High Hopes for Building Materials in 2015 - Modern Distribution Management

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High Hopes for Building Materials in 2015

4Q14 MDM-Baird Distribution Survey reveals lofty expectations for sector this year.

The building materials sector made plenty of news in the fourth quarter with its M&A activity, but another potentially prominent storyline has emerged for 2015 – skyrocketing revenue growth.

Coming off a lackluster fourth quarter in which building materials saw -0.1 percent revenue decline due to continued softness in housing, the sector is poised for much brighter days ahead, according to the most recent MDM-Baird Distribution Survey.

More than 500 distributors and manufacturers forecasted the building materials sector to see 3.4 percent revenue growth in the first quarter and 7.1 percent revenue growth in 2015, the highest forecast in the survey and the largest percentage gain, by far, from fourth quarter 2014.

The forecast mirrors some other recent projections for the building materials sector in 2015, such as 80 percent of contractors saying they plan to expand their work force this year as optimism in U.S. construction grows.

With the exception of roofing, where demand is soft due to factors such as longer-lasting shingles and widespread lack of home equity needed to take on large home improvements, all buildings products & facilities maintenance subsectors are poised for a positive 2015, according to the MDM-Baird Survey. Notable subsectors include HVAC's projected 5.4 percent revenue growth and pool & spa's projected 6.1 percent growth in 2015.

One survey respondent said about the pool & spa sector: "Design and construction revenue took a positive turn in the fall." Another said: "2014 finished up about 5 percent over 2013, which is the fourth year in a row of growth since the plunge in the market since 2010."

Read more about the results of the fourth-quarter 2014 survey, including results by sub-sector, in the January 25, 2015, issue of MDM Premium.

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