Average sales growth for HVACR distributor members increased 18.9 percent in April, according to the Heating, Air-conditioning and Refrigeration Distributors International TRENDS report.
The strong results followed a 6.9 percent decline in March. The performance was encouraging, because it was not being compared to an unusually weak prior year, but to a fairly normal 8.3 percent gain in April 2012. Five of seven reporting regions experienced a sales contraction in March 2013, while six of seven experienced very strong growth in April.
The recent volatile monthly performance is why analysts prefer the annualized sales growth to assess the market’s temperature. The average participating HARDI distributor has experienced 6.1 percent sales growth over twelve months through April 2013.
“HVACR distribution continues to benefit from an improving economic environment in 2013,” said Andrew Duguay, senior economist, ITR Economics. “Home values are rising at the fastest pace since 2006, driving a strong recovery trend in new home construction.”
Duguay noted other positive economic indicators: “April Retail Sales (excluding automobiles) came in 3.9 percent above last April. This is the highest year-over-year growth rate in retail sales in 13 months. This includes a 7.7 percent year-to-year gain in retail sales at home improvement stores showing that consumers are more readily willing to spend money on their homes which are rising in value.”
“HVAC equipment sales generated the strongest sales gains last month, followed by Controls, and then Refrigeration,” said Brian Loftus, market research and benchmarking analyst, HARDI. The Days Sales Outstanding, a measure of how quickly customers pay their bills, increased slightly during the month to a level consistent with the April 2012 level that was also the 2012 peak.
“The cooling season appears to be off to a strong start,” Loftus said, “but the recent volatility will persist. May 2012 was unusually strong.” It is easy to forget how weak the economy was and, therefore, how much growth potential persists. “The revenue per employee over the past twelve months has improved 3.1 percent, or about half the overall distributor growth,” Loftus said. HARDI members are expecting the sales growth to continue.