Distributor News: 11.15.2011

Graybar Breaks $4 Billion Sales in 9 Months

A recent news release from Graybar said sales rose 16.7% in Q3 (over Q3/10), to $1.45 billion. That took nine-month sales to $4.01 billion, up 18.8% compared to last year’s same period. The company does not have shares in public hands—it’s owned by its employees and retirees. Under SEC rules, it files 10-Q (quarterly) and 10-K (annual) reports where the public can see them.

Thus far in 2011, “we continue to achieve strong organic growth and have set two monthly sales records this year,” said Robert A. Reynolds Jr., chairman, president and CEO.

Gross margin in Q3 was 18.4% (18.7% one year ago). At the nine-month mark, Graybar’s gross margin was 18.5%, vs. 18.98% in 2010’s first three quarters. Numbers for these computations came from the company’s 10-Q filing.

With $16 million more than $4 billion in sales, the company vaulted the $4 billion mark in nine months for only the second time Tedmag.com went back in the SEC filing records and checked each nine-month sales total—here are selected years:

• 2000: 9-month sales of $3.88 billion. The company’s full year came in at $5.2 billion.
• 2003: Sales of $2.84 billion after nine months—the lowest in the 11 years we checked. Sales for the year were $3.8 billion.
• 2008: Net sales of $4.15 billion, highest ever. Sales for the year came in at $5.4 billion.  

Other news from the 10-Q filing:

• Graybar now has an unsecured $500 million revolving credit facility with Bank of America and other lenders. The previous facility available to the company was for $200 million.
• While it earlier had a trade receivables securitization program, under which it could securitize up to $100 million of receivables, the program expired in October and, thus far, has not been renewed.
• During 2011, the company exercised “its purchase option available under the lease agreement on its 200,000-sq.-ft. operations and administration center in St. Louis.”

Other Graybar info of note:

Electric vehicles: On its website, under its Graybar PowerSmart offerings, the company offers a page on EV charging, featuring Leviton and Schneider Electric. Other resources include links to six non-supplier EV websites. There’s also a link to a DOE page with federal and state incentives.

Below: A portion of the Graybar page described above.

LED lighting:  A “Five questions” article in the St. Louis Post-Dispatch featured Russell Cox (pictured below in a photo from the newspaper’s website), manager of lighting business development with Graybar.

In answer to one of the questions, Cox provided an outlook for 2012:

“The cost of LEDs are drastically decreasing. I think by the first or second quarter of next year, you're going to see a lot more options on the market and a lot lower prices. Yeah, you have this investment up front, but piggyback the energy savings on top of the maintenance costs.

“That's a big thing for LEDs, because LEDs last so long.

“For example, if you take for example your typical lamp today and how many times a business is going to pay a maintenance guy to go change that lamp, the cost of the lamp and the cost of the guy vs. how many times you would change an LED, that's when you start looking at the big picture and looking at the LED and saying this isn't as expensive as you think it is.”

Rexel’s Q3 Sales Up 9% In U.S.

U.S. sales of roughly $899 million in its third quarter were up 9.2% compared to last year’s same period, according to Rexel’s recent news release on its global financial data.

Note: Rexel presents its data in euros, as it is based in France with the company’s common stock trading on the Paris exchange. Company data is offered “on a constant basis and same days.”

[Fluctuations in the euro-dollar exchange rate affect the values in U.S. dollars. To eliminate confusion, data below is all presented with the euro translated into dollar at the current rate of 1 euro = $1.37. www.oanda.com’s Historical Exchange Rates page provided a value of 1 euro was worth $1.36 on 9/30/11.]

Over the nine-month period ending Sept. 30, Rexel’s U.S. sales were $2.5 billion, up 6.7%

Rexel’s release provided gross profit (or gross margin) percentages based on sales in North America (U.S. and Canada). This figure was 21.1% in Q3, down 50 basis points from one year earlier. For the nine-month period, the figure was 21.2%, down 40 basis points.

Page 11 (Appendix 4) of the Rexel release profits “headcount and branches by geography.” According to this table, U.S. operations:

• Are down 2% in employees since Dec. 31, 2010, to 4,934.
• Have 305 branches now, 3% fewer than Dec. 31, 2010.
• Comparisons with Sept. 30, 2010, for the U.S.: 8% fewer employees (down 441); 8% fewer branches (the earlier number was 330).

Obviously, the information above ignores Rexel’s overall performance, as the company has operations around the globe. For the year’s first nine months, sales were roughly $12.8 billion, up 6.7% compared to one year ago (up 6.6% on “organic same-day” basis). Global gross margin was 24.5% for the nine-month period.

Q3 global sales were nearly $4.4 billion, up 5.6% (up 7.5% on “organic same-day” basis). Gross margins in Q3 averaged 24.0% worldwide.

Jean-Charles Pauze, chairman and CEO, said, “Thanks to solid cash-flow generation, we continued deleveraging the company.” Along those lines, the company’s balance sheet showed roughly $2.5 billion in long-term debt on the books as of Sept. 30—down 25% from Dec. 31, 2010.

On the subjects of credit and company ownership:

Standard & Poor’s raised Rexel’s credit rating from “BB-” to “BB” in recognition of the company’s credit performance thus far in 2011. The company said “we believe that Rexel can sustain these metrics, even considering an increase in acquisition activity,” according to a news release posted on Reuters.com.

S&P went on to say, “Rexel's shareholder structure largely consists of private equity investors with only 26.9% of publicly traded shares. We note that Rexel's shareholder structure could be subject to change as the current private equity investors have been invested in the group for over six years.

“Nevertheless, based on our recent meetings with the three largest shareholders, we believe that both management and shareholders remain focused on ongoing deleveraging while at the same time seeking to grow the business organically and through bolt-on acquisitions.”

Contractor Re-Opens Closed Distributor

Jim Williams, an electrical contractor who was a customer of Thunderbird Wholesale Electrical Distributor in Richmond, Mo. didn’t like seeing it close down a few months ago.

So, according to the Richmond Daily News, Williams, who owns Expert Electric and also Baldwin Electric of Excelsior Springs, Mo., bought the company. Expert Electric has been run by Williams for the past seven years.

Williams told the newspaper that Thunderbird “never had any material that was needed. You had to order everything, and they would have it for you later in the week.”

He claimed the re-opened location “has five times the material on hand” compared with the old operation.