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Electric Signs

2006 Electric State of the Industry Report

Unprecedented proft margins and sales per employee make 2006 a recordbreaking year.

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This year’s Electric State of the Industry Report, the 24th of our annual studies, surprisingly shows recordbreaking statistics in the two most compelling areas: profit margin and sales per employee. And although unprecedented average sales volumes similarly characterize this year’s study, such data holds true across most of the four sales-volume categories. These results haven’t been inordinately skewed by large-company influence.

Consequently, this year’s study also reflects significant growth in the size of the overall U.S. electric-sign industry. Incremental annual growth can be attributed to America’s societal growth, but this year’s growth recalls the phenomenal growth of the ’80s. We conservatively estimate growth for 2006 at 8% to $6.2 billion.

(Please note, whenever we say “this year,” it reflects 2006 data. Similarly, notations as to “last year” indicate 2005.)

Yet, surprisingly, the bulk of the rest of these tables indicates very little change. I struggled to extract data of particular note to add to the bullet points listed below. Nevertheless, here they are:

• The average profit margin of 11.8% is highest in the 20+ years of this study, inching past the previous high of 11.4% set in

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• Similarly, the average sales-per-employee figure, $147,233, is easily the highest yet, eclipsing the $136,000 figure from 1999 (Table 19). This held true in all four sales-volume categories.

• The average sales volume of more than $6.5 million is nearly twice as high as the $3.5 million average from 2004, and more than $2 million higher than the previous high of $4.5 million, set last year (Table 1).

The average increase in sales volume, 12.3%, is the highest since the 16.5% increase shown from 1998 to 1999 (Table 3). However, the median, 7%, is the lowest in three years.

• Anticipated purchases of software, vinyl-cutting plotters and crane/hydraulic trucks should reach unprecedented levels (Table 6b).

• More electric signs than ever before (11.4%) now incorporate digital imaging (Table 9).

• Ownership of flatbed printers more than doubled, from 5.8% to 13.1% last year (Table 11).

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• “Marketshare” for the use of neon and fluorescent illumination collectively dropped 4.4%, while LED usage increased 3% (Table 12a).

• Although the percentage of companies that are marketing electronic digital signage (EDS) has increased (27%), the percentage of companies that has received subsequent inquiries (23%) has waned (Table 13a).

• A huge majority of companies selling EDS signage (73%) utilize liquid-crystal displays (LCDs). Plasma is a distant second at 16% (Table 13b).

• The percentage of sign companies that wholesale (78%) is the highest since 2001 (Table 15).

What a difference a year makes. In last year’s report, we described sales per employee and profit margin as “disappointing.” This year, they set records.

Also, generally speaking, the bigger the sign company, the lower its profit margin. Yet, in this year’s study, we have the opposite of “stagflation” (when interest rates rise in a down economy). We have hugely unprecedented average sales volume, coupled with unprecedented profit. It sounds too good to be true.

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This year’s study is prone to some skewing, because the 199 responses is the second lowest we’ve received; only last year’s 189 was worse. However, the huge differences can’t possibly be relegated to skewing.

We also assume the huge increase in average sales volumes must be somewhat attributable to consolidation, but, again, the increase is too large for that to be a primary cause.

For a full report, please read Signs of the Times' July issue, starting on page 84.

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