The volume of the total market of PHCP wholesalers in the United States and Canada was estimated at $65.92 billion (U.S.) for fiscal year 2005, up 8.8% from $60.6 billion (U.S.) in 2004.
Much of the sales gain was a function of higher prices, according to an industry insider. Inflation boosted the prices of copper tube and plastic pipe in particular. The Producer Price Index compiled by the U.S. Bureau of Labor Statistics revealed that the selling price for copper and copper alloy tube rose by 35.6% between December 2004 and December 2005; the selling price for plastic pipe and fittings jumped 48.3% in that same period. The Producer Price Index is the price at which a commodity or product is sold at its first sale. This refers to the first sale after it has been manufactured, mined, refined or produced.
Inflation also helped in the plumbing category, although not so dramatically.
Prices were up 4.3% for both vitreous china fixtures and fixture fittings and trim in December 2005 vs. December 2004, according to the Producer Price Index.
Moving On UpJust like last year, 16 PHCP wholesale firms moved up 10 or more spots in this year's Premier 150 listing. Four companies moved up 20 or more spots in the ranking: Industrial Piping Specialists, Tulsa, OK; Ameripipe Supply, Dallas, TX; Dealers Supply Co., Forest Park, GA; and Aces A/C Supply, Houston, TX.
A few more companies joined the ranks of the $100 million-plus organizations. This year 67 of the Premier 150 wholesalers reported sales of $100 million or higher, vs. 65 last year.
The top 10 companies listed in the Premier 150 accounted for 58.3% of the sales reported by all 150 firms.
“There will always be a place for the independent wholesaler,” said the president of one of the Premier 150 companies. While his company does not fall within the category he described, he pointed out that wholesalers with sales ranging from $5 million to $10 million are increasing at a faster rate than mid-size wholesalers, who are becoming fewer in numbers. Some of these smaller wholesale firms are being opened by former big-box employees.
“If your sales are under $15 million, you can do a lot more and be more flexible,” he said.
Consolidation Hits The GiantsAs in past years, Newport News, VA-based Ferguson and Orlando, FL-based Hughes Supply competed for the top spot in the Premier 150. The big news at Hughes was reported in February 2006, when big-box giant The Home Depot announced it would acquire Hughes Supply and operate it as part of The Home Depot Supply, its division that serves business-to-business customers such as homebuilders, professional contractors, municipalities and maintenance professionals. Hughes had been No. 2 in the Premier 150 ranking since 2002; prior to that, the wholesaler had occupied the No. 1 position since 1998. The acquisition was completed in the first quarter of 2006, so Hughes reported its results for 2005 as Hughes Supply.
Another force in the PHCP wholesaling industry, Noland Co., which like Ferguson is based in Newport News, VA, is missing from the Premier 150 list this year following its acquisition by WinWholesale, Dayton, OH, in April 2005. The inclusion of Noland's sales made WinWholesale an even more powerful No. 3 in the Premier 150 list.
Kelly's Pipe & Supply, Las Vegas, No. 103 in the 2005 Premier 150, was not included in this year's edition following its acquisition by Hajoca Corp., Ardmore, PA, reported in May 2005.
East Coast Metal Distributors, Durham, NC, was acquired by Watsco, based in Coconut Grove, FL. Watsco announced its intentions in December 2004, and they were reported in January 2005 SUPPLY HOUSE TIMES. East Coast Metal Distributors, No. 29 in the 2005 Premier 150 (based on 2004 sales results) and No. 10 in the top 50 HVACR distributors, was removed from the list this year.
Other companies that are not on this year's list:
- Parnell-Martin Cos. LLC, Charlotte, NC, ranked at No. 59 in the 2005 Premier 150, was acquired by Wolseley plc, Reading, England, parent company of Ferguson (reported in February 2005).
- Frischkorn, Richmond, VA, ranked No. 75 in the 2005 Premier 150, was acquired by Newport News, VA-based Ferguson at the end of November 2005 (reported in December) and declined to participate in this year's Premier 150.
- Bardon Supplies Ltd., Belleville, Ontario, Canada, ranked No. 77 in the 2005 Premier 150, was acquired by Groupe Deschenes, Montreal, Quebec, Canada, (reported in July 2005). Groupe Deschenes was ranked No. 20 in 2005 and moved up to No. 18 in the 2006 list.
- SPS Co., Minneapolis, ranked No. 93 in the 2005 Premier 150, when contacted for this year's edition, asked to be removed from the list.
- Bell Pump Co./Simons Co., Hartford, CT, ranked No. 94 in the 2005 listing, also requested that it be deleted from the 2006 Premier 150 list.
- J.D. Daddario Co., Franklin, MA, which made its debut in the 2005 Premier 150 list at No. 101, was removed from the list this year following its acquisition by Ferguson early in 2005.
