The 2020 Mid-Year Economic Update_long

Weather Dampens Distributors’ 1Q Results

Colder weather versus the prior-year quarter affected results in several sectors.
Angela

Weather dampened revenues and earnings for many distributors in the first quarter. According to the first-quarter 2013 MDM/Baird Distribution Survey, construction and utility markets were particularly affected. But judging by the comments made by distribution and manufacturing executives about first-quarter results, other sectors were also impacted.

HVACR average distributor monthly sales fell 6.9 percent in March versus 2012, according to Heating, Air-conditioning & Refrigeration Distributors International’s Monthly TRENDS report. “An unseasonably cool weather-related anomaly is a likely contributing factor,” said Andrew Duguay, senior economist, ITR Economics. Duguay said March of this year was cooler than normal for every region excluding the West, and March 2012 was warmer than usual. Some survey participants said half of their sales in the first quarter typically occur in March, so poor sales for the month have had a major impact on first-quarter results.

Building materials manufacturer Carlisle Companies Inc., Charlotte, NC, reported sales for its construction materials segment declined 4 percent during the first quarter, which, according to a press release, was primarily the result of unfavorable weather conditions.

First-quarter results for electrical manufacturer Encore Wire Corp., McKinney, TX, were also affected. Daniel L. Jones, president and CEO, said sales, which decreased 5.4 percent from the prior year, may have been held down somewhat by lingering winter weather in the first quarter.

The foodservice sector may have also been affected. Sales for Sysco Corp., Houston, TX, for the quarter ended March 30 were $10.9 billion, an increase of 4 percent over the prior year, while profit fell 22.4 percent. President and CEO Bill DeLaney said results were negatively impacted by economic- and weather-related headwinds, which he said dampened consumers' willingness to spend on meals away from home.

As the unusually cold weather drove up heating demand in March, the output of utilities jumped 5.3 percent, according to the Federal Reserve.

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