Performance Report reveals gap in profit margin among firms.
Press Release Summary:
According to 2010 PT Distributor Performance Report, high-profit distribution firms had pre-tax profit margin 5 percentage points higher in 2009 than typical firms' pre-tax profit margin. Typical sales volume of power transmission/motion control distributors in 2009 was down 19.2%, and gross margins for distribution firms showed little variance at 27.1% (typical) and 27.4% (high-profit). Also, high-profit firms kept operating expenses to 21.7%, while typical firms crept to 26.3%.
Original Press Release:
PT Distributor Performance Report Reveals Significant Gap in Profit Margins among High-Profit and Typical Firms
Chicago, Ill. - The recently completed 2010 PT Distributor Performance Report reveals that high-profit distribution firms had a pre-tax profit margin nearly 5 percentage points higher in 2009 than the typical firm's pre-tax profit margin. The annual report, released by the Power Transmission Distributors Association (PTDA), demonstrates a wide variance in financial performance.
When asked in October 2008 to forecast sales for 2009, nearly one-third of distribution firms predicted sales declines. According to the 2010 PT Distributor Performance Report, the typical sales volume of power transmission/motion control distributors in 2009 was down 19.2 percent.
Gross margins for typical- and high-profit distribution firms showed little variance at 27.1 percent for typical firms and 27.4 percent for high-profit companies.
The median "high profit" distribution firm (top 25 percent of firms based on ROA) also diverged in other important ways from the median "typical" firm. The results suggest the most successful firms continue to exhibit critical profit variables well above those of the typical firm. Sales per employee at high-profit distributors totaled $554,771 in comparison to $384,819 for typical firms. Additionally, high-profit distribution firms kept operating expenses to 21.7 percent, whereas they crept to 26.3 percent for typical firms.
The PT Distributor Performance Report, conducted annually for PTDA by Profit Planning Group of Boulder, Colo., is a compilation of operational statistics from 42 distribution firms throughout North America. This valuable resource examines five-year distributor performance trends in return on investment, income statement, and balance sheet line items and examines financial ratios, asset productivity ratios, growth and cash sufficiency ratios and employee productivity ratios.
Data is reported for three U.S. regions (Eastern, Southern, Midwest) and Canada, and four sales volume categories, ranging from less than $10 million to more than $75 million. Additional breakouts include machinery, repair and operations (MRO) emphasis versus original equipment manufacturer (OEM) emphasis and product mix (percentage of sales by bearings, power transmission and other).
The report is designed for distributors seeking information to benchmark their company's performance against that of the industry as well as manufacturers looking to obtain insight into the operational and business needs of their distributors.
The report is available for purchase to PTDA members for $169.95 and to non-members for $299.95. For more information, contact PTDA at +1.312.516.2100 or visit the PTDA Store at www.ptda.org/store.
Founded in 1960, the Power Transmission Distributors Association (PTDA) is the leading association for the industrial power transmission/motion control (PT/MC) distribution channel. A U.S.-based trade association, PTDA represents 198 power transmission/motion control distribution firms that generate more than $10 billion in sales and span 3,500 locations in North America and 11 other countries. PTDA members also include 187 manufacturers that supply the PT/MC industry.
PTDA is dedicated to providing exceptional networking, targeted education, relevant information and leading-edge business tools to help distributors and manufacturers meet marketplace demands competitively and profitably. For more information, visit www.ptda.org.
Contact:
Brigitte Lyons
Power Transmission Distributors Association (PTDA)
blyons@ptda.org
+1.312.516.2100
