Our Manufacturing & Distribution Clients Report 13% Average Profit Increase
Published:
by Marie Jett, CPA and Anita Sherman, CPA | Team Members of the Manufacturing & Distribution Services Group
Our M&D Services Team recently summarized some financial data from about 20 of our largest manufacturing & distribution clients. Our manufacturing clients’ sales increased by an average of 9%, ranging from a 14% decrease to a 25% increase. Our distribution clients saw their sales increase by an average of 10.5% ranging from a 2% decrease to a 37% increase. Generally speaking, even with increasing sales, our clients have been able to maintain their gross profit as a percent of sales indicating that they were able to keep their operating efficiencies even as sales increased. A few clients with larger sales increases actually improved their gross profit rates by streamlining their operations and eliminating wasteful activities.
Pre-tax income for our manufacturing clients increased an average of 16%, and pre-tax income for our wholesale and distribution clients increased an average of 12%.
Indiana is one of 10 states where manufacturing still matters. Of those 10 states, Indiana leads, with its manufacturing share of output at 28.2% (Kentucky and Ohio are 6th and 7th at 17.1% of total state output). Indiana has added manufacturing jobs at one of the fastest rates in the nation over the past several years, with year over year growth at or above 3.7% at the end of the past three years. The unemployment rate for Indiana is still relatively high at 8.4% (of the 10 states, Iowa had the lowest unemployment rate at 5.2%).
In July, America’s manufacturing sector grew for the second month in a row. In general, clients are cautiously optimistic and are continuing to make capital improvements in 2013. Their biggest fear is the impact of Obamacare (Affordable Health Care Act) where so much uncertainty abounds.
Finally, we wanted to share another bright note that impacts our Indiana economy. These 20 companies invested over $11.4 million in capital assets (primarily equipment) compared to just over $7.5 million the year before.
We are delighted to celebrate our client’s successes after the recent very challenging times.
Contact:
Marie Jett, CPA | Manager, Tax Services Group | Team Member of the Manufacturing & Distribution Services Group | 317.240.4472 | mjett@greenwaltcpas.com
Anita Sherman, CPA | Managing Partner | 317.260.4486 | asherman@greenwaltcpas.com