Analysis of Variance Wood Fixture Manufacturers Analysis of Variance Metal Fixture Manufacturers... 25

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3 Table of Contents Foreword Introduction... 5 Executive Summary... 6 Detailed Results Return On Investment Product Profile Income Statement Balance Sheet Financial Ratios Asset Productivity Ratios Employee Productivity Ratios Analysis of Variance Wood Fixture Manufacturers Analysis of Variance Metal Fixture Manufacturers Sales Volume Analysis Trend Analysis All Fixture Manufacturers Wood Fixture Manufacturers Metal Fixture Manufacturers Appendix

4 This report is a project of A.R.E. s General Management Committee. Thanks are extended to all member companies who contributed surveys and shared their suggestions to make this project possible. Chair: Robert Frackelton Reeve Store Equipment Co Pico Rivera, CA Committee Members: Donald Bloom Prime Retail Services Inc. Flowery Branch, GA Christopher Carlson Carlson Co. Inc. of Madison Madison, WI Mike Haddon American Installation Companies Plymouth, MN Eric Jones J.R. Jones Fixture Company Minneapolis, MN Paul Pinkus McGladrey LLP Chicago, IL Bob Riley DSA/Phototech Carson, CA Dean Rubin Rose Displays Ltd. Salem, MA James Schubert Showbest Fixture Corp. Richmond, VA Richard Stolls Almax: Global Visual Group (Almax Lifestyle Trimco Viaggio) New York, NY Stephan Waltman Stiles Machinery Inc. Grand Rapids, MI Copyright 2014 by A.R.E. All Rights Reserved The A.R.E Industry Performance Report is published by A.R.E., 4651 Sheridan St., Suite 470, Hollywood, FL 33021; No part of this report may be reproduced for distribution without the express written permission of the publisher. 2

5 Foreword The A.R.E Industry Performance Report provides unique financial data for companies that offer products and services for retail environments. The 2014 Report is based on the 2013 financial performance of 54 A.R.E. member companies. These companies reported sales of $1.3 billion in This year s report includes information for producers of visual products and point-of-purchase as well as wood and metal store fixtures. New this year are several graphs showing the differences in key indicators between types of companies within our industry. These graphs visually show the similarities among most suppliers as well as some surprising differences between wood and metal manufacturers in the industry. In this particular reporting period, not all segments of the industry fared the same. Of note, while overall industry profits showed improvement in 2013 over the past several years, the wood manufacturers experienced a significantly higher increase. In addition to receiving this report, participants in the survey receive a complimentary copy of their individual Company Financial Performance Report, and a proprietary management tool that compares their company to industry peers. Participants also can access survey results online through A.R.E. s website. Please contact A.R.E. if you have any questions about the survey or this report. The Industry Performance Survey and subsequent report are evolving tools developed to help your business. Let us know if you have suggestions or improvements for future reports. A.R.E. has many resources available to help you succeed in the industry. I encourage you to visit the A.R.E. website at contact us at are@retailenvironments.org, or call for more information. Todd Dittman Executive Director Association for Retail Environments (A.R.E.) 3

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7 Introduction The 2014 A.R.E. Industry Performance Report provides detailed financial results of store fixture manufacturers, signage hardware companies, and P-O-P companies. Results profiled in this report are based on income statement, balance sheet, and operating data provided by 54 manufacturers representing $1.3 billion in sales. Wood fixture manufacturers represented $630 million and metal fixture manufacturers represented $534 million in sales volume. The tables and graphs contained in this report are designed to provide comprehensive, yet straightforward guidelines for analyzing profitability among store fixture manufacturers, signage hardware and P-O-P companies. This management tool is designed to provide the resources that enable A.R.E. members to evaluate, plan, and better manage their businesses. Report Format This report is presented in five sections: Detailed Results for all participants in the study, Wood Fixture Manufacturer analysis, Metal Fixture Manufacturer results, Sales Volume Analysis, and Trend Analysis. The first section examines return on investment, income statement, balance sheet and financial ratios. Management commentary is provided to help non-financial managers more easily understand the meaning and importance of these critical operating statistics. Manufacturers in the survey reported the types of materials used in their fixtures: wood store fixtures and displays (including laminates), metal store fixtures and displays (including welded wire), P-O-P, signage hardware, and visual presentation products. Survey participants were then classified based on the primary materials used; wood fixture manufacturers or metal fixture manufacturers. Data for signage hardware and P-O-P segments are not available due to insufficient sample size. The second section reviews performance for A.R.E. wood fixture manufacturers. This section of the report displays results for the lower quartile, the median result and the upper quartile for wood fixture manufacturers. The third section reviews performance for A.R.E. metal fixture manufacturers. Again, the report displays results for the lower quartile, the median result and the upper quartile for metal fixture manufacturers. Explanation of Statistics Almost all of the figures provided in this report are medians. The median for a particular variable or calculation is the middle number of all values reported arranged from lowest to highest. The median represents the typical company s results. The median is not influenced by any extremely high or low values reported. An average or mean value, on the other hand, may be influenced by extreme values. Thus, the median is the preferred statistic for this analysis. To determine the group of high profit firms, all participating firms are ranked on the basis of pre-tax return on assets (ROA). The high profit category includes the top twenty-five percent of the firms based on ROA. The figures reported for the high profit firms represent a median for this group. Please note that throughout the report, blank designates numbers that are not available due to limited sample size. Participant Support Each A.R.E. member that participated received a personalized Financial Performance Report and a Financial Toolkit computer software package. The Financial Performance Report contains comparisons of the firm s financial performance to the industry. The Financial Toolkit is a very simple, but powerful software package that enables members to easily set their own targets for improvement and immediately view the financial results based on a series of what-if scenarios. The fourth section summarizes A.R.E. manufacturer results by six sales volume categories. The Trend section highlights how performance has changed over time on key measures. 5

