Times continue to be good right now in the PHCP-PVF industry.
That declaration comes from the results of the 2019 Supply House Times Premier 150 distributor survey. The annual Premier 150 survey 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 and PM Engineer (pme).
The Premier 150 survey ranks the top PHCP-PVF distributors by their reported sales for the past year. The 2019 survey is based on sales for fiscal 2018. Individual company sales are never disclosed. In some cases editor estimates are used if companies did not respond to the survey, which is made readily available through a number of different industry channels and partners at the beginning of each year, including via the American Supply Association, PHCP-PVF buying groups, regional distributor associations and via Supply House Times’ various digital platforms.
Now to the numbers: A year ago, 89% of survey respondents had an increase in sales in 2017, while only 7% saw a decrease and 4% reported flat sales. This year, 94% of companies that responded to the survey said they had an increase in sales in 2018, while only 4% stayed the same and 2% decreased.
The 94% total goes above the 92% number of distributors that predicted a 2018 increase in last year’s survey.
Parsing the industry’s upward trajectory over the last five years of surveys shows the percentage of respondents that reported increased sales at 83% in 2014, 79% in 2015, 75% in 2016, 89% in 2017 and now 94% in 2018.
“2018 was a fantastic year,” noted Alexander Rodriguez, COO of Farmers Branch, Texas-based Shearer Supply. “We felt both weather and economic factors were in our favor.”
Howard Frankel, president of Central Plumbing Specialties/Grande Central Showrooms of New York, also reported a robust 2018 performance. “2018 was a high-water mark for Central with double-digit gain over 2017,” he said.
Montana-based Mountain Supply COO Ryan Rubie pointed to two factors that contributed to his company’s 2018 prosperity. “2018 was our highest sales year ever,” he said. “That is mostly attributed to our employees’ relationships with our customers and the booming residential building.”
Frequent Premier 150 rankings commentator Jim Fabricatore, vice president of DASCO Supply, which recently was acquired by Premier 150 No. 3 Watsco, noted last year was record-breaking for the New Jersey-based company. “We were able to grow sales substantially without adding additional employees,” he said.
Morris Cregger, chairman of South Carolina-based Cregger Co., again reported strong returns for his distributorship. “It was a year of growth as we added appliances as a new category to our product offering and we opened two new locations in late November to bring our total to 33,” he explained.
National distributor Winsupply out of Dayton, Ohio, had its fifth year in a row of record sales. “Our local companies led the way with outstanding performances steered by courageous entrepreneurs who are the heartbeat of Winsupply,” Winsupply Director of Communications Maury Williams said.
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This annual PHCP survey, conducted by Supply House Times, ranks the top plumbing, heating, cooling and piping wholesalers and distributors by their reported sales for the past year. The 2019 Premier 150 Sales Trends are as follows:
Sales Trends for 2019 Premier 150
(Year-To-Year Comparison And Projection)
*Totals may not add up to 100% due to rounding
Source: Supply House Times/ BNP Media Market Research 2019
For more information please view the image in the slideshow.
Market segments
2019 survey respondents were again firmly entrenched in the sale of plumbing and hydronic heating equipment to the tune of $ 12.8 billion, which is down from last year’s $13.9 billion number, but in line with the two surveys previous to that ($12.8 billion and $12.2 billion). A likely partial cause for the deterioration of this year’s P&H number is the fluctuation of companies doing primary business in that space that submitted surveys.
PVF sales for survey respondents added up to $17.2 billion for fiscal 2018, that’s strongly up from $15.8 billion in fiscal 2017, $15.1 billion in 2016, $12.2 billion in 2015 and $15.7 billion from fiscal 2014, further demonstrating this particular volatile market segment’s recent recovery.
“Columbia Specialty experienced explosive growth in 2018 in several sectors including commercial construction, industrial MRO and OEM markets,” noted Michael Taylor, president and CEO of Long Beach, California-based Columbia Specialty, an industrial PVF distributor.
John Howe, CEO of Birmingham, Alabama-based industrial PVF distributor American Pipe & Supply, reported strong double-digit growth for his company in fiscal 2018, while Brian Tuohey, president of Connecticut-based industrial PVF distributor The Collins Companies, also reported a double-digit increase in same-store revenues for fiscal 2018.
Companies in the HVAC space that responded to the survey had fiscal 2018 sales of $12.9 billion, which is up from just over $12 billion last year and back near the $13 billion total in fiscal 2016.
