One of the great things about construction supply companies is that they're private, relatively small businesses, but that also means it's devilishly hard to get a sense of how they're doing financially. One of the best sources is the annual Building Materials Operations Comparison survey, and its recent report confirmed what most in the business suspected: Companies continued to face hard times last year, but they didn't fare quite as poorly as in 2009.
Just over 100 construction supply companies nationwide reported an average operating loss of $228,882 and a pretax loss of $50,365 on sales of nearly $16.5 million in 2010, the latest survey found. In contrast, the survey for 2009 showed the average respondent suffered an operating loss of $1.5 million and a pretax loss of $1.3 million on $26.5 million in net sales.
"The 2010 Operations Comparison survey reflects another year of dismal sales, but it also shows that dealers generally have done a lot of work to ensure the viability of their businesses," says Jim Moody, president of the Construction Suppliers Association, the LBM industry group for Georgia and Alabama and the person who spearheaded the data-collection effort on behalf of regional LBM groups nationwide.
"Fixed expenses are down, and so are employee costs. Dealers have improved collections and reduced their debt. We've been in this downward spiral long enough for the survivors to realize that hoping for better days is not a good business strategy. Given that sales are not picking up, dealers must reduce their costs to stay afloat, and the survey indicates they are doing the things that have to be done."
Respondents' average gross margin in 2010 amounted to 26.16% of sales, or $4.2 million, while the average operating expense was 27.97% of net sales, or $4.5 million.
Conditions in 36 states were represented in the results from the more than 100 dealers that filled out the survey. Of those, roughly 60% also took part in the survey for 2009.
A copy of the full report costs $500. Survey participants paid $200 and got faster and more substantial results. To buy a copy, contact your regional construction supply association or e-mail email@example.com.