行业焦点——第三季度分销市场更新

Consumer Confidence in Turbulent Times: The Recession WorryConsumer sentiment hits all-time low, raising concerns of a looming recession Thoughts for theThird Quarter Market Observations After revenue growth slowedsignificantly during Q2 2023, wholesaledistributors performed slightly betterduring Q3, and the overall forecast fortotal-year growth ticked upward. Industrysources report a return-to-normal forbacklog levels, but still well above pre-pandemic revenue. Pricing continues Wholesale distributors performedbetter in Q3, despite pricingdifferencesInventory levels have partiallynormalizedMarket uncertainty has drivenmany acquirers to “stay in theirlanes”Efforts to stabilize supply chainsand normalize inventory levelshave eased inflation concerns,and commodity prices havemoderated Despite certain economicchallenges, we are observingpockets of resilience and vitality. to moderate as well, and executiveshave noted margin erosion due to anincrease in competitive pressures andcustomer shopping. residential construction, buildingproducts distributors face strongerheadwinds than those serving theindustrial or commercial sectors. Whilerising mortgage rates are keepingAmericans in their homes, distributorssupplying materials for non- Building Product Declines Given the recent slow down in discretionary residential serviceproviders such as HVAC, plumbing andelectrical services will continue toperform in today’s enviroNAent. overstocked manufacturing customersand a complex new constructionenviroNAent. Despite manufacturing sentimentpersisting in negative territory, theperformance of industrial distributorsremains promising, driven by longer-term reshoring trends, increasingindustrial output, and a surge in energymarkets. Industry Trends The confluence of substantialdestocking and the divestment of high-priced commodity inventory, acquiredduring the peak of inflation, has resulted Mergers & Acquisitions Industrial distributors, especially inPVF, show immense promise anddemand. In the current climate of marketuncertainty, acquirers tend to favorfamiliar strategies, constrained byhigher debt costs, leading to increasedcaution in potential acquisitions. Thiscautious approach is marked byheightened scrutiny and emotions,particularly fear, underscoring thegrowing emphasis on gainingcomprehensive visibility into forwarddemand. in distributors and manufacturing clientswitnessing a partial normalization ofinventory levels. This adjustment periodhas exerted notable effects on both top-line revenue and margin performance. Commodity-exposed distributors in theconstruction and chemicals sectorshave borne the brunt of this adjustment,experiencing significant negativeimpacts. This is attributed to the declinein year-over-year prices of lumber andcommodity chemicals, coupled withdemand challenges stemming from In this uncertain market, acquirerscautiously stick to familiarstrategies despite higher debtcosts, prioritizing forward demandvisibility. However, macro tensions fueled by warsin Ukraine and the Middle-East aredriving growing uncertainty. In addition,a Fed course reversion towards loweringrates in 2024 could drive a resurgence ininflation. In this dynamic economiclandscape, adaptability and foresight arevital for businesses and policymakers asthey navigate evolving outcomes. Inflation With supply chain and inventory levelsstabilizing, inflation concerns havelargely eased. Commodity prices have,for the most part, declined to moresustainable levels and, apart fromspecific pockets, product availability hasnormalized. Distribution Market Indicators Distribution Market Indicators (Cont’d.) Q3 Public Company Performance (Cont’d.) Public Distribution Market Industry Takeaways Q3 2023 Market Outlook “Trends suggest that the current market easing is more reflective of a cooling in customer activityrather than a retrenchment or contraction, while growing secular spending backdrop is providingincremental support.” - Neil A. Schrimsher, President, CEO & Director, Applied Industrial Technologies “In general, what we've seen is that we've had a bit more capacity available as the overall markethas slowed and that's allowed us to focus in and we've had some success. So while there's -- therehave been and we see it as well, some headlines out of the economists that the investment side onthe R&R might be pressured, we're feeling pretty good about what we've seen so far in our ability tofill available capacity by just offering our better services and product portfolio and expertise to thecategories of customers who want it but haven't been able to get access to it.” - Peter M. Jackson, Executive VP & CFO, Builders FirstSource “The combined HVAC and residential trade plumbing market amounts to approximately $100 billion,of which we estimate nearly $30 billion of the market is serviced by more than 65,000 dual tradeplumbing and HVAC professionals. And this segment of the market is growing rapidly.” – Kevin