Transcript Highlights of the Ready Mixed Concrete Industry Data Report Presented to the 46th Annual Business Administration Conference by William B.

Highlights
of the
Ready Mixed Concrete Industry
Data Report
Presented to the 46th Annual
Business Administration Conference
by
William B. Allen
Allen Villere Partners
Benchmarking

Assists in helping to analyze the cost of doing
business

Assists in helping to analyze the efficiency of
an operation
Surveys Available

Industry Data Survey
 Fleet Benchmarking Survey
 Safety Survey
 Wage & Benefits Study
The Industry Data Survey

Company Size Analysis By % Sales & $-Per-yd

Regional Analysis By % Sales & $-Per-yd

Rural, Urban & Mixed Area Type Analysis

Five Year Trend Analysis
Ready Mixed Concrete Production
500
Millions of Cubic Yards
450
400
350
300
250
200
150
100
50
75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1 2 3
Average Price of Ready Mix per Yard
46.6
46.1
47.6
46.9
46.7
46.9
46.5
$50
45.3
Price per Yard
$60
47.5
68.04
67.21
66.48
65.26
63.56
60.8
59.88
$70
NRMCA Data
48.0
48.9
50.0
52.3
52.1
57.9
Average Price
$80
66.24
(1984 - 2003)
$40
$30
$20
$10
$0
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0
MODULE III: SESSION 1 - 0H
1
2
3
48
Average Ready Mixed Concrete
Profit as a % of Sales
5.8 7.3 8.1 6.4
6
5.4
4.8
5
4.2
4.1
% of Sales
4 3.7
3.2 3.1
3.4
4.9
3.4
3.4
3
2.4
2.0
2
1
0
-1
0.9
0.4
0.1
0.5 -
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 0 1
2 3
Ready Mixed Concrete
Profitability
$6.00
Pre-tax Concrete Profit
(per cubic yard)
5.27
$5.50
$5.00
$4.50
$4.00
3.23
$3.50
$3.00
$2.50
2.30
$2.00
1.58
$1.50
$1.00
$0.50
-0.05
$0.00
1991
1999
2001
2002
2003
1996 1997 1998 1999 2000 2001 2002 2003
450
$6.00
400
350
300
$4.00
250
$3.00
200
150
$2.00
100
$1.00
50
0
$0.00
1996 1997 1998 1999 2000 2001 2002 2003
Year
US Production
Avg. Pretax Profit
Average Pretax $ Profit
Cubic Yards Produced
(in millions)
$5.00
Growth Comparison
YTY % Change
Percentage Annual Growth
60.0%
40.0%
20.0%
0.0%
Profit Growth
Production Growth
-20.0%
-40.0%
-60.0%
-80.0%
1997
1998
1999
2000
Year
2001
2002
2003
Profit vs Sales Price
$6.00
$70.00
$68.00
$66.00
$64.00
$62.00
$60.00
$58.00
$56.00
$54.00
$ Profit
$5.00
$4.00
$3.00
$2.00
Avg. Pretax Profit
$1.00
Avg. Cubic Yard Price
$0.00
1996
1997
1998
1999
2000
Year
2001
2002
2003
$ Sales Price
Profit vs Sales Price Comparison
Price vs Cost
Avg Price per yard
Price vs Total Cost
$70.00
$65.00
$60.00
$55.00
1998
1999
2000
Avg Total Cost
2001
2002
Avg. Cubic Yard Price
2003
Cement Prices vs Ready Mix Prices
Portland Cement Prices
Ready-mix concrete prices
Linear (Portland Cement Prices)
Linear (Ready-mix concrete prices)
85
70
55
40
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
3
1
1st Quarter of 1980 to 4th Quarter of 2002
3
1
3
1
3
1
3
1
3
Net Profit as a Percent of Sales
by Company Size
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Under 100,000
Cubic Yds.
100,000 to 299,999
Cubic Yds.
300,000 to 500,000
Cubic Yds.
Over 500,000 Cubic
Yds.
Typical NRMCA
Member
Industry Leaders
Net Profit as a Percent of
Sales by Region
Northeastern
MidAtlantic Region
9.0%
8.0%
7.0%
6.0%
5.0%
Southeastern
Region
North Central
Region
South Central
Region
Great Lakes Region
4.0%
Rocky Mountain
Region
3.0%
Pacific Northwest
Region
2.0%
Pacific Southwest
Region
1.0%
0.0%
Typical NRMCA
Member
Industry Leaders
Return on Assets (ROA) by
Company Size
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Under 100,000
Cubic Yds.
100,000 to 299,999
Cubic Yds.
300,000 to 500,000
Cubic Yds.
Over 500,000 Cubic
Yds.
Typical NRMCA
Member
Industry Leaders
Return on Assets (ROA)
by Regions
Northeastern
MidAtlantic Region
12.0%
Southeastern
Region
10.0%
North Central
Region
8.0%
South Central
Region
Great Lakes Region
6.0%
Rocky Mountain
Region
4.0%
Pacific Northwest
Region
2.0%
Pacific Southwest
Region
0.0%
Typical NRMCA
Member
Industry Leaders
Return on Net Worth (Equity)
(ROE) by Company Size
Under 100,000
Cubic Yds.
40.0%
100,000 to 299,999
Cubic Yds.
30.0%
20.0%
10.0%
0.0%
300,000 to 500,000
Cubic Yds.
Over 500,000 Cubic
Yds.
Typical NRMCA
Member
Industry Leaders
Return on Net Worth (Equity)
(ROE) by Region
Northeastern
MidAtlantic Region
16.0%
Southeastern
Region
14.0%
North Central
Region
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
