Anixter Buys Tri-Ed

By: John Honovich, Published on Aug 11, 2014

Anixter Security has been struggling in 2014, with revenue actually declining in the most recent quarter. In particular, Anixter has emphasized that they are doing poorly in the low end of the market.

And who better at the low end than Tri-Ed? (besides ADI)

The big news is that Anixter is buying Tri-Ed [link no longer available].

In this note, we breakdown Tri-Ed's financial details, examine the strategic fit and the financial impact of the deal.

******* ******** *** **** struggling ** ****, *********** ******** *********** *** **** ****** quarter. ** **********, ******* has ********** **** **** are ***** ****** ** the *** *** ** the ******.

*** *** ****** ** the *** *** **** Tri-Ed? (******* ***)

*** *** **** ** that ******* ** ****** Tri-Ed [**** ** ****** available].

** **** ****, ** breakdown ***-**'* ********* *******, examine *** ********* *** and *** ********* ****** of *** ****.

[***************]

Price / ****

******* ** ****** $*** million *** ***-**. ****'* actually **** **** ***-**'* annual revenue, ***** *** **** a **** ******* ($*** million).

** ***-** *********** * lot ** ******** ********* but ***** *** ************* is **** ** *** existent, **** ******* ********* an '******** ******' ** 6%. ** ******, **** metric ****** *** ********* things **** ********, ***** and ************ / ************. Factoring **** **, ** is ******** ***-** *** any **** *******, ***** is *** ********** ***** how *********** *** ************ business **.

******* ******** ******** ** larger **** ***-**'*. ** estimate *******'* ****** ******* for ******** ** ** ~$1 billion.

*** *********** ***** ******* is ******* ********** **% in ****.

*******

******* **** **** ***** was * *********** '*******' to *** ***-** **** **** won.

Tri-Ed's ******* *********

*******'* *********** ******* **** ******* ** Tri-Ed's *******:

  • *****: **% / $*** million ** ***-**'* ******* is **** *****
  • *** ***** **% ** Tri-Ed's ******* ** **** everything **** - ******, intrusion, ****, ***. [*** segmented]
  • ** ********: **% / $445 ******* ** ***-** revenue ** **** *** US, ******* **** ******
  • *********** *****: **% / $228 ******* ** ***-**'* overall ******* ** **** the *********** ******, *** rest **** **********
  • ****** ********: **% ** sales **** **** **** branches
  • *** *** ******* ********: 65% ** ***** *** to ******* **** **** 22% ** *********** *** 13% ** ******** ********

*** ****'* *** ***** from *** ****:

Previously ******** ** ****

***-** *** ********* **** over *** ***** ***** ******* ******* ***** Group. *** ***** ***** to ****, ***** ********* of ****** ****** ******** ***-** *** ******** **** video *********** ********. 

Recent *********

***-** ****** *** ********* its ********* ** ****** years, **** ******** ********** regional******** *********** ***** *** ********* **.

Consolidation ******** ************ ** *** **

*** **** ****** **** certainly ** ** *** US, *** **** ****** of **** *******.

** ******** **** ******** they **** ******* *** ~20% ** ******** ******* sales ** *** **. That **** **** **** be **** **********, ** increasing ***** *****. *******, they **** *** ** big ****** ** ********* / ***** *** ******.

***** ************'* ******* ********* to ******** *********** *********** in *** ******** ***, this *********** **** **** them ******** ************, ********* duplicative *********.

*************

******* *** ***-** **** traditionally ******** ** ********* sides ** *** ******, with ******* ***** ******* on *** **** *** IT ****** *** ***-** on *** *** ***.

** ************, ***-** *** ~61 ******** ****** ******* throughout *** ** [**** no ****** *********], **** this *** *********** **:

******

****** ******** ******* ** reach *** ***** *** of *** ******, **** now ***** ******* * retail / ***** ******** throughout *** **, ***** could ** ** ***** even ** *** ****** customers.

