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HARDI Distributors Report Modest Growth

December 12, 2011
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HARDI reportCOLUMBUS, Ohio — Heating, Air-conditioning and Refrigeration Distributors International (HARDI) announced North American HVACR average distributor sales for October were up 3.4 percent from the same month last year, which is down from last month’s 5.6 percent growth.

October finally reversed a seven-month decline in the annual distributor growth rate, perhaps signaling a positive turn in the business cycle. HARDI’s Monthly Targeted and Regional Economic News for Distribution Strategies (TRENDS) report showed growth in six of eight North American regions, though none achieved double digit improvement compared to October 2010. U.S.-only distributor sales growth averaged 3.6 percent for the month.

“Inventories are trending slimmer compared to last year for an increasing number of distributors, with 50 percent of companies reporting inventory levels lower than last year, 46 percent reporting inventory levels higher and 4 percent reporting level inventories,” reported HARDI economist, Andrew Duguay of the Institute for Trend Research (ITR).

Duguay continued, “the 7.2 percent growth rate is a tentative turning point in the business cycle for HARDI members, however knowing that November and December 2010 were strong sales months for most members due to expiring tax credits, I would not be surprised to see the growth rate lower again in the coming surveys. Either way, seeing October 2011 outpace October 2010 is a positive sign for the industry.”

Days Sales Outstanding (a measure of how quickly customers pay their bills) continued a third consecutive month of increases up almost 1.5 percent from last month. Distributor productivity reflected by sales per employee backtracked for the fourth consecutive month down 24 percent from its July peak.

“Like much in today’s economy, signals are mixed and our October report is no different,” said HARDI executive vice president and COO Talbot Gee.

“Seeing a rebound in the annual growth rate is encouraging, but it seems to be at the expense of some fundamentals with higher DSO and lower sales per employee.

“Margin pressures are certainly intense this year, so I’ll be anxious to see our annual profitability survey mid-next year. We still see 2012 as a year for strong growth, but only those right-sized and optimized distributors will grow real profits.”

Publication date: 12/12/2011

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