With the exception of the tumultuous industrial pipe, valves and fittings segment, the industry as a whole enjoyed a productive 2015, so say respondents to the 2016 Supply House Times Premier 150 distributor survey.
The annual Premier 150 survey, now in its 24th year, is conducted by Supply House Times and BNP Media Market Research. BNP Media is the parent company of Supply House Times as well as BNP Media Plumbing Group publications Plumbing & Mechanical, PM Engineer (pme) and West Coast-based Reeves Journal.
The Premier 150 survey ranks the top PHCP-PVF distributors by their reported sales for the past year. The 2016 survey is based on sales for fiscal 2015. Individual company sales are never disclosed and in some cases editor estimates were used if companies did not respond to the survey.
This time around, 2015 sales projections did not quite match up to actual 2015 performances. In last year’s survey, 87% of respondents predicted their sales would increase. This year’s Premier 150 survey reveals 79% of companies reported an increase in sales in 2015, down 4% from last year’s 83%. Fourteen percent of companies taking the 2016 survey say sales decreased in 2015.
One area of concern continues to be the industrial pipe, valves and fittings segment, which has fallen on hard times recently due to the oil and gas industry slowdown.
“2015 was a challenging year with pricing dropping and demand down,” said Mike Abeling, CEO of Fontana, Calif.-based Consumers Pipe & Supply Co., an industrial PVF distributor.
Brian Tuohey, president of East Windsor, Conn.-based The Collins Companies, another industrial PVF distributor, had a good-news/bad-news scenario to report. “Last year’s sales performance was impacted by the significant slowdown in the oil and gas market, but we are pleased to report our gross profit performance actually improved vs. 2014,” he said.
Randy Trachtenberg, CEO of Oklahoma City, Okla.-based M&M Supply Co., does see light at the end of the PVF tunnel. “2015 was tough on the oil and gas industry,” he said. “The first and second quarters of 2016 look to be difficult as well, but we see some promising increases in the third and fourth quarters.”
Those not participating in the PVF-related oil and gas patch had, for the most part, favorable reviews of their 2015 metrics. “2015 was an exceptional year for all our marketing areas in South Florida, Central and South America,” said Dennis Lehman, president of Miami-based Lehman Pipe and Plumbing Supply.
Geography indeed played a prominent role in how companies performed in 2015. “2015 was a great year for commercial construction in Chicago,” said Jim Porter, CEO of Addison, Ill.-based Porter Pipe and Supply. “2016 will be better. There are 34 tower cranes in Chicago for 2016. It’s going to be a great year.”
Rogers Earl Jr., CEO of Elkins, W. Va.-based Valley Supply Co., noted his company bucked economic trends in its home state. “Due to the declining economy of West Virginia, we are pleased to have had such a strong 2015 and look forward to improving 2016 over 2015,” he stated.
By market sector, respondents mainly focused on the plumbing and hydronics side of the industry generated $12.2 billion in sales. That’s a marked increase over last year when plumbing-and-hydronics-focused respondents accounted for total sales of $9.2 billion.
HVAC-focused company’s checked in this year with $14 billion in total sales, up from $11.1 billion last year. However, pipe, valves and fittings-centric companies participating in the survey generated $12.2 billion in 2015 sales, sharply down from the $15.7 billion total a year ago.
This year’s Premier 150 survey shows a much more balanced landscape in terms of company sales figures. Nearly a quarter of all 2016 respondents fall into the $50 to $99.9 million sales category, while 21% fall into the $34.9 million or less bracket and 20% are in the $100 million to $199.9 million range. Only 14% of respondents had 2015 sales in excess of $300 million.
Survey respondents generated a total of $64.8 billion in sales in 2015, down from last year’s survey total of $65.7 billion, but still well above the $56.3 billion total of 2014. Aside from year-to-year survey respondent fluctuation, a healthy amount of consolidation occurred in the industry last year with 2015 Premier 150 entrants Security Plumbing & Heating Supply (No. 105 last year), Murray Supply (No. 108) and Riback Supply
(No. 128) all being acquired and thus dropping out of the rankings. Dallas-based All-Tex Pipe & Supply, acquired this spring by Hajoca Corp., makes its final appearance in this year’s rankings.
Crystal ball time
Survey respondents remain optimistic that improving conditions in the industry will continue on an upward trend. Eighty-six percent predict sales will increase in 2016, while 6% say sales will stay flat and 7% predict a decrease in sales.
“2015 was a solid year for growth and we expect our growth to continue in 2016. This has been a great market,” said Jeff New, president of Elkhart, Ind.-based Mid-City Supply. “Relationships with our customers and suppliers continue to be the driving force in our growth.”
Several distributors believe factors such as diversification and internal growth will help raise the bar even higher in 2016.
“Our diversity of products helped us in 2015,” said Ernie Coutermarsh, senior vice president at Bedford, Mass.-based F.W. Webb Co. “We are entering the waterworks business in 2016 and are building a new 1 million-sq.-ft. distribution center.”
Brent Anderson, CEO of Orem, Utah-based Mountainland Supply (featured on the cover of the 2015 Premier 150 issue), noted his company will continue to push marketing programs that have generated positive results. “We will continue to have a focused energy with our vendor-marketing programs and experienced-based customer relationships,” he said. “We are expecting a year of average sales growth with strong commitments to vendor-marketing programs.”
Chris Perry, president and CEO of Richmond, Va.-based VAMAC, said 2016 can be a prosperous year for those companies who don’t shy away from change. “Change is occurring at an ever-advancing rate that requires greater skills, the abilities to face them quickly and leverage resources to maximize customer value and relationships,” he said. “2016 will offer opportunities to those who can embrace change, maintain good financial health and continually provide added value to their customers, associates and vendors.”
Voices in the industry
“The past year held steady growth in new construction in our region and we hope 2016 will continue in this positive trend.” — Reed White, George T. Sanders Co.
“Winsupply had record-breaking sales and record-breaking profits in 2015 (fiscal 2016) and expect continued growth in both categories in 2016 (our fiscal 2017). — Maury Williams, Winsupply
“Markets dislike uncertainty and an election year brings uncertainty. However, recent trade cases should serve to stabilize and increase steel and metal pricing. However, it will continue to be a challenging year.” — Dr. Don McNeeley, Chicago Tube & Iron
“We are diversifying more into the HVAC side of heating and cooling while maintaining a strong presence in the hydronic heating business.” — Bill Duggan, Republic Plumbing Supply Co.