South Central
Region
Great Lakes Region
Rocky Mountain
Region
Pacific Northwest
Region
Pacific Southwest
Region
Typical NRMCA
Member
Industry Leaders
2003 TYPICAL YARD OF CONCRETE
AVERAGE SELLING PRICE $68.04
MATERIAL 54.1% $36.98
PROFIT 3.4% $2.30
DELIVERY 18.9% $12.91
FIXED 17.8% $12.18
PLANT 5.9% $4.04
2003 INDUSTRY LEADER YARD OF CONCRETE
AVERAGE SELLING PRICE $72.81
MATERIAL 53.3% $39.09
PROFIT 6.1% $4.44
DELIVERY 17.5% $12.82
PLANT 5.9% $4.33
FIXED 17.2% $12.60
NON PROFIT YARD OF CONCRETE
MATERIAL 55.0%
FIXED 20.0%
DELIVERY 20.0%
PLANT 5.0%
IDEAL YARD OF CONCRETE
MATERIAL 46.8%
DELIVERY 14.7%
PLANT 3.9%
PROFIT 19.7%
FIXED 14.9%
2003 MATERIAL COSTS
AS A PERCENT OF MATERIAL COSTS @ $36.98/YD
CEMENT 46.7% $17.28
FLY ASH 3.2% $1.17
ADMIXES 3.5% $1.28
SLAG 2.1% $0.77
COLOR 0.2% $0.07
AGG 42.1% 15.56
MIS 2.3% 0.85
Typical Variable Costs
Materials
Cement
Flyash & Other Cementitious
Admixtures
Coarse Aggregate
Fine Aggregate
Water/other
Total
2003
$17.28
$1.17
$1.28
$9.62
$5.94
$0.85
$36.98
2002
$17.47
$1.91
$1.28
$9.02
$6.06
$0.93
$36.81
Note: Cost figures are not adjusted for inflation
2003 VARIABLE DELIVERY COSTS
AS A PERCENT OF DELIVERY COSTS @12.91/YD
LABOR 49.3% $6.36
OTHER 3.2% $0.41
FRINGES 19.0% $2.45
TIRES 2.0% $0.26
R&M 16.2% $2.09
FUEL 10.4% $1.34
Typical Variable Costs
Delivery
Driver Salary
Benefits & Taxes
R&M
Fuel & Oil
Tires
Other
Total
2003
$6.36
$2.45
$2.09
$1.34
$0.26
$0.41
$12.91
2002
$6.13
$2.27
$2.15
$1.18
$0.26
$0.33
$12.33
Note: Cost figures are not adjusted for inflation
2003 VARIABLE PLANT COSTS
AS A PERCENT OF PLANT COSTS @ $4.04/YD
PLT/YD LBR 33.9% $1.37
FRINGES 12.9% $0.52
R&M 24.8% $1.00
OTHER 14.4% 0.58
WASTE 2.5% 0.1
POWER 11.6% $0.47
Typical Variable Costs
Plant and Yard
Plant and Yard Salaries
Fringes
R&M
All Other Variable Plant Expenses
Total
2003
$1.37
$0.52
$1.00
$1.15
$4.04
2002
$1.34
$0.48
$0.98
$1.04
$3.85
Note: Cost figures are not adjusted for inflation
Typical Variable Costs
2003
2002
Materials
Delivery
Plant and Yard
$36.98
$12.91
$ 4.04
$36.81
$12.33
$ 3.85
Total Variable Costs
Marginal Contribution
(Margin)
$53.93
$14.11
20.7%
$52.99
$14.22
21.2%
2003 FIXED COSTS
AS A PERCENT OF FIXED COSTS @ $12.18
DIRECT FC 57.6% $6.84
SELLING 11.0% $1.30
G&A 31.4% $3.73
Delivery Direct Fixed Costs
Truck Depreciation
Dispatch/Clerical Compensation
Truck & Equipt Leases
Taxes/Licenses
Fleet Insurance
Info Tech
All Other Delivery FC
Total
2003
$1.51
$0.68
$0.46
$0.30
$0.45
$0.06
$0.33
$3.79
2002
$1.46
$0.68
$0.70
$0.28
$0.46
$0.05
$0.30
$3.99
Note: Cost figures are not adjusted for inflation
Plant Direct Fixed Costs
Plant &Equip Depreciation
QC
Equip Leases
Taxes
Equip Insurance
Info Tech
Environmental
All Other Plant FC
Total
2003
$1.05
$0.43
$0.21
$0.20
$0.15
$0.03
$0.08
$0.90
$2.56
2002
$1.00
$0.42
$0.26
$0.21
$0.12
$0.04
$0.15
$0.83
$3.02
Note: Cost figures are not adjusted for inflation
Total Direct Fixed Costs
Delivery Fixed Costs
Plant Fixed Costs
Total Direct Fixed Costs
2003
$3.79
$3.05
$6.84
2002
$3.99
$3.02
$7.01
Operating Profit
$7.27
$7.21
Note: Cost figures are not adjusted for inflation
Selling Expenses
2003
Salaries plus Fringes
$0.85
Auto/Travel/Entertainment
$0.19
Advertising/Marketing/Promotion $0.10
All other Sales Expenses
$0.16
Total Sales Expenses
$1.30
2002
$0.97
$0.19
$0.11
$0.08
$1.36
G&A Expenses
Executive Salaries
Executive Bonuses
Office Salaries
Interest Expense
Fringes
Office Supplies
Communications
Legal & Proff
All Other Insurance
All Other Depr &
Bad Debts
All Other G&A
2003
$0.55
$0.10
$0.72
$0.31
$0.35
$0.17
$0.13
$0.18
$0.15
$0.24
$0.15
$0.86
2002
$0.60
$0.19
$0.86
$0.34
$0.37
$0.19
$0.14
$0.19
$0.14
$0.29
$0.15
$0.82
Total G&A
$3.73
$4.08
The Bottom Line – 2003 vs 2002
Total Sales
Total Variable Costs
Margin (Marginal Contribution)
Total Fixed
Total Expenses
Other Income
Other Expenses
2003
$68.04
$53.93
$14.11
2002
$67.21
$52.99
$14.22
$12.18
$66.11
$0.48
($0.11)
$ 12.79
$65.78
$0.15
NA
Net Income Before State/Fed Taxes $2.30/3.4%
$1.58/2.4%
Note: Cost figures are not adjusted for inflation
Food For Thought
 After tax profit/yd
 Avg profit per 7 yd load
 Avg profit per 3 loads/day
 Avg profit/hr per 10hr/day
 @ 5000 yds/yr
 @ 4000
yds/yr
$1.38
$9.66
$28.98
$2.89
$6,900
$5,520
2003 Average Ready Mixed Concrete
Company Reporting









