With over 90 years of experience in package gases and distributor sales, operations, and administration we have developed a Performance Metrics & Benchmarking Program for US Gas &Welding (G&W) Distributors. The foundation of this program originates with a review of the Profit and Loss (P&L’s) and Balance Sheets from various surveys (e.g. PAR Reports) and our direct operations experience, as well as our merger and acquisition assessment experience.
We believe that cylinder delivery is the most important cost in a typical distributor’s operations, but the least understood and managed. As such, we have developed a program that provides metrics for improving the productivity of cylinder distribution to achieve greater profitability and cash generation.
For this introductory discussion of our program we developed Table 1, which shows a typical P&L for a G&W Distributor with revenues of $25 million, a gas:hardgoods mix of 45%:55%, with company Gross Profit at 45 percent, and with gas/rent and hard-goods margins at 66 percent and 27.5 percent. Shown here is the most-costly operating expense of Distribution with its percent of revenues. (Note: this table does not address the structure of the revenue streams with volumes and prices, or the resulting structure of Cost of Sales and Gross Profits by product line).
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