The second quarter Baird Industrial Distribution Survey indicates that average second quarter year over year revenues were slightly worse than the first quarter, with the third quarter forecast slightly better than current quarter trends. Encouragingly, pricing and gross margins appear to be holding relatively steady while inventory levels continue to decline with no re-stock expected in the near-term.
"The bottoming process appears to be underway in most industries," said David Manthey, CFA, Baird’s senior research analyst who leads the firm’s Industrial Distribution sector research. "With conditions stabilizing and inventories at very low levels throughout most supply chains, industrial distributors should continue to see improvement into 2009."
Baird’s Industrial Distribution Research Team collected feedback on second quarter results from nearly 300 independent and captive distributors with combined annual revenue of nearly $50 billion. Key survey findings include:
- Average revenues declines were slightly worse in the second quarter at -16.0% year over year compared to 13.4% year over year last quarter.
- Pricing appears to be holding relatively steady, as average pricing was -1.7% year over year in the second quarter compared to -1.4% year over year last quarter.
- Respondents’ third quarter outlook is slightly better than current quarter trends at 11.6% year over year.
- Inventories continued to decline with no re-stock in sight near-term.
- Gross margins remain relatively stable, with most reporting no material change and overall gross margin percentages declining approximately 33bps year over year on average.