With earnings season continuing, it’s good to check in to see what some of the other national chains are doing. If you recall, last week we commented on WESCO. Here’s the info, and some insights, into AD, HD Supply, Graybar and Rexel … all positive, some more so than others.
AD
- AD electrical affiliate Q3 results are in and the membership, as a group, was up 3%, with 2.3% on a same store basis. Again, higher than most of the national electrical distributors, indicating that, at least, some members are taking share in their local marketplaces.
- The growth is especially interesting given that AD has many industrially-oriented electrical distributors and, anecdotal conversations indicate that the industrial space is not having as much growth this year.
- AD’s Clean Energy initiative is benefiting a number of members, further helping accelerate energy efficiency sales for affiliates.
- Interesting tidbit … through the first 9 months, AD members have hired 1808 people and have opened 108 branches … further indicating growth and a positive outlook to the future.
- They shared their recent sales performance at the Baird Industrial Conference. For August, September and a projected October, they were up 5.8%, 7.3% and 5.8% for the respective months, excluding acquisitions (and October revenue was projected at close to $900M.)
- In thinking about HD Supply, it really isn’t a national electrical distributor. Electrical, as in serving the contractor and industrial markets, is not a large component of the business; but they are one of the leaders on the utility side of the business (with WESCO and Sonepar / Irby). What their performance may speak to, however, is the benefits of diversification of product offerings, the range of end-user markets that they serve as well as the growth being seen in some of their geographical markets (FL, AZ, CA).
- And they’ve opened a few new locations, identifying areas to grow and adding salespeople.
- While many have focused on the headline number of a 7% growth, perhaps the more interesting number is the 9.5% electrical growth (datacom came in only with a 1.2% growth and we understand that this market segment is challenging for a number of leading national electronic distributors.)
- For 9 months, Graybar electrical is up 6.8%
- Both Graybar’s Q3 and first 9 month results indicate that Graybar is taking share, nationally. They are doing much better than in recent memory. Initiatives have included:
- Opening new locations, enabling them to take share in specific geographic areas, with targeted market niches, that are growing … think petrochem and more.
- They are hiring salespeople … from other distributors in the industry as well as from outside distributors.
- Their product managers are engaging with their strategic partners seeking ways to accelerate growth and looking to develop joint sales / marketing strategies where they can partner to create business at the end-user level (gaining preference).
- They are actively promoting their energy efficiency / LED business.
- They are promoting their value-added services and have invested, through outside agencies, in the development of sales and marketing tools.
- They are advertising in contractor publications with supplier support
- We’ve also heard reports of a small contractor initiative.
- and they are actively conducting training seminars and counter days / customer events … and promoting them via social media.
- Here’s interesting tidbits from Graybar’s 10Q (which was forward to us by a friend)
- all full-time employees become 100% vested in the pension program after only 3 years of service to the company, regardless of age. Nowadays that can be a powerful recruitment tool.
- Company-wide gross margin for 9 months increased 2.1% and for Q3 it grew 8.4%. Perhaps the benefit of better utilization of their SAP system? Perhaps a pricing initiative or maybe increased usage of SPAs or maybe cost reductions due to improved productivity and process refinement?
- SG&A for the 3 months increased only 3.5% … on an overall 7% growth rate. Obviously this helps the net profitability.
And while some have said that Graybar is really 14 companies (corporate plus the divisions / regions), they operate the closest to a true national chain than any of the other national chains.
While every company has some warts, it appears that Graybar is hitting on more cylinders than it has in a long time … and more than most, if not all, of its publicly held peers.
- Rexel shared it’s Q3 performance recently and, here in the U.S., reported a 1.5% same day sales increase, which they say would have been a little higher if incentives hadn’t negatively impacted it’s wind business. For the 9 months, the US is up .9%.
- And while the 9 month may appear small, it is, at worst case, around the “industry” performance and better than some chains, but it is also evidence that Rexel appears on the uptick.
- Rexel says it is benefiting from the housing market, and given their locales, this indicates FL, AZ, NV, CA to name a few states. But since new single family housing starts are about 650-700,000 units, this may also indicate that Rexel is doing well in the remodeling market, possibly with small contractors or with the investor community that has bought, and is renting or flipping, renovated homes.
- The wind business in Q3 was $18.3M, for 9 months it was $39.4M.
- EBITDA for Q3 was 5.6%, for 9 months it is 5.4%
- North American gross margins have improved to 22.1%, 30 basis points
- They’ve added 19 people, net, this year
- and this is while closing, net, 3 locations through the first 9 months of this year
- North America represents 35% of Rexel’s business.
- Click here for a copy of their presentation.
- We’ve also heard, from manufacturers, of a Rexel US plan to consolidate purchasing into 12 regional hubs, essentially RDCs, that report to Dallas while the sales focus remains in the current locales. Some manufacturers questioned how the process will work and where “they” (regional management) need to call on to ensure their product is stocked in the RDC to support “their” branches, especially since a competitor may be needed for other branches. Some wondered if Rexel Holdings will make this into a significant profit center and hence disincent branches from ordering through the RDC (which has happened when others have attempted similar). Time will tell.
- If you’ve heard more on this, please share to enlighten all.
So … all seem to be having greater electrical sales performance than other publicly held electrical distributors. We don’t know about IMARK, Crescent or Sonepar. Sonepar had a Leadership Conference recently. If you know high level sales performance for any of these groups, please let us know of comment anonymously on ET as it helps everyone benchmark their performance.
From the above we hope you can get a sense of what the overall industry is doing, who may be taking share and and have something to benchmark your performance against.
How was your Q3?
4 Comments
The Kelly Family
November 7, 2013 at 2:01 pm
Great article. Thanks for a nice summary comparison. Great to hear about growth overall!
November 7, 2013 at 2:09 pm
thanks for the info. we’re up 5% year to date and are in the northeast. some big construction jobs and lighting are driving growth. we don’t see any of HD, but Graybar has gotten stronger. Hadn’t heard of the Rexel initiative but may make reps more interested in working with us since we control whom gets the business and have relationships with them
November 7, 2013 at 3:19 pm
rexel is non existent, canada carries north america now
November 7, 2013 at 10:59 pm
after reading this and the WESCO earnings overview, looks like Wesco is sucking wind
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