There are lots of reasons to celebrate the big numbers that dealers put up in this year’s ProSales 100. I’m happy in part because the housing recession has gone on for so long, I was running out of realistic but still encouraging ways to describe what the slump has done to dealers. Consider how we’ve headlined our ProSales 100 reports over the past five years:
2007: “Weathering the Storm”
2008: “Red Scare”
2009: “The Long Climb Out”
2010: “Still Fighting”
2011: “The Hole Truth”
One more year of dismal returns and I fear we would have had to resort to the punchline of that old joke: There must be a pony around here somewhere.
Instead, we can report that our industry has rounded the turn. Sales rose 7.3% for the group last year, 72 of the 100 dealers reported increased revenues, and not a single dealer incurred a 20% sales decline in 2011. In contrast, 31 fell at least that far in 2009. Prospects for continued sales gains this year are bright, in part because we’re entering a time in which continued modest increases in homebuilding are likely to temporarily outstrip production capacity at mills and at building material manufacturers. That’s could lead by this fall to product shortages, the return of allocations, the end of next-day delivery guarantees—and higher prices. Shortages bring their own headaches, but compared with the sales drought we’ve had, I’m betting this is the kind of problem you’d prefer.
Of course, we’re talking revenues here, not profits and overall financial strength, and in those areas the outlook is more mixed. While national roofing dealers appear to be in good health, big companies that focus on selling commodities are having a much harder time; sales at Builders FirstSource rose 35% in this year’s first quarter over the year-earlier period and it still reported a net loss of $19 million, while ProBuild, Stock Building Supply, and 84 Lumber all did no better in 2011 than match their previous year’s revenues.
Among smaller dealers, companies with strong balance sheets are getting a leg up on competitors by buying deep and upgrading computer systems so they can manage better. At the same time, I think dealers that starved during housing’s famine are falling behind because they’re too weak to move ahead on their own and are too unattractive to get financial credits. They’re entering a state of suspended animation: Alive pretty much in name only, with barely enough activity to keep the lights running.
Your state depends in part on, well, your state: As Kate Tyndall’s ProWatch indicates, dealers serving the energy boom in North Dakota are experiencing such strong demand that even 2005 pales in comparison. But that’s an exception. For the rest of the country, the rise is much more modest. Still, for the majority of dealers, the outlook is getting better all the time. Perhaps there really is a pony out there.