November 20, 2024
Electric Avenue — News Impacting Lighting Markets: November 2024
Acquisitions and expansions shape recent electrical distribution developments
Welcome to Electric Avenue, where each month we explore the intersections between the electrical industry and our beloved lighting industry.
With a focus on news, trends, and economic factors shaping the landscape of electrical distribution, construction, contracting, and manufacturing, Electric Avenue is your resource for staying informed of some of the more notable electrical industry events that may impact North American lighting markets.
Each month, Electric Avenue delivers important news on macro market conditions and changing business dynamics affecting commercial lighting projects and general lighting "stock & flow" distribution across North America.
Here's what's happening since our last Electric Avenue digest was published on October 23:
Electrical Distributor News
Walters Wholesale Electric Acquires Desert Electric Supply and Pomona Wholesale Electric
Walters Wholesale Electric, a division of U.S. Electrical Services Inc. (USESI) headquartered in Brea, California, has acquired Desert Electric Supply and Pomona Wholesale Electric. The acquisition broadens Walters' presence in Southern California, incorporating Desert Electric Supply’s three Coachella Valley locations in Indio, Palm Desert, and Palm Springs, as well as Pomona Wholesale Electric’s single location in Pomona. The terms of the deal were not disclosed.
Desert Electric Supply, founded in 1972, has served contractors and industrial clients for over five decades. Former owner Eric Stevens will remain involved during the transition. Walters plans to retain the Desert Electric brand while integrating both companies into its centralized logistics and inventory system. Walters operates over 33 locations, employs more than 500 people, and aims to strengthen regional service through the acquisitions.
“Walters Wholesale Electric Co. is thrilled to announce the acquisition of Desert Electric Supply and Pomona Wholesale Electric. This includes locations in Pomona, Valley in Indio, Palm Desert, and Palm Springs. This expansion allows us to enhance our coverage across Southern California while maintaining our commitment to exceptional service and growth. We are excited to welcome these teams into the Walters family and look forward to building on our shared dedication to excellence. With over 33 locations under Walters Wholesale Electric Co., we’re proud to expand our offerings and provide reliable service across Southern California, from San Diego to Ventura County,” a Walters spokesperson said in a statement shared with Inside Lighting.
Wesco International to Acquire Ascent LLC for $185 Million
Wesco International, headquartered in Pittsburgh, Pennsylvania, has entered into a definitive agreement to acquire Ascent LLC, a privately held data center facility management services provider based in St. Louis, Missouri. The purchase price is $185 million on a cash-free, debt-free basis. Ascent, with approximately 330 employees across the United States and Canada, reported $115 million in trailing twelve-month sales and a 30% three-year sales compound annual growth rate.
This acquisition aims to enhance Wesco's data center solutions portfolio by integrating Ascent's engineering expertise and professional services. Ascent's offerings include liquid cooling design and implementation, facility-wide maintenance, critical systems repairs, emergency services, and management of third-party maintenance workflows. The transaction is expected to close in the fourth quarter, pending customary regulatory approval.
Grove Electric & Lighting Supply acquired by Raven Resources
Raven Resources Corp., headquartered in Dallas, Texas, has acquired Grove Electric & Lighting Supply from its previous owner, Caisha Wholesale Electric. The financial terms of the transaction, announced on Nov. 1, 2024, were not disclosed. Grove Electric, based in Rove, Oklahoma, has been in operation for approximately 27 years, providing electrical supplies to residential and commercial contractors as well as individual customers.
Under Raven Resources’ ownership, Grove Electric will retain Tim Williams as manager, ensuring continuity in operations and customer service. Raven Resources specializes in strategic investments and actively supports its portfolio companies through financial direction and management consulting. This acquisition highlights Raven’s commitment to expanding its portfolio in construction-related markets.
Allied Wholesale Electrical Supply Acquires Midland Electric Supply
Indianapolis-based Allied Wholesale Electrical Supply, Inc., a 39-year-old family-owned business with branches in Anderson, Bloomington, and Lafayette, has acquired Midland Electric Supply, a single-location distributor also based in Indianapolis. Terms of the transaction were not disclosed.
Lonestar Electric Supply Expands Operations to Louisiana
Lonestar Electric Supply announced plans to launch its first out-of-state operation in New Orleans, Louisiana, by the end of 2024. This marks the Houston-based distributor’s 14th location and the beginning of its expansion into the Louisiana market. The new facility, led by Brett Comeaux, will employ approximately 20 people and will focus on providing innovative electrical products and solutions for contractors. Lonestar, named the 20th largest electrical distributor by Electrical Wholesaling magazine, partners with major manufacturers such as ABB, Southwire, and Orbit Industries.
