Columbus, OH — HVACR distributors continued five consecutive years of sales growth last year with an 11.5 percent increase in sales from 2004 according to the HARDI 2006 Profit Report.
Pretax profit margins also continued their five-year climb from 2001's historical low; 2005's margin of 3 percent was a 58 percent increase from the dangerously low 1.9 percent margin of five years ago.
Increasing profit margins in the wholesale business is extremely difficult when sales have to grow 11.5 percent to generate a 0.2 percent increase in net profits (before taxes). HVACR distributors have had to generate and manage their growth without significant increases in employment. HVACR distributors experienced a third consecutive year of employment growth, but staffs grew only an average of one person from 2004 to 2005.
Significant technology investments and advances in inventory management methods enabled distributors to increase sales per employee by 8 percent from 2004 to 2005, up 13 percent since 2001. A 2005 increase in gross margin per employee of 6 percent brings the five-year total to an impressive 19 percent increase since 2001.
HARDI conducts the Profit Report annually to provide financial benchmarks for its distributor members. This 2006 Report, based on 2005 financial data, was accumulated from over 100 HVACR distributors across the United States. The Profit Report includes detailed data on every major facet of a distributor business in the HVACR industry with five-year trends, regional breakdowns and general product category comparisons. Inventory data such as turns, holding periods and gross margin return on inventory are measured as well as general compensation breakdowns and key metrics like return on investment and debt-to-equity ratios. All are included in the report.
Members can purchase copies of the 2006 Profit Report for $130, or $300 for nonmembers. Distributor participants in the Profit Report Survey receive complimentary copies of the Report. Contact HARDI at 614/488-1835 or [email protected] for more information.