Hardware, Plumbing & HVAC Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 10,100 hardware, plumbing, and HVAC/R distributors in the US consolidate a variety of products from many different manufacturers to offer customers wide selection, reasonable prices, and a single point of contact. Distributors may sell a combination of product categories or specialize.

Construction Drives Demand

Hardware, plumbing, and HVAC distributors depend on construction projects as major sources of revenue.

Consolidation Continues

Distributors continue to expand into new industries and geographical markets or gain market share via acquisitions.

Industry size & Structure

A typical hardware, plumbing, HVAC and refrigeration distributor operates out of a single location, employs about 27 workers, and generates $17.5 million annually.

    • The hardware, plumbing, and HVAC/R distributor industry consists of 10,100 companies, employs 277,400 workers, and generates about $178 billion annually.
    • Most distributors are small, independent operations - 52% operate out of a single location and 79% have fewer than 20 workers.
    • Customers include building contractors, residential and commercial builders, dealers, hardware retailers, government accounts, and industrial and institutional customers.
    • Large companies include Ace Hardware, Ferguson, MRC Global, Hajoca (EMCO), Watsco, DistributionNOW, and HD Supply.
                              Industry Forecast
                              Hardware, Plumbing & HVAC Distributors Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 17, 2022 - HVAC Supply Chain Issues, Long Lead Times Persist
                              • Some construction industry insiders believe that the pandemic-related supply chain issues that tightened HVAC equipment supply chains and lengthened lead times will likely persist into 2023 and perhaps further, according to Construction Dive. Some HVAC manufacturers are still contending with shortages of semiconductor chips, which are often the same types used in the auto industry. Some of the products with the longest lead times include air handlers, rooftop units, and air-cooled chillers.
                              • The Dodge Momentum Index (DMI) increased 9.6% in October 2022 to 199.7 (2000=100), up from the revised September reading of 182.2. The DMI Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component increased by 13%, and institutional rose by 2.9%. An increase in office and lodging projects boosted the commercial planning pipeline. The institutional sector was mixed amid a growing pipeline of recreation and education projects, but the number of healthcare and public planning projects declined. Developers and project owners continue to see healthy demand, despite recession concerns, although continued inflation, high interest rates and materials costs, and labor shortages have the potential to blunt the flow of new projects.
                              • High interest rates, elevated building materials prices, and a lack of affordable inventory pushed home builder sentiment lower in November, according to the National Association of Home Builders (NAHB). Homebuilder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 33 in November 2022 from 38 in October, marking the 11th consecutive monthly decline. Any HMI reading over 50 indicates more builders see conditions as good than poor. Amid weak buyer traffic, 37% of homebuilders reported cutting prices in November compared to 26% who reduced prices in September, according to the NAHB.
                              • In January 2023, new Department of Energy (DOE) efficiency standards for commercial rooftop HVAC systems go into effect, requiring new units to increase energy efficiency by 15%, according to Air Conditioning, Heating, and Refrigeration News. To comply, manufacturers will likely have to add advanced features that are mostly found on higher-end models and make them standard across their offerings, which is expected to increase prices. However, some industry insiders believe the new standard could prompt building owners to choose replacement over repairs to save on energy costs. The tax incentives included in the Inflation Reduction Act are also projected to increase demand for more efficient HVAC equipment.
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