February 19, 2025
Electric Avenue — News Impacting Lighting Markets: February 2025
Large distributor chains see flat-ish 2024 revenues. Plus, keen industry insights into tariff uncertainty.
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 January 29, 2025:
Electrical Distributor News
Border States’ View of Anticipated Tariff Risks and Impacts
Border States, one of the largest electrical distributors in the U.S., shares its view on how new tariffs could significantly affect pricing and supply chains for electrical and lighting products. The tariffs may eventually include a 25% duty on imports from Canada and Mexico, a 10% tariff on Chinese goods, and additional levies on steel and aluminum.
For the lighting sector, approximately 50% of Border States’ lighting products and 40% of lighting controls are exposed to Mexico, Canada, and China — countries subject to these tariffs. Other key electrical components have less exposure, including switchgear (20% imported), wire and cable (5% imported), and PVC conduit (25% imported).
Border States estimates that increased costs and supply chain disruptions are likely as companies seek alternative sourcing options. Businesses may face logistical challenges, inflationary pressures, and delays in securing materials. To mitigate risks, Border States advises early inventory planning and flexibility in material sourcing.
Sonepar Merges Four Midwest Distributors Under Echo Electric Brand
Sonepar is consolidating its Midwest operations by merging Echo Electric, Springfield Electric, Richards Electric, Pepco, and Holt under the Echo Electric brand, effective April 2024. The newly formed organization will generate over $1.2 billion in annual sales and operate more than 60 locations across Illinois, Indiana, Iowa, Kansas, Kentucky, Missouri, Ohio, Nebraska, and southern South Dakota. The combined company will have 1,300 employees and cover a service area of 500,000 square miles.
Chris Scarbrough, formerly president of Springfield Electric, will lead Echo Electric. The integration aims to strengthen operations, expand inventory, and enhance service capabilities. Echo will be Sonepar’s sixth U.S. operation to exceed $1 billion in sales.
Republic Electric Merges With T.F. Ehrhart
Republic Electric Company, a Davenport, Iowa-based distributor of electrical and HVAC systems, has merged with Quincy, Illinois-based T.F. Ehrhart Company, according to an announcement from Republic’s owner, Graycliff Partners LP. The deal creates one of the largest HVAC equipment distributors in the Midwest and strengthens Republic’s position as the region’s top distributor of Johnson Controls HVAC products.
Republic operates six branches across Iowa, Illinois, and Wisconsin, offering over 40,000 products, including HVAC systems, electrical components, and related tools. T.F. Ehrhart distributes residential and commercial HVAC equipment from brands such as Luxaire, Bosch, and Samsung through its four branches in Illinois and Missouri. The combined company plans to leverage shared supplier networks and regional reach to support growth. Terms of the transaction were not disclosed.
These 14 Distributor People are Now Lighting Certified
Sonepar announced that 14 employees from its various distributor brands have earned their Lighting Certification (LC) after passing the required exam. The company’s internal Sonepar Lighting Academy provided training and mentorship to prepare them for certification.
Newly Certified Employees:
- Meghan Behn, LC – Viking Electric
- Ed Bitterman, LC – Codale Electric Supply, Inc.
- Kate Bookstein, LC – Sonepar
- Katie Douthitt, LC – Capital Electric
- John Ebreo, CALT, LC – World Electric Supply
- Hunter Hensley, LC – Capital Electric
- Matthew Jarboe, LC – HOLT Electrical Supply
- Katie Klabacka, LC – Viking Electric
- Jason Lutz, LC – Crawford Electric Supply
- Kevin Massey, LC – World Electric Supply
- Kevin Mesusan, LC – Crawford Electric Supply
- Carly Schrock, LC, CALT – Springfield Electric
- Joe Scott, LC, MIES, CALT – Crawford Electric Supply
- Raymond White, LC – North Coast Electric
AD Reports Record 2024 Sales and Membership Growth
AD, a distributor buying group, reported record results for 2024, with owner/member sales increasing 6% to $83.3 billion. On a same-store basis, sales rose 4% in the U.S., 3% in Canada, and 10% in Mexico. Purchases from AD supplier partners grew 5% to $20.7 billion, while net distributions to owner/members increased 5% to $1.45 billion. AD also expanded its membership by adding 110 new members, driven by organic growth and its merger with the Edge Group. While 22 members exited through acquisitions outside AD, existing members acquired 57 companies externally and 13 from within the group, bringing total membership to 932 at year-end.
