Electrical Observations on the 2024 MDM Top Distributor List

A couple of weeks ago I had the opportunity to participate in MDM’s Top Distributor podcast with Mike Hockett and Tom Gale from MDM as well as Craig Webb from Webb Analytics (who talked about the Building Supplies industry) and John Gunderson (who focused on the industrial supplies category.)

MDM researched various companies, reached out and received input from some of the privately-held companies and Craig, John and I helped curate the lists for the remainder to help place companies who did not share their revenue in approximately the right order.

Overall, MDM shared distributor rankings for 20 industries. The podcast focused on three industries, and I provided some commentary on the electrical industry.

I encourage you to view the podcast and to download the report.

MDM Top Distributor Electrical Overview

As a preview, here’s a synopsis of some of what I said:

“In previewing the rankings, I compared the current year’s list of top players with the previous year’s rankings. Not surprisingly. many of the same companies are present with similar rankings, indicating stability in the market. However, it also highlights significant changes and trends within the industry.

One notable change is the rise of Texas-based Lonestar Electric Supply, a company that did not exist a decade ago but is now approaching the billion-dollar revenue mark. This growth reflects the expansion of the Texas marketplace and Lonestar’s ability to capture a significant market share.

Another observation is the global presence of companies like WESCO, with approximately 20% of its business coming from the rest of the world. WESCO, along with Sonepar and Rexel, are the major players in the global electrical components market, which is valued at around $250 billion. While CED is US-focused, when its various sister companies around the world is included, the aggregation could be ranked as high as number two globally.

Consolidation is a key driver in the industry, with over 30 deals identified in the last year and 102 since 2020. This trend is not limited to large corporations; independent distributors have been surprisingly active, accounting for half of the deals. The top three acquirers are Sonepar, Graybar (which surprised many with its activity), and Green Mountain Electric Supply, a company not on the list but notable for its acquisitions in upstate New York.

Investments in regional distribution centers (RDCs) and technology are also driving change within the industry. Companies like Border States are strategically aiming to move up in the rankings, expecting to be in the top five within five years. This operational shift is part of a broader trend of deploying technology and capturing large-scale projects such as data centers and utility grid initiatives. The electrification of various sectors is seen as a major tailwind for distributors, driving demand regardless of economic conditions. This includes the shift towards electric vehicles (EVs), with significant investments in charging infrastructure and manufacturing.

Other revenue drivers have included the impact of supply chain issues, inflation, tariffs, and commodity prices. Government policies supporting electrification, along with the need for data centers and underground power lines in states like California and Florida, are further driving demand. To illustrate this, I mentioned research I saw where a consulting firm in the utility space estimated that a $469 billion investment is needed to meet various electrification and grid deadlines. This investment includes the construction of factories and the installation of EV charging infrastructure.

Another area I commented on is the aging of the industry, which is facilitating consolidation as owners sell out to larger companies. This consolidation is impacting distributors and independent reps. Further it is changing “relationships” as manufacturer regional sales management, and senior executives, prepare to retire. All this will lead to channel change in the coming years and will reshape the future landscape of the electrical distribution industry.”

This, and more, including some comments regarding the upcoming AD / IMARK merger were also discussed.

Check out the rankings. Check out the podcast. Have questions, give me a call. Have observations, feel free to post below or send me a note.