The company’s Louisiana expansion follows a period of rapid growth, with recent openings in McAllen, College Station, McKinney, and multiple West Texas markets. Serving primarily commercial electrical contractors, Lonestar also operates divisions for industrial work, renewable energy, and EPC projects. With approximately 800 employees and over 4,000 contractor partners, Lonestar attributes its success to value-added services, including in-house lighting design and integrated project management.
DSG Acquires Peoria Pump, Expands into Illinois
DSG, headquartered in Plymouth, Minnesota, has acquired Peoria Pump in an asset purchase effective Nov. 4, 2024. Peoria Pump, established in 1947, operates two branches in Peoria and Rockford, Illinois, serving as a wholesale distributor of pumps, pipe, and geothermal supplies for well drillers in the Midwest. This acquisition expands DSG’s operations into Illinois, marking its presence in nine states. Terms of the deal were not disclosed.
Terry Cole, Peoria Pump’s owner, will remain during the transition, and the company will continue operating as Peoria Pump: A DSG Company before fully integrating under the DSG brand.
World Electric Opens New Gainesville, Florida Branch
World Electric, a Sonepar company, has opened a new 7,000-square-foot facility in Gainesville, Florida, to serve residential, commercial, and industrial contractors. The branchfeatures a fully stocked counter, morning and afternoon deliveries, and an after-hours pick-up box for added convenience. Tammy Livers, President of World Electric, expressed enthusiasm for the expansion, saying, “We’re thrilled that World Electric is now serving the Gainesville, FL market! We’re grateful for how the community has embraced us so far and look forward to helping our new customers keep the jobsite running each day.” The branch is managed by Gary Weber.
Headquartered in Jacksonville, Florida, World Electric has been serving customers in Florida and Georgia since 1999.
Sonepar Lends Insights into $2B North America Revenue Boost
Sonepar has reported a $2 billion revenue increase in 2024, driven by seven recent acquisitions and the addition of 89 new branches. Since 2021, the electrical distribution company has completed 21 acquisitions across North America, adding approximately 1,700 associates and bolstering its operational footprint to 548 branches across all provinces, territories, and states.
The company has invested in digital innovation and expanded offerings in key sectors such as solar, electric vehicles (EVs), industrial solutions, broadband, and utilities. Proprietary platforms like Spark and the Digital Job Center are part of Sonepar's strategy to enhance its distribution services and meet customer needs efficiently.
Authority Fines Schneider, Rexel, Sonepar, Legrand Over $500m
The French Competition Authority has fined Schneider Electric, Rexel, Sonepar, and Legrand a total of €470 million (approximately $512.3 million) for alleged anti-competitive practices involving "special price agreements" or "dérogations." These agreements reportedly allowed manufacturers to influence distributors' resale prices, violating competition laws.
The fines are distributed as follows: Schneider Electric (€207 million), Rexel (€124 million), Sonepar (€96 million), and Legrand (€43 million). All four companies have announced plans to appeal the decision, denying the allegations and asserting their commitment to compliance with competition regulations.
Sonepar Earns Military Friendly Awards and Top Vet Ranking
Sonepar has been recognized with five 2025 Military Friendly® awards, including a Gold rating as a Military Friendly Employer, and has secured a spot in the top 100 of the Military Times Best for Vets 2024 Ranking. These honors highlight the company’s exceptional commitment to supporting the military community through veteran recruitment, retention, and strategic initiatives.
President Rob Taylor credited Military and Veteran Relations Manager Chris Miles and Sonepar’s Military Employee Resource Group (MERGE) for spearheading efforts to assist veterans, military spouses, and reservists transitioning to civilian careers.
Quarterly Earnings
Wesco Reports Third Quarter 2024 Results
In the third quarter of 2024, Wesco International reported net sales of $5.5 billion, a 2.7% decrease from the same period in 2023, primarily due to the divestiture of Wesco Integrated Supply. Organic sales declined by 0.6% year-over-year but increased by 0.1% sequentially. The company achieved an operating profit of $335.6 million, with an operating margin of 6.1%. Gross margin improved to 22.1%, up 50 basis points from the previous year.
Adjusted earnings per diluted share were $3.58, reflecting a 20.3% year-over-year decrease. Operating cash flow for the quarter was $302.1 million, and free cash flow reached $279.5 million, equating to 144.9% of adjusted net income. Wesco reaffirmed its full-year outlook, anticipating continued growth in the data center sector and large projects in the electrical and industrial markets.
Graybar Reports Growth in Third Quarter
In the third quarter of 2024, Graybar reported net sales of $3.0 billion, marking a 4.4% increase compared to the same period in 2023. Net income attributable to Graybar for the quarter was $110.2 million, a 6.4% decrease from the previous year. For the first nine months of 2024, the company achieved net sales of $8.7 billion, up 4.8% year-over-year, while net income decreased by 11.2% to $325.8 million.