These figures do not yet reflect AD’s 2024 merger with IMARK Electrical, which formed the AD Independent Electrical Supply Division. Over 530 former IMARK members, representing more than 99% of IMARK’s volume, have joined AD, increasing total membership to over 1,400 at the start of 2025. AD projects member sales to exceed $100 billion in 2025.
Standard Electric and Madison Electric Combine Leadership
Sonepar’s U.S. subsidiaries, Standard Electric Company and Madison Electric Company, are consolidating leadership while continuing to operate under their respective brand names.
Bill Gray
The Michigan-based distributors, along with Wittock Supply, will function as a single organization with a combined leadership team led by Bill Gray, president of Standard Electric.The companies collectively generate $350 million in annual sales and serve electrical, HVAC, plumbing, network communication, industrial, and automation customers across Michigan and northern Indiana through 36 branches and nearly 550 employees.
Brett Schneider will remain in a key leadership role as the transition aims to improve operational efficiency and customer experience. Senior leadership teams from both companies will work closely together to ensure business continuity for customers and suppliers.
Quarterly Earnings News
Wesco International Sees Slight Sales Dip in 2024
Wesco International (NYSE: WCC) reported a 0.5% year-over-year (YOY) increase in fourth-quarter net sales, with organic sales rising 2.4%. Diluted earnings per share (EPS) reached $3.03, while adjusted diluted EPS grew 19% YOY to $3.16.
Full-year 2024 net sales declined 2.5% YOY, with organic sales down 0.6%. Operating profit totaled $1.2 billion, with a 5.6% operating margin, while adjusted EBITDA margin declined by 70 basis points to 6.9%. The company generated a record $1.1 billion in operating cash flow, up from $493 million in 2023.
CEO John Engel highlighted strong fourth-quarter sales growth in Wesco's Data Center and Broadband Solutions businesses, offset by a slowdown in industrial and utility segments. The company reduced net debt by $431 million, repurchased $425 million in shares, and executed strategic acquisitions, including Ascent.
Rexel Reports Resilient FY 2024 Performance Amid Market Challenges
Rexel reported full-year 2024 sales of €19.3 billion, a 0.7% increase on a reported basis, with Q4 sales reaching €4.9 billion. Despite a softer market in Europe, strong momentum in North America, particularly from acquisitions and digital sales growth, contributed to overall stability. The company's current adjusted EBITA margin stood at 5.9%, reflecting cost adaptation efforts, while free cash flow conversion exceeded expectations at 76%. Rexel also proposed a €1.20 per share dividend for 2024.
Looking ahead, the company expects stable to slightly positive same-day sales growth in 2025, with a continued focus on digital expansion and operational efficiencies.
Grainger Reports Solid 2024 with Strong Profitability
Grainger (NYSE: GWW) reported fourth-quarter sales of $4.2 billion, up 5.9% year-over-year, with a 15.0% operating margin. Diluted earnings per share (EPS) increased 23.1% to $9.71.
For the full year, sales rose 4.2% to $17.2 billion, with a 15.4% operating margin. Adjusted EPS grew 6.2% to $38.96. Grainger generated $2.1 billion in operating cash flow and returned $1.6 billion to shareholders through dividends and share repurchases. CEO D.G. Macpherson credited the company’s focus on customer relationships and operational execution for its strong performance.
Looking ahead to 2025, Grainger projects daily, constant currency sales growth of 4.0% to 6.5%.
Electrical Rep News
Mega-Rep JD Martin Unveils New Brand Identity
Manufacturers' representative JD Martin sells electrical products through qualified distributor channels across more than 17 states spanning the Southeast, South Central, Mountain, and Mid-Atlantic regions. The company has introduced a new brand identity, modernizing its look while reinforcing its core values. Developed in partnership with marketing firm Mower, the rebranding includes an updated logo, a refreshed color palette, and a revised value proposition.
