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After successfully navigating through most of the 2021’s COVID-induced challenges, Top 150 distributors now must learn to overcome historic product price increases, supply chain snafus and labor shortages in the field and at their own companies.
From what Electrical Wholesaling’s editors saw in the survey responses for this year’s Top 150 ranking, North America’s largest electrical distributors are confident they can overcome these challenges. Over the past two years, distributors found they could not only adapt to COVID-19 restrictions out in the field and use hybrid work strategies at their own businesses, but also grow market share and continue to invest in their businesses.
Lonestar Electric Supply, Houston, and Schaedler YESCO Distribution Services, Harrisburg, PA, exemplify these trends. No stranger to double-digit annual revenue growth, Jeff Metzler, Lonestar's CEO, expects +25% growth this year because of inflation and market share growth. He is also excited about joining the IMARK buying/marketing group.
Matt Brnik, Schaedler YESCO's executive VP, said the company gained more market share in the construction and commercial markets. The company made major investments in its logistical capabilities, adding 40,000 sq ft to an existing central distribution center; purchasing a larger facility in the Allentown, PA; market; and purchasing a warehouse in the Pittsburgh metropolitan area to convert into a CDC. Schaedler YESCO is also seeing increased revenues from the branches in Pittson, PA, and Johnson City, NY, it purchased from Rexel in 2020.
While most Top 150 distributors are bullish about opportunities for growth in 2022 and none said in their responses that they expect recessionary conditions, they are also realistic about the magnitude of the problems with price increases of excessive lead times and as a group don’t expect either to lighten up until 2023. Many of the 100-plus respondents were optimistic about new revenues from electric vehicles chargers and roughly half of respondents said some customers are already installing them in retail, local government and K-12/college & university applications. They are not seeing as much activity in residential EV applications, although 38% said some contractors are already installing EV chargers in homes.
Top 150 respondents were not yet seeing much federal funding for projects in their local markets from the Biden infrastructure bill. In the key areas of the legislation that would impact the electrical market, only 12% of respondents are seeing funds flowing for expansion of high-speed internet networks, and 6% said funds are now supporting electric grid expansion or retrofits. A slightly higher percentage (22%) are seeing funds for upgrades to hospitals and federal buildings. Less than 12% of respondents are seeing infrastructure funding from the government for traditional infrastructure projects like roads, bridges, rails airports and ports; commercial and residential energy retrofits; and modernization of schools and child-care facilities.
Acquisitions are having a huge impact on EW’s annual ranking of North America’s largest distributors, and because so many large distributors have been acquired over the past few years, EW’s editors now rank 150 companies instead of 200 firms, as they did for many years. Over the past two years, no less than 18 distributors formerly ranked on the Top 200 have been acquired, reducing the “pool” of sizeable companies to include in the list, and if you consider the number of distributors with $20 million in sales or more that have been acquired over the past five years, that adds at least 20 more distributors that had been in EW’s annual ranking before their acquisitions.
This year’s Top 150 distributors had an estimated $84 billion in 2021 revenues and operate more than 7,000 locations. We estimate these companies account for roughly 70% of the electrical market’s total sales. EW will be publishing the full ranking and related Top 150 analysis next month, but EM subscribers get this sneak preview of the ranking as part of their subscription.
