Paint and Varnish Wholesalers

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 9700 paint, varnish, and supply wholesalers in the US act as middlemen between manufacturers and a variety of end users, including retailers, other wholesalers, collision repair centers, OEMs, and building contractors. Special purpose coatings, which include automotive paints, account for over 40% of industry sales. Architectural coatings account for one third of industry sales. Other products include architectural coatings, enamels, primers, stains, solvents, and lacquers; paint supplies (brushes and rollers); OEM coatings; and wallpaper and wallpaper supplies.

Dependence on Automotive Collision Repair Business

Because automotive paint and coating sales account for a significant percentage of the market, the industry is influenced by demand from the vehicle collision repair market, which consists primarily of small independent businesses.

Dependence on Construction Industry and Economy

Demand for architectural paint and coatings is dependent on the health of the construction industry, which is cyclical and influenced by economic conditions.

Industry size & Structure

The average paint, varnish, and supply wholesaler employs 16 workers and generates $7-8 million annually.

    • The paint, varnish, and supply wholesale industry consists of about 970 firms that employ 16,000 workers and generate $7 billion annually.
    • The industry is concentrated; the top 50 companies account for about 84% of industry revenue.
    • Large automotive paint, body, and equipment (PBE) wholesalers include LKQ Corporation and FinishMaster (Uni-Select). Large manufacturers of paints and coatings include PPG, Sherwin-Williams, and RPM. Sherwin-Williams is one of the largest wallpaper distributors in the US.
                                  Industry Forecast
                                  Paint and Varnish Wholesalers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 17, 2022 - Existing Home Sales Drop
                                  • Sales of existing US homes, a key demand driver for architectural paint, fell 1.5% in September from August and were down 23.8% year over year, according to the National Association of Realtors (NAR). August marked the eighth consecutive monthly drop as rising interest rates slow home sales. NAR chief economist Lawrence Yun said, "The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%."
                                  • 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.
                                  • Home centers Home Depot and Lowe’s managed to pull off sales wins in the third quarter even as inflation was rising, according to Construction Dive. Home Depot’s sales rose 5.6% year over year to reach $38.9 billion. Lowe’s Q3 sales of $22.5 billion were up 2.4% over Q3 2021. Both retailers said sales growth in Q3 was strongest for their professional customer segments as consumers cut back on DIY spending due to high inflation. Higher home center sales could help increase demand for paint and varnish wholesalers.
                                  • Nonresidential construction firms’ backlogs contracted in October, according to the Associated Builders and Contractors (ABC). The ABC’s Construction Backlog Indicator dropped to 8.8 months in October, down from 9 months in September. However, backlogs were up compared to October 2021’s 8.1 months. October’s weakness was led by the commercial and institutional segment, which fell to 8.8 months in October from 9 months in September. The heavy industrial segment’s backlog grew from 8.5 months in September to 10.3 months in October. The infrastructure backlog rose from 7.2 months to 8.9 months over the same period. However, despite a shrinking backlog, the ABC’s Construction Confidence Index for sales climbed to 57.2 in October over September’s reading of 55.1. A Confidence Index sales reading of 50 or more indicates most contractors are optimistic about sales.
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