During a webinar presentation with Stephen Tusa, JP Morgan’s HVAC industry analyst, it was noted that confidence in a recovery was improving in the back half of 2012 and that the 2013 forecast had a positive bias because the correction had been so deep and painful. According to Tusa, at the time it was difficult to generate a great deal of confidence in an aggressive growth forecast, but that would have been more accurate.
“In general things have been better than expected. Sales of condensing units and furnaces have been better than expected and SEER mix has also improved,” said Tusa. “There has been more system replacement and they are opting for more expensive systems. Maybe the consumer is actually getting better.”
The webinar presentation was a follow up to the annual outlook presentation HARDI developed earlier this year. According to the survey, more than half of respondents expect their revenues to improve by 5 to 10 percent.
“For the first time in our survey, more distributors expected repair activity to decline,” noted Tusa. “That could be an indication of an unlocking of the pent-up demand from units that were fixed instead of replaced over the past few of years.”
As for single digit revenue, Brian Loftus, HARDI Market Research and Benchmarking analyst, said that things appeared favorable for 2014.
“We feel pretty good about our high single digit revenue forecast for next year,” he said. “Following the real estate correction, there is a lot of older equipment out there. That older equipment is more expensive to operate and energy costs are higher than five years ago.”
Tusa explained that the high single digit growth forecasted in 2014 reflects a modestly higher replacement rate.
“Replacement rates are the wild card,” he said. “They could easily turn down, but the industry has some momentum at this point.”
The survey goes into detail on residential end market demand, commercial end market demand, inventory levels, raw material and OEM price pressures, and government policy measures.
The report and webinar playback are available for purchase at www.hardinet.org.