Not since Supply House Times introduced the Premier 150 in May 1993 have so many PHCP wholesalers reported sales increases. The 2005 survey found that 93.8% of responding wholesalers enjoyed higher sales in fiscal 2004. More than 95% of wholesalers responding to last year's survey had projected sales growth for fiscal 2004.
In 1993, 77% of companies surveyed said their fiscal 1992 sales were up vs. 1991, and 90% projected 1993 sales would beat 1992.
Since that time (excluding last year), from 70% to 91% of surveyed wholesalers have projected the next year's sales would be higher, but the largest percentage reporting an actual increase was 78.2% in 2001, comparing fiscal 2000 with 1999 sales.
The volume of the total market of PHCP wholesalers in the United States and Canada was estimated at $60.6 billion (U.S.) for fiscal 2004, up 9.5% from $52.5 billion (U.S.), a revised estimate of total sales for 2003. Last year's survey listed $53.8 billion (U.S.) as the volume of the total market of PHCP wholesalers. The updated estimate reflects an adjustment in U.S. Census Bureau figures for “Hardware and Plumbing,” further revised by an industry insider, indicating what percentage of these figures represents the PHCP market excluding the hardware sector.
The estimated sales increase for the total market was quite large and one not seen in any recent era, but unfortunately, it appears that about half or more of the increase resulted from inflation.
One wholesale executive pointed out that the public companies had reported inflation of 7% or more boosting their sales figures. “They had the same unit volume but higher prices and on top of that, market growth,” the executive said. “For many of these companies, the 7% or so inflation raised their sales by percentages in the low- to mid-teens, such as 13%.” That closely matches the results of the Premier 150 survey, which found an average 14% sales increase reported by respondents.
Price levels for piping materials in 2003 and 2004 rose well into double digits for steel, copper and brass, all resins made from oil and/or gas feedstocks, and various formulations of stainless and other high-alloy steels, according to the industry expert. Prices for fixtures and equipment remained relatively stable through 2004 but have started to escalate in 2005, he said.
A Closer Look At SalesSales increases and changes in the wholesalers populating the list resulted in 16 companies moving up 10 spots or more within the rankings of the Premier 150 this year. For fiscal 2003 reported in 2004, 35 companies moved up 10 spots or more.
Total fiscal 2004 sales of $100 million or more were reported by 65 companies in this year's Premier 150, up from 57 for fiscal 2003.
Among the top 50 plumbing and heating companies, 46 had sales increases in fiscal 2004 and 32 of those reported growth in double-digit percentages. Of those, 22 said their sales had risen by 14% or more.
Among the top 50 PVF wholesalers, 45 had sales growth and 34 reported increases in double-digit percentages. Of those, 29 said their sales had risen by 14% or more.
Two companies that just missed the Premier 150 ranking this year were not included in the top 50 PVF wholesaler list accompanying this story. Jabo Supply Co. (No. 152), Huntington, W.Va., would have been No. 42 in the PVF top 50 chart; Omaha, Neb.-based Central States Group (No. 151), would have been ranked No. 47 in the PVF top 50.
Among the top 50 HVACR wholesalers, 44 reported higher sales, and 21 enjoyed increases in double-digit percentages. Of those, 14 said their sales had risen by 14% or more.
The Canadian Institute of Plumbing & Heating reported that Canadian PHCP wholesaler sales grew by 8.9% in 2004. As of October 2004, plumbing sales were up 10%; PVF sales were up an estimated 7%; HVACR sales were up about 6%; hydronics sales had risen 4.9%; and waterworks sales had grown by about 2%, according to CIPH.
Changes To The ListThe number of wholesalers in the Premier 150 with “editor's estimates” of their sales continues to decline. This year sales were estimated for 16 companies, down from 21 estimated last year.
