AD Q3, Good but Difficult to Determine Electrical Performance vs Chains

Over the past year AD has grown significantly with the merger with IMARK and its recently announced merger with The Commonwealth Group.

In addition, sales from its independent members continues to soar. According to a recent AD press release, through the first nine months of the year, sales across the group’s 13 divisions and three countries increased to $78 billion.

The growth was further aided by members acquiring 75 companies, across the 13 divisions.

Unfortunately, AD does not publicly share performance by division and by country, making it impossible to compare independent’s performance versus national chains, in aggregate or by division.

For the US, overall, AD members’ same store sales increased by 6%.

When compared versus publicly released information, it is

• Below Wesco’s EES division
• Below Graybar
• Below Rexel’s North American performance
• On par with Grainger
• Below Fastenal
• Slightly better than HARDI (HVAC), which reported September at 5.4% and past 12 months at 4.6%, inclusive of significant price increases.

This does not mean that electrical is lagging as it could be up significantly with other divisions pulling the average down.

We know that

• Copper is up 20-25% YTD which would relate to a 3-5% sales increase for a distributor
• Lighting is lagging the market, according to our Q3 Pulse of Lighting report.
• Many distributors have passed on some, perhaps all, of the tariff-driven price increases
• But there are some market segments that are challenged and perhaps some distributors that have benefited from data centers, however, most are not participating in the data center market, even for discretionary business due to their locale, business mix, or ability to handle this type of business (or have relationships with the contractors that are winning in this space.)
• And some distributors are benefiting from the industrial / automation opportunities in their marketplace.

So, overall, does 6% “feel” viable for electrical? Probably. A SWAG of an average would be 6-8%, driven by some of the larger members capitalizing on macroeconomic drivers.

It is hoped that AD is providing further detail to members so that they can benchmark their performance vs publicly shared information to help companies better understand if they are taking share and to help manufacturers benchmark their performance vs AD overall and vs national chains. It’s very doubtful that AD, as a channel, is a laggard.

Thoughts?