Familiar names continue to dominate the top tier of this year’s Distribution Trends Top 50, all ringing up HVACR sales of more than $200 million in fiscal year 2019.

Watsco Inc. retains its perch at the top of the list, which uses survey respondents’ reported sales figures to determine rank. The Miami-based company reports an additional 34 locations over the past year. Watsco also added 500 team members.

The second spot remains unchanged, with Johnstone Supply turning in another successful year. Johnstone added 15 locations to its lineup, along with almost 300 new employees.

Last year’s list found R.E. Michel Company; Russel Sigler Inc.; Winsupply; and Mingledorff’s Inc. landing in consecutive spots, and they finished in the same order this year, covering slots three through six.

That quartet maintained strong performance without significant change to their number of branches. Those companies’ net changes in locations ranged from adding four to reducing by three since the last survey.

The Habegger Corporation gained ground, moving from No. 10 to No. 7 this year. Habegger boosted its fortunes in part via eight added locations and a workforce expansion of over 20 percent. Likewise, Illinois-based Munch’s Supply also picked up three spots, entering the top 10.

Two other companies entered the top 10 — Gustave A. Larson Co. hit number nine this year, progressing upward four spots. And Sid Harvey’s leaped seven spots to number 10, adding three locations.

A few more distributors whose rankings improved to spots just past the top 10: Hercules (from 20 to 11); Koch Air (from 18 to 12); Century A/C Supply (from 19 to 13); and GW Berkheimer (from 21 to 14).

1 Russell Sigler Inc. 100%
2 Koch Air 100%
3 GW Berkheimer 100%
4 AC Pro 100%
5 Value Added Distributors 100%
6 Shearer Supply 100%
7 Conklin Metal Industries 100%
8 American Metals Supply 100%
9 Dealers Supply Company Inc. 100%
10 Mingledorff's Inc. 100%
1 First Supply LLC 32%
2 Design Air 25%
3 Sid Harvey's 25%
4 APR Supply Co. 21%
5 CFM Equipment Distribution 20%
6 CCOM Group 16%
7 Standard Air & Lite Co. 15%
8 R.E. Michel Company 15%
9 Cochrane Supply & Engineering 15%
10 Robertson Heating Supply 10%
10 Auer Steel & Heating Supply Co. 10%
10 Charles D. Jones Co. 10%
10 Midea America Corp 10%
10 Corken Steel Products Company 10%
1 Illco Inc. 60%
2 Meier Supply Co. 48%
3 Young Supply Company 35%
4 Sid Harvey's 25%
5 Gustave A Larson Co. 18%
6 Johnstone Supply 15%
7 Refrigeration Sales Corp. 14%
8 Midea America Corp 10%
9 Minnesota Air 10%
10 Johnson Supply 7%


Growth Propositions

Sacramento-based cfm Distributors, Inc. reported growth over 20 percent for the last year, topping all other participants and fueling cfm’s entrance into the Top 50 “with a bullet” at 47.

New Jersey’s Total Home Supply finished just outside the Top 50 this year but was the only other participant to report growth of at least 20 percent.

S.G. Torrice Co., headquartered in Wilmington, Mass., registered 16 percent growth, while API of New Hampshire Inc. turned in 15 percent boost.

Spread throughout this year’s rankings, five other distributors achieved growth of 10 percent or more: Sid Harvey’s; Cochrane Supply & Engineering of Madison Heights, Michigan; American Metals Supply of Hazelwood, Missouri; Dayton, Ohio’s Winsupply; and APR Supply Co. of Lebanon, Pennsylvania.


Added-Value Insights

This year’s survey process straddled the rise of the novel coronavirus as a dominant story in the U.S. Many distributors participated before COVID-19 cases proliferated and before widespread closures and executive orders.

ORBIS beverage pallets.

PLUGGED INTO THE MARKET: “The trend toward electrification continues to boost the heat pump and ductless markets at the expense of natural gas furnaces and traditional split systems,” noted one survey participant.

While some late responses did take the coronavirus into account, most comments did not. As a result, this overview is setting aside the input regarding sales projections for fiscal 2020.

Nevertheless, many of the challenges and trends that distributors were facing or expecting before the virus spread through the U.S. did not go anywhere, either.

“Labor in logistics and with our contractors,” said Tim Brooks, president of Lohmiller & Company (dba Carrier West), when asked about trends for this year. Brooks elaborated to include “price pressures created by tariffs, transportations, increased labor costs, and increased material costs.”

Mike Luongo, president of Total Home Supply, had been looking to a couple of upward trends. In particular, he said, “We see a strong resurgence in VTACs and PTACs. Multi-zone mini splits continue to grow.”

Given the continued embrace of mini splits’ flexibility as consumers experience them for the first time in their own residences, that area could hold up better than some others in a downturn.

Several respondents shared thoughts on significant hurdles and developments they expected in 2020, doing so as anonymous industry pros.

“Transportation issues,” one said to start their list. “Difficult to find drivers, warehouse, and qualified inside sales people.”

Another noted that “Multi-family housing still seems to be going strong, and low interest rates continue to fuel new construction in certain areas. The trend towards electrification continues to boost the heat pump and ductless markets at the expense of natural gas furnaces and traditional split systems.”

Multiple respondents mentioned continued consolidation, tariffs and related steel pricing, and the possibility of future regulatory and refrigerant-related rulings as elements that could make life more challenging for distributors in the coming year.

A couple also commented along the lines of “the influx of technology and how it is leveraged in distribution,” not so much a hurdle as an opportunity that still could require attention and investment.

Some distributors did take a positive attitude about current challenges as an exceptionally difficult year shapes up.

One anonymous respondent reminded the traditional distributor readership that “online distributors are always a threat to value-added distributors. However, while online distributors have low margins due to little to no overheard, they also provide little value to their partners.”

“Price-conscious millennials are about to overtake baby-boomers as the largest generation,” said Matt Bedard, CEO of S.G. Torrice Company. “This segment directly impacts how both contractors and distributors craft the customer experience.”

Matt Bedard, CEO of S.G. Torrice Company, likewise emphasized that distributors have an opportunity to help themselves regardless of the economy at the moment.

“The contractor of today relies more than ever on distributors to help them navigate in the new digital age,” Bedard said. “The distributor that provides succinct, easy-to-understand guidance on myriad issues will earn the right to serve the contractor community. Consultative selling has never been more prevalent.”

Another factor? Awareness of a generational sea change, not just on the technician side but on the customer side.

“Price-conscious millennials are about to overtake baby boomers as the largest generation,” he added. “This segment directly impacts how both contractors and distributors craft the customer experience.”

As for the technician side, Bedard observed that manufacturers continue to change how troubleshooting takes place, predicting that future technicians “will be much like the auto mechanic of the today, relying on diagnostic codes to lead them to solutions.”

If recent comments from industry leaders like Johnson Controls come to pass, more and more of that diagnosis and even repair will take place remotely as well.

With the HVAC landscape changing everywhere, from technology to warehouse operations to how and where service takes place, the companies most likely to make gains in next year’s rankings may be the ones who find new ways to serve not just as a source but as a resource.