8 Executive Summary Financial performance varied widely within the industry in As can be seen in the table on the next page, the typical A.R.E. manufacturer had sales of $17.4 million and a pre-tax profit of 5.2 percent. In contrast, the high-profit manufacturer had sales of $20.2 million, and profit of 11.9 percent. Of greatest consequence, the typical firm had a pre-tax return on assets of 13.0 percent. For the high profit firm return on assets was 34.5 percent. One of the prevailing myths about high-profit firms is that they do everything better than the typical firm and not just better, they do them a lot better. The reality is just the opposite. The high-profit firm inevitably does only some things better than the typical firm. In addition, they do them only a little better. The challenge is in identifying what they do better and why these factors are so important in generating higher profits. The exhibit below reviews the factors for success. Even with this small number of factors, no firm is perfect. Instead, the most successful firms tend to fit these factors into a model that creates improved results for their firm. The challenge is in knowing how to build the model for your firm. Typical High- Typical High- Typical High- Factors a.r.e. Profit Wood Profit Metal Profit For Success Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Income Statement Factors Sales Per Employee $210,821 $227,915 $223,035 $278,401 $159,390 $162,233 Sales Growth 10.5% 23.4% 11.0% 22.2% 10.5% 35.7% Gross Margin Percentage 20.1% 22.0% 17.2% 23.6% 20.8% 20.8% Operating Expense Percentage 14.4% 10.0% 10.4% 11.7% 15.6% 10.1% Balance Sheet Factors Inventory Turnover (Times) Average Collection Period (Days) Sales To Fixed Assets

9 Executive Summary The typical and the high profit firms have different sales volumes. They also differ on the factors identified above. The result is dramatically improved operating performance. The following exhibit indicates the results the typical firm achieved and the results the high profit company earned. Typical High-Profit Typical High-Profit Income Statement Wood Mfr. Wood Mfr. Metal Mfr. Metal Mfr. Net Sales $15,548, % $15,498, % $20,665, % $48,938, % Cost Of Goods Sold Materials Costs 6,779, ,408, ,204, ,373, Direct/Installation Labor 4,089, ,712, ,434, ,151, Other Direct Costs 2,005, ,720, ,727, ,234, Cost Of Goods Sold 12,874, ,841, ,366, ,759, Gross Margin 2,674, ,657, ,298, ,179, S,G&A Expenses 1,617, ,813, ,223, ,942, Operating Profit 1,057, ,844, ,074, ,236, Other Income/Expenses 124, , , , Profit Before Taxes $932, % $1,782, % $785, % $4,991, % Assets Cash $813, % $1,452, % $760, % $1,794, % Accounts Receivable 3,216, ,919, ,037, ,319, Inventory 2,083, ,030, ,463, ,014, Other Current Assets 182, , , , Total Current Assets 6,295, ,569, ,383, ,326, Gross Fixed Assets 3,695, ,284, ,732, ,957, Accumulated Depreciation 2,402, ,250, ,619, ,703, Net Fixed Assets 1,292, ,034, ,113, ,254, Other Fixed Assets 15, ,574, ,909, ,048, Total Assets $7,603, % $6,028, % $10,406, % $16,628, % Return On Assets 15.6% 38.0% 7.6% 24.5% 7

10 Executive Summary Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Number Of Firms Reporting Typical Sales Volume ($ million) $17.4 $20.2 $15.5 $15.5 $20.7 $48.9 Sales Growth (2013 vs. 2012) 10.5% 23.4% 11.0% 22.2% 10.5% 35.7% Strategic Profit Model Profit Margin (Pre-tax) 5.2% 11.9% 6.0% 11.5% 3.8% 10.2% Asset Turnover Return On Assets (Pre-tax) 13.0% 34.5% 15.6% 38.0% 7.6% 24.5% Financial Leverage Return On Net Worth (Pre-tax) 23.4% 62.1% 28.1% 87.4% 12.9% 39.2% Income Statement Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost Of Goods Sold Materials Costs Factory Labor Other Direct Costs Total Cost Of Goods Sold Gross Margin S,G&A Expenses Selling Expenses G&A Expenses Total S,G&A Expenses Operating Profit Other Income/Expenses Profit Before Taxes 5.2% 11.9% 6.0% 11.5% 3.8% 10.2% 8

11 Executive Summary Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Financial Ratios Current Ratio Quick Ratio Debt To Equity EBITDA 32.5% 101.1% 35.9% 67.8% 26.9% 89.8% EBIT To Total Assets 15.1% 32.1% 19.6% 34.6% 11.4% 29.0% Times Interest Earned Sales To Working Capital Average Collection Period (Days) Inventory Turnover Sales To Fixed Assets Sales by Source Of Revenue Manufacturing 82.0% 83.8% 87.1% 84.2% 73.7% 88.8% Distribution Installation Graphics/Design Work Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Sales by Product Category Metal Store Fixtures & Displays 31.9% 27.0% 12.2% 15.4% 71.1% 72.6% Wood Store Fixtures & Displays Permanent P-O-P Temporary P-O-P Signage Hardware Visual Presentation Products Other Sales Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% % of purchases sourced off-shore 7.0% 5.0% 0.0% 15.1% 10.0% 5.0% Employee Productivity Sales Per Production Employee $349,428 $397,407 $371,864 $430,705 $257,927 $460,152 Sales Per Employee $210,821 $227,915 $223,035 $278,401 $159,390 $162,233 9

12 Executive Summary The graph below displays three rates of return for all A.R.E. members that participated in the survey, for Wood Fixture Manufacturers, and for Metal Fixture Manufacturers. The graph displays Return on Sales or Profit Margin, Return on Assets, and Return on Net Worth. Each of these benchmarks are explained in more detail later in the report. Return On Investment 30% 28.1% 25% 23.4% 20% 15% 13.0% 15.6% 12.9% 10% 5% 5.2% 6.0% 3.8% 7.6% 0% Typical A.R.E. Typical Wood Typical Metal Profit Margin Return On Assets Return On Net Worth The graph below displays Gross Margin and S,G&A Expenses. The difference in height between the Gross Margin bar and the S,G&A Expenses bar represents profit. The greater the difference, the greater the profit. Gross Margin & S,G&A Expenses 25% 20% 15% 20.1% 14.4% 17.2% 20.8% 15.6% 10% 10.4% 5% 0% Typical A.R.E. Typical Wood Typical Metal GrossMargin S,G&A Expenses 10