12 Plants
123 Trucks
699,321 Cubic Yards
5,709 yds/trk
87 Months Average Age of Fleet
2.9 yds/hr
$0.62 Variable Delivery Cost/Min
$0.19 Fixed Delivery Cost/Min
3,984 yds per Production Employee
11
117
658,105
5,608
86
3.1
$0.63
$0.21
4,117
TABLE 1: Efficiency Ratios by Company Size
Item
<100K
100-299K
300-500K
>500K
Typical
Leader
DSO
39.7
57.9
47.0
49.7
50.4
49.2
Yds/Hour
2.5
2.6
2.8
2.9
2.9
3.1
Yds/Truck/Yr
3593
4473
5532
5937
5709
5720
Sales/Employee
140k
186k
206k
219k
220k
234k
VarDel/minute
.53
.58
.62
.61
.62
.65
TABLE 2: Efficiency Ratios by Regions
Item
NE/MA
SE
NC
SC
GL
RM
PNW
PSW
Typical
Leader
DSO
61.8
46.4
45.1
48.0
63.4
35.6
50.8
42.3
50.4
49.2
Yds/Hour
2.8
3.0
2.6
3.1
2.6
2.9
3.4
3.1
2.9
3.1
Yds/Truck/Yr
4856
5989
4650
6529
4986
5553
4990
7520
5709
5720
$Sales/Employee
220k
204k
153k
236k
198k
371k
195k
311k
220k
234k
VarDel/minute
.67
.53
.52
.51
.70
.83
.60
.70
.62
.65
Summary
What Can We Do To Improve Our
Bottom Line?

Compare Strengths & Weaknesses to Peers
 Improve Your Management Financial Cost
Data (Use NRMCA’s Chart of Accounts)
 Know Your Break-even Point
 Cost Out Jobs (Use NRMCA’s Job Cost
Program)
 Price Jobs Based On A Desired Return