Five companies were removed from the list this year. D.C. Sales, Minneapolis, ranked No. 123 last year; J.O. Galloup, Battle Creek, Mich., ranked No. 106 in 2004; Thornes (Source Atlantic), St. John, New Brunswick, Canada, ranked No. 97 last year; CC Distributors, Corpus Christi, Texas, ranked No. 84 in 2004; and Cal-Steam Wholesale Plumbing Supply, Hayward, Calif., ranked No. 119 last year. Cal-Steam requested its removal; the others had declined to participate in recent years so we had been ranking them based on estimated sales that we were unable to confirm.
This opened the Premier 150 list to some new faces. New this year are Wolseley Canada, Burlington, Ontario, at No. 9; J.D. Daddario Co., Franklin, Mass., at No. 101; Webb Distributors, Glendale, Ariz., at No. 112; Robinson Plumbing & Heating Supply, Fall River, Mass., at No. 134; Monumental Supply, Baltimore, at No. 147; Nu-Way Supply, Utica, Mich., at No. 149; and Eastern Industrial Supplies, Greenville, S.C., at No. 150.
ConsolidationThe year 2004 ended with a flurry of acquisitions. Watsco (No. 5), based in Coconut Grove, Fla., announced in December it had executed a definitive purchase agreement to acquire Durham, N.C.-based East Coast Metal Distributors (No. 29). East Coast operates 24 wholesale locations and three commercial manufacturer representative locations, and serves more than 3,500 air conditioning and heating contractors in North Carolina, South Carolina, Georgia, Virginia and Tennessee. The wholesaler was ranked No. 10 in the top 50 HVACR distributors for fiscal 2004, reported this year. Watsco said that East Coast will retain its present name and management team, operating as a subsidiary of Watsco.
Also in December, Wolseley plc, Reading, England, parent company of Ferguson (No. 1), acquired Parnell-Martin LLC (No. 59), based in Charlotte, N.C. Parnell-Martin distributes plumbing products from 17 locations in Virginia, North Carolina, South Carolina, Georgia and Florida.
Also, Ferguson, Newport News, Va., acquired Record Supply Co., (R Supply) based in Reno, Nev., in December 2004. R Supply, with four locations, distributes plumbing, heating, air conditioning, waterworks, irrigation and industrial tools to customers in Nevada and California. Its president, Bob Edmonds, is remaining with the business as president and general manager.
Other Ferguson acquisitions during 2004 included 13 locations of the Builders Group of Companies, based in Addison, Ill.
Todd Pipe & Supply, Hawthorne, Calif., (No. 21 in 2004 and SUPPLY HOUSE TIMES' 2002 Wholesaler of the Year) was acquired by Hughes Supply (No. 2), Orlando, Fla., in May 2004. The company's eight branches in southern California and single location in Las Vegas now are operating under the Hughes name.
Also in May, Hughes Supply acquired Standard Wholesale Supply Co., a distributor of waterworks, electrical and plumbing products serving the Las Vegas area. Standard also changed its name to Hughes.
In January 2004, Baltimore, Md.-based Northeastern Supply (No.67) said it had completed the acquisition of Wholesale Enterprises in Roanoke and Christiansburg, Va., a distributor of plumbing supplies and heating equipment serving the residential and commercial markets. This expanded to 27 the number of branches Northeastern Supply operates in Maryland, Pennsylvania, Delaware, West Virginia and Virginia.
The possible acquisition of Houston-based Wilson Supply (ranked No. 6), a wholly owned subsidiary of Smith International, by CE Franklin Ltd., based in Calgary, Alberta, Canada, announced in September 2004, was cancelled with the termination of negotiations in April 2005. Smith owns about 55% of the outstanding shares of CE Franklin.
The Granite Group Wholesalers LLC, based in Concord, N.H., acquired County Supply of Lowell, Mass., in February 2004. Ranked No. 54 in this year's Premier 150, the Granite Group has 17 branches serving the New England states and eastern New York. County Supply operates a 40,000-sq.-ft. facility that includes a 6,000-sq.-ft. showroom named Choices.