13 Executive Summary EBITDA is an important measure of the profitability of the company. As it incorporates depreciation and amortization, it represents the best estimate of the firm s operating cash margin. EBITDA 40% 32.5% 35.9% 30% 26.9% 20% 10% 0% Typical A.R.E. Typical Wood Typical Metal The current ratio measures the margin of safety that management maintains in order to allow for the inevitable unevenness in the flow of funds through the current assets and current liabilities accounts. Current Ratio Typical A.R.E. Typical Wood Typical Metal 11

14 Executive Summary The average collection period ratio is also known as days sales outstanding. The average collection period is the number of days, on average, that it takes a company to collect its credit accounts or its accounts receivables. In other words, this financial ratio is the average number of days required to convert receivables into cash. Average Collection Period (Days) Typical A.R.E. Typical Wood Typical Metal Inventory turnover is a measure of the number of times inventory is sold or used in a time period such as a year. A low turnover rate may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort. In some instances, however a low rate may be appropriate, such as where higher inventory levels occur in anticipation of rapidly rising prices or expected seasonality of sales. Conversely a high turnover rate may indicate inadequate inventory levels, which may lead to a loss in business as the inventory is too low. This often can result in stock shortages. Inventory Turnover Typical A.R.E. Typical Wood Typical Metal 12

15 Executive Summary Payroll expense is the salaries and wages paid to employees in exchange for services rendered by them to a business. Payroll includes the cost of all related payroll taxes, such as the employer s matching payments for Medicare and social security. Payroll expense is the second largest expense that a company incurs. Payroll Expense (% of Sales) 40% 30% 20% 34.9% S,G&A Payroll 10.3% Factory Labor 24.6% 34.9% 35.3% S,G&A Payroll 8.6% Factory Labor 26.3% S,G&A Payroll 9.0% Factory Labor 26.3% 10% 0% Typical A.R.E. Typical Wood Typical Metal Employees are the lifeblood of the organization. Without a properly motivated and compensated work force, few firms can produce much more than basic levels of performance. Employee payroll costs make up the second largest expense category on the income statement. In controlling employee payroll, the key to success is not the absolute level of compensation, but rather the productivity of employees both collectively and individually. In general, the greater the employee productivity, the more successful the firm. Employee Productivity $400,000 $349,428 $371,864 $300,000 $200,000 $210,821 $223,035 $159,390 $257,927 $100,000 $0 Typical A.R.E. Typical Wood Typical Metal Sales per Employee Sales per Production Employee 13

16 Return On Investment Return on investment is the most meaningful way to evaluate overall company profitability. It is important to understand how return on investment is calculated and how it can be improved. The elements of a complete return on investment analysis are shown in the table on the facing page. Strategic Profit Model There are two distinct return on investment measures: return on assets and return on net worth. Return On Assets looks at the economic viability of the firm. Return On Net Worth (or Return On Owner Equity) examines the return being generated for the firm s owners. Both have their own value in analyzing performance. These two return on investment ratios are driven by three performance ratios: profit margin, asset turnover and financial leverage. Each of these represents a different strategy, or profitability pathway, to improve return on investment. These five ratios can be combined into what is commonly called the Strategic Profit Model. It is simply a graphical representation of a comprehensive return on investment analysis. The strategic profit model is shown below using figures for the typical A.R.E. member. Path 1 Profit Margin Path 2 Asset Turnover Return On Assets Path 3 Financial Leverage Return On Net Worth 5.2% X 2.5 = 13.0% X 1.8 = 23.4% Profit Before Taxes Net Sales Net Sales Total Assets Profit Before Taxes Total Assets Total Assets Net Worth Profit Before Taxes Net Worth Path 1: Profit Margin = Profit Before Taxes Net Sales x 100 The first, and most important, profitability pathway is profit margin management. In the figure above, a profit margin of 5.2 percent means that for every $1.00 of sales the company was able to produce 5.2 in profit before taxes. Profit margin focuses on sales productivity, gross margin management and operating expense control. Return On Assets = Profit Before Taxes Total Assets x 100 Return on assets (ROA) is the direct result of the first two pathways; profit margin multiplied by asset turnover. This measure of performance is a good indicator of the firm s ability to survive and prosper. The pre tax return on assets ratio should at least equal the cost of capital. For the typical A.R.E. member ROA is 13 percent. Path 2: Asset Turnover = Net Sales Total Assets Asset turnover reflects the sales the firm produces per dollar invested in assets. The ratio of 2.5 means that the firm is able to generate $2.50 in sales for every $1.00 in assets. If a firm s assets, cash, accounts receivable, inventory, property, equipment and all other assets, can be used as efficiently as possible, then a maximum amount of sales can be generated from a given asset investment. Path 3: Financial Leverage = Total Assets Net Worth Financial leverage measures the total dollars of assets per dollar of net worth. The ratio measures the extent to which the firm uses outside (non-owner) financing. The higher the ratio, the more the firm relies on outside financing. The ratio of 1.8 times suggests that for every $1.00 in net worth, the firm had $1.80 in total assets. If for every $1.80 in total assets the owners put up $1.00, then outsiders put up the remaining $

17 Return On Investment Return On Net Worth = Profit Before Taxes Net Worth x 100 The end result of the three profitability pathways is return on net worth. It is seldom possible to generate an adequate rate of return on net worth by emphasizing just one of the profitability pathways. Each pathway should be examined carefully for improvement opportunities and then trade offs made in order to increase overall profitability. An improvement plan should not be based upon any single measure of performance, but be developed with the complete picture in mind, i.e., the impact on return on net worth. The typical A.R.E. firm has a return on net worth of 23.4 percent; that is, for every $1.00 of net worth, the firm produced 23.4 of profit before taxes. Companies must earn an adequate return on investment to satisfy the owners needs. The following table provides guidelines for return on assets and for return on net worth. Primary return On Return On Financial Objective assets net Worth Effect on Company Performance Minimum 8 10% 15 20% Minimum long term return necessary to ensure survival. Target 15 20% 30 40% Satisfies owners minimum needs, but doesn t provide for growth or offset inflation. Top Performance 25 30% 50 60% Would make the firm one of the top profit producers in the industry. Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Number Of Firms Reporting Typical Sales Volume ($ million) $17.4 $20.2 $15.5 $15.5 $20.7 $48.9 Sales Growth (2013 vs. 2012) 10.5% 23.4% 11.0% 22.2% 10.5% 35.7% STRATEGIC PROFIT MODEL Profit Margin (Pre-tax) 5.2% 11.9% 6.0% 11.5% 3.8% 10.2% Asset Turnover Return On Assets (Pre-tax) 13.0% 34.5% 15.6% 38.0% 7.6% 24.5% Financial Leverage Return On Net Worth (Pre-tax) 23.4% 62.1% 28.1% 87.4% 12.9% 39.2% 15

