After three years of drought, the Top 200 post a 14.9 percent increase in sales for 2004.
The complete listing, which includes individual company revenues, number of employees and locations, can be purchased on EW's Resources Page.
For 2004, sales were up a healthy 14.9 percent among the Top 200 electrical distributors that reported revenues for both 2003 and 2004.
When completing Electrical Wholesaling's 2005 Survey of the Top Electrical Distributors, many electrical distributor executives pointed to commodity price increases of steel and copper when asked what factors contributed to their companies' 2004 sales increases.
“With anything we sell that's got any steel or copper in it — if prices go up, then we have a little growth built on top of that,” said Tom Leuenberger, president of Nelson Electric Supply Co., Racine, Wis.
In addition to price increases, the stronger economy also topped the list of reasons sales grew in 2004. Distributors reported an increase in commercial construction projects and steady residential building. Among historically industrial distributors, many acknowledged that their companies have had to broaden their customer bases in order to grow sales.
“We had always been more industrial than commercial contractor, so we have become more diversified between 2003 and 2004,” said Kathleen Ellison, president, B&K Electric Wholesale, City of Industry, Calif. With a 28 percent increase in sales, B&K added a lot of commercial contractor business in 2004, including about $4 million in school lighting. Additionally, as part of Vanguard National Alliance, B&K was able to add some national accounts work to its 2004 revenue.
Medler Electric Co., Alma, Mich., has also spread the reach of its 14 branches beyond its traditional industrial focus. According to Medler Electric's president, Ron Heine, the company has transitioned from a customer mix of roughly 40 percent industrial MRO, 40 percent construction and 20 percent other, to about 60 percent construction. “Over the last four years, we've made that swing,” said Heine. Medler Electric grew sales 18 percent from 2003 to 2004.
For Nelson Electric Supply Co., industrial MRO spending rebounded a bit in 2004. “During the 2002 to 2003 period, people were really holding the purse strings kind of tight,” said Nelson's Leuenberger. By 2004, industrials had to spend some money on maintenance, he said. “Stuff needed repair. Stuff needed to be changed. Stuff needed to be updated.” With an increase in sales of 13 percent from 2003 to 2004 and $26.5 million in sales, Nelson Electric Supply Co. just missed the cutoff of $28 million for making the Top 200.
Parallel to the capital expenditures some industrial facilities are making, electrical distributors also appear to be loosening their purse strings and investing in their companies' futures. Among the larger investments, Graybar Electric Co., St. Louis, Mo., completed its upgrade of the company's computer system to a SAP enterprise resource planning system. Last year, too, W.W. Grainger Inc., Lake Forest, Ill., completed its logistics network project, launched its comprehensive expansion program in 10 U.S. markets and instituted new telephony and IT infrastructure throughout all U.S. branches.
When asked about major changes to their companies this year or last, nearly 20 distributors indicated they had or would be upgrading computer software or switching vendors completely. More than 30 distributors cited the addition of a new branch. And, quite a few mentioned the need to upgrade and/or add to warehouse space.
“We are currently operating beyond facility capacity,” wrote George Adams, president, Electric Supply of Tampa Inc., Tampa, Fla., in his survey response. “We are trying to find additional warehouse space to complement our existing facility. If we succeed, we anticipate operational efficiency gains to provide the capacity to resume growth.”
Despite busting at the seams, Electric Supply of Tampa was able to pull off a 39 percent sales increase for 2004. Adams attributed the increase to additional salespeople, market growth and storm recovery business from Florida's 2004 hurricanes.
For Edson Electric Supply, Phoenix, a warehouse upgrade has already begun to payoff. At No. 59 with $100.2 million in 2004 sales, Edson posted a 30 percent increase for 2004. “After opening a new distribution center in 2003, our capacity to grow business has increased dramatically,” reported Scott Liles, chief operating officer and general manager, in his survey response. “The CDC (central distribution center) has increased our fill rates to 97 percent and given us the opportunity to customize services to meet our customer needs.”
Electrical distributors responding to the survey noted other ways to meet customer needs and expand into new markets as well.
Independent Electric Supply Inc., San Carlos, Calif., is expanding from its base in northern California into Southern California through acquisition, a new branch and a new utility division. The distributor now has 25 locations in California, up from last year's 18. In 2004, Independent Electric Supply acquired three California branches (Paso Robles, San Luis Obispo and Santa Maria) from Beacon Electric Supply, San Diego. In March 2005, Independent Electric opened a branch in Riverside and started a new underground utility division with facilities in Fremont, Tracy and West Sacramento.
“Sales were up 26 percent, mainly due to market penetration and the stability and caliber of our workforce,” wrote Jack Phelan, president, in his survey response. “Our acquisitions, new branches and start-up will not take effect until later this year.”
OneSource Distributors Inc., Oceanside, Calif., has also been expanding its presence in the utility arena of Southern California, according to Carol Ulak, marketing manager for OneSource Distributors. And Hughes Supply expanded its utility business with its acquisition of two utility distributors last year: Southwest Power, Santa Fe Springs, Calif., and Western States Electric, Portland, Ore.
At the time of the acquisitions, Tom Morgan, president and CEO of Hughes Supply, Orlando, Fla., said the acquisitions would strategically expand the company's utilities business to the western and southwestern regions of the United States and Canada.
The drought appears to be over. Those electrical distributors that reported sales volume for both 2003 and 2004 increased sales an average of 14.9 percent, bringing total sales for the Top 200 up to an estimated $39.15 billion for 2004. Double-digit sales growth is certainly a welcome change after two years of decreased sales volume for 2001 and 2002 and a 1.8 percent increase in 2003.
Clyde Rutland, chairman of Wholesale Electric Supply Co. of Houston L.P., succinctly summed up 2004 when he noted on the Top 200 survey, “Industrial plants spent more electrical material dollars; commercial builders spent more money.”
Based on 2004 total electrical sales estimates of $83.48 billion, the Top 200 electrical wholesalers command 46.9 percent of the industry's available market share. The Top 200 electrical distributors employ an estimated 72,125 people at approximately 5,180 locations.
The average sales per employee came in at $540,638, based on the distributors that furnished both a sales volume and an employee count for the current list. When looking at the median sales per employee, the number comes in at $475,362.
Market share of the electrical industry's four full-line national chains — Graybar Electric, WESCO, Consolidated Electrical Distributors (CED) and GE Supply — dipped again. With combined estimated 2004 sales of $12.12 billion, their collective market share is approximately 13.6 percent compared with 16.1 percent for 2003. That makes three consecutive years the four national chains have lost market share. From 1995 through 2001, the four chains steadily grew market share, peaking in 2001 with 18 percent.
Although merger and acquisition activity has definitely slowed, one electrical distributors appearing on the current list has been acquired in 2005. WinWholesale, Dayton, Ohio, acquired Noland Co., Newport News, Va.
Three distributors included on last year's Top 200 dropped from this year's list due to acquisition in 2004: Maddux Supply Co., Greensboro, N.C.; Peerless Electric Supply, Indianapolis; and Braid Electric Co., Nashville, Tenn. Mayer Electric Supply Co. Inc., Birmingham, Ala., acquired Maddux; Crescent Electric Supply Co., East Dubuque, Ill., acquired Peerless Electric Supply; and Rexel, Dallas, acquired Braid Electric.
Other Top 200 distributors have made acquisitions in 2004 and 2005 as well. Please see the acquisition chart on page 28 for more information on consolidations.
At least 16 single-location distributors filled spots on the Top 200 this year, with Electric Supply of Tampa at the top in regard to annual revenues.
To qualify for a spot on the Top 200 list, a distributor had to have electrical wholesale product sales of at least $27.973 million in 2004 — up $3 million from last year's cut-off of $25 million.
To place a firm on the list, Electrical Wholesaling sent more than 500 surveys by mail and e-mail to electrical distributors believed to have annual electrical sales in excess of $20 million. The survey list was compiled from the “2004-2005 Directory of Electrical Wholesale Distributors,” “Dun and Bradstreet's Million Dollar Database” and Electrical Wholesaling's own Top 200 database.
Top 200 distributors are ranked by sales volume insofar as possible. If an electrical distributor does not provide sales data, we estimate sales based on “Dun and Bradstreet's Million Dollar Database” as well as our own data.
When responding to the survey, distributors have the option of providing sales data on a confidential basis. We then use the data to accurately place a firm on the list, but we do not print the sales number. When we use Dun and Bradstreet data or our own estimates, we also do not print a sales number.
More than 80 percent of the electrical distributors ranked among the Top 200 supplied sales data or provided it confidentially. Although the majority recognizes the prestige that comes with making the list, there are electrical distributors that prefer to keep their numbers — and their business practices — very private. The editors of Electrical Wholesaling respect that privacy, but to make the list as complete and as accurate as possible we must then resort to estimating sales for placement in the listing. Usually, we believe we're pretty close in our estimates, but occasionally we're off.
A few years back, we had a phone call from an electrical distributor executive who was upset because he believed his company was listed much too low on the list. This particular company had never provided data — and apparently had grown in leaps in bounds instead of the average growth we had applied in our estimates.
This year, while following up with phone calls to electrical distributors we had not yet heard from, an executive told us he believes that some companies lie when reporting annual revenues. Undoubtedly, it's possible that some distributors inflate sales, but those who do would be a small minority. The level of integrity and honesty in this industry is high.
Qualified revenues include sales of products a typical electrical distributor handles, as well as electronic wire and cable, pole-line hardware and utility products, lighting fixtures sold at retail in a lighting showroom, high-tech and factory automation products, and voice/data communications products. It does not include revenues from motor repair, plumbing supplies, etc.
Top 200 By the Numbers
Estimated average sales increase from 2003 to 2004 for the Top 200
Total estimated sales for the Top 200
Estimated portion of total market share commanded by the Top 200 (based on 2004 total electrical sales estimates of $83.48 billion)
Average sales per employee for 2004 based on the 132 Top-200 electrical distributors responding to the survey with both sales and employee counts
Estimated employees among the Top 200
Estimated branch locations among the Top 200
Top 5 Reasons Sales Grew in 2004
- Commodity price increases
- Stronger economy
- Increased market share
- Steady residential building and increased commercial construction
- Hard work and sales efforts of outstanding staff
Top 5 Changes in 2004 and 2005
- New branch location(s)
- Changing or upgrading software
- Personnel changes
- Making an acquisition
- Warehouse upgrades and expansions