First-time entry HD Supply, a division of The Home Depot that serves business-to-business customers such as homebuilders, professional contractors, municipalities and maintenance professionals, followed as a close second. In total reported sales, HD Supply tops our No. 1, Ferguson. However, HD Supply declined to break down sales by product categories, and we know that a large portion of its sales is attributed to various building materials and industrial products outside of our industry. Its relevant sales in the PHCP category stem from its purchase of Hughes Supply and, previously, the former Apex Supply regional chain. Available information suggests it would come in second to Ferguson’s PHCP sales volume.

Orlando, FL-based Hughes Supply, which had competed neck and neck with Ferguson for the top spot for the past few years, is now a part of HD Supply. The acquisition of Hughes Supply more than doubled the size of HD Supply, bringing its 2006 combined sales to about $12 billion.

Other than that, the top 50 companies in the list look pretty much the same as last year, with a few small position changes. More changes are evident among the companies listed from No. 51 to No. 150. Just as in our Premier 150 reports from 2006 and 2005, 16 PHCP wholesale firms moved up 10 or more spots in this year’s version.

This year the survey was conducted by Clear Seas Research, a division of BNP Media, parent company of Supply House Times. Surveys were sent out via e-mail, fax and regular mail and could be filled out online via a link. A dozen distribution firms in addition to HD Supply are new to the Premier 150 list this year. We heard back from about 220 companies this year and want to thank everyone who took the time to respond.

The Total Market

The total PHCP wholesaling market in the United States and Canada was estimated at $73.2 billion, up 11% from a revised estimate of $66 billion for 2005. We published $65.9 billion in last year’s report, but this figure was adjusted upward slightly in response to later revisions by the U.S. Census Bureau in its tracking of “Hardware and Plumbing” sales.

This year our estimates show the Premier 150 companies represent about 73% of the total market in the U.S. and Canada, up from 62.5% in 2006. A total of 16 Premier 150 companies reported sales of $500 million or higher vs. 14 last year; 14 companies had sales in the range of $200 to $299.9 million, up from 11 last year; and 37 companies had sales of $100 to $199.9 million compared with 36 last year.

Still Thinking Positive

For fiscal 2007, 81% project a sales increase, 4% expect a decrease in sales and 15% predict flat sales.

Among the top 50 wholesalers in each of the segments - Plumbing & Hydronics, PVF and HVACR - no more than two to five companies from each group saw their sales decline in 2006.

More than half of the top 10 companies in the Premier 150 enjoyed double-digit sales increases, ranging from 18% to 35%.

The Canadian Institute of Plumbing & Heating reported that Canadian wholesalers achieved record high sales for 2006, up 7.5% compared with year-end 2005.

Rising Stars

New to the Premier 150 this year, besides HD Supply, were (in alphabetical order):

All-Tex Pipe & Supply, Dallas, TX (www.alltexsupply.com)
APR Supply, Lebanon, PA (www.aprsupply.com)
Bergen Industrial Supply, Elmwood Park, NJ (www.bergenindustrial.com)
City Pipe & Supply, Odessa, TX (www.citypipe.com)
M. Cooper Supply, Orland Park, IL (www.mcoopersupply.com)
Modern Supply Co., Knoxville, TN (www.modernsupplyco.com)
Munch’s Supply Co., New Lenox, IL (no Web site found)
Murray Supply Co., Winston-Salem, NC (www.murraysupply.com)
O’Connor Co., Lenexa, KS (www.oconnor-hvac.com)
Standard Plumbing Supply, Salt Lake City (www.standardplumbing.com)
Western Water Works Supply, Chino Hills, CA (www.wwwsco.com)
and Wichita Sheet Metal Supply, Wichita, KS (www.wsmind.com).

Changing Faces

Hughes Supply was removed because it is now reported as part of HD Supply.

Ferguson/Wolseley acquired the following companies which were removed from this year’s listing: Air Cold Supply, Pomona, CA, which ranked at No. 27; Palermo Supply Co., Bergenfield, NJ, ranked No. 82; The Plumbers Warehouse, Carson, CA, ranked No. 91; and Supply North Central Group, Ann Arbor, MI, ranked No. 129 last year.

Able Distributing Co., based in Wausau, WI, and Phoenix, AZ, was removed from this year’s list following its acquisition by Ardmore, PA-based Hajoca Corp.

DXP Enterprises, Houston, TX, which was ranked No. 34 last year, was removed from the list this year in response to their informing us that they do not sell the products we list in the survey as relevant to our industry. Other companies that were listed last year but were pushed off the list by the newcomers include: American Industrial Supply, Perth Amboy, NJ, ranked No. 149 last year; Nu-Way Supply, Utica, MI, ranked No. 143 last year; Jabo Supply Corp., Hungtington, WV, ranked No. 148 last year; and Modern Plumbing Supply, New Milford, CT, ranked No. 150 last year.

Missing Or Just Missed…

Equipment Sales Corp., Mobile, AL, was not listed last year, and just missed the list this year. The company has 11 locations, 102 employees and 100% of its sales are in HVACR.

Outlook For 2007

The U.S. housing market is expected to continue to remain soft for the remainder of the calendar year, Wolseley said in its interim results for the half year ended Jan. 31, 2007. The repairs, maintenance and improvement, and commercial and industrial markets are expected to continue to hold up. Ferguson should increase its market share and achieve good levels of organic growth, but at a more modest rate than the first half. Wolseley reported that sales for its U.S. plumbing and heating operations, including Ferguson, rose by 18.8% in the first half, with trading profit up by 13.4%. Organic revenue growth of 9.1% was more than twice that of the market generally, Wolseley said.

Wolseley also said that in Canada, exploration-related business is expected to improve, but the new residential housing market is likely to slow from recent high levels.

At The Home Depot, the 2007 sales outlook for HD Supply is for positive organic growth in the mid-single-digit area, according to Carol Tome, chief financial officer and EVP-corporate services, in a presentation at The Home Depot’s Investor and Analyst Conference. No gross margin expansion is projected on the supply side. She said that the company is projecting a slight supply operating margin expansion due to productivity.

In January 2007 Canadian PHCP wholesalers saw sales rise 7.2% vs. January 2006. HVACR and hydronics “picked up” from December, and plumbing had a good month, while PVF and waterworks were basically flat vs. 2006, according to CIPH. The CIPH reported these results in its Pipeline newsletter, listing Statistics Canada as its source.

For more information, visit www.ciph.com or www.statcan.ca.

Canadian housing starts are projected to be moderate this year compared with 2006, but will remain in excess of 200,000 units for the sixth consecutive year, CIPH reported, based on information from Canada Mortgage and Housing Corp. Housing starts may dip below the 200,000 mark in Canada in 2008.

Next year’s Premier 150 report may look very different. There are questions about the future ownership of HD Supply. As reported in March 2007 Supply House Times, The Home Depot’s board said it would consider selling its HD Supply division, spinning it off to investors or even establishing a separate IPO for the unit. That same news story referred to a news story that had surfaced in Great Britain earlier this year that a private-equity firm might attempt a takeover of Wolseley.

If you are a PHCP wholesaler and did not receive a Premier 150 survey this year, please contact Pat Lenius (leniusp@bnpmedia.com) and Lydia White at Clear Seas Research (whitel@clearseasresearch.com) so we can add you to our database.

Links

• Premier 150: The Rankings
• Market Share: U.S. and Canada
• Consolidation Update
• Segment Leaders
• Combined Sales For The Premier 150