Supply New England (No. 105), Attleboro, Mass., acquired plumbing and heating wholesaler Charles Manoog Co. of Worcester, Mass., in January 2004.
Another new entry into the Premier 150 is a new entity: Ameripipe Supply, the result of a merger between D-FW Supply Co. of Dallas and PFV Supply Co. of San Antonio, two privately owned wholesale pipe, valves and fittings companies, which was formed in January 2004. Ameripipe is based in Dallas and operates offices and distribution centers in Texas (Austin, Dallas, Houston and San Antonio) and Oklahoma (Oklahoma City).
The industry continues to consolidate. Transactions completed early this year, including WinWholesale's (No. 3) purchase of Noland Co. (No. 12), Newport News, Va., and Hajoca's (No. 4) acquisition of Kelly's Pipe & Supply (No. 103), Las Vegas, will likely have an impact on next year's Premier 150.
Upward Trend ContinuesWholesalers remain optimistic about fiscal 2005, with 94.81% projecting increased sales, compared with 0.74% expecting a decline in sales and 4.44% predicting flat sales.
Interline Brands (No. 10), Jacksonville, Fla., projected an average daily sales rate increase of about 5% to 8% for fiscal 2005, excluding the impact of any potential acquisitions. In a conference call with financial analysts, Mike Grebe, Interline's president/CEO, said that general economic conditions continue to improve and the company is growing sales profitably.
At Hughes Supply (No. 2), Orlando, Fla., Tom Morgan, president and CEO, said in a statement that the wholesaler is entering 2005 “with good momentum” and is encouraged by the strengthening demand in both the commercial construction and the industrial end markets. Residential activity also continues to be very strong in the geographic markets in which Hughes operates. He projected high, single-digit organic sales growth, with some moderation in gross margins from the fiscal year 2005 levels.
“While we expect good organic growth in the [first] quarter and for the year, we do not expect the extraordinary level of growth experienced last year,” Morgan said in a statement. “Gross margin in the first quarter of last year was the highest gross margin in the company's history, as rapidly rising commodity prices and strong demand expanded margins considerably. Accordingly, we expect gross margins to return to a more normal level in the first quarter of  compared to last year's first quarter; however, expenses as a ratio to sales should improve as our level of investment spending begins to moderate.”
Wolseley plc, Reading, England, parent of Newport News, Va.-based Ferguson, said in a statement that it expects U.S. housing demand to remain strong and the commercial sector may improve. The company acknowledged some uncertainty regarding commodity pricing and exchange rates but expressed optimism for the future. Wolseley and Ferguson are committed to the target of achieving double-digit growth in sales and profits, the company said.
As acquisitions, mergers and restructuring continue in the PHCP industry, next year's edition of the Premier 150 should prove an interesting challenge. <<
Sidebar: Sales Breakdown By CategoryIn addition to identifying the top 50 wholesalers in each category, ranked by their sales of plumbing and hydronics, pipe-valves-fittings or HVACR, this year we are sharing the approximate sales figures we collected in total for wholesalers in those categories.
Plumbing & Hydronics.
Fiscal 2004: $13.1 billion sales for all survey respondents;
$11.9 billion for the Top 50.
Fiscal 1994: $5.7 billion for Premier 150 wholesalers.
Fiscal 1993: $3.8 billion for Premier 150 wholesalers.
Fiscal 2004: $9.1 billion sales for all survey respondents;
$8.96 billion for the Top 50.
Fiscal 1994: $3.7 billion for Premier 150 wholesalers.
Fiscal 1993: $2.5 billion for Premier 150 wholesalers.
Fiscal 2004: $8.9 billion sales for all survey respondents;
$7.8 billion for the Top 50.
Fiscal 1994: $5.6 billion for Premier 150 wholesalers.
Fiscal 1993: $4.3 billion for Premier 150 wholesalers.