18 Product Profile Most firms fail to take control over their product and customer mixes. Oftentimes the choice of products manufactured and customers serviced is left almost to chance. The two must complement each other, and that balance is not achieved without some measure of planning. In recent years decisions such as make versus buy have become much more complex. To be effective today it is necessary to continually review the mix of fixtures being manufactured to ensure that it is appropriate. The focal point of such a review should be the needs of the customer base being serviced. Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Number Of Firms Reporting Typical Sales Volume ($ million) $17.4 $20.2 $15.5 $15.5 $20.7 $48.9 Sales Growth (2013 vs. 2012) 10.5% 23.4% 11.0% 22.2% 10.5% 35.7% Sales by Source of Revenue Manufacturing 82.0% 83.8% 87.1% 84.2% 73.7% 88.8% Distribution Installation Graphics/Design Work Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Sales by Product Category Metal Store Fixtures & Displays 31.9% 27.0% 12.2% 15.4% 71.1% 72.6% Wood Store Fixtures & Displays Permanent P-O-P Temporary P-O-P Signage Hardware Visual Presentation Products Other Sales Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% % of purchases sourced off-shore 7.0% 5.0% 0.0% 15.1% 10.0% 5.0% 16

19 Income Statement The income statement reflects the ability of management to make sales, control expenses, and thereby earn profit. Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost Of Goods Sold Materials Costs Raw Materials Purchased Components Subcontract Expenses Total Materials Costs Factory Labor Direct Labor/Manufacturing Wages Installation Labor Indirect Labor Eng./Drafting/Design/Estimating Salaries & Bonuses Plant Supervision Salaries & Bonuses Total Factory Labor Salaries, Wages & Bonuses Factory Payroll Taxes, FICA, Unemployment & Workers Comp Factory Employee Fringe Benefits Total Factory Labor Other Direct Costs Utilities (heat, light, power, water) Plant Repairs & Maintenance Plant Rent or Ownership in Real Estate Insurance (liability & casualty) Freight Out Depreciation (plant & installation equip.) All Other Direct Overhead Total Other Direct Costs Total Cost Of Goods Sold Gross Margin Selling Expenses In-house Sales Staff Salaries & Commissions Sales Payroll Taxes, Group Insurance & Fringe Benefits Outside Sales Rep Commissions Paid Travel & Entertainment Advertising & Promotion All Other Selling Expenses Total Selling Expenses General & Administrative Expenses Owners/Officers Compensation All Other Salaries, Wages & Bonuses Payroll Taxes, Group Ins. & Fringe Ben. (Admin) Professional Fees (legal, accounting, etc.) Bad Debt Losses All Other G&A Expenses Total G&A Expenses Total S,G&A Expenses Operating Profit Other Income Interest Expense Other Non-Operating Expenses Profit Before Taxes 5.2% 11.9% 6.0% 11.5% 3.8% 10.2% 17

20 Balance Sheet The balance sheet reflects the financial stability of the firm. As such it indicates how much money is invested in the business and where those investments are centered, how much money is owed to various creditors and the value of the business to the owners. Unlike the income statement which reflects the flow of funds through a business during an entire accounting period, the balance sheet is a picture of the position of a business at the end of the accounting period. As the name implies, the balance sheet must balance! That is, Assets = Liabilities plus Net Worth. Assets The asset portion of the balance sheet represents the total investment made in the firm. When focusing on investment control strategies, two accounts require particular attention accounts receivable and inventory. Accounts Receivable Accounts receivable are uncollected dollars owed to the firm for products sold on credit. These funds are unavailable for paying immediate cash obligations. Shortening the collection period will strengthen the firm s cash position; however, the possible negative impact on sales volume must also be considered. Inventory Inventory represents the firm s investment in finished goods or work in progress. Excessive inventory is expensive. Inventory carrying costs may include interest, personal property taxes, markdowns and shrinkage. On the other hand, inventory shortages may hinder sales productivity if out-of-stock items become lost sales. Efforts to maximize sales per dollar of inventory, while minimizing the inventory holding period, will increase asset turnover and return on investment. Liabilities and Net Worth Liabilities and net worth represent the two methods of funding assets. Liabilities Liabilities reflect financing by outside creditors. Such funds may be provided by suppliers who have sold merchandise to the firm on credit (accounts payable), as well as individuals or financial institutions that have loaned the firm money (short or long term notes payable). Net Worth Whereas liabilities are funds provided from outside the firm, net worth represents funds provided from inside the firm. Net worth is the sum of the owners paid-in capital, plus loans from owners, plus all earnings retained in the business. These funds are totally at risk. A positive return on owners investment depends completely upon the profit earned by the company. Assets Cash & Marketable Securities 8.2% 22.4% 10.7% 19.1% 10.0% 23.6% Accounts Receivable Inventory Other Current Assets Total Current Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Other Fixed Assets Total Assets 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Liabilities and Net Worth Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Accounts Payable Notes Payable Customer Deposits Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth Or Owner Equity Total Liabilities & Net Worth 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 18

