Canadian Electrical Wholesaler

 

May 11, 2018

DistributorBy David Gordon

It’s quarterly review time again and an opportunity to review publicly traded distributors’ 2018 Q1 performance — Rexel, WESCO, Anixter, AD, Grainger and Fastenal — to see if we can identify trends.

WESCO

From the earnings slides and earnings call, the company reports 11% organic growth (company-wide) with expanding backlog

  • Overall 10% in US and Canada, 24% internationally
  • Industrial up 10% — 9% in US, 17% in Canada
  • Construction up 9% organically (10% in US and Canada)
  • Utility up 18% (21% in US, 6% decline in Canada)
  • Institutional up 9% (3% in US and 5% in Canada); seeing increasing interest in LED retrofits and datacom initiatives
  • Increased sales guidance to 5-8% for the year, which is inline with industry projections … the low-end for contractor markets, the high-end for industrial markets
  • Gross margin was 19.1%
  • Operating margin was 3.7%
  • Tax rate decreased from an expected 22% to 19.6% due to the new tax law.
  • Customer trends across businesses: high expectations for supply chain process improvement, cost reductions and “supplier consolidation”; technical expertise
  • Outlook for Q2: projecting sales growth of 7-10% and operating margin of 4.2-4.5%

Overall, originally WESCO was targeting 3-6% growth. Now it is targeting 5-8% growth with end-markets being 3-6% and market out-performance, taking share, being 1-2%.

Rexel

Rexel’s business model is different than WESCO’s, so shares a different side of the market. While they serve some large industrials and contractors, the business model is more focused on the small to mid-sized customer base.

The following is from their call and slides, only touches on corporate:

  • Q1, worldwide, in line with expectations with 3.9% growth.
  • Gross margin, worldwide, of 25.1% and EBITDA of 4%, down 32 basis points
  • Investing more in IT (eCommerce / digital)
  • North America, 34% of sales, was up 3.5%
  • Seeing some benefits from recent US realignment and branch openings / remodels
  • Project business down (continued affects of GE and large projects. GE Industrial also probably impacting their commercial contractor business and GE impacts sales, as a customer, by being down 1.6%)
  • Gross margin in North America was up to 22.8

Anixter

Anixter, through its Anixter Power Solutions group, which previously was HD Supply, serves the electrical and utility segments. Below are some points relative to this segment of their business from its earnings call and slides:

  • Anixter reports three parts to its business. NSS (51% of business, a US$1 billion Q1 business) is its Network and Security Solutions and EES (29% of business, a US$568M Q1 business) is Electrical and Electronic Services and UPS (20% of business) is its utility group.
  • The EES portion had a sales increase of 3.7%, consistent with expectations. Expect accelerated Q2 and second half sales growth.
  • North America sales were US$443M, up 3.6% organically with strong OEM sales in Canada and “strong recovery on the industrial side.” Sluggish US commercial construction.
  • Anixter wants to grow in the electrical product segment, although it’s questionable, from reading the report, if they are investing to grow, if manufacturers are putting them into the business as they “don’t want to miss out,” or if customers are asking for Anixter to serve them as these customers are seeking an additional / alternative supplier.
  • This division is adding industrial automation to its US offering (to better pursue this faster growing segment of the industrial business, thereby creating more competition for electrical distributors.)
  • Intends to cross-sell security and low voltage electrical products across the legacy Anixter wire & cable business, hence leveraging its salesforce, relationships and broadening its benefit to manufacturers 
  • Overall, Anixter is investing US $60-70M in CapEx with much of the investment going into systems and technology.
  • Made acquisitions of three small security firms. If Anixter wants to increase its involvement in the electrical industry, contractor or industrial segments, it will become interesting to see if they pursue electrical distribution acquisitions to quicken this cross-selling opportunity. To date we have not heard their name mentioned as an aggressive player in the electrical segment.)

AD

AD, the contractor and industrial products wholesale buying / marketing group, reported a 12% increase in Member sales, across 12 AD divisions, totaling US$9.7 Billion. Purchases from AD suppliers grew by 12% in Q1 YTD and distributions to Members were also up 12%.

On a same store basis, by industry, Q1 YTD PHCP sales were up 12%; Industrial / PT sales were up 11%; Electrical sales were up 10%; and Building Materials was up 4%.  By country, Same Store sales in the U.S. grew 10%; Canada was up 9% and Mexico grew 10%.

The interesting parts are that:

  • AD Electrical was up 10%, which is above industry trends overall and on a par with WESCO and Grainger performance, which may infer stronger industrial growth
  • AD’s Industrial / PT sales up 11% lend further credence to growth in the industrial customer segment (hence transfers to the electrical business also)

So, what do we learn:

  • Industrial market is outperforming construction
  • Large contractors have work but have labor issues and the market is very price competitive
  • Small to mid-sized contractor market is “sluggish”
  • Rexel and Anixter are investing in technology / digital strategies
  • Rexel and Anixter tones are relatively informative whereas WESCO “stuck to the numbers”

And if we think about Grainger (U.S. sales up 9%, further growth 30%) in small to mid-sized accounts… and distributors can learn from their pricing “challenge” from last year and how price effectiveness can drive sales and GM$ increases) and Fastenal (call, 66% of sales to industrial and overall company sales up 13%), we’re seeing growth in industrial, penetration into mid-sized accounts, investments in digital and services.

