Growth of 2.7% reported by ASA members in the third quarter. 

For the fifth consecutive month, the American Supply Association members have reported growth, showing a 2.4% improvement in per-workday revenues during the month of September 2010 as compared to the same month in 2009. For the first time, the plumbing, heating and pipe, valve and fitting distributors are ahead of last year by 0.2%. For the quarter, revenues grew by 2.7%. However, this is in comparison to the worst quarter in the history of the association keeping these records, when it reported revenues down by 19.9%. This leaves the association in 2010 behind 2008 by 18% for the quarter and 16% year-to-date.

A few more distributors are reporting improved margins in September 2010 as compared to 2009. Larger distributors also continue to be doing better on general profitability than the rest of the distributors serving this industry.

Inventory reduction continues as another 0.7% drop has been achieved as compared to 2009, and a 12% drop as compared to 2008. As compared to 2008, inventory turns have been reduced as the sales drop exceeds the inventory reduction. In accounts receivable, days sales outstanding have increased by 0.3 days vs. 2009, but below 2008 by 1.4 days; the industry stands at 47.4 days. The trend of reduced head count continues for the second consecutive year, but for the first time there are slightly more distributors reporting flat or up in employment than down in employment against 2009.

This develops a positive 2010 industry cash flow index of 2.3 inventory days compared to 2009, and a very healthy industry cash flow index of 12.0 compared to 2008. This is developed by using a multiplier on the accounts receivable days sales outstanding to convert it to days of inventory, and adding the days of inventory to establish the index.

With stronger balance sheets, the income statement-side of the financial management for the PHCP industry shows a slow, methodical recovery. Better than two-thirds of the distributors are reporting improved profitability as compared to 2009, when almost all of the members reported reduced profitability.

For a full report containing statistical evaluation by regions of the country, market segments and distributor size, companies should contact Chris Murin at cmurin@asa.net or 312.464.0090 ext. 204.

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