A 2009 Summary of ASA's Industry Intelligence Report: <br>A Market Analysis for the Industry Executive

By Gregory N. Manns

As members of ASA, you have at your disposal a “toolbox,” if you will, of tools that can assist you in improving your company’s operations. I like to think I can fix anything around the house as long as I have my tools. Of course my wife will tell you otherwise, but that’s another story. Just as each tool in my toolbox serves a purpose, I feel each one of these “tools” ASA provides serves a purpose as well. In particular, ASA’sIndustry Intelligence Report: A Market Analysis for the Industry Executiveprovides participants with a tool to monitor month-to-month their performance vs. the industry. In addition, the report provides key economic indicators that can help participants identify market trends.

ASA’sIndustry Intelligence Reportis available FREE and EXCLUSIVELY to all participating ASA wholesaler members.

The reportprovides performance figuresfor:

sales
inventory
days sales outstanding
gross margins
profit before taxes
number of employees

Theresults are aggregatedby:

all responding firms
primary business emphasis
ASA regions
states (as the sample size permits)

On average, respondents have identified their

primary business emphasisas follows:

57% as Plumbing, Heating and
Cooling (PHCP),
27% as PHCP and PVF
16% as Industrial PVF

Since its launch in January 2009, the report on average has had 67 firms participating each month representing an average of over 890 locations. The report has a fairly representative mix of participants in terms of size of companies and regions of the country.

Although 2009 was a year worth forgetting, with most wholesalers reporting double digit declines in year-over-year sales each month, themedian December 2009 vs. 2008 decrease was the lowest for the year.Additionally, the decreases for each of the last six months of 2009 were progressively smaller, which is hopefully an indicator of an improving 2010. In addition, the most recently released U.S. Department of Commerce Monthly Wholesale Trade Report for November showed a modest increase of 0.6% vs. November 2008.

Inventory levels have experienced double digit decreases for most of 2009.After rising for the first part of 2009, days sales outstanding is returning to early 2009 levels.The majority of participating wholesalers has experienced decreased gross margin percentages and profit before taxes for most of 2009. Additionally, most participants had fewer employees than the prior year.

At press time, the U.S. economy has shown some glimmer of hope recently. The “Real” GDP figure for the 3rd Quarter grew 2.2%. The fact that this is an increase technically indicates an end to a recession. Additionally, some of the other indicators are continuing to hint that the downturn is starting to bottom out. For instance, manufacturers’ new orders and housing statistics are holding steady, and the Purchasing Managers’ Index (PMI) remained over 50 for the fifth month in a row. A reading of 50 or higher generally indicates that the industry is expanding. The unemployment rate, which is a lagging indicator, remained at 10.0% and the average weekly initial claims declined for the fifth consecutive month.

If you have been participating in this valuable ASA service, we hope you have found the reports insightful and will continue. If you have not yet taken part, please consider participating in this valuable service to see what you have been missing. TheIndustry Intelligence Reportis a free tool that should be in any ASA member’s business toolbox.

Mr. Manns is Sr. Vice President of Industry Insights, Inc., an independent survey research firm that prepares ASA’s Industry Intelligence Report each month as well as ASA’s annual Operating Performance Report. He can be contacted at gmanns@industryinsights.com. Industry Insights has been in business since 1980 and specializes in providing high quality survey research services to trade and professional associations, dealer organizations, and other affiliated groups of companies.

“I'M PRETTY SURE WE'RE GOING TO GET BETTER THAN AVERAGE RESULTS…ONCE WE FIGURE OUT WHAT AVERAGE IS!”

When evaluating your company’s performance, comparison to previous year’s results is only part of the picture. Looking at how you are performing in your state, region and market emphasis can uncover strengths or weaknesses you didn’t know existed.

TheASA Industry Intelligence Reportis the singular resource for comprehensive data analysis specifically for the PHCP/PVF industry. Your participation is important for two reasons: 1) the more companies that submit data, the more precise the analysis, and 2) it’s the only way you can gain access to this valuable resource.

To participate in the February 2010 report, please contact Gregg Manns of Industry Insights atgmanns@industryinsights.com. For more information on this report or any of ASA’s benchmarking programs, please contact Chris Murin, executive director, atcmurin@asa.netor 312.464.0090 ext. 204.