21 Financial Ratios Financial ratios are the basic scores on which managers are judged by creditors and the suppliers of capital to the business, the investors. The ratios covered here are the key ratios necessary to make such evaluations. Current Ratio = Current Assets Current Liabilities The current ratio measures the margin of safety that management maintains in order to allow for the inevitable unevenness in the flow of funds through the current assets and current liabilities accounts. A company needs a supply of current funds to be assured of being able to pay its bills when they come due. As a general rule, the current ratio should be 2.0 or higher. Quick Ratio = (Cash + Accounts Receivable) Current Liabilities Quick assets include cash, marketable securities, and current accounts receivable. Presumably, these items can be converted into cash quickly at approximately their stated amounts, unlike inventory which is the principal current asset excluded from this calculation. The quick ratio is therefore a measure of the extent to which liquid resources are readily available to meet current obligations. A guideline for the quick ratio is 1.0. Accounts Payable To Inventory = Accounts Payable Inventory x 100 Businesses generally purchase materials on credit. The accounts payable to inventory ratio measures the extent to which a company s inventory is financed by its suppliers. Accounts Payable Payout Period = Accounts Payable (Materials Costs 365 Days) The accounts payable payout period measures the timeliness of paying suppliers. This figure is related directly to the normal credit terms of the company s purchases. Debt To Equity = Total Liabilities Net Worth Debt is risky because if creditors are not paid promptly they can take legal action to obtain payment which can, in extreme cases, force the company into bankruptcy. The greater the proportion of its financing that is obtained from owners, the less worry the company has in meeting its fixed obligations. The debt to equity ratio shows the balance that management has struck between debt and owners equity. An optimum mix is $1.00 debt to $1.00 equity. EBITDA = Earnings Before Interest & Taxes + Depreciation & Amortization Net Sales x 100 EBITDA is an important measure of the profitability of the company. As it incorporates depreciation and amortization, it represents the best estimate of the firm s operating cash margin. EBIT To Total Assets = Earnings Before Interest And Taxes Total Assets x 100 EBIT to total assets is an important return on investment ratio that provides a profit analysis based on earnings, before interest and income taxes. This ratio is best compared with a company s annual interest rate on borrowed funds. If a firm s EBIT to total assets ratio is higher than their cost of capital, there is a favorable spread between the two. A spread of at least 2.0 percentage points is most desirable. Times Interest Earned = (Profit Before Taxes + Interest) Interest The times interest earned ratio measures the number of times earnings before interest and taxes will cover total interest payments on debt. The result indicates the level to which income can decline without impairing the company s ability to meet interest payments on its liabilities. If the ratio falls below 1.0, the firm is not generating enough earnings to cover the interest due on loans. A reasonable level would be 6 to 8 times. Sales To Working Capital = Net Sales (Current Assets Current Liabilities) Measures the ability of the firm to generate sales without tying up high levels of investment in working capital. A ratio of 5.1, for example, means the firm can generate $5.10 in sales for every $1.00 invested in working capital. This ratio can be impacted by changes in any of the three working capital items improving inventory turnover, reducing accounts receivable collections or obtaining more favorable accounts payable payment terms. Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Current Ratio Quick Ratio Accounts Payable To Inventory 46.7% 57.8% 47.2% 82.9% 42.9% 35.6% Accounts Payable Payout Period Debt To Equity EBITDA 32.5% 101.1% 35.9% 67.8% 26.9% 89.8% EBIT To Total Assets 15.1% 32.1% 19.6% 34.6% 11.4% 29.0% Times Interest Earned Sales To Working Capital

22 Asset Productivity Ratios Average Collection Period = Accounts Receivable (Credit Sales 365 Days) The average collection period can be evaluated against the credit terms offered by the company. As a rule, the collection period should not exceed 1 1 /3 times the regular payment period. That is, if your company s typical terms call for payment in 30 days, then the collection period should not exceed 40 days. Changes in the ratio indicate changes in the company s credit policy or changes in its ability to collect receivables. Inventory Turnover = Cost Of Goods Sold Average Inventory Inventory turnover is an indication of the velocity with which merchandise dollars move through the business. An increase in the value of inventory may represent the additional stock required by an expanding business, or it may represent an accumulation of merchandise from declining sales volume. In the latter case, the inventory turnover will decrease. A decrease in the inventory turnover ratio may therefore be a significant danger signal. Inventory Holding Period = 365 Days Inventory Turnover Business managers and owners must be concerned with a holding period that is longer than necessary due to the high costs of tying up capital in excess inventory. On the other hand, reducing inventory levels too much could result in lost sales because certain products are not available when the customer wants them. The cost of carrying inventory has to be balanced against the profit opportunities lost by not having product in stock ready for sale. Cash Cycle = Average Collection Period + Inventory Holding Period Accounts Payable Payout Period Most firms are anxious to expand their sales base. As they do so, however, cash flow becomes a major issue. Ideally, firms would like to have enough cash to fund expansion and to provide a buffer in the event of a cyclical slowdown in the industry. At the same time, no firm wants to have excessive cash balances remaining idle. The cash cycle determines the number of days of investment in a product from the time the materials are purchased from the supplier until the sales invoice is collected from the customer. Anything that can be done to shorten this period facilitates sales growth without additional outside investment. Sales To Fixed Assets = Net Sales Net Fixed Assets The store fixture industry requires a significant investment in fixed assets, particularly equipment. To reach a sufficient level of profitability, these assets must be utilized as efficiently as possible. This ratio provides a basis for comparing fixed asset utilization across different types of operations. Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Average Collection Period (Days) Inventory Turnover Inventory Holding Period (Days) Cash Flow Cycle Average Collection Period (Days) Plus Inventory Holding Period Gross Cash Flow (Days) Minus A/P Payout Period (Days) Cash Cycle (Days) Sales To Fixed Assets

