MRO Magazine

Report reveals profit challenges of PT distribution

Chicago, Ill. -- The Power Transmission Distributors Association (PTDA) has announced the results of its 2004 PT Di...


Industry

October 1, 2004
By MRO Magazine
MRO Magazine

Chicago, Ill. — The Power Transmission Distributors Association (PTDA) has announced the results of its 2004 PT Distributor Performance Report (based on 2003 data). Revealing the profit challenges and opportunities in the power transmission/motion control (PT/MC) industry, the report suggests that the typical PTDA distributor continues to produce only adequate profits, while the most successful firms use a business model that produces superior performance.

With respect to the bottom line, the pre-tax profit margin for typical power transmission/motion control distributors was 0.8% in 2003, compared to 0.6% in 2002. Meanwhile, high-profit firms recorded margins of 3.3 percent in 2003, as compared to 3.0% in 2002.

Typical and high profit PT/MC distributors differentiated themselves in terms of sales volume in 2003. While typical PTDA distributors experienced an increase of 3.2% in 2003, high profit distributors reported an 8.1 percent gain in sales growth.

High-profit firms reported a pre-tax return on assets (ROA) of 9.6%, while the typical PT/MC distributor reported ROA of only 2.2%.

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Total operating expenses as a% of net sales was 25.1% for high- profit firms, compared to 25.1% for typical firms.

The PT Distributor Performance Report, conducted annually by PTDA in partnership with an unbiased third-party vendor, is a compilation of operational statistics from 55 PTDA members throughout North America. This valuable resource examines five-year distributor performance trends in return on investment, income statement, gross margin-related expenses, balance sheet, financial ratios, asset productivity ratios, growth and cash sufficiency ratios, operations profile and employee productivity ratios.

Data is reported for typical PT/MC distributors and high-profit firms (top 25% 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 $5 million to $20 million and over. Additional breakouts include MRO emphasis versus 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 312-876-9461, or visit the PTDA web site at www.ptda.org.