Is the Economy Getting Better? | AVFX Boston Audio Visual Staging

Is the Economy Getting Better?

We’re seeing growth this year and have been hiring to stay ahead of the curve.

[Credit: This article is from Corelytics]

AV INDUSTRY INDEX:

updated July 22, 2013

InfoComm has retained Corelytics to compile statistical data from participating Pro AV companies. The goal is to provide members with the most current and most accurate data available in order to monitor the overall health of the AV industry and to inform internal decision processes. The following data is derived from companies using the Corelytics Financial Dashboard between April 2013 – June 2013.  InfoComm members receive a 50% discount on the Corelytics Dashboard subscription and get on-demand graphical trends, forecasts and benchmarks based on data derived from their accounting system. InfoComm members can signup at https://infocomm.corelytics.com.

Sales
Average Monthly Sales Growth
24 month growth trend: –1.6%6 month growth trend: +0.9% The revenue growth trend of the past 24 months (year over year growth) has drifted slightly negative but is showing positive signs over the past 6 months. Any time we see 4 out of the past 6 months sitting above the trend line, we know that something healthy is emerging. Much of the past weakness in sales appears to be driven by economic uncertainties and reluctant spending. The emerging trend upwards seems to be tied to increasing business confidence and small but real increases in spending. The expectation for the next 3 months is a cautious continuation of an upward trend in sales.
Cash
Average Month-end Cash Balances
24 month growth trend: +52.6%6 month growth trend: +164.1% Cash had been an area of concern over the past 12 months, but in the past few months we have seen a dramatic correction. The “leading indicators” (performance in the most recent 6 months) show a dramatic correction. This jump in cash points to 2 likely explanations: (1) your customers are getting caught up on their payables, and (2) Pro AV companies are hanging on to cash in response to uncertain revenue trends. As overall business growth becomes a bit more certain it is likely that we will see this cash put to work to further accelerate growth.
Gross Margin
Average Gross Margin %
12 month percent of revenue: 29.7%24 month growth trend: –6.3%6 month growth trend: +19.5% Of all the numbers to watch, this is the one that tells us the most about business strength. This picture drives the message home: business is on a healthy up-trend. While actual gross margin dollars (gross profit) has been falling over the past 24 months we are seeing an emphatic upturn in the most recent 6 months. Given the falling trend line over the past 24 months, it is safe to assume that much of the recent up-trend is a correction and less about moving into new territory. In other words, its more about getting back to an acceptable level of gross profit. At the same time it is important to point out that the small increase in sales combined with a bigger increase in gross margin suggests that corrections are being made across the board and not on incremental new sales. This is further reinforced by gross margin being at 29.7% of revenue which is a solid margin and has actually increased slightly from prior months.
Payroll (with contractors)
Average Payroll (includes contractors)

12 month percent of revenue: 26.2%24 month growth trend: –6.6%6 month growth trend: +4.3% 
Payroll is climbing faster than sales and could be an area to watch. This payroll growth indicates a bullish management outlook that is running ahead of the current sales trend data. This can be very damaging to profits and needs to be watched closely.[Note that the 6 month increase in payroll is shown in red because it exceeds the rate of revenue growth; the 24 month trend is less than the sales growth rate and therefore is green.]

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AVFX is an audiovisual staging company located in Boston, MA, offering audio, video and lighting services to meeting planners, exhibit builders and special event producers in New England and across the US.