23 Employee Productivity Ratios All companies want to improve employee productivity, but how? Following are 7 steps management can take to improve productivity: 1. Design economic incentives so employees at all levels of an organization can benefit from them. 2. Provide meaningful feedback in a constructive manner on a regular basis. 3. Respect employees as individuals, in addition to the job they do. 4. Be sure management at all levels receives adequate training. 5. Provide support for employees when it s genuinely needed, like equipment when existing is outdated or inefficient. 6. Don t be emotionally stingy. Recognition is often a more powerful motivator than money. 7. Ensure senior leadership models behavior that makes the rank-and-file proud to be part of the team. To help boost productivity, employee engagement matters. Ultimately, most employees would much rather be part of a team they re committed to, not just a member of an organization. Developing and maintaining a consistent management approach that engenders esprit de corps is a key link in the productivity process. Balancing appropriate levels of results-orientation with understanding of employee needs is not easy but it is attainable. Sales Per Employee = Net Sales Total Employees Every business ability to perpetuate is highly contingent upon the productivity of its employees. With a motivated and productive work force, a company can establish a differential advantage over its competitors by earning a higher amount of sales per employee. Employees are one of your firm s greatest resources. Therefore, the sales dollars each employee is able to generate become a crucial factor when analyzing ways to improve profitability. Employees By Function Typical High- Typical High- Typical Higha.R.E. Profit Wood Profit Metal Profit Mfr. Mfr. Mfr. Wood Mfr. Mfr. Metal Mfr. Production Engr/Drafting/Design/Estimating In-house Sales Staff Plant Supervision Project/Acct Mgmt./Customer Svc Purchasing Receiving/Inventory Control Shipping & Warehousing All Other Employees Total Number Of Employees Employee Productivity Ratios Sales Per Production Employee $349,428 $397,407 $371,864 $430,705 $257,927 $460,152 Sales Per Sales Employee $5,087,645 $9,717,109 $8,030,522 $11,277,764 $3,439,339 $5,571,047 Sales Per Employee $210,821 $227,915 $223,035 $278,401 $159,390 $162,233 Gross Margin Per Employee $40,469 $50,371 $40,457 $75,695 $39,472 $39,472 Salary Per Employee $56,990 $57,501 $62,344 $57,538 $42,823 $40,800 Payroll Per Employee $66,804 $67,344 $71,079 $68,557 $55,446 $51,230 Payroll Expense (% Of Sales) Factory Labor 24.6% 21.9% 26.3% 17.5% 26.3% 18.7% S,G&A Payroll Expenses Total Payroll Expense 34.9% 29.7% 34.9% 27.2% 35.3% 25.9% 21

24 Analysis of Variance: Wood Store Fixture Manufacturers This section details the range of common experience for each ratio and measure in the report. This range is between the lower quartile (25th percentile) and the upper quartile (75th percentile) results, based on all participating firms. Also provided, as a reference point, is the midpoint or median result for the statistic. The word quartile means that something is divided into quarters, or segments of twenty-five percent each. The lower quartile is the figure halfway between the median and the lowest performance value. Twenty-five percent of the firms are below this figure and seventy-five percent are above it. The upper quartile is the figure between the median and the highest value. Therefore, the values between the lower and upper quartiles profile the middle fifty percent of the results for any given measure. This range of common experience provides an understanding of the variability of the data without having to consider extreme results. Reference to the range of common experience helps put the differences in a particular ratio into perspective. Performance outside this middle 50% range may warrant closer management scrutiny since it is beyond the normal range for that measure. Performance within the range of common experience may be less of a priority. Attention to differences within the range of common experience may still be warranted, but close scrutiny would first be directed to measures that fall outside the range of common experience. Wood Mfr. Median Wood Mfr. lower Wood Upper Quartile Mfr. Quartile general Number Of Firms Reporting 27 Typical Sales Volume ($ million) $11.1 $15.5 $31.8 Sales Growth (2013 vs. 2012) 1.0% 11.0% 23.8% Strategic Profit Model Profit Margin (Pre-Tax) 3.5% 6.0% 9.9% Asset Turnover Return On Assets (Pre-Tax) 6.1% 15.6% 26.5% Financial Leverage Return On Net Worth (Pre-Tax) 7.4% 28.1% 77.0% Sales by Source of Revenue Manufacturing 76.5% 87.1% 98.0% Distribution Installation Graphics/Design Work Sales by Product Category Metal Store Fixtures & Displays 0.0% 12.2% 20.0% Wood Store Fixtures & Displays Permanent P-O-P Temporary P-O-P Signage Hardware Visual Presentation Products Other Sales % of purchases sourced off-shore 0.0% 0.0% 16.0% 22

25 Analysis of Variance: Wood Store Fixture Manufacturers Wood Mfr. Median Wood Mfr. lower Wood Upper INCOME STATEMENT Quartile Mfr. Quartile Net Sales 100.0% Cost Of Goods Sold Materials Costs Raw Materials Purchased Components Subcontract Expenses Total Materials Costs Factory Labor Direct Labor/Manufacturing Wages Installation Labor Indirect Labor Eng./Drafting/Design/Estimating Salaries & Bonuses Plant Supervision Salaries & Bonuses Total Factory Labor Salaries, Wages & Bonuses Factory Payroll Taxes, FICA, Unemployment & Workers Comp Factory Employee Fringe Benefits Total Factory Labor Other Direct Costs Utilities (heat, light, power, water) Plant Repairs & Maintenance Plant Rent or Ownership in Real Estate Insurance (liability & casualty) Freight Out Depreciation (plant & installation equip.) All Other Direct Overhead Total Other Direct Costs Total Cost Of Goods Sold Gross Margin Selling Expenses In-house Sales Staff Salaries & Commissions Payroll Taxes, Group Ins. & Fringe Ben. (Sales & Marketing) Outside Sales Rep Commissions Paid Travel & Entertainment Advertising & Promotion All Other Selling Expenses Total Selling Expenses General & Administrative Expenses Owners/Officers Compensation All Other Salaries, Wages & Bonuses Payroll Taxes, Group Ins. & Fringe Ben. (Admin) Professional Fees (legal, accounting, etc.) Bad Debt Losses All Other G&A Expenses Total G&A Expenses Total S,G&A Expenses Operating Profit Other Income Interest Expense Other Non-Operating Expenses Profit Before Taxes 3.5% 6.0% 9.9% 23

