The year 2010 saw small improvements made in many segments served by the members of the American Supply Association. Revenues, profitability, and cash flow all improved during the year, at least in most parts of the country and in most segments of the industry, although housing starts remain more than 10% below 2008 levels.
For the third consecutive quarter and eighth
consecutive month, the plumbing, heating and pipe, valve and fittings
distributors have reported increased and growing revenues, showing a 6.7%
improvement in per-workday revenues during the month of December 2010 as
compared to the same month in 2009, and - for the first time this year - up
1.9% against 2008. These distributors
are now ahead of last previous year-to-date by 2.6% on a per-day basis. As there was one additional workday in
November 2010 than in 2009, and the same as 2008, the raw monthly revenues for
the industry members were up 11.5% for the month vs. 2009, and up 1.1% as
compared to two years ago.
The product segment breakout shows the
industrial PVF firms entered and exited the downturn about 120 days later than
the plumbing segment, but today both segments are in a 4% growth mode and poised
to rebound nicely in 2012. On a regional basis, the far west remains in a
downward trend, currently down 22% year to date since 2008. The Illinois, Indiana and Michigan markets have
been the best performing markets over the last two year-to-date periods,
showing a decrease of only 13.5% versus 2008 and up nearly 11% versus 2009
year-to-date. Size of the distributor does not show to be an indicator of rate
of revenue growth; although the larger the distributor the more growth of profitability
has been achieved. The national distributors that have reported have indicated
their profitability has increased primarily driven by cost controls, similar to
the large regional independent distributor.
Consistent throughout the fourth quarter of
2010, almost half of all distributors this month are again reporting reduced
margins in 2010 as compared to 2009, with only about one-third reporting
After 20 consecutive months of declining
inventories, ASA members, for the third consecutive month, have put additional
inventory on the shelves by adding 2.9% of inventory as compared to 2009, but
still have reduced by 10.7% as compared to 2008. Inventory turns are also
improving for the second consecutive month.
In accounts receivable, days sales outstanding have made a big turn in
December 2010 by switching from a large decrease in November to a small 0.1
increase in days versus 2009. The trend of reduced head count returned in
December after taking two months off in October and November, after two
continuous years of decline.
The PHCP industry recovery is trending
positive and clearly gaining some momentum as most distributors continue to
report improved profitability, as compared to 2009 when exactly the opposite
For a full report containing statistical
evaluation by regions of the country, market segments and distributor size,
companies should contact Chris Murin firstname.lastname@example.org 312.464.0090 ext.