EMCB reports average net profits hit 4.04 percent in 2005

Average net profits before taxes for electrical distributors increased in 2005 by nearly a half-percent to 4.04 percent, according to a study by the Electrical Manufacturers' Credit Bureau (EMCB), Murrieta, Calif. In “2005 Financial Norms of the Electrical Wholesaling Industry,” average gross profits for electrical distributors that provided EMCB with financial information decreased 0.03 percentage point in 2005 to 20.9 percent.

The report broke out financial data for smaller electrical distributors in a variety of categories, and profit data for the 25 distributor respondents with a net worth of more than $10 million was reported separately. The financial data for these companies came in close to the EMCB's industry average, with gross profits at 20.82 percent and net profits before taxes at 4.12 percent. Gross profits for the following large distributors were: Graybar Electric Co., St. Louis, 19 percent; Hagemeyer North America, Charleston, S.C., 23.25 percent; Rexel Inc., Dallas, 25.25 percent; and WESCO Distribution Inc., Pittsburgh, 19 percent. While profit margins for The Home Depot, Atlanta, and Lowe's, Mooresville, N.C., were not included in the study, their net profits before taxes were 11.39 percent and 10.42 percent, respectively.

Other key data in EMCB's “2005 Financial Norms of the Electrical Wholesaling Industry”: cash (5.67 percent); receivables (46.28 percent); inventory (44.52 percent); current ratio (1.91 to 1); quick ratio (0.99 to 1); worth debt ratio (0.66 to 1).

The EMCB Norms Report is published as a special service to the electrical industry and is available to electrical manufacturers and electrical distributors. The annual report is intended to establish a basis for comparing and measuring the financial status of electrical distributors. The data comes from financial statements for fiscal years ending 2005 and 2006.

For more information, contact EMCB at (951) 834-9540.

Electrical Wholesalers' Operations StatisticsNational
NormNet Worth
Under
$150,000$150,000
to
$300,000$300,000
to
$500,000$500,000
to
$1,000,000$1,000,000
to
$10,000,000Large
Companies 2005 2004 Cash* 5.67 7.14 11.96 3.60 9.47 6.47 6.19 5.63 Receivables* 46.28 46.04 55.48 44.28 64.84 54.97 51.23 45.95 Inventory* 44.52 43.35 31.33 51.68 22.91 37.63 40.42 44.80 Current Ratio 1.91 1.97 1.66 1.43 1.32 1.50 1.80 1.92 Quick Ratio 0.99 1.05 1.12 0.69 0.98 0.92 1.04 0.99 Worth-Debt Ratio 0.66 0.71 0.30 0.35 0.29 0.55 0.83 0.66 Gross Profit (%) 20.90 20.93 29.07 17.63 20.44 20.86 22.84 20.82 Net Profit (%)** 4.04 3.56 5.32 0.57 1.72 3.03 2.25 4.12 Collection Period 51.83 50.00 56.29 41.92 102.53 89.30 56.00 51.44 Inventory Turnover 7.22 7.62 13.16 4.39 9.94 5.95 8.61 7.18 Return on Assets 9.13 8.34 15.52 1.59 3.79 5.96 6.98 9.21 Return on Net Worth 23.05 20.11 66.32 5.63 16.94 16.22 16.44 23.28 Current Ratio = current assets/current liabilities
Quick Ratio = cash and receivables/current liabilities
Worth-Debt Ratio = net worth/total liabilities
*% In relation to current assets
**before taxes
National Norms — Past Ten Years Electrical Wholesalers' Operations Statistics 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Cash* 4.68 4.05 3.55 2.65 3.32 7.08 5.59 4.95 7.14 5.67 Receivables* 48.25 48.65 45.14 42.88 41.84 41.55 42.21 44.14 46.04 46.28 Inventory* 46.07 46.47 48.35 51.30 50.20 48.01 48.75 47.20 43.35 44.52 Current Ratio 1.83 2.08 2.05 1.92 1.62 1.81 1.92 1.91 1.97 1.91 Quick Ratio 0.97 1.06 1.00 .87 0.73 0.88 0.92 0.94 1.05 0.99 Worth-Debt Ratio 0.71 0.69 0.48 0.50 0.43 0.58 0.69 0.67 0.71 0.66 Gross Profit (%) 20.00 21.47 20.19 20.10 18.66 18.12 19.44 20.42 20.93 20.90 Net Profit (% Before Taxes) 2.34 2.90 2.46 2.21 2.44 1.43 2.27 2.41 3.56 4.04 *% In relation to current assets
Source: Electrical Manufacturers' Credit Bureau