*** ** **** ****** to ** ******** / hurt ** **** **** as ** ******* * mega-competitor *** ****.

Comments (28)

Poll:

As an integrator, ADI hasn't competed against us in bids and sales. Anixter has. One of the reasons we don't do business with Anixter. Now this is a reason not to do business with Tri-Ed. The low end may eventually fall to the box stores and online stores while mid to top tier products and installations may keep to the distributors that don't try to pander to the low end market.

While most (all?) respectable manufacturers do not support a direct to end user sales model, there ARE times when it's a logical approach. Using a distributor to pass the blame onto is a convienient work-around.

There is a small but growing segment of usually larger end-users that are 100% capable of being their own "integrator". If you want to maintain a traditional security channel, having a distributor that handles these cases can help you maintain your innocence, so to speak.

Whie most manufacturers will state they don't support this, that isn't always 100% true.

I understand that and can't wholly blame them. Yes, I know there are some very large customers that can handle their own jobs and I can't expect every distributor to be loyal to little 'ole me. But when I keep seeing Anixter on almost every bid, small and large, because they are actively going after it, then that is the bed they make. I'm making no claims on the right or wrong of it except if they try and say one thing and then do another. I.e. the article John referenced above, "Does Anixter Sell Direct To End Users? YES"

I have not seen Anixter generally go that route, especially because they certainly don't have an installation group. When they are bidding against you so regularly what do you think is the rationale? Are these very small jobs where the end user could conceivably do their own install? Are they bidding at a street price or at a dealer price level?

We've already had an extremely in-depth and contentious debate on Anxiter selling to end users.

We are not going to have it here again.

This thread is for discussion of the Anixter / Tri-Ed deal.

...And I have no further wish to go into more detail for our own privacy and agree with John wanting to keep on topic. My comment was only to express our views from a business aspect and what would influence our business relations, and how that would be affected by this aquisition.

What I've seen them do multiple times over the years is: they sell the end user directly providing all the hardware and if the user needs installation, Anixter calls one of their smaller integrators and has them quote the install only. They once asked me to quote like this but they were dictating the hourly rate at about $20.00 below market and if I wanted the work I had to be willing to do at that price. Forget it!!!! If Anixter wanted to truly support the channel, they would work with the end user to win the design, bring the integrator in at the front end and let them quote the entire project to the end user using Anixter as thier supplier. Whats so complicated about that? If the user is doing thier own install, great - the equipment sale should still go through the integrator and then Anixter will have won points with the integrator community, the user will have a capable integrator to call just in case they run into trouble on the install & need assistance and the integrator is positioned with the user to potentially get future business from them on other service or larger install projects.

I voted this as a "good move", but only for a purely tactical reason on Anixter's part.

They didn't need to buy Tri-Ed in order to target the low end of the market. Anixter could have just as easily cut their prices, or utilized Accu-Tech as the budget arm. I think Tri-Ed's holding company wanted to get rid of that business and Anixter snagged them just to keep ADI or someone else from doing so.

I don't see the distribution business having a lot of glamorous future. These days product demand and educated is handlied directly via online marketing. There was a time when a large proportion of distributor sales/order guys were seasoned (at least somewhat) and they would be the best practical outlet for advice on parts and products. These days I don't really see the same thing, you have a lot of people that have never actually worked in any outside capacity and they're regurgitating the same perspective you can get from a manufacturers website.

Distribution outlets are handy for integrators that don't want or need to stock a lot of product and spare parts. But it's silly to think that distributors have a lot of influence in the broader market perspective. Sure they might get lucky and actually drive a project but it's more along the lines of "even a blind squirrel sometimes finds a nut".

This purchase is a good short-term move for Anixter. They'll pick up some business via Tri-Ed, and they'll probably be able to cut a LOT of duplicate jobs and consolidate some offices and locations. But we're not going to see Anixter (or any other similar distributor) suddenly emerge as a force in the industry.

One thing that sticks out to me as telling is the purchase price is less than a single year revenue. ($420M vs $570M)

Just how miserable are profits for security distributors anyway?

Answer: Pretty miserable.

Good surveillance manufacturers typically get 2x or more.