26 Analysis of Variance: Wood Store Fixture Manufacturers Wood Mfr. Median Wood Mfr. lower Wood Upper Quartile Mfr. Quartile BALANCE SHEET Assets Cash & Marketable Securities 1.4% 10.7% 20.0% Accounts Receivable Inventory Other Current Assets Total Current Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Other Fixed Assets Liabilities and Net Worth Accounts Payable Notes Payable Customer Deposits Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth Or Owner Equity FINANCIAL RATIOS Current Ratio Quick Ratio Accounts Payable To Inventory 40.4% 47.2% 111.5% Accounts Payable Payout Period Debt To Equity EBITDA 14.6% 35.9% 63.4% EBIT To Total Assets 6.3% 19.6% 27.8% Times Interest Earned Sales To Working Capital ASSET PRODUCTIVITY RATIOS Average Collection Period (Days) Inventory Turnover Inventory Holding Period (Days) Cash Flow Cycle Average Collection Period (Days) Plus Inventory Holding Period Gross Cash Flow (Days) Minus A/P Payout Period (Days) Cash Cycle (Days) Sales To Fixed Assets EMPLOYEES BY FUNCTION Production Engineering/Drafting/Design/Estimating In-house Sales Staff Plant Supervision Project Mgmt./Acct. Mgmt/Customer Svc Purchasing Receiving/Inventory Control Shipping & Warehousing All Other Total Number Of Employees (FTE) EMPLOYEE PRODUCTIVITY RATIOS Sales Per Production Employee $303,068 $371,864 $585,695 Sales Per Sales Employee $5,170,416 $8,030,522 $13,467,498 Sales Per Employee $176,695 $223,035 $304,247 Gross Margin Per Employee $30,291 $40,457 $59,808 Salary Per Employee $55,888 $62,344 $78,254 Payroll Per Employee $56,692 $71,079 $91,503 24

27 Analysis of Variance: Metal Store Fixture Manufacturers This section details the range of common experience for each ratio and measure in the report. This range is between the lower quartile (25th percentile) and the upper quartile (75th percentile) results, based on all participating firms. Also provided, as a reference point, is the midpoint or median result for the statistic. The word quartile means that something is divided into quarters, or segments of twenty-five percent each. The lower quartile is the figure halfway between the median and the lowest performance value. Twenty-five percent of the firms are below this figure and seventy-five percent are above it. The upper quartile is the figure between the median and the highest value. Therefore, the values between the lower and upper quartiles profile the middle fifty percent of the results for any given measure. This range of common experience provides an understanding of the variability of the data without having to consider extreme results. Reference to the range of common experience helps put the differences in a particular ratio into perspective. Performance outside this middle 50% range may warrant closer management scrutiny since it is beyond the normal range for that measure. Performance within the range of common experience may be less of a priority. Attention to differences within the range of common experience may still be warranted, but close scrutiny would first be directed to measures that fall outside the range of common experience. general Number Of Firms Reporting 19 Typical Sales Volume ($ million) $11.9 $20.7 $46.9 Sales Growth (2013 vs. 2012) 0.1% 10.5% 25.2% Strategic Profit Model Profit Margin (Pre-Tax) 0.0% 3.8% 8.6% Asset Turnover Return On Assets (Pre-Tax) 0.0% 7.6% 18.8% Financial Leverage Return On Net Worth (Pre-Tax) 0.3% 12.9% 40.1% Sales by Source of Revenue Manufacturing 56.0% 73.7% 100.0% Distribution Installation Graphics/Design Work Sales by Product Category Metal Mfr. Median Metal Mfr. lower Metal Upper Quartile Mfr. Quartile Metal Store Fixtures & Displays 50.0% 71.1% 95.0% Wood Store Fixtures & Displays Permanent P-O-P Temporary P-O-P Signage Hardware Visual Presentation Products Other Sales % of purchases sourced off-shore 4.0% 10.0% 50.0% 25

28 Analysis of Variance: Metal Store Fixture Manufacturers Metal Mfr. Median Metal Mfr. lower Metal Upper income statement Quartile Mfr. Quartile Net Sales 100.0% Cost Of Goods Sold Materials Costs Raw Materials Purchased Components Subcontract Expenses Total Materials Costs Factory Labor Direct Labor/Manufacturing Wages Installation Labor Indirect Labor Eng./Drafting/Design/Estimating Salaries & Bonuses Plant Supervision Salaries & Bonuses Total Factory Labor Salaries, Wages & Bonuses Factory Payroll Taxes, FICA, Unemployment & Workers Comp Factory Employee Fringe Benefits Total Factory Labor Other Direct Costs Utilities (heat, light, power, water) Plant Repairs & Maintenance Plant Rent or Ownership in Real Estate Insurance (liability & casualty) Freight Out Depreciation (plant & installation equip.) All Other Direct Overhead Total Other Direct Costs Total Cost Of Goods Sold Gross Margin Selling Expenses In-house Sales Staff Salaries & Commissions Payroll Taxes, Group Ins. & Fringe Ben. (Sales & Marketing) Outside Sales Rep Commissions Paid Travel & Entertainment Advertising & Promotion All Other Selling Expenses Total Selling Expenses General & Administrative Expenses Owners/Officers Compensation All Other Salaries, Wages & Bonuses Payroll Taxes, Group Ins. & Fringe Ben. (Admin) Professional Fees (legal, accounting, etc.) Bad Debt Losses All Other G&A Expenses Total G&A Expenses Total S,G&A Expenses Operating Profit Other Income Interest Expense Other Non-Operating Expenses Profit Before Taxes 0.0% 3.8% 8.6% 26

29 Analysis of Variance: Metal Store Fixture Manufacturers Metal Mfr. Median Metal Mfr. lower Metal Upper Quartile Mfr. Quartile BALANCE SHEET Assets Cash & Marketable Securities 0.1% 10.0% 20.5% Accounts Receivable Inventory Other Current Assets Total Current Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Other Fixed Assets Liabilities and Net Worth Accounts Payable Notes Payable Customer Deposits Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth Or Owner Equity FINANCIAL RATIOS Current Ratio Quick Ratio Accounts Payable To Inventory 28.7% 42.9% 66.5% Accounts Payable Payout Period Debt To Equity EBITDA 3.5% 26.9% 64.6% EBIT To Total Assets 2.2% 11.4% 23.2% Times Interest Earned Sales To Working Capital ASSET PRODUCTIVITY RATIOS Average Collection Period (Days) Inventory Turnover Inventory Holding Period (Days) Cash Flow Cycle Average Collection Period (Days) Plus Inventory Holding Period Gross Cash Flow (Days) Minus A/P Payout Period (Days) Cash Cycle (Days) Sales To Fixed Assets EMPLOYEES BY FUNCTION Production Engineering/Drafting/Design/Estimating In-house Sales Staff Plant Supervision Project Mgmt./Acct. Mgmt/Customer Svc Purchasing Receiving/Inventory Control Shipping & Warehousing All Other Total Number Of Employees (FTE) EMPLOYEE PRODUCTIVITY RATIOS Sales Per Production Employee $205,219 $257,927 $525,853 Sales Per Sales Employee $2,147,639 $3,439,339 $8,156,454 Sales Per Employee $145,867 $159,390 $241,187 Gross Margin Per Employee $28,764 $39,472 $47,703 Salary Per Employee $34,308 $42,823 $56,306 Payroll Per Employee $39,613 $55,446 $68,614 27