David Gordon is President of Channel Marketing Group. Channel Marketing Group develops market share and growth strategies for manufacturers and distributors and develops market research. CMG’s specialty is the electrical industry. He also authors an electrical industry blog, www.electricaltrends.com. He can be reached at 919-488-8635 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Contribute Your Product Knowledge to Develop the Industry’s Harmonized Data Model (HDM)

IDEA Harmonized Data ModelHave you heard about the industry’s Harmonized Data Model (HDM) initiative? IDEA, in partnership with NAED, is calling all product experts to get involved and be recognized by the industry. People who join the Product Expert Task Force will impact the future of the electrical distribution channel.

In the next 6 months, subject matter experts (SMEs) will be harmonizing the categorization for dozens of product categories. It’s an opportunity for industry experts to participate as a SME in the HDM initiative.

 

 

 

For more information Go Here.


 

 

McKenna

By Rhonda Cox, Regional Sales Manager, Western Canada, EGLO Canada

It is with pleasure that EGLO Canada annouces the nomination of McKenna Agencies as our representation in the specification market as well as electrical distributor channel for the markets of Alberta, Yukon, Northwest Territories and parts of B.C.

Covering various interveners within the specification market (engineers, architechts and designers), McKenna Agencies is a privately-owned-andoperated company whose history under its current ownership dates back to 1988. 

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Sonepar CioffiRenato

Sonepar has officially signed an agreement for the acquisition of 100% of shares in CioffiRenato. Founded in 1974, CioffiRenato is a company active in the distribution of electrical material operating in the Lecce province, with its headquarters in Casarano.

In 2021, with its two branches serving all the area, the company recorded sales of around €10 million. It employs 17 associates and 2 sales representatives. Thanks to this acquisition, Sonepar, already present in Puglia with six branches, will strengthen its business in the region.

 

 

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Chris Farrah

Electrozad have recently announced the retirement of Sales Representative Chris Farrah, on July 29th, 2022. Chris began his career with Electrozad on February 20th, 1983. His first position was doing deliveries as a truck driver, then advanced to a warehouse position, then a Customer service/Counter sales representative.

Finally in 1991, Chris was promoted to the position of Sales Representative where he continued to excel and increase his relationships with customers and vendors for the remainder of his career. Chris had been a valuable member not only of Electrozad's business but of the Electrozad family too. 

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Franklin Electric

 

Franklin Electric Co., Inc. released its third annual Sustainability Report this month, once again providing transparency, insight and data related to the Company’s performance toward Environmental, Social and Governance (ESG) initiatives and goals. The commitment to these initiatives and goals led the Company to be named to Newsweek’s 2022 list of America’s Most Responsible Companies.

This year’s report includes several details related to product advancements, employee health and wellness programs, and manufacturing initiatives. 

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Doug Bunting

I am pleased to announce the appointment of Doug Bunting as Senior Sales Manager, Western Ontario District effective Aug 2nd, 2022. Doug will continue to report directly to me. Doug is a well-known industry veteran who has held many leadership positions over his 35 years with Westburne.

In this role, Doug will drive commercial sales activities and will help recruit, mentor, and develop our team of commercial account managers, branch staff, and project managers. He will focus on accelerating sales growth in the Western Ontario District and will play a key role in supporting vendor and customer relationships.

 

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Greg Parsons

It is with mixed feelings that Stanpro recently announced that Greg Parsons, Vice-President of Sales, will be retiring at the end of the year. Greg has been with Stanpro for the last 18 years as well as four years with Standard prior to joining Stanpro. Greg has been a key contributor to the success and growth Stanpro has known. He has been the face and leader of the sales force; he has built strong long-lasting relationships with customers and partners and he has been a pillar and mentor for many.

With Greg retiring, Stanpro are very pleased to announce the nomination of Adam Silverman as the National Sales Director. This nomination is effective immediately. 

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Jennifer Penton

Magic Lite is proud to announce the appointment of Jennifer (Jen) Penton to the position of National Sales Manager. Jen joins the team with a proven track record having spent the last 10 years in business development and project management with engineering consulting firm GHD.


Prior to this she earned a PhD at the University Of Western Australia. As the daughter of Magic Lite founder and CEO Tom Penton, Jen is very familiar with the company and its operations and is looking forward to bringing her passion and drive to the family company.

 

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AES Acquisition

RESA Power, LLC has recently announced the acquisition of Advanced Electrical Services, Ltd. Based in Alberta, Canada, Advanced Electrical Services (AES) is a NETA accredited company that has two locations in Calgary and Edmonton from which it has been providing electrical testing services since 2008 throughout Western Canada.

AES specializes in providing medium and high voltage services and products into the renewable energy, mining, commercial, utility, and oil & gas market segments in Western Canada. RESA Power was acquired by Investcorp, a leading global alternative investment firm, in December 2021 and this marks the first add-on acquisition under their ownership.

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