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    Success Despite the Economic Slowdown – Which Distributors are Winning and Why

    2 min read time

    The economic slowdown continues to provide challenges and opportunities to distributors of all descriptions. While a limited group of distributors have proved to be immune to the current downturn, by and large most participants within the marketplace are affected by an uneasy environment. With no signs of the weakness abating, it is critical to consider all options available to most successfully maintain and/or add value during these turbulent times.

    In the previous newsletter I discussed the following strategic initiatives that distributors should consider to weather the downturn and create value:

    1. Take market share while competitors are struggling
    2. Consider acquisitions as prices and valuations have softened
    3. Focus on improving processes, systems and people.

    There is evidence that the effective implementation of these strategies is creating positive results. The following examples offer evidence as to how superior results can be created through the push and pull of the aforementioned strategic levers.

    • Airgas Q1 Results Total sales climbed 22%, with 7% contributed from organic growth and 15% from acquisitions. Profits soared 33%. “The strong outlook for energy and infrastructure construction continues and export activity is still supporting U.S. manufacturers in the face of slowing domestic demand. Acquisition activity is also contributing to our growth and we have announced more than $130 million of acquired annual revenue since our fiscal year began in April,” stated Peter McCausland, Chairman and CEO of Airgas.
    • Pool Corp Q2 Results Base business sales slowed 7% but net results narrowed only 5% due to sales from acquired business and an increase in MRO product sales. Pool Corp President and CEO, Manuel Perez de la Mesa said, “While sales remain pressured by the unprecedented adverse market conditions impacting our industry, we have improved margin management, controlled expenses and realized market share gains while strengthening our business foundation for the future.”
    • Watsco Q2 Results While same-store sales declined 5%, total revenues for the quarter increased 8% driven by revenue growth of $62 million from 58 locations acquired, or opened, during the last 12 months.
    • MSC Industrial Direct Q3 Results Net sales rose 6.1% and operating income advanced 12.5%. “Driven by the value proposition we provide to our customers, we continued to grow sales and take share.” said MSC President and CEO, David Sandler. “We reported solid growth in profitability resulting from our increased revenue and focus on operating cost controls. Growth initiatives, including our Large Account Customer program and investments in our West Coast operations, also contributed to our results and represent excellent opportunities for the company moving forward.” added Sandler.

    Market share gains, acquisitions and process improvements all have been a focus of the above distributors and led to superior performance in a tough economy. If your company has not already considered these approaches, now may be a good time to re-evaluate your strategic plan. If you would like to discuss how you might consider one or more of these alternatives, please contact PCE at 407.621.2100.

    If you have comments or questions about this article, or would like more information on this subject matter, please contact us.

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    Michael Rosendahl


    Michael Rosendahl

    Investment Banking

    New York Office

    201-444-6280 Ext 1 (direct)

    201-444-6280 Ext 1 (direct)

    407-621-2199 (fax)

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