The American Supply Association’s Quarterly Pulse report shows member distributors held their own despite extremely challenging conditions related to the COVID-19 pandemic.

ASA business intelligence partner Industry Insights, which prepares the Quarterly Pulse for association members, noted the second quarter of 2020 was the first full quarter of operating under the strains of the COVID-19 pandemic. As expected, April was a very challenging month, but as many stay-at-home orders began to be lifted in May and into June, the overall economy started the long road to recovery, Industry Insights added.

With all that transpired in the second quarter, Industry Insights said it is encouraging to see that the Q2 2020 sales vs. Q2 2019 sales change was not worse. While 25% of respondents reported over double-digit sales declines for the second quarter 2020 vs. the second quarter 2019, respondents reported a median decrease of .4.2% and an average decrease of 5.4%.

Respondents reported a median of -0.1% drop in calendar year-to-date sales as of June 30 vs. 2019. For the trailing 12 months, respondents reported median sales growth of 2.0%.

Inventory dropped 2.0% for the Q2 2020 vs. Q2 2019. The median three-month average days sales outstanding dropped to 43.0 days in the second quarter. Industry Insights noted this metric will be critical to monitor over the next quarter as some have already reported receivables increasing.
Margin pressures are beginning to show as 44% of respondents reported declining gross margin percentages for the second quarter 2020 vs. the same timeframe in 2019, with another 24% reporting flat percentages.

More than half of the respondents (52%) report company year-to-date profit before tax declined, but Industry Insights noted it’s encouraging that 40% reported an increase compared to last year.

Staffing levels, Industry Insights added, are fairly mixed with a nearly equal split of one-third reporting having more full-time-equivalent employees vs. a year ago, while 30% report being about the same and 36% report staffing levels as down vs. a year ago.

Industrial pipe, valve and fittings distributors report an average Q2 sales decrease of 14.9% and a median decrease of 11.5% compared to the same timeframe last year. 

Calendar-year-to-date, PVF distributors report a 6.7% average sales decrease, while the median is at -6.0%. Trailing 12-month totals are at 4.7% (average) and 1.8 (median) decreases.

Inventory levels decreased on average by 7.1% for PVF distributors (1.8% median). The median three-month average days sales outstanding was at 47 for Q2 2020 for PVF distributors (median 48 days).