PT/MC Distributors' 2007 Performance on Target with Forecasts
Chicago, Ill. – May 14, 2008 – The Power
Transmission Distributors Association (PTDA) recently announced the
results of its 2008 PT Distributor Performance Report (based on 2007
data). Revealing the profit challenges and opportunities in the
power transmission/motion control (PT/MC) industry, the report supports
the forecasts made by PTDA members in late 2006 of moderate growth in
sales with little change in gross margins in 2007.
When asked in October 2006 to forecast sales for 2007, four-fifths
(78 percent) of distribution firms anticipated growth in sales, with 39
percent of distributor respondents indicating that they expected sales
to increase between 5 percent and 9.9 percent. The actual sales
growth rate for a typical PTDA distributor in 2007, as reported in the
2008 PT Distributor Performance Report, fell at the low end of that
range at 5.4 percent. As for gross margins, exactly half of the
respondents expected gross margins to remain constant in 2006.
According to the data collected for the PT Distributor Performance
Report, the forecast was slightly pessimistic as gross margins for 2007
increased by 0.6%.
In addition to affirming the forecasts, the 2008 PT Distributor
Performance Report also suggests that while the typical PTDA distributor
generates more sales than the high-profit distributors, the most
successful firms continue to exhibit profits that more than double those
of the typical firm. With respect to the bottom line, the typical PTDA
distributor member generated pre-tax profit of 2.9 percent on annual
sales of $29.3 million, compared to high-profit firms that produced an
average profit of 7.6 percent on sales of $21.9 million. The ability to
generate higher profits is not all due to sales growth. While
typical PTDA distributors experienced an increase of 5.4 percent in
2007, high-profit distributors reported a 6.8 percent gain in sales
growth over the same period.
Successfully managing expenses is a primary contributor to a
firm’s profitability. High-profit firms reported a pre-tax
return on assets (ROA) of 24.3 percent, while the typical PT/MC
distributor reported ROA of only 9.3 percent. Total operating
expenses as a percent of net sales was 19.3 percent for high-profit
firms, compared to 23.8 percent for typical firms.
The PT Distributor Performance Report, conducted annually by PTDA in
partnership with the Profit Planning Group of Boulder, Colo., is a
compilation of operational statistics from 46 PTDA members throughout
North America. This valuable resource examines five-year
distributor performance trends in return on investment, income
statement, and balance sheet line and examines financial ratios, asset
productivity ratios, growth and cash sufficiency ratios and employee
productivity ratios.
Data is reported for typical PT/MC distributors and high-profit firms
(top 25 percent of firms based on ROA). Data also is reported for
five U.S. regions (Eastern, Southern, Midwest, South Central and
Western) and Canada, and four sales volume categories, ranging from less
than $10 million to over $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 their
competitors 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 211 power
transmission/motion control distributor firms with over 3,500 locations
throughout North America and 12 other countries, as well as 202
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.
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