Data from GAWDA’s 2009 PROFIT Report explain cylinder financials.
Cylinder rentals represent a major revenue stream for the majority of GAWDA members. Consequently, it is extremely important to fully understand the economics of the cylinder operation. Most of the figures identified below are self-explanatory. However, a few need some clarification:
Cylinders in Working Stocks: This represents the total number of cylinders that are not currently at customer locations. It includes all cylinders in the distribution center, on trucks and the like.
Cylinder Turnover = Cylinders Filled per Year ÷ Total Number of Cylinders: The number of times each cylinder is refilled per year and is a measure of the productivity of this investment.
Contribution Margin per Cylinder = Cylinder Contribution Margin ÷ Total Number of Cylinders: This is the cylinder contribution margin expressed on a per-cylinder basis.
| Cylinder Data | Typical GAWDA Distributor |
High-Profit GAWDA Distributor |
Gas & Cyl Sales Under 35 |
Gas & Cyl Sales 35-50% |
Gas & Cyl Sales Over 50% |
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| Asset Cylinders Currently Owned | 44,085 | 61,560 | 18,832 | 68,460 | 37,818 | ||||||
| Asset Cylinders not Owned | 1,741 | 3,240 | 2,568 | 1,540 | 1,699 | ||||||
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| Total Number of Cylinders | 45,826 | 64,800 | 21,400 | 70,000 | 39,517 | ||||||
| Asset Cylinders Currently Owned | 96.2% | 95.0% | 88.0% | 97.8% | 95.7% | ||||||
| Asset Cylinders Not Owned | 3.8 | 5.0 | 12.0 | 2.2 | 4.3 | ||||||
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| Total Number of Cylinders | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | ||||||
| Cylinders in Working Stocks | 7,727 | 10,000 | 2,577 | 11,099 | 7,363 | ||||||
| % of Total Number of Cylinders | 16.8% | 15.4% | 15.5% | 19.4% | 15.9% | ||||||
| Cylinders Filled (per year) | 120,000 | 315,000 | 78,683 | 178,769 | 135,879 | ||||||
| Cylinder Turnover (unit) | 3.0 | 4.7 | 3.1 | 2.6 | 3.2 | ||||||
| Cylinder Depreciation | |||||||||||
| Gross Cylinder Investment | $3,712,381 | $8,465,527 | $1,707,000 | $7,062,738 | $3,872,041 | ||||||
| Total Accumulated Cylinder Depreciation | 2,472,446 | 4,571,385 | 1,104,429 | 4,435,400 | 2,838,206 | ||||||
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| Net Cylinder Investment | $1,239,935 | $3,894,142 | $602,571 | $2,627,338 | $1,033,835 | ||||||
| Gross Cylinder Investment | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | ||||||
| Total Accumulated Cylinder Depreciation | 66.6 | 54.0 | 64.7 | 62.8 | 73.3 | ||||||
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| Net Cylinder Investment | 33.4% | 46.0% | 35.3% | 37.2% | 26.7% | ||||||
| Cylinder Profit Profile | |||||||||||
| Gas Sales (industrial, medical & specialty gases) |
$5,279,034 | $9,106,980 | $3,501,150 | $8,159,818 | $4,215,948 | ||||||
| Cost of Gases Sold | 2,296,380 | 3,952,429 | 1,533,504 | 3,549,521 | 1,939,336 | ||||||
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| Gas Gross Margin | $2,982,654 | $5,154,551 | $1,967,646 | $4,610,297 | $2,276,612 | ||||||
| Cylinder Rental Income | $1,679,489 | $3,232,337 | $920,000 | $3,232,337 | $1,679,489 | ||||||
| Cylinder Filling Salaries | 179,705 | 268,284 | 98,440 | 336,163 | 179,705 | ||||||
| Cyl. Rental Expense (rent, depr., maintenance) |
483,693 | 1,027,883 | 276,920 | 898,590 | 493,770 | ||||||
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| Net Cylinder Rental Income | $1,016,091 | $1,936,170 | $544,640 | $1,997,584 | $1,006,014 | ||||||
| Cylinder Contribution Margin (gas gross margin + net cylinder rental income) |
$3,998,745 | $7,090,721 | $2,512,286 | $6,607,881 | $3,282,626 | ||||||
| Contribution Margin Per Cylinder | $94 | $128 | $83 | $99 | $94 | ||||||
GAWDA’s annual PROFIT Report provides detailed financial results for typical and high-performing gases and welding distribution firms. For more information or to obtain a copy, contact GAWDA headquarters at 215-564-3484.
