CEDIA: Installer Revenues, Margins Up In '10

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Indianapolis - Electronic systems contractors (ESCs) who are CEDIA members enjoyed 13 percent revenue growth and rising profit margins in 2010 despite the depressed market for new home construction, CEDIA's

annual benchmarking survey

found.

The responding companies also expect their revenues to grow in 2011.

Average revenues for a responding company hit $1.32 million in 2010, up 13 percent, with installers expecting 2011 gross revenues to increase on average by 15 percent to $1.52 million. In 2010, most of the ESC's revenues again came from retrofit and remodeling installs, both of which accounted for an average of 63 percent of gross revenue in 2010.

Average net profit margin rose to 4.1 percent in 2010 from 3.5 percent in 2009, though the average margin is still below 2007's 6.8 percent.

For 2011, the respondents expect the number of jobs they do to increase from 2010, when the median number of projects for ESC companies was 41, and they expect that number to grow to a median 51 in 2011. The average 2010 project size was $32,000.

A stepped-up marketing effort was the reason cited most often by installers for their expectations of rising sales and profits in 2011. After the end of the first quarter of 2011, 93 percent of respondents indicated that they expect to be profitable at the end of 2011.

Among project types, home theater/media room installs accounted for a smaller share of respondents' gross revenues, falling to 17 percent in 2010 from the previous year's 24 percent, presumably because installers have been diversifying into lighting, security, energy management, and systems integration. In fact, respondents called "systems integration/control" their most profitable product category in 2010, CEDIA said.

In addition, installers see themselves offering a variety of products and services (see table) during the next two years. Seventy-two percent expect to be offering energy-management products, 24 percent expect to offer smart appliances, 33 percent expect to offer home health equipment, 49 percent expect to be offering LED lighting, and 18 percent expect to offer alternative energy sources.

Survey results are designed to help installers evaluate and improve operations, CEDIA said. The results also help manufacturers, distributors and other companies interested in entering the business to assess the state of the market. Results include financial information such as cost of goods sold and operating expenses, business/operational practices such as job costing and contract types, and staffing levels and compensation.

For the 2011 survey, 112 companies completed valid survey responses for a response rate of about 8 percent. The companies employ a total of 932 employees. Results are representative of CEDIA members and reported at a 95 percent confidence level, CEDIA said.

The survey was conducted by research firm Brand Ubiquity. Results are free to respondents and available for purchase through the

CEDIA Marketplace

for $1,495 for CEDIA members and $2,995 for non-members. A discount of 35 percent is available on reports pre-ordered before Sept. 11.

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