Cylinder Profit Profile

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%
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
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
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
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
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
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
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.

Gases and Welding Distributors Association