or investment article they were reading about this stock. Nevertheless this company provides a vital service for hundreds of businesses across the country. They act as sort of a middle man usually to OEMs, supplying a variety of business’s with small component parts to be used for a variety of manufacturing processes.
The products this company sells are usually too cheap and too various for it to be worth it for a manufacturing company to source these products individually and so the company I’m writing about today does that for them. Oftentimes this company will “Kit” these items, putting several products together in one package to be used simultaneously in a manufacturing process. They do this primarily through a small army of a couple of hundred sales representatives that work with over 10,000 businesses to keep them supplied with the parts they need to keep producing the products they make.
This business has had a long growth story. Their revenue has grown at an average annual rate of 17% since 2015, their operating income has shot from $5.7 million to $32.8 million from 2015 to 2024, and their net income went from $3.7 million in 2015 to $15.0 million in 2024. The company’s net income should actually pop back up into the $21 million range this year as the company had spent a considerable amount of their earning buying their headquarters the year previous. This steady growth over the past decade has led to the company experiencing a $532% increase in their share price during that time frame.