The decline in net income is partly attributed to investments in Graybar Connect, a multi-year strategic business transformation project. Chairman, President, and CEO Kathleen M. Mazzarella expressed pride in the company's positive results amid market uncertainties and emphasized a focus on serving customers and making strategic investments for long-term success.
Grainger Reports Results For The Third Quarter 2024
In its third-quarter 2024 earnings report, Grainger announced a 4.3% year-over-year increase in sales to $4.4 billion and a 4.7% rise in diluted EPS to $9.87. However, the company cut its 2024 outlook, narrowing its full-year guidance for daily, organic constant currency sales growth to 4.5%-5.25% and lowering its adjusted diluted EPS range to $38.65-$39.35, reflecting a more cautious view for the remainder of the year.
What We are Reading
What Advanced Logistics Can Do For Supply Chain
According to Supply & Demand Chain Executive, the logistics and retail sectors have undergone rapid evolution, with immediacy becoming the new consumer standard and environmental consciousness shifting from a consideration to a necessity. The surge in e-commerce has led to unprecedented increases in last-mile deliveries, making it challenging for companies to balance customer satisfaction with sustainable operations, cost efficiency, and profitability.
To address these complexities, organizations are adopting advanced technologies such as virtual twins, artificial intelligence, machine learning, and the Internet of Things. These innovations enable real-time data processing, predictive analytics, and seamless collaboration among key players in the logistics ecosystem, facilitating more informed decision-making and optimized operations.
NAED CEO Releases Statement on 2024 Election
Wes Smith, President and CEO of the National Association of Electrical Distributors (NAED), issued a statement via tED Magazine following the 2024 election, highlighting priorities for the new administration and Congress. Smith emphasized the importance of strengthening the supply chain, enhancing workforce development, implementing permitting reforms, and fostering a stable tax and regulatory environment.
As reported by tED Magazine, Smith also highlighted the need for policies that support innovation and expand customer choices. Smith expressed NAED's readiness to work with elected officials to advance the needs of the electrical distribution industry.
Schneider Electric fires CEO after disagreement
TECHZINE reports that Schneider Electric has dismissed CEO Peter Herweck, effective immediately, due to disagreements over the company's strategic implementation. The board cited divergences in executing the company's roadmap during a period of significant opportunity.
Herweck, who served as CEO for 18 months, will be succeeded by Olivier Blum, the current head of the energy management division, tasked with accelerating strategy execution. TECHZINE added that the leadership change surprised investors, as the company had recently reported an 8% increase in third-quarter sales driven by organic growth.
Economic Factors
Construction Backlog Dips Slightly in October; Contractor Optimism Endures
Associated Builders and Contractors (ABC) reported a slight decline in its Construction Backlog Indicator (CBI) for October, which measured 8.4 months of work under contract, unchanged from October 2023. Backlogs fell in every region except the Northeast, with only the Middle States recording an increase compared to a year ago.
ABC’s Construction Confidence Index (CCI) showed optimism among contractors, with improved expectations for sales and staffing over the next six months, despite a minor decline in anticipated profit margins. All three confidence metrics remained above the growth threshold of 50.
Above: Construction Backlog data, courtesy of Associated Builders and Contractors
“While backlog declined in October, it remains at a healthy level and has been remarkably stable over the past year,” said ABC Chief Economist Anirban Basu. “Despite a wait-and-see attitude among project owners due to interest rates and election outcomes, contractors remain upbeat about the next two quarters. Approximately 53% of ABC members expect their sales to increase, while just 22% anticipate a decline.”
Nonresidential Construction Spending Edges Up in September
Nonresidential construction spending rose by 0.1% in September to an annualized $1.22 trillion, driven by gains in public infrastructure projects, according to Associated Builders and Contractors (ABC). Public nonresidential spending increased 0.4%, offsetting a 0.1% decline in private-sector construction. “Spending accelerated in several publicly funded segments, including highway and street, sewage and waste disposal, and water supply,” said ABC Chief Economist Anirban Basu.
While private spending dipped, Basu noted, “Given ongoing manufacturing megaprojects and healthy backlog levels, the nonresidential segment should hold up well as the industry waits for lower borrowing costs and looser lending standards to arrive.”
Copper
Copper prices surged above $5.00 per pound in May but have recently retreated to slightly lower levels.
Global Container Freight Rates
Above: 90-day container rates from China to West Coast USA. Image: Courtesy of Freightos, used under license
The FBX01 global ocean freight container pricing index tracks the cost of shipping 40-foot containers between major ports in China and East Asia and the West Coast of North America. This index, developed in partnership with the Baltic Exchange, includes key Chinese ports like Shanghai (PVG) and Ningbo (NGB), and U.S. ports such as Los Angeles (LAX) and Chicago (ORD).
This trade route is a vital artery for global commerce, facilitating the movement of billions of dollars' worth of goods across the Pacific. Commonly shipped items on this route include electronics, clothing, furniture, toys, and machinery.