30 Sales Volume Analysis This section of the report analyzes A.R.E. manufacturers by sales size, regardless of materials used in producing the fixtures. General Number Of Firms Reporting Typical Sales Volume ($ million) $8.1 $11.6 $17.4 $32.2 $55.7 Sales Growth (2013 vs. 2012) 7.0% 8.3% 10.6% 1.7% 23.1% Strategic Profit Model Profit Margin (Pre-Tax) 1.9% 4.1% 4.8% 5.4% 8.6% Asset Turnover Return On Assets (Pre-Tax) 4.0% 9.8% 12.5% 13.5% 23.2% Financial Leverage Return On Net Worth (Pre-Tax) 6.8% 12.7% 20.0% 35.1% 39.4% Sales by Source of Revenue Manufacturing 74.0% 82.5% 79.8% 86.6% 87.3% Distribution Installation Graphics/Design Work Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% Sales by Product Category sales Sales Sales Sales Sales under $10 $10 $15 $15 $25 $25 $45 Over $45 Million Million Million Million Million Metal Store Fixtures & Displays 21.2% 16.5% 41.9% 33.2% 47.4% Wood Store Fixtures & Displays Permanent P-O-P Temporary P-O-P Signage Hardware Visual Presentation Products Other Sales Total Sales 100.0% 100.0% 100.0% 100.0% 100.0% % of purchases sourced off-shore 0.1% 2.0% 8.5% 19.5% 15.0% 28

31 Sales Volume Analysis sales Sales Sales Sales Sales under $10 $10 $15 $15 $25 $25 $45 Over $45 INCOME STATEMENT Million Million Million Million Million Net Sales 100.0% 100.0% 100.0% 100.0% 100.0% Cost Of Goods Sold Materials Costs Raw Materials Purchased Components Subcontract Expenses Total Materials Costs Factory Labor Direct Labor/Manufacturing Wages Installation Labor Indirect Labor Eng./Drafting/Design/Estimating Labor Plant Supervision Salaries Total Factory Labor Compensation Payroll Taxes, FICA, Unemployment, Workers Comp Factory Employee Fringe Benefits Total Factory Labor Other Direct Costs Utilities (heat, light, power, water) Plant Repairs & Maintenance Plant Rent or Ownership in Real Estate Insurance (liability & casualty) Freight Out Depreciation (plant & installation equip.) All Other Direct Overhead Total Other Direct Costs Total Cost Of Goods Sold Gross Margin Selling Expenses Sales Staff Salaries & Commissions Payroll Taxes, Group Ins. & Fringe Benefits Outside Sales Rep Commissions Paid Travel & Entertainment Advertising & Promotion All Other Selling Expenses Total Selling Expenses General & Administrative Expenses Owners/Officers Compensation All Other Salaries, Wages & Bonuses Payroll Taxes, Group Ins. & Fringe Ben Professional Fees (legal, accounting, etc.) Bad Debt Losses All Other G&A Expenses Total G&A Expenses Total S,G&A Expenses Operating Profit Other Income Interest Expense Other Non-Operating Expenses Profit Before Taxes 1.9% 4.1% 4.8% 5.4% 8.6% 29

32 30 Sales Volume Analysis Sales Sales Sales Sales Sales under $10 $10 $15 $15 $25 $25 $45 Over $45 Million Million Million Million Million BALANCE SHEET Assets Cash & Marketable Securities 11.1% 8.0% 14.0% 4.1% 23.7% Accounts Receivable Inventory Other Current Assets Total Current Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Other Fixed Assets Total Assets 100.0% 100.0% 100.0% 100.0% 100.0% Liabilities and Net Worth Accounts Payable Notes Payable Customer Deposits Other Current Liabilities Total Current Liabilities Long Term Liabilities Net Worth Or Owner Equity Total Liabilities & Net Worth 100.0% 100.0% 100.0% 100.0% 100.0% FINANCIAL RATIOS Current Ratio Quick Ratio Accounts Payable To Inventory 49.8% 104.3% 48.5% 41.9% 42.3% Accounts Payable Payout Period Debt To Equity EBITDA 14.1% 35.9% 41.3% 18.1% 49.8% EBIT To Total Assets 6.1% 16.8% 16.3% 13.2% 26.7% Times Interest Earned Sales To Working Capital ASSET PRODUCTIVITY RATIOS Average Collection Period (Days) Inventory Turnover Inventory Holding Period (Days) Cash Flow Cycle Average Collection Period (Days) Plus Inventory Holding Period Gross Cash Flow (Days) Minus A/P Payout Period (Days) Cash Cycle (Days) Sales To Fixed Assets EMPLOYEES BY FUNCTION Production Engineering/Drafting/Design/Estimating In-house Sales Staff Plant Supervision Project Mgmt./Acct. Mgmt/Customer Svc Purchasing Receiving/Inventory Control Shipping & Warehousing All Other Total Number Of Employees (FTE) EMPLOYEE PRODUCTIVITY RATIOS Sales Per Production Employee $325,000 $344,869 $290,993 $491,079 $530,501 Sales Per Sales Employee $2,961,266 $5,771,603 $4,649,652 $5,005,230 $9,377,840 Sales Per Employee $178,227 $218,392 $174,056 $232,111 $304,247 Gross Margin Per Employee $38,898 $32,605 $34,464 $54,118 $46,696 Salary Per Employee $50,549 $56,247 $55,940 $64,639 $60,394 Payroll Per Employee $60,284 $63,422 $67,011 $78,823 $69,672

33 TREND ANALYSIS: Highlighting how performance has changed over time on key measures. 31