- Webb Distributors, Glendale, AZ, which joined the Premier 150 list in 2005 as No. 112, was not included in this year's listing due to its acquisition by Ferguson. Air Cold Supply, a Ferguson enterprise, and Webb Distributors, a family-owned business, combined forces in Arizona and California in July 2005, creating nearly 50 locations in the region. Air Cold Supply had been acquired by Ferguson as part of the Westburne Co. acquisition in 2002. Webb Distributors began operations in 1959 under the name of Baseline Trading Center. The company was split into two divisions in 1984, with the wholesale side of the business taking the name, Webb Distributors.
Other ChangesStill on the list, but estimated this year, and possibly off the list next year: Able Distributing Co., based in Wausau, WI and Phoenix, AZ, ranked No. 60 in the 2005 Premier 150, was acquired by Ardmore, PA-based Hajoca Corp. (reported in November 2005). Based on our estimates of its performance in 2005, Able ranked at No. 55 in the 2006 listing.
Also still on the list is Emco Ltd., London, Ontario, Canada, which is now owned by Hajoca but according to trade sources, operates and reports independently. Emco was listed at No. 8 in the 2005 Premier 150 and based on industry estimates for fiscal 2005, was ranked at No. 9 in the 2006 list.
New FacesThree companies were inadvertently left out of the 2005 Premier 150 listing: Pacific Plumbing Supply Co. LLC, Seattle, which would have ranked at about No. 97 and reported 90% of its sales in plumbing, 10% hydronics. This year the company ranked at No. 95 and reported the same percentage breakdown for fiscal 2005.
Worly Plumbing Supply, Columbia, OH, would have ranked at about No. 135 in last year's Premier 150 and this year was at the same position. Its sales percentage breakdown was 99% plumbing and 1% HVACR for both 2004 and 2005.
Record Supply Co. (R Supply), Reno, NV, would have ranked at about No. 145 in the 2005 Premier 150 based on fiscal 2004, but was removed from the list for 2006 following its acquisition by Ferguson, Newport News, VA, in December 2004, reported in February 2005.
Air Cold Supply, Pomona, CA, a division of Ferguson, is a new entry to the Premier 150 in 2006, ranking at No. 27, based on its performance in 2005. The company has 39 locations and 100% of its business is in HVACR.
Farnsworth Wholesale, Gilbert, AZ, made its debut on the Premier 150 list this year at No. 99. The company has two locations and 100% of its business is in plumbing.
Hinkle Metals & Supply Co., Birmingham, AL, joined the Premier 150 list at No. 108. It has 11 locations.
Penco Corp., Seaford, DE, was introduced to the Premier 150 list at No. 145. The company has six locations and more than half of its business is in HVACR.
American Industrial Supply, Perth Amboy, NJ, is also new to the Premier 150. It ranked at No. 149. The company has one location and is primarily involved in PVF.
Modern Plumbing Supply, New Milford, CT, ranked No. 150. The company operates four locations and reports 70% of its sales is in plumbing.
Positive PerformanceAmong the top 50 wholesalers in the Plumbing and Hydronics segment, 47 reported sales increases; 34 had double-digit increases and 17 enjoyed increases of 14% or higher vs. 2004.
In the Pipe-Valves-Fittings segment, 48 of the top 50 wholesalers had sales increases; 39 reported a double-digit rise in sales; and 25 saw their sales grow by 14% or more vs. 2004.
Among the top 50 HVACR wholesalers in the Premier 150 listing, 48 reported a sales increase. For 33 of those, the sales jump was by a double-digit percentage and for 19 wholesalers, sales were up by 14% or higher.
The Canadian Institute of Plumbing & Heating reported in its December 2005 newsletter, “Pipeline,” that October 2005 was the best month of the year, with sales up 12% vs. 2004. CIPH also acknowledged that significant levels of inflation in product categories, particularly PVF and waterworks, resulted in dollar increases being greater than the increase in physical volume. Double-digit increases were reported in HVACR, hydronics and PVF in the year-to-date report that included October.
Bright Outlook, Future ChallengesRick Elliott, president of McKeough Supply, Chatham, Ontario, Canada, and chairman of CIPH, said in the association's newsletter, “Pipeline” that 2006 promises to be a profitable year.
About 96% of the companies that responded to the Premier 150 survey indicated they expect sales to increase in 2006.
One of the challenges for next year will be finding 150 wholesalers for the list! Consolidation continues at a rapid pace. Ferguson is said to be actively negotiating for a large number of companies. According to some trade sources, rumors have been circulating that Hajoca and The Home Depot may be having conversations. The Home Depot Supply has declared its intent to become the largest diversified wholesale distribution business in the United States by the end of the decade. Yet many of the independent PHCP wholesalers, as well as the big guys, remain optimistic about the future. Wholesalers are planning showrooms, opening new locations and developing programs and promotions to improve their businesses. And, as SUPPLY HOUSE TIMES Editor Jim Olsztynski said in a recent editorial, “the vast majority of trade professionals prefer to buy from wholesaler-distributor supply houses rather than the big boxes.” He said it is business as usual for the hundreds of smaller distributors who collectively sell more than 90% of our industry's goods. Bright outlook? Yes!