Axis is at 3x, Avigilon 4x, etc.

Not great, I'll tell you that much. It's a cutthroat business with razor thin margins. As Undisclosed A said upthread, eventually the low end is going to be all online and big-box places.

I think that this is a good move for Anixter.

We sell to both distributors and their business model is completely different. I think Anixter has a lot of difficulty with the traditional security dealers because of their lack of showrooms/counter sales and their reliance on phone sales only. This is completely different from Tri-ED/ADI where a dealer can walk in and have a coffee while buying 7 motion detectors, a door contact and a DSC panel.

This provides Anixter with a traditional security distribution presence, one that is firmly ensconced in the mass of dealers selling alarm/access/video.

Long-term, I think that Anixter will run the security business in parallel with their wire-and-cable businesses and not integrate them together at the branch level. I would not be surprised if Anixter folded their security specialists into the Tri-ed mix and renamed the whole thing "Anixter Tri-ed" (until the Tri-ed name disappears completely in a few years).

All-in-all a good move for Anixter and at a good price, too (considering the cost savings they will have once both organizations start cleaning house...)

From what your saying it sounds like almost as good a fit as you can have with two large players in a mature industry.

And though Tri-Ed's business model is much more like ADI than it is Anixter's, we shouldn't automatically assume that an ADI - Tri-Ed deal would provide more value than the Tri-Ed Anixter one. Certainly there could be an easing of price pressure for ADI if they acquired a low-ball competitor, but since they share many of the same customers already, the new customer sales upside is not as great. So it makes sense that Anixter would pay more than ADI would, though if ADI had any idea of the deal, they would have bid just to keep the price as high possible for Anixter.

and renamed the whole thing "Anixter Tri-ed"...

I say no, it invites the rejoinder: " and Fail-ed." Unless of course they also acquired a company named "True". :)

I say no, it invites the rejoinder: " and Fail-ed." Unless of course they also acquired a company named "True". :)

Trunkslammorama.

Funny!

The Tri-Ed in my area is so understaffed compared to ADI, I sure hope they shift some staff from Anixter to Tri-Ed lol

Does the slammer reference pertain to them selling to trunk slammers? I've never used nor heard of them.

Tri-Ed? Yes. I am sure some buy parts from local branches when they need something right away but most real integrators are not depending on Tri-Ed for much more than that.

And Tri-Ed's revenue breakdown (summarized in the above post) supports that.

The best part about this is that Dropcam sold for $130M more. I know that these are two different busniess but that is still cool. I know we make fun of trunckslammers here but they are a healty part of the the ecosystem. Becuase they made security super cheap, that helped mature the industry and create truck slammer manfactures in China that can compete with bid greedy big manfactures.

Yes, Dropcam sold for $130 million more on probably less than 1/10 of Tri-Ed's revenue. Quite a contrast...

What will happen with brand representations overseas from Tri-Ed? Will Anixter be able to sell them in all of their overseas branches?

This is just more uninspiring news from the security industry. The "demand creators" (yeah right) at Anixter join forces with the tired old "box movers" at Tri-Ed...this is so entirely uninteresting to me that I just had to chime in. I'm sure the counter guys at ADI are thrilled though. Um, as thrilled as those guys get, anyway.

I was thinking Security-R-Us would be a good new name.

This best analogy that comes to mind is a large grocery store chain buying a convenience store chain.

Yes, they both sell milk, soda, eggs, chips, diapers, and dog food, but two different strategies and delivery methods.

If you want to buy everything for a large Thanksgiving dinner, you go to the grocery store (Anixter). If you need a loaf of bread in a hurry, go to the corner quickie mart (Tri-Ed).

Typical deal for a maturing industry. Basically they preform no valuable product or service. No local stock. No local service. Once you see a decline on the number of feet on the street, then it will change to a more mfg to integrator modle. Lets ask Lenel how it owrks for them. How the market further fractures will be the telling blow.

Remember plug and play has its down side for integrators. These move are working for the benifit of the end user and mfg. Again this is just my opinion. Look at the consolidation of Camera companies and VMS mfg.

