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"We believe serving the electric utilities industry is an excellent business with very good long-term growth prospects as utility companies, in efforts to increase efficiency and productivity, are increasingly outsourcing their inventory management and procurement services to distributors," said Tom Morgan, president and CEO of Hughes Supply. "In addition, we expect a higher level of maintenance spending by utility companies with the recent passage of the Energy Bill by Congress that will require electric utilities to meet federal reliability standards for the electricity grid. The maintenance-related nature of the Utilities business, along with its use of multi-year alliance contracts with utility providers, makes it less vulnerable to construction cycles, allowing for a more predictable cash flow. Additionally, its efficient use of capital results in a higher return on invested capital than Hughes Supply's overall return.
"The acquisition of TVESCO further strengthens the geographic footprint of our Utilities and Electrical businesses by expanding into the Tennessee Valley region. Its stable base of municipal utility, rural electric cooperative utility and electrical contractor customers nicely complements our existing customer base, and its reputation for customer service excellence is well-aligned with Hughes.