The largest number of respondents to this year’s Premier 150 survey fall into the $100-$199 million category with the $50-$99.9 million category ranking a close second, a flip-flop of last year’s top two segments. The $35-$49.9 million category and the $34.9 million or less category combined to make up 27% of survey respondents.
What does the future hold?
In terms of the future, it looks to be a healthy dose of more of the same. Ninety-three percent of respondents to this year’s survey expect an in-crease in sales for fiscal 2019, while 7% say sales will be flat and no respondents feel sales will decrease this year.
“We’ve seen the market remain solid with good activity in the PHCP sector,” said Todd Eber, director of marketing at Fargo, North Dakota-based Dakota Supply Group, a recent Supply House Times Supply House of the Year winner. “Based on our market analytics we see this continuing to be strong through 2019.”
“2018 was a robust year,” noted Lindsay Taylor, marketing director at Colorado Springs, Colorado-based Rampart Supply. “We grew our staff and sales in 2018, and we are optimistic that 2019 will be another year of growth for us.”
Nathan Wachtel, CFO of Louisville, Kentucky-based Masters’ Supply, echoes familiar sentiments with his 2018 wrap-up and has even more reason for optimism this year. “2018 was a very successful year for the company,” he said. “Our stock valuation continues to climb as a 100% employee-owned business. We are opening a new branch in 2019 in a new market and also are eyeing opportunities in the southern part of our state. We have well-qualified, competent people who are more than making a difference.”
Steve Berger, president of New Milford, Connecticut-based Modern Supply, is seeing fast returns in 2019. “2019 already is starting out ahead of 2018,” he said. “We had a strong first quarter.”
Jay Bazemore, vice president of sales at West Virginia-based PVF distributor JABO Supply, sees more industry prosperity this year. “Currently, all markets are on an upward trajectory and should continue through 2019,” he said.
Continuing with the PVF theme, one Gulf Coast-based PVF distributor reported a 74% increase in revenue in 2018 and expects the company to grow to nine figures in sales this year.
And this from another industry resource that enjoyed a massive sales increase as well: “Our company/regional outlook for 2019 is strong,” the source said. “Sales grew in 2018 25% with growth coming from new product lines and a concerted effort placed on growth in the branches. In 2019, we aren’t pursuing as high a growth rate as we funded all the growth without borrowing in 2018. Our 2019 goal is moderate growth with an improved balance sheet. A fifth branch is on the table as well.”
Josh Brown, vice president at New England-based Metropolitan Pipe & Supply, said business remains quite strong around Boston. “The greater Boston area has been booming for nearly 10 years now and most mechanical contractors are booked out at least a few more years,” he said. “We should be good a little while longer here.”
George T. Sanders Co. President Ted Batchelder noted 96% of the company’s sales occur in the state of Colorado, which he added has enjoyed strong economic growth compared to national levels. “In 2018 we increased our commercial sales at a higher rate than our residential plumbing,” he said. “In 2019 we expect sales growth to slow from 2018, but still gain 4-6% in our core business.”
The Dallas-Fort Worth metroplex area continued to be strong for Apex Supply Co., noted Vice President of Operations Eric Barnett. “That’s where the majority of our locations are,” he said. “The remodeling industry continues to grow and the repair/replacement plumber continues to stay busy.”
The story was the same out west, according to one industry resource. “The western United States experienced tremendous growth of infrastructure and new construction in 2018,” the source noted. “We are planning for similar growth in our market as we continue to target opportunities for what we expect to be similar growth in 2019.
However, several distributors weave a cautionary tale regarding outside forces disrupting this prosperity party.
“Tariff-induced inflation was and continues to be a concern,” TORRCO CEO Joel Becker said. “We experienced year-over-year inflation of more than 5% in many products directly related to tariffs. We are concerned about inventory devaluation and pricing deflation when the tariffs are removed.”
Standard Plumbing Supply President Richard Reece added: “The consolidators are buying like crazy. Prices are up. It looks just like it did up to 2007.”
Cregger projects another year of solid growth for Cregger Co., but that statement comes with an asterisk. “We recognize there are many problems outside the industry that could dampen the overall economy,” he said. “If we escape any major external disasters, we see a very strong opportunity for double-digit growth.”
To view more Premier 150 breakout charts, visit SupplyHT.com.