Eventually online purchases will prevail to be the bank for this industry.

We estimate that combined they will account for ~20% of security product sales in the US.

Of product sold thru distribution or overall?

Login to read this IPVM report.
Why do I need to log in?
IPVM conducts unique testing and research funded by member's payments enabling us to offer the most independent, accurate and in-depth information.

Related Reports

The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
OpenALPR Doubles Prices on Jun 06, 2019
There is no 'race to the bottom' in cloud / AI video surveillance. In May, Verkada increased their prices. Now, OpenALPR is doing the same with a...
Axis Will Not Block Resellers on Jun 10, 2019
While Axis generally has strong favorability amongst integrators, the biggest complaint is their channel model, which results in smaller integrator...
Hikvision USA Giving Free Cameras In Biggest Flash Sale on Jun 26, 2019
Hikvision redefined sales promotions in the US video surveillance market, starting at the end of 2015, with across the board discounts. Now,...
Vivotek Revenue Soars on Aug 05, 2019
Vivotek's revenue has soared so far in 2019, growing 45%. Inside this note, we examine import records and see who is driving Vivotek's growth...
Interlogix Shutting Down on Sep 20, 2019
Interlogix is shutting down, as UTC has confirmed to IPVM in a statement about their "plans to wind down" the once leading brand. Inside this...
Resideo CEO To Step Down on Dec 03, 2019
Resideo's CEO, Mike Nefkins, is stepping down, just 18 months after being brought in to lead the now plagued spin-out. Inside this note, we...
Anixter Resisting Takeover From Competitor, Bidding War Emerges, Wesco Wins on Jan 13, 2020
Mega distributor Anixter is going to be acquired but by whom? Initially, Anixter planned to go private, being bought by a private equity firm....
End User Buying Axis At Prices Better Than Axis Gold on Jan 10, 2020
IPVM recently found an integrator contract with an end-user that guaranteed the end user could buy Axis products at a price / discount better than...
Wesco Wins Anixter on Jan 13, 2020
Despite Anixter earlier arguing that Wesco's bid was inferior to CD&R's by nearly 10%, Anixter confirmed that they are taking Wesco's 3.1%...

Most Recent Industry Reports

Every VMS Will Become a VSaaS on Feb 21, 2020
VMS is ending. Soon every VMS will be a VSaaS. Competitive dynamics will be redrawn. What does this mean? VMS Historically...
Video Surveillance 101 Course - Last Chance on Feb 20, 2020
This is the last chance to join IPVM's first Video Surveillance 101 course, designed to help those new to the industry to quickly understand the...
Vulnerability Directory For Access Credentials on Feb 20, 2020
Knowing which access credentials are insecure can be difficult to see, especially because most look and feel the same. Even insecure 125 kHz...
AI/Smart Camera Tutorial on Feb 20, 2020
Cameras with video analytics, sometimes called 'Smart' camera or 'AI' cameras, etc. are one of the most promising growth areas of video...
China Manufacturer Suffers Coronavirus Scare on Feb 20, 2020
Uniview suffered a significant health scare last week after one of its employees reported a fever and initially tested positive for coronavirus....
Cheap Camera Problems at Night on Feb 19, 2020
Cheap cameras generally have problems at night, despite the common perception that integrated IR makes cameras mostly the same, according to new...
Milestone Launches Multiple Cloud Solutions on Feb 18, 2020
Milestone is going to the cloud, becoming one of the last prominent VMSes to do so. Milestone is clearly late but how competitive do these new...
Video Surveillance Architecture 101 on Feb 18, 2020
Video surveillance can be designed and deployed in a number of ways. This 101 examines the most common options and architectures used in...
UK Stands Behind Hikvision But Controversy Continues on Feb 18, 2020
Hikvision is exhibiting at a UK government conference for law enforcement, provoking controversy from the press, politicians, and activists due to...
IronYun AI Analytics Tested on Feb 17, 2020
Taiwan startup IronYun has raised tens of millions for its "mission to be the leading Artificial Intelligence, big data video software as a service...