The new tagline, Local Power… Accelerated Growth, highlights JD Martin’s commitment to local autonomy while leveraging centralized corporate resources to drive sales. The company utilizes an enterprise-wide business operating system, a proprietary AI-driven data management tool, and a performance management platform to support its network of manufacturers and distributors.
What We are Reading
AI’s Energy Demands Challenge U.S. Power Infrastructure
Power Engineering reports that the rapid growth of data centers, artificial intelligence (AI), and onshoring of manufacturing is placing unprecedented strain on the U.S. power grid. Utilities, long accustomed to stable electricity demand, now face significant load increases, with some sites requiring over 1.2 gigawatts (GW) of power.
The International Energy Agency forecasts a five percent load growth by 2030, while other estimates suggest the need for at least 80 GW of new generation. At POWERGEN International’s keynote, NVIDIA’s Marc Spieler highlighted AI’s dual role in exacerbating and mitigating these challenges, emphasizing its potential to optimize grid operations and create virtual utility experts to enhance efficiency.
Addressing "Zombie" Operations in Distribution for Greater Efficiency
Modern Distribution Management (MDM) highlights the challenge of "zombie" operations—outdated processes, unprofitable customers, and inefficient business practices—that hinder growth in distribution businesses.
These inefficiencies drain resources and prevent companies from adapting to market changes. To combat this, businesses must regularly evaluate profitability, streamline operations, and leverage technology to enhance efficiency. Proactive leadership, data-driven decision-making, and strategic customer management are essential for eliminating waste and driving sustainable growth in an increasingly competitive landscape.
Electrical Industry Braces for Potential Tariff Impacts
Electric Wholesaling assesses how the electrical industry is preparing for potential supply chain disruptions if President Donald Trump moves forward with 25% tariffs on imported steel and aluminum, along with possible copper tariffs. These tariffs, set to take effect on March 4, could significantly increase costs for manufacturers, distributors, and contractors, affecting key products such as wire, conduit, and switchgear. While industry groups, including the National Electrical Manufacturers Association (NEMA) and the National Association of Electrical Distributors (NAED), acknowledge the administration’s goal of reshoring production, they stress the need for balanced trade policies to avoid excessive price hikes and supply chain instability.
The uncertainty surrounding the tariffs has also led some companies to delay capital investments. Industry leaders are closely monitoring developments, as the long-term effects on manufacturing, pricing strategies, and domestic production remain unclear.
Economic Factors
Construction Backlog Rises to 8.4 Months, Confidence in Sales and Profits Improves
The Associated Builders and Contractors' Construction Backlog Indicator rose to 8.4 months in January, unchanged from the previous month, according to a survey of ABC members. The Western region saw the most significant backlog growth, while the South maintained the longest backlog despite a year-over-year decline.
Above: Construction Backlog data, courtesy of Associated Builders and Contractors
ABC’s Construction Confidence Index showed increased optimism for sales and profit margins, though expectations for staffing levels weakened. “Despite lingering concerns about project financing and labor shortages, contractors remain upbeat about demand for their services,” said ABC Chief Economist Anirban Basu.
Nonresidential Construction Spending Declines Slightly
National nonresidential construction spending fell 0.2% in December 2024, totaling $1.241 trillion on a seasonally adjusted annualized basis, according to an Associated Builders and Contractors (ABC) analysis of U.S. Census Bureau data. Spending declined in nine of 16 nonresidential subcategories, with public nonresidential construction down 0.5% and private nonresidential spending rising slightly by 0.1%.
Above: Nonresidential Spending data, courtesy of Associated Builders and Contractors
ABC Chief Economist Anirban Basu noted that public sector spending was likely affected by seasonal factors and the transition between presidential administrations. Meanwhile, data centers and manufacturing projects drove 94% of the annual increase in nonresidential construction spending, with Basu emphasizing that these sectors remain resilient despite high interest rates and trade uncertainties with Canada and Mexico.
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.
