RS GroupRS1

Why is RS Group interesting?

Founded in 1937, Electrocomponents (ECM) is a UK-listed industrial and electronics distributor that provides MRO components, automation and control, and technical electronics products to businesses globally. The company is a high-service distributor that aims to provide value-added service beyond simply selling components that an Arrow Electronics would focus on.

Over the last 10 years, the company has faced gross margin pressure and lower conversion of gross to operating profit that has dampened FCF growth. Lindsley Ruth, ECM's CEO, joined in 2015 and has reorganised the business to focus on value-add services to drive organic growth in addition to multiple acquisitions. ECM has compounded FCF per share at over 10% for 20 years and still has opportunity to expand globally.

ECM is part of our global B2B distributor coverage to understand what drives a sustainable competitive advantage in this business.

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Electrocomponents, RS PRO & B2B Distribution

ARWArrow Electronics RS1RS Group

Executive Bio

Kurt Colehower

Former President at Electrocomponents

Why is this interview interesting?

ECM is facing gross margin pressure as suppliers have more bargaining power and take back ownership of servicing end customer
The broker community is pressuring ECM competitively by sourcing product more efficiently during tight supply
Potential competitive risk if Arrow can find a way to get into high-service distribution
RS Pro has room to expand to 25% of total sales which will drive gross margin

Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

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RS GroupRS1

Why is RS Group interesting?

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