Electrical Wholesaling's 2012 Top 200 Electrical Distributors: Analysis & Commentary

Electrical Wholesaling’s annual Top 200 listing always offers one of the best reality checks of what’s really happening in the electrical market. Each year, senior executives from more than 100 of the industry’s largest distributors offer invaluable insight into what’s happening with the business and the electrical industry.

As one might expect, 2012 has been a bit of a mixed bag for them. On the bright side, 53 of the 116 executives (46%) who offered sales forecasts in the survey responses Top 200 electrical distributors expect sales increases of at least 10%. However, 40 respondents (34%) expect their year to be flat and at best offer 5% growth. Some of the electrical distributors expecting sluggish sales pointed to the poor residential construction market and a scarcity of new commercial jobs. Still, the general tone of the Top 200 respondents was decidedly optimistic. Even if some of their core markets were growing slowly, at least they were moving in the right direction, unlike during the dark years of 2008-2009. Considering how slow the all-important commercial market was for many local markets in 2011, it’s surprising that so many electrical distributors enjoyed decent growth last year in the 5%–8% range.

Distributor Comments

Langdon Scott, the vice president and general manager of Peninsular Electrical Distributors, West Palm Beach, Fla., is expecting 5% growth for his company. Scott says commercial construction in his marketplace is mostly treading water but that, “Residential construction, surprisingly is growing.”

Tammy Miller, CEO, Border States Electric, Fargo, N.D., believes sales will increase 10% in 2012, led by robust growth in the industrial market and slow, steady growth in the construction market. She says Border States is also currently enjoying expanded products sales to existing customers and strong oil patch and utility sales.

Several other distributors mentioned the oil and gas segment as one of their stronger customer segments. Bill Elliott, president, Elliott Electric Supply, Nacogdoches, Texas, expects this niche to help fuel a 20%-sales increase. He also acquired Key Electrical Supply, Houston, and several branches of Treadway Electric Co., Inc., Little Rock, Ark. Rick Teaberry says Winkle Electric Co. Inc., Youngstown, Ohio, has benefitted from a major capital project in its northeastern Ohio market area — a greenfield pipe manufacturing plant that will support the Marcellus Shale Gas find in western Pennsylvania and eastern Ohio. Teaberry, the company’s president, sees a 15% increase in 2012 sales due to this project, other oil and gas projects, and an increase in market share from existing customers.

The industrial market has also been strong for Graybar Electric Co., St. Louis, says Kenton Sorenson, senior accountant, while the residential contractor market has lagged behind. “Growth in industrial production helped push plant capacity utilization rates and capital expenditures on business equipment to their highest levels in three years,” he said. “Non-residential construction grew moderately during 2011, driven by investment in the energy sector.”

Graybar was one of the Top 200 Graybar was one of the Top 200 distributors that launched new branches in 2011, with new locations in California, Indiana, Missouri, Minnesota and New York. This year, the company also opened the doors of new branches in North Charleston, S.C.; Joplin, Mo.; and Lincoln, Neb. To service its utility customers, TEC Utility Supply & Service, Georgetown, Texas, opened up three new branches inside customers’ existing warehouses, but uses those facilities distributors that launched new branches in 2011, with new locations in California, Indiana, Missouri, Minnesota and New York. This year, the company also opened the doors of new branches in North Charleston, S.C.; Joplin, Mo.; and Lincoln, Neb. To service its utility customers, TEC Utility Supply & Service, Georgetown, Texas, opened up three new branches inside customers’ existing warehouses, but uses those facilities to service other customers as well.

Some distributors saw broadbased improvement across all key markets. Timothy Berry, president and CEO of Kriz-Davis Co., Grand Island, Neb., expects high-single to low double-digit growth for 2012, and said all of the company’s markets grew last year. “Commercial construction and industrial sales results were our biggest rebound segments, with utility numbers posting continued steady growth patterns,” he said. “Consumer confidence remained cautious, but did increase during 2011 in our geography. Our sales mix is very diversified by design with a healthy mix of utility, construction, and industrial customers.”

With a 20%-increase baked into his 2012 sales forecast, Doug Borchers, vice president, Dickman Supply, Sidney, Ohio, was one of nine respondents looking for sales to increase more than 20%. His optimism is based in large part on a strong industrial market and a construction market that’s starting to wake up in west-central Ohio. “The industrial automation market is very strong and the construction market just now showing small signs of activity after a couple years of stagnation,” he said. “The strong industrial market contributed heavily to growth. We’re expecting another 20% increase in 2012 based on activity so far and backlog at our customers.”

While the executive management team at WinWholesale, Dayton, Ohio, expects more modest growth this year, Chuck Manker, corporate communications manager, sees growth in work from the federal government, health care, education and multi-family construction. He said the company has an “increased focus on customer needs, and an emphasis on business basics — relationships with current customers, acquiring new customers, sensible expense control and managing assets.”

Kriz-Davis’ Berry said a back-to-basics sales approach also worked well for his company in 2011. “Our focus was selling basics and making it easier for the customer to do business with us,” he said. “Through an increase in inventory levels during this time and e-commerce and back-office platform initiatives, the response from our customer base was positive, resulting in our increased sales performance for 2011.”

Several companies mentioned government contracts as a solid source of business over the past 12 months. David Zelandi, marketing manager, Granite City Electric, Quincy, Mass., and Rich Cotter, V.P. of finance, Needham Electric Supply Corp. (NESCO), Canton, Mass., both said their government sales were up in the eastern Massachusetts electrical market. Cotter said lighting retrofits and large project are ran strong in 2011. Interestingly, both executives see 15% growth for 2012.

You will notice some new members of Electrical Wholesaling’s Top 200 distributors this year — several of the largest independent Canadian electrical distributors. Since several of the largest national distributors now provide EW’s editors with their North American sales for this list and don’t break out their U.S. sales, we thought including the largest Canadian distributors would offer a more accurate reflection of the largest distributors on the continent. Any 2011 sales data provided by Canadian distributors was converted into U.S. dollars by using the exchange rate on Dec. 31, 2011.

Methodology

To compile this listing, in April of this year Electrical Wholesaling’s editors sent out a survey to several hundred distributors of electrical supplies that have either been on the listing in the past or have at least $15 million in annual sales according to our data sources. In addition, we get data from publicly held distributors and other companies that make their sales and company data publicly data. This year we got information back from 130 Top 200 distributors, which in itself is remarkable because the vast majority of companies on this listing are privately held. Many of these companies do ask us to use their sales data confidentially and only for placement on the listing. We have been happy to do that since the late 1970s, when this ranking was established by the late Andrea Herbert, Electrical Wholesaling’s chief editor for many years. You will also notice that we do rank companies that have been acquired in either 2011 or 2012. Our general rule of thumb here is that when a company has been acquired, we include their sales (or a sales estimate) for that calendar year, but take them off the Top 200 listing the next year, when they are fully integrated into the acquirer. In those situations where a distributor is large enough to make the listing but did not respond to our surveys, if we have reliable sales or employee data from the past few years, we will place them on the listing, using a sales-per-employee average, or the average sales increase based on responses from Top 200 respondents or other Electrical Wholesaling sales data. However, if we haven’t heard from you for a while and your company is on this year’s listing, there’s no guarantee that it will be ranked again next year. We make every effort to make this listing as accurate as possible, and can’t rely on sales estimates or other company data that’s more than a few years old.

Strictly by the numbers

With an estimated $58.3 billion in sales, EW estimates the Top 200 distributors controlled more than 60% of the $86.9 billion in 2011 sales through electrical distributors. According to EW estimates, these 200 companies had at 68,924 employees and 5,500 North American branches. From the 130 companies that provided both sales and employee data, Electrical Wholesaling’s editors estimated that full-line distributors averaged $666,635in sales-per-employee, and that all Top 200 respondents (including the product specialists with markedly higher sales-